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GLOBAL
OFFERING
Stock Code : 6166
(A joint stock company incorporated in the People’s Republic of China with limited liability)
上海劍橋科技股份有限公司
CIG SHANGHAI CO., L TD.
Sole Sponsor, Sponsor-Overall Coordinator, Joint Global Coordinator, Joint Bookrunner and Joint Lead Manager


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IMPORTANT: If you are in any doubt about any of the contents of this Prospectus, you should seek independent professional advice.
CIG SHANGHAI 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
: 67,010,500 H Shares (subject to the
Over-allotment Option)
Number of Hong Kong Offer Shares : 6,701,050 H Shares (subject to
reallocation)
Number of International Offer Shares : 60,309,450 H Shares (subject to
reallocation and the Over-allotment
Option)
Maximum Offer Price : HK$68.88 per H Share, plus brokerage
of 1.0%, SFC transaction levy of
0.0027%, Hong Kong Stock Exchange
trading fee of 0.00565% and AFRC
transaction levy of 0.00015% (payable
in full on application in Hong Kong
dollars and subject to refund)
Nominal value : RMB1.00 per H Share
Stock code : 6166
Sole Sponsor
Joint Overall Coordinators, Joint Global Coordinators, Joint Bookrunners, and
Joint Lead Managers
Joint Global Coordinator, Joint Bookrunner and Joint Lead Manager
Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsib ility for the contents of this
Prospectus, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arisin g 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 “Documents Delivered to the Registrar of Companies and Available on Dis play” in Appendix VII to this Prospectus,
has been registered by the Registrar of Companies in Hong Kong as required by Section 342C of the Companies (Winding Up and Miscellaneous Provisions) O rdinance (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 o f this Prospectus or any other documents
referred to above.
The Offer Price is expected to be fixed by agreement between the Sole Sponsor-Overall Coordinator (for itself and on behalf of the Underwriters) and us on the Price Determination Date. The Price
Determination Date is expected to be on or around Friday, October 24, 2025 (Hong Kong time) and, in any event, not later than 12:00 noon on Friday, Octobe r 24, 2025 (Hong Kong time). The
Offer Price will not be more than HK$68.88 per Offer Share unless otherwise announced. If, for any reason, the Offer Price is not agreed by 12:00 noon on F riday, October 24, 2025 (Hong Kong
time) between the Sole Sponsor-Overall Coordinator (for itself and on behalf of the Underwriters) and us, the Global Offering will not proceed and wil l lapse. Applicants for Hong Kong Offer Shares
may be required to pay, on application (subject to application channels), the maximum Offer Price of HK$68.88 for each Hong Kong Offer Share together w ith a brokerage fee of 1.0%, a SFC
transaction levy of 0.0027%, a Hong Kong Stock Exchange trading fee of 0.00565% and an AFRC transaction levy of 0.00015%, subject to refund if the Offer Price as finally determined is less
than HK$68.88.
The Sole Sponsor-Overall Coordinator (for itself and on behalf of the Underwriters) may, where considered appropriate and with our consent, reduce t he number of Hong Kong Offer Shares and/or
the indicative Offer Price range at any time on or prior to the morning of the last day for lodging applications under the Hong Kong Public Offering. In su ch a case, notices of the reduction in the
number of Hong Kong Offer Shares and/or the indicative Offer Price range will be published as soon as practicable following the decision to make such re duction, 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. Such notices will also be available on the webs ite of our Company at www.cigtech.com
and on the website of the Hong Kong Stock Exchange at www.hkexnews.hk . Further details are set forth in “Structure of the Global Offering” and “How to Apply for Hong Kong Offer Shares”.
Prior to making an investment decision, prospective investors should carefully consider all of the information set out in this Prospectus, in partic ular, the risk factors set out in “Risk Factors”. The
obligations of the Hong Kong Underwriters under the Hong Kong Underwriting Agreement are subject to termination by the Sole Sponsor-Overall Coordin ator (for itself and on behalf of the
Underwriters) if certain grounds arise prior to 8:00 a.m. on the Listing Date. Such grounds are set out in “Underwriting”. It is important that you refe r to that section for further details.
The Offer Shares have not been and will not be registered under the U.S. Securities Act or any state securities laws in the United States, and may not be of fered, sold, pledged or transferred within
or to the United States, or for the account or benefit of U.S. persons (as defined in Regulation S), except in transactions exempt from, or not subject to , the registration requirements of the U.S.
Securities Act. The Offer Shares are being offered and sold outside the United States in offshore transactions in accordance with Regulation S.
ATTENTION
We have adopted a fully electronic application process for the Hong Kong Public Offering pursuant to Rule 12.11 of the Hong Kong Listing Rules. We will n ot provide printed copies
of this Prospectus 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 and our website at www.cigtech.com. If you require a pri nted copy of this Prospectus,
you may download and print from the website addresses above.
IMPORTANT
October 20, 2025


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IMPORTANT NOTICE TO INVESTORS:
FULLY ELECTRONIC APPLICATION PROCESS
We have adopted a fully electronic application process for the Hong Kong
Public Offering. We will not provide printed copies of this Prospectus 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 “ HKEXnews > New Listings > New Listing Information ”
section, and our website at www.cigtech.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:
(i) apply online through the HK eIPO White Form service at www.hkeipo.hk ;
or
(ii) apply electronically through the HKSCC EIPO channel and cause HKSCC
Nominees to apply on your behalf by instructing your broker or custodian who
is a HKSCC Participant to give electronic application instructions via
HKSCC’s FINI system to apply for the Hong Kong Offer Shares on your
behalf.
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 document 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.
Please refer to “How to Apply for Hong Kong Offer Shares” for further details on
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 HKSCC EIPO
channel must be for a minimum of 50 Hong Kong Offer Shares and in one of the numbers
set out in the table below.
IMPORTANT
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If you are applying through the HK eIPO White Form service, you may refer to
the table below for the amount payable for the number of Offer Shares you have selected.
Y ou must pay the respective amount payable on application in full upon application for
Hong Kong Offer Shares.
If you are applying through the HKSCC EIPO channel, you are required to
pre-fund your application based on the amount specified by your broker or custodian ,
as determined based on the applicable laws and regulations in Hong Kong.
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
HK$ HK$ HK$ HK$
50 3,478.73 800 55,659.72 7,000 487,022.58 100,000 6,957,465.48
100 6,957.47 900 62,617.18 8,000 556,597.24 200,000 13,914,930.95
150 10,436.20 1,000 69,574.65 9,000 626,171.90 300,000 20,872,396.45
200 13,914.93 1,500 104,361.98 10,000 695,746.55 400,000 27,829,861.92
250 17,393.66 2,000 139,149.31 20,000 1,391,493.10 500,000 34,787,327.40
300 20,872.40 2,500 173,936.64 30,000 2,087,239.64 600,000 41,744,792.88
350 24,351.13 3,000 208,723.97 40,000 2,782,986.19 700,000 48,702,258.35
400 27,829.86 3,500 243,511.29 50,000 3,478,732.75 800,000 55,659,723.85
450 31,308.60 4,000 278,298.62 60,000 4,174,479.29 900,000 62,617,189.32
500 34,787.33 4,500 313,085.94 70,000 4,870,225.83 1,000,000 69,574,654.80
600 41,744.80 5,000 347,873.28 80,000 5,565,972.39 2,000,000 139,149,309.60
700 48,702.25 6,000 417,447.93 90,000 6,261,718.93 3,350,500
(1) 233,109,880.91
Notes:
(1) Maximum number of Hong Kong Offer Shares you may apply for and this is approximately 50% of the
Hong Kong Offer Shares initially offered.
(2) The amount payable is inclusive of brokerage, SFC transaction levy, the Stock Exchange trading fee
and AFRC transaction levy. If your application is successful, brokerage will be paid to the Exchange
Participants (as defined in the Listing Rules) or to the HK eIPO White Form Service Provider (for
applications made through the application channel of the HK eIPO White Form service) while the
SFC transaction levy, the Stock Exchange trading fee and the AFRC transaction levy will be paid to
the SFC, the Stock Exchange and the AFRC, respectively.
IMPORTANT
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If there is any change in the following expected timetable of the Hong Kong Public
Offering, we will issue an announcement in Hong Kong to be published on our Company’ s
website at www.cigtech.com and the website of the Hong Kong Stock Exchange at
www.hkexnews.hk .
Hong Kong Public Offering commences .............................. .9:00 a.m. on
Monday, October 20, 2025
Latest time for completing electronic applications
under the HK eIPO White Form service through
designated website www.hkeipo.hk (2) ...................... 1 1:30 a.m. on Thursday,
October 23, 2025
Application lists of the Hong Kong Public Offering open (3) ....... 1 1:45 a.m. on Thursday,
October 23, 2025
Latest time for completing payment of HK eIPO
White Form applications by effecting internet banking
transfer(s) or PPS payment transfer(s) ................... .12:00 noon on Thursday,
October 23, 2025
If you are instructing your broker or custodian who is a HKSCC Participant to submit
an EIPO application on your behalf through HKSCC’s FINI system, you are advised to
contact your broker or custodian for the latest time for giving such instructions which may
be different from the latest time as stated above.
Application lists of the Hong Kong Public Offering close (3) ..... .12:00 noon on Thursday,
October 23, 2025
Expected Price Determination Date (5) .....................o no r before 12:00 noon on
Friday, October 24, 2025
Announcement of the final Offer Price, the level of
indications of interest in the International Offering,
the level of applications in the Hong Kong Public
Offering and the basis of allocation of the Hong Kong
Offer Shares under the Hong Kong Public Offering
to be published on the websites of the Hong Kong
Stock Exchange at www.hkexnews.hk and our Company
at www.cigtech.com (6) on or before .................................. 1 1:00 p.m.
Monday, October 27, 2025
EXPECTED TIMETABLE (1)
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Results of allocations in the Hong Kong Public Offering to be available through a variety
of channels, including:
 in the announcement to be posted on the websites
of the Hong Kong Stock Exchange at www.hkexnews.hk
and our Company at www.cigtech.com (6) by no later than ...........1 1:00 p.m. on
Monday, October 27, 2025
 from the “Allotment Results” function at
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 11:00 p.m. on
Monday, October 27, 2025 to
12:00 midnight on Sunday,
November 2, 2025
 from the allocation results telephone enquiry line by
calling +852 3691 8488 .............................. .between 9:00 a.m. and
6:00 p.m. from Tuesday,
October 28, 2025
to Monday,
November 3, 2025
(excluding Saturday, Sunday
and public holidays in
Hong Kong)
Dispatch of H Share certificates or deposit of the
H Share certificates into CCASS in respect of wholly
or partially successful applications pursuant to
the Hong Kong Public Offering on or before
(7) ........... Monday, October 27, 2025
Despatch of HK eIPO White Form e-Auto Refund payment
instructions/refund checks in respect of wholly
or partially unsuccessful applications pursuant
to the Hong Kong Public Offering on or before
(7) ........... T uesday, October 28, 2025
Dealings in H Shares on the Hong Kong
Stock Exchange expected to commence at ................... .9:00 a.m. on Tuesday,
October 28, 2025
Notes:
(1) All times and dates refer to Hong Kong local times and dates.
EXPECTED TIMETABLE (1)
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(2) Y ou will not be permitted to submit your application under the HK eIPO White Form service or the
designated website at www.hkeipo.hk after 11:30 a.m. on the last day for submitting applications. If you have
already submitted your application and obtained an application reference number from the designated website
prior to 11:30 a.m., you will be permitted to continue the application process (by completing payment of
application monies) until 12:00 noon on the last day for submitting applications, when the application lists
close.
(3) If there is/are a tropical cyclone warning signal number 8 or above, 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 Thursday,
October 23, 2025, the application lists will not open or close on that day. Further information is set out in “How
to Apply for Hong Kong Offer Shares — E. Severe Weather Arrangements”.
(4) Applicants who apply for Hong Kong Offer Shares by giving electronic application instructions to HKSCC
via HKSCC’s FINI system should refer to “How to Apply for Hong Kong Offer Shares — A. Application for
Hong Kong Offer Shares — 2. Application Channels”.
(5) The Price Determination Date is expected to be on or about Friday, October 24, 2025, and in any event, not
later than 12:00 noon on Friday, October 24, 2025. If, for any reason, the Offer Price is not agreed between
the Sole Sponsor-Overall Coordinator (for itself and on behalf of the Underwriters) and us on or before 12:00
noon on Friday, October 24, 2025, the Global Offering will not proceed and will lapse.
(6) None of the websites or any of the information contained on the websites forms part of this Prospectus.
(7) H Share certificates for the Hong Kong Offer Shares will only become valid evidence of title provided that the
Global Offering has become unconditional in all respects prior to 8:00 a.m. on Tuesday, October 28, 2025.
Investors who trade H Shares on the basis of publicly available allocation details prior to the receipt of H Share
certificates or prior to the H Share certificates becoming valid evidence of title do so entirely at their own risk.
e-Auto Refund payment instructions/refund checks will be issued in respect of wholly or partially unsuccessful
applications pursuant to the Hong Kong Public Offering and in respect of successful applicants in the event
that the final Offer Price is less than the price payable per Offer Share on application.
Further information is set out in the sections headed “How to Apply for Hong Kong Offer Shares — D.
Despatch/Collection of H Share Certificates and Refund of Application Monies”.
The above expected timetable is a summary only. For details of the structure and
conditions of the Global Offering, including its conditions, and the procedures for applications
for Hong Kong Offer Shares, please refer to the sections headed “Structure of the Global
Offering” and “How to Apply for Hong Kong Offer Shares” in this Prospectus, respectively.
EXPECTED TIMETABLE (1)
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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, and does not constitute, an offer or a solicitation of an offer
to subscribe for or buy, any security in any other jurisdiction or in any other
circumstances. No action has been taken to permit a public offering of the Offer Shares
or the distribution of this Prospectus in any jurisdiction other than Hong Kong. The
distribution of this Prospectus and the offering and sale of the Offer Shares in other
jurisdictions are subject to restrictions and may not be made except as permitted under
the applicable securities laws of such jurisdictions pursuant to registration with or
authorization by the relevant securities regulatory authorities or an exemption therefrom.
You should 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 Joint Overall Coordinators, the Joint Global Coordinators, the Joint
Bookrunners, the Joint Lead Managers and the Capital Market Intermediaries, any of 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 v
CONTENTS ....................................................... v i i
SUMMARY ....................................................... 1
DEFINITIONS ..................................................... 2 6
GLOSSARY OF TECHNICAL TERMS ................................. 4 0
FORW ARD-LOOKING STATEMENTS ................................. 4 7
RISK FACTORS ................................................... 4 9
CONTENTS
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W AIVERS FROM STRICT COMPLIANCE WITH HONG KONG LISTING
RULES AND EXEMPTION FROM STRICT COMPLIANCE WITH THE
COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS)
ORDINANCE .................................................... 8 5
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL
OFFERING ...................................................... 9 8
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING ..... 1 0 2
CORPORATE INFORMATION ....................................... 1 0 8
INDUSTRY OVERVIEW ............................................. 1 1 1
REGULATORY OVERVIEW ......................................... 1 3 1
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE ............. 1 5 6
BUSINESS ........................................................ 1 7 1
RELATIONSHIP WITH OUR SINGLE LARGEST GROUP OF
SHAREHOLDERS ................................................ 2 8 8
DIRECTORS AND SENIOR MANAGEMENT ............................ 2 9 3
SUBSTANTIAL SHAREHOLDERS ..................................... 3 0 7
SHARE CAPITAL .................................................. 3 0 9
FINANCIAL INFORMATION ......................................... 3 1 2
FUTURE PLANS AND USE OF PROCEEDS ............................. 3 7 3
CORNERSTONE INVESTORS ........................................ 3 8 0
UNDERWRITING .................................................. 3 9 0
STRUCTURE OF THE GLOBAL OFFERING ............................ 4 0 2
HOW TO APPLY FOR HONG KONG OFFER SHARES ................... 4 1 3
APPENDIX I – ACCOUNTANTS’ REPORT ....................... I - 1
APPENDIX II – UNAUDITED PRO FORMA FINANCIAL
INFORMATION .............................. II-1
CONTENTS
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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 A V AILABLE ON DISPLAY . . VII-1
CONTENTS
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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 and is qualified in its entirety by, and should be in conjunction with, the
full text of this Prospectus. You should read the entire Prospectus before you decide to
invest in the Offer Shares. There are risks associated with any investment. Some of the
particular risks in investing in the Offer Shares are set out in the section headed “Risk
Factors” in this Prospectus. You should read that section carefully before you decide to
invest in the Offer Shares.
OVERVIEW
We are primarily engaged in designing, developing and selling connectivity and data
transmission devices. During the Track Record Period, we generated our revenue primarily
from the sales of our products in (i) broadband; (ii) wireless; and (iii) photonics technologies.
According to F&S, we were one of the few companies that offer products across these three
technologies to a global customer base, and ranked 5th in the global integrated optical and
wireless connectivity devices (“ OWCD ”) industry in 2024, with a market share of 4.1%, in
terms of sales revenue. During the Track Record Period, the revenue generated from overseas
markets represented 82.9%, 89.3%, 92.6%, and 94.0% of our total revenue, respectively. In
addition to our operations in China, we are also co-headquarted in the United States, with
overseas R&D centers in the United States and Japan, overseas sales offices in the United
States and Italy, and overseas co-location manufacturing facilities in the United States,
Germany, Poland, and Malaysia. Moving forward, we will pursue a number of strategies for our
overseas business, including (i) recruiting overseas talents; (ii) optimizing our production
capacity layout overseas; and (iii) expanding our sales network overseas.
Our products
Since our inception, we have been dedicated to providing customized products to meet the
needs of our customers. Our offerings comprise product design and development, as well as the
necessary software and support services to ensure effective implementation.
Key features of our products include the following:
Major areas
of connectivity Major applicable fields:
Network
topology
General description
of users/customers
Broadband /H1118Delivering efficient data
transmission between
computing clusters and
users’ premises
(i) FTTH and FTTB
deployments; (ii) Multi-
gigabit broadband
infrastructure for
residential and commercial
use; and (iii) Telecom and
ISP backbone upgrades
Point to
multi-point
over fiber
Telecommunications
operators and internet
service providers,
municipal broadband
providers; or large
residential property
developers or campus
network operators.
SUMMARY
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Major areas
of connectivity Major applicable fields:
Network
topology
General description
of users/customers
Wireless /H1118/H1118/H1118Delivering high
bandwidth, fast
transmission speeds,
and low network
latency between users’
premises and end-
users’ smart devices
(i) Smart home and smart
office environments;
(ii) Enterprise and campus
wireless networking; and
(iii) Hospitality, retail, and
public venue connectivity
Over the air Consumer electronics brands
and OEMs, enterprises
deploying large-scale
wireless network, or
system integrators and
managed service
providers.
Photonics /H1118/H1118Delivering efficient
connectivity within
and between
computing clusters
(i) Data center interconnect
and cloud infrastructure;
(ii) Connectivity in
relation to AI computing
clusters and hyperscale
computing; and (iii)
Connectivity in relation to
high-performance
computing and financial
trading networks
Point to point
over fiber
Hyperscale cloud service
providers (e.g., public
cloud platforms), data
center operators and
co-location providers,
network equipment
manufacturers and optical
system integrators.
In relation to our broadband products, our XGS PON products (which are among the
mainstream 10GPON products in the wider broadband sector) accounted for over 30% of the
global 10GPON market by shipping volume as of December 31, 2024. We were among the first
worldwide to achieve mass production of 25GPON and to pioneer the deployment of 50GPON.
As of the Latest Practicable Date, our 25GPON was the fastest mass-produced product
globally, while 50GPON is poised to become the next generation mainstream technology. We
are also contributing to the early-stage evaluation of 100GPON, reinforcing our role in shaping
the future of broadband.
In relation to our wireless products, our portfolio includes Wi-Fi products for unlicensed
spectrum ideal for households and small businesses and small cell products for licensed
spectrum applications such as cellular services and broadcasting. We were among the first in
the global OWCD industry to develop and mass-produce Wi-Fi 7 products, which offer high
bandwidth, fast transmission speeds, and low latency. In partnership with Google Fiber, we
launched the industry’s first 20G uplink Wi-Fi 7 gateway for home and small business users,
delivering network services exceeding 10Gb/s. We are also actively developing Wi-Fi 8, the
next-generation mainstream product.
In relation to our photonics products, our portfolio, which spans 100G, 400G, 800G, and
1.6T interconnection speeds, is adaptable to a wide range of industry standard form factors. We
were among the first globally to deploy 800G and 1.6T photonics products. Our pioneering
work in silicon photonics enables high transmission rates with low cost and power
consumption critical for supporting the exponential growth in computational power. We are
also advancing Linear-drive Pluggable Optics (“ LPO”) technology, which offers low power
consumption, low latency, and high performance, making it ideal for AI models and data
centers. To complement this, we are developing immersion liquid-cooled photonics to enhance
SUMMARY
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server efficiency and thermal management. Additionally, we are working on our packaged laser
and silicon photonics engine (i.e., ELS, external light source) for Co-Packaged Optics (“ CPO”)
technology, which integrates the network and photonic engine into a single slot, drastically
reducing signal transmission distance and latency ideal for AI training and inference.
The following diagram illustrates a scenario that demonstrates the applications of our
products within a network system:
Computing
clusters
Data
storage
Data switches
Data centers
Computing
clusters
Data
storage
Data switches
Data centers
Internet
Optical network
terminals (“ONT”)
Access Points
(“AP”)
Computers, smartphones, and other IoT devices
Photonics
connectivity
Broadband
connectivity
Wireless
connectivity
SUMMARY
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The following tables set forth a breakdown of our sales volume, revenue, gross profit, and gross profit margin by such types of products for
the periods indicated:
For the year ended December 31,
2022 2023 2024
Sales volume Revenue
Gross
profit
Gross
profit
margin Sales volume Revenue
Gross
profit
Gross
profit
margin Sales volume Revenue
Gross
profit
Gross
profit
margin
Units’000 % RMB’000 % RMB’000 % Units’000 % RMB’000 % RMB’000 % Units’000 % RMB’000 % RMB’000 %
Broadband products /H1118/H1118/H1118/H1118/H1118/H111810,169 74.0 2,059,278 54.5 306,581 14.9 7,559 77.6 1,827,146 59.2 356,432 19.5 9,580 74.7 2,032,689 55.7 377,832 18.6
Wireless products /H1118/H1118/H1118/H1118/H1118/H1118/H11182,018 14.7 1,056,051 27.9 210,583 19.9 1,220 12.5 718,518 23.3 165,042 23.0 2,570 20.0 1,052,400 28.8 259,054 24.6
Photonics products /H1118/H1118/H1118/H1118/H1118/H1118/H1118890 6.5 478,215 12.6 131,886 27.6 587 6.0 446,680 14.5 130,166 29.1 356 2.8 491,527 13.5 119,063 24.2
Others (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118671 4.8 190,195 5.0 39,585 20.8 376 3.9 93,018 3.0 12,455 13.4 319 2.5 73,273 2.0 6,298 8.6
Total/overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813,748 100.0 3,783,739 100.0 688,635 18.2 9,742 100.0 3,085,362 100.0 664,095 21.5 12,825 100.0 3,649,889 100.0 762,247 20.9
Note:
1. Primarily included carrier-grade ethernet switches and edge computing products.
SUMMARY
–4–


--- page 15 ---
For the six months ended June 30,
2024 2025
Sales volume Revenue Gross profit
Gross
profit
margin Sales volume Revenue Gross profit
Gross
profit
margin
Units’000 % RMB’000 % RMB’000 % Units’000 % RMB’000 % RMB’000 %
(Unaudited) (Unaudited)
Broadband products /H1118/H1118/H1118/H1118/H1118/H1118/H11185,143 77.4 975,732 55.4 199,613 20.5 5,286 80.4 1,192,642 58.6 229,259 19.2
Wireless products /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,228 18.5 551,193 31.3 143,647 26.1 928 14.1 415,166 20.4 84,915 20.5
Photonics products /H1118/H1118/H1118/H1118/H1118/H1118/H1118120 1.8 202,041 11.5 39,805 19.7 247 3.8 394,216 19.4 127,602 32.4
Others (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118153 2.3 32,442 1.8 101 0.3 117 1.7 31,999 1.6 2,804 8.8
Total/overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,644 100.0 1,761,408 100.0 383,166 21.8 6,578 100.0 2,034,023 100.0 444,580 21.9
Note:
1. Primarily included carrier-grade ethernet switches and edge computing products.
SUMMARY
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--- page 16 ---
In general, fluctuations in our revenue during the Track Record Period were primarily
driven by changes in industry-wide demand, while our international expansion strategy
supported revenue growth in specific markets. In 2023, our revenue declined due to an
industry-wide inventory destocking cycle, following elevated stockpiling during the pandemic
period which resulted in a postponed demand. However, in 2024, this deferred demand
materialized, leading to a robust rebound in sales. This recovery was further bolstered by our
intensified international sales efforts, particularly in the United States and Europe, where we
expanded our commercial presence and developed stronger customer relationships. Overall,
our total sales volume decreased from 13.7 million units in 2022 to 9.7 million units in 2023,
and recovered to 12.8 million units in 2024. Similarly, our total revenue decreased from
RMB3,783.7 million in 2022 to RMB3,085.4 million in 2023, then increased to RMB3,649.9
million in 2024. For the six months ended June 30, 2024 and 2025, our revenue increased from
RMB1,761.4 million to RMB2,034.0 million for similar reasons.
From a profitability perspective, our gross profit and gross profit margins were generally
lower in 2022 due to elevated raw material costs. These were driven by industry-wide supply
chain disruptions that persisted from the pandemic period, which limited our ability to procure
materials cost-effectively. As these disruptions eased in 2023, procurement costs normalized,
contributing to a recovery in gross profit margins. This trend continued into 2024, supported
by both improved cost structures and a favorable product mix, resulting in a relatively higher
gross profit. Particularly, as we rolled out more sophisticated, high-margin photonics products
in the six months ended June 30, 2025, our gross profit margins further improved. Looking
ahead, we remain focused on sustaining our revenue growth while continuing to introduce
advanced products that enhance our profitability profile.
SUMMARY
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Our average selling price (“ ASP”) is calculated by dividing the revenue generated by our
key product lines by the total sales volume of each product line. Each product line may
comprise over hundreds of products, which may vary significantly in terms of pricing,
customer type, and timing of sales. During the Track Record Period, we did not experience a
concentration of revenue derived from any single product, with our top one product
contributing 10.9% of our total revenue for 2024. Given the wide variety of our products, we
adopt pricing strategies that are tailored to market conditions and customer needs. These
strategies are designed to safeguard and enhance our profitability. The following sets forth a
breakdown of the ASPs of our key product categories for the years/periods indicated:
For the year ended December 31,
For the six months
ended June 30,
2022 2023 2024 2024 2025
RMB/unit RMB/unit RMB/unit RMB/unit RMB/unit
Broadband products /H1118/H1118202.5 241.7 212.2 189.7 225.6
Wireless products /H1118/H1118/H1118523.3 588.9 409.5 448.8 447.4
Photonics products /H1118/H1118537.3 761.0 1,380.7 1,682.3 1,595.7
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118283.5 247.4 229.7 212.0 274.6
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118275.2 316.7 284.6 265.1 309.2
 Our broadband products saw an increase in ASP from RMB202.5 per unit in 2022
to RMB241.7 in 2023, followed by a decline to RMB212.2 in 2024. This fluctuation
was primarily due to a shift in product mix toward newer, higher-functionality
models in 2023 (such as 10G PON devices), which allowed for higher pricing, while
in 2024, as the upgraded products entered broader commercial deployment, the unit
price declined slightly. The ASP of our broadband products increased from
RMB189.7 to RMB225.6 for the six months ended June 30, 2024 and 2025.
 Our wireless products followed a similar pattern, rising from RMB523.3 in 2022 to
RMB588.9 in 2023 as we launched Wi-Fi-6E devices. The decline to RMB409.5 in
2024 was largely driven by market conditions. The ASP of our wireless products
remained steady at RMB448.8 and RMB447.4 for the six months ended June 30,
2024 and 2025.
 Our photonics products, on the other hand, showed a strong upward trend, with ASPs
increasing from RMB537.3 in 2022 to RMB761.0 in 2023, and then surging to
RMB1,380.7 in 2024. This was mainly due to the successful rollout of advanced,
high-value photonics products that met growing demand for cutting-edge optical
technologies. This sustained increase was also driven by growing shipments of 400G
products throughout 2023 and 2024. As the product line continues to evolve and
upgrade, the higher-performance 400G offerings have contributed to a higher overall
ASP . The ASP of our photonics products decreased from RMB1,682.3 to
RMB1,595.7 for the six months ended June 30, 2024 and 2025.
SUMMARY
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--- page 18 ---
Our management and presence overseas and in China
Our founder and management team have globalized educational backgrounds and gained
their industry experience overseas and in China. Notably, our founder, Mr. Gerald G Wong, is
an MIT graduate and he served at A T&T Bell Labs (which later became Lucent Technologies
Bell Labs) and as a vice president of Lucent Technologies.
We are a company with a presence overseas and in China. Over the years, we have set up
R&D centers and in-house manufacturing facilities, and engaged in multiple co-location
manufacturing arrangements with local partners across multiple countries and regions, as
follows:
Function Location
No. of
establishments
Headquarters /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118China and the United States 2
R&D centers /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118China, the United States, and Japan, 6
In-house manufacturing
facilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
China 2
Co-location manufacturing
facilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
China, the United States, Germany, Poland, and
Malaysia
6
Sales offices /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118China, the United States, and Italy 3
In addition to the sales offices, we have also deployed personnel to multiple countries and
regions to support our sales and customer relationship management efforts. Moreover, we have
expanded our footprint through strategic acquisitions such as photonics assets and R&D teams
from MACOM and Lumentum, and software capabilities from Actiontec. As of June 30, 2025,
our customer base spanned across 52 countries and regions, serving the world’s top five ICT
equipment providers, and a majority of our revenue was generated from overseas markets. For
2022, 2023, and 2024, and the six months ended June 30, 2025, our revenue generated from
overseas markets represented 82.9%, 89.3%, 92.6%, and 94.0% of our total revenue, respectively.
SUMMARY
–8–


--- page 19 ---
The following table sets forth the breakdown of our revenue by geographical region in
which our customers are located for the years/periods indicated:
For the year ended December 31, For the six months ended June 30,
2022 2023 2024 2024 2025
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(Unaudited)
North America
– United States /H1118/H1118/H11181,187,244 31.4 1,161,500 37.6 1,448,139 39.7 691,922 39.3 980,454 48.2
– Mexico /H1118/H1118/H1118/H1118/H1118/H111832,046 0.9 14,523 0.5 6,744 0.2 7,101 0.4 – –
– Canada /H1118/H1118/H1118/H1118/H1118/H1118109,843 2.9 25,741 0.8 1,097 0.1 9 0.0 642 0.0
– Others /H1118/H1118/H1118/H1118/H1118/H1118/H111827,208 0.7 22,201 0.7 942 0.0 650 0.0 – –
Sub-total /H1118/H1118/H1118/H1118/H1118/H1118/H11181,356,341 35.9 1,223,965 39.6 1,456,922 40.0 699,682 39.7 981,096 48.2
Europe
– Finland /H1118/H1118/H1118/H1118/H1118/H11181,257,194 33.2 1,115,094 36.1 1,515,843 41.5 731,271 41.5 788,646 38.8
– Others (1) /H1118/H1118/H1118/H1118/H1118103,004 2.7 75,107 2.5 57,721 1.6 24,949 1.4 24,242 1.2
Sub-total /H1118/H1118/H1118/H1118/H1118/H1118/H11181,360,198 35.9 1,190,201 38.6 1,573,564 43.1 756,220 42.9 812,888 40.0
Chinese Mainland /H1118/H1118/H1118647,799 17.1 331,358 10.7 270,360 7.4 133,832 7.6 121,824 6.0
Asia (excluding
Chinese Mainland) /H1118414,705 11.0 331,895 10.8 341,101 9.3 165,657 9.4 117,020 5.8
Others (2) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,696 0.1 7,943 0.3 7,942 0.2 6,017 0.4 1,195 0.0
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,783,739 100.0 3,085,362 100.0 3,649,889 100.0 1,761,408 100.0 2,034,023 100.0
Note:
1. Primarily included Denmark, the Netherlands, and the United Kingdom.
2. Primarily included countries in South America, South Africa, and Oceania.
Our revenue from North America decreased from RMB1,356.3 million in 2022 to
RMB1,224.0 million in 2023, before rising to RMB1,456.9 million in 2024. Similarly, our
revenue from Europe declined from RMB1,360.2 million in 2022 to RMB1,190.2 million in
2023, and then increased to RMB1,573.6 million in 2024. The declines in 2023 in both regions
primarily reflected an industry-wide inventory destocking cycle, following elevated
stockpiling during the pandemic period. In 2024, this deferred demand materialized, and our
intensified sales efforts, particularly in the United States and key European markets, led to a
strong recovery. Our revenue generated from North America increased from RMB699.7 million
to RMB981.1 million for the six months ended June 30, 2024 and 2025. This was due to an
increase in sales volume generated from the region.
Our revenue from Chinese Mainland declined steadily from RMB647.8 million in 2022
to RMB331.4 million in 2023, and further to RMB270.4 million in 2024. While the 2023
decline was partially influenced by the broader post-pandemic inventory cycle, the continued
decrease in 2024 reflected the strategic expansion of our overseas sales and marketing efforts.
SUMMARY
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--- page 20 ---
Our R&D capabilities
As of June 30, 2025, our R&D team comprised 673 members, representing over 50% of
our total workforce, and we have established R&D centers in China, the United States, and
Japan. During the Track Record Period, our R&D expenses represented 7.1%, 8.9%, 8.8%, and
7.9% of our total revenue, respectively, and our cumulative R&D investments during the Track
Record Period exceeded RMB1.4 billion.
Our manufacturing capabilities
We primarily manufacture our products via (i) our co-location manufacturing model; and
(ii) our in-house manufacturing facilities. Our co-location manufacturing model, which is a
commonly-used term in the industry according to F&S, involves close partnership between our
co-location partners and us, where we are responsible for the product design, key materials,
core machinery, processes, and overall management, while our co-location partners provide the
factory space, workforce, basic machinery, assistance on logistics and procurement, and handle
local regulations. This setup gives us better control over quality and consistency across all
production sites. We also benefit from our co-location partners’ experience and logistics
networks, which help us deliver products faster to nearby customers. As of the Latest
Practicable Date, we had entered into agreements with three co-location partners in China, and
three overseas, namely in Malaysia, the United States, and Europe. Our in-house
manufacturing facilities (with the first one located in Shanghai and has been in operation since
2014, and the new facility located in Jiashan, near Shanghai, which has been in operation from
July 2025) are also considered essential to our production capabilities. We conduct pilot runs
in-house to optimize processes before replicating them at co-location sites, and we maintain the
production in-house as a benchmark for co-location operations.
Our JDM and ODM models
We serve customers through either Joint Design Manufacturing (“ JDM”) or Original
Design Manufacturing (“ ODM”) models. Under the JDM model, we work closely with customers
from the early stages of product design and development. JDM projects typically involve a longer
lead time, often one to two years, for certification due to the high level of customization and the
need for strong financial and operational capabilities. This model is best suited for clients seeking
unique, high-performance products and who value close technical collaboration. In contrast,
under our ODM model, we design and develop products internally and then offer them to
customers. This model offers faster time-to-market and cost efficiency, making it ideal for clients
who prefer proven, off-the-shelf products with minimal development time.
SUMMARY
–1 0–


--- page 21 ---
The following sets forth the revenue, gross profit, and gross profit margins generated
from such models during the Track Record Period:
For the year ended December 31, For the six months ended June 30,
2022 2023 2024 2024 2025
Revenue
Gross
profit
Gross
profit
margin Revenue
Gross
profit
Gross
profit
margin Revenue
Gross
profit
Gross
profit
margin Revenue
Gross
profit
Gross
profit
margin Revenue
Gross
profit
Gross
profit
margin
RMB’000 RMB’000 % RMB’000 RMB’000 % RMB’000 RMB’000 % RMB’000 RMB’000 % RMB’000 RMB’000 %
(Unaudited)
JDM /H1118/H11182,187,589 393,306 18.0 1,639,179 298,608 18.2 1,950,263 360,558 18.5 977,804 195,631 20.0 933,385 181,022 19.4
ODM /H1118/H11181,596,150 295,329 18.5 1,446,183 365,487 25.3 1,699,626 401,689 23.6 783,604 187,535 23.9 1,100,638 263,558 23.9
Total /H1118/H11183,783,739 688,635 18.2 3,085,362 664,095 21.5 3,649,889 762,247 20.9 1,761,408 383,166 21.8 2,034,023 444,580 21.9
In general, there was no distinct factor differentiating the revenue fluctuations between
our JDM and ODM customers. During the Track Record Period, the revenue from our JDM
customers decreased by RMB548.4 million, or by 25.1%, from RMB2,187.6 million in 2022
to RMB1,639.2 million in 2023. Similarly, the revenue from our ODM customers declined by
RMB150.0 million, or by 9.4%, from RMB1,596.2 million in 2022 to RMB1,446.2 million in
2023. These declines were primarily due to an industry-wide inventory destocking cycle,
following elevated stockpiling during the pandemic period which resulted in postponed
demand across both JDM and ODM segments. In 2024, this deferred demand began to recover.
Coupled with our enhanced sales and marketing efforts, especially in overseas markets, the
demand from both JDM and ODM customers rebounded. Consequently, the revenue from our
JDM customers increased by RMB311.1 million, or by 19.0%, to RMB1,950.3 million, while
the revenue from our ODM customers rose by RMB253.4 million, or by 17.5%, to RMB1,699.6
million. For the six months ended June 30, 2024 and 2025, the revenue generated from our
JDM customers slightly decreased from RMB977.8 million to RMB933.4 million, and the
revenue generated from our ODM customers increased from RMB783.6 million to
RMB1,100.6 million.
Under the JDM model, customers often participate in the development process by
providing specific features such as firmware modules. In contrast, the ODM model grants us
full responsibility for feature development and enables us to deliver more value-added
components, such as software and interworking capabilities. This generally supports higher
margins. It is worth noting that the relatively lower gross profit margin from ODM in 2022 was
primarily due to our Group’s strategic decision to pay a premium for securing critical materials
amid shortages, in order to maintain delivery commitments. This was considered a necessary
trade-off to uphold customer trust and continuity.
SUMMARY
–1 1–


--- page 22 ---
CUSTOMERS AND SUPPLIERS
During the Track Record Period, our major customers comprised mostly information and
communication technology manufacturers. In 2022, 2023, and 2024, and the six months ended
June 30, 2025, the revenue generated from our five largest customers in each year/period of the
Track Record Period amounted to RMB2,398.5 million, RMB2,122.7 million, RMB2,737.6
million, and RMB1,677.5 million, representing 63.5%, 68.8%, 74.9%, and 82.5% of our total
revenue, and the revenue generated from our largest customer for each year/period represented
33.6%, 36.1%, 41.8%, and 41.7% of our total revenue, respectively. Our major suppliers during
the Track Record Period comprised mostly providers of telecommunications parts and
components. In 2022, 2023, and 2024, and the six months ended June 30, 2025, purchases from
our five largest suppliers in each year/period of the Track Record Period amounted to
RMB1,130.5 million, RMB709.7 million, RMB1,089.4 million, and RMB754.6 million,
representing 34.0%, 35.3%, 38.8%, and 44.3% of our total purchases, and purchases from our
largest supplier for each year/period represented 8.5%, 9.3%, 10.4%, and 16.0% of our total
purchases, respectively.
MARKET OPPORTUNITIES AND COMPETITIVE LANDSCAPE
According to F&S, the global OWCD market encompasses a comprehensive suite of
devices essential for the optical communication and wireless networking industry, including
photonics, wired broadband access, and wireless network access devices. From 2020 to 2024, the
global sales revenue of the OWCD industry increased from USD32.4 billion to USD54.6 billion,
with a CAGR of 13.9%. It is projected to reach USD111.8 billion by 2029, representing a CAGR
of 15.4% from 2024 onwards. Moreover, in relation to the market for broadband products, most
notably, PON devices, the global market size for PON devices by sales revenue increased from
USD6.2 billion in 2020 to USD7.8 billion in 2024, with a CAGR of approximately 5.8%, and is
projected to reach USD11.9 billion in 2029, with a CAGR of approximately 8.8% from 2024. In
relation to the market for Wi-Fi products, the global market size for Wi-Fi devices, the global
sales revenue of Wi-Fi devices rose from USD13.7 billion in 2020 to approximately USD16.7
billion in 2024, with a CAGR of around 5.1%, and is projected to reach USD21.2 billion in 2029,
with a CAGR of 4.9%. In relation to photonics products, global sales revenue of photonics rose
from USD11.2 billion in 2020 to USD17.8 billion in 2024, with a CAGR of 12.2%, and is
expected to reach USD41.5 billion in 2029 with a CAGR of 18.5%.
Furthermore, the recent explosive growth of AI applications has created a growing need
for connectivity solutions that ensure fast, low-latency, and high-capacity data transmission
between data centers, and also from computational power to end-users’ network and smart
devices support the future of AI development. According to F&S, notable developments in this
era of AI advancement include the following:
SUMMARY
–1 2–


--- page 23 ---
 Large-scale AI infrastructure investments: Certain notable investments in AI
infrastructure are expected in the coming years. For example, the United States
government launched the “Stargate Initiative” in 2025 to expand AI-supporting
infrastructure with a commitment of USD500 billion over four years. Global tech
giants are also projected to invest over USD400 billion in AI infrastructure within
the next three years.
 Decentralization of computing networks with lightweight AI models: The rise of
lightweight AI models and open-source platforms has made AI technology more
accessible. This allows small and medium-sized businesses to create their own AI
models and local data centers, reducing dependency on external resources. The
democratization of AI enables more companies to innovate and improve operations,
increasing demand for small and medium-sized data centers.
 Rapid proliferation of AI applications: The widespread adoption of advanced AI
models and decreased costs have led to a surge in global data traffic and demand for
higher-end broadband, wireless, and industrial IoT equipment.
In terms of market competition, the global integrated OWCD industry is relatively
competitive with a total market size of USD12.4 billion in 2024. The top five players had an
aggregate of 30.4% of the market share in the industry in terms of sales revenue. Our Company
ranked 5th among all players, with a market share of 4.1% in global integrated OWCD industry.
OUR COMPETITIVE STRENGTHS AND FUTURE STRATEGIES
Our achievements to date and the foundation for our future growth are driven by several
competitive advantages, including (i) our capable management and R&D teams, with their
backgrounds and industry insights, have driven us to achieve R&D breakthroughs; (ii) we are
well-positioned in the market to capture future growth opportunities; (iii) we are a company
with a presence overseas and in China; (iv) our success has been driven by flexible and
efficient business models; and (v) we are capable of, and have successfully, scaled-up our
manufacturing capabilities.
We are committed to preserving our status as market leaders and to fostering our financial
and operational expansion to this end, we intend to (i) continue attracting top global talent to
enhance our overall competitiveness; (ii) increase our R&D investments to maintain our
competitive edge in the industry; (iii) optimize our production capacity layout overseas and in
China and continue to invest in intelligent manufacturing to meet the demand of our customers;
and (iv) further expand our sales network.
SUMMARY
–1 3–


--- page 24 ---
SUMMARY OF HISTORICAL FINANCIAL INFORMATION
The following table sets forth a summary of our results of operations:
For the year ended December 31, For the six months ended June 30,
2022 2023 2024 2024 2025
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(Unaudited)
Revenue /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,783,739 100.0 3,085,362 100.0 3,649,889 100.0 1,761,408 100.0 2,034,023 100.0
Cost of sales /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(3,095,104) (81.8) (2,421,267) (78.5) (2,887,642) (79.1) (1,378,242) (78.2) (1,589,443) (78.1)
Gross profit /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118688,635 18.2 664,095 21.5 762,247 20.9 383,166 21.8 444,580 21.9
Other income, net /H1118/H1118/H1118/H1118/H1118/H111820,006 0.5 18,882 0.6 49,663 1.4 38,900 2.2 14,427 0.7
Other gains, net /H1118/H1118/H1118/H1118/H1118/H1118/H111834,776 0.9 31,133 1.0 24,458 0.7 (7,091) (0.4) 13,965 0.7
Research and development
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(270,376) (7.1) (275,799) (8.9) (320,368) (8.8) (149,005) (8.5) (160,785) (7.9)
Selling and marketing
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(58,106) (1.5) (70,484) (2.3) (90,065) (2.5) (43,144) (2.5) (52,042) (2.5)
General and administrative
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(206,271) (5.5) (217,488) (7.0) (208,259) (5.7) (103,234) (5.9) (111,199) (5.5)
Reversal/(Provision) of
expected credit loss, net /H1118/H111827,751 0.7 4,698 0.2 (1,351) (0.1) (4,288) (0.2) (5,587) (0.3)
Finance costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(57,903) (1.5) (61,123) (2.0) (52,890) (1.4) (32,132) (1.8) (24,263) (1.2)
Profit before income tax /H1118/H1118178,512 4.7 93,914 3.1 163,435 4.5 83,172 4.7 119,096 5.9
Income tax (expense)/credit /H1118 (7,406) (0.2) 1,051 0.0 3,606 0.1 1,407 0.1 (1,550) (0.1)
Profit for the year/period /H1118/H1118171,106 4.5 94,965 3.1 167,041 4.6 84,579 4.8 117,546 5.8
Our cost of sales mainly consists of (i) raw materials; (ii) manufacturing overhead; and (iii)
staff costs. Our raw materials mainly include integrated circuits, structural components,
transistors, and connectors. During the Track Record Period, our cost of sales represented 81.8%,
78.5%, 79.1%, and 78.1% of our total revenue, and 84.8%, 85.1%, 85.7%, and 84.3% of our cost
of sales were attributable to the procurement of raw materials necessary to production.
During the Track Record Period, our Group experienced fluctuations in our net profit
primarily due to shifts in customer demand and cost structures. In 2023, our net profit declined
to RMB95.0 million from RMB171.1 million in 2022, largely as a result of postponed demand
for our products resulted from the industry’s gradual consumption of inventories accumulated
during the pandemic. This was compounded by increased research and development,
administrative, and marketing expenses, including share-based payment expenses. However, in
2024, our net profit rebounded to RMB167.0 million, supported by a recovery in revenue,
improved gross profit, and a notable increase in other income such as government subsidies and
interest income, alongside reduced finance costs and a favorable income tax credit. For the six
months ended June 30, 2024 and 2025, our net profit increased from RMB84.6 million to
RMB117.5 million, mainly due to an increase in revenue, particularly in relation to our
photonics products.
SUMMARY
–1 4–


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The following table sets forth a summary of our financial position:
As of December 31, As of June 30,
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Non-current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,405,278 1,481,032 1,555,643 1,860,325
Current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,831,892 3,254,886 3,633,171 4,399,087
Total assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,237,170 4,735,918 5,188,814 6,259,412
Non-current liabilities /H1118/H1118/H1118/H1118/H1118196,185 209,814 298,821 266,433
Current liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,115,468 2,238,143 2,429,004 3,449,769
Total liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,311,653 2,447,957 2,727,825 3,716,202
Net current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118716,424 1,016,743 1,204,167 949,318
Net assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,925,517 2,287,961 2,460,989 2,543,210
As of December 31, 2022, 2023 and 2024, and June 30, 2025, our net assets amounted to
approximately RMB1,925.5 million, RMB2,288.0 million, RMB2,461.0 million, and
RMB2,543.2 million, respectively. Our net assets increased by RMB362.5 million, or by
18.8%, from RMB1,925.5 million as of December 31, 2022 to RMB2,288.0 million as of
December 31, 2023, primarily due to the capital injection in a subsidiary from non-controlling
interest of RMB150.0 million, our profit for the year of RMB95.0 million, the exercise of share
options of RMB85.9 million, and the vesting of awarded shares under restricted shares
incentive scheme of RMB34.0 million. Our net assets rose further by RMB173.0 million, or by
7.6%, from RMB2,288.0 million as of December 31, 2023 to RMB2,461.0 million as of
December 31, 2024, primarily due to our profit for the year of RMB167.0 million and the
release of awarded shares under restricted shares incentive scheme of RMB39.5 million,
partially offset by the dividends declared of RMB43.7 million. Our net assets increased by
RMB82.2 million, or by 3.3%, from RMB2,461.0 million as of December 31, 2024 to
RMB2,543.2 million as of June 30, 2025, primarily due to our profit for the period of
RMB117.5 million and the release of awarded shares under restricted shares incentive scheme
of RMB18.2 million, partially offset by the dividends declared of RMB59.0 million.
Our total assets decreased by RMB501.3 million, or by 9.6%, from RMB5,237.2 million
as of December 31, 2022 to RMB4,735.9 million as of December 31, 2023. This decrease was
mainly attributable to reductions in inventories and trade receivables, reflecting tighter
working capital management and improved collections, as well as a decrease in other current
assets. Our total assets increased by RMB452.9 million, or by 9.6%, from RMB4,735.9 million
as of December 31, 2023 to RMB5,188.8 million as of December 31, 2024. The increase was
primarily due to higher inventories and cash balances, as well as investments in property, plant
and equipment, which supported our business expansion and operational needs. Our total assets
increased by RMB1,070.6 million, or by 20.6%, from RMB5,188.8 million as of December 31,
2024 to RMB6,259.4 million as of June 30, 2025. This growth was driven by a rise in
inventories and trade receivables, as well as an increase in cash and cash equivalents, both
reflecting our business growth.
SUMMARY
–1 5–


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Our net current assets increased by RMB300.3 million, or by 41.9%, from RMB716.4
million as of December 31, 2022 to RMB1,016.7 million as of December 31, 2023. This
improvement was mainly due to a substantial reduction in current liabilities, particularly our
trade and bills payables and other borrowings. Our net current assets increased by RMB187.5
million, or by 18.4%, from RMB1,016.7 million as of December 31, 2023 to RMB1,204.2
million as of December 31, 2024. The increase was driven by higher inventories and cash
balances, while current liabilities grew at a slower pace, indicating effective liquidity
management and support for ongoing operations. Our net current assets decreased by
RMB254.9 million, or by 21.2%, from RMB1,204.2 million as of December 31, 2024 to
RMB949.3 million as of June 30, 2025. This decline was primarily the result of an increase in
current liabilities, especially in our bank borrowings and trade payables, which outpaced the
growth in our current assets and reflected a temporary build-up in working capital requirements
or a shift towards short-term financing.
The following table sets forth a summary of our consolidated statements of cash flows:
For the year ended December 31,
For the six months ended
June 30,
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Net cash generated from/(used in)
operating activities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111856,255 142,942 561,970 330,171 (189,867)
Net cash used in investing activities /H1118/H1118/H1118(193,641) (204,545) (293,948) (132,161) (324,601)
Net cash generated from/(used in)
financing activities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118231,772 93,083 (200,733) (61,166) 585,103
Net increase in cash and cash
equivalents /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111894,386 31,480 67,289 136,844 70,635
Cash and cash equivalents, beginning of
year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118225,311 354,707 417,977 417,977 507,341
Effect of exchange rate changes on cash
and cash equivalents /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111835,010 31,790 22,075 24,254 10,255
Cash and cash equivalents, end of
year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118354,707 417,977 507,341 579,075 588,231
For the six months ended June 30, 2025, we had net cash used in operating activities of
RMB189.9 million, which primarily represented our profit before income tax of RMB119.1
million, adjusted by (i) non-cash and non-operating items, which primarily consisted of
depreciation of RMB70.8 million; and (ii) movements in working capital, mainly consisting of
increase in inventories of RMB296.1 million, increase in trade and other receivables of
RMB389.3 million.
SUMMARY
–1 6–


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The following table sets forth a summary of our key financial ratios:
As of/for the year ended December 31,
As of/for the
six months
ended June 30,
2022 2023 2024 2025
Return on equity (1) /H1118/H1118/H1118/H1118/H1118/H1118/H11189.3% 4.5% 7.0% 4.8%
Return on assets (2) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183.8% 1.9% 3.4% 2.1%
Gearing ratio (3) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111865.6% 58.4% 50.4% 75.6%
Gross profit margin (4) /H1118/H1118/H1118/H1118/H111818.2% 21.5% 20.9% 21.9%
Net profit margin (5) /H1118/H1118/H1118/H1118/H1118/H1118/H11184.5% 3.1% 4.6% 5.8%
R&D to revenue ratio (6) /H1118/H1118/H1118/H11187.1% 8.9% 8.8% 7.9%
Notes:
(1) Return on equity is calculated based on the profit for the year/period attributable to owners of our
Company divided by the arithmetic mean of the opening and closing balances of the total equity and
multiplied by 100%.
(2) Return on assets is calculated based on the profit for the year/period attributable to owners of our
Company divided by the arithmetic mean of the opening and closing balances of the total assets and
multiplied by 100%.
(3) Gearing ratio is calculated based on total indebtedness (including bank borrowings, other borrowings
and lease liabilities) divided by total equity and multiplied by 100%.
(4) Gross profit margin equals gross profit for the year/period divided by revenue for the year/period and
multiplied by 100%.
(5) Net profit margin equals net profit for the year/period divided by revenue for the year/period and
multiplied by 100%.
(6) Calculated by dividing our R&D expenses by our revenue for the year/period and multiplied by 100%.
DIVIDEND
As of the Latest Practicable Date, we did not maintain any fixed dividend payout policy.
Pursuant to PRC laws and regulations, including the PRC Company Law ( ʕശɛ͏΍ձ਷ʮ
) and the No. 3 Guideline for the Supervision of Listed Companies — Cash Dividend
Distribution of Listed Companies (2025 Revision) (ˏୋ3໮ —ږ
ߎ2025ࠈࡌ)) and Articles of Association, within any three consecutive years, our
distributed cumulative profits in cash shall not be less than 30% of the average distributable
profits realized in the latest three years. The specific dividend ratios shall be determined by our
Board according to relevant regulations and our operating conditions, and shall be considered and
resolved at our general shareholders’ meeting. Future profit distributions may be carried out in
the form of cash dividends or stock dividends or a combination of cash dividends and stock
dividends. Any proposed distribution of dividends is subject to the discretion of our Board and
the approval at our Shareholders’ meetings. Our Board may recommend a distribution of
dividends in the future after taking into account our results of operations, financial condition,
SUMMARY
–1 7–


--- page 28 ---
operating requirements, capital requirements, shareholders’ interests and any other conditions
that our Board may deem relevant. During the Track Record Period, we had declared and paid
interim dividends totalling RMB8.0 million and final dividends totalling RMB35.7 million to our
A Shareholders for the year ended December 31, 2024. We had declared dividends totalling
RMB59.0 million for the year ended December 31, 2024, which had been paid as of June 30,
2025. We had declared interim dividends totalling RMB12.1 million for the six months ended
June 30, 2025, which had been paid as of the Latest Practicable Date.
USE OF PROCEEDS
We estimate the net proceeds of the Global Offering which we will receive, based on the
maximum Offer Price of HK$68.88 per Offer Share, will be approximately HK$4,480.0
million, after the deduction of underwriting fees and commissions and estimated expenses
payable by us in connection with the Global Offering, and assuming that the Over-allotment
Option is not exercised.
In line with our future strategies, we intend to use our proceeds from the Global Offering
for the following purposes assuming the maximum Offer Price of HK$68.88 per Offer Share:
 50.0% of the net proceeds, or HK$2,240.0 million, will be used to enhance our
production capabilities. In particular, (i) 25.0% of the net proceeds, or HK$1,120.0
million, will be used in relation to our photonics products, including our 800G/1.6T
products; (ii) 12.0% of the net proceeds, or HK$537.6 million, will be used in
relation to our broadband products, including our 50G/25GPON products; and (iii)
13.0% of the net proceeds, or HK$582.4 million, will be used in relation to our
wireless products, including our Wi-Fi 7 and Wi-Fi 8 products;
 20.0% of the net proceeds, or HK$896.0 million, will be used to further enhance our
R&D talents and skills. In particular, (i) 5.5% of the net proceeds, or HK$246.4
million, will be used on recruitment; (ii) 9.5% of the net proceeds, or HK$425.6
million, will be used to support the continued R&D of our manufacturing
technologies through acquiring advanced machinery and software; and (iii) 5.0% of
the net proceeds, or HK$224.0 million, will be used to acquire essential materials to
support our R&D efforts;
 5.0% of the net proceeds, or HK$224.0 million, will be used for business promotion
and marketing. In particular, (i) 4.7% of the net proceeds, or HK$210.6 million, will
be used to enhance our sales and marketing capabilities; and (ii) 0.3% of the net
proceeds, or HK$13.4 million, will be used for expanding our market presence;
 15.0% of the net proceeds, or HK$672.0 million, will be used for overseas strategic
investments; and
 10.0% of the net proceeds, or HK$448.0 million, will be used for general corporate
purposes, including working capital needs.
SUMMARY
–1 8–


--- page 29 ---
For details, please refer to the section headed “Future Plans and Use of Proceeds” in this
Prospectus.
SUMMARY OF RISK FACTORS
Our business and the Global Offering involve certain risks as set out in the section headed
“Risk Factors” in this Prospectus. Some of the major risks we face include: (i) we are engaged
in a competitive industry, in which our operational and financial performance, financial
condition, and future prospects may be affected by our competitors or changes in such
competitive environment; (ii) our continuous success will rely on our R&D efforts; (iii) we
may face risks associated with our operations overseas and in China; (iv) our results of
operations are exposed to risks in relation to escalating trade tensions; (v) the success of our
customers is essential to our business; and (vi) our success may depend on maintaining long
term relationships with our major customers. Y ou should read that section in its entirety
carefully before you decide to invest in our Shares.
SANCTIONS-RELATED MATTERS
During the Track Record Period, our Group has sold optical and wireless connectivity
devices to non-sanctioned customers in the Relevant Regions, for which none of the Relevant
Regions a Sanctioned Countries because these regions are not subject to general and
comprehensive export, import, financial or investment embargo under sanctions related law or
regulation of the Relevant Jurisdiction, these regions are subject to a rather limited sets of
sanctions targeting certain sanctioned entities and sectors or prohibited activities within such
regions. As advised by our International Sanctions Legal Advisors after performing the
procedures they consider necessary, these transactions involving Relevant Regions did not
involve any sanctioned entities or exports or transactions of any items subject to the EAR, and
hence did not represent a Primary Sanctioned Activity or violation of International Sanctions;
and, the risk of these transactions being viewed as a Secondary Sanctionable Activity is low
because there were no activities targeted by extra-territorial provisions of sanctions law or
regulation in the Relevant Jurisdictions. Our Directors, and the Sole Sponsor, concur with such
views from the International Sanctions Legal Advisers.
During the Track Record Period, our Group has also provided design and manufacturing
services to Customer D domestically in China, transactions were denominated in RMB and did
not involve exports or transactions outside the Chinese border. For our Group to provide the
design and manufacturing services, Customer D provided raw materials and accessories to our
Company, none of the raw materials and accessories are subject to the EAR, our Company then
delivered the finished products to Customer D after manufacturing. As advised by our
International Sanctions Legal Advisors after performing the procedures they consider
necessary, given the nature of the transactions involving Customer D stated above, including
that our Group was not engaged in any exports or transactions of any items subject to the EAR
to Customer D, export restrictions applicable to Customer D being designated on the Entity
List maintained by the BIS were not implicated and such transactions did not represent a
Primary Sanctioned Activity or a violation of International Sanctions; and, the risk of these
SUMMARY
–1 9–


--- page 30 ---
transactions being viewed as a Secondary Sanctionable Activity is low because there were no
activities targeted by extra-territorial provisions of sanctions law or regulation in the Relevant
Jurisdictions. Our Directors, and the Sole Sponsor, concur with such views from the
International Sanctions Legal Advisers.
For more details, please refer to the section headed “Risk Factors — We could be adversely
affected as a result of any sales we make to certain countries that are, or become subject to,
sanctions administered by the United States, the European Union, the United Kingdom, the
United Nations, Australia and other relevant sanctions authorities” and “Business — Business
Activities that may be subject to International Sanctions” in this Prospectus.
LEGAL PROCEEDINGS AND COMPLIANCE
We may from time to time be subject to various legal or administrative claims and
proceedings arising from the ordinary course of business. For instance, as of the Latest
Practicable Date, there have been two lawsuits that involve either Mr. Gerald G Wong or our
Group. Both proceedings are ongoing, and no provision for contingent liability has been made
in either case. Even taking into account the cases mentioned above, our Directors believe that,
during the Track Record Period and up to the Latest Practicable Date, there was no material
litigation, arbitration, proceedings, pending or threatened against us or our Directors that
could, individually or in the aggregate, have a material and adverse effect on our business,
financial condition, or results of operations.
For details, please refer to the section headed “Business — Legal proceedings and
compliance” in this Prospectus.
RESPONDING TO THE RECENT TRADE TARIFFS
In early 2025, the United States issued a series of executive orders (“ EO”) that reshaped
the tariff regime for imports from various jurisdictions. These included significant tariffs on
products originating from the PRC, and the repeal of the De Minimis Exemption for
PRC-origin goods under USD800 (effective May 2, 2025). According to our adviser as to U.S.
tariffs laws and regulations, as of the Latest Practicable Date, for products originating from the
PRC and shipped to the United States, the applicable tariffs may include: (i) a tariff of 30%
(comprising 20% fentanyl-related, and 10% reciprocal tariff); (ii) “Section 301” tariffs that
have been imposed since 2019 (ranging from 7.5% to 25%); and (iii) standard customs duties
(i.e., most-favored nation (“ MFN”) duties). According to our adviser as to U.S. tariffs laws and
regulations, based on the current technical specifications and comparable U.S. Customs and
Border Protection (“ CBP”) rulings (i.e., administrative classification determinations published
by CBP), they are of the view that our U.S.-bound products manufactured in the PRC would
be classified under the Harmonized Tariff Schedule of the United States (“ HTSUS ”)
8517.62.0090 for tariff purposes, for which the applicable U.S. duty rate is 27.5% as of the
Latest Practicable Date. The tariffs will include (i) “Section 301” tariff of 7.5%; and (ii) a 20%
fentanyl-related tariff, where the 10% reciprocal tariff will not apply due to an exemption under
EO 14257 for HTSUS 8517.62.0090. Such U.S. tariffs remain fluid, and we will continue to
monitor the evolving trade policies and potential second-order effects.
SUMMARY
–2 0–


--- page 31 ---
Despite these developments, our Directors are of the view, and the Sole Sponsor concurs,
that the imposition of these tariffs has not had, and is not expected to have, a material adverse
effect on our Group’s operations, financial performance, or relationships with key customers
and suppliers. This is primarily due to our overseas expansion strategy, which includes
diversified production capacity in Malaysia, the United States, Germany, and Poland.
Currently, products originating outside of the PRC and shipped to the United States are not
subject to the Section 301 tariffs and fentanyl-related tariffs applicable to PRC-origin goods if
they (i) are fully manufactured, produced, or grown in another country (e.g., Malaysia); (ii)
qualify under the “substantial transformation” test; or (iii) satisfy any other applicable U.S.
country of origin rules. According to our adviser as to U.S. tariffs laws and regulations, based
on the current technical specifications and comparable CBP rulings, they are of the view that
our U.S.-bound products manufactured in Malaysia would be classified under HTSUS
8517.62.0090 for tariff purposes, for which the applicable U.S. duty rate is 0% as of the Latest
Practicable Date.
Moreover, products that are produced in the United States, for example, those from our
co-location partners in the United States, would not be subject to import tariffs when sold in
the United States. We believe that whilst such U.S.-based facilities have limited capacity and
contributed no revenue during the Track Record Period, they are positioned to support future
localized demand. We remain vigilant of evolving trade policies and acknowledge potential
second-order effects, such as intensified competition overseas and in China and shifts in
consumer demand. We were not aware of any material adverse impact on our major customers
and suppliers as a result of the Sino-U.S. trade tensions.
Our Directors confirm that there have been no significant changes in our export sales
arrangements with U.S. customers during the Track Record Period, before and after our
Company began relying solely on its co-location manufacturing facility in Malaysia in 2025.
We operate with a flexible deployment model across our in-house facilities and co-location
partners in the PRC, Malaysia, Germany, Poland, and the United States. This operational
approach allows us to determine the most suitable production location, either in the PRC or
Malaysia, based on a comprehensive evaluation of landed costs. These costs include labor
rates, logistics expenses, tariff implications, production efficiency, supply chain resilience, and
prevailing economic conditions. During the Track Record Period and up to the Latest
Practicable Date, our export sales to U.S. customers have primarily been conducted under Free
On Board (“ FOB”) or Free Carrier (“ FCA”) terms. Under this arrangement, we fulfil our
delivery obligations once the goods are loaded onto a vessel at the port of shipment or handed
over to the carrier designated by the customer at the agreed location. Following the imposition
of elevated tariffs on PRC-origin goods and the removal of the De Minimis Exemption in 2025,
our U.S. customers have borne, or will bear, the impact of these increased tariffs. While we are
contractually able to pass on these additional costs to our customers under the FOB and FCA
terms, doing so may adversely affect our customers’ competitiveness in the U.S. market. In
response, we strategically reallocated our production capacity to Malaysia. This shift enables
our customers to maintain their business competitiveness and avoid the fluctuations of the
customers’ demand caused by the significant tariff increase. Consequently, we have
manufactured products intended for U.S.-bound exports using our co-location manufacturing
SUMMARY
–2 1–


--- page 32 ---
facility in Malaysia. The cost advantages associated with tariff-free imports from Malaysia
have been well received by our U.S. customer base, allowing us to continue meeting customer
expectations following this transition.
For further details, please refer to the section headed “Business — Legal proceedings and
compliance — Impact of the 2025 U.S. tariff regime on our Group’s business model” in this
Prospectus.
RECENT DEVELOPMENT
Subsequent to the Track Record Period and up until the Latest Practicable Date, we
continued to (i) receive new orders from customers, (ii) deliver our products to our customers;
and (iii) grow our customer base. As of the Latest Practicable Date, we had over 100 customers
worldwide. In September 2025, during the latest China International Optoelectronic
Exposition, we showcased several mass-produced 800G OSFP modules and 800G LPO
modules. We also presented samples of our 1.6T OSFP (200G per channel) products currently
undergoing customer testing, as well as prototype units of our 1.6T and 3.2T CPO optical
engines and a pre-research prototype of the 1.6T packaged laser and silicon photonics engine
(i.e., ELS, external light source) for CPO technology to industry participants.
Shanghai No. 2 facility
Subsequent to the Track Record Period, our in-house Shanghai No. 2 facility, with a total
GFA of 100,000 sq.m., located in Jiashan commenced production in July 2025. Our Company
intends to progressively ramp up both production volume and utilization in the near term. As
of the Latest Practicable Date, we operate two in-house facilities—Shanghai No. 1 and
Shanghai No. 2. In line with our long-term operational strategy and in anticipation of the lease
expiry of Shanghai No. 1 later this year, we plan to consolidate all in-house production
activities at the Shanghai No. 2 facility (the property of which is owned by our Company).
Shanghai No. 2 is expected to absorb all personnel, materials, and equipment currently
deployed at Shanghai No. 1. The facility has been designed with expanded capacity to
accommodate future growth and to ensure readiness for any potential surge in customer
demand from the PRC and/or overseas markets.
No material adverse change
Our Directors confirm that, up to the date of this Prospectus, there had been no material
adverse change in our business, financial condition, and results of operations since June 30, 2025,
which is the end date of the years/period reported on in the Accountants’ Report as set out in
Appendix I to this Prospectus, and there is no event since June 30, 2025 which would materially
affect the information in the Accountants’ Report as set out in Appendix I to this Prospectus.
SUMMARY
–2 2–


--- page 33 ---
IMPACT OF THE COVID-19 PANDEMIC
The COVID-19 pandemic, which began in early 2020, had a broad impact on our
operations and financial performance through 2022 and into 2023. While global public health
measures, such as lockdowns, travel bans, and logistics restrictions, led to a certain degree of
supply chain disruptions and delays in transportation, they also led to a growth in demand for
higher-speed network connectivity, which benefited our industry. However, the same measures
created supply constraints in 2022, increasing our costs as we took proactive steps to maintain
delivery commitments to customers. These included securing materials at elevated prices and
managing extended lead times. As a result, although demand remained strong, our margins
were temporarily pressured.
In 2023, as supply conditions began to normalize, the industry experienced a slowdown
in demand due to excess inventory accumulated during the earlier phases of the pandemic.
Many customers continued to draw down on their stockpiles, which led to a moderate decline
in new orders and revenue despite broader signs of economic recovery. From late 2023 into
2024, the pandemic’s effects began to ease. Economic activity resumed, procurement cycles
normalized, and customer engagement improved. While some residual impacts persisted, we
focused on operational resilience, adopting remote work, digital tools, and flexible supply
chain strategies, to maintain continuity. As a result, our financial performance began to
stabilize, reflecting a return to more typical business conditions. Overall, our total sales volume
declined from 13.7 million units in 2022 to 9.7 million in 2023, which recovered to 12.8
million in 2024, and our total revenue decreased from RMB3,783.7 million in 2022 to
RMB3,085.4 million, and then increased to RMB3,649.9 million. For the six months ended
June 30, 2024 and 2025, our revenue increased from RMB1,761.4 million to RMB2,034.0
million.
OUR SINGLE LARGEST GROUP OF SHAREHOLDERS
As of the Latest Practicable Date, (i) Mr. Gerald G Wong indirectly controlled
approximately 11.95% of our A Shares held by CIG Cayman (a company wholly owned by Mr.
Gerald G Wong); (ii) Mr. Zhao Haibo indirectly controlled approximately 2.18% of our A Shares
held by Kangling Technology. The executive partner of Kangling Technology is Mr. Zhao Haibo
(holding 19.80% partnership interest in it), and its limited partners consist of Ms. Qin Y an (Mr.
Zhao Haibo’s spouse, holding 0.20% partnership interest in it) and Kangling Management (a
limited partnership holding 80.00% partnership interest in it). The executive partner of Kangling
Management is Mr. Zhao Haibo (holding 90.00% partnership interest in it) and its limited partner
is Ms. Qin Y an (Mr. Zhao Haibo’s spouse, holding 10.00% partnership interest in it). As the
executive partner of Kangling Technology and Kangling Management, Mr. Zhao Haibo is
responsible for the execution of partnership affairs and thus ultimately controls the voting power
of Kangling Technology and Kangling Management, respectively; and (iii) Mr. Gerald G Wong
and Mr. Zhao Haibo are parties acting in concert pursuant to the Concert Party Agreement.
Pursuant to the Hong Kong Listing Rules and Chapter 1.1C of the Guide for New Listing
Applicants, Mr. Gerald G Wong, CIG Cayman, Mr. Zhao Haibo, Ms. Qin Y an, Kangling
Technology and Kangling Management constitute our Single Largest Group of Shareholders,
SUMMARY
–2 3–


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holding in aggregate approximately 14.13% of our A Shares as of the Latest Practicable Date.
Apart from their respective investment (directly or indirectly) in our Company, none of the Single
Largest Group of Shareholders had engaged in other business or operation.
Immediately following completion the Global Offering, the Single Largest Group of
Shareholders will in aggregate hold approximately 11.31% of our Shares (assuming the
Over-allotment Option is not exercised, the options granted under the 2024 Share Option
Incentive Scheme are not exercised and no changes are made to the issued share capital of our
Company between the Latest Practicable Date and Listing). For further details about our Single
Largest Group of Shareholders, please refer to the section headed “Relationship with our
Single Largest Group of Shareholders” in this Prospectus.
LISTING EXPENSES
Listing expenses represent professional fees, underwriting commission and other fees
incurred in connection with the Global Offering. Assuming the Over-allotment Option is not
exercised and based on the maximum Offer Price of HK$68.88 per Offer Share, listing
expenses to be borne by us are estimated to be HK$135.7 million, comprising: (i) underwriting
commissions, sponsor fees, SFC transaction levy, Stock Exchange trading fees and AFRC
transaction levy of HK$104.9 million; and (ii) non-underwriting-related expenses of HK$30.8
million, which are further categorized into: (a) fees and expenses of legal advisers and
accountants of HK$20.8 million; and (b) other fees and expenses of HK$10.0 million. Amongst
the listing expenses, HK$9.6 million was charged or is expected to be charged to our
consolidated statements of profit or loss, and HK$126.1 million is expected to be deducted
from equity upon the completion of the Global Offering. The listing expenses are expected to
represent approximately 3.0% of the gross proceeds of the Global Offering, assuming the
maximum Offer Price of HK$68.88 per Offer Share and that the Over-allotment Option is not
exercised. The listing expenses above are the latest practicable estimate for reference only, and
the actual amount may differ from this estimate.
OUR LISTING ON THE SHANGHAI STOCK EXCHANGE
Since November 10, 2017, our A Shares have been listed on the Shanghai Stock
Exchange. Our Directors confirmed that, during the Track Record Period and up to the Latest
Practicable Date, we had no instance of material non-compliance with the rules of the Shanghai
Stock Exchange and other applicable securities laws and regulations of the PRC, and, to the
best knowledge of our Directors having made all reasonable enquiries, there was no material
matter that should be brought to the investors’ attention in relation to our compliance record
on the Shanghai Stock Exchange. Our PRC Legal Adviser advised us that during the Track
Record Period and up to the Latest Practicable Date, we have not been subject to any
substantial administrative penalties or regulatory measures imposed by PRC securities
regulatory authorities and we have complied with the relevant laws and regulations on A share
listings applicable to us in all material respects. Based on the independent due diligence
SUMMARY
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conducted by the Sole Sponsor, nothing has come to the Sole Sponsor’s attention that would
cause it to cast doubt on our Directors’ confirmation with regard to the compliance record of
our Company on the Shanghai Stock Exchange in any material respect.
GLOBAL OFFERING STATISTICS
Based on a maximum
Offer Price of HKD68.88
per H Share
Market capitalization of our H Shares (1)(2) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118HKD4,615.7 million
Market capitalization of our Shares upon completion
of the Global Offering (1)(3) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
HKD41,780.3 million
Unaudited pro forma adjusted consolidated net tangible
assets per Share (4)(5) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
HKD19.10
Notes:
(1) All statistics in the table are based on the assumption that the Over-allotment Option is not exercised
and the options granted under the 2024 Share Option Incentive Scheme are not exercised.
(2) The calculation of market capitalization of our H Shares is based on the assumption that 67,010,500 H
Shares will be in issue immediately upon completion of the Global Offering.
(3) The calculation of market capitalization of our Shares is based on the assumption that 67,010,500 H
Shares will be in issue immediately upon completion of the Global Offering and 268,019,841 A Shares
are issued and outstanding immediately upon completion of the Global Offering with an average closing
price of RMB126.60 during the five trading days of A Shares immediately preceding the Latest
Practicable Date.
(4) The unaudited pro forma adjusted consolidated net tangible assets per Share is calculated on the basis
that 335,030,341 Shares (representing 268,041,841 A Shares in issue as at June 30, 2025, excluding
22,000 A Shares held for restricted shares incentive scheme as at June 30, 2025, adding 67,010,500
Offer Shares) were in issue and after making the adjustments referred to in the section headed
“Appendix II — Unaudited Pro Forma Financial Information” in this Prospectus.
(5) No adjustment has been made to the unaudited pro forma adjusted consolidated net tangible assets of
the Group attributable to the owners of the Company as of June 30, 2025 to reflect any trading results
or other transactions of the Group entered into subsequent to June 30, 2025. In particular, the above
unaudited pro forma adjusted net tangible assets have not been taken into account the interim dividend
which has not less than 10% of net profit for six months ended June 30, 2025 declared on August 18,
2025. Has the interim dividend of 10% of net profit for six months ended June 30, 2025 declared on June
30, 2025, the unaudited pro forma adjusted net tangible assets of the Group attributable to equity holders
of the Company as of June 30, 2025 would have been decreased by approximately RMB12,114,000
while the unaudited pro forma adjusted net tangible assets of the Group attributable to equity holders
of the Company per Share as at June 30, 2025 would have been decreased by RMB0.04 or HK$0.04.
SUMMARY
–2 5–


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In this Prospectus, unless the context otherwise requires, the following terms shall
have the meanings set out below. Certain other terms are explained in “Glossary of
Technical Terms”.
“2024 Share Option Incentive
Scheme”
the 2024 share option incentive scheme adopted by the
then Shareholders on August 26, 2024, the principal
terms of which are set out in “Statutory and General
Information — Our Share Incentive Schemes — 2024
Share Option Incentive Scheme” in Appendix VI to this
Prospectus
“A Share(s)” ordinary shares issued by our Company, with a nominal
value of RMB1.00 each, which are listed on the Shanghai
Stock Exchange and traded in Renminbi
“A Shareholder(s)” holder(s) of our A Share(s)
“Accountants’ Report” the accountants’ report of our Group for the Track Record
Period as set out in Appendix I to this Prospectus
“affiliate(s)” with respect to any specified person, any other person,
directly or indirectly, controlling or controlled by or
under direct or indirect common control with such
specified person
“AFRC” the Accounting and Financial Reporting Council of Hong
Kong
“Articles” or “Articles of
Association”
the articles of association of our Company, as amended,
which shall become effective on the Listing Date, a
summary of which is set out in Appendix V to this
Prospectus
“associate(s)” has the meaning ascribed thereto under the Hong Kong
Listing Rules
“Audit Committee” the audit committee of the Board
“BIS” U.S. Department of Commerce, Bureau of Industry and
Security
“Board” or “Board of Directors” the board of directors of our Company
DEFINITIONS
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“Business Day” a day on which banks in Hong Kong are generally open
to the public for normal banking business and which is
not a Saturday, Sunday or public holiday in Hong Kong
“Capital Market Intermediaries”
or “CMIs”
has the meaning ascribed thereto under the Hong Kong
Listing Rules and, unless the context requires otherwise,
refers to the capital market intermediaries named in
“Directors and Parties Involved in the Global Offering”
“CCASS” the Central Clearing and Settlement System established
and operated by HKSCC
“CG Code” the Corporate Governance Code as set out in Appendix
C1 to the Hong Kong Listing Rules
“China” or “PRC” the People’s Republic of China, except where the content
or context requires otherwise
“CIG Cayman” Cambridge Industries Company Limited, an investment
holding company which was incorporated in May 2005 in
the Cayman Islands and wholly owned by Mr. Gerald G
Wong since its establishment, being a member of the
Single Largest Group of Shareholders
“CIG Holding” Hong Kong CIG Holding Company, Limited, an
investment holding company incorporated in June 2011
in Hong Kong, which was owned as to 50.40% by Mr.
Gerald G Wong as of the Latest Practicable Date and
accordingly is our connected person. For the avoidance of
doubt, CIG Holding ceased to hold our Shares since
August 14, 2023
“close associate(s)” has the meaning ascribed thereto under the Hong Kong
Listing Rules
“Companies Ordinance” the Companies Ordinance (Chapter 622 of the Laws of
Hong Kong), as amended, supplemented or otherwise
modified from time to time
“Companies (Winding Up and
Miscellaneous Provisions)
Ordinance”
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
DEFINITIONS
–2 7–


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“Company” or “our Company” CIG SHANGHAI CO., LTD. (ʮ
̡), a PRC company established on March 14, 2006, the
A Shares of which have been listed on the Shanghai Stock
Exchange (stock code: 603083)
“Comprehensively Sanctioned
Countries”
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, currently Cuba, Iran, North Korea,
Syria, the Crimea Region of Russia/Ukraine, the self-
proclaimed Luhansk People’s Republic (LPR) and
Donetsk People’s Republic (DPR) regions and
Zaporizhzhia and Kherson regions
“Concert Party Agreement” the concert party agreement entered into by Mr. Gerald G
Wong and Mr. Zhao Haibo (΋͛) on August 30,
2017. Please refer to the section headed “History,
Development and Corporate Structure” in this Prospectus
for details
“connected person(s)” has the meaning ascribed thereto under the Hong Kong
Listing Rules
“connected transaction(s)” has the meaning ascribed thereto under the Hong Kong
Listing Rules
“core connected person(s)” has the meaning ascribed thereto under the Hong Kong
Listing Rules
“Countries subject to
International Sanctions”
any country or territory subject either to a general and
comprehensive embargo or a more limited set of export,
import, financial or investment restrictions under
sanctions related laws or regulation of the Relevant
Jurisdiction
“CSRC” The China Securities Regulatory Commission ( ʕ਷ᗇՎ
ึ)
“Director(s)” the director(s) of our Company
“EAR” United States Export Administration Regulations, 15
C.F.R. Parts 730-774
DEFINITIONS
–2 8–


--- page 39 ---
“EIT Law” the PRC Enterprise Income Tax Law ( ʕശɛ͏΍ձ਷
)
“ESG” environmental, social and governance
“EU” the European Union
“Euro”, “EUR” or “
C” the lawful currency of the member states of the EU
participating in the third stage of the EU’s Economic and
Monetary Union
“Extreme Conditions” extreme conditions caused by a super typhoon as
announced by the government of Hong Kong
“FINI” or “Fast Interface for
New Issuance”
an online platform operated by HKSCC that is mandatory
for admission to trading and, where applicable, the
collection and processing of specified information on
subscription in and settlement for all new listings
“F&S” Frost & Sullivan (Beijing) Inc., Shanghai Branch Co., an
independent global market research and consulting
company
“F&S Report” the report prepared by Frost & Sullivan
“General Rules of HKSCC” the General Rules of HKSCC as may be amended or
modified from time to time and where the context so
permits, shall include the HKSCC Operational
Procedures
“Global Offering” the Hong Kong Public Offering and the International
Offering
“Group”, “our Group”, “we”,
“us” or “our”
our Company and our subsidiaries from time to time, and
where the context requires, in respect of the period prior
to our Company becoming the holding company of its
present subsidiaries, such subsidiaries as if they were
subsidiaries of our Company at the relevant time
“Guide for New Listing
Applicants”
the Guide for New Listing Applicants issued by the Hong
Kong Stock Exchange, as amended, supplemented or
otherwise modified from time to time
DEFINITIONS
–2 9–


--- page 40 ---
“H Share(s)” ordinary shares in the share capital of our Company with
a nominal value of RMB1.00 each, to be listed and traded
on the Hong Kong Stock Exchange
“H Shareholder(s)” holder(s) of our H Share(s)
“H Share Registrar” Tricor Investor Services Limited
“HK eIPO White Form ” the application for Hong Kong Offer Shares to be issued
in the applicant’s own name, submitted online through
the designated website at www.hkeipo.hk
“HK eIPO White Form Service
Provider”
the HK eIPO White Form service provider designated
by our Company as specified on the designated website at
www.hkeipo.hk
“HK$”, “Hong Kong dollars”,
or “HKD”
Hong Kong dollars, the lawful currency of Hong Kong
“HKSCC” Hong Kong Securities Clearing Company Limited, a
wholly-owned subsidiary of Hong Kong Exchanges and
Clearing Limited
“HKSCC EIPO ” the application for the Hong Kong Offer Shares to be
issued in the name of HKSCC Nominees and deposited
directly into CCASS to be credited to your designated
HKSCC Participant’s stock account through causing
HKSCC Nominees to apply on your behalf, including by
instructing your broker or custodian who is an HKSCC
Participant to give electronic application instructions
via HKSCC’s FINI system to apply for the Hong Kong
Offer Shares on your behalf
“HKSCC Nominees” HKSCC Nominees Limited, a wholly-owned subsidiary
of the HKSCC
“HKSCC Operational
Procedures”
the operational procedures of HKSCC, containing the
practices, procedures and administrative or other
requirements relating to HKSCC’s services and the
operations and functions of CCASS, FINI or any other
platform, facility or system established, operated and/or
otherwise provided by or through HKSCC, as from time
to time in force
DEFINITIONS
–3 0–


--- page 41 ---
“HKSCC Participant” a participant admitted to participate in CCASS as a direct
clearing participant, a general clearing participant or a
custodian participant
“Hong Kong” or “HK” the Hong Kong Special Administrative Region of the
People’s Republic of China
“Hong Kong Listing Rules” or
“Listing Rules”
the Rules Governing the Listing of Securities on The
Stock Exchange of Hong Kong Limited, as amended from
time to time
“Hong Kong Offer Shares” the 6,701,050 H Shares initially being offered for
subscription in the Hong Kong Public Offering (subject
to reallocation as described in the section headed
“Structure of the Global Offering” in this Prospectus)
“Hong Kong Public Offering” the offer for subscription of the Hong Kong Offer Shares
to the public in Hong Kong, on the terms and subject to
the conditions described in this Prospectus, as further
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
“Hong Kong Takeovers Code” or
“Takeovers Code”
Code on Takeovers and Mergers and Share Buy-backs
issued by the SFC, as amended, supplemented or
otherwise modified from time to time
“Hong Kong Underwriters” the underwriters of the Hong Kong Public Offering as
listed in the section headed “Underwriting — Hong Kong
Underwriters” in this Prospectus
“Hong Kong Underwriting
Agreement”
the underwriting agreement dated October 17, 2025
relating to the Hong Kong Public Offering and entered
into by our Company, the Sole Sponsor, the Sole
Sponsor-Overall Coordinator and the Hong Kong
Underwriters, as further described in the section headed
“Underwriting — Hong Kong Public Offering” in this
Prospectus
“IFRS” IFRS Accounting Standards, as issued by the
International Accounting Standards Board
DEFINITIONS
–3 1–


--- page 42 ---
“Independent Third Party(ies)” any entity or person who is not a connected person of our
Company within the meaning ascribed thereto under the
Hong Kong Listing Rules
“International Offer Shares” the 60,309,450 H Shares being initially offered for
subscription and purchased at the Offer Price under the
International Offering together, where relevant, with any
additional H Shares that may be sold and transferred
pursuant to any exercise of the Over-allotment Option,
subject to reallocation as described in the section headed
“Structure of the Global Offering” in this Prospectus
“International Offering” the conditional placing of the International Offer Shares
at the Offer Price outside the United States in offshore
transactions in accordance with Regulation S, as further
described in the section headed “Structure of the Global
Offering” in this Prospectus
“International Sanctions” all applicable laws and regulation to economic sanctions,
export controls, trade embargoes and wider prohibitions
and restrictions on international trade and investment
related activities, including those adopted administered
and enforced by the U.S. Government, the EU and its
member states, the UN or the Government of Australia
“International Underwriters” the underwriters of the International Offering
“International Underwriting
Agreement”
the international underwriting agreement relating to the
International Offering and expected to be entered into by
our Company, the Sole Sponsor, the Sole Sponsor-
Overall Coordinator and the International Underwriters
on or around October 24, 2025, as further described in the
section headed “Underwriting — International Offering”
in this Prospectus
“Joint Overall Coordinators”,
“Joint Global Coordinators”,
“Joint Bookrunners”, and
“Joint Lead Managers”
the joint overall coordinators, the joint global
coordinators, the joint bookrunners, and joint lead
managers as named in the section headed “Directors and
Parties Involved in the Global Offering” in this
Prospectus
“JPY” the Japanese Y en, the lawful currency of Japan
DEFINITIONS
–3 2–


--- page 43 ---
“Kangling Management” Shanghai Kangling Enterprise Management Partnership
(Limited Partnership)* ( ɪऎੰ˿Άุ၍ଣΥྫΆุ(Ϟ
Υྫ)), a limited partnership incorporated in November
2021 in the PRC and previously known as Qingdao Jiuda
Investment Partnership (Limited Partner)* (ɮ༺ҳ
༟ΥྫΆุ(Υྫ)), being a member of the Single
Largest Group of Shareholders
“Kangling Technology” Shanghai Kangling Technology Partnership (Limited
Partnership)* (ҦΥྫΆุ(Υྫ)), a
limited partnership incorporated in October 2011 in the
PRC and previously known as Shanghai Kangling
Investment Consulting Company Limited* ( ɪऎੰ˿ҳ
ʮ̡), being a member of the Single Largest
Group of Shareholders
“Latest Practicable Date” October 10, 2025, being the latest practicable date for the
purpose of ascertaining certain information contained in
this Prospectus prior to its publication
“Listing” the listing of the H Shares on the Main Board of the Hong
Kong Stock Exchange
“Listing Committee” the listing committee of the Hong Kong Stock Exchange
“Listing Date” the date, expected to be on or around Tuesday,
October 28, 2025 from which the H Shares are listed and
dealings in the H Shares are permitted to take place on
the Hong Kong Stock Exchange
“Listing of A Shares” the listing of our A Shares on the Shanghai Stock
Exchange on November 10, 2017
“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 Growth Enterprise
Market of the Hong Kong Stock Exchange
“MOF” or “Ministry of Finance” Ministry of Finance of the PRC (௅)
“MOFCOM” Ministry of Commerce of the PRC ( ʕശɛ͏΍ձ਷ਠਕ
௅)
DEFINITIONS
–3 3–


--- page 44 ---
“NDRC” National Development and Reform Commission of the
PRC (ึ)
“Nomination Committee” the nomination committee of the Board
“Non-public Issuance of A
Shares”
the non-public issuance of A Shares by our Company on
April 21, 2020, pursuant to which, we issued 24,224,806
new A Shares at an issue price of RMB30.96 per A Share
to thirteen subscribers
“NPC” National People’s Congress of the PRC ( ʕശɛ͏΍ձ਷
ɽึ)
“OFAC” the U.S. Department of Treasury’s Office of Foreign
Assets Control
“Offer Price” the final offer price per Offer Share (exclusive of
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%) at which the
Offer Shares are to be subscribed for and issued pursuant
to the Global Offering, to be determined as described in
“Structure of the Global Offering”
“Offer Shares” the Hong Kong Offer Shares and the International Offer
Shares, where relevant, with any additional H Shares to
be issued by our Company pursuant to the exercise of the
Over-allotment Option
“Over-allotment Option” the option expected to be granted by us to the
International Underwriters exercisable by Sole Sponsor-
Overall Coordinator (for itself and on behalf of the
International Underwriters) under the International
Underwriting Agreement, to require our Company to allot
and issue up to an aggregate of 10,051,500 additional H
Shares at the Offer Price, to cover over-allocations in the
International Offering, if any, further details of which are
described in “Structure of the Global Offering”
“PBOC” the People’s Bank of China ( ʕ਷ɛ͏ვБ)
DEFINITIONS
–3 4–


--- page 45 ---
“PRC Company Law” the Company Law of the PRC, as amended, modified
and/or otherwise supplemented from time to time
“PRC GAAP” generally accepted accounting principles in mainland
China
“PRC Government” or “State” 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” Beijing DeHeng Law Offices, the legal adviser of our
Company as to the PRC laws
“Price Determination Agreement” the agreement to be entered into between our Company
and Sole Sponsor-Overall Coordinator (for itself and on
behalf of the Underwriters) on or about the Price
Determination Date to record and fix the Offer Price
“Price Determination Date” the date, expected to be on or before Friday, October 24,
2025, on which the Offer Price is to be fixed for the
purposes of the Global Offering
“Primary Sanctioned Activity” any activities in a Comprehensively Sanctioned Country
or (i) with; or (ii) directly or indirectly benefiting or
involving the property or interests in property of, a
Sanctioned Target by our 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 and regulation
“Prospectus” this Prospectus being issued in connection with the Hong
Kong Public Offering
“province” a province or, where the context requires, a provincial
level autonomous region or municipality, under the direct
supervision of the central government of the PRC
“R&D” research and development
“Regulation S” Regulation S under the U.S. Securities Act
DEFINITIONS
–3 5–


--- page 46 ---
“Relevant Jurisdiction” any jurisdiction that is relevant to our 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 assess or certain countries,
governments, person or entities targeted by such law or
regulation. For the purpose of this Prospectus, Relevant
Jurisdictions include the United States, the European
Union, the United Kingdom, the United Nations and
Australia
“Relevant Persons” means our 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
“Relevant Regions” Balkans (Serbia), Hong Kong, Iraq and Lebanon
“Remuneration and Evaluation
Committee”
the remuneration and evaluation committee of the Board
“Renminbi” or “RMB” Renminbi, the lawful currency of the PRC
“SAFE” the State Administration of Foreign Exchange of the PRC
(̮ි၍ଣ҅)
“SAMR” the State Administration for Market Regulation of the
PRC (̹ఙ္ຖ၍ଣᐼ҅)
“Sanctioned Person” certain person(s) and identity(ies) listed on OFAC’s
Specially Designated Nationals and Blocked Persons List
or other restricted parties lists maintained by the United
States, the European Union, the United Kingdom, the
United Nations, or Australia
DEFINITIONS
–3 6–


--- page 47 ---
“Sanctioned Target” any person or entity (i) designated on any list of targeted
persons or entities issued under the sanctions-related law
or regulation of a Relevant Jurisdiction; (ii) that is, or is
owned or controlled by, a government of a
Comprehensively Sanctioned Countries; or (iii) 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 (i) or (ii)
“SA T” the State Administration of Taxation of the PRC ( ʕശɛ
೼ਕᐼ҅)
“SDN” individuals and entities that are listed on the SDN List
“SDN List” the list of Specially Designated Nationals, and Blocked
Persons maintained by OFAC, which sets forth
individuals and entities that are subject to its sanctions
and restricted from dealings with U.S. persons
“Secondary Sanctionable
Activity”
certain activity by our Company 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 our Company is not incorporated or located in
that Relevant Jurisdiction and does not otherwise have
any nexus sutra that Relevant Jurisdiction
“Securities Law” the Securities Law of the People’s Republic of China ( ʕ
), as amended, supplemented or
otherwise modified from time to time
“SFC” or “Securities and Futures
Commission”
the Securities and Futures Commission of Hong Kong
“SFO” the Securities and Futures Ordinance (Chapter 571 of the
Laws of Hong Kong), as amended, supplemented or
otherwise modified from time to time
“Shanghai-Hong Kong Stock
Connect”
a securities trading and clearing links program developed
by the Hong Kong Stock Exchange, Shanghai Stock
Exchange, HKSCC and China Securities Depository and
Clearing Corporation Limited for mutual market access
between Hong Kong and Shanghai
DEFINITIONS
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“Shanghai Stock Exchange” the Shanghai Stock Exchange (ה׸)
Share(s)” ordinary share(s) in the share capital of our Company
with a nominal value of RMB1.00 each, comprising A
Share(s) and H Share(s)
“Shareholder(s)” holder(s) of our Share(s)
“Shenzhen-Hong Kong Stock
Connect”
a securities trading and clearing links program developed
by the Hong Kong Stock Exchange, Shenzhen Stock
Exchange, HKSCC and China Securities Depository and
Clearing Corporation Limited for mutual market access
between Hong Kong and Shenzhen
“Single Largest Group of
Shareholders”
Mr. Gerald G Wong, CIG Cayman, Mr. Zhao Haibo, Ms.
Qin Y an ( ॢዲɾɻ), Kangling Technology and Kangling
Management as further detailed in “Relationship with our
Single Largest Group of Shareholders”
“Sole Sponsor” Guotai Junan Capital Limited, a licensed corporation
registered under the SFO to carry on Type 6 (advising on
corporate finance) regulated activity as defined in the
SFO
“Sole Sponsor-Overall
Coordinator”
the Sole Sponsor-Overall Coordinator as named in the
section headed “Directors and Parties Involved in the
Global Offering” in this Prospectus
“Stabilizing Manager” Guotai Junan Securities (Hong Kong) Limited
“State Council” the State Council of the PRC ( ʕശɛ͏΍ձ਷਷ਕ৫)
“Strategy and ESG Committee” the strategy and ESG committee of the Board
“subsidiary(ies)” has the meaning ascribed thereto under the Hong Kong
Listing Rules
“substantial shareholder(s)” has the meaning ascribed thereto under the Hong Kong
Listing Rules
“Track Record Period” the financial years ended December 31, 2022, 2023, and
2024, and the six months ended June 30, 2025
DEFINITIONS
–3 8–


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“Transfer Pricing Adviser” Zhitong (Beijing) Registered Tax Agents Co., Ltd.
Shanghai Branch
“Trial Measures” the Trial Administrative Measures of Overseas Securities
Offering and Listing by Domestic Companies ( ྤʫΆ
), promulgated by
the CSRC on February 17, 2023
“U.S.”, “US” or “United States” the United States of America, its territories, its
possessions, and all areas subject to its jurisdictions
“U.S. dollars”, “US dollars”,
“USD” or “US$”
United States dollars, the lawful currency of the United
States
“U.S. Securities Act” United States Securities Act of 1933 and the rules and
regulations promulgated thereunder
“Underwriters” the Hong Kong Underwriters and the International
Underwriters
“Underwriting Agreements” the Hong Kong Underwriting Agreement and the
International Underwriting Agreement
“V A T” value-added tax
“%” per cent
Unless otherwise specified, in this Prospectus:
1. For ease of reference, the names of the PRC established companies or entities, laws
or regulations 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.
2. Certain amounts and percentage figures included in this Prospectus have been
subject to rounding. Accordingly, figures shown as totals in certain tables may not
be an arithmetic aggregation of the figures preceding them. Any discrepancies in
any table or chart between the total shown and the sum of the amounts listed are due
to rounding.
* For identification purposes only
DEFINITIONS
–3 9–


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This glossary contains definitions of certain technical terms used in this Prospectus
in connection with our Company. Such terms and their meanings may not correspond to
standard industry definitions or usage.
“1.6T” 1.6 Terabits per second
“100G” 100 Gigabits per second
“200G” 200 Gigabits per second
“25G” 25 Gigabits per second
“400G” 400 Gigabits per second
“4G” fourth generation mobile network
“4T4R” in telecommunications, 4T4R stands for 4 Transmitters
and 4 Receivers, a configuration used in multiple input
multiple output systems to enhance wireless
communication performance
“50G” 50 Gigabits per second
“5G” fifth generation mobile network
“800G” 800 Gigabits per second
“AI” artificial intelligence
“AOI” automatic optical inspection, i.e., a technology used in
electronics manufacturing to visually inspect products for
defects using advanced optics, cameras, and image
processing software
“AP” access points
“A TE” automated test equipment, i.e., computerized machinery
that uses test instruments to perform and evaluate
functionality, performance, quality, and stress tests on
electronic devices and systems
“BOM” bill of materials
GLOSSARY OF TECHNICAL TERMS
–4 0–


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“BOSA” bi-directional optical sub-assembly covering both
transmit and receiver, i.e., a process which converts
optical signals to electrical signals
“CAGR” compound annual growth rate
“CPO” co-packaged optics technology
“CPS” cyber-physical systems, i.e., integrated systems that
combine computational algorithms and physical
processes. These systems are tightly interconnected with
the internet and their users, enabling real-time
monitoring and control of physical processes
“Datacom” data communications, i.e., the transmission of digital data
between computers or devices over a network, typically
involving protocols and technologies that support
enterprise networking, cloud services, and internet
connectivity
“DIP” dual in-line package, i.e., a type of electronic component
package with two parallel rows of pins used for mounting
on a printed circuit board
“DSP” digital signal processing, i.e., the manipulation of signals
to improve or modify them using digital techniques
“DVT” design validation testing, i.e., the process of testing a
product to ensure it meets design specifications and
requirements
“Enterprise AP” enterprise-grade access points, i.e., high-performance
wireless networking devices designed for use in business
environments
“EPON” ethernet passive optical network, i.e., a
telecommunications technology that uses optical fiber to
provide internet access
“ERP” enterprise resource planning
“EVT” engineering validation testing, i.e., the process of testing
prototypes to verify that they meet engineering design
requirements
GLOSSARY OF TECHNICAL TERMS
–4 1–


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FTTB Fiber to the Building, i.e., a fiber-optic broadband
solution where the fiber reaches the boundary of a
building, such as a basement or communications room,
with the final connection to individual units made via
copper or Ethernet cabling
FTTH Fiber to the Home, i.e., a broadband network architecture
in which optical fiber is deployed directly from a central
point to individual residences, enabling high-speed
internet access with minimal signal degradation
FTTx Fiber to the x, i.e., a collective term for various fiber-
optic broadband architectures (e.g. FTTH, FTTB, FTTC),
where “x” denotes the termination point of the fiber,
reflecting different deployment strategies and service
scopes
“Gb/s” gigabits per second
“GE” gigabit ethernet
“GFA” gross floor area
“GHz” gigahertz
“GPON” gigabit passive optical network, i.e., a
telecommunications technology that uses optical fiber to
deliver high-speed internet access
“GPU” graphics processing unit
“IC” integrated circuit
“ICT” information and communication technology
“IEEE” Institute of Electrical and Electronics Engineers
“IoT” internet of things
“ISP Backbone” core infrastructure of an internet service provider,
comprising high-capacity routers and fibre-optic links
that interconnect regional networks and provide access to
global internet exchanges
GLOSSARY OF TECHNICAL TERMS
–4 2–


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“IT” information technology
“ITU-T” International Telecommunication Union
“JDM” joint design manufacturing
“km” kilometer
“LLM” large language model, i.e., a type of artificial intelligence
model designed to understand and generate human
language
“LPO” linear pluggable optics, i.e., optical transceivers used in
telecommunications to convert electrical signals into
optical signals and vice versa
“LTE” long term evolution, i.e., a standard for wireless
broadband communication for mobile devices and data
terminals
“m” meter
“MDU” multiple dwelling units
“MES” manufacturing execution system, i.e., software systems
used to monitor and control manufacturing operations
“MHz” megahertz
“MSO” multiple system operator, i.e., a company that operates
multiple cable television systems
“nm” nanometer
“ODM” original design manufacturing
“OLT” optical line terminal, i.e., a device in a fiber-optic
network that connects to the internet and distributes
signals to optical network terminals
“ONT” optical network terminal, i.e., a device that converts
optical signals to electrical signals in a fiber-optic
network
GLOSSARY OF TECHNICAL TERMS
–4 3–


--- page 54 ---
“O-RAN” open radio access network, i.e., a network architecture
that promotes interoperability and standardization in
radio access networks
“ORM” ongoing reliability monitoring, i.e., continuous
monitoring of a system’s reliability to ensure it meets
performance standards
“ORT” ongoing reliability testing, i.e., continuous testing of a
system to verify its reliability over time
“OSFP” octal small form factor pluggable, i.e., a type of optical
transceiver used in high-speed data communication
networks
“OWCD” optical and wireless connectivity devices
“PCB” printed circuit board
“PLC” programmable logic controllers, i.e., industrial digital
computers used to control manufacturing processes
“PLM” product lifecycle management
“PON” passive optical network, i.e., a telecommunications
technology that uses fiber-optic cables to deliver internet
services
“QSFP-DD” quad small form factor pluggable double density, i.e., a
type of optical transceiver used in high-speed data
communication networks
“RAN” radio access networks, i.e., the part of a
telecommunications system that connects individual
devices to the core network
“RFID” radio frequency identification, i.e., a technology that uses
electromagnetic fields to automatically identify and track
tags attached to objects
“RGU” residential gateway unit, i.e., a device that connects home
networks to the internet
GLOSSARY OF TECHNICAL TERMS
–4 4–


--- page 55 ---
“RMA” return material authorization, i.e., a process for returning
defective products to the manufacturer for repair or
replacement
“ROSA” receiver optical sub-assembly, i.e., a process which
converts optical signals to electrical signals
“SC” subscriber connector, i.e., a type of fiber-optic connector
used in telecommunications
“SFF” small form factor, i.e., a designation for compact
electronic devices or components
“SFP” small form pluggable, i.e., a type of optical transceiver
used in telecommunications
“SFU” single family unit
“Silicon V alley” a region in Northern California, the United States, known
as a global center for high technology and innovation
“SMT” surface-mount technology, i.e., a method for producing
electronic circuits where components are mounted
directly onto the surface of PCBs
“SOP” standard operating procedure
“SPI” serial peripheral interface, i.e., a communication protocol
used for short-distance communication between
microcontrollers and peripheral devices
“sq.m.” square meter
“SSM” supplier synergism management
“Telecom” telecommunications, i.e., the broader field encompassing
the transmission of voice, data, and video over long
distances through wired or wireless means, including
services such as mobile, fixed-line, and satellite
communications
“TOSA” transmit optical sub-assembly, i.e., a process which
converts electrical signals to optical signals
GLOSSARY OF TECHNICAL TERMS
–4 5–


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“Wi-Fi” wireless fidelity
“Wi-Fi 6” sixth generation of Wi-Fi technology
“Wi-Fi 6E” an extension of Wi-Fi 6
“Wi-Fi 7” seventh generation of Wi-Fi technology
“WMS” warehouse management system
“XGS-PON” 10 Gb/s symmetric pon, i.e., a type of passive optical
network that supports symmetrical 10 Gb/s speeds
“X-Ray” x-radiation
“°C” degree(s) Celcius
GLOSSARY OF TECHNICAL TERMS
–4 6–


--- page 57 ---
We have included in this Prospectus forward-looking statements, i.e., statements
that are not historical facts, including statements about our intentions, beliefs,
expectations or predictions for the future.
This Prospectus contains certain forward-looking statements and information relating to
us and our subsidiaries that are based on the beliefs of our management as well as assumptions
made by and information currently available to our management. When used in this Prospectus,
the words “aim”, “anticipate”, “believe”, “can”, “could”, “estimate”, “expect”, “forecast”,
“going forward”, “intend”, “may”, “might”, “ought to”, “plan”, “potential”, “predict”,
“project”, “seek”, “should”, “will”, “wish”, “would” and the negative of these words and other
similar expressions, as they relate to our Company or our management, are intended to identify
forward-looking statements. Such statements reflect the current views of our Company’s
management with respect to future events, operations, liquidity and capital resources, some of
which may not materialize or may change. These forward-looking statements are subject to
certain risks, uncertainties and assumptions, including the other risk factors as described in this
Prospectus. Although we believe that our expectations expressed in these forward-looking
statements are reasonable, our expectations may later be found to be incorrect. Our actual
results could be materially different from our expectations. Important risks and factors that
could cause our actual results to be materially different from our expectations are generally set
forth in the sections headed “Risk Factors”, “Business”, “Financial Information” and other
sections in this Prospectus. Y ou should read thoroughly this Prospectus with the understanding
that our actual future results may be materially different from and worse than what we expect.
Y ou are strongly cautioned that reliance on any forward-looking statements involves
known and unknown risks and uncertainties. The risks and uncertainties facing our Company
that could affect the accuracy of forward-looking statements include, but are not limited to, the
following:
 our business strategies, plans, objectives and goals, and our ability to implement
such strategies, plans, objectives, and goals;
 our future business development, financial conditions, and results of operations;
 our ability to develop new solutions and bring them to market in a timely manner
and make enhancements to our existing solutions;
 our ability to acquire new customers and gain their trust and loyalty;
 changes to regulatory and operating conditions in the industry and markets in which
we operate;
 the future developments and competitive environment in our industry;
FORW ARD-LOOKING STATEMENTS
–4 7–


--- page 58 ---
 our ability to stay in compliance with laws and regulations that currently apply or
become applicable to our business both in China and internationally;
 our ability to maintain, protect, and enhance our intellectual property;
 margins, overall market trends, risk management, and exchange rates;
 the actions and developments of our competitors;
 capital market development;
 other statements in this Prospectus that are not historical fact; and
 all other risks and uncertainties described in the section headed “Risk Factors” in
this Prospectus.
Since actual results or outcomes could differ materially from those expressed in any
forward-looking statements, we strongly caution investors against placing undue reliance on
any such statements. Any forward-looking statement speaks only as of the date on which such
statement is made, and, except as required by the Hong Kong Listing Rules, we undertake no
responsibility to update any forward-looking statement or statements to reflect events or
circumstances after the date on which such statement is made or to reflect the occurrence of
any subsequent unanticipated event. Statements of or references to our intentions or those of
any of our Directors are made as of the date of this Prospectus. Any such intentions may change
in light of future developments.
All forward-looking statements in this Prospectus are expressly qualified by reference to
this cautionary statement.
FORW ARD-LOOKING STATEMENTS
–4 8–


--- page 59 ---
You should carefully consider all the information in this Prospectus and, in
particular , the risks and uncertainties described below before making an investment in
our H Shares. The occurrence of any of the following events could materially and
adversely affect our business, financial condition, results of operations or prospects. If
any of these events occur , the trading price of our H Shares could decline and you may
lose all or part of your investment.
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
headed “Forward-Looking Statements” in this Prospectus.
RISKS RELATING TO OUR BUSINESS AND INDUSTRY
We are engaged in a competitive industry, in which our operational and financial
performance, financial condition, and future prospects may be affected changes in such
competitive environment.
According to F&S, the industry in which we operate, i.e., the global integrated optical and
wireless connectivity devices industry, is relatively competitive. For 2024, the total market size
of this market reached USD12.4 billion, with the top five industry players occupying 30.4% of
the market share in terms of sales revenue. Competition in this market may intensify as our
competitors that possess longer operational histories and more substantial financial, technical,
sales, marketing, and other resources may enhance their offerings to increase the market share.
We may also face competition from emerging companies entering our existing or new markets.
Such competitive pressures could lead to a drop in the market demand for our products, thus
negatively impacting our revenue generation and results of operations. Furthermore, our
competitors may replicate our business model, products, or any other aspects that have led to
our current level of success, thus potentially eroding the competitive advantages that
distinguish us in the market. Therefore, failing to compete successfully against both existing
and new competitors could materially and adversely affect our business, results of operations,
and financial condition.
Moreover, the market demand for our products is often cyclical and characterized by
constant and rapid technological change, price erosion, evolving standards and wide
fluctuations in product supply and demand. Our products may face downturns that are often
connected with, or in anticipation of, the maturation of product cycles. These downturns could
result in diminished product demand, production overcapacity, high inventory levels and
accelerated erosion of such products’ selling prices. Such changes in the market demand for,
or cyclical changes in any of the markets utilizing, our products may materially and adversely
affect our performance and profitability, and we may not be able to accurately predict these
fluctuations and the impact that these fluctuations may have on our results of operations.
RISK FACTORS
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Our Company operates in fast-evolving sectors including broadband, wireless, and
photonics, where technological upgrades and standardisation cycles are critical to product
relevance and market competitiveness. As industry transitions accelerate from 10G to 25G/50G
PON in broadband, Wi-Fi 6/6E to Wi-Fi 7 in wireless, and 800G to 1.6T/3.2T in photonics,
there are inherent risks associated with integrating new technologies into our product portfolio.
Product integration risks may arise from delays in ecosystem readiness, evolving industry
standards (e.g., ITU-T G.9804 for PON, or IEEE 802.11be for Wi-Fi 7), and extended
qualification cycles for next-generation photonics. These factors may impact our ability to
timely develop, test, and commercialise new products aligned with market expectations. In
particular, premature investment in technologies that are not yet widely adopted or
standardised may result in underutilized R&D resources or inventory obsolescence.
Moreover, as our customers increasingly demand end-to-end solutions that incorporate
multiple advanced technologies, any misalignment in product interoperability, performance
benchmarks, or certification requirements could adversely affect customer satisfaction and
order fulfilment. For example, in relation to photonics products, the integration of 1.6T and
future 3.2T modules into AI data centre infrastructure requires rigorous validation and long
lead times.
Failure to manage these product integration risks effectively could result in delayed
market entry, reduced competitiveness, and potential loss of revenue opportunities during key
upgrade cycles and business development cycles. There can be no assurance that all integration
challenges will be resolved in a timely or cost-effective manner.
We may be exposed to liquidity risk due to a long cash conversion cycle.
We had recorded relatively long inventory turnover days and trade and bills receivable
turnover days, which may lead to delays in converting our revenue into cash. Our cash
conversion cycle, a metric to measure how efficiently we manage its working capital by
tracking the number of days it takes to convert our investments in inventory and other
resources into cash flows from sales, was 157 days, 208 days, 188 days, and 172 days for 2022,
2023, and 2024, and the six months ended June 30, 2025, respectively. The cash conversion
cycle is calculated by adding inventory turnover days and trade and bills receivables turnover
days, then subtracting trade and bills payables turnover days. The improvement in 2024 and the
six months ended June 30, 2025 was primarily attributable to our continued focus on enhancing
cash flow efficiency through strengthened supply chain coordination, more effective inventory
management. However, there can be no assurance that similar performance can be sustained in
future periods, particularly in light of potential fluctuations in customer payment patterns,
supply chain volatility, and broader macroeconomic conditions. A long cash conversion cycle
may increase our reliance on working capital or external financing to support our operations
and growth. If we are unable to manage our inventory and receivables efficiently or to secure
adequate financing on acceptable terms, our liquidity position, financial condition, and results
of operations could be materially and adversely affected.
RISK FACTORS
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Our continuous success will rely on our R&D efforts.
In order to stay competitive, we will need constant innovation to ensure the timely
introduction of new and improved products. However, the development of technologically
advanced products is a complex and uncertain process that requires frequent innovation, highly
skilled personnel, an accurate anticipation of technological and market trends, as well as
significant capital. Our R&D expenses represented 7.1%, 8.9%, 8.8%, and 7.9% of our total
revenue for 2022, 2023, and 2024, and the six months ended June 30, 2025, respectively.
Additionally, our cumulative R&D investments during the Track Record Period exceeded
RMB1.4 billion. As of June 30, 2025, our R&D teams comprised 673 employees, including 55
overseas R&D personnel. This allocation of resources to R&D highlights the critical role it
plays in our strategic objectives. However, the failure of key R&D projects could result in
wasted resources and missed opportunities, ultimately impacting our financial performance.
Moreover, product development delays may occur from time to time, which are attributable to
numerous factors such as (i) changing product specifications and customer requirements; (ii)
unanticipated engineering complexities; (iii) difficulties in hiring and retaining necessary
technical personnel; (iv) difficulties in reallocating engineering resources and overcoming
resource limitations; or (v) rapidly changing technology or the release of competing products.
Nevertheless, without constant investment in R&D to support the much needed innovation, our
products may eventually become technologically obsolete.
There can be no assurance that we will be able to identify, develop, manufacture, market,
or support new or enhanced products successfully or on a timely basis, or to acquire and/or
develop the underlying technologies necessary to create such new or enhanced products. If we
are unable to make our new or enhanced products commercially available on a timely basis, we
may lose existing and potential customers and our financial results could be materially and
adversely affected. The introduction of new products by other companies embodying new
technologies, or the emergence of new industry standards, could also render our existing
products uncompetitive from a pricing standpoint, obsolete, or otherwise unmarketable,
resulting in a write-down in the value of our inventory.
We may face risks associated with our operations overseas and in China.
As a company operated overseas and in China, a significant portion of our operations and
revenue is derived from international markets, including markets in the United States, Europe,
and the Asia-Pacific. In 2022, 2023, and 2024, and the six months ended June 30, 2025, our
revenue generated from overseas markets represented 82.9%, 89.3%, 92.6%, and 94.0% of our
total revenue, respectively. Conducting our business internationally, particularly when we
expand to other emerging markets in which we have limited prior experience, subjects us to
certain risks and challenges, including:
 major geopolitical events, such as changes in relations between certain countries,
global or regional pandemics, war, terrorism, and other force majeure events;
RISK FACTORS
–5 1–


--- page 62 ---
 compliance with multiple and potentially conflicting laws and regulations governing
various aspects of our operations, including competition, pricing, transportation,
logistics, tariffs, trade protection, and other activities important to our business;
 exposure to business cultures where improper business practices may be prevalent;
 difficulties in managing, growing, and staffing our international operations;
 challenges in cultivating and maintaining productive relationships with local
business partners;
 impact of import and export restrictions, such as tariffs that may be imposed in
relation to our products, and changes in trade regulations;
 risks associated with legal systems subject to undue influence or corruption;
 vulnerability to changes in local political, social, or economic conditions; and
 operational challenges due to distance, language, and cultural differences.
Our ability to maintain and expand our presence in international markets will be critical
to the success of our business. However, there is no guarantee of this, and any of the
aforementioned risks could pose significant challenges for us. If we are unable to manage one
or more of these risks adequately, our results of operations and financial condition may be
materially and adversely affected.
Our results of operations are exposed to risks in relation to escalating trade tensions.
Our Group’s operations can be influenced by developments in international trade policy,
particularly the evolving dynamics between China and the United States. Heightened tensions
in the Sino-U.S. trade relationship, manifested through tariffs and other trade barriers, pose
risks to the cost and availability of raw materials, components, and finished goods that are
either sourced from or destined for these key markets. These trade measures may also give rise
to second-order effects, including retaliatory actions, shifts in global supply chains, and
increased regulatory compliance requirements. Such developments could disrupt our
procurement strategies and dampen customer demand, potentially resulting in elevated
operational costs, production or delivery delays, and diminished competitiveness in critical
markets. Moreover, our suppliers and customers may themselves be directly affected by these
trade-related disruptions. Their ability to fulfill contractual obligations or sustain demand for
our products and services could be compromised, thereby adversely impacting our supply chain
stability and customer base. Any material deterioration in these areas may, in turn, negatively
affect our Group’s financial condition and operating results.
RISK FACTORS
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Our exposure to international markets further amplifies these risks. For 2022, 2023, and
2024, and the six months ended June 30, 2025, revenue generated from overseas markets
accounted for approximately 82.9%, 89.3%, 92.6%, and 94.0% of our total revenue,
respectively. This underscores our reliance on global trade and our heightened vulnerability to
geopolitical and policy-related developments. From a cost perspective, during the Track
Record Period, our cost of sales represented 81.8%, 78.5%, 79.1%, and 78.1% of total revenue.
Among which, 84.8%, 85.1%, 85.7%, and 84.3% were attributable to the procurement of raw
materials essential to our production processes. Given that these materials are primarily
sourced through international trade, fluctuations in their pricing, driven by tariffs, trade
tensions, or supply chain disruptions, would have a direct impact on our profitability and
overall business performance and there is no assurance that any of our mitigation strategies or
measures will fully offset the adverse effects of evolving global trade dynamics.
Our results of operations can be affected by ever-changing tariff rules, regulations, and/or
policies.
In early 2025, the United States issued a series of EO that reshaped the tariff regime for
imports from various jurisdictions. These included significant tariffs on products originating
from the PRC, and the repeal of the De Minimis Exemption for PRC-origin goods under
USD800 (effective May 2, 2025). According to our adviser as to U.S. tariffs laws and
regulations, as of the Latest Practicable Date, for products originating from the PRC and
shipped to the United States, the applicable tariffs may include: (i) a tariff of 30% (comprising
20% fentanyl-related, and 10% reciprocal tariff); (ii) “Section 301” tariffs that have been
imposed since 2019 (ranging from 7.5% to 25%); and (iii) standard customs duties (i.e., MFN
duties). According to our adviser as to U.S. tariffs laws and regulations, based on the current
technical specifications and comparable CBP rulings, they are of the view that our U.S.-bound
products manufactured and produced in the PRC and shipped to the U.S. would be classified
under HTSUS 8517.62.0090 for tariff purposes, for which the applicable U.S. duty rate is
27.5% as of the Latest Practicable Date. The tariffs will include (i) “Section 301” tariff of
7.5%; and (ii) a 20% fentanyl-related tariff, where the 10% reciprocal tariff will not apply due
to an exemption under EO 14257 for HTSUS 8517.62.0090. Such U.S. tariffs remain fluid, and
we will continue to monitor the evolving trade policies and potential second-order effects.
Currently, products originating outside of the PRC and shipped to the United States are
not subject to the Section 301 tariffs and fentanyl-related tariffs applicable to PRC-origin
goods if they (i) are fully manufactured, produced, or grown in another country (e.g.,
Malaysia); (ii) qualify under the “substantial transformation” test; or (iii) satisfy any other
applicable U.S. country of origin rules. According to our adviser as to U.S. tariffs laws and
regulations, based on the current technical specifications and comparable CBP rulings, they are
of the view that our U.S.-bound products manufactured and produced in Malaysia and shipped
to the U.S. would be classified under HTSUS 8517.62.0090 for tariff purposes, for which the
applicable U.S. duty rate is 0% as of the Latest Practicable Date.
RISK FACTORS
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However, potential impacts remain. U.S. tariff scope and magnitude are still uncertain as
the government continues trade negotiations despite court rulings on some tariff executive
orders; and our Company’s business is tied to the ICT industry, so macroeconomic or
geopolitical fluctuations affecting the market may in turn impact demand for its products,
necessitating ongoing monitoring by our Group.
The success of our customers is essential to our business. Should they underperform, our
business, growth and prospects may be adversely affected.
Our business model primarily serves joint design manufacturing (“ JDM”) and original
design manufacturing (“ ODM”) customers, who may provide specific needs and requirements
throughout the design and manufacturing process. During the Track Record Period, revenue
generated from JDM customers represented 57.8%, 53.1%, 53.4%, and 45.9% of our total
revenue, and revenue generated from our ODM customers represented 42.2%, 46.9%, 46.6%,
and 54.1% of our total revenue, respectively. For further details of our business model, please
refer to the section headed “Business — Our business model” in this Prospectus. The sales
performance of our products depends on their business success and the marketability of the
products we design and manufacture for them. Factors beyond our control, such as changing
market demand, adjustments in our customers’ business plans, economic conditions, exchange
rate fluctuations, weak consumer demand, and unsuccessful sales and marketing efforts by our
customers, can negatively impact their purchases from us. Our future growth depends on
maintaining our market position, retaining customers, and expanding our customer base. We
cannot guarantee that our products will meet the evolving needs of end-users, nor can we
guarantee that our customers can accurately predict the market demand or direction in order to
provide us with the product specifications that will allow them to succeed in the market. If our
customers cannot successfully sell the products we manufacture, or if they make significant
changes to their business plans regarding our products, our business and results of operations
may be materially and adversely affected.
Our success may depend on maintaining long term relationships with our major
customers.
For 2022, 2023, and 2024, and the six months ended June 30, 2025, revenue from our five
largest customers in each year/period of the Track Record Period represented 63.5%, 68.8%,
74.9%, and 82.5% of our total revenue, and revenue from our largest customer represented
33.6%, 36.1%, 41.8%, and 41.7% of our total revenue, respectively. According to F&S, this is
common in the industry. For further details, please refer to the section headed “Business —
Customers, sales, and competition — Our major customers” in this Prospectus. Our major
customers’ stable relationship with us and consistent demands from them for our products are
crucial to our business. Their business conditions, liquidity, and solvency may have a
significant impact on our business performance. Any disruption in our business relationship
with major customers could have a material and adverse effect on our business, financial
condition and results of operations. In the event that the existing major customers reduce or
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cease to purchase our products and we are unable to find new customers with similar level of
demands at comparable terms within a reasonable period of time or at all, our business and
profitability may be materially and adversely affected.
Our manufacturing capability, through both our co-location manufacturing partners and
our in-house facilities, is essential to our business.
We believe in the importance in designing, developing, and manufacturing quality
products to the satisfaction of our customers, and we believe in the importance maintain
efficient manufacturing, and to expand our production capacity as needed. As of the Latest
Practicable Date, our manufacturing layout comprised our in-house facilities in China and six
co-location manufacturing partners in China, Malaysia, Europe, and the United States. During
the Track Record Period, revenue generated from the sale of products manufactured at our
in-house facilities represented 54.2%, 39.7%, 37.5%, and 34.8% of our total revenue, and
revenue generated from the sale of products manufactured at our co-location manufacturing
facilities represented 45.8%, 60.3%, 62.5%, and 65.2% of our total revenue, respectively.
Moreover, during the same years, the utilization rates of our in-house facility in Shanghai were
88.7%, 91.0%, 83.9%, and 85.5% of the utilization rates of our co-location manufacturing
facilities ranged from 87.7% to 90.1%, from 83.0% to 88.9%, from 2.9% to 89.5%, and from
16.7% to 90.9%, respectively. For details on our production capacity, production volume, and
utilization, please refer to the section headed “Business — Manufacturing” in this Prospectus.
The level of utilization regarding our co-location partners and our in-house facilities primarily
depends on the demand for our products and the availability and maintenance of our
equipment, but this may also be affected by factors such as employee availability, stable
electricity supply, seasonal influences, and changes in environmental laws and regulations. If
our manufacturing facilities, or those of our co-location partners, cannot maintain their
operational efficiency, we may fail to fulfill purchase orders on time, which may result in a
material and adverse effect on our reputation, business, and operations. In the future, as our
business grows, we may need to further increase our production capacity, possibly through
expanding to more production lines, co-location partners and/or new equipment. If we cannot
manage such expansion effectively, resulting in increasing production costs or acquiring the
needed machinery at unfavorable terms, our growth strategies may be materially and adversely
affected.
Furthermore, the success of our co-location manufacturing model depends on the
reliability and performance of our co-location partners. Issues with our co-location partners
such as financial instability or operational inefficiencies or other adverse factors beyond our
control could severely affect their capabilities. Our co-location partners must also comply with
the laws and regulations of different countries and regions. Non-compliance by any of them
could delay our production schedules and significantly increase manufacturing costs. Such
events may also materially and adversely affect our business, financial condition, and
operations.
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Our in-house manufacturing operations are also subject to the relevant workplace safety
laws of the PRC, and we aim to provide a safe and accident-free environment for our
workforce. We implement and require compliance with safety measures and procedures as
stipulated in our internal policies. However, there is no assurance that these safety measures
and procedures will be strictly followed by our employees or the employees of our co-location
partners. Given the complexity of our manufacturing process and the operation of tools,
equipment, and machinery, accidents resulting in employee injuries may occur. Such accidents
could disrupt our operations and expose us to liabilities. We may not have adequate insurance
to cover these liabilities, which may materially and adversely affect our business, results of
operations, and financial condition.
An inability to manage our growth effectively may have an adverse impact on our
business, future prospects, and financial condition.
Since our inception, our results of operations had gone through various degrees of growth
and decline, thus, our previous results may not be indicative of any future success. For
instance, during the Track Record Period, our revenue declined from RMB3,783.7 million in
2022 to RMB3,085.4 million in 2023, and then recovered to RMB3,649.9 million in 2024.
Moreover, for the six months ended June 30, 2024 and 2025, our revenue had grown from
RMB1,761.4 million to RMB2,034.0 million. Our business growth and expansion efforts will
depend on a multitude of elements, some of which are outside our sphere of influence. Such
elements include, but are not limited to, our ability to (i) adjust our business model and
operations to adapt to any changes in customer preferences; (ii) maintain and, even expand, our
current customer base; (iii) manage our supply chain to support our business growth;
(iv) manage a larger organization with a greater number of employees in different divisions,
across multiple time zones and countries; (v) control expenses and investments in anticipation
of expanded operations; (vi) improve on our R&D and manufacturing capabilities; (vii) procure
funding with agreeable terms; and (viii) address new markets and potentially unforeseen
challenges as they arise. The trajectory of our future business may also be swayed by external
contingencies such as the global political and economic climate, shifting trade relations and
tariffs imposed, governmental directives and regulations, as well as the prevailing interest and
exchange rates. In addition, we may look to acquire certain businesses, assets, and
technologies, or undertake similar investments as a part of our overall growth strategy.
Potential target companies may be subject to domestic and foreign regulatory regimes with
which we have insufficient experience, and such companies may be subject to further risks
which we may be unable to evaluate at the time we acquire them. Such acquisition risks include
(i) the diversion of our management’s attention from our existing business; (ii) a failure to
ascertain the right value of a target; (iii) unknown or inadequately quantified actuarial
liabilities; (iv) the deterioration of book quality of an acquired business; (v) the failure to retain
key acquired personnel, suppliers, distributors or customers; and (vi) an inability to leverage
synergies. Additionally, there is no assurance that we will be able to successfully implement
these initiatives within their expected time frames or at all.
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All of the above factors affecting our growth could place significant strain on our
managerial, operational and financial resources. For such reasons, our growth will depend on
our ability to continue to implement and improve on our operational, financial, and
management know-how, and adapt to changes in market conditions. If we are unable to do so,
we may fail to execute our business strategy to achieve further growth, and as a consequence,
our business success, financial condition and future prospects may be materially and adversely
affected.
Our business depends on a number of key personnel, including our senior management,
and the loss of, or our inability to attract or retain, such persons could materially and
adversely affect our business, future prospects, and financial condition.
Our business depends substantially on the continuing efforts of our Directors, senior
management, and other key personnel for setting our strategic business direction and managing
our business. For the biographical information of our Directors, and senior management,
please refer to the section headed “Directors and Senior Management” in this Prospectus.
Our ability to set strategic directions for continued success and future business challenges
depends on the uninterrupted service of our experienced senior management and on our ability
to attract, recruit, and retain experienced, talented, and skilled professionals. Due to the current
limited pool of skilled personnel, competition for senior management, commercial and finance
professionals in our industry can be intense and we may face challenges in attracting, retaining
and motivating highly skilled, qualified and experienced personnel in these fields. Even if we
are successful in recruiting and retaining such personnel, competition for such employees may
significantly increase our compensation costs, which could impact our profitability. In the
event of the loss of services of our Directors, senior management or other key personnel, or if
we are unable to recruit or train a sufficient number of experienced personnel or to manage the
attrition levels in different employee categories, our business performance and future prospects
may be materially and adversely affected.
Our operations may be materially and adversely affected if our suppliers fail to deliver
raw materials as required in terms of time, cost, quality, or quantity.
We may encounter raw material shortages resulting from delay in delivery, unsatisfactory
quality, or production disruption of our suppliers. If our suppliers are unable to supply these
raw materials on time, or at all, it may be difficult to procure alternative supplies in a timely
manner. During the Track Record Period, the cost of procuring raw materials necessary for
production represented 84.8%, 85.1%, 85.7%, and 84.3% of our total cost of sales,
respectively. Any disruption in the supply of raw materials could temporarily interrupt our
production or result in more significant cost burdens unless we are able to establish alternative
supplies or to source sufficient quantities of the relevant raw materials from other existing
suppliers at favorable prices.
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With our business expansion, we may from time to time significantly increase our
production, and order additional raw materials from our suppliers within a relatively short time
frame. Our suppliers may fail to satisfy our needs, and even if they could, they may not be able
to provide such raw materials in a timely manner or at favorable prices. For further
information, please refer to the section headed “Business — Suppliers, procurement, and
inventory — Inventory management” in this Prospectus. If we cannot secure a qualified
substitute supplier in a timely manner, or at all, we may experience significant disruption in the
supply of essential raw materials of our products and material delay in the delivery of our
products, which may materially and adversely impact our business and results of operations.
In addition, we regularly negotiate with existing suppliers to obtain discounts and avoid
adverse changes in commercial terms and seek new suppliers for certain components with
lower costs. Our results of operations may be materially and adversely affected if we are
unsuccessful in controlling and reducing supplier costs, in particular in the process of
upgrading our existing products and introducing new products.
Developments in the labor market, increases in labor costs, or any possible labor unrest
may materially and adversely affect our business and results of operations.
As of June 30, 2025, our Group comprised 1,281 employees. We foresee that our
workforce may expand further as we continue to grow our business. Please refer to the section
headed “Business — Employees” in this Prospectus for more details. Whilst we have
implemented policies and measures to protect the welfare and working conditions of our
workforce, we cannot guarantee the absence of labor-related issues such as collective
bargaining, workplace relations disputes, strikes, or challenges in attracting and retaining
qualified workers. Such issues could result in work stoppages or labor shortages, significantly
impacting our ability to meet customer demands and fulfill orders on time. Moreover, resolving
labor disputes, hiring temporary workers, or implementing contingency plans to mitigate the
effects of labor shortages could incur additional costs. These expenses, along with potential
revenue losses from delayed deliveries, may materially and adversely affect our profitability
and overall results of operations. During the Track Record Period, staff costs represented (i)
2.1%, 1.9%, 2.0%, and 3.3% of our cost of sales; (ii) 53.5%, 51.5%, 51.4%, and 52.6% of our
R&D expenses; (iii) 73.2%, 73.3%, 69.9%, and 67.5% of our selling and marketing expenses;
and (iv) 37.0%, 34.8%, 40.9%, and 42.3% of our general and administrative expenses,
respectively. Furthermore, our operations depend on a substantial number of employees. Any
failure to maintain a stable and dedicated workforce could lead to severe disruptions. To ensure
workforce stability, we might need to offer more attractive salary packages to remain
competitive and retain our current pool of talent. Labor costs could also rise due to regulatory
measures if more countries adopt stringent minimum wage laws. A significant rise in our labor
costs as a result of the aforementioned reasons materially and adversely impact our margins
and profitability. Unless we can implement other appropriate means to reduce production costs,
our profit margin may decrease, thus materially and adversely affecting our business, financial
condition, and results of operations.
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As a company operated overseas and in China, we have employees operating in multiple
countries including China, the United States, and Japan, and we are bound by all the local
employment laws and regulations that are applicable to our hiring and employment practices.
Failure of such regulations may result in fines and/or significant rectification costs. In
particular, regarding our employees in China, we are required under PRC law to participate in
various employee benefit plans, including social insurance fund and housing provident fund
and contribute to the amounts equal to certain percentage of salaries, including bonuses and
allowances, of their employees up to a maximum amount specified by the local government
from time to time at locations where they operate their business. During the Track Record
Period, we had engaged third-party agencies to pay social insurance or housing provident fund
contributions to about 132, 33, 7, and nil employees on our behalf, respectively. As of the
Latest Practicable Date, any non-compliance related to the payment of social insurance and
housing provident fund contributions via third parties had been fully rectified. Pursuant to the
Interpretation II of the Supreme People’s Court of Issues Concerning the Application of Law
in the Trial of Labor Dispute Cases (༆
ᙑ(ɚ)) enacted by the Supreme People’s Court on 31 July 2025 and implemented on 1
September 2025, any agreement between an employer and an employee for the non-payment
of social insurance or any employee undertaking to waive such payment shall be determined
as void by the people’s court. In light of (i) the absence of prior agreements excluding social
insurance payments, or major complaints, reports, or labor disputes related to social insurance
against our Group during the Track Record Period and up to the Latest Practicable Date; and
(ii) our PRC Legal Adviser’s opinion that the aforementioned judicial interpretation does not
expand our Company’s penalty exposure or repeal the social insurance laws and regulations
currently in force of the PRC, our Directors believe the aforementioned judicial interpretation
would not have a material adverse effect on our business or financial results. However, while
our PRC Legal Adviser believes that, under the assumptions that no material changes to
prevailing policies, regulations and the local government enforcement requirements, and
absence of material complaints from employees, the risk of additional contributions, late
payment fees, or material administrative penalties by regulatory authorities, is remote and
unlikely to have a material and adverse effect on our Company, we cannot guarantee that
government authorities will share this view. We may also be subject to labor disputes arising
from such arrangements with the relevant employees.
Product defects may adversely affect our business and reputation.
Our manufacturing processes are required to meet certain quality standards, and we are
subject to various laws and regulations in the jurisdictions where our products are sold. Whilst
we have implemented and maintained a quality control system and perform various inspections
throughout our manufacturing process, we cannot guarantee that our quality control system
will remain effective and compliant with relevant laws, regulations, and standards. Any
significant failure or deterioration of our quality control system could seriously damage our
product quality, negatively impact our reputation, and lead to reduced orders or loss of
customers, thereby harming our business, financial condition, and results of operations. We
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also cannot assure you that all products produced by us, or by our co-location partners, are free
of any defects. Quality defects may fail to be detected or remediated as a result of a number
of factors, many of which are outside of our control, including:
 manufacturing errors;
 technical or mechanical malfunctions in the manufacturing process;
 human error or malfeasance by our quality control personnel;
 tampering by third parties; and/or
 quality issues with the raw materials we produce or purchase.
A failure to detect quality defects in our products or to prevent such defective products
from being delivered to our customers, even due to factors beyond our scope of control, could
result in product recalls or withdrawals, license revocation or regulatory fines, product
liabilities or other problems that could seriously harm our reputation and business. Product
liability claims, even unsuccessful, would likely be time-consuming and costly to defend,
which could divert significant resources and management attention, and thus materially and
adversely affect our revenue and profitability.
Any change or discontinuation of preferential tax treatment we currently enjoy would
increase our tax charge.
During the Track Record Period, our Company was recognized as a “High and New
Technology Enterprise” and the recognition remained effective as of the Latest Practicable
Date, and thus our Company was entitled to a preferential corporate income tax rate of 15%
in the PRC for three years commencing from November 15, 2023. During the Track Record
Period, we had an income tax expense of RMB7.4 million and RMB1.6 million in 2022 and the
six months ended June 30, 2025 and income tax credit of RMB1.1 million and RMB3.6 million
in 2023 and 2024, respectively. We cannot assure you that the PRC policies on preferential tax
treatments will not change or that the current preferential tax treatments we enjoy or will be
entitled to enjoy will not be cancelled. Moreover, we cannot assure you that our Company will
continue to be accredited as a “High and New Technology Enterprise” upon expiration of the
relevant certificate. If any such change, cancellation or discontinuation of preferential tax
treatment occurs, our Company will be subject to corporate income tax at a rate of 25% on
taxable income. As a result, the increase in our tax charge could materially and adversely affect
our results of operations.
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If we fail to effectively manage our inventory, our financial results may be materially and
adversely affected.
Our inventories are mostly finished goods, semi-finished goods, and raw materials for
production and sales. We had inventories of RMB1,729.5 million, RMB1,573.5 million,
RMB1,685.5 million, and RMB1,978.3 million, as of December 31, 2022, 2023, and 2024, and
June 30, 2025, respectively. Our average inventory turnover days were 171, 246, 203, and 207
days, in the years ended December 31, 2022, 2023, and 2024, and the six months ended June
30, 2025, respectively. As the markets of our products are competitive and subject to rapid
technological advances and frequent price fluctuations, we are required to manage our
inventories efficiently. If we were unsuccessful in accurately quantifying appropriate levels of
inventory, our business, financial condition, results of operation and prospects may be
materially and adversely affected. We rely on demand forecasts to decide on purchases of
long-lead-time raw materials and manage production and inventory. However, market demand
can change significantly due to general market conditions, new product launches, pricing, and
discounts, which are not always within our control. Developing and marketing new products
may hinder stable supplier relationships and accurate demand forecasting. Acquiring certain
raw materials may require significant lead time and prepayment, and they may be non-
returnable. Expanding our portfolio of products will further complicate inventory and logistics
management. We cannot ensure that all inventory will be sold promptly, risking increased
storage costs, obsolescence, a decline in value, and significant write-offs, thus materially and
adversely impacting our results of operations and financial condition.
Price volatility in our raw materials may affect our profitability.
Our business operations are significantly exposed to fluctuations in the cost of raw
materials, which constitute a substantial portion of our total cost of sales. For 2022, 2023, and
2024, and the six months ended June 30, 2025, raw material costs accounted for approximately
84.8%, 85.1%, 85.7%, and 84.3% of our total cost of sales, respectively. This high dependency
renders our profitability sensitive to changes in raw material pricing, which may arise from
factors beyond our control, including global supply chain disruptions, inflationary pressures,
geopolitical tensions, and shifts in commodity markets. V olatility in raw material prices may
adversely affect our gross profit and gross margin, particularly if we are unable to pass
increased costs onto customers in a timely or effective manner. Additionally, any deterioration
in the availability or quality of critical raw materials could disrupt our production schedules
and impair our ability to meet customer demand. Regardless of any mitigation measures that
may be put in place, there can be no assurance that our mitigation strategies will fully offset
the impact of raw material price volatility. Any sustained increase in procurement costs or
supply instability could materially and adversely affect our financial condition, operational
performance, and competitive position.
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We may from time to time be subject to claims, disputes, lawsuits, and other legal and
administrative proceedings.
From time to time, we are or may be a party to various litigation claims, legal or arbitral
proceedings, government, and regulatory inquiries, and/or proceedings, including, but not
limited to, intellectual property, fraud, unfair business practices, product liability, employee-
related claims, breach of contract claims and securities actions. Additionally, alleged
non-compliance and breaches of laws and regulations may also lead to litigation, legal
proceedings, government, and regulatory inquiries and/or proceedings. We may also initiate
legal proceedings against former employees who engage in fraudulent activities, and our
customers for any owed payments. For instance, a civil lawsuit was filed which involved Mr.
Gerald G Wong concerning a contractual dispute. In December 2024, the Shanghai Financial
Court issued a first-instance judgment ordering Mr. Wong to pay approximately RMB25.2
million, which he has appealed on the grounds of legal and factual errors. The appeal is
currently under review, and the initial judgment has not taken legal effect. Our Directors
confirm that none of the companies within our Group is a party in this lawsuit. Moreover, CIG
USA is defending a patent infringement lawsuit in the United States District Court for the
Northern District of California, with trial initially scheduled for June 2026. CIG USA had
initiated inter partes review proceedings in January 2025 in relation to five of the eight patents.
The court will reschedule the proceedings only after rulings have been issued on all of these
inter partes review proceedings. Both proceedings are ongoing, and no provision for contingent
liability has been made in either case. For details, please refer to the section headed “Business
— Legal proceedings and compliance” in this Prospectus. Any negative publicity arising from
such proceedings, claims, litigation or disputes, regardless of the accuracy of such negative
publicity, could damage our reputation and brand.
Defending these proceedings and/or addressing such negative publicity can be time-
consuming and result in significant ongoing expenditures and the diversion of our
management’s time and attention from the day-to-day operation of our business, which could
have a negative impact on our business operations. Due to the inherent uncertainty of the
litigation process, there is no guarantee that we will succeed in defending ourselves against
such claims or proceedings, or that the management’s assessment of the materiality of these
matters, including the accounting provisions made in connection therewith, will be consistent
with the ultimate outcome of such claims or proceedings. Unfavorable outcomes or
developments relating to any proceedings, such as judgments for monetary damages, penalty
fees, injunctions, product recalls or denial or revocation of licenses or permits, could have a
material adverse effect on our business, prospects, and financial condition. Our failure to
successfully defend or settle any litigation, legal or arbitral proceedings or to assess accurately
the materiality of a claim could result in liabilities that, to the extent not covered or only
partially covered by our insurance, could have a material and adverse effect on our business,
financial condition, and prospects.
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We may need to defend ourselves against claims for intellectual property infringement,
which may be time-consuming and would cause us to incur substantial costs.
Our success depends, in part, upon our intellectual property, products and operations not
infringing, misappropriating or violating the intellectual property rights owned by others. We
cannot be certain that our operations or any aspects of our business do not or will not infringe
upon or otherwise violate patents, copyrights or other intellectual property rights held by third
parties, or that our actions, unintended or not, may breach the licensing agreements that we had
entered in relation to certain intellectual property rights. We may from time to time be, subject
to legal proceedings and claims in various jurisdictions where we operate and where our
products are sold relating to the intellectual property rights of others. There could also be
existing patents of which we are not aware that other aspects of our business may inadvertently
infringe. We cannot assure you that holders of patents purportedly relating to some aspects of
our technology or business, if any such holders exist, would not seek to enforce such patents
against us. Further, the application and interpretation of patent laws and the procedures and
standards for granting patents in the countries and regions where we operate may keep
evolving, and we cannot assure you that relevant courts or regulatory authorities would agree
with our analysis.
If we are found to have violated the intellectual property rights of others, we may be
subject to liability for our infringement activities or may be prohibited from using such
intellectual property, and we may incur licensing fees or be forced to develop alternatives of
our own. In addition, we may incur significant expenses and may be forced to divert
management’s time and other resources from our business and operations to defend against
these third-party infringement claims, regardless of their merits. Successful infringement or
licensing claims made against us may result in significant monetary liabilities and may
materially disrupt our business and operations by restricting or prohibiting our use of the
intellectual property in question. Any intellectual property-related dispute or litigation,
regardless of its outcome or merit, could result in substantial costs and expenses, adverse
publicity or diversion of management resources, any of which could materially and adversely
affect our business, financial conditions and results of operations.
We may not be able to prevent others from unauthorized use of our intellectual
properties, which could harm our business and competitive position.
Our trade secrets, trademarks, patents, software copyrights, and other intellectual
property rights are essential to our success. Unauthorized use by third parties may materially
and adversely impact our revenues and reputation. To safeguard our intellectual property, we
rely on trademark and patent law, unfair competition laws, and contractual rights, including
confidentiality agreements with employees and third parties. However, these measures may be
insufficient or breached, leading to unauthorized disclosure of our trade secrets and proprietary
information. Additionally, there is no guarantee that our applications for trademarks, patents,
and other intellectual property will be approved, or that our rights will not be challenged or
deemed invalid. The intellectual property granted to us in certain jurisdictions would not
guarantee us the similar rights in other jurisdictions due to the complexity of the regulation and
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process. Failure to register these properties could prevent us from stopping others from using
them, significantly affecting our business, financial condition, and operational results. Policing
unauthorized use of proprietary technology is challenging and expensive. Despite our efforts,
third parties may attempt to copy or misuse our intellectual property or seek court declarations
of non-infringement. Monitoring unauthorized use is difficult and costly, and we cannot ensure
our measures will prevent misappropriation. We may need to resort to litigation to enforce our
rights, incurring substantial costs and resource diversion.
Consequently, we might lose vital competitive advantages derived from our intellectual
property. Significant impairments to our intellectual property rights could have a materially
adverse effect on our business. Events beyond our control may also threaten our intellectual
property rights and brand. Effective protection of our trademarks, patents, software copyrights,
domain names, and other intellectual property rights is costly and complex.
Additionally, issued patents may not provide meaningful protection or competitive
advantages. Patent claims might not be broad enough to prevent others from developing similar
technologies. Others’ intellectual property rights could prevent us from licensing and
exploiting our patents. Numerous patents and pending applications in our field could have
priority over ours, potentially invalidating our applications. Our patents may expire without
extension and may be contested, circumvented, invalidated, or limited in scope, reducing their
effectiveness.
Failure to obtain, renew, or retain licenses, permits or approvals may affect our business.
We are required to obtain certain approvals, licenses, and permits from various
government authorities in the jurisdictions in which we operate. In addition to such licensing
requirements, our business must comply with various laws and regulations in such jurisdictions
as well. Such regulatory frameworks are subject to change, which may lead to new laws,
regulations, and requirements, while existing ones may be reinterpreted or modified.
Consequently, we may need to obtain additional approvals, licenses, permits, and certifications
for our ongoing operations or any new business ventures. However, we cannot guarantee that
we will always successfully secure all the necessary approvals, licenses, and permits, as
regulatory bodies may interpret the laws and regulations differently, nor can we guarantee that
government authorities will consistently act in our favor using their discretionary powers.
Therefore, any failure to obtain, renew or retain such licenses, permits or approvals may
materially and adversely affect our business operations and financial condition. For further
information of such licenses, permits or approvals, please refer to the section headed
“Regulatory Overview” in this Prospectus.
Some of our leased properties did not complete the necessary government filing and
registration.
As of the Latest Practicable Date, two out of our five leased properties in China, with an
aggregate gross floor area of approximately 1,087.69 sq.m. had not been registered or filed
with the relevant land and real estate administration bureaus in the PRC. As advised by our
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PRC Legal Adviser, while the lack of registration will not affect the validity of the lease
agreements, we may be ordered by the relevant government authorities to register the relevant
leases within a prescribed period, failing which we may be subject to a fine ranging from
RMB1,000 to RMB10,000 for each unregistered lease. To this end, the maximum penalty that
may be imposed onto us for such non-compliance during the Track Record Period would be up
to RMB20,000. We cannot assure you that our use of such leased properties will not be
challenged. In the event that our use of properties is successfully challenged, we may be
subject to fines and forced to relocate the affected operations. In addition, we may become
involved in disputes with the property owners or third parties who otherwise have rights to or
interests in our leased properties. We can provide no assurance that we will be able to find
suitable replacement sites on terms acceptable to us on a timely basis, or at all, or that we will
not be subject to liability resulting from third parties’ challenges on our use of such properties.
As a result, our business, financial condition and results of operations may be materially and
adversely affected.
We may not continue to receive government subsidies at historical levels or at all, which
could adversely affect our financial performance.
Our Group has historically received government subsidies, most of which are one-off in
nature and not subject to specific performance conditions. In 2022, 2023, and 2024, and the six
months ended June 30, 2025, our government subsidies received amounted to RMB16.6
million, RMB10.1 million, RMB31.0 million, and RMB9.6 million, respectively. While these
subsidies have contributed positively to our financial results in certain periods, they are not
guaranteed and are granted at the discretion of relevant government authorities. There is no
assurance that similar subsidies will be available to us in the future, either in amount or
frequency. As such, we cannot rely on these subsidies as a recurring source of income. Any
reduction, delay, or discontinuation of such government support could adversely affect our
profitability and financial condition, particularly in periods where such subsidies have
constituted a material portion of our other income.
We are subject to anti-corruption and anti-bribery and similar laws, and non-compliance
with such laws can subject us to administrative, civil and criminal fines and penalties,
collateral consequences, remedial measures and legal expenses, all of which could
materially and adversely affect our business, results of operations, financial condition and
reputation.
We are subject to anti-corruption, anti-bribery and similar laws and regulations in various
jurisdictions in which we conduct activities. Whilst we have implemented policies and
procedures designed to ensure compliance by us and our Directors, officers, employees,
representatives, consultants, agents and business partners with laws and regulations, our
policies and procedures may not be sufficient, and our directors, officers, employees,
representatives, consultants, agents, and business partners could engage in improper conduct
for which we may be held responsible.
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Non-compliance with anti-corruption or anti-bribery laws and regulations could subject
us to whistleblower complaints, adverse media coverage, investigations, and severe
administrative, civil and criminal sanctions, collateral consequences, remedial measures and
legal expenses, all of which could materially and adversely affect our business, results of
operations, financial condition and reputation.
We are exposed to the credit risks of our customers.
We are subject to the credit risks of our customers and our profitability and cash flow are
dependent on our receipt of timely payments from our customers. During the Track Record
Period, we generally granted credit terms of 30 to 90 days to our customers. However, there
can be no assurance that the collection of amounts due from our customers will be timely. This
might result in slow turnover of our trade and bills receivables and restrict our working capital
resources. As of December 31, 2022, 2023, and 2024, and June 30, 2025, we recorded trade and
bills receivables of RMB1,606.9 million, RMB1,115.6 million, RMB1,238.1 million, and
RMB1,580.2 million, representing 41.9%, 34.3%, 34.1%, and 35.9% of our current assets,
respectively. As of the same dates, the turnover days for our trade and bills receivables were
144, 159, 116, and 125 days, and our expected credit loss allowance on trade and bills
receivables amounted to RMB17.6 million, RMB12.8 million, RMB14.4 million, and
RMB18.7 million, respectively. If any of our customers faces unexpected situations, such as
financial difficulties or deterioration in credit worthiness, there may be challenges in collecting
full or partial payments from them and enforcing judgment debts against them could be
difficult. These unforeseen circumstances may also render our judgments or estimations on
expected credit loss allowance on trade and bills receivables inaccurate, potentially resulting
in higher losses than currently estimated. If we fail to receive payments from our customers on
a timely basis, our cash flows and financial condition could be materially and adversely
affected.
Our operations may be significantly disrupted by risks associated with natural disasters,
health epidemics, and other outbreaks.
Our operations, including those of our co-location partners, are vulnerable to interruption
and damage from natural disasters and other calamities, such as fires, floods, severe weather
conditions, earthquakes, power failures, civil unrest, and acts of terrorism. 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, and therefore materially and adversely affect our operations and financial
conditions.
In addition, our business could be affected by public health epidemics and pandemics,
such as the outbreak of Ebola, SARS, avian influenza, H1N1, or COVID-19 virus or other
disease. Even if we are not directly affected, such disaster or disruption could affect the
operations or financial conditions of our customers, which could harm our results of
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operations. If any of our employees, or those of our co-location partners, is suspected of having
contracted a contagious disease, such operations may be required to follow strict quarantine
measures, or even half production. Furthermore, any future outbreak may restrict economic
activities in affected regions, resulting in reduced business volume, temporary closure of our
offices or otherwise disrupt our business operations, thus materially and adversely affecting
our financial condition and results of operations.
We are exposed to interest rate risks from floating rate bank borrowings.
We are exposed to interest rate risk arising from our floating rate bank borrowings, which
may adversely affect our financial performance and cash flow. As of December 31, 2022, 2023,
and 2024, and June 30, 2025, our borrowings were primarily subject to variable interest rates,
exposing us to cash flow volatility in the event of interest rate fluctuations. A general increase
or decrease of 100 basis points in market interest rates would have resulted in a corresponding
decrease or increase in our profit for the respective years by approximately RMB561,000,
RMB582,000, and RMB1,784,000, and RMB3,137,000 during the Track Record Period.
This sensitivity to interest rate movements reflects our reliance on floating rate debt as
a financing strategy. While this approach may offer cost advantages during periods of low
interest rates, it also increases our exposure to rising borrowing costs in a tightening monetary
environment. Given the current global macroeconomic conditions and the potential for further
rate hikes by central banks, our interest expense could increase materially, thereby reducing our
net income and limiting our financial flexibility.
Although we maintain interest-bearing bank deposits, these are not expected to
significantly offset the impact of rising interest rates due to their relatively stable yield profile.
We currently do not employ interest rate hedging instruments, and any future adoption of such
strategies may not fully mitigate the risk or could introduce additional costs and complexities.
Accordingly, fluctuations in interest rates could materially and adversely affect our financial
condition, results of operations, and ability to service our debt obligations
If we upgrade our manufacturing equipment more quickly than expected, we may have to
shorten the useful lives of any equipment to be retired as a result of any such update, and
the resulting accelerated depreciation could negatively affect our financial results.
We have invested, and expect to continue to invest, significantly in manufacturing
equipment, and we depreciate the cost of such equipment over their expected useful lives.
During the Track Record Period, our capital expenditures were used for property, plant and
equipment, which amounted to RMB34.9 million, RMB52.2 million, RMB259.5 million, and
RMB361.7 million, respectively. We funded these expenditures mainly with cash generated
from our business operations. However, manufacturing technology may evolve rapidly, and we
may decide to update our manufacturing process with advanced equipment more quickly than
expected. Moreover, as our engineering and manufacturing expertise and efficiency increase,
we may be able to manufacture our products using less of our installed equipment. The useful
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life of any equipment that would be retired early as a result would be shortened, causing the
depreciation on such equipment to be accelerated, and to the extent we own such equipment,
our results of operations could be materially and adversely impacted.
Our cashflow may deteriorate due to the mismatch in time between receipt of payments
from our customers and payments to our suppliers.
Our financial stability is closely tied to the creditworthiness of our customers, and our
liquidity hinges on their timely remittance. As of December 31, 2022, 2023, and 2024, and June
30, 2025, the turnover days of our trade and bills payables were 158, 197, 131, and 160 days,
and the turnover days of our trade and bills receivables were 144, 159, 116, and 125 days,
respectively. Consequently, the interval between the receipt of customer payments and the
settlement of supplier invoices can lead to potential cash flow discrepancies. We cannot
guarantee the complete avoidance of significant cash flow imbalances in the future. Moreover,
the effectiveness of our cash flow management strategies is not infallible. Inadequate cash flow
management and insufficient working capital may expose us to credit risks that could
significantly impact our financial health, operational results, and cash flow. Additionally, our
operations are vulnerable to the risk of delayed or unfulfilled contractual commitments by our
customers, as the collection of such payments is not guaranteed. Should we encounter
substantial difficulties in debt recovery or defaults by our clients, it could have a material and
adverse effect on our financial condition, results of operations, and cash flow sustainability.
We are exposed to risks in relation to impairment losses on intangible assets and goodwill.
We are exposed to the risk of recognizing impairment losses on intangible assets and
goodwill, which could materially and adversely affect our financial condition and results of
operations. As part of our business strategy, we have invested significantly in intangible assets,
including software, patents, and deferred development costs. As of December 31, 2022, 2023,
and 2024, and June 30, 2025, the value of our intangible assets amounted to RMB579.4
million, RMB591.4 million, RMB543.7 million, and RMB547.7 million, respectively. Our
goodwill arises from the acquisition of Actiontec Electronics. Our goodwill remained at
RMB99.0 million as of December 31, 2022, 2023, and 2024. These assets are initially
recognized at cost and subsequently measured at cost less accumulated amortization and
impairment losses, where applicable.
Goodwill and intangible assets with indefinite useful lives are not amortized but are tested
for impairment annually, or more frequently if events or changes in circumstances indicate that
they might be impaired. Acquired intangible assets are recognized initially at cost. After initial
recognition, intangible assets with finite useful lives are carried at cost less accumulated
amortization and any accumulated impairment losses. Amortization for intangible assets with
finite useful lives is provided on straight-line basis over their estimated useful lives.
Amortization commences when the intangible assets are available for use. The determination
of whether an impairment exists requires management to make significant estimates and
assumptions, including those related to future cash flows, discount rates, and growth
projections. These estimates are inherently uncertain and may be affected by various factors
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such as changes in market conditions, technological obsolescence, or underperformance of
business units. If the carrying amount of an asset or cash-generating unit exceeds its
recoverable amount, an impairment loss is recognized. Such losses could have a significant
impact on our profitability and net asset value. Furthermore, any future acquisitions may
increase the amount of goodwill on our balance sheet, thereby heightening our exposure to
impairment risk.
We cannot assure that future impairment losses will not occur, and any such losses could
materially affect our financial performance.
If we fail to fulfill our obligations under our contracts with customers in respect of
contract liabilities, our results of operations and financial condition may be adversely
affected.
As of December 31, 2022, 2023, and 2024, and June 30, 2025, our contract liabilities
amounted to RMB11.9 million, RMB45.4 million, RMB33.4 million, and RMB24.8 million,
respectively. Our contract liabilities primarily represent advance payments from customers for
goods and rebated payables to customers. If we fail to fulfill our obligations under our
contracts with customers, we may not be able to convert such contract liabilities into revenue,
and our customers may also require us to refund the purchase price we have received, which
may materially and adversely affect our cash flow and liquidity condition, our ability to meet
our working capital requirements and our results of operations and financial condition. In
addition, if we fail to fulfill our obligations under our contracts with customers, it may
adversely affect our relationship with such customers, which may also materially and adversely
affect our reputation, business and results of operations in the future.
We are exposed to risks relating to the recoverability of deferred tax assets.
We are subject to income taxes in multiple jurisdictions, and our financial statements
reflect deferred tax assets arising from temporary differences between the carrying amounts of
assets and liabilities and their respective tax bases. During the Track Record Period, we
recorded income tax expense of RMB7.4 million and RMB1.6 million in 2022 and the six
months ended June 30, 2025, and income tax credit of RMB1.1 million and RMB3.6 million
in 2023 and 2024, respectively. The recognition of deferred tax assets is based on our
management’s assessment that it is probable future taxable profits will be available against
which these deductible temporary differences and tax losses can be utilized. However, the
recoverability of deferred tax assets is inherently uncertain and depends on the generation of
sufficient future taxable income. This requires significant judgement and estimation by
management, particularly in forecasting future financial performance, tax planning strategies,
and the timing of reversal of temporary differences. Changes in market conditions, regulatory
environments, or business performance could adversely affect these estimates and result in the
need to write down deferred tax assets.
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If actual future taxable income is less than expected, or if there are adverse changes in
tax laws or rates, we may be required to reduce the carrying amount of deferred tax assets
through a charge to income tax expense. Such impairment could materially and adversely affect
our financial condition and results of operations. Furthermore, the complexity of tax
regulations across jurisdictions increases the risk of misinterpretation or misapplication, which
could lead to disputes with tax authorities and adjustments to our deferred tax positions. We
cannot assure that all deferred tax assets recognized will be fully recoverable, and any
impairment could have a significant impact on our profitability and equity position.
We may face risks associated with IT system failures, network disruptions, or
cybersecurity breaches.
IT systems are critical to our ability to effectively manage our operations. If we do not
allocate sufficient resources to build and sustain the proper IT infrastructure, we could be subject
to transaction errors, processing inefficiencies, customer service disruptions and, in some
instances, loss of customers. Moreover, if our data management systems do not effectively
collect, store, process and report relevant data for the operation of our business, whether due to
equipment malfunction or constraints, software deficiencies, system failures, cybersecurity
attack, or human error, our ability to effectively plan, forecast and execute our business plan and
comply with applicable laws and regulations will be impaired. Challenges relating to the building
of new IT structures can also subject us to certain errors, inefficiencies, disruptions and, in some
instances, loss of customers. Our IT systems, and the systems of our third-party IT service
providers may also be vulnerable to a variety of interruptions due to events beyond our control,
including, but not limited to, natural disasters, terrorist attacks, electrical or telecommunications
failures, software program errors, computer viruses, cyber-attacks or hackers, and other security
issues or threats that may pose a risk of financial losses, business interruptions, wrongful use of
information, damage to reputation, and lack of proper protection. Cybersecurity attacks are
evolving and include, but are not limited to, malicious software, attempts to gain unauthorized
access to data, and other electronic security breaches that could lead to disruptions in systems,
unauthorized release of confidential or otherwise protected information and corruption of data.
Given the unpredictability of the timing, nature and scope of such disruptions, such measures
may not have been effectively implemented or may not be adequate to ensure that our operations
are not disrupted and we could potentially be subject to operational interruption, damage to our
image and private data exposure. We may also incur significant expenses for implementing
additional security measures to protect our IT systems.
Our risk management and internal control systems may not be adequate or effective.
We have developed and implemented comprehensive risk management and internal
control policies that encompass various aspects of our business operations to supervise and
address a spectrum of operational, financial, legal and market risks that may be or have been
identified. Please refer to the section headed “Business — Risk management and internal
control” in this Prospectus. Since the effectiveness of our risk management and internal control
systems depend on the implementation of the same by our employees, we cannot assure you
that our employees or other related third parties are sufficiently or fully trained to implement
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these systems, or that their implementation will be free from human error or mistakes. If we
fail to timely update, implement and modify, or fail to deploy sufficient human resources to
maintain our risk management policies and procedures, our business, results of operations,
financial condition, and prospects could be materially and adversely affected.
We recorded negative cash flows from operating activities in the six months ended
June 30, 2025.
Due to nature of our business, we may record net cash used in operating activities from
time to time. Throughout the Track Record Period, our cash inflow was primarily generated
from the sales of our products. For the six months ended June 30, 2025, we had net cash used
in operating activities of RMB189.9 million, which primarily represented profit before tax of
RMB119.1 million, adjusted by (i) non-cash and non-operating items, which primarily
consisted of depreciation of RMB70.8 million; and (ii) movements in working capital, mainly
consisting of an increase in inventories of RMB296.1 million, and an increase in trade and
other receivables of RMB389.3 million. We may continue to experience such net cash outflows
from our operating activities in the future. If we are unable to maintain adequate working
capital, we may not be able to meet our capital expenditure requirements or pursue our growth
strategies, which may have a material adverse effect on our business, financial condition,
results of operations, and prospects.
Our insurance coverage may not be sufficient to cover all the losses associated with our
business operations.
We face various risks in connection with our business. As of the Latest Practicable Date,
we maintained insurance policies for our products. We provide social security insurance as
required by relevant rules and regulation in PRC, including general care and work-related
injury insurance, for our employees. We have also maintained various insurance policies
regarding different aspects of our overseas operations, such as general liability, property, errors
and omissions, employment, and cargo. However, we cannot assure you that our insurance
coverage is sufficient to prevent us from any loss, or that we will be able to successfully claim
our losses under our current insurance policies on a timely basis, or at all. If we incur any loss
that is not covered by our insurance policies, or the compensated amount is significantly less
than our actual loss, our business, financial condition, and results of operations could be
materially and adversely affected.
We could be adversely affected as a result of any sales we make to certain countries that are,
or become subject to, sanctions administered by the United States, the European Union, the
United Kingdom, the United Nations, Australia and other relevant sanctions authorities.
The United States and other jurisdictions or organisations, including the European Union,
the United Kingdom, the United Nations and Australia, have, through executive order, passing
of legislation or other governmental means, implemented measures that impose economic
sanctions against such countries or against targeted industry sectors, groups of companies or
persons, and/or organisations within such countries.
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During the Track Record Period, our Group has sold optical and wireless connectivity
devices to non-sanctioned customers in the Relevant Regions, for which none of the Relevant
Regions a Sanctioned Countries because these regions are not subject to general and
comprehensive export, import, financial or investment embargo under sanctions related law or
regulation of the Relevant Jurisdiction, these regions are subject to a rather limited sets of
sanctions targeting certain sanctioned entities and sectors or prohibited activities within such
regions. As advised by our International Sanctions Legal Advisors after performing the
procedures they consider necessary, these transactions involving Relevant Regions did not
involve any sanctioned entities or exports or transactions of any items subject to the EAR, and
hence did not represent a Primary Sanctioned Activity or violation of International Sanctions;
and, the risk of these transactions being viewed as a Secondary Sanctionable Activity is low
because there were no activities targeted by extra-territorial provisions of sanctions law or
regulation in the Relevant Jurisdictions. Our Directors, and the Sole Sponsor, concur with this
view from the International Sanctions Legal Adviser.
During the Track Record Period, our Group has also provided design and manufacturing
services to Customer D domestically in China, transactions were denominated in RMB and did
not involve exports or transactions outside the Chinese border. For our Group to provide the
design and manufacturing services, Customer D provided raw materials and accessories to our
Company, none of the raw materials and accessories are subject to the EAR, our Company then
delivered the finished products to Customer D after manufacturing. As advised by our
International Sanctions Legal Advisors after performing the procedures they consider
necessary, given the nature of the transactions involving Customer D stated above, including
that our Group was not engaged in any exports or transactions of any items subject to the EAR
to Customer D, export restrictions applicable to Customer D being designated on the Entity
List maintained by the BIS were not implicated and such transactions did not represent a
Primary Sanctioned Activity or violation of International Sanctions; and, the risk of these
transactions being viewed as a Secondary Sanctionable Activity is low because there were no
activities targeted by extra-territorial provisions of sanctions law or regulation in the Relevant
Jurisdictions. Our Directors, and the Sole Sponsor, concur with this view from the International
Sanctions Legal Adviser.
Sanctions 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 U.K., the UN, 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 details of our business operations in the Countries subject
to International Sanctions and our undertakings to the Hong Kong Stock Exchange and its
related group companies, please refer to the section headed “Business — Business Activities
in relation to Countries subject to International Sanctions” in this Prospectus.
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Changes in Environmental, Social and Governance (“ESG”) compliance requirements
could have an adverse impact on our business, operating results and financial condition.
With the rising awareness of ESG issues, including with respect to waste disposal,
packaging waste, greenhouse gas emissions and environmental protection, more stringent laws
and regulations that affect our business operations may be adopted. Accordingly, we may need
to devote more effort and resources to ensure our compliance with such laws or regulations. We
have adopted a series of measures aiming to ensure our compliance with the ESG-related laws
and regulations applicable to us. There can be no assurance that these measures can effectively
help us to navigate the complex and evolving regulatory environment. Changes in existing
ESG-related laws and regulations or the promulgation of new ESG-related laws and regulations
may increase our compliance costs, and accordingly may have an material and adverse impact
on our business, results of operations and financial performance.
RISKS RELATING TO DOING BUSINESS IN THE JURISDICTIONS WHERE WE
OPERATE
Any slowdown in the growth of regional or global economy and inflation could affect our
business, results of operations and financial condition.
The growth of the regional and global economy has slowed in recent years. It remains
uncertain whether, and for how long, the regional and global economic slowdown will persist.
There are considerable uncertainties over the long-term effects of the monetary and fiscal
policies adopted by the central banks and financial authorities of some of the world’s leading
economies. There have been concerns over war, as well as unrest and terrorist threats in certain
countries and regions, which have resulted in volatility in oil and other markets. Regional
economic conditions are sensitive to global economic conditions, changes in domestic
economic and political policies as well as the expected overall economic growth rate.
It is unclear whether these challenges and uncertainties will be effectively managed or
resolved and what effects they may have on the global political and economic conditions in the
long term. Any economic slowdown or negative business sentiment could have an indirect
potential impact on our industry. In addition, continued turbulence in the international markets,
including ever-changing trade relations between certain countries, or any newly imposed tariffs
against our products, may adversely affect our ability to access capital markets to meet
liquidity needs. As a result, our business operations and financial performance may be
materially and adversely affected.
Changes in the economic, political and social conditions as well as government policies in
the countries and regions where we operate could adversely affect our business and
prospects.
A substantial part of our operations are located in a number of overseas markets.
Accordingly, our business, financial condition and results of operations could also be
influenced by political, economic and social conditions in these markets. Economic growth in
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each of our geographic markets has been uneven, both geographically and among various
sectors within any one of the relevant economies. Any economic downturn, whether actual or
perceived, further decrease in economic growth rates or an otherwise uncertain economic
outlook in our geographic markets or any other market in which we may operate could affect
our business, financial condition and results of operations. Changes in the economic or
political environment could increase our exposure to legal and business risks, and may
materially and adversely our operations and affect our results of operations.
Uncertainties embedded in the legal systems of certain geographic markets where we
operate could affect our business, financial condition and results of operations.
Legal systems of the geographic markets where we operate vary significantly from
jurisdiction to jurisdiction. Some jurisdictions have a civil law system based on written statutes
and others are based on common law. Unlike the common law system, prior court decisions
under the civil law system may be cited for reference but have limited precedential value.
The legal systems of some geographic markets where we operate are consistently
evolving. Laws and regulations that are recently enacted may not sufficiently cover all aspects
of economic activities in such markets. In particular, the interpretation and enforcement of
these laws and regulations are subject to future implementations, and the application of some
of these laws and regulations to our businesses is not settled. Since local administrative and
court authorities are authorized to interpret and implement statutory provisions and contractual
terms, it may be difficult to evaluate the outcome of administrative and court proceedings and
the level of legal protection we have in many of the geographic markets where we operate.
Local courts may have discretion to reject enforcement of foreign awards or arbitration awards.
These uncertainties may affect our judgment on the relevance of legal requirements and our
ability to enforce our contractual rights or claims. In addition, the regulatory uncertainties may
be exploited through unmerited or frivolous legal actions, claims concerning the conduct of
third parties, or threats in attempt to extract payments or benefits from us.
Furthermore, many of the legal systems in the geographic markets where we operate are
based in part on their respective government policies and internal interpretations, some of
which are not published on a timely basis or at all and may have retroactive effects. There are
other circumstances where key regulatory definitions are unclear, imprecise or missing, or
where interpretations that are adopted by regulators are inconsistent with interpretations
adopted by a court in analogous cases. As a result, we may not be aware of our violation of
certain policies or rules until some time after the violation. In addition, administrative and
court proceedings in certain of our geographic markets may be protracted, resulting in
substantial costs and diversion of resources and management attention.
It is possible that a number of laws and regulations may be adopted or construed to be
applicable to us in our geographic markets and elsewhere that could affect our businesses and
operations. Scrutiny and regulations of the industries in which we operate may further increase,
and we may be required to devote additional legal and other resources to addressing these
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regulations. Changes in current laws or regulations or the imposition of new laws and
regulations in our geographic markets may slow the growth of our industries and affect our
business, financial condition and results of operations.
Fluctuations in exchange rates may have a material adverse effect on our results of
operations, financial condition and your investment.
Due to the presence overseas and in China of our business, we are inherently exposed to
risks associated with foreign currency exchange fluctuations. Our Group’s subsidiaries mainly
operate in the China, the United States and Japan and the majority of our transactions are
settled in RMB, USD, and JPY , which are the functional currencies of our Group entities to
which the transactions relate. Any appreciation or depreciation in the value of the RMB, USD,
and JPY or other foreign currencies that our operations are exposed to will affect our business,
results of operations and financial condition adversely in different ways. During the Track
Record Period, our exchange gains, net, amounted to RMB35.0 million, RMB31.8 million,
RMB14.4 million, and RMB13.7 million, respectively. It is difficult to predict how external
factors may impact the exchange rate of RMB and other foreign currencies in the future.
Moreover, we may from time to time implement various hedging policies, such as currency
swaps, natural hedging, or diversification, to mitigate these risks, it is important to note that
these measures may not fully eliminate the potential adverse impacts of currency movements.
The availability and effectiveness of our hedging measures in order to reduce our exposure to
foreign exchange risks may be limited, and we may not be able to adequately cover our
exposure or at all. Whilst the majority of our revenues and expenditures were denominated in
RMB, USD, and JPY , our proceeds from the Global Offering will be denominated in Hong
Kong dollars. Any significant change in the exchange rates of the Hong Kong dollar may
materially adversely affect any dividends payable on, our H Shares in Hong Kong dollars.
We are a Chinese Mainland enterprise, and we are subject to Chinese Mainland tax on
our global income and any gains on the sales of H Shares and dividends on the H Shares
may be subject to Chinese Mainland income taxes.
Under the Enterprise Income Tax Law of the PRC ()
(“EIT Law ”) and its implementation rules, subject to any applicable tax treaty or similar
arrangement between the Chinese Mainland and a non-Chinese Mainland investor’s
jurisdiction of residence that provides for a different income tax arrangement, Chinese
Mainland withholding tax at the rate of 10% is normally applicable to dividends from Chinese
Mainland sources payable to investors that are non-Chinese Mainland resident enterprises,
which do not have an establishment or place of business in Chinese Mainland, or which have
an establishment or place of business in Chinese Mainland if the relevant income is not
effectively connected with such establishment or place of business. Any gains realized on the
transfer of shares by such investors are subject to a 10% Chinese Mainland income tax rate if
such gains are regarded as income from sources within Chinese Mainland unless a treaty or
similar arrangement provides otherwise.
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Pursuant to the Individual Income Tax Law of the PRC (੻೼
) (the “ IIT Law ”), which was promulgated by the SCNPC on September 10, 1980, and was
most recently amended on August 31, 2018, and effective on January 1, 2019, and the
Implementation Regulations for the IIT Law (ૢԷ),
dividends from sources within Chinese Mainland paid to foreign individual investors who are
not Chinese Mainland residents are generally subject to a Chinese Mainland withholding tax
at a rate of 20% and gains from Chinese Mainland sources realized by such investors on the
transfer of shares are generally subject to a 20% Chinese Mainland income tax rate, in each
case, subject to any reduction or exemption set forth in applicable tax treaties and laws in
Chinese Mainland. Pursuant to the Circular on Questions Concerning the Collection of
Individual Income Tax Following the Repeal of Guo Shui Fa [1993] No. 045 (਷೼೯
[1993]045) (Guo Shui Han [2011] No. 348)
(਷೼Ռ[2011]348 ໮) dated June 28, 2011, issued by the SA T, dividends paid to non-Chinese
Mainland resident individual holders of H Shares are generally subject to individual income tax
of Chinese Mainland at the withholding tax rate of 10%, depending on whether there is any
applicable tax treaty between Chinese Mainland and the jurisdiction in which the non-Chinese
Mainland resident individual holder of H Shares resides as well as the tax arrangement between
Chinese Mainland and Hong Kong. Non-Chinese Mainland resident individual holders who
reside in jurisdictions that have not entered into tax treaties with Chinese Mainland are subject
to a 20% withholding tax on dividends received from us. However, pursuant to the Circular
Declaring that Individual Income Tax Continues to be Exempted over Income of Individuals
from Transfer of Shares () issued
by the MOF of Chinese Mainland and the SA T on March 30, 1998, gains of individuals derived
from the transfer of listed shares of enterprises may be exempt from individual income tax. In
addition, on December 31, 2009, the MOF, the SA T and the CSRC jointly issued the Circular
on Relevant Issues Concerning the Collection of Individual Income Tax over the Income
Received by Individuals from Transfer of Listed Shares Subject to Sales Limitation (ࡈ׵
) (Cai Shui [2009] No. 167)
which states that individuals’ income from the transfer of listed shares on certain domestic
exchanges shall continue to be exempted from individual income tax, except for the relevant
shares which are subject to sales restrictions as defined in the Supplementary Circular on
Relevant Issues Concerning the Collection of Individual Income Tax over the Income Received
by Individuals from Transfer of the Listed Shares Subject to Sales Limitations (ɛᔷ
) (Cai Shui [2010] No. 70). As
of the Latest Practicable Date, the aforesaid provision has not expressly provided that
individual income tax shall be collected from non-Chinese Mainland resident individuals on
the sale of shares of Chinese Mainland resident enterprises listed on overseas stock exchanges.
If Chinese Mainland income tax is imposed on gains realized from the transfer of our H
Shares or on dividends paid to our non-Chinese Mainland resident investors, the value of your
investment in our H Shares may be affected. Furthermore, our Shareholders whose jurisdictions
of residence have tax treaties or arrangements with Chinese Mainland may not qualify for
benefits under such tax treaties or arrangements.
RISK FACTORS
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Our Company may be subject to approval, filing or other regulatory requirements of the
CSRC or other PRC governmental authorities in connection with future capital raising
activities.
Our Company may, from time to time, undertake capital raising activities, including
offerings of equity or debt securities in the PRC or overseas markets. In connection with such
activities, our Company may become subject to approval, filing, registration or other
regulatory requirements imposed by the CSRC or other relevant PRC governmental authorities,
particularly in light of evolving regulatory frameworks governing offshore listings and
securities offerings by PRC-related entities.
Any failure or delay in obtaining the necessary approvals or completing the required
filings could materially and adversely affect our Company’s ability to access capital markets
in a timely manner or on commercially favorable terms, which may in turn impact our funding
strategy, expansion plans and overall financial condition.
Restrictions on the remittance of Renminbi into and out of China and governmental
control of currency conversion may limit our ability to pay dividends and other
obligations and affect the value of your investment.
The conversion and remittance of foreign currencies are subject to PRC foreign exchange
regulations. As we may convert our revenue in Renminbi into other currencies to meet our
foreign currency obligations, such as payments of dividends on our Shares, there is no
assurance that we will have sufficient foreign exchange to meet these requirements. Under
existing PRC foreign exchange regulations, payments of current account items, including profit
distributions, interest payments and trade and service-related foreign exchange transactions,
can be made in foreign currencies without prior SAFE approval by complying with certain
procedural requirements. However, any changes to these foreign exchange policies that prevent
us from obtaining sufficient foreign currencies may affect our ability to pay dividends in
foreign currencies to our Shareholders.
Y ou may experience difficulties in effecting service of legal process and enforcing
judgments against us and our management.
We are incorporated under the laws of the PRC with limited liability, and a portion of our
assets are located in the PRC. In addition, a majority of our Directors and our 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 most of our Directors and senior
management personnel.
When it comes to trans-jurisdictional recognition and enforcement of judgments, the PRC
does not have treaties providing for the reciprocal recognition and enforcement of judgments
of courts with the United States, the United Kingdom, Japan or many other countries. In
RISK FACTORS
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addition, Hong Kong has no arrangement for the reciprocal enforcement of judgments with the
United States. As a result, recognition and enforcement in the PRC or Hong Kong of judgments
of a court obtained in the United States and any of the other jurisdictions mentioned above may
be uncertain.
On July 14, 2006, the Supreme People’s Court of the PRC and the Government of the
Hong Kong Special Administrative Region signed an Arrangement on Reciprocal
Recognition and Enforcement of Judgments in Civil and Commercial Matters (ʫήၾ
τર) (the “ 2006
Arrangement ”). Under the 2006 Arrangement, where any designated People’s Court of the
PRC or Hong Kong court has made an enforceable final judgment requiring payment of money
in a civil and commercial case pursuant to a choice of court agreement, any party concerned
may apply to the relevant People’s Court of the PRC or Hong Kong court for recognition and
enforcement of the judgment. Therefore, it is not possible to enforce a judgment rendered by
a Hong Kong court in the PRC if the parties in dispute have not agreed to enter into such a
choice of court agreement in writing. Therefore, it may not be possible to enforce a judgment
rendered by a Hong Kong court in the PRC if the parties in dispute have not entered into a
jurisdiction agreement in writing under the 2006 Arrangement.
As between the PRC and Hong Kong, the new arrangement entered into between the
Supreme People’s Court of the PRC and the government of the Hong Kong Special
Administrative Region on January 18, 2019 which took effect on January 29, 2024, has lifted
the requirements for a choice of court agreement in writing in a civil or commercial case under
the previous regime on bilateral recognition and enforcement. However, the 2006 Arrangement
will remain applicable to a “jurisdiction agreement in writing” as defined in the 2006
Arrangement which is entered into before the 2019 Arrangement taking effect. However, since
the 2019 Arrangement is newly effected and promulgated, the interpretation, application and
enforcement must be determined in accordance with the relevant laws and regulations in effect
at the time.
Payment of dividends is subject to laws and regulations in regions where we operate.
Under the PRC laws, dividends may be paid only out of distributable profits. Our
distributable profits represent our distributable net profits less appropriations to statutory
surplus reserve, general reserve, and discretionary surplus reserve (as approved by our
Shareholders’ meeting). Our distributable net profit represents the lowest of (i) our net profit
attributable to our equity holders for a period plus distributable profits or net of accumulated
losses, if any, at the beginning of such period, as determined under PRC GAAP , and (ii) our
net profit attributable to our equity holders for the period plus distributable profits or net of
accumulated losses, if any, at the beginning of such period, as determined under IFRS
Accounting Standards. As a result, we may not have sufficient distributable profits to make
dividend distributions to our Shareholders in the future, including in respect of periods where
we register an accounting profit. Any distributable profits that are not distributed in a given
year are retained and available for distribution in subsequent years.
RISK FACTORS
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Our offshore subsidiaries may be deemed to be a PRC tax resident enterprise.
Under the EIT Law and the Regulation on the Implementation of the Enterprise Income
Tax Law of China (ૢԷ), enterprises established under
the laws of jurisdictions outside of China with “de facto management bodies” located in China
may be considered PRC tax resident enterprises for tax purposes and may be subject to the PRC
enterprise income tax at the rate of 25% on their global income. In addition, the Notice
Regarding the Determination of Chinese-Controlled Offshore Incorporated Enterprises as PRC
Tax Resident Enterprises on the Basis of De Facto Management Bodies (׵
), or Circular
82, specifies that certain Chinese-controlled offshore incorporated enterprises, defined as
enterprises incorporated under the laws of foreign countries or territories and that have PRC
enterprises or enterprise groups as their primary controlling shareholders, will be classified as
resident enterprises if all of the following conditions are met: (i) senior management personnel
and departments that are responsible for daily production, operation and management are
located mainly within China; (ii) financial and personnel decisions are subject to determination
or approval by bodies or persons in China; (iii) key properties, accounting books, company seal
and minutes of board meetings and shareholders’ meetings are located or kept within China;
and (iv) at least half of the directors with voting rights or senior management reside within
China. The State Administration of Taxation of the PRC, or SA T, has subsequently provided
further guidance on the implementation of Circular 82.
Although most of our offshore subsidiaries have substantive business operations in the
countries or regions where they are located, as our Company is a PRC enterprise, our offshore
subsidiaries may be questioned by the competent regulatory authorities, and if our offshore
subsidiaries are deemed PRC resident enterprises, they could be subject to the EIT at 25% on
their global income, except that the dividends they receive from our PRC subsidiaries, if any,
may be exempt from the EIT to the extent such dividend income constitutes “dividends
received by a PRC resident enterprise from its directly invested entity that is also a PRC
resident enterprise.” Nonetheless, it remains subject to future interpretation as to what type of
enterprise would be deemed a “PRC resident enterprise” for such purposes. The EIT on our
subsidiaries’ global income could significantly increase our tax burden and affect our cash
flows and profitability.
RISKS RELATING TO THE GLOBAL OFFERING
Our A Shares have been listed in China since 2017, and the characteristics of the A Share
and H Share market may differ.
Our A Shares have been listed on the Shanghai Stock Exchange since 2017. Following the
Global Offering, our A Shares will continue to be traded on the Shanghai Stock Exchange and
our H Shares will be traded on the Hong Kong Stock Exchange. Under the current PRC laws
and regulations, without the approval from the relevant regulatory authorities, our H Shares
and A Shares are neither interchangeable nor fungible, and there is no trading or settlement
between the H Share and A Share markets. With different trading characteristics, the H Share
RISK FACTORS
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and A Share markets have divergent trading volumes, liquidity and investor bases, as well as
different levels of retail and institutional investor participant. As a result, the trading
performance of our H Shares and A Shares may not be comparable. Nonetheless, fluctuations
in the price of our A Shares may adversely affect the price of our H Shares, and vice versa. Due
to the different characteristics of the H Share and A Share markets, the historical prices of our
A Shares may not be indicative of the performance of our H Shares. Y ou should therefore not
place undue reliance on the trading history of our A Shares when evaluating the investment
decision in our H Shares.
We will be concurrently subject to PRC and Hong Kong listing and regulatory
requirements.
As we are listed on the Shanghai Stock Exchange and will be listed on the Main Board
of the Hong Kong Stock Exchange, we will be required to comply with the listing rules (where
applicable) and other regulatory regimes of both jurisdictions, unless otherwise agreed by the
relevant regulators. Accordingly, we may incur additional costs and resources in continuously
complying with all sets of listing rules in the two jurisdictions.
Y ou should not place any reliance on any information released by us in connection with
the listing of our A Shares on the Shanghai Stock Exchange.
As our A Shares are listed on the Shanghai Stock Exchange, we have been subject to
periodic reporting and other information disclosure requirements in Chinese Mainland. As a
result, from time to time, we publicly release information relating to us on the Shanghai Stock
Exchange or other media outlets designated by the CSRC. However, the information announced
by us in connection with our A Shares listing is based on the regulatory requirements of the
securities authorities, industry standards and market practices in Chinese Mainland, which are
different from those applicable to the Global Offering. The presentation of financial and
operational information for the Track Record Period disclosed on the Shanghai Stock Exchange
or other media outlets may not be directly comparable to the financial and operational
information contained in this Prospectus. As a result, prospective investors in our H Shares
should be reminded that, in making their investment decisions as to whether to purchase our
H Shares, they should rely only on the financial, operating and other information included in
this Prospectus. By applying to purchase our H Shares in the Global Offering, you will be
deemed to have agreed that you will not rely on any information other than that contained in
this Prospectus and any formal announcements made by us in Hong Kong with respect to the
Global Offering.
There has been no prior public market for our H Shares, and an active trading market for
our H shares may not develop or be sustained.
Prior to the Global Offering, there was no public market for our H Shares. There can be
no guarantee that an active trading market for our H Shares will develop or be sustained after
the completion of the Global Offering. The Offer Price is the result of negotiations between our
Company, the Sole Sponsor-Overall Coordinator (for itself and on behalf of the Underwriters),
RISK FACTORS
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which may not be indicative of the market price at which our H Shares will be traded following
completion of the Global Offering. If an active market for our H Shares does not develop
following the completion at the Global Offering, the market price and liquidity of our H Shares
may be materially and adversely affected.
The trading price of our H Shares may be volatile, which could result in substantial losses
to you.
The price and trading volume of our H Shares may be volatile and could fluctuate widely
in response to factors beyond our control, including general market conditions of the securities
markets in Hong Kong, and elsewhere in the world. In particular, the performance and
fluctuation of the market prices of other companies with business operations located mainly in
Chinese Mainland that have listed their securities in Hong Kong may affect the volatility in the
price and trading volumes of our H Shares. A number of Chinese Mainland-based companies
have listed their securities, and some are in the process of preparing for listing their securities,
in Hong Kong. Some of these companies have experienced significant volatility, including
significant price declines after their initial public offerings. The trading performances of the
securities of these companies at the time of or after their offerings may affect the overall
investor sentiment towards Chinese Mainland-based companies listed in Hong Kong and
consequently may impact the trading performance of our H Shares. These factors may
significantly affect the market price and volatility of our H Shares, regardless of our actual
operating performance.
A future significant increase or perceived significant increase in the supply of our
H Shares in public markets could cause the market price of our H Shares to decrease
significantly, and/or dilute shareholdings of holders of H Shares.
The Offer Price of the Offer Shares is higher than the net tangible asset value per H 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. In order 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 H Share of their H Shares if we issue additional Shares in the future at a price
which is lower than the net tangible asset value per H Share at that time. Furthermore, we may
issue Shares pursuant to any existing or future equity incentive plan, which would further
dilute our Shareholders’ interests in our Company.
Future sales or perceived sales of substantial amount of our Shares in the public market,
especially by our Directors, executive officers and substantial Shareholders, could
materially and adversely affect the prevailing market price of our H Shares.
Future sales of a substantial number of our Shares, especially by our Directors, executive
officers and substantial Shareholders, or the perception or anticipation that such sales might
occur, could negatively impact the market price of our H Shares and our ability to raise equity
capital in the future at a time and price that we deem appropriate. While we currently are not
RISK FACTORS
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aware of any intention of such persons to dispose of significant amounts of their Shares, we
cannot assure you that they will not dispose of any Shares they may own now or in the future.
Market sale of Shares by such Shareholders and the availability of these Shares for future sale
may have a negative impact on the market price of our H Shares.
Certain facts, forecasts and other statistics contained in this Prospectus obtained from
government official sources have not been independently verified and may not be reliable.
There can be no assurance of the accuracy or completeness of certain facts, forecasts and
other statistics contained in this Prospectus.
Certain facts, forecast and other statistics in this Prospectus are derived from various
government official sources. However, our Directors cannot guarantee the quality or reliability
of such source materials. We believe that the sources of the information are appropriate sources
for such information, and we have taken reasonable care in extracting and reproducing such
information. We have no reason to believe that such information is false or misleading or that
any fact has been omitted that would render such information false or misleading.
Nevertheless, information from official government sources has not been independently
verified by us, the Sole Sponsor, the Joint Overall Coordinators, the Joint Global Coordinators,
the Joint Lead Managers, the Joint Bookrunners, the Underwriters, the Capital Market
Intermediaries or any other party involved in the Global Offering, and no representation is
given as to its accuracy. Y ou should therefore not place undue reliance on such information. In
addition, we cannot guarantee that such information is stated or compiled on the same basis or
with the same degree of accuracy as or consistent with similar statistics presented elsewhere,
and such information may not be complete or up-to-date. In any event, you should consider
carefully the importance placed on such information or statistics.
We cannot assure you that we will declare and distribute any dividends in the future. If
we do not pay dividends in the foreseeable future after the Listing, you must rely on price
appreciation of our H Shares for a return on your investment.
We cannot assure you when and in what form dividends will be paid on our H Shares after
the Global Offering. Our historical dividends may not be indicative of its future dividend
policy, and the declaration and distribution of dividends is at the complete discretion of the
Board, and our ability to pay dividends or make other distributions to our Shareholders is
subject to various factors, including our business and financial performance, capital and
regulatory requirements and general business conditions. We may not be able to have sufficient
or any profits to enable us to make dividend distributions to our Shareholders in the future,
even if our financial statements indicate that our operations have been profitable. As a result
of the above, we cannot assure you that we will make/can make dividend payments on our
H Shares in the future.
If we retain most, or all, of our available funds and any future earnings after the Global
Offering to fund the development and commercialization of our new product candidates, we
may not expect to pay any cash dividends in the foreseeable future. Therefore, you may not be
able to rely on an investment in our H Shares as a source for any future dividend income.
RISK FACTORS
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Even if our Board decides to declare and pay dividends, the timing, number and form of
future dividends, if any, will depend on our future results of operations and cash flow, our
financial condition, general business conditions and business strategies, expected working
capital requirements and future expansion plans, legal, regulatory and other contractual
restrictions and other factors deemed relevant by our Board. Accordingly, the return on your
investment in our H Shares will likely depend entirely upon any future price appreciation of
our H Shares. There is no guarantee that our H Shares will appreciate in value after the Global
Offering or even maintain the price at which you purchased the H Shares. Y ou may not realize
a return on your investment in our H Shares and you may even lose your entire investment in
our H Shares.
This Prospectus contains forward-looking statements relating to our plans, objectives,
expectations and intentions, which may not represent our overall performance for periods
of time to which such statements relate.
This Prospectus contains certain statements and information that are “forward-looking”
and uses forward-looking terminology such as “anticipate,” “believe,” “could,” “estimate,”
“expect,” “may,” “ought to,” “should” or “will” or similar terms. Those statements include,
among other things, the discussion of our growth strategy and expectations concerning our
future operations, liquidity and capital resources. Investors in the H Shares are cautioned that
reliance on any forward-looking statements involves risks and uncertainties and that any or all
of those assumptions could prove to be inaccurate, and, as a result, the forward-looking
statements based on those assumptions could also be incorrect. The uncertainties in this regard
include, but are not limited to, those identified in this section, many of which are not within
our control. In light of these and other uncertainties, the inclusion of forward-looking
statements in this Prospectus should not be regarded as representations by us that our plans or
objectives will be achieved and investors should not place undue reliance on such forward-
looking statements. We do not undertake any obligation to update publicly or release any
revisions of any forward-looking statements, whether as a result of new information, future
events or otherwise.
Y ou should read the entire Prospectus carefully, and we strongly caution you not to place
any reliance on any information contained in press articles and/or other media regarding
us, our business or the Global Offering.
Y ou are strongly advised to read the entire prospectus carefully and are cautioned against
placing any reliance on the information in any press article or any other media coverage which
contains information not disclosed or not consistent with the information included in this
Prospectus.
Prior to the completion of the Global Offering, there may be press and media coverage
regarding our Group and the Global Offering. Our Directors would like to emphasize to
prospective investors that we do not accept any responsibility for the accuracy or completeness
of such information, and such information is not sourced from or authorized by our Directors
or our management team. Our Directors make no representation as to the appropriateness,
RISK FACTORS
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accuracy, completeness and reliability of any information or the fairness or appropriateness of
any forecast, view or opinion expressed by the press or other media regarding our Group or our
H Shares. In making decisions as to whether to invest in our H Shares, prospective investors
should rely only on the financial, operational and other information included in this Prospectus.
By applying to purchase our H Shares in the Global Offering, you will be deemed to have
agreed that you will not rely on any information other than that contained in this Prospectus
and the Global Offering. To the extent that any such information is inconsistent or conflicts
with the information contained in this Prospectus, we disclaim responsibility for it and you
should not rely on such information.
RISK FACTORS
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In preparation for the Listing, our Company has sought the following waivers from strict
compliance with the relevant provisions of the Hong Kong Listing Rules and exemption from
strict compliance with the Companies (Winding Up and Miscellaneous Provisions) Ordinance:
MANAGEMENT PRESENCE IN HONG KONG
Pursuant to Rule 8.12 of the Hong Kong Listing Rules, a new applicant applying for
listing on the Hong Kong Stock Exchange must have a sufficient management presence in
Hong Kong. This normally means that at least two of its executive directors must be ordinarily
resident in Hong Kong. Rule 19A.15 of the Hong Kong Listing Rules further provides that the
requirement in Rule 8.12 may be waived by having regard to, among other considerations, the
applicant’s arrangements for maintaining regular communication with the Hong Kong Stock
Exchange.
Since most of the business operations of our Group are managed and conducted outside
of Hong Kong, and all of the executive Directors ordinarily reside outside Hong Kong, our
Company considers that it would not be practically feasible or commercially reasonable for our
Company to arrange for two executive Directors to be ordinarily resident in Hong Kong.
Therefore, we do not have, and for the foreseeable future will not have, sufficient management
presence in Hong Kong for the purpose of satisfying the management presence requirement
under Rule 8.12 of the Hong Kong Listing Rules.
Accordingly, we have applied to the Hong Kong Stock Exchange for, and the Hong Kong
Stock Exchange has granted a waiver from strict compliance with Rule 8.12 and Rule 19A.15
of the Hong Kong Listing Rules, subject to the conditions that, among other things, we
maintain the following arrangements to maintain effective communication between us and the
Hong Kong Stock Exchange:
(a) Authorized representatives: we have appointed two authorized representatives
pursuant to Rule 3.05 of the Hong Kong Listing Rules, who will act as our principal
channel of communication with the Hong Kong Stock Exchange. The two appointed
authorized representatives are Mr. Gerald G Wong, our executive Director, chairman
of our Board and general manager (chief executive officer) and Ms. So Lai Shan
(ɾɻ), one of our joint company secretaries (the “ Authorized
Representatives ”), who will act as our principal channel of communication with the
Hong Kong Stock Exchange and would be readily contactable by phone, facsimile
and email to deal promptly with enquiries from the Hong Kong Stock Exchange.
Accordingly, the Authorized Representatives will be able to meet with the relevant
members of the Hong Kong Stock Exchange to discuss any matters in relation to our
Company within a reasonable period of time;
W AIVERS FROM STRICT COMPLIANCE WITH HONG KONG LISTING RULES AND
EXEMPTION FROM STRICT COMPLIANCE WITH THE COMPANIES (WINDING UP
AND MISCELLANEOUS PROVISIONS) ORDINANCE
–8 5–


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(b) Directors: each of our Authorized Representatives has means to contact all
members of our Board (including our independent non-executive Directors)
promptly at all times as and when the Hong Kong Stock Exchange wishes to contact
the members of our Board for any matters. In the event that any Director expects to
travel or otherwise be out of office, he/she will provide a contactable phone number
of him/her to the Authorized Representatives. Pursuant to Rule 3.20 of the Hong
Kong Listing Rules, each of our Directors shall provide his/her telephone number,
mobile phone number, facsimile number (if available), email address (if available),
residential address and contact address (if different from the residential address) for
correspondence to the Hong Kong Stock Exchange. To the best of our knowledge
and information, each Director who does not ordinarily reside in Hong Kong
possesses 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 request of the
Hong Kong Stock Exchange;
(c) Compliance Adviser: our Company has, in accordance with Rule 3A.19 of the
Listing Rules, also appointed Guotai Junan Capital Limited as our Compliance
Adviser, who will act as an additional channel of communication with the Hong
Kong Stock Exchange. The Compliance Adviser will advise ongoing compliance
requirements and other issues arising under the Hong Kong Listing Rules and other
applicable laws and regulations in Hong Kong for a period commencing on the
Listing Date at least and ending on the date on which our Company complies with
Rule 13.46 of the Hong Kong Listing Rules in respect of our Company’s financial
results for the first full financial year after the Listing Date. Pursuant to the note to
Rule 3A.23 of the Hong Kong Listing Rules, we shall ensure that the Compliance
Adviser will have access at all times to our Authorized Representatives, our
Directors and other officers. We shall also ensure that our Authorized
Representatives, our Directors and other officers will provide promptly such
information and assistance as the Compliance Adviser may need or may reasonably
require in connection with the performance of the Compliance Adviser’s duties as
set forth in Chapter 3A of the Hong Kong Listing Rules. We shall ensure that there
are adequate and efficient means of communication among our Company, our
Authorized Representatives, our Directors and other officers and the Compliance
Adviser, and will keep the Compliance Adviser fully informed of all
communications and dealings between us and the Hong Kong Stock Exchange; and
(d) Hong Kong legal adviser: we will retain a Hong Kong legal adviser to advise us
on the on-going compliance requirements, any amendment or supplement to and
other issues arising under the Hong Kong Listing Rules and other applicable laws
and regulations in Hong Kong after the Listing.
W AIVERS FROM STRICT COMPLIANCE WITH HONG KONG LISTING RULES AND
EXEMPTION FROM STRICT COMPLIANCE WITH THE COMPANIES (WINDING UP
AND MISCELLANEOUS PROVISIONS) ORDINANCE
–8 6–


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JOINT COMPANY SECRETARIES
Pursuant to Rules 3.28 and 8.17 of the Hong Kong Listing Rules, the company secretary
must be an individual who, by virtue of his or her academic or professional qualifications or
relevant experience, is, in the opinion of the Hong Kong Stock Exchange, capable of
discharging the functions of the company secretary.
Pursuant to Note 1 to Rule 3.28 of the Hong Kong Listing Rules, 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); or
(c) a certified public accountant as defined in the Professional Accountants Ordinance
(Chapter 50 of the Laws of Hong Kong).
Pursuant to Note 2 to Rule 3.28 of the Hong Kong Listing Rules, in assessing the
“relevant experience”, the Hong Kong Stock Exchange will consider the individual’s:
(a) length of employment with the issuer and other issuers and the roles he or she
played;
(b) familiarity with the Hong Kong Listing Rules and other relevant law and regulations
including the SFO, the Companies Ordinance, the Companies (Winding Up and
Miscellaneous Provisions) Ordinance and the Takeovers Code;
(c) relevant training taken and/or to be taken in addition to the minimum requirement
under Rule 3.29 of the Hong Kong Listing Rules; and
(d) professional qualifications in other jurisdictions.
We have appointed Mr. Jin Zeqing (ዣ૶΋͛), who is our deputy general manager and
secretary to our Board, as one of our joint company secretaries. Although Mr. Jin Zeqing does
not possess the qualification and sufficient relevant experience as stipulated in the notes to
Rule 3.28 of the Hong Kong Listing Rules, we would like to appoint him as our joint company
secretary due to his past management experience within our Group and his thorough
understanding of the internal administration and business operations of our Group. In addition,
we have appointed Ms. So Lai Shan (ɾɻ), who fulfils the requisite qualification as
required under Note 1 to Rule 3.28 of the Hong Kong Listing Rules, to act as our other joint
company secretary and to assist Mr. Jin Zeqing to acquire all qualifications and experience as
W AIVERS FROM STRICT COMPLIANCE WITH HONG KONG LISTING RULES AND
EXEMPTION FROM STRICT COMPLIANCE WITH THE COMPANIES (WINDING UP
AND MISCELLANEOUS PROVISIONS) ORDINANCE
–8 7–


--- page 98 ---
the company secretary of our Company required under Rule 3.28 of the Hong Kong Listing
Rules. Please refer to the section headed “Directors and Senior Management” in this
Prospectus for further information regarding the qualifications and experience of Mr. Jin
Zeqing and Ms. So Lai Shan.
Apart from discharging her functions in her role as one of our joint company secretaries,
Ms. So Lai Shan will assist Mr. Jin Zeqing in enabling him to acquire the relevant company
secretary experience as required under Rule 3.28 of the Hong Kong Listing Rules and to
become familiar with the requirements of the Hong Kong Listing Rules and other applicable
Hong Kong laws. In addition, Mr. Jin Zeqing will also attend relevant professional training
during each financial year as required under Rule 3.29 of the Hong Kong Listing Rules.
We have applied for, and the Hong Kong Stock Exchange has granted, a waiver from strict
compliance of Rules 3.28 and 8.17 of the Hong Kong Listing Rules in respect of the
appointment of Mr. Jin Zeqing as one of our joint company secretaries pursuant to Chapter 3.10
of the Guide for New Listing Applicants on the following conditions:
(a) Mr. Jin Zeqing must be assisted by Ms. So Lai Shan, who possesses the
qualifications and experience required under Rule 3.28 of the Hong Kong Listing
Rules and is appointed as a joint company secretary of our Company throughout the
validity period of the waiver;
(b) the waiver is valid for an initial period of three years commencing from the Listing
Date and will be revoked immediately if there are material breaches of the Hong
Kong Listing Rules by our Company; and
(c) before the end of the three-year period, the qualifications and experience of Mr. Jin
Zeqing will be further evaluated by our Company. Our Company will then endeavor
to demonstrate to the Hong Kong Stock Exchange’s satisfaction that Mr. Jin Zeqing,
having had the benefit of the assistance of Ms. So Lai Shan for the immediately
preceding three years, has acquired the relevant experience (within the meaning of
Note 2 to Rule 3.28 of the Hong Kong Listing Rules) such that a further waiver from
Rules 3.28 and 8.17 of the Hong Kong Listing Rules will not be necessary.
W AIVERS FROM STRICT COMPLIANCE WITH HONG KONG LISTING RULES AND
EXEMPTION FROM STRICT COMPLIANCE WITH THE COMPANIES (WINDING UP
AND MISCELLANEOUS PROVISIONS) ORDINANCE
–8 8–


--- page 99 ---
W AIVER AND EXEMPTION IN RELATION TO THE 2024 SHARE OPTION
INCENTIVE SCHEME
The Hong Kong Listing Rules and the Companies (Winding Up and Miscellaneous
Provisions) Ordinance prescribe certain disclosure requirements in relation to the options
granted by our Company:
(a) Rule 17.02(1)(b) of the Hong Kong Listing Rules stipulates that all material terms
of a scheme involving issue of new shares by listed issuers must be clearly set out
in the prospectus. Our Company is also required to disclose in this Prospectus full
details of all outstanding options and their potential dilution effect on the
shareholdings upon Listing as well as the impact on the earnings per share arising
from the issue of shares in respect of such outstanding options;
(b) Paragraph 27 of Appendix D1A to the Hong Kong Listing Rules requires our
Company to set out in the prospectus particulars of any capital of any member of our
Group that is under option, or agreed conditionally or unconditionally to be put
under option, including the consideration for which the option was or will be granted
and the price and duration of the option, and the name and address of the grantee;
and
(c) Paragraph 10 of Part I of the Third Schedule to the Companies (Winding Up and
Miscellaneous Provisions) Ordinance requires our Company to disclose, amongst
others, details of the number, description and amount of any shares in or debentures
of our Company which any person has, or is entitled to be given, an option to
subscribe for, together with the particulars of the option, that is to say, (a) the period
during which it is exercisable; (b) the price to be paid for shares or debentures
subscribed for under it; (c) the consideration (if any) given or to be given for it or
for the right to it; and (d) the names and addresses of the persons to whom it or the
right to it was given or, if given to existing shareholders or debenture holders as
such, the relevant shares or debentures must be specified in the prospectus.
Pursuant to paragraphs 6 to 7 of Chapter 3.6 of the Guide for New Listing Applicants, the
Hong Kong Stock Exchange would normally grant waivers from disclosing the names and
addresses of certain grantees if the issuer could demonstrate that such disclosures would be
irrelevant and unduly burdensome, subject to certain conditions specified therein.
Our Company may, from time to time, adopt share incentive schemes. As of the Latest
Practicable Date, the 2024 Share Option Incentive Scheme remained in effect, with 15,138,300
outstanding options held by 743 eligible grantees, representing approximately 5.65% of the
total issued Shares of our Company. Among these 743 eligible grantees, two are our Directors
(our connected persons), one is a member of our senior management and a director of our
significant subsidiary (our connected person), three are directors, supervisors or chief
W AIVERS FROM STRICT COMPLIANCE WITH HONG KONG LISTING RULES AND
EXEMPTION FROM STRICT COMPLIANCE WITH THE COMPANIES (WINDING UP
AND MISCELLANEOUS PROVISIONS) ORDINANCE
–8 9–


--- page 100 ---
executives of our significant subsidiaries (our connected persons), and the remaining 737 are
other employees of our Group. Please refer to the section headed “Statutory and General
Information — Our Share Incentive Schemes — 2024 Share Option Incentive Scheme” in
Appendix VI to this Prospectus.
We have applied to: (i) the Hong Kong Stock Exchange for a waiver from strict
compliance with the disclosure requirements under Rule 17.02(1)(b) of, and paragraph 27 of
Appendix D1A to, the Hong Kong Listing Rules, in relation to the options granted under the
2024 Share Option Incentive Scheme; and (ii) the SFC for a certificate of exemption under
section 342A of the Companies (Winding Up and Miscellaneous Provisions) Ordinance
exempting our Company from strict compliance with paragraph 10(d) of Part I of the Third
Schedule to the Companies (Winding Up and Miscellaneous Provisions) Ordinance in relation
to the options granted under the 2024 Share Option Incentive Scheme, respectively, on the
ground that strict compliance with the above requirements would be unduly burdensome for
our Company and the exemption would not prejudice the interests of the investing public for
the following reasons:
(a) given that 743 eligible grantees (representing approximately 60% of the total
number of our employees) are involved, strict compliance with such disclosure
requirements in setting out full details of all the eligible grantees under the 2024
Share Option Incentive Scheme in this Prospectus would be costly and unduly
burdensome for us in light of a significant increase in cost and timing for
information compilation and prospectus preparation. For example, we would need to
collect and verify the addresses of a large number of eligible grantees to meet the
disclosure requirement. Further, the disclosure of the personal details of each
eligible grantee, including their names, addresses and the number of options granted,
may require obtaining prior written consent from the eligible grantees in order to
comply with personal data privacy laws and principles and it would be unduly
burdensome for our Company to obtain such consents given the number of eligible
grantees;
(b) the grant and exercise in full of the options under the 2024 Share Option Incentive
Scheme will not cause any material adverse impact to the financial position of our
Group;
(c) there will not be any new H Shares issued under the 2024 Share Option Incentive
Scheme as the Shares granted under the 2024 Share Option Incentive Scheme are our
A Shares;
(d) non-compliance with the above disclosure requirements would not prevent us from
providing our potential investors with an informed assessment of the activities,
assets, liabilities, financial position, management and prospects of our Company;
and
W AIVERS FROM STRICT COMPLIANCE WITH HONG KONG LISTING RULES AND
EXEMPTION FROM STRICT COMPLIANCE WITH THE COMPANIES (WINDING UP
AND MISCELLANEOUS PROVISIONS) ORDINANCE
–9 0–


--- page 101 ---
(e) material information relating to the 2024 Share Option Incentive Scheme has been
disclosed in this Prospectus to provide prospective investors with sufficient
information to make an informed assessment of the potential dilutive effect and
impact on earnings per Share of the options in making their investment decision, and
such information includes:
(1) a summary of the major terms of the 2024 Share Option Incentive Scheme;
(2) the aggregate number of A Shares subject to the options and the percentage to
our total issued Shares as of the Latest Practicable Date;
(3) the dilutive effect and the impact on earnings per Share upon full exercise of
the options immediately following completion of the Global Offering;
(4) full details of the options granted to our Directors, senior management and
connected persons (if any), on an individual basis, are disclosed in this
Prospectus, and such details include all the particulars required under Rule
17.02(1)(b) of the Hong Kong Listing Rules, paragraph 27 of Appendix D1A
to the Hong Kong Listing Rules and paragraph 10 of Part I of the Third
Schedule to the Companies (Winding Up and Miscellaneous Provisions)
Ordinance;
(5) with respect to the options granted to other eligible grantees (other than those
referred to in (4) above), disclosures are made on an aggregate basis,
categorized into lots based on the number of A Shares underlying each
individual grantee, and the following details are disclosed in this Prospectus,
including (1) the aggregate number of such grantees and the number of A
Shares subject to the options; (2) the consideration paid for the grant of the
options; and (3) the exercise period of the options and the exercise price for the
options; and
(6) the particulars of the waiver and exemption granted by the Hong Kong Stock
Exchange and the SFC, respectively.
The Hong Kong Stock Exchange has granted a waiver from strict compliance with the
requirements under Rule 17.02(1)(b) of, and paragraph 27 of Appendix D1A to, the Hong Kong
Listing Rules, in relation to the options granted under the 2024 Share Option Incentive Scheme
on the conditions that:
(a) full details of the options under the 2024 Share Option Incentive Scheme granted to
each of our Directors, senior management, connected persons and other eligible
grantees who have been granted options to subscribe for 50,001 A Shares or more
are disclosed in “Statutory and General Information — Our Share Incentive
Schemes — 2024 Share Option Incentive Scheme” in Appendix VI to this
W AIVERS FROM STRICT COMPLIANCE WITH HONG KONG LISTING RULES AND
EXEMPTION FROM STRICT COMPLIANCE WITH THE COMPANIES (WINDING UP
AND MISCELLANEOUS PROVISIONS) ORDINANCE
–9 1–


--- page 102 ---
Prospectus as required under Rule 17.02(1)(b) of, and paragraph 27 of Appendix
D1A to, the Hong Kong Listing Rules, and paragraph 10 of Part I of the Third
Schedule to the Companies (Winding Up and Miscellaneous Provisions) Ordinance;
(b) in respect of the options under the 2024 Share Option Incentive Scheme granted to
remaining grantees (being the other grantees who are not our Directors, senior
management, connected persons or have been granted options to subscribe for
50,000 A Shares or less), disclosures are made, on an aggregate basis, categorized
into lots based on the number of A Shares underlying each individual grantee, being
(1) 1,000 to 25,000; (2) 25,001 to 50,000. For each lot of A Shares, the following
details are disclosed in this Prospectus, including (1) their aggregate number of
grantees and number of A Shares underlying the options under the 2024 Share
Option Incentive Scheme, (2) the consideration (if any) paid for the grant of the
options under the 2024 Share Option Incentive Scheme, and (3) the exercise period
of the options and the exercise price of the options granted under the 2024 Share
Option Incentive Scheme;
(c) the aggregate number of A Shares underlying the options granted under the 2024
Share Option Incentive Scheme and the percentage to our total issued share capital
represented by such number of A Shares as of the Latest Practicable Date are
disclosed in this Prospectus;
(d) the dilutive effect and impact on earnings per Share upon full exercise of the options
under the 2024 Share Option Incentive Scheme are disclosed in “Statutory and
General Information — Our Share Incentive Schemes — 2024 Share Option
Incentive Scheme” in Appendix VI to this Prospectus;
(e) a summary of the major terms of the 2024 Share Option Incentive Scheme are
disclosed in “Statutory and General Information — Our Share Incentive Schemes —
2024 Share Option Incentive Scheme” in Appendix VI to this Prospectus;
(f) a full list of grantees under the 2024 Share Option Incentive Scheme containing all
the particulars as required under Rule 17.02(1)(b) of, and paragraph 27 of Appendix
D1A to, the Hong Kong Listing Rules are made available for public inspection in
accordance with “Documents Delivered to the Registrar of Companies and Available
on Display — Document Available for Inspection” in Appendix VII to this
Prospectus;
(g) the grant of a certificate of exemption under the Companies (Winding Up and
Miscellaneous Provisions) Ordinance from the SFC exempting our Company from
strict compliance with paragraph 10(d) of Part I of the Third Schedule to the
Companies (Winding Up and Miscellaneous Provisions) Ordinance; and
(h) the particulars of the waiver will be disclosed in this Prospectus.
W AIVERS FROM STRICT COMPLIANCE WITH HONG KONG LISTING RULES AND
EXEMPTION FROM STRICT COMPLIANCE WITH THE COMPANIES (WINDING UP
AND MISCELLANEOUS PROVISIONS) ORDINANCE
–9 2–


--- page 103 ---
The SFC has granted a certificate of exemption under section 342A of the Companies
(Winding Up and Miscellaneous Provisions) Ordinance from strict compliance with paragraph
10(d) of Part I of the Third Schedule to the Companies (Winding Up and Miscellaneous
Provisions) Ordinance in relation to the options granted under the 2024 Share Option Incentive
Scheme on the conditions that:
(a) full details of the options under the 2024 Share Option Incentive Scheme granted to
each of our Directors, senior management, connected persons and other eligible
grantees who have been granted options to subscribe for 50,001 A Shares or more
are disclosed in “Statutory and General Information — Our Share Incentive
Schemes — 2024 Share Option Incentive Scheme” in Appendix VI to this
Prospectus as required under paragraph 10 of Part I of the Third Schedule to the
Companies (Winding Up and Miscellaneous Provisions) Ordinance;
(b) in respect of the options under the 2024 Share Option Incentive Scheme granted to
remaining grantees (being the other grantees who are not our Directors, senior
management, connected persons or have been granted options to subscribe for
50,000 A Shares or less), disclosure are made, on an aggregate basis, categorized
into lots based on the number of A Shares underlying each individual grantee, being
(1) 1,000 to 25,000; (2) 25,001 to 50,000. For each lot of A Shares, the following
details are disclosed in this Prospectus, including (1) their aggregate number of
grantees and number of A Shares underlying the options under the 2024 Share
Option Incentive Scheme, (2) the consideration (if any) paid for the grant of the
options under the 2024 Share Option Incentive Scheme, and (3) the exercise period
of the options and the exercise price of the options granted under the 2024 Share
Option Incentive Scheme;
(c) a full list of grantees under the 2024 Share Option Incentive Scheme containing all
the particulars as required under paragraph 10 of Part I of the Third Schedule to the
Companies (Winding Up and Miscellaneous Provisions) Ordinance are made
available for public inspection in accordance with “Documents Delivered to the
Registrar of Companies and Available on Display — Document Available for
Inspection” in Appendix VII to this Prospectus; and
(d) the particulars of the exemption will be disclosed in this Prospectus and this
Prospectus will be issued on or before October 20, 2025.
ALLOCATION OF H SHARES TO EXISTING MINORITY SHAREHOLDERS AND
THEIR CLOSE ASSOCIATES
Rule 10.04 of the Hong Kong Listing Rules requires that a person who is an existing
shareholder of the issuer may only subscribe for or purchase any securities for which listing
is sought which are being marketed by or on behalf of the issuer either in his or its own name
or through nominees if the conditions in Rules 10.03(1) and (2) of the Hong Kong Listing
Rules are fulfilled. It is provided in Rule 10.03(1) of the Hong Kong Listing Rules that no
W AIVERS FROM STRICT COMPLIANCE WITH HONG KONG LISTING RULES AND
EXEMPTION FROM STRICT COMPLIANCE WITH THE COMPANIES (WINDING UP
AND MISCELLANEOUS PROVISIONS) ORDINANCE
–9 3–


--- page 104 ---
securities may be offered to existing shareholders on a preferential basis and no preferential
treatment may be given to them in the allocation of the securities; and in Rule 10.03(2) of the
Hong Kong Listing Rules that the minimum prescribed percentage of public shareholders
required by Rule 19A.13A(2) (for PRC issuers with other listed shares) of the Hong Kong
Listing Rules must be achieved.
Rule 19A.13A(2) of the Hong Kong Listing Rules requires that where a new applicant is
a PRC issuer with other listed shares at the time of listing, the portion of H shares for which
listing is sought that are held by the public, at the time of listing, must: (a) represent at least
10% of the issuer’s total number of issued shares in the class to which H shares belong
(excluding treasury shares); or (b) have an expected market value of not less than HK$3 billion.
Paragraph 1C(2) of Appendix F1 to the Hong Kong Listing Rules provides that no
allocations will be permitted to the existing shareholders of the applicant or their close
associates, whether in their own names or through nominees, in the Global Offering unless the
conditions set out in Rules 10.03 and 10.04 of the Hong Kong Listing Rules are fulfilled.
Paragraph 13 of Chapter 4.15 of the Guide for New Listing Applicants provides that the
Hong Kong Stock Exchange will consider giving consent and granting waiver from Rule 10.04
of the Hong Kong Listing Rules to an applicant’s existing shareholders or their close associates
to participate in an initial public offering if any actual or perceived preferential treatment
arising from their ability to influence the applicant during the allocation process can be
addressed.
Paragraph 14 of Chapter 4.15 of the Guide sets out the conditions required to be fulfilled
and confirmations from relevant parties to be provided when the Stock Exchange considers
granting a waiver and consent from Rule 10.04 of the Hong Kong Listing Rules to placing to
existing shareholders or their close associates (the “ Existing Shareholder Conditions ”).
Prior to the Listing, our Company’s share capital comprises entirely A Shares listed on the
Shanghai Stock Exchange. We have a large and widely dispersed public A Share shareholder
base. The Company can only obtain register of A Shareholders of our Company (“ Register of
A Shareholders ”) from China Securities Depository and Clearing Corporation Limited
showing the largest 200 A Shareholders, but not all A Shareholders, for specified dates, namely
on the 10th day, 20th day and the end of the month, and a full list of Register of A Shareholders
for the date of shareholders’ meeting. Having considered that A shares are freely transferable
and there may be time difference between the date of Register of A Shareholders and the date
of bookbuilding, it would not be practicable for our Company and the Joint Overall
Coordinators to ascertain whether the placees hold any A Shares by merely checking the
Register of A Shareholders. In addition, there may be circumstances where an investor
purchases our A Shares through a nominee and the nominee’s name is shown on the Register
of A Shareholders, resulting difficulties in identifying the actual ultimate beneficial owner of
A Shares.
W AIVERS FROM STRICT COMPLIANCE WITH HONG KONG LISTING RULES AND
EXEMPTION FROM STRICT COMPLIANCE WITH THE COMPANIES (WINDING UP
AND MISCELLANEOUS PROVISIONS) ORDINANCE
–9 4–


--- page 105 ---
We have applied to the Hong Kong Stock Exchange for, and the Hong Kong Stock
Exchange has granted to us, a waiver from strict compliance with the requirements under Rule
10.04 and consent under Paragraph 1C(2) of Appendix F1 to the Hong Kong Listing Rules to
permit H Shares in the International Offering to be placed to certain existing minority
Shareholders who (i) hold less than 5% of the total number of A Shares in issue of our
Company prior to the completion of the Global Offering and (ii) are not and will not become
(upon completion of the Global Offering) core connected persons of our Company or the close
associates of any such core connected person (together, the “ Existing Minority
Shareholders ”), subject to the conditions as follows:
(a) the Sole Sponsor confirms that each Existing Minority Shareholder to whom our
Company may allocate the H Shares in the International Offering holds less than 5%
of the voting right in our Company immediately before Listing;
(b) the Sole Sponsor confirms that each Existing Minority Shareholder is not, and will
not be, a core connected person of our Company or any close associate of any such
core connected person immediately prior to or following the Global Offering;
(c) the Sole Sponsor confirms that none of the Existing Minority Shareholders have the
right to appoint a Director (which, for the avoidance of doubt, does not include the
director nomination right of a Shareholder under the Articles of Association) and/or
have any other special rights;
(d) the Sole Sponsor confirms that allocation to the Existing Minority Shareholders or
their close associates will not affect our ability to satisfy the public float
requirement as prescribed under Rule 19A.13A(2) of the Hong Kong Listing Rules;
(e) the Sole Sponsor confirms to the Hong Kong Stock Exchange in writing that based
on (i) its discussions with our Company and the Joint Overall Coordinators; and (ii)
the confirmations provided to the Hong Kong Stock Exchange by our Company and
the Joint Overall Coordinators (confirmations (f) and (g) mentioned below), and to
the best of its knowledge and belief, it has no reason to believe that any of the
Existing Minority Shareholders or their close associates received any preferential
treatment, or is in a position to exert influence on our Company to obtain actual or
perceived preferential treatment, in the allocation either as a cornerstone investor or
as a placee by virtue of their relationship with our Company, other than the
preferential treatment of assured entitlement under a cornerstone investment
following the principles set out in Chapter 4.15 of the Guide for New Listing
Applicants, and details of the allocation to the Existing Minority Shareholders
holding more than 1% of the issued share capital of our Company immediately prior
to the completion of the Global Offering will be disclosed in the allotment results
announcement;
W AIVERS FROM STRICT COMPLIANCE WITH HONG KONG LISTING RULES AND
EXEMPTION FROM STRICT COMPLIANCE WITH THE COMPANIES (WINDING UP
AND MISCELLANEOUS PROVISIONS) ORDINANCE
–9 5–


--- page 106 ---
(f) our Company will confirm to the Hong Kong Stock Exchange in writing that no
preferential treatment has been, nor will be, given to the Existing Minority
Shareholders or their close associates, nor is the Existing Minority Shareholder in
a position to exert influence on our Company to obtain actual or perceived
preferential treatment, by virtue of their relationship with our Company in any
allocation in the placing tranche; and
(g) the Joint Overall Coordinators will confirm to the Hong Kong Stock Exchange that,
to the best of their knowledge and belief, no preferential treatment has been, nor will
be, given to the Existing Minority Shareholders or their close associates by virtue
of their relationship with our Company in any allocation in the placing tranche.
DISCLOSURE OF OFFER PRICE
Paragraph 15(2)(c) of Appendix D1A to the Listing Rules provides that the issue price or
offer price of each security must be disclosed in this Prospectus. Pursuant to Paragraph 12 of
Chapter 4.14 of the Guide for New Listing Applicants, the Stock Exchange also allows an
indicative offer price range to be included in the prospectus, as an alternative to the disclosure
of a fixed offer price.
We have applied to the Stock Exchange a waiver from strict compliance with paragraph
15(2)(c) of Appendix D1A to the Listing Rules so that the Company will only disclose the
maximum Offer Price in the Prospectus on the below basis:
(a) The Offer Price will be determined with reference to, among other factors, the
closing price of our Company’s A Shares on the Shanghai Stock Exchange on the
last trading day on or before the Price Determination Date. Our Company is unable
to control the trading price of our A Shares on the Shanghai Stock Exchange;
(b) Setting a fixed offer price or an offer price range with a low-end may adversely
affect our ability to price our H Shares in the best interests of our Shareholders and
the market price of the A Shares and the Hong Kong Offer Shares;
(c) Pursuant to paragraphs 9 and 10(b) of the Third Schedule to the Companies
(Winding Up and Miscellaneous Provisions) Ordinance, the amount payable on
application and allotment on each share, and the price to be paid for shares
subscribed for, shall be specified in this Prospectus, respectively. Disclosure of a
maximum offer price complies with the requirements prescribed under paragraphs 9
and 10(b) of Part I of the Third Schedule to the Companies (Winding Up and
Miscellaneous Provisions) Ordinance by providing a clear indication of the
maximum subscription consideration a potential investor shall pay for the Offer
Shares; and
W AIVERS FROM STRICT COMPLIANCE WITH HONG KONG LISTING RULES AND
EXEMPTION FROM STRICT COMPLIANCE WITH THE COMPANIES (WINDING UP
AND MISCELLANEOUS PROVISIONS) ORDINANCE
–9 6–


--- page 107 ---
(d) A maximum Offer Price will be disclosed in this Prospectus. This alternative
disclosure approach would not prejudice the interests of the investing public in
Hong Kong.
The Stock Exchange has granted to us a waiver from strict compliance with paragraph
15(2)(c) of Appendix D1A to the Listing Rules on the conditions that this Prospectus will
disclose:
(a) the maximum Offer Price;
(b) the time for the determination of the Offer Price and the form of its publication;
(c) the historical prices of our Company’s A Shares and trading volume on the Shanghai
Stock Exchange during the Track Record Period and up to the Latest Practicable
Date;
(d) the determinants of the final Offer Price; and
(e) the source for investor to access the latest market price of our Company’s A Shares.
See “Structure of the Global Offering — Pricing of the Global Offering” in this
Prospectus for the historical prices of our A Shares and trading volume on the Shanghai Stock
Exchange.
W AIVERS FROM STRICT COMPLIANCE WITH HONG KONG LISTING RULES AND
EXEMPTION FROM STRICT COMPLIANCE WITH THE COMPANIES (WINDING UP
AND MISCELLANEOUS PROVISIONS) ORDINANCE
–9 7–


--- page 108 ---
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 (Chapter 571V
of the laws of Hong Kong) and the Hong Kong Listing Rules for the purpose of giving
information with regard to us. Our Directors, having made all reasonable enquiries, confirm
that to the best of their knowledge and belief, the information contained in this Prospectus is
accurate and complete in all material respects and not misleading or deceptive, and there are
no other matters the omission of which would make any statement herein or this Prospectus
misleading.
RESTRICTIONS ON OFFER AND SALE OF H SHARES
Each person acquiring the Hong Kong Offer Shares under the Hong Kong Public Offering
will be required to, or be deemed by his/her/its acquisition of Hong Kong Offer Shares to,
confirm that he/she/it 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 H Shares or the distribution
of this Prospectus in any jurisdiction other than Hong Kong. Accordingly, and 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 publicly offered and sold, and will not
be offered and sold, directly or indirectly, in the PRC or the United States.
CSRC FILING
We have filed the required documents with the CSRC, and we have received a filing
notice from the CSRC dated September 28, 2025, confirming our completion of the filing
procedures pursuant to the new filing regime introduced by the new regulations on filing for
the Global Offering and the application for listing of the H Shares on the Hong Kong Stock
Exchange.
INFORMATION ON THE GLOBAL OFFERING
This Prospectus is published solely in connection with the Hong Kong Public Offering.
For applications under the Hong Kong Public Offering, this Prospectus contains the terms and
conditions of the Hong Kong Public Offering. The Global Offering comprises the Hong Kong
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
–9 8–


--- page 109 ---
Public Offering of initially 6,701,050 Offer Shares and the International Offering of initially
60,309,450 Offer Shares (assuming the Over-allotment Option is not exercised and subject, in
each case, to reallocation on the basis as set out in “Structure of the Global Offering”).
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
authorized by our Company, the Sole Sponsor, the Joint Overall Coordinators, the Joint Global
Coordinators, the Joint Lead Managers, the Joint Bookrunners, the Underwriters, the Capital
Market Intermediaries, any of our or their affiliates or 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 in our affairs since the date of this Prospectus or that the information in
this Prospectus is correct as of any subsequent time.
UNDERWRITING
The Listing is sponsored by the Sole Sponsor and the Global Offering is managed by the
Sole Sponsor-Overall Coordinator. The Hong Kong Public Offering is fully underwritten by the
Hong Kong Underwriters subject to the terms and conditions of the Hong Kong Underwriting
Agreement and is subject to us and the Sole Sponsor-Overall Coordinator (for itself and on
behalf of the Underwriters) agreeing on the Offer Price. The International Offering is expected
to be fully underwritten by the International Underwriters, subject to the terms and conditions
of the International Underwriting Agreement. Please refer to the section headed
“Underwriting” in this Prospectus for further details on the Underwriters and the underwriting
arrangements.
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). Dealings
in the H Shares on the Hong Kong Stock Exchange are expected to commence on Tuesday,
October 28, 2025. Except for the A Shares that have been listed on the Shanghai Stock
Exchange and our pending application to the Hong Kong Stock Exchange for the listing of, and
permission to deal in, the H Shares, no part of our share or debt securities is listed on or dealt
in on the Hong Kong Stock Exchange or any other stock exchange and no such listing or
permission to list is being or proposed to be sought in the near future.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
–9 9–


--- page 110 ---
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 listing of, and permission to deal in, the H Shares on the Hong
Kong Stock Exchange and our compliance with the stock admission requirements of HKSCC,
the H Shares will be accepted as eligible securities by HKSCC for deposit, clearance and
settlement in CCASS with effect from the date of commencement of dealings in the H Shares
on the Hong Kong Stock Exchange or 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 HKSCC and HKSCC Operational Procedures in effect from
time to time. Investors should seek the advice of their stockbroker or other professional
advisers for the details of the settlement arrangements as such arrangements may affect their
rights and interests. All necessary arrangements have been made for the H Shares to be
admitted into CCASS.
REGISTER OF MEMBERS AND STAMP DUTY
All of the H Shares issued pursuant to applications made in the Global Offering
(including any H Shares which may be issued pursuant to the exercise of the Over-allotment
Option) will be registered on our H Share register of members to be maintained in Hong Kong
by our H Share Registrar, Tricor Investor Services Limited. Our principal register of members
will be maintained by us at our headquarters in Chinese Mainland.
Dealings in the H Shares registered in our H Share Register of members will be subject
to Hong Kong stamp duty.
DIVIDENDS PAYABLE TO HOLDERS OF H SHARES
Unless determined otherwise by our Company, dividends payable in Hong Kong dollars
in respect of our H Shares will be paid to the Shareholders as recorded on the H Share Register
of our Company in Hong Kong and sent by ordinary post, at the Shareholders’ risk, to the
registered address of each Shareholder of our Company.
PROFESSIONAL TAX ADVICE RECOMMENDED
Y ou should consult your professional advisers if you are in any doubt as to the taxation
implications of subscribing for, purchasing, holding, disposal of, dealing in or the exercise of
any rights in relation to our H Shares. None of our Company, the Sole Sponsor, the Joint
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
– 100 –


--- page 111 ---
Overall Coordinators, the Joint Global Coordinators, the Joint Lead Managers, the Joint
Bookrunners, the Underwriters, the Capital Market Intermediaries, any of our or their affiliates
or any of their respective directors, officers, employees, advisers, agents or representatives, or
any other persons or parties involved in the Global Offering accepts responsibility for any tax
effects on, or liabilities of, any person resulting from the subscription, purchase, holding,
disposal of, dealing in, or the exercise of any rights in relation to, our H Shares.
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, such as share ownership and operating data,
included in this Prospectus may have been subject to rounding adjustments. Accordingly,
figures shown as totals in certain tables may not be an arithmetic aggregation of the figures
preceding them.
CURRENCY TRANSLATIONS
Solely for your convenience, this Prospectus contains translations among certain amounts
denominated in Renminbi, Hong Kong dollars, Japanese Y en and U.S. dollars.
Unless otherwise specified, this Prospectus contains certain translations for convenience
purposes at the following rates: Renminbi into Hong Kong dollars at the rate of HKD1.00 to
RMB0.9130, Renminbi into Japanese Y en at the rate of JPY1.00 to RMB0.0465, Renminbi into
U.S. dollars at the rate of USD1.00 to RMB7.1048, and Hong Kong dollars into U.S. dollars
at the rate of USD1.00 to HKD7.7818.
No representation is made that any amounts in RMB or Hong Kong dollars can be or
could have been at the relevant dates converted at the above rate or any other rates or at all.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
– 101 –


--- page 112 ---
DIRECTORS
Name Address Nationality
Executive Directors:
Mr. Gerald G Wong 4 Raritan Place
Basking Ridge
NJ 07920
United States
American
Mr. Zhao Haibo (΋͛) Room 2003, No. 70
Caoxi Xincun Sicun
Xuhui District
Shanghai
PRC
Chinese
Mr. Zhao Hongwei ( Ⴛ҃ਃ
΋͛)
Room 701, No. 9
Lane 818, Minsheng Road
Pudong New Area
Shanghai
PRC
Chinese
Mr. Zhang Jie ( ੵ௫΋͛) Room 401, No. 2
Lane 333, Dongchuan Road
Minhang District
Shanghai
PRC
Chinese
Independent Non-Executive Directors:
Mr. Qin Guisen (ಌ΋͛) 283-101, Building 8
Wanke Y oushan
No. 288 Zhiwang Road
Qingpu District
Shanghai
PRC
Chinese
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
– 102 –


--- page 113 ---
Name Address Nationality
Mr. Liu Guisong (΋͛) Room 1401, Unit 1, Building 22
No. 1313 Xiyuan Avenue
Westpark of Hi-tech
Development Zone
Chengdu
Sichuan Province
PRC
Chinese
Mr. Y ao Minglong (Ꮂ
΋͛)
Room 401, Unit 1
Building 28
Santang Lanyuan
Xiacheng District, Hangzhou
Zhejiang Province
PRC
Chinese
Ms. Y uen Shuk Y ee ( ঺ૺᄃ
ɾɻ)
Flat A, 7/F
Block 18, Phase 1, Broadway Street
Mei Foo Sun Chuen
Kowloon
Hong Kong
Chinese
(Hong Kong)
Further information about our Directors are set out in the section headed “Directors and
Senior Management” in this Prospectus.
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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--- page 114 ---
PARTIES INVOLVED IN THE GLOBAL OFFERING
Sole Sponsor Guotai Junan Capital Limited
27/F, Low Block
Grand Millennium Plaza
181 Queen’s Road Central
Hong Kong
Sole Sponsor-Overall Coordinator Guotai Junan Securities (Hong Kong)
Limited
27/F, Low Block
Grand Millennium Plaza
181 Queen’s Road Central
Hong Kong
Joint Overall Coordinators Guotai Junan Securities (Hong Kong) Limited
27/F, Low Block
Grand Millennium Plaza
181 Queen’s Road Central
Hong Kong
CLSA Limited
18/F, One Pacific Place
88 Queensway
Hong Kong
Joint Global Coordinators, Joint
Bookrunners and Joint Lead
Managers
Guotai Junan Securities (Hong Kong)
Limited
27/F, Low Block
Grand Millennium Plaza
181 Queen’s Road Central
Hong Kong
CLSA Limited
18/F, One Pacific Place
88 Queensway
Hong Kong
DBS Asia Capital Limited
73/F, The Center
99 Queen’s Road Central
Central
Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
– 104 –


--- page 115 ---
Capital Market Intermediaries Guotai Junan Securities (Hong Kong)
Limited
27/F, Low Block
Grand Millennium Plaza
181 Queen’s Road Central
Hong Kong
CLSA Limited
18/F, One Pacific Place
88 Queensway
Hong Kong
DBS Asia Capital Limited
73/F, The Center
99 Queen’s Road Central
Central
Hong Kong
Star River Securities Limited
Room 2102, The Galleria
9 Queen’s Road Central
Central
Hong Kong
Legal Advisers to our Company As to Hong Kong and U.S. laws:
Baker & McKenzie
14/F, One Taikoo Place
979 King’s Road
Quarry Bay
Hong Kong
As to PRC laws:
Beijing DeHeng Law Offices
12/F Tower B, Focus Place
19 Finance Street
Beijing
PRC
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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--- page 116 ---
As to U.S. laws in relation to our business
operation in the U.S.:
Thompson Hine LLP
3900 Key Center
127 Public Square
Cleveland, Ohio 44114-1291
United States
As to Japan laws in relation to our business
operation in Japan:
Hibiya Park Law Offices
Hibiya Marine Building
5th Floor, 5-1 Y urakucho 1-chome
Chiyoda-ku, Tokyo 100-0006
Japan
As to Hong Kong laws in relation to our
business operation in Hong Kong:
Deacons
5/F, Alexandra House
18 Chater Road
Central
Hong Kong
As to International Sanctions laws:
Hogan Lovells International LLP
11th Floor, One Pacific Place
88 Queensway
Hong Kong
As to U.S. tariff laws and regulations:
Commerce & Finance Law Offices LLP
45 Rockefeller Plaza Suite 2000
New Y ork, NY 10111
United States
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
– 106 –


--- page 117 ---
Legal Advisers to the Sole Sponsor and
the Underwriters
As to Hong Kong laws:
Eric Chow & Co. in Association with
Commerce & Finance Law Offices
3401, Alexandra House
18 Chater Road
Central
Hong Kong
As to PRC laws:
JunHe LLP
26/F, HKRI Centre One
HKRI Taikoo Hui 288 Shimen Road (No. 1)
Shanghai
PRC
Reporting Accountants and Independent
Auditors
Grant Thornton Hong Kong Limited
Certified Public Accountants and Registered
Public Interest Entity Auditor
11/F, Lee Garden Two
28 Y un Ping Road
Causeway Bay
Hong Kong
Compliance Adviser Guotai Junan Capital Limited
27/F, Low BlockGrand Millennium Plaza
181 Queen’s Road Central
Hong Kong
Industry Consultant Frost & Sullivan (Beijing) Inc.,
Shanghai Branch Co.
Room 2504, Wheelock Square
No. 1717 West Nanjing Road
Jing’an District
Shanghai
PRC
Receiving Bank DBS Bank (Hong Kong) Limited
16/F The Center
99 Queen’s Road Central
Central
Hong Kong
Transfer Pricing Adviser Zhitong (Beijing) Registered Tax Agents
Co., Ltd. Shanghai Branch
45/F Raffles City
268 Xizang Zhong Road
Shanghai
PRC
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
– 107 –


--- page 118 ---
Registered Office, Principal Place of
Business and Headquarters in the PRC
Room 501, Building 8
No. 2388 Chenhang Road
Minhang District
Shanghai
PRC
Principal Place of Business and
Headquarters in the United States
2445 Augustine Drive, 6th Floor
Santa Clara
CA 95054
United States
Principal Place of Business in Hong Kong Room 1901, 19/F
Lee Garden One
33 Hysan Avenue
Causeway Bay
Hong Kong
Company’s Website www.cigtech.com
(information contained in this website does
not form part of this Prospectus)
Joint Company Secretaries Mr. Jin Zeqing (ዣ૶΋͛)
No. 141, Wanke Jingyuan
Lane 9, Junfeng Road
Qingpu District
Shanghai
PRC
Ms. So Lai Shan (ɾɻ)
(ACG, HKACG)
Room 1901, 19/F
Lee Garden One
33 Hysan Avenue
Causeway Bay
Hong Kong
CORPORATE INFORMATION
– 108 –


--- page 119 ---
Authorized Representatives Mr. Gerald G Wong
4 Raritan Place
Basking Ridge
NJ 07920
United States
Ms. So Lai Shan (ɾɻ)
Room 1901, 19/F
Lee Garden One
33 Hysan Avenue
Causeway Bay
Hong Kong
Audit Committee Mr. Y ao Minglong (Ꮂ΋͛) (chairman)
Mr. Liu Guisong (΋͛)
Ms. Y uen Shuk Y ee ( ঺ૺᄃɾɻ)
Nomination Committee Mr. Qin Guisen (ಌ΋͛) (chairman)
Mr. Zhao Haibo (΋͛)
Ms. Y uen Shuk Y ee ( ঺ૺᄃɾɻ)
Remuneration and Evaluation Committee Mr. Liu Guisong (΋͛) (chairman)
Mr. Gerald G Wong
Mr. Y ao Minglong (Ꮂ΋͛)
Strategy and ESG Committee Mr. Gerald G Wong (chairman)
Mr. Zhao Haibo (΋͛)
Mr. Zhang Jie ( ੵ௫΋͛)
Mr. Zhao Hongwei ( Ⴛ҃ਃ΋͛)
Mr. Qin Guisen (ಌ΋͛)
H Share Registrar Tricor Investor Services Limited
17/F, Far East Finance Centre
16 Harcourt Road
Hong Kong
CORPORATE INFORMATION
– 109 –


--- page 120 ---
Principal Banks China Construction Bank
Shanghai Y anghang Branch
No. 155, Y angtao Road
Baoshan District
Shanghai
PRC
Bank of Communications
Shanghai Caohejing Branch
2/F, Building C
No. 900, Yishan Road
Shanghai
PRC
Agricultural Bank of China
Shanghai Minhang Branch
No. 68, South Shuiqing Road
Minhang District
Shanghai
PRC
Ningbo Bank
Shanghai Branch
No. 8 Yincheng Middle Road
Pudong New Area
Shanghai
PRC
JP Morgan Chase Bank
383 Madison Ave
New Y ork
NY 10179
USA
CORPORATE INFORMATION
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--- page 121 ---
The information and statistics set out in this section and other sections of this
Prospectus were extracted from the F&S Report, which was commissioned by us, and
from various official government publications and other publicly available publications.
We engaged F&S to prepare the F&S Report, an independent industry report, in
connection with the Global Offering. We believe that the sources of this information are
appropriate sources for such information and have taken reasonable care in extracting
and reproducing such information. We have no reason to believe that such information is
false or misleading or that any fact has been omitted that would render such information
false or misleading. The information from official government sources has not been
independently verified by us, the Sole Sponsor , Joint Overall Coordinators, Joint Global
Coordinators, Joint Bookrunners, Joint Lead Managers, Underwriters, any of their
respective directors and advisors, or any other persons or parties involved in the Global
Offering, and no representation is given as to its accuracy.
SOURCE OF INFORMATION
We commissioned F&S to conduct market research on the global optical and wireless
connectivity devices industry and prepare the F&S Report. F&S is an independent global
consulting firm founded in 1961 in New Y ork that offers industry research and market
strategies. We have contracted to pay RMB400,000 to F&S for compiling the F&S Report.
In preparing the F&S Report, F&S conducted detailed primary research which involved
discussing the status of the industry with certain leading industry participants and conducting
interviews with relevant parties. F&S also conducted secondary research which involved
reviewing company reports, independent research reports and data based on its own research
database. F&S obtained the figures for the estimated total market size from historical data
analysis plotted against macroeconomic data as well as considered the above-mentioned
industry key drivers. Its market engineering forecasting methodology integrates several
forecasting techniques with the market engineering measurement-based system and relies on
the expertise of the analyst team in integrating the critical market elements investigated during
the research phase of the project. These elements primarily include expert-opinion forecasting
methodology, integration of market drivers and restraints, integration with the market
challenges, integration of the market engineering measurement trends and integration of
econometric variables.
The F&S Report is compiled based on the following assumptions: (i) the social, economic
and political environment of the globe and the PRC is likely to remain stable in the forecast
period; and (ii) related industry key drivers are likely to drive the market in the forecast period.
INDUSTRY OVERVIEW
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--- page 122 ---
GLOBAL ICT AND CONNECTIVITY OVERVIEW
Overview
The global information and communications technology (“ ICT”) and telecommunications
sectors are undergoing continuous development, driven by ongoing digital transformation,
infrastructure upgrades, and growing user demand. In 2024, total global ICT investment
exceeds USD5 trillion and is projected to surpass USD7 trillion by 2029, representing a CAGR
of approximately 7% over the period. The global number of internet users has reached 5.5
billion people in 2024 and is projected to exceed 6 billion people by 2029, reflecting sustained
global connectivity growth. These trends signal a strong foundation for the continued
expansion of digital services and the increased deployment of advanced ICT infrastructure.
Meanwhile, AI technologies are accelerating the upgrade of ICT industry, unlocking new
development opportunities across a wide range of sectors. AI demands massive computing
power, high-speed connectivity, and low-latency data processing, which in turn is accelerating
the upgrade and expansion of ICT infrastructure. This includes advancements in data centers,
communication networks and data transmission systems, all of which are becoming more
intelligent, efficient and scalable to support AI workloads. The AI market is projected to exceed
USD3,000 billion by 2029, with a CAGR of 37.8% from 2024. Major global tech companies
are expected to invest more than USD400 billion over the next three years in developing AI
infrastructure, including compute power, storage systems, and data center capacity. As a result,
the number of global data center racks, critical for supporting AI workloads, is forecasted to
reach 139.8 million units by 2029, growing at a CAGR of 32.8% from 2024. The rapid
development of AI technologies is not only transforming end-user applications but also
fundamentally reshaping the ICT industry.
In addition, as bandwidth demands surge across sectors, from cloud computing and video
streaming to industrial automation and smart cities, there is growing demand for high-
performance connectivity equipment capable of supporting large-scale, real-time data
transmission. This need is further intensified by the rise of edge computing, 5G networks, and
the widespread adoption of data-intensive applications across various sectors. Advanced
connectivity solutions have become fundamental components of modern infrastructure,
enabling efficient communication between devices, users, and platforms. Meanwhile, the rapid
proliferation of intelligent applications is fueled by the continued expansion of the Internet of
Things (“ IoT”), which serves as a key bridge between the physical and digital worlds in areas
such as smart manufacturing, intelligent transportation, and energy management. The number
of global IoT connections is projected to reach 71.8 billion by 2029, with a CAGR of 30.8%
from 2024. As end-user devices become more intelligent and interconnected, demand continues
to rise for faster, more robust connectivity to support high-frequency interaction and real-time
responsiveness.
INDUSTRY OVERVIEW
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--- page 123 ---
In this context, the development of wired broadband and wireless access products will be
critical to supporting the increasingly data-driven and intelligent global economy. The
convergence of ICT infrastructure upgrades, growing network traffic, AI workloads, and IoT
expansion is creating strong momentum for high-performance connectivity technologies,
reinforcing their strategic role in the next stage of digital and industrial transformation.
OVERVIEW OF GLOBAL OPTICAL AND WIRELESS CONNECTIVITY DEVICES
(“OWCD”) INDUSTRY
Overview of the OWCD industry
OWCDs refer to a comprehensive suite of devices supporting critical stages across the
optical communication and wireless networking industry, which mainly include (i) photonics
(optical transceivers/optical modules); (ii) wired broadband access devices; and (iii) wireless
network access devices. OWCDs enable high-speed, low-latency and high-bandwidth
transmission of data and computing power, playing a pivotal role in supporting the broader ICT
ecosystem. OWCDs ensure reliable connectivity across core networks, edge nodes, and
end-user environments. As AI technologies become increasingly integrated into the ICT
ecosystem, OWCDs play a foundational role in AI infrastructure, facilitating the efficient
distribution and exchange of computing power and data within and between computational
clusters, as well as from computational clusters to end users, thereby driving industry
innovation and transformation through enhanced connectivity and communication capabilities.
Integrated OWCD companies are companies that specialize in the production of at least
two sectors within the OWCD category. Their comprehensive product portfolios are designed
to meet the needs of downstream customers, such as ICT equipment providers, communication
service providers, technology companies and IoT solutions providers. The products from these
companies are primarily integrated into the solutions delivered by their customers to the
end-users, or directly incorporated into their own data communication infrastructure, such as
data centers. Integrated OWCD companies mainly collaborate with their customers through
joint design manufacturing (“ JDM”) model and original design manufacturing (“ ODM”)
model, ensuring tailored solutions that align with specific customer requirements.
Integrated OWCD companies are becoming more common in the industry, leveraging the
synergy between photonic and wired broadband access devices (for optical communication)
and wireless network access devices (for wireless communication), which are essential and
closely interconnected components of modern communication networks. Most integrated
OWCD companies operate across two of these three segments. In 2024, the market size of
integrated OWCD companies as a percentage of the overall OWCD industry reached 22.6%.
INDUSTRY OVERVIEW
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Full-sector coverage integrated OWCD companies are those engaged across all three
sectors within the OWCD category. Only a few companies meet this criterion, setting
themselves apart with uniquely comprehensive portfolios. Their broad capabilities position
them to deliver highly customized solutions tailored to the diverse and evolving needs of
downstream customers. In 2024, the market size of full-sector coverage integrated OWCD
companies as a percentage of the overall OWCD industry was below 10.0%.
Value chain analysis
Raw materials and
equipment suppliers
Integrated OWCD
companies
Customers End users
ICT
equipment
providers
Upstream Midstream Downstream
Raw material
Core equipment
JDM or ODM Model (e.g., Communication
equipment manufacturers)
• Communication
service providers
• Technology
companies
• IoT solutions
providers
• Businesses
• Households
... ...... ...
(e.g., Telecommunications
operators, MSOs)
(e.g., AI data centers)
The integrated OWCD industry chain includes upstream suppliers of key raw materials
(e.g., optical devices, integrated circuit chips, structural components, PCBs) and specialized
equipment (e.g., coating machines and inspection tools) crucial for manufacturing photonics
and network access devices. Midstream, integrated OWCD companies produce a variety of
products across multiple categories, often through JDM or ODM models, to meet the
customized needs of customers. Downstream players then incorporate these products into their
solutions or data communication infrastructures, ultimately enhancing communication
experiences for business and household end-users.
Market size of the OWCD industry
From 2020 to 2024, the global sales revenue of the OWCD industry has increased from
USD32.4 billion to USD54.6 billion with a CAGR of 13.9%. The accelerating trend and
intelligent transformation, coupled with favorable policies from various countries, have led the
OWCD industry to undergo technological innovation and industrial upgrade. Thus, due to the
accelerated iteration and evolving frontier technologies, the global sales revenue of OWCD
industry is expected to reach USD111.8 billion in 2029, representing a CAGR of 15.4% from
2024.
INDUSTRY OVERVIEW
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--- page 125 ---
Sales revenue of the OWCD industry (Global), 2020-2029E
0
20
40
60
80
100
120
USD Billion
2020 2021 2022 2023 2024 2025E 2026E 2027E 2028E 2029E
32.4 36.8
46.3 45.8
54.6
65.7
75.9
85.8
97.1
111.8
CAGR 2020-2024 CAGR 2024-2029E
Global OWCD industry 13.9% 15.4%
Source: Interviews with industry experts by F&S, F&S
From 2020 to 2024, the global sales revenue of the integrated OWCD industry has
increased from USD7.1 billion to USD12.4 billion with a CAGR of 15.0%. Leading companies
in the OWCD industry are well-positioned to drive market expansion by offering a
comprehensive portfolio of advanced photonic components, PON devices, and wireless
network access equipment. This diversified offering supports the rapid development of the
global integrated OWCD industry. As customer demand grows for one-stop suppliers, the
integrated OWCD providers are expected to become increasingly attractive to customers in the
future. The global sales revenue of the integrated OWCD industry is expected to reach
USD28.6 billion in 2029, representing a CAGR of 18.3% from 2024, surpassing that of the
global OWCD industry in the same period.
Sales revenue of the integrated OWCD industry (Global), 2020-2029E
USD Billion
2020 2021 2022 2023 2024 2025E 2026E 2027E 2028E 2029E
7.1 8.2
10.9 10.9
12.4
14.8
17.3
20.4
23.9
28.6
CAGR 2020-2024 CAGR 2024-2029E
Global integrated OWCD industry 15.0% 18.3%
0
10
20
30
Source: Interviews with industry experts by F&S, F&S
INDUSTRY OVERVIEW
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Market drivers and developing trends
Digital Transformation
The rapid rise in demand for high-bandwidth, low-latency networks in both enterprise and
residential settings is driving increased deployment density and performance upgrades of wired
broadband access and wireless network access devices. As enterprises accelerate digital
transformation, industrial parks and office buildings are placing higher demands on efficient
access and stable multi-device connectivity. On the residential side, the proliferation of HD
video conferencing, online education, 4K/8K streaming, AR/VR applications, and smart home
devices is reshaping network infrastructure needs, challenging the concurrent processing
capabilities of access devices. The boom of AIGC and other AI technologies is rapidly
advancing the AI industry. Meanwhile, the increasing adoption of AI-driven applications such
as AIGC is further amplifying the demand for robust and responsive network environments. In
January 2025, a China-based AI LLM company launched an open-source lightweight AI large
model, significantly enhancing the accessibility of AI technologies, thereby promoting the
widespread adoption of AI technology. With major AI models in China and the United States
reaching tens of millions of daily active users and global computational power projected to
grow at a CAGR of 42.2% from 2024 to 2029, higher-performance, more reliable OWCDs are
becoming key to ensuring wide coverage, stable connectivity and real-time data transmission
in increasingly complex usage scenarios.
Continuous FTTx Deployment
The number of fixed broadband subscribers worldwide has increased from 1.2 billion
households in 2020 to approximately 1.6 billion households in 2024, representing a CAGR of
6.3%. As major countries and regions around the world prioritize broadband infrastructure as
a key area of strategic investment, the construction of FTTx networks continues to gain
momentum, significantly driving the demand for PON devices. For example, China is actively
advancing the “Gigabit Optical Network” initiative and the “Eastern Data, Western
Computing” project, aiming to achieve universal gigabit access capabilities by 2025. In
addition, in January 2025, the Ministry of Industry and Information Technology (MIIT) issued
a notice on launching 10G optical network pilot programs, focusing on scenarios such as
residential communities, factories, and industrial parks. These pilots will enable the
deployment of advanced optical network technologies such as 50G-PON ultra-broadband
access and FTTH (Fiber to the Home)/FTTR (Fiber to the Room). In the United States, the
Infrastructure Investment and Jobs Act passed in 2021 allocated USD1.2 trillion for various
infrastructure projects, including USD65 billion specifically for improving broadband access
and quality. Similarly, in 2021, the European Union released the “2030 Digital Compass: the
European way for the Digital Decade” plan, aiming to ensure gigabit network coverage for all
households by 2030. Under the strong policy push across the globe, telecom operators are
expected to continue expanding the coverage of PON networks, thereby generating sustained
demand for the procurement and replacement of PON devices. The number of fixed broadband
subscribers worldwide is expected to reach 1.9 billion households by 2029.
INDUSTRY OVERVIEW
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Advanced PON Technologies
With the acceleration of global digital transformation and the development of emerging
technologies, advanced PON technology meets the urgent need for higher bandwidth and lower
latency in the market. 10G PON technology has become the mainstream solution for
telecommunications operators to deploy gigabit networks and meet the growing demand for
broadband. At the same time, with the accelerated application of emerging technologies such
as digitalization, AI and IoT, the industry’s demand for higher bandwidth and greater data
processing capabilities has increased significantly, driving the emergence of 25G/50G PON
technology. Compared with 10G PON, 25G/50G PON can provide higher bandwidth, lower
latency and stronger network scalability, better meeting the high-speed data transmission needs
of scenarios such as data centers, cloud computing and intelligent manufacturing. It is expected
that with the continuous maturity of technology and the gradual release of market demand,
25G/50G PON products will achieve larger-scale deployment in the near term, with 100G PON
and beyond emerging as longer-term trends.
Upgrade of Wireless Network Technology
With the emergence of Wi-Fi 7 (IEEE 802.11be), the communication device industry will
experience a new round of revolution in wireless connection technology. Wi-Fi 7 offers higher
data transmission rates, lower latency and improved spectrum efficiency, making it better
suited to support data-intensive applications. In both enterprise and home environments, Wi-Fi
7 deployment will significantly enhance the stability, speed and coverage of wireless networks,
enabling multiple devices to connect simultaneously without compromising performance.
Wi-Fi 7 ensures a smoother user experience, addressing the need for high concurrency, low
latency and high bandwidth. In addition, with the rise of emerging technologies such as 5G,
edge computing and AI, the demands on wireless networks are becoming more complex and
varied. The introduction of Wi-Fi 7 will not only meet these evolving needs but also accelerate
the widespread adoption and expansion of wireless connectivity technology. Meanwhile,
advanced research into Wi-Fi 8 is already underway, aiming to further push the limits of
wireless performance in the future.
Proliferation of data centers fueling accelerated iteration of high-speed photonics demand
Governments worldwide are introducing policies to support data center development. In
the United States, the Stargate Project announced in January 2025 plans to invest USD500
billion over four years in new AI infrastructure. Similarly, China has issued policies such as
the “Guidance on the Construction of National Data Infrastructure” to accelerate the
construction of data infrastructure. With the rapid development of cloud computing, global data
centers are entering a stage of large-scale commercialization. The cumulative volume of data
center racks is projected to reach 139.8 million units by 2029 at a CAGR of 32.8% from 2024.
Thus, the photonics industry is undergoing rapid technological advancement and product
iteration. High-speed photonics — such as 400G, 800G — offer greater bandwidth, lower
latency, and higher efficiency, making them critical for interconnecting devices in and across
data centers. Meanwhile, the next generation of 1.6T high-speed photonics is under
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development and undergoing small-batch shipments, with an expected mass production around
2026. As data demands grow, high-speed photonics will see increasing adoption in datacom
applications, driving the accelerated iteration in the OWCD industry.
Evolving of frontier technologies in photonics
Driven by downstream demand, companies in the photonics industry are actively
strengthening the R&D of new technologies. Below introduce the leading frontier technologies
in the photonics industry:
 Silicon photonics technology uses existing CMOS processes to develop and
integrate optical devices and photonics. Photonics integrating silicon photonic
elements are expected to occupy a mainstream position in the future due to their
advantages of high integration and low power consumption.
 Innovative packaging technologies such as linear-drive pluggable optics (“ LPO”),
by removing the digital signal processor (“ DSP”), can significantly optimize the
power consumption of photonics. Co-packaged optics (“ CPO”) technology, by
co-packaging optical engine and switching chip on the same motherboard, can
effectively reduce power consumption and improve transmission efficiency.
 Liquid-cooled photonics technology, through a unique liquid-cooled heat dissipation
design, effectively improves heat dissipation efficiency and module stability.
Industry barriers
Technology development
The OWCD market is highly technical with significant entry barriers, especially in areas
like photonics, PON devices, and wireless access equipment. Developing advanced
technologies such as silicon photonics and high-speed, low-power devices requires deep
expertise in materials, optics, and microelectronics, along with strong R&D and sustained
investment. Leading players leverage cutting-edge innovation and smart manufacturing to stay
ahead, while those lacking resources and integration capabilities face major challenges
entering the market.
Customization capability
As the demand for efficient, personalized solutions rises, customization has become a key
competitive edge. Integrated OWCD companies must tailor products for specific needs like
data centers, AI and IoT, requiring both standardized offerings and flexible, responsive design
and manufacturing. For new entrants, this poses a high barrier due to the significant investment
needed to support such adaptability.
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Product comprehensiveness
Leading companies in the integrated OWCD industry typically offer a broad product
portfolio — covering photonics, PON devices, and wireless access equipment — with
advanced technologies in each area. For example, photonics involves silicon and high-speed
photonics, while PON devices are advancing toward 50G/25G to meet rising bandwidth needs.
Strong players excel across multiple products and provide integrated solutions, creating
synergy and raising entry barriers for new entrants.
Customers
Integrated OWCD customers mainly include ICT equipment providers, telecom operators,
and tech companies such as data center and cloud service providers, all of whom demand high
standards in quality, performance, reliability, and service. Due to large volumes and long
procurement cycles, they rely heavily on trusted suppliers. New entrants must invest
considerable time and resources to meet these standards and build trust, especially under
deeply integrated models like JDM. Such close partnerships enhance customer loyalty and raise
the entry barrier for newcomers.
Supply chain
To reduce supplier concentration risk and enhance supply chain resilience, integrated
OWCD companies increasingly adopt multi-supplier strategies, ensuring stable access to key
components and minimizing disruption risks. However, new entrants often lack the resources
to build reliable, diversified supplier networks, creating a significant entry barrier to market
competitiveness.
Globalization
Companies in the OWCD industry often need to establish a global presence spanning
R&D, manufacturing, and sales operations. In particular, building globally distributed
manufacturing and operational capabilities is critical to meeting the demands of fast-growing
sectors such as AI, data centers, and IoT. This requires not only significant financial
investment, but also strong global supply chain management, localized market strategies, and
the ability to navigate complex regulatory and logistical environments. For new entrants,
replicating this level of global integration and operational excellence poses a major barrier,
demanding substantial resources and highly coordinated international strategies.
Cost structure
The raw materials of photonics mainly include optical devices (e.g., TOSA, ROSA and
other optical devices), circuit chip, PCB and others (body and other components). Optical
devices account for approximately 74% of the total cost of photonics. Among the optical
devices include the TOSA, ROSA and other optical devices including optical filter, pigtail and
other components. Meanwhile, different technologies adopted in photonics can impact the cost
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structure of various optical devices. For PON device, cost of photonics and other electronic
components account for the major sector with 75% of the total cost. Body and other structural
components and others (software costs, etc.) account for the rest 25%. Similarly, chip and
electronic components account for 65% of the total cost for Wi-Fi device, the rest 35% includes
the cost of body and other structural components and others (software costs, etc.).
Cost structure analysis of photonics,
PON Device and Wi-Fi devices (Global), 2024
75%
15%
10%
Photonics and other electronic components
Body and other structural components
Others (software costs, etc.)
Chip and electronic components
Body and other structural components
Others (software costs, etc.)
PON device
74%
19%
Optical devices
Circuit chip Others (body and other components)
Printed circuit board (PCB)
Photonics Wi-Fi device
65%
10%
25%
3%
4%
Source: Interviews with industry experts by F&S, F&S
Raw material price
Different types of chips are the major raw materials in the OWCD industry. The chart
below illustrates the price trends of two representative chip types. DRAM chips are widely
used in PON devices and Wi-Fi devices, while Flash chips are commonly applied in photonics.
DRAM chip prices experienced a significant increase in 2021, mainly driven by strong demand
from remote education and work-from-home scenarios during the pandemic, which led to a
surge in consumption of DRAM-intensive products such as smartphones and laptops. Flash
chip prices have remained relatively stable over the past few years, with limited volatility due
to more balanced supply and demand dynamics in their application markets. Looking ahead,
both DRAM and Flash chip prices are expected to remain relatively stable in the short term,
assuming no major disruptions in global supply chains or end-market demand.
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Average price of flash and DRAM chip (Global), 2020-2024
0.0
0.5
1.0
1.5
2.0
2.5
3.0
USD/Piece
DRAM*
2020 2021 2022 2023 2024
0.961.06
2.15
2.90
1.60
0.0
0.5
1.0
1.5
2.0
2.5
USD/Piece
Flash*
2020 2021 2022 2023 2024
2.14 2.10 2.082.042.15
Source: WIND, Frost & Sullivan
*Note: Refer to NAND Flash (32Gb 4Gx8 MLC) and DRAM: DDR3(4Gb(512Mx8),1600MHz); Due to the price
variations among different chip models and types, the selected chip prices above do not represent the
industry average.
Competitive landscape of the integrated OWCD industry
The global integrated OWCD industry is relatively fragmented and competitive with total
market size of USD12.4 billion in 2024. The top five players had an aggregate of 30.4% of the
market share in the industry in terms of sales revenue. Our Company ranked fifth among all
players, achieving sales revenue of USD502 million with a market share of 4.1% in global
integrated OWCD industry.
Top five companies in the integrated OWCD industry
by sales revenue (Global), 2024
Company A
Company C
Company B
the Company
Company D
900
870
780
700
502
7.3%
7.0%
6.3%
5.7%
4.1%
Subtotal 30.4%
Ranking Company Sales Revenue (USD Million)
1
2
3
4
5
Market Share
Source: Interviews with industry experts by F&S, F&S
Among the integrated OWCD industry, market participants with full-sector coverage,
including photonics, PON devices, and wireless network access devices, have the capability to
provide end-to-end solutions. We are one of the few and the second largest market participant
in the global integrated OWCD industry with full-sector coverage in 2024.
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Sector coverage of global top five companies
in the integrated OWCD industry, 2024
Photonics PON devices Wireless network access devices
Company A
Company B
Company C
Our Company
Company D
/g57/g57
/g57/g57
/g57/g57
/g57/g57 /g57
/g57/g57 /g57
X
X
X
Source: Official Websites of the Companies, Annual Reports of Listed Companies, Interviews with industry experts by
F&S, F&S
Notes:
1. Company A is a listed company on the Taiwan Stock Exchange established in 1992, primarily engaging in
businesses of PON devices and wireless network access devices. The company is headquartered in Taipei, with
its market presence spanning North America, Europe, China, and the Asia-Pacific region.
2. Company B is a listed company on the Taiwan Stock Exchange established in 2003, primarily engaging in
providing wired broadband access devices, wireless network access devices and multimedia products. The
company is headquartered in Hsinchu, with its markets mainly in Americas, Europe, and Asia.
3. Company C is a listed company on the Shanghai Stock Exchange established in 1998, primarily engaging in
businesses of PON devices and wireless network access devices. The company is headquartered in Shenzhen,
with market presence mainly in China, Americas, and Europe.
4. Company D is an unlisted company established in 2003, primarily engaging in businesses of photonics, PON
devices and wireless network access devices. The company is headquartered in Qingdao, and its products are
primarily sold to Asia, North America, and Europe.
OVERVIEW OF MAJOR CORE DEVICES — GLOBAL WIRED BROADBAND
ACCESS DEVICE INDUSTRY
Definition and classification
Wired broadband access devices refer to hardware used to connect user terminal devices
to broadband networks via wired connections. Passive optical network (“ PON”) devices serve
as the core components of wired broadband access, providing reliable connectivity through a
point-to-multipoint architecture.
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Market size of the PON device industry
The market size of global PON device industry by sales revenue increased from USD6.2
billion in 2020 to USD7.8 billion in 2024, with a CAGR of approximately 5.8%. The decline
in the global PON equipment market in 2023 and 2024 was mainly attributed to cyclical factors
of the industry, including inventory adjustments and reduced capital expenditures by
telecommunications operators. However, driven by the increasing demand for global 5G small
cells and data centers, the market size of the global PON device industry is projected to further
increase, reaching USD11.9 billion in 2029, with a CAGR of approximately 8.8% from 2024.
Evolution of PON technology
Bandwidth 1G/2.5G 10GPON 50G/25G
50G EPON
25G EPON
50GPON
25GPONNG PON2
XGS PONXG PON
GPON
EPON 10G EPON
202020102003
EPON and GPON, standardized in the early 2000s by IEEE and ITU-T, laid the
groundwork for high-speed broadband access. GPON (2.5 Gb/s down/1.25 Gb/s up) became the
mainstream FTTH solution since 2007, while EPON (1 Gb/s symmetrical), launched in 2008,
offers a cost-effective Ethernet-based alternative. Together, 1G/2.5G PON devices generated
USD3.7 billion in revenue in 2020, accounting approximately 60% of the total PON market.
10GPON is currently the mainstream technology in the wired broadband access sector.
10GPON technologies, including 10GEPON, XG-PON, and XGS-PON, represent major
upgrades. Among them, XGS-PON is favored in Europe and the United States for its
symmetrical bandwidth, especially in cloud and HD video scenarios. In 2024, the market size
of XGS-PON devices accounted for over 50% of the global 10GPON segment. XGS-PON is
projected to lead the 10GPON market, with its market size expected to reach USD1.8 billion
in 2024 and grow to USD2.6 billion in 2029, capturing 21.9% of the total market share in 2029.
NG-PON2, offering up to 40 Gb/s via WDM, remains underutilized due to high costs.
Looking ahead, 25GPON and 50GPON technologies are emerging to meet rising demand
from data centers and 5G/6G networks. With downstream speeds of 25–50 Gb/s, these
technologies are entering early deployment phases. The combined market is projected to reach
USD5.7 billion by 2029, representing a CAGR of 99.8% from 2024, becoming core enablers
of next-generation broadband infrastructure.
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Sales revenue of PON devices by rate (Global), 2020-2029E
2020
0.3
0.0 0.00.7
1.3
1.5 1.7
2.1 1.5 1.2
1.3
1.1
1.3
1.2
1.2
1.6 1.8
2.3
2.6
2.6
2.6
2.6
2.0
3.2
5.7
3.7
1.8
6.4
4.4 4.1
3.7
3.2
2.7
2.3
2.0
2021 2022 2023 2024 2025E 2026E
1.0
2027E 2028E 2029E
USD Billion
2.6% -13.5%
CAGR 2020-2024 CAGR 2024-2029E
-1.3% -1.7%
24.3% 7.9%
1G/2.5G PON
XG PON
XGS PON
10G EPON
NG PON2
25G/50GPON
Total
22.4%
-9.0%
–
5.8%
-10.5%
3.2%
99.8%
8.8%
0
2
0.10.1 0.20.2 0.20.2 0.20.2 0.20.2
0.20.2
0.10.1
0.10.1
0.20.2
0.20.2
0.30.3
0.30.3
0.30.3
0.20.2
4
6
8
10
12
0.00.0 0.00.0 0.00.0 0.20.2
0.2 0.2 0.5
6.2
3.4
6.9
10.6
8.0 7.8
8.3 8.6
9.0
9.7
11.9
0.20.2 0.10.1
Source: LightCounting, Interviews with industry experts by F&S, F&S
Competitive landscape of the wired broadband access device industry
The global PON device market is relatively competitive, with a few players leading the
industry while numerous regional and specialized companies also contribute to the landscape.
Major companies compete on the basis of technology innovation, product quality and
scalability. Key factors driving competition include the ongoing demand for faster internet
speeds, the expansion of fiber networks and the shift towards next-generation PON
technologies. As a result, companies are increasingly investing in R&D to enhance their
product offerings and differentiate themselves in a rapidly evolving market.
OVERVIEW OF MAJOR CORE DEVICES — GLOBAL WI-FI DEVICE INDUSTRY
Definition and classification
As key wireless network access devices, Wi-Fi devices refer to hardware used to connect
user terminal devices to a computer network via wireless signals. These devices use radio
waves to transmit data, providing convenient network access services. Wi-Fi devices are
commonly used in homes, offices, public places, etc., supporting network access and data
exchange for mobile devices. Wi-Fi devices mainly include wireless routers and access points
(“APs”), etc.
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Market Size of the Wi-Fi devices industry
The global Wi-Fi device industry, encompassing routers, APs, gateways, and other
wireless equipment, has grown steadily due to rising demand for faster, more reliable wireless
connectivity across homes, businesses, and industries. From 2020 to 2024, global sales revenue
of Wi-Fi devices rose from USD13.7 billion to approximately USD16.7 billion, with a CAGR
of around 5.1%. This growth is driven by evolving Wi-Fi standards, 5G rollout, and increasing
numbers of connected devices.
Wi-Fi technology has evolved from Wi-Fi 1 (802.11) in 1997 to today’s Wi-Fi 6 and 6E,
significantly improving transmission speed, coverage, and device capacity. Wi-Fi 6 and Wi-Fi
6E currently dominate the market, generating USD9.7 billion and USD2.7 billion in sales
revenue respectively in 2024. Looking ahead, Wi-Fi 7 is set to become a key enabler for
high-speed, low-latency connectivity in smart homes, gaming, IoT, telemedicine, and
intelligent vehicles. Global Wi-Fi 7 device sales are projected to reach USD13.8 billion by
2029, representing a CAGR of 82.2% from 2024.
Sales revenue of Wi-Fi devices by technology (Global), 2020-2029E
Wi-Fi 6 39.8% -12.7%
CAGR 2020-2024 CAGR 2024-2029E
Wi-Fi 6E N/A -12.4%
Wi-Fi 7 N/A 82.2%
Others (Wi-Fi 4, Wi-Fi 5, etc.)
Total
-24.4%
5.1% 4.9%
-21.2%
2020 2021 2022 2023 2024 2025E 2026E 2027E 2028E 2029E
3.3
3.31.7 2.7
2.8
2.0
1.4
0.00.00.00.0
0.00.00.00.0
0.40.40.00.0
0.00.0 0.70.7
1.1
2.1 4.3
7.0
10.1
13.8
11.1 9.2 7.4
4.8
10.2
3.6 2.4 1.8 1.5 1.3
2.5 5.7 9.3 9.7 10.0
9.3
8.2
6.8
4.916.7
13.7
14.9
17.0 16.7
17.8 18.7 19.5 20.2 21.2
USD Billion
0
2
4
6
8
10
12
14
16
18
20
22
Source: IDC, Interviews with industry experts by F&S, F&S
Competitive landscape of Wi-Fi devices
The global Wi-Fi device market is relatively concentrated, with leading companies firmly
holding market dominance through technological advantages, strong brand presence, and
deeply established sales channels. In the future, industry competition will revolve around the
development of next-generation wireless technologies (e.g., Wi-Fi 7), AI-powered capabilities,
cloud-based management, and enhanced network security across multiple dimensions.
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OVERVIEW OF MAJOR CORE DEVICES — GLOBAL PHOTONICS INDUSTRY
Definition and classification
Photonics (i.e., optical transceivers and optical modules) are optoelectronic devices that
convert optical and electrical signals, enabling data transmission essential for connecting data
center infrastructure and telecommunication networks. They typically include a transmitter
(“TOSA ” with lasers), a receiver (“ ROSA ” with photodetectors), functional circuits, and
optical/electrical interfaces. Transmission rate, measured in Gb/s, is a key performance metric.
Currently, 800G is the most advanced in mass production, while 1.6T represents the
next-generation technology under development and undergoing small-batch shipments.
Photonics are mainly used in datacom and telecom. In datacom, they connect servers, switches,
and storage in data centers. In telecom, they support metropolitan area networks (“ MANs ”),
wide area networks (“ W ANs”) and PONs, enabling efficient long-distance, high-capacity
communication.
Market Size of the photonics industry
The photonics market has grown steadily in recent years, driven by demand for
high-speed data transmission and data-intensive applications such as AI, cloud computing and
5G. From 2020 to 2024, global sales revenue of photonics rose from USD11.2 billion to
USD17.8 billion, with a CAGR of 12.2%. In 2023, the photonics market declined due to global
economic uncertainties, supply chain disruptions, slower cloud investment and industry
cyclical fluctuations. However, the role of photonics in enabling the digital and intelligent
transformation remains indispensable, laying the foundation for sustained growth in the
coming years. Looking forward, it is expected that the sales revenue of global photonics
industry will reach USD41.5 billion in 2029 with a CAGR of 18.5% from 2024.
In 2024, datacom photonics sales reached approximately USD11.3 billion, fueled by data
center growth and AI advancements. This segment is projected to grow to USD28.6 billion by
2029, with a CAGR of 20.4% from 2024. While telecom photonics declined slightly in recent
years, it is expected to rebound, driven by 5G and new network infrastructure, reaching
USD12.8 billion in 2029 with a CAGR of 14.6% from 2024.
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Sales revenue of photonics by application segment (Global), 2020-2029E
2020 2021 2022 2023 2024 2025E 2026E 2027E 2028E 2029E
11.2 12.0 13.3 12.3
17.8
23.5
28.3
32.0
36.1
41.5
4.3 5.4 6.0 6.2
11.3
16.1
19.6
22.1
24.9
28.6
7.0 6.7 7.3 6.1 6.5 7.4 8.7 9.9 11.3 12.8
0
5
10
15
20
25
30
35
40
45
USD Billion
CAGR 2020-2024 CAGR 2024-2029E
Datacom 27.6% 20.4%
Telecom -1.8% 14.6%
Total 12.2% 18.5%
Source: LightCounting, Interviews with industry experts by F&S, F&S
Driven by the rapid growth of data centers and cloud computing, high-speed photonics —
especially 800G and above — are expanding quickly. As the most advanced mass-produced
technology, 800G photonics saw a CAGR of 188.1% from 2020 to 2024 and is projected to
grow at 19.1% from 2024 to 2029. The R&D of 800G photonics began around 2020 -2021, and
leading manufacturers are now capable of large-scale shipments. Meanwhile, 1.6T photonics,
representing next-generation technology, is expected to surge with a 180.0% CAGR from 2024
to 2029, fueled by rising demand for higher bandwidth, lower power consumption, and
AI-driven data processing. The R&D of 1.6T photonics started mainly in 2022 -2023, with
some leading manufacturers having entered the small-batch shipment phase. As hyperscale
infrastructure expands, 1.6T is set to go mainstream, with 3.2T photonics on the horizon.
Sales revenue of photonics by rate (Global), 2020-2029E
0
5
10
15
20
25
30
35
40
45
2020 2021 2022 2023 2024 2025E 2026E 2027E 2028E 2029E
37.9% 33.5% 35.0% 27.6% 17.8% 14.3% 13.8% 13.4% 13.2% 13.0%
25.6%
36.1%
39.4%
40.9%
34.6%
26.3%
4.1%
10.6%
6.9%
14.8%
25.4%
33.3%
36.8%
32.7%
27.5%
20.5%
15.0%
10.8%
16.3% 17.2% 19.2% 15.9%
10.1%
7.5%
5.2%
3.8%
33.6% 27.9% 20.4% 15.5%
9.3%
7.4%
7.1%
6.0%
4.9%
3.9%
11.2 12.0 13.3 12.3
17.8
23.5
28.3
32.0
36.1
41.5
2.8%
2.1%
0.0% 0.0%11.6%0.6% 0.0% 0.0%
19.7%1.8% 0.0% 0.0% 0.0%0.0% 0.0%0.5% 0.0% 0.1% 0.7%0.2%
21.7% 26.2%3.6% 14.8%
CAGR 2020-2024 CAGR 2024-2029E
100G
200G
400G
800G
1.6T
3.2T
Others
(1G-10G/25G/40G/50G, etc.ʣ
-18.5% -0.3%
-13.6%
-7.3%
19.1%
180.0%
N/A
11.3%
-0.5%
49.6%
188.1%
N/A
N/A
-7.2%
Source: LightCounting, Interviews with industry experts by F&S, F&S
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Competitive landscape of the photonics industry
The global photonics market is relatively competitive, driven by the increasing demand
for high-speed data transmission in telecommunications, data centers and cloud computing.
Key players include established companies from the United States, China, and Japan, each
vying for market share through technological advancements and scaling production
capabilities. Companies in China have made significant progress in recent years, benefiting
from lower production costs and strong R&D capabilities. The market is also shaped by rapid
developments in AI, 5G, and IoT, driving further competition among these players.
BUSINESS MODEL ANALYSIS OF INTEGRATED OPTICAL AND WIRELESS
CONNECTIVITY DEVICES INDUSTRY
Integrated OWCD companies mainly collaborate with their customers through JDM
and/or ODM models. In terms of manufacturing, contract manufacturing (“ CM”) and
co-location manufacturing model are two models primarily adopted by these companies in
addition to in-house manufacturing. The following are analyses of the major business models:
JDM vs. ODM
Different from ODM model, JDM emphasizes collaboration at each stage from product
concept to final manufacture, allowing for high customization and innovation. It requires
significant collaboration and close communication from both parties, particularly in design and
development while ODM operates with more independent, streamlined approach, where
integrated OWCD companies handles most of the design, development and manufacturing.
Thus, JDM is resource-intensive and demands significant financial and operational capabilities
as it involves extensive collaboration and customization, where companies with multiple
large-scale customers are able to afford to make such investments. The table below represents
the comparison between JDM and ODM models as follows:
Stage
Software
development
Hardware
development
New production
introduction/
prototype/testing
Manufacture
Sales
Description Customer
involvement
Customer
involvement Description
JDM ODM
Joint involvement of customers: Collaborative
design and development with the customer
Joint involvement of customers: Collaborative
efforts with the customer to design hardware
Joint involvement of customers: Joint efforts in
prototyping, testing and ensuring quality
Joint involvement of customers: Manufacturing
occurs in close collaboration with the customer
Full involvement of customers: Customer is
leading the sales and marketing activities
No material involvement of customers:
Integrated OWCD company handles software
design independently
No material involvement of customers:
Integrated OWCD company handles hardware
development independently
No material involvement of customers:
Integrated OWCD company independently
creates prototypes and conducts testing
No material involvement of customers:
Manufacturing is handled independently by the
integrated OWCD company
Customer is leading sales and marketing
activities of the customized products, while
integrated OWCD company may promote the
standard products under separate branding
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Contract manufacturing (“CM”) vs. Co-location manufacturing
The CM model is typically more focused on large-scale contract manufacturing.
Compared with CM model, co-location manufacturing offers a flexible, integrated approach,
which has become a manufacturing model commonly used in the industry. Under this model,
companies typically retain control over core elements such as product design, key materials,
key equipment, and overall management, while local partners are responsible for
manufacturing operations, labor, and compliance with local regulations. This model supports
consistent global quality standards, enhances supply chain responsiveness, and improves cost
efficiency. By leveraging local expertise, it also helps mitigate geopolitical risks and facilitates
agile capacity deployment with relatively low capital investment, making it a widely adopted
option among integrated OWCD companies. The table below represents the comparison
between CM and co-location manufacturing models as follows:
Process design
Manufacturing and
testing process
intellectual property
Production, labor
and facilities
Raw material
procurement
Equipment
CMCriteria Co-location manufacturing
Developed and owned by the manufacturing partner
Belongs to the manufacturing partner
Handled by the manufacturing partner
Procured by the manufacturing partner
Provided by the manufacturing partner
Developed and owned by integrated OWCD company, transferred to
its manufacturing partner
Belongs to integrated OWCD company
Handled by the manufacturing partner in compliance with
established procedures and protocols of integrated OWCD company
Integrated OWCD company provides core raw materials
Integrated OWCD company provides core equipment
Production quality
control Supervised and managed by the manufacturing partner Supervised and managed by personnel assigned by integrated
OWCD company
The data presented in the “ Industry Overview” section has taken into account the
potential impact of trade restrictions and tariffs, based on several key assumptions that support
the industry’s resilience and sustained growth trajectory:
Sustained Global Demand
It is assumed that global demand for OWCDs will continue its steady upward trend. This
growth is underpinned by the ongoing digital transformation across sectors, rapid expansion of
cloud computing and AI workloads, and increasing internet penetration in emerging markets.
The proliferation of 5G networks, IoT deployments, and data center construction further
reinforces the demand for high-performance data transmission infrastructure. Given these
long-term drivers, the demand for OWCDs is expected to remain robust.
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Resilient Global Supply
It is assumed that global OWCD supply will remain stable despite potential trade barriers.
Major leading industry participants have implemented proactive strategies to mitigate risks,
including shifting production to overseas manufacturing sites and expanding overseas capacity.
These measures are expected to effectively reduce the impact of trade restrictions and tariffs
on the overall supply landscape.
Technological Innovation as a Growth Catalyst
The continued advancement of core technologies, such as high-speed photonics
(e.g., 800G/1.6T), 25G/50G PON, and Wi-Fi 7, is unlocking new application scenarios and
driving structural upgrades in demand. These innovations are expanding the addressable
market for OWCDs and improving the performance of these products, which in turn drives
broader adoption across downstream customers. The pace of technological iteration is expected
to remain a key enabler of long-term industry growth.
Globalization Trend
To diversify markets and mitigate geopolitical risks, many OWCD companies are
accelerating overseas expansion through joint ventures, local R&D and production facilities,
and regional ecosystem partnerships. Emerging markets such as ASEAN countries, India and
the Middle East are attracting investment with growing infrastructure demand and supportive
policies. This global expansion is expected to serve as a key driver of long-term growth for the
OWCD industry tapping into emerging market potential.
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I. LA W AND REGULATIONS RELATING TO OUR GROUP’S BUSINESS AND
OPERATIONS IN THE PRC
We are subject to a variety of PRC laws, rules and regulations across a number of aspects
of our business. The following is a summary of the most significant laws and regulations that
are applicable to our current business activities within the territory of the PRC.
REGULATIONS RELATING TO FOREIGN INVESTMENT
Investment activities in China by foreign investors are principally regulated by (i) the
Catalogue of Encouraged Industries for Foreign Investment (ོᎸ̮ਠҳ༟ପุͦ፽) (the
“Encouraging Catalog ”), (ii) the Special Administrative Measures (Negative List) for Foreign
Investment Access (݄(૶ఊ)) (the “ Negative List ”), each of
which was promulgated and amended from time to time by the NDRC, and (iii) the Foreign
Investment Law of the PRC ()(the “ Foreign Investment
Law”), which was adopted by the NPC on March 15, 2019, and became effective on January
1, 2020, as well as their respective implementation rules and ancillary regulations.
According to Article 2 of the Foreign Investment Law , Foreign investment in the territory
of the People’s Republic of China (hereinafter referred to as “within China”) shall be governed
by this Law. For the purposes of this Law, “foreign investment” means the investing activities
within China directly or indirectly conducted by foreign natural persons, enterprises, and other
organizations (hereinafter referred to as “foreign investors”). As disclosed above, the
Company’s controlling Shareholder and de facto controller are foreign investors. Therefore,
the regulations relating to foreign investment are applicable to the Group. For the permitted
scope of foreign investor, the Negative List uniformly set forth the ownership requirements,
requirements for senior executives, and other special administrative measures for the access of
foreign investment. As advised by our PRC Legal Adviser, our Group’s principal business,
during the Track Record Period and up to the Latest Practicable Date, did not involve any
prohibited or restrictive areas stipulated under the Negative List. Our Group’s businesses fall
under the permitted scope.
Guidance Catalog of Industries for Foreign Investment
The Encouraging Catalog and the Negative List lay out the basic framework governing
foreign investment in China, classifying businesses into three categories, namely the
“encouraged” category, the “restricted” category, and the “prohibited” category, based on the
level of participation allowed to and conditions required of foreign investment.
On October 26, 2022, the MOFCOM and the NDRC released the Catalogue of
Encouraged Industries for Foreign Investment (Edition 2022) (ོᎸ̮ਠҳ༟ପุͦ፽(2022
و)), which became effective on January 1, 2023 and replaced the previous Encouraging
Catalog. On September 6, 2024, the MOFCOM and the NDRC released the Special
Administrative Measures (Negative List) for Foreign Investment Access (Edition 2024) (̮
݄(૶ఊ)(2024و)) (the “ Negative List 2024 ”), which became
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effective on November 1, 2024 and replaced the previous Negative List. Any industry not listed
on the Negative List 2024 is a permitted industry and generally accessible to foreign
investment unless specifically prohibited or restricted by any PRC laws or regulations.
The Foreign Investment Law
The Foreign Investment Law is formulated to further expand the opening-up of the
Chinese economy, vigorously promote foreign investment and safeguard the legitimate rights
and interests of foreign investors. According to the Foreign Investment Law, a foreign
investment means any foreign investor’s direct or indirect investment in China, including: (i)
establishing foreign-invested enterprises (the “ FIEs ”) in China either individually or jointly
with other investors; (ii) obtaining stock shares, stock equity, property shares or other similar
interests in Chinese domestic enterprises; (iii) investing in new projects in China either
individually or jointly with other investors; and (iv) making investment through other means
provided by laws, administrative regulations or by the State Council of the PRC. Foreign
investments are entitled to pre-entry national treatment and are subject to the Negative List.
The pre-entry national treatment means that the treatment accorded to foreign investors and
their investments at the stage of investment access is not lower than that of domestic investors
and their investments. The State implements special administrative procedures for access to
foreign investment in specific fields and foreign investors shall not invest in any prohibited
fields stipulated in the Negative List and shall meet the conditions stipulated in the Negative
List before investing in any restricted fields.
The investment, earnings and other legitimate rights and interests of a foreign investor
within the territory of China shall be protected in accordance with the law, and all national
policies supporting the development of enterprises shall apply equally to FIEs. The State
guarantees that FIEs are able to participate in the formulation of standards in an equal manner
and government procurement activities through fair competition in accordance with the law.
The State shall not expropriate any foreign investment except under special circumstances. The
State may levy or expropriate the investment of foreign investors in accordance with the law
for the public interest. The expropriation and requisition shall follow legal procedures and
timely and reasonable compensation shall be given. In business activities, FIEs shall comply
with applicable rules and regulations on labor protection, social insurance, tax, accounting,
foreign exchange and other matters prescribed by law.
On December 26, 2019, the State Council promulgated the Implementation Regulations
for the Foreign Investment Law of the PRC (ૢԷ), which
came into effect on January 1, 2020, and further requires that FIEs and domestic enterprises be
treated equally with respect to policy making and implementation.
On December 30, 2019, the MOFCOM and the SAMR jointly issued the Measures on
Reporting of Foreign Investment Information () (the “ Foreign
Investment Information Measures ”), which came into effect on January 1, 2020 and replaced
the Interim Administrative Measures for the Record-filing of the Establishment and
Modification of Foreign-invested Enterprises (၍ଣᅲБ፬
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). Starting from January 1, 2020, foreign investors and FIEs in the PRC shall submit
information relating to their investment through the Enterprise Registration System and the
National Enterprise Credit Information Publicity System established by the SAMR by
submitting initial reports of establishment, reports on changes to the investment, reports on
termination of the investment and annual investment reports in accordance with the Foreign
Investment Information Measures. Where a foreign investor or a FIE fails to submit any
required information or make any correction or resubmission when directed by the competent
authority, it may be subject to a fine of up to RMB300,000 (or RMB500,000 in the event of
serious violations).
LA WS AND REGULATIONS RELATING TO OUR BUSINESS
According to the Radio Regulations of the PRC (ʕശɛ͏΍ձ਷ೌᇞཥ၍ଣૢԷ),
which was issued by the State Council and the Central Military Commission on September 11,
1993, revised on November 11, 2016, and came into effect on December 1, 2016. The radio
regulatory authority of the state shall be responsible for radio regulation nationwide, The
production or import of radio transmitting equipment for domestic sale and use shall be in
compliance with the laws and regulations on product quality, national standards and the
provisions of the state on radio regulation. Except for micro power short-distance radio
transmitting equipment, for any production or import of other radio transmitting equipment for
domestic sale and use, an application for model confirmation shall be filed with the radio
regulatory authority of the state. For anyone who, in violation of the provisions hereof,
produces or imports any radio transmitting equipment sold or used within China without
obtaining model confirmation, the radio regulatory authority shall order the violator to take
corrective action, and impose a fine ranging from RMB50,000 to RMB200,000 on the violator;
and if the violator refuses to take corrective action, shall confiscate the radio transmitting
equipment without model confirmation, and impose a fine ranging from RMB200,000 to
RMB1 million on the violator. For anyone who sells any radio transmitting equipment for
which model confirmation should have been obtained in accordance with the provision of
Article 44 hereof, the radio regulatory authority shall order the violator to take corrective
action, confiscate illegally sold radio transmitting equipment and illegal income, and may
impose a fine of not more than 10% of the goods value of illegally sold equipment; and if it
refuses to take corrective action, shall impose a fine of not less than 10% but not more than
30% of the goods value of illegally sold equipment on the violator.
According to the Telecommunications Regulations of the PRC (ૢ
Է) issued by the State Council on September 25, 2000, revised on February 6, 2016, and
effective on the same day. The State shall implement a network connection licensing system
for telecommunications terminal equipment, radio telecommunications equipment, and
interconnection-related equipment. Telecommunications terminal equipment, radio
telecommunications equipment, and interconnection-related equipment accessing a public
telecommunications network shall comply with the standards stipulated by the State, and
obtain a network connection permit. Telecommunications equipment manufacturing enterprises
shall guarantee the quality and reliability of telecommunications equipment which has obtained
a network connection permit, and shall not lower product quality or performance. Selling
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telecommunications terminal equipment which does not carry a network connection permit
shall be ordered by the telecommunications administration authorities of the province,
autonomous region or centrally-administered municipality to make corrections and be imposed
a fine ranging from RMB10,000 to RMB100,000. Any offender who violates the provisions of
these Regulations in the lowering of product quality or performance after obtaining the
telecommunications equipment network connection permit, shall be punished by the product
quality supervision authorities pursuant to the provisions of the relevant laws and
administrative regulations.
According to the Measures for the Administration of Telecommunications Equipment
Network Access (), which was issued by the Ministry of
Information Industry (abolished) on May 10, 2001, revised by the Ministry of Industry and
Information Technology (the “ MIIT ”) on January 18, 2024, and came into effect on the same
day, telecommunications equipment manufacturers (hereinafter referred to as manufacturers)
must comply with national laws, regulations, and policy requirements when applying for
telecommunications equipment network access licenses. The telecommunications equipment
applying for network access licenses must meet national standards, communication industry
standards, and the requirements of the MIIT. Telecommunications equipment manufacturers
shall have a sound quality assurance system and after-sales service measures. Manufacturers
that have obtained network access licenses shall accept the supervision and management of the
communications administrations of the provinces, autonomous regions, or municipalities
directly under the Central Government where they are located. For those who forge,
fraudulently use, transfer network access licenses, or fabricate network access license numbers,
the MIIT or the communications administrations of the provinces, autonomous regions, or
municipalities directly under the Central Government shall confiscate their illegal earnings and
impose a fine of not less than three times but not more than five times the illegal earnings. If
there are no illegal earnings or the illegal earnings are less than RMB10,000, a fine of not less
than RMB10,000 but not more than RMB100,000 shall be imposed.
On October 22, 2019, the MIIT issued the Guiding Opinions of the Ministry of Industry
and Information Technology on Accelerating the Cultivation of New Modes and New Forms of
Shared Manufacturing to Promote the High-quality Development of the Manufacturing
Industry (ܸٙ࢝
ኬจԈ). It is clearly stipulated therein that efforts shall be made to promote the construction
of new infrastructure. Specifically, the construction of new-type infrastructure, including 5G,
artificial intelligence, the industrial Internet, and the Internet of Things, shall be strengthened,
and the coverage scope of high-speed, large-capacity, and low-latency networks shall be
expanded. Manufacturing enterprises are encouraged to achieve the interconnection of people,
machines, and things by means of the transformation and upgrading of their internal networks,
thereby providing information network support for shared manufacturing.
On November 10, 2019, the NDRC, the MIIT, the Cyberspace Administration of China,
the Ministry of Education, the MOF, the Ministry of Human Resources and Social Security, the
Ministry of Natural Resources, MOFCOM, the PBOC, the SAMR, the National Bureau of
Statistics, the National Copyright Administration, the China Banking and Insurance Regulatory
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Commission, the CSRC, and the National Intellectual Property Administration jointly issued
the Implementation Opinions on Promoting the In-depth Integration and Development of
Advanced Manufacturing and Modern Service Industries (ਕ
จԈ). It is proposed therein that the innovative application of the
industrial Internet shall be accelerated. Supported by the construction of network
infrastructure, the development of an application platform system, and the improvement of
security guarantee capabilities, efforts shall be made to promote the connection of all elements
and the entire industrial chain in the manufacturing industry, improve the collaborative
application ecosystem, and build a digital, networked, and intelligent manufacturing and
service system. Moreover, the integrated development of the manufacturing industry, the
service industry, and the Internet shall be deepened, “Internet +” shall be vigorously developed,
development vitality and potential shall be stimulated, and a new ecosystem for integrated
development shall be created.
On March 6, 2020, the General Office of the MIIT issued the Notice of the General Office
of the Ministry of Industry and Information Technology on Promoting the Accelerated
Development of the Industrial Internet (પਗʈุʝᑌၣ̋Ҟ೯
). It was proposed therein that the internal and external networks of the industrial
Internet should be transformed and upgraded. Specifically, efforts should be made to promote
basic telecommunications enterprises to build high-quality external networks covering all
prefecture-level cities across the country, and create 20 excellent service cases for enterprise
industrial Internet external networks. Industrial enterprises are encouraged to upgrade and
transform the internal networks of the industrial Internet, create 10 benchmark networks, and
promote 100 leading enterprises in key industries and 1,000 local backbone enterprises to carry
out the upgrading and transformation of the internal networks of the industrial Internet.
On March 24, 2021, the MIIT issued the Action Plan for the Coordinated Development
of ‘Dual Gigabit’ Networks (2021-2023) (“ᕐɷΊ”ྌ(2021-2023
ϋ)). It proposed that within three years, the “dual gigabit” network infrastructure
comprehensively covering urban areas and conditional towns and townships should be
basically completed, so that both fixed and mobile networks generally have the capacity to
provide gigabit-to-the-home services. Specific targets were set: by the end of 2021, the gigabit
fiber-optic network should be capable of covering 200 million households, the scale of
10GPON and above ports should exceed 5 million, and the number of gigabit broadband users
should exceed 10 million; by the end of 2023, the gigabit fiber-optic network should be capable
of covering 400 million households, and the scale of 10GPON and above ports should exceed
10 million.
On November 1, 2021, the MIIT issued the 14th Five-Year Plan for the Development of
the Information and Communication Industry (“ɤ̬ʞ”஝ྌ). The plan
proposes that by 2025, a new type of digital infrastructure that is high-speed, ubiquitous,
integrated, interconnected, intelligent, green, safe and reliable will be basically established.
Focusing on the construction of new digital infrastructure and the expansion of the digital
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space, 26 key development areas and 21 projects have been put forward, aiming to
comprehensively improve the development quality of the industry and the ability to empower
the digital transformation of the economic society.
On January 22, 2022, the General Office of the MIIT and the General Office of the NDRC
issued the Notice on Promoting Cloud-Network Integration and Accelerating the Construction
of Information Infrastructure in Small and Medium-Sized Cities (ආථၣፄΥ̋Ҟʕ
). It was proposed that by 2025, the cloud-network
infrastructure covering small and medium-sized cities should be basically completed in the
eastern region, as well as in most parts of the central, western, and northeastern regions. The
construction goals of “Gigabit Connectivity in a Thousand Cities” and “A Thousand Cloud
Resource Pools in a Thousand Cities” should be achieved, that is, gigabit access capabilities
and cloud resource pools should cover more than 1,000 small and medium-sized cities.
REGULATIONS RELATING TO PRODUCTION SAFETY
On June 29, 2002, the Standing Committee of the National People’s Congress (the
“SCNPC ”) promulgated the Production Safety Law of the PRC (ʕശɛ͏΍ձ਷τΌ͛ପ
) (the “ Production Safety Law ”), which was recently amended by the SCNPC on June 10,
2021 and became effective on September 1, 2021. According to the Production Safety Law,
enterprises that are engaged in production and business activities shall abide by the relevant
laws and regulations concerning work safety, strengthen work safety management, establish
and improve the all-staff work safety responsibility system and work safety rules and
regulations, increase investment in funds, materials, technologies and personnel for work
safety, improve the conditions for work safety, strengthen the standardized and information
technology development of work safety, establish a dual prevention mechanism of graded
management and control of safety risks and the screening and handling of hidden dangers,
improve the risk prevention and resolution mechanism, and improve the level of work safety
so as to ensure workplace safety. The safety facilities of a producer or business operator for
engineering projects to be built, renovated or expanded shall be designed, constructed, and put
into operation and use simultaneously with the principal part of the projects. Investments in
safety facilities shall be included in the budgetary estimates for the construction projects. Any
entity that fails to provide required production safety conditions is prohibited from engaging
in production activities.
REGULATIONS RELATING TO PRODUCT QUALITY
According to the Product Quality Law of the PRC ()
promulgated by the SCNPC on February 22, 1993 and recently amended with immediate effect
on December 29, 2018, producers shall: (i) be responsible for the quality of the products they
produce; (ii) not produce products that have been explicitly eliminated by the state; (iii) not
forge the place of origin, forge or falsely use the name and address of another person’s factory;
and not forge or fraudulently use quality marks such as certification marks; (iv) not produce
or market adulterated products or use fake goods as genuine or sub-standard products as
standard; and (v) ensure that the packaging quality of fragile, flammable, explosive, toxic,
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corrosive, radioactive and other dangerous goods, products that cannot be inverted during
storage and transportation and other products with special requirements meets the
corresponding requirements, and make warning signs or warning instructions in Chinese, or
indicate matters needing attention during storage and transportation. If a defect in the product
causes damage to the person or property of others, the victim may claim compensation from
the producer of the product or from the seller of the product. Producers or sellers who produce
or sell substandard products will be ordered to cease production and sales, the illegally
produced or sold products will be confiscated, and a fine will be imposed. If there is any illegal
income, the illegal income will also be confiscated. If the circumstances are serious, the
business license shall be revoked. If a crime is constituted, criminal responsibility shall be
investigated in accordance with law.
According to the Civil Code of the PRC (Պ) promulgated by the
SCNPC on May 28, 2020 and became effective on January 1, 2021, if a defect of a product
causes damage to another person, the infringed person may claim compensation against the
manufacturer or the seller of the product. If the infringer knows that the product is defective
and still produces or sells it, or fails to take effective remedial measures in accordance with the
provisions of the Civil Code of the PRC, resulting in the death of another person or serious
damage to the health of another person, the infringed person shall be entitled to claim
corresponding punitive damages. If a product is defective due to the fault of a third party, such
as a transporter or warehouseman, and causes damage to another person, the producer or seller
of the product shall have the right to recover compensation from the third party after making
compensation to the infringed person.
REGULATIONS RELATING TO CONSTRUCTION AND ENVIRONMENTAL
PROTECTION
Regulations on construction
According to the Urban and Rural Planning Law of the PRC (ඊ஝
) which was promulgated by the SCNPC with effect from January 1, 2008 and recently
amended with immediate effect on April 23, 2019, the Construction Law of the PRC (ʕശ
) which was promulgated by the SCNPC with effect from March 1, 1998
and recently amended with immediate effect on April 23, 2019 and the Regulation on Quality
Management of Construction Projects (ணʈ೻ሯඎ၍ଣૢԷ) which was promulgated
on January 30, 2000 and amended with immediate effect on April 23, 2019, the construction
activities carried out in the built-up areas of cities, towns and villages as well as areas that must
be under planning control for urban and rural construction and development shall be in
compliance with the relevant requirements of the Urban and Rural Planning Law of the PRC.
The construction entity shall obtain the construction land planning permit and the construction
project planning permit from the competent department of urban and rural planning under the
people’s government at the county level, and shall obtain the construction permit from the
competent department of housing and urban and rural construction under the people’s
government at municipal and county level or above of the place of the construction project
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before commencement of construction. After receiving the construction project completion
report, the construction entity shall organize the entities of design, construction, project
supervision and other relevant entities to complete the acceptance.
According to the Regulations on the Administration of Approval and Filing of Enterprise
Investment Projects (၍ଣૢԷ), which was promulgated by the
State Council on November 30, 2016 and came into effect on February 1, 2017, projects related
to national security, major productivity distribution, strategic resource development and major
public interests are subject to approval management. The specific project scope, the approval
authority and the approval power shall be implemented in accordance with the catalog of
investment projects approved by the government.
LA WS AND REGULATIONS RELATING TO FIRE PREVENTION
According to the Fire Prevention Law of the PRC ()
promulgated by the SCNPC on April 29, 1998 and implemented since September 1, 1998, and
last amended on April 29, 2021 and implemented since the same date, together with the Interim
Provisions on the Administration of Examination and Acceptance of Fire Prevention Design for
Construction Projects () promulgated by the
Ministry of Housing and Urban-Rural Development on April 1, 2020 and implemented since
June 1, 2020, and last amended on August 21, 2023 and implemented since October 30, 2023,
the fire prevention design and construction work of a construction project must conform to the
national fire prevention technical standards. For construction projects which are required to
have fire prevention design in accordance with the national fire prevention technical standards
for project construction, the examination and acceptance system on fire prevention design for
construction project shall be applied. Where, upon the completion of construction projects,
application for acceptance on fire prevention is required by the competent department of
housing and urban-rural development under the State Council, the construction entities shall
apply to the competent department of housing and urban-rural development for acceptance
checks for fire prevention. With respect to construction projects other than those mentioned
above, construction entities shall, after an acceptance check, file their results to the competent
department of housing and urban-rural development for record purposes, and such department
shall conduct random inspections thereof. Construction projects that are subject to fire
prevention acceptance check in accordance with the laws are prohibited from being put into use
if they do not go through or fail the fire prevention acceptance check. Other construction
projects that fail the random inspections according to laws shall be suspended from using.
Regulations in relation to environmental protection
According to the Environmental Protection Law of the PRC (ᚐ
), promulgated by the SCNPC on December 26, 1989 and last amended on April 24, 2014
and which came into effect on January 1, 2015, the Environmental Impact Assessment Law of
the PRC (), promulgated by the SCNPC on October 28,
2002 and latest amended on December 29, 2018, and the Administrative Regulations on the
Environmental Protection of Construction Project (ᚐ၍ଣૢԷ),
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promulgated by the State Council on November 29, 1998 and last amended on July 16, 2017
and which came into effect on October 1, 2017, enterprises which plan to construct projects
shall engage qualified professionals to provide the assessment reports, assessment form, or
registration form on the environmental impact of such projects. The assessment reports,
assessment form, or registration form shall be filed with or approved by the relevant
environmental protection bureau prior to the commencement of any construction work.
Regulations relating to pollutant discharge permits
According to the Regulations on the Administration of Pollutant Discharge Permits (ર
Ϯ஢̙၍ଣૢԷ) promulgated by the State Council on January 24, 2021 and coming into
effect on March 1, 2021, enterprises, institutions and other producers and operators subject to
pollutant discharge permit management should apply for and obtain pollutant discharge permits
in accordance with the provisions of the regulations. Those who have not obtained pollutant
discharge permits are not allowed to discharge pollutants.
According to the Classified Management Catalog of Pollutant Discharge Permits for
Stationary Sources of Pollution (2019 Edition) (๕રϮ஢̙ʱᗳ၍ଣΤ፽(2019 ϋ
و)) promulgated by the Ministry of Ecology and Environment on December 20, 2019 and
coming effective on the same day, a pollutant discharge entity subject to registration
management is not required to apply for a pollutant discharge permit. It shall fill in the
pollutant discharge registration form on the management information platform of state
pollutant discharge permits, and register its basic information, pollutant discharge route,
pollutant discharge standards implemented, pollution prevention and control measures adopted,
and other information.
REGULATIONS RELATING TO THE IMPORT AND EXPORT OF GOODS AND
TECHNOLOGY
According to the Foreign Trade Law of the PRC ()
promulgated by the SCNPC on May 12, 1994, which was recently amended with immediate
effect on December 30, 2022, and the Notice of the Department of Enterprise Management and
Inspection on Matters Related to the Record-filing of Consignors and Consignees of Import
and Export Goods ()
published by the General Administration of Customs of the PRC with immediate effect on
January 3, 2023, if consignors and consignees of import and export goods apply for
record-filing, they shall obtain the market entity qualification and are not required to obtain the
record-filing of foreign trade business operators. For technologies that fall under the category
of free import and export, the contract record-filing and registration formalities shall be
handled with the foreign trade department in charge under the State Council or the institutions
entrusted by it.
According to the Law of the PRC on Import and Export Commodity Inspection (ʕശ
) promulgated by the SCNPC on February 21, 1989 and
implemented since August 1, 1989, and last amended on April 29, 2021 and came into effect
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on the same date, and the Regulations for the Implementation of the Law of the PRC on Import
and Export Commodity Inspection (ૢԷ)
promulgated by the State Council on August 31, 2005 and implemented since December 1,
2005, and last amended on March 29, 2022 and implemented since May 1, 2022, the General
Administration of Customs shall be responsible for inspection of import and export
commodities in the PRC. The entry-exit inspection and quarantine authorities shall conduct
inspection on the import and export of commodities listed in the catalog and on the import and
export other commodities that shall be subject to the inspection by the entry-exit inspection
authorities as prescribed by laws and administrative regulations. For the imported and exported
commodities other than those that are subject to inspection by the entry-exit inspection and
quarantine authorities as mentioned above, the entry-exit inspection and quarantine authorities
shall conduct random inspection in accordance with state regulations. Imported commodities
subject to inspection may not be sold or used if they have not been inspected. Exported
commodities subject to inspection may not be exported if they have not been inspected or fail
to pass the inspection.
REGULATIONS RELATING TO OVERSEAS INVESTMENT
The Measures for Overseas Investment Management () was
promulgated by the MOFCOM on March 16, 2009, which was amended on September 6, 2014
and came into effect on October 6, 2014. As defined therein, overseas investment means that
the enterprises legally incorporated in the PRC own the non-financial enterprises or obtain the
ownership, control and operation management rights of the existing non-financial enterprises
in foreign countries through incorporation, merger and acquisition and other means. If the
overseas investments involve sensitive countries and regions or industries, they shall be subject
to the approval of competent authorities. For other overseas investments, they shall be subject
to filing administration.
The Administrative Measures for Outbound Investment by Enterprises (Άุྤ̮ҳ༟
) was promulgated by the NDRC on December 26, 2017 and came into effect on
March 1, 2018. As defined therein, overseas investment means any investment activities in
which a domestic enterprise of the PRC obtains ownership, control, operation and management
rights and other relevant interests directly or through its controlled overseas enterprise by
contributing asset and/or interest or providing financing and/or guarantee. To conduct overseas
investment, certain procedures shall be compiled with, including approval and record-filing of
overseas investment projects, reporting relevant information and cooperating with the
supervision and inspection. The NDRC promulgated the Catalog of Sensitive Sectors for
Outbound Investment (2018 Edition) (ྤ̮ҳ༟ઽชБุͦ፽(2018و)) on January 31,
2018 and came into effect on March 1, 2018, to list the current sensitive industries in detail.
According to (i) the Foreign Exchange Administration Rules on Outbound Direct
Investment of the PRC Organizations () promulgated
by the SAFE on July 13, 2009 and becoming effective on August 1, 2009 and (ii) the Circular
on Further Simplifying and Improving Policies for Foreign Exchange Administration for
Direct Investment ()
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promulgated on February 13, 2015 and becoming effective on June 1, 2015, which was
partially abolished by the SAFE, a PRC enterprise which has completed the approval or filing
procedures at the outbound investment regulatory authorities shall make the registration with
SAFE through its designated banks in connection with its outbound direct investment and
obtain a corresponding SAFE registration certificate. With the approval or filing certificate
issued by the outbound investment regulatory authorities and the SAFE registration certificate,
the PRC enterprise can remit funds outside the PRC through the designated banks for the
purpose of outbound direct investment. In the event of changes to certain basic information of
the offshore company registered at SAFE’s system, the PRC enterprise shall make the
alteration registration with SAFE through its designated banks.
Pursuant to the Notice on Issues concerning Foreign Exchange Control Pertaining to
Overseas Listing (), promulgated
by the SAFE with immediate effect on December 26, 2014, domestic companies listed overseas
shall submit the registration documents for their overseas listings to domestic banks to open
designated foreign exchange accounts regarding their initial or follow-on offerings and share
repurchases, and handle the exchange, transfer and remittance of relevant funds through such
designated accounts, and the proceeds raised from overseas listings of a domestic company
may be remitted into the PRC or deposited overseas, and the use of such proceeds shall be
consistent with those set out in the prospectus or other publicly disclosed documents such as
the corporate bonds offering documentations, board resolutions or shareholders’ resolutions.
REGULATIONS RELATING TO LABOR, SOCIAL INSURANCE AND HOUSING
PROVIDENT FUND
Labor contract
According to the Labor Contract Law of the PRC ()
promulgated by the SCNPC on June 29, 2007, which was recently amended on December 28,
2012 and became effective on July 1, 2013, and the Implementation Rules of the Labor
Contract Law of the PRC (ૢԷ) promulgated by the State
Council with immediate effect on September 18, 2008, a written employment contract shall be
entered into to create an employment relationship. If an employer fails to enter into a written
employment contract with an employee within one year from the date on which the
employment relationship is created, the employer must enter into a written employment
contract with the employee and pay the employee an amount equal to twice such employee’s
salary for the period from the day following the lapse of one month from the date of the
creation of the employment relationship to the day prior to the execution of the written
employment contract. These rules also require compensation to be paid by the employer in
certain events as a result of the termination. In addition, if an employer intends to enforce a
non-compete provision in an employment contract or non-competition agreement with an
employee, it has to compensate the employee on a monthly basis during the term of any
restrictive period after the termination or expiry of the labor contract. In most cases, employers
are also required to provide severance payment to their employees after their employment
relationships are terminated.
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Social Insurance and Housing Provident Fund
According to the Social Insurance Law of the PRC ()
promulgated by the SCNPC on October 28, 2010 and amended with immediate effect on
December 29, 2018, the Administrative Regulations on Housing Provident Fund (ʮጐ
၍ଣૢԷ) promulgated by the State Council on April 3, 1999 and recently amended with
immediate effect on March 24, 2019 and the Provisional Regulations on Collection and
Payment of Social Insurance Premiums (ᎈ൬ᅄᖮᅲБૢԷ) promulgated by the
State Council on January 22, 1999 and amended with immediate effect on March 24, 2019, a
domestic enterprise shall pay a premium for basic pension insurance, unemployment insurance,
maternity insurance, work injury insurance, basic medical insurance and housing provident
fund for its employees at an appropriate percentage based on the amounts stipulated by the
laws. Employers who fail to promptly contribute social insurance premiums in full amount
shall be ordered by the social insurance premium collection agency to make or supplement
contributions within a stipulated period, and shall be subject to a penalty for late payment from
the due date at the rate of 0.05% per day; where payment is not made within the stipulated
period, the relevant administrative authorities shall impose a fine ranging from one to three
times the amount of the amount in arrears. If the employer fails to pay the housing fund within
the prescribed time, it may be ordered to pay within a certain period of time, and if it still fails
to pay, compulsory enforcement by the court can be applied.
According to the Opinions of the Office of the State Council on Comprehensively
Promoting the Implementation of the Merger of Maternity Insurance and the Basic Medical
Insurance for Employees (ᎈΥԻྼ
จԈ) which was promulgated by the State Council with immediate effect on March 6,
2019, the PRC facilitates the incorporation of maternity insurance fund into basic medical
insurance fund of employees for unified payment. According to the Urgent Notice on
Implementing the Spirit of the Executive Meeting of the State Council and Effectively Doing a
Good Job in Stabilizing the Collection of Social Insurance Premiums (ღ௅
) which
was promulgated by the Ministry of Human Resources and Social Security with immediate
effect on September 21, 2018, it is strictly prohibited to independently organize centralized
collection and clearance of enterprises’ historical arrears of social insurance premiums. Those
that have already carried out centralized collection and clearance should immediately correct
it and properly handle the follow-up work.
LA WS AND REGULATIONS RELATING TO CYBERSECURITY AND DATA
SECURITY
On July 1, 2015, the SCNPC promulgated the State Security Law of the PRC (ʕശɛ
), which became effective on the same day, pursuant to which the state
shall establish a national security review and supervision system to review, among other things,
foreign investment, key technologies, internet and information technology products and
services, projects relating to national security matters and other important activities that are
likely to impact national security of China. According to the State Security Law of the PRC,
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national security refers to a status in which the regime, sovereignty, unity, territorial integrity,
welfare of the people, sustainable economic and social development, and other vital interests
of the state, and the capability to maintain a sustained security status are not faced with any
danger and not threatened internally or externally.
The SCNPC promulgated the Data Security Law of the PRC (ʕശɛ͏΍ձ਷ᅰኽτΌ
) on June 10, 2021, which became effective on September 1, 2021, for the establishment
of a data classification and hierarchical protection system to conduct classified and hierarchical
protection of data. Entities carried out data processing activities shall establish a sound data
security management system throughout the whole process, organize data security education
and training, and take corresponding technical measures and other necessary measures to
ensure data security, in accordance with the provisions of laws and regulations.
Pursuant to Measures on Cybersecurity Review () jointly
announced by the Cyberspace Administration of China and several regulatory authorities in
China on April 13, 2020 and implemented since June 1, 2020, last amended on December 28,
2021 and implemented since February 15, 2022, the Cybersecurity Review Office is
established under the Cyberspace Administration of China, and responsible for formulating
cybersecurity review systems and standards and organizing cybersecurity reviews. Key
information infrastructure operators who purchase network products and services and network
platform operators who engage in data processing activities that affect or may affect national
security are subject to cybersecurity review by the Cybersecurity Review Office. Network
platform operators with personal data of more than one million users must file applications to
the Cybersecurity Review Office for cybersecurity review before listing overseas. If the
member units under the cybersecurity review working mechanism opine that any network
products and services and data processing activities affect or potentially affect national
security, the Cybersecurity Review Office has the duty to conduct a review in accordance with
relevant requirements after reporting to the Central Cyberspace Affairs Commission for
approval in compliance with the procedure.
The Personal Information Protection Law of the PRC (ᚐ
) (the “ PIPL ”) was promulgated by the SCNPC on August 20, 2021 and became effective
on November 1, 2021. The PIPL stipulates the scope of personal information and the ways of
processing personal information, establishes rules for processing personal information and for
providing personal information to overseas recipients, and clarifies the individual’s rights and
the processor’s obligations in the process of personal information processing.
The Cyberspace Administration of China promulgated the Security Assessment Measures
for Data Provision Abroad () (the “ Security Assessment
Measures ”), which came into effect on September 1, 2022. The Security Assessment Measures
specifies the circumstances where a cross-border data transfer is subject to security assessment.
The MIIT promulgated the Administrative Measures on Data Security in the Field of
Industry and Information Technology (for Trial Implementation) (ʷჯਹᅰኽτ
ج(༊Б)), effect on January 1, 2023. The Measures applies to the data processing
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activities in the field of industry and information technology carried out within the territory of
China, and sets out a series of data security protection obligations for data processors in such
field, such as establishing a full life-cycle data security management system, appointing data
security management personnel, and conducting filings for the important data and core data
processed by the data processors.
The Cyberspace Administration of China promulgated the Provisions on Promoting and
Regulating Crossborder Data Flows (), which came into
effect on March 22, 2024. The Provisions specifies the circumstances where it is not required
to apply for security assessment for data to be provided abroad, to conclude a standard contract
for personal information to be provided abroad or to pass the certification for personal
information protection.
On September 24, 2024, the State Council promulgated the Regulation on Network Data
Security Management (ၣഖᅰኽτΌ၍ଣૢԷ), which has come into force on January 1,
2025. The Regulation on Network Data Security Management introduces several key
obligations, including requiring network data handlers to specify the purpose and method of
personal information processing, as well as the types of personal information involved, before
any personal information is handled. It also outlines the obligations of those handling
important data, establishes broader contractual requirements for data sharing between data
handlers, and introduces a new exemption for regulatory obligations regarding cross-border
data transfers.
REGULATIONS RELATING TO INTELLECTUAL PROPERTY
Patent
According to the Patent Law of the PRC (), which was
promulgated by the SCNPC on March 12, 1984 and recently amended on October 17, 2020 and
became effective on June 1, 2021, and the Implementation Rules of the Patent Law of the PRC
(), promulgated by the State Council on June 15, 2001,
which was recently amended on December 11, 2023 and became effective on January 20, 2024,
the patent administrative department under the State Council is responsible for the
administration of patent-related work nationwide and the patent administration departments of
the provincial, autonomous regions or municipal governments are responsible for the
administration of patents within their respective administrative areas. They provide for three
types of patents, namely “inventions,” “utility models” and “designs”. Invention patents are
valid for twenty years, utility model patents are valid for ten years and design patents are valid
for fifteen years, in each case from the date of application. The Chinese patent system adopts
a “first come, first file” principle, which means that where more than one person files a patent
application for the same invention, a patent will be granted to the person who files the
application first. 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. Otherwise, the unauthorized use constitutes an
infringement on the patent rights.
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Trademark
According to the Trademark Law of the PRC () promulgated
by the SCNPC on August 23, 1982, which was recently amended on April 23, 2019 and became
effective on November 1, 2019, the Trademark Office of the State Administration for Industry
and Commerce Authority (the predecessor of the SAMR), under the State Council is
responsible for the registration and administration of trademarks in China. The SAMR has
established a Trademark Review and Adjudication Board for resolving trademark disputes.
Registered trademarks are valid for 10 years from the date the registration is approved. A
registrant may apply to renew a registration within 12 months before the registration expiration
date. If the registrant fails to apply in a timely manner, a grace period of 6 additional months
may be granted. If the registrant fails to apply before the grace period expires, the registered
trademark shall be deregistered. Renewed registrations are valid for 10 years. On April 29,
2014, the State Council issued the revised Implementing Regulations of the Trademark Law of
the PRC (ૢԷ), which specifies the requirements for the
application of trademark registration and renewal.
Copyright
On September 7, 1990, the SCNPC promulgated the Copyright Law of the PRC (ʕശ
) (the “ Copyright Law ”), which was recently amended on November
11, 2020. The latest amendment took effect on June 1, 2021 and extends copyright protection
to internet activities, products disseminated over the internet and software products. In
addition, there is a voluntary registration system administered by the Copyright Protection
Centre of China. According to the Copyright Law, Chinese citizens, legal persons and
organizations shall own copyright to their copyrightable works, regardless of whether such
works are published or not, which include, among others, works of literature, art, natural
science, social science, engineering technology and computer software. Copyright owners
enjoy certain legal rights, including the right of publication, right of authorship and right of
reproduction. An infringer of copyrights shall be subject to various civil liabilities, which
include ceasing infringement activities, apologizing to the copyright owners and compensating
the loss of the copyright owner. An infringer of copyrights may also be subject to fines and/or
administrative or criminal liabilities under certain circumstances.
In order to further implement the Regulations on Computer Software Protection (ၑ
ᚐૢԷ), promulgated by the State Council on June 4, 1991, which was recently
amended on January 30, 2013 and became effective on March 1, 2013, the National Copyright
Administration issued the Measures for the Registration of Computer Software Copyright
() on February 20, 2002, which specifies detailed procedures
and requirements with respect to the registration of software copyrights.
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Domain names
According to the Administrative Measures for Internet Domain Names (ʝᑌၣਹΤ၍
) promulgated by the MIIT on August 24, 2017 and which became effective from
November 1, 2017, the establishment of domain name root servers and domain name root
server operation institutions, domain name registration management institutions and domain
name registration service institutions within the territory of the PRC shall obtain permission
from the MIIT or the communications administration department of the province, autonomous
region or municipality directly under the Central Government. The principle of “first come,
first served” applies to domain name registration services. The Notice of the Ministry of
Industry and Information Technology on Regulating the Use of Domain Names in Internet
Information Services (), which
was promulgated by the MIIT on November 27, 2017 and came into effect on January 1, 2018,
stipulates the obligations of Internet information service providers and other entities to combat
terrorism and maintain network security.
REGULATIONS RELATING TO THE EIT AND V ALUE-ADDED TAX
According to the EIT Law recently amended by the SCNPC and became effective on
December 29, 2018, and the Implementation Rules of the Enterprise Income Tax Law of the
PRC (ૢԷ) recently amended by the State Council on
December 6, 2024, an enterprise which is established within the PRC in accordance with the
laws or established in accordance with any laws of the foreign country (region) but with an
actual management entity within the PRC shall be regarded as a resident enterprise. A resident
enterprise shall be subject to an enterprise income tax of 25% of any income generated within
or outside the PRC. Preferential enterprise income tax is granted to industries and projects that
are supported and encouraged by the country. For high and new technology enterprises that
need the support of the country are entitled to enjoy the reduced enterprise income tax rate of
15%.
Pursuant to the Provisional Regulations on V alue-added Tax of the PRC (ʕശɛ͏΍
೼ᅲБૢԷ) (the “ V AT Regulations ”) promulgated by the State Council on
December 13, 1993, latest amended and became effective on November 19, 2017, and the
Implementing Rules for the Provisional Regulations on V alue-added Tax of the PRC (ʕശ
) promulgated by the MOF on December 25, 1993,
latest amended on October 28, 2011 and became effective on November 1, 2011, all enterprises
and individuals that engage in the sale of goods, the provision of processing, repair and
replacement services, the sale of services, intangible assets or immovable properties and the
importation of goods within the territory of the PRC must pay the V A T. Any adjustments to the
V A T tax rates shall be decided by the State Council, according to the Notice of the MOF and
the SAT on the Relevant Policies on the Streamlining and Combination of V alue-added Tax
Rates (), the Notice of the
MOF and the SAT on the Adjusting V alue added Tax Rates (࠽
) and the Announcement of the MOF , the SAT and the General Administration
of Customs on Relevant Policies for Deepening the V alue-Added Tax Reform (௅e೼ਕ
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ʮѓ), the V A T tax rates currently
implemented is 13%, 9%, 6% and 0%, and the V A T tax rate applicable to the small-scale
taxpayers is 3%. On December 25, 2024, the SCNPC promulgated the V alue-Added Tax Law
of the PRC (), which will become effective on January 1, 2026,
upon which V A T Regulations shall be repealed.
REGULATIONS ON SECURITIES AND OVERSEAS LISTINGS
Securities Laws and Regulation
The Securities Law, which was promulgated by the SCNPC on December 29, 1998, and
was recently amended on December 28, 2019 and took effect on March 1, 2020,
comprehensively regulates activities in the Chinese Mainland securities market including
issuance and trading of securities, takeovers by listed companies, securities exchanges,
securities companies and the duties and responsibilities of securities regulatory authorities, etc.
The Securities Law further regulates that a domestic enterprise issuing securities overseas
directly or indirectly or listing its securities overseas shall comply with the relevant provisions
of the State Council and for subscription and trading of shares of domestic companies using
foreign currencies, detailed measures shall be stipulated by the State Council separately. The
CSRC is the securities regulatory body set up by the State Council to supervise and administer
the securities market according to law, maintain order in the market, and ensure the market
operates in a lawful manner. Currently, the issue and trading of H shares are principally
governed by the regulations and rules promulgated by the State Council and the CSRC.
Overseas Listing
On February 17, 2023, the CSRC promulgated the Trial Measures and circulated five
supporting guidelines (() collectively, the “ Filing Rules ”), which have become
effective on March 31, 2023. The Filing Rules have comprehensively improved and reformed
the regulatory regime for overseas offering and listing of the PRC domestic companies’
securities to regulate both direct and indirect overseas offering and listing of the PRC domestic
companies’ securities by adopting a filing-based regulatory regime. The Filing Rules apply to
all overseas equity financing and listing activities of PRC domestic companies, including
initial and follow-on offerings of shares, depository receipts, convertible corporate bonds, or
other equity instruments and trading of securities in overseas market.
The Filing Rules provide that no overseas offering and listing shall be made under any of
the following circumstances: (i) such securities offering and listing is explicitly prohibited by
provisions in laws, administrative regulations and relevant state rules; (ii) the intended
securities offering and listing may endanger national security as reviewed and determined by
competent authorities under the State Council in accordance with law; (iii) the domestic
company intending to make the securities offering and listing, or its controlling shareholders
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 make the securities offering and
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listing is suspected of committing crimes or major violations of laws and regulations, and is
under investigation according to law 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 or by other shareholders that are controlled by the controlling shareholder and/or
actual controller. Additionally, the Filing Rules stipulates that after an issuer has offered and
listed securities in an overseas market, the issuer shall submit a report to the CSRC within 3
working days after the occurrence and public disclosure of (i) a change of control thereof; (ii)
investigations of or sanctions imposed on the issuer by overseas securities regulators or
relevant competent authorities; (iii) changes of listing status or transfers of listing segment; and
(iv) a voluntary or mandatory delisting. Overseas offering and listing by domestic companies
shall be made in strict compliance with relevant laws, administrative regulations and rules
concerning national security in spheres of foreign investment, cybersecurity, data security etc.,
and duly fulfill their obligations to protect national security.
On February 24, 2023, the CSRC and three other relevant government authorities jointly
promulgated the Provisions on Strengthening the Confidentiality and Archives Administration
Related to the Overseas Securities Offering and Listing by Domestic Enterprises (̋੶
), which has become
effective on March 31, 2023. Pursuant to the Provisions on Strengthening the Confidentiality
and Archives Administration Related to the Overseas Securities Offering and Listing by
Domestic Enterprises, where a domestic enterprise provides or publicly discloses any
document or material that involves state secrets and working secrets of state agencies to the
relevant securities companies, securities service institutions, overseas regulatory authorities
and other entities and individuals, it shall report to the competent department with the
examination and approval authority for approval in accordance with the law, and submit to the
secrecy administration department of the same level for filing. The working papers formed
within the territory of Chinese Mainland by the securities companies and securities service
agencies that provide corresponding services for the overseas issuance and listing of domestic
enterprises shall be kept within the territory of Chinese Mainland. Cross-border transfer shall
go through the examination and approval formalities in accordance with the relevant provisions
of the State.
OTHER REGULATIONS
Information disclosure
A listed company shall establish a sound information management system in accordance
with the regulatory requirements of the securities authorities, market practice, its specific
circumstances, and the general information disclosure requirements for listed companies, such
as the Administrative Measures for the Disclosure of Information of Listed Companies (ɪ
) promulgated by CSRC on January 30, 2007, which was last
amended on March 26, 2025 and became effective on July 1, 2025.
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SANCTIONS LA WS AND REGULATIONS
Hogan Lovells, our International Sanctions Legal Advisors, have provided the following
summary of the sanctions regimes imposed by their respective jurisdictions. This summary
does not intend to set out the laws and regulations relating to the United States, the European
Union, the United Kingdom, the United Nations and Australian sanctions in their entirety.
The United States
Treasury regulations
OFAC is the primary agency responsible for administering U.S. sanctions programmes
against targeted countries, entities, and individuals. “Primary” U.S. sanctions apply to “U.S.
persons” or activities involving a U.S. nexus (e.g., funds transfers in U.S. currency even if
performed by non-U.S. persons), and “secondary” U.S. sanctions apply extraterritorially to the
activities of non-U.S. persons even when the transaction has no U.S. nexus. Generally, U.S.
persons are defined as entities organized under U.S. law (such as companies and their U.S.
subsidiaries); any U.S. entity’s domestic and foreign branches (sanctions against Iran and Cuba
also apply to U.S. companies’ foreign subsidiaries or other non-U.S. entities owned or
controlled by U.S. persons); U.S. citizens or permanent resident aliens (“green card” holders),
regardless of their location in the world; individuals physically present in the United States;
and U.S. branches or U.S. subsidiaries of non-U.S. companies.
Depending on the sanctions program and/or parties involved, U.S. law also may require
a U.S. company or a U.S. person to “block” (freeze) any assets/property interests owned,
controlled or held for the benefit of a sanctioned country, entity, or individual when such
assets/property interests are in the United States or within the possession or control of a U.S.
person. Upon such blocking, no transaction may be undertaken or effected with respect to the
asset/property interest — no payments, benefits, provision of services or other dealings or
other type of performance (in case of contracts/agreements) — except pursuant to an
authorization or license from OFAC.
OFAC’s comprehensive sanctions programmes currently apply to Cuba, Iran, North
Korea, Syria, the Crimea region of Russia/Ukraine, and and the self-proclaimed Luhansk
People’s Republic (“ LPR”) and Donetsk People’s Republic (“ DPR”) regions (the
comprehensive OFAC sanctions programme against Sudan was terminated on October 12,
2017). OFAC also prohibits virtually all business dealings with persons and entities identified
in the SDN List. Entities that a party on the SDN List owns (defined as a direct or indirect
ownership interest of 50% or more, individually or in the aggregate) are also blocked,
regardless of whether that entity is expressly named on the SDN List. Additionally, U.S.
persons, wherever located, are prohibited from approving, financing, facilitating, or
guaranteeing any transaction by a non-U.S. person where the transaction by that non-U.S.
person would be prohibited if performed by a U.S. person or within the United States.
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United Nations
The United Nations Security Council (the “ UNSC ”) can take action to maintain or restore
international peace and security under Chapter VII of the United Nations Charter. Sanctions
measures encompass a broad range of enforcement options that do not involve the use of armed
force. Since 1966, the UNSC has established 30 sanctions regimes.
The UNSC sanctions have taken a number of different forms, in pursuit of a variety of
goals. The measures have ranged from comprehensive economic and trade sanctions to more
targeted measures such as arms embargoes, travel bans, and financial or commodity
restrictions. The UNSC has applied sanctions to support peaceful transitions, deter non-
constitutional changes, constrain terrorism, protect human rights and promote non-
proliferation.
There are 14 ongoing sanctions regimes which focus on supporting political settlement of
conflicts, nuclear non-proliferation, and counter-terrorism. Each regime is administered by a
sanctions committee chaired by a non-permanent member of the UNSC. There are ten
monitoring groups, teams and panels that support the work of the sanctions committees.
United Nations sanctions are imposed by the UNSC, usually acting under Chapter VII of
the United Nations Charter. Decisions of the UNSC bind members of the United Nations and
override other obligations of United Nations member states.
European Union
Under European Union sanction measures, there is no “blanket” ban on doing business in
or with a jurisdiction targeted by sanctions measures. It is not generally prohibited or otherwise
restricted for a person or entity to do business (involving non-controlled or unrestricted items)
with a counterparty in a country subject to European Union sanctions where that counterparty
is not a Sanctioned Person and not engaged in prohibited activities, such as exporting, selling,
transferring or making certain controlled or restricted products available (either directly or
indirectly) to, or for use in a jurisdiction subject to sanctions measures, provided that no funds
and economic resources are made available to the Sanctioned Persons.
United Kingdom and United Kingdom overseas territories
As of January 1, 2021, the United Kingdom is no longer an EU member state. EU law
including EU sanctions measures continued to apply to and in the United Kingdom until
December 31, 2020. EU sanctions measures had also been extended by the United Kingdom on
a regime by regime basis to apply in the United Kingdom overseas territories, including the
Cayman Islands. Starting from January 1, 2021, the United Kingdom applies its own sanctions
programs and has extended its autonomous sanctions regimes to apply to and in the United
Kingdom overseas territories.
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Australia
The Australian restrictions and prohibitions arising from the sanctions laws apply broadly
to any person in Australia, any Australian anywhere in the world, companies incorporated
overseas that are owned or controlled by Australians or persons in Australia, and/or any person
using an Australian flag vessel or aircraft to transport goods or transact services subject to
United Nations sanctions.
II. LA W AND REGULATIONS RELATING TO OUR GROUP’S BUSINESS AND
OPERATIONS IN THE UNITED STATES
We engage in research and development, trading business through our wholly owned
subsidiaries, Cambridge Industries USA Inc. and Actiontec Electronics, Inc., both of which
were incorporated in Delaware, the United States, and generated the substantial majority of our
revenue during the Track Record Period. The following is a summary of certain U.S. federal
and state laws and regulations that are material to our operations. This summary does not
purport to be complete or describe applicable U.S. federal, state, or local laws in their entirety.
The summary highlights material laws, rules, and regulations to illustrate the legal issues that
arise in the conduct of our business, but does not explain every single law, interpretation or
application. In many cases, the outcome of a legal matter will be highly fact-specific.
Federal Communications Commission
The Federal Communications Commission (“ FCC”) is responsible for the regulation of
the sale and marketing of certain radio frequency (“ RF”) device, proposed to be sold by
manufacturers or importers of the devices, to businesses and individuals located in the U.S.
The law and rules the FCC administers serve to establish technical regulations for
transmitters and other equipment in order to minimize the potential for such equipment to cause
interference to other users, in the same or different telecommunications services. In turn, the
FCC undertakes an equipment authorization program to ensure that covered equipment that is
marketed and then sold in the U.S. first comply with the technical requirements that have been
established. As a consequence, the FCC authorizes the marketing and sale of such devices as
mobile telephones, garage door openers, wireless home security systems, microwave ovens,
and certain children’s toys. In addition to preventing devices from interfering with each other,
the FCC’s rules are intended to protect the public, whether or not users of the devices, from
harmful exposure to RF energy emitted by the regulated devices.
The FCC has determined that RF devices that are subject to its equipment authorization
rules are such devices that are capable of emitting RF energy by radiation, conduction, or other
means. The FCC has divided RF devices into separate categories based on the potential for RF
interference that they might cause. These devices are deemed to be unintentional radiators,
incidental radiators, or intentional radiators. Devices that intentionally generate and emit RF
energy constitute the class of “intentional radiators.” This category includes smartphones, baby
monitors, private radios, and microwave ovens.
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The FCC has established different procedures for manufacturers to receive equipment
authorizations, depending on the level of the device’s RF emissions. These equipment
authorization procedures are known as declaration of conformity and certification. Under the
FCC’s rules, our devices, such low-power transmitters, transceivers and broadband equipment,
have been classified as intentional radiators and, thereby, subject to the certification procedure.
The certification process involves a review for compliance with the FCC rules by a private
testing entity authorized to undertake such process by the FCC. Upon a finding of compliance,
the testing body will issue the appropriate equipment authorization. An authorization number
can be found on the FCC’s Office of Engineering and Technology (OET) equipment
authorization database. The FCC OET maintains such database which is online and open to the
public.
Once having secured the required equipment authorization, we are then permitted to
market and sell our RF devices. These authorized devices also must comply with specific
labelling requirements which evidence the authorization and enable the ability of a user to
secure information about the device or communicate about it with the FCC. So long as our
devices remain compliant with the testing information that was considered, we can continue to
market and sell our devices without further action of the FCC.
Over time, we have undertaken the certification process to secure a number of equipment
authorizations for our RF devices. We continue to do so on a regular basis and are familiar with
the requirements for enabling us to market and sell our FCC regulated devices in the U.S.
Foreign entities that manufacture or distribute telecommunications devices with wireless
features must now give due consideration to the potential impact on them of the FCC’s focus
on national security enforcement, which could detrimentally affect their ability to engage in
their current lines of business.
The FCC has, over the years, expanded its rules, regulations and enforcement focus
dealing with foreign companies that provide equipment to telecommunications providers and
consumers that provide wireless features that implicate the FCC’s focus on the national
security impacts of those devices. The FCC’s programs seek to mitigate the risk that foreign
governments that control the equipment providers can use the wireless features to obtain
sensitive information, enabling the governments to use such information for goals that are
adverse to the best interests of this nation.
The FCC has prohibited entities on what it calls its Covered List, a listing of foreign
entities that pose national security concerns, and their affiliates from obtaining new
authorizations to sell equipment in the US. It is currently considering expanding the rules to
allow for the prohibition of the sale of any equipment from entities on the Covered List,
including equipment that has previously received FCC equipment authorizations.
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The Chairman of the FCC has recently established a Council on National Security within
the agency. The purposes of the Council are to reduce American supply chain dependence on
foreign adversaries, to mitigate American vulnerability of cyberattacks, espionage and
surveillance by foreign adversaries, and to ensure that the United States wins the strategic
competition with foreign adversaries over critical technologies, such as 5G and 6G, satellites,
quantum computing and others.
All of these actions, when taken as a whole, could result in a telecommunications
equipment marketplace where there are limitations on the sale of equipment from ventures
established in a country deemed national security threats to the U.S., that lead to limits on
products now available.
Food and Drug Administration
The Food and Drug Administration (“ FDA”), regulates electronics products that emit
radiation. Manufacturers of electronic products are required to comply with the general
requirements under the Federal Regulations 21 CFR 1000 through 1005 (“ CFR 21 ”).
Furthermore, manufacturers of electronics are required to notify FDA of any defects in an
electronic product. The repair, replacement or refund for defective electronics are regulated by
CFR 21 as well. Manufacturers or importers engage FDA authorized third party testing labs to
certify their electronic products that require FDA certification. Additionally, manufacturers of
electronic products are required to submit an Annual Report to FDA ’s Center for Devices and
Radiological Health by September 1.
Overview of intellectual property laws
U.S. intellectual property laws include copyright, trademark, trade secrets, patent, and
domain name-related laws. Copyright law is governed by the Copyright Act of 1976, which is
codified in Title 17 of the U.S. Code. The U.S. Copyright Office, a department within the U.S.
Library of Congress, examines copyright applications and grants registrations. Federal law,
however, provides for common law rights for copyrights and trademarks as well. Both federal
and state law apply to trademarks. Federal trademark law is governed by the Lanham Act,
which is codified in Title 15 of the U.S. Code. The U.S. Patent and Trademark Office
(“USPTO”), an agency within the U.S. Department of Commerce, issues federal trademark
registration to providers of goods and/or services. Federal trade secrets law is governed by the
Defend Trade Secrets Act of 2016, which is codified in Title 18 of the U.S. Code. Trade secrets
are also protected by state law, with most states having enacted a version of the Uniform Trade
Secrets Act. Patent law is governed by Title 35 of the U.S. Code. The USPTO also issues
patents to inventors. Title 37 of the Code of Federal Regulations contains regulations directed
towards copyrights, trademarks and patents. Finally, the Anti-cybersquatting Consumer
Protection Act, 15 U.S.C. §1125(d), is a U.S. law establishing a cause of action for registering,
trafficking in or using a domain name confusingly similar to, or dilutive of, a trademark or
personal name.
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Outbound Rules
On August 9, 2023, President Biden issued Executive Order 14105, “Addressing U.S.
Investments in Certain National Security Technologies and Products in Countries of Concern”
(the “ Outbound Order ”). The Outbound Order declared a national emergency to address the
threat posed to U.S. national security by “countries of concern” seeking to develop and exploit
“sensitive technologies and products critical for the military, intelligence, surveillance, or
cyber-enabled capabilities” of those countries. The Outbound Order also stated that certain
U.S. investments abroad risk exacerbating this threat. The categories of national security
technologies and products identified in the Outbound Order include semiconductors and
microelectronics, quantum information technologies, and artificial intelligence.
The Outbound Order directed the Secretary of the Treasury to issue regulations and
establish a new national security program to prohibit or require notification of certain outbound
investments by U.S. persons into entities located in, owned by persons of, or subject to the
jurisdiction of a country of concern involved in national security technologies or products.
In October 2024, the Treasury Department issued the final rule, “Provisions Pertaining to
U.S. Investments in Certain National Security Technologies and Products in Countries of
Concern” (the “ Outbound Rules ”), to implement the Outbound Order and provide the
operative regulations. The Outbound Rules provide detailed guidance on key concepts and
provisions to implement the program. The Outbound Rules became effective on January 2,
2025. The Department of the Treasury may issue further public guidance. The Outbound
Investment Security Program will be administered by a newly created Office of Global
Transactions.
The Outbound Rules broadly apply to “covered transactions” which include various forms
of direct or indirect investments, such as acquiring equity interests, certain debt financing,
greenfield and brownfield investments, entering into joint ventures, and acquiring limited
partner interests in non-U.S. pooled investment funds under specific circumstances.
Based on the advice of Thompson Hine LLP , our Directors are of the view and the Sole
Sponsor concurs that investments in our Company’s publicly traded securities will not be
prohibited or subject to reporting requirements under the Outbound Rules.
Prohibited Transactions
Transactions deemed a particularly acute national security threat are strictly prohibited.
These include direct or indirect investments by U.S. persons in entities located in countries of
concern that are engaged in specific activities within the following technology sectors:
 Semiconductors and Microelectronics: Activities related to electronic design
automation software, advanced integrated circuits (ICs), and certain
supercomputers.
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 Quantum Information Technologies: Development or production of quantum
computers, quantum sensing platforms for specified uses, and certain quantum
information technologies.
 Artificial Intelligence (AI) Systems: Development of certain AI systems intended
for military, government intelligence, or mass surveillance end uses, or those trained
using significant computing power or biological sequence data.
Transactions that would otherwise require notification are also prohibited if they involve
parties listed on U.S. government restricted lists.
Notifiable Transactions
Investments in less sensitive areas within the aforementioned technologies require U.S.
persons to notify the Treasury Department within 30 days of completion. Examples include:
 Semiconductors and Microelectronics: Designing, fabricating, or packaging certain
ICs that are not otherwise prohibited.
 Artificial Intelligence (AI) Systems: Developing certain AI systems that do not fall
under the prohibited category but meet specific criteria, such as those intended for
military or intelligence end uses, cybersecurity, control of robotic systems, or those
trained with a specified level of computing power.
Exceptions
The Outbound Rules provide exceptions to both the prohibition and notification
requirements. These exceptions cover areas such as investments in publicly traded securities,
certain limited partner investments, specific derivatives, buyouts of country of concern
ownership, intracompany transfers, and certain syndicated debt financings.
Stock options and other equity-based compensation are also excluded from covered
transactions. According to Section 850.501(f) of the Outbound Rules, the receipt of
employment compensation by an individual in the form of an award of equity, the grant of an
option to purchase equity in a covered foreign person, or the exercise of such an option is not
considered a “covered transaction.”
It should also be noted that the prohibition and notification requirements in the Outbound
Rules do not apply to transactions completed before January 2, 2025, the effective date of the
Outbound Rules. The Outbound Rules do not apply retroactively.
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OVERVIEW
Our history can be traced back to 2005, when our founder, Mr. Gerald G Wong, with his
colleagues together founded and bootstrapped our telecommunication broadband access
business in Silicon V alley in the United States as a startup, and later registered CIG Cayman
as a company wholly owned by Mr. Gerald G Wong in the Cayman Islands on May 19, 2005.
Details of the background of Mr. Gerald G Wong are set out in “Directors and Senior
Management”. Through our layout overseas and in China, we successively set up Cambridge
Industries Group Limited in Hong Kong on May 28, 2005, Xinqiao Network Equipment
(Shanghai) Co., Ltd.* ( อ⢿ၣഖண௪(ɪऎ)ʮ̡) (the predecessor of our Company) in
Shanghai on March 14, 2006, and Cambridge Industries USA Inc. in the United States on April
26, 2010 to carry out our operations overseas and in China. In preparation for the Listing of
A Shares, CIG Cayman became an investment holding company at the end of 2011 in the
process of reorganization.
In June 2011, our Company was renamed as CIG Shanghai Company Limited* ( ɪऎᄏ
ʮ̡). We were then converted into a joint stock limited company in July 2012. On
November 10, 2017, we successfully completed the Listing of A Shares and our A Shares have
been listed on the Shanghai Stock Exchange (stock code: 603083) since then. As of the Latest
Practicable Date, our Single Largest Group of Shareholders held in aggregate approximately
14.13% of our A Shares. During the Track Record Period and up to the Latest Practicable Date,
our Single Largest Group of Shareholders had disposed of a total of 19,476,669 A Shares held
by them pursuant to their respective independent and personal decision through block trading
and/or continuous auction on the Shanghai Stock Exchange, pursuant to the which, our Single
Largest Group of Shareholders’ shareholding in our Company reduced from 22.74% at the
commencement of the Track Record Period to 14.13% as of the Latest Practicable Date.
With a vision “to support the development of AI with our solutions”, we have become an
industry-leading company that provides critical infrastructure components for the development
of AI through two decades of operations. As of the Latest Practicable Date, our Company had
sixteen subsidiaries covering the jurisdictions of the PRC (including Hong Kong and Taiwan),
the United States, Japan, Germany and Malaysia. Details of our presence overseas and in China
are set out in “Business”.
KEY MILESTONES
The following is a summary of our key corporate and business development milestones:
Y ear Event
2005 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Our founder, Mr. Gerald G Wong, with his colleagues together
founded and bootstrapped our telecommunication broadband access
business in Silicon V alley in the United States as a startup, and later
registered CIG Cayman as a company wholly owned by Mr. Gerald
G Wong in the Cayman Islands
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Y ear Event
2006 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Xinqiao Network Equipment (Shanghai) Co., Ltd.* ( อ⢿ၣഖண௪
(ɪऎ)ʮ̡), the predecessor of our Company was established
in Shanghai
2011 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118We began establishing our presence in automation and
informatization by implementing industrial information systems,
which includes workshop management systems and production
traceability systems
2017 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118We successfully completed the Listing of A Shares and our A Shares
were listed on the Shanghai Stock Exchange (stock code: 603083)
2018 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118We expanded into the photonics industry and successfully
completed the acquisition of LR4 100G long-range optical
sub-assembly product line from MACOM Japan Limited, a
subsidiary of MACOM Technology Solution Holdings, Inc.
We advanced our overseas manufacturing strategy by establishing a
production base in Malaysia
2019 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118We fully entered the photonics industry by acquiring the Datacom
transceiver product line of Oclaro Japan, which was under
Lumentum
2020 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118We successfully completed the Non-public Issuance of A Shares
2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118We successfully completed the acquisition of Actiontec Electronics,
Inc. and Actiontec Electronics (Shanghai), Inc.* ( ᒕ౽ฆཥɿ(ɪऎ)
ʮ̡), which had become our wholly-owned subsidiaries upon
completion
2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118We have completed the new product introduction (“NPI”) for our
manufacturing facility in Europe
2025 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118We have completed the NPI for our manufacturing facility in the
United States
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MAJOR SUBSIDIARIES
As of the Latest Practicable Date, the following entities were our major subsidiaries
which had made a material contribution to our results of operation during the Track Record
Period:
Name of subsidiary
Date and jurisdiction
of establishment
Equity interest
attributable to
our Group
Principal
business activities
Cambridge Industries USA Inc. /H1118/H1118April 26, 2010
United States
100% R&D, trading
CIG Shanghai Communication
Equipment Co., Ltd.*
(ʮ̡) /H1118/H1118
August 9, 2013
PRC
100% Trading
Cambridge Industries Group
Telecommunication Limited /H1118/H1118/H1118
April 9, 2018
Hong Kong, PRC
100% Trading
CIG Wuhan Co., Ltd.*
(Ҧ(ဏ)ʮ̡) /H1118
April 23, 2018
PRC
100% Manufacturing
CIG Photonics Japan Limited /H1118/H1118/H1118/H1118March 11, 2019
Japan
100% R&D
Actiontec Electronics, Inc. /H1118/H1118/H1118/H1118/H1118October 5, 2020
United States
100% R&D, trading
CIG Zhejiang Telecommunication
Equipment Co., Ltd.*
(ʮ̡) /H1118/H1118
July 18, 2023
PRC
66.67% Manufacturing
As of the Latest Practicable Date, our Company had sixteen subsidiaries. Except for CIG
Zhejiang Telecommunication Equipment Co., Ltd.* (ʮ̡), in which we
held 66.67% equity interest, all of the other subsidiaries were wholly owned by our Company.
Please refer to the section headed “Statutory and General Information — Further Information
about Our Group — Changes in Share Capital of Our Subsidiaries” in Appendix VI to this
Prospectus for more details on recent share capital changes of the subsidiaries.
MAJOR SHAREHOLDING CHANGES IN OUR COMPANY
Early Development
In 2005, our founder, Mr. Gerald G Wong, with his colleagues together founded and
bootstrapped our telecommunication broadband access business in Silicon V alley in the United
States as a startup, and later registered CIG Cayman as a company wholly owned by Mr. Gerald
G Wong in the Cayman Islands on May 19, 2005. On March 14, 2006, the predecessor of our
Company, Xinqiao Network Equipment (Shanghai) Co., Ltd.* ( อ⢿ၣഖண௪(ɪऎ)ʮ̡),
was established in Shanghai by the then sole Shareholder, CIG Cayman, as a wholly
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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foreign-owned enterprise with registered share capital of USD140,000 to primarily design,
produce and develop computer software and equipment and provide technical and consulting
services. In June 2011, our Company was renamed as CIG Shanghai Company Limited* ( ɪऎ
ʮ̡).
In order to establish a long-term mechanism for management team and key employees
ownership, and as a part of reorganization, CIG Cayman resolved and agreed to sell
approximately 57.29% of the equity interest in our Company in total to five
employee shareholding platforms, namely (i) CIG Holding, (ii) Shanghai Kangling
Technology Partnership (Limited Partnership)* (ҦΥྫΆุ(Υྫ)), (iii)
Shanghai Kangyiqiao Investment Consulting Partnership (Limited Partnership)* (዗
ҳ༟ፔ༔ΥྫΆุ(Υྫ)) (“ Kangyiqiao ”), (iv) Shanghai Kanguiqiao Investment
Consulting Partnership (Limited Partnership)* (዗ҳ༟ፔ༔ΥྫΆุ(Υྫ))
(“Kangguiqiao ”), and (v) Changxing Kangwuqiao Enterprise Management Consulting
Partnership (Limited Partnership)* (Υྫ)
(“Kangwuqiao ”), and the above five employee shareholding platforms agreed to purchase the
respective equity interest held by CIG Cayman in our Company. The shareholding structure of
our Company immediately following completion of the share transfer in December 2011 was
as follows:
Shareholders
Capital
contribution
Shareholding
percentage
(USD in ten
thousand)
CIG Cayman 1 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185.98 42.71%
Kangyiqiao 2/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183.91 27.93%
Kangling Technology 3 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181.80 12.86%
CIG Holding 4 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181.40 10.00%
Kangguiqiao 5 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11180.70 5.00%
Kangwuqiao 6 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11180.21 1.50%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814.00 100%
Notes:
(1) CIG Cayman was incorporated in May 2005 in the Cayman Islands and has been wholly owned by Mr.
Gerald G Wong since its establishment.
(2) As one of our employee shareholding platforms, Kangyiqiao is a limited partnership established in
October 2011 in the PRC by our several then domestic employees. Kangyiqiao no longer held any Shares
in our Company since February 21, 2025. As of the Latest Practicable Date, to the best knowledge of
our Company, the partners of Kangyiqiao was considering to dissolve it by resolution.
(3) As one of our employee shareholding platforms, Kangling Technology is a limited liability company
incorporated in October 2011 in the PRC by Mr. Zhao Haibo as its sole shareholder. Kangling
Technology changed its form to a partnership and was later renamed as Shanghai Kangling Technology
Partnership (Limited Partnership)* (ҦΥྫΆุ(Υྫ)) in 2022. Please refer to the
section headed “Relationship with Our Single Largest Group of Shareholders” in this Prospectus for
details of Kangling Technology.
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(4) As one of our employee shareholding platforms, CIG Holding is an investment holding company
incorporated in June 2011 in Hong Kong by Mr. Gerald G Wong. CIG Holding no longer held any Shares
in our Company since August 14, 2023.
(5) As one of our employee shareholding platforms, Kangguiqiao is a limited partnership established in
October 2011 in the PRC by our several then domestic employees. Kangguiqiao was dissolved by its
then partners in November 2023.
(6) As one of our employee shareholding platforms, Kangwuqiao is a limited partnership established in
October 2011 in the PRC by our several then domestic employees. Kangwuqiao was dissolved by its
then partners in March 2019.
Capital Injection and Conversion into Joint Stock Limited Company in 2012
In February 2012, our Company introduced ten external institutional investors by way of
capital injection, namely (i) Ningbo Anfenghezhong V enture Capital Investment Partnership
(Limited Partnership)* (τᔮձ଺௴ุҳ༟ΥྫΆุ(Υྫ)) (“ Anfenghezhong ”), (ii)
Jiangsu Gaotou Growth V alue Equity Investment Partnership (Limited Partnership)* ( Ϫᘽ৷
ᛆҳ༟ΥྫΆุ(Υྫ)) (“ Jiangsu Gaotou ”), (iii) Shanghai Jinmu
Investment Management Center (Limited Partnership)* (ͦҳ༟၍ଣʕː(Υྫ))
(“Shanghai Jinmu ”), (iv) Shanghai Jianxin V enture Capital Investment Company Limited*
(ʮ̡ (“Shanghai Jianxin ”, dissolved in 2020), (v) Shanghai Shengyan
Investment Partnership (Limited Partnership)* (ҳ༟ΥྫΆุ(Υྫ))
(“Shanghai Shengyan ”, previously known as Tianjin Shengyan Equity Fund Investment
Partnership (Limited Partnership)* (ΥྫΆุ(Υྫ)), “ Tianjin
Shengyan ”), (vi) Shanghai Zhongying Equity Investment Management Center (Limited
Partnership)* (ᛆҳ༟၍ଣʕː(Υྫ)) (“ Shanghai Zhongying ”), (vii)
Shanghai Shengwan Investment Company Limited* (ʮ̡)( “ Shanghai
Shengwan ”), (viii) Shanghai Shengwanyanrun Investment Partnership (Limited Partnership)*
(ᆗҳ༟ΥྫΆุ(Υྫ)) (“ Shanghai Shengwanyanrun ”, previously known
as Tianjin Shengwan Investment Partnership (Limited Partnership)* (ସຬҳ༟ΥྫΆุ
(Υྫ)), “ Tianjin Shengwan ”), (ix) Ningbo Anfenglingxian V enture Capital
Investment Partnership (Limited Partnership)* (τᔮჯ΋௴ุҳ༟ΥྫΆุ(Υྫ))
(“Anfenglingxian ”), and (x) Y antai Jianxin Blue Economy V enture Capital Company Limited* ( ๧
ʮ̡)( “ Y antai Jianxin ”) (collectively the “ 2012 Investors ”).
Upon completion of the aforesaid capital injection, the registered share capital of our Company
increased to RMB1,658,657.
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In June 2012, the sixteen then Shareholders of our Company, as the promoters, resolved
to convert our Company into a joint stock limited company. In July 2012, our Company was
converted into a joint stock limited company with registered share capital of RMB75,000,000
divided into 75,000,000 Shares after share capital subdivision. The shareholding structure of
our Company immediately following our conversion into a joint stock company was as follows:
Shareholders/Promoters Number of Shares
Shareholding
percentage
CIG Cayman /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821,682,575 28.91%
Kangyiqiao /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814,179,200 18.91%
Kangling Technology /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,528,600 8.70%
Anfenghezhong /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,789,850 7.72%
Jiangsu Gaotou /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,078,775 6.77%
CIG Holding /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,076,675 6.77%
Shanghai Jinmu /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,742,600 3.66%
Shanghai Jianxin /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,640,975 3.52%
Tianjin Shengyan /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,574,000 3.43%
Kangguiqiao /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,538,375 3.38%
Shanghai Zhongying /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,133,150 2.84%
Shanghai Shengwan /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,015,725 1.35%
Tianjin Shengwan /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,015,725 1.35%
Anfenglingxian /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118812,625 1.08%
Kangwuqiao /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118761,475 1.02%
Y antai Jianxin /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118429,675 0.57%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111875,000,000 100%
Capital Reduction by Repurchase and Share Transfer in 2015
In August 2014, our Company entered into a share purchase agreement with the 2012
Investors to repurchase a total of 9,500,000 Shares at a total consideration of
RMB152,817,058. In September 2014, Shanghai Zhongying entered into a share transfer
agreement to transfer all its Shares (being 1,296,917 Shares) to Jiangsu Gaotou Bangsheng
V enture Capital Investment Partners (Limited Partnership)* ( Ϫᘽ৷ҳԞସ௴ุҳ༟ΥྫΆุ
(Υྫ)) (“ Jiangsu Bangsheng ”) at a consideration of RMB10,793,785.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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Immediately following the completion of the aforementioned capital reduction and share
transfer in May 2015, the shareholding structure of our Company was as follows:
Shareholders Number of Shares
Shareholding
percentage
CIG Cayman /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821,682,575 33.10%
Kangyiqiao /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814,179,200 21.65%
Kangling Technology /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,528,600 9.97%
CIG Holding /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,076,675 7.75%
Anfenghezhong /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,520,076 5.37%
Anfenglingxian /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118494,060 0.75%
Jiangsu Gaotou /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,087,745 4.71%
Kangguiqiao /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,538,375 3.88%
Shanghai Jianxin /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,866,874 2.85%
Shanghai Jinmu /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,667,444 2.55%
Shanghai Shengyan /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,564,946 2.39%
Jiangsu Bangsheng /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,296,917 1.98%
Shanghai Shengwan /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118617,519 0.94%
Shanghai Shengwanyanrun /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118617,519 0.94%
Kangwuqiao /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118761,475 1.16%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111865,500,000 100%
Capital Injection in 2016
In March 2016, the registered share capital of our Company increased to RMB73,403,666
by introduction of six external institutional investors, including (i) Shanghai Diankechengding
Intelligent Industry Investment Partnership (Limited Partnership)* (༐ཻ౽ঐପุҳ
༟ΥྫΆุ(Υྫ)) (“ Diankechengding ”), (ii) Hangzhou Anfengchenyuan V enture
Capital Investment Partnership (Limited Partnership)* (ʩ௴ุҳ༟ΥྫΆุ(ࠢ
Υྫ)) (“ Anfengchenyuan ”), (iii) Nanjing Bangshengjuhong Equity Investment Partnership
(Limited Partnership)* (ᛆҳ༟ΥྫΆุ(Υྫ)) (“ Bangshengjuhong ”),
(iv) Jiangsu Talent Innovation and V enture Capital Investment Fund II (Limited Partnership)*
(ږ(Υྫ)) (“ Talent Fund ”), (v) Shanghai Baodingaiping
Investment Partnership (Limited Partnership)* ( ɪऎᘒཻฌ̻ҳ༟ΥྫΆุ(Υྫ))
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 162 –


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(“Baodingaiping ”) and (vi) Shengye (Shanghai) Asset Management Center (Limited
Partnership)* ( ସϝ(ɪऎ)༟ପ၍ଣʕː(Υྫ)) (“ Shengye Asset ”). Upon completion of
the capital injection in March 2016, the shareholding structure of our Company was as follows:
Shareholders Number of Shares
Shareholding
percentage
CIG Cayman /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821,682,575 29.54%
Kangyiqiao /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814,179,200 19.32%
Kangling Technology /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,528,600 8.89%
Anfenghezhong /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,520,076 4.80%
Anfengchenyuan /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,965,000 2.68%
Anfenglingxian /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118494,060 0.67%
CIG Holding /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,076,675 6.92%
Jiangsu Gaotou /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,087,745 4.21%
Talent Fund /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118873,333 1.19%
Bangshengjuhong /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,572,000 2.14%
Jiangsu Bangsheng /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,296,917 1.77%
Kangguiqiao /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,538,375 3.46%
Diankechengding /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,183,333 2.97%
Shanghai Jianxin /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,866,874 2.54%
Shanghai Shengwan /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118617,519 0.84%
Shanghai Shengwanyanrun /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118617,519 0.84%
Shengye Asset /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118436,667 0.59%
Shanghai Jinmu /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,667,444 2.27%
Shanghai Shengyan /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,564,946 2.13%
Baodingaiping /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118873,333 1.19%
Kangwuqiao /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118761,475 1.04%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111873,403,666 100%
Concert Party Agreement in 2017
In the course of the preparation of the Listing of A Shares, to ensure the ownership
stability after the Listing of A Shares, Mr. Gerald G Wong and Mr. Zhao Haibo entered into the
Concert Party Agreement on August 30, 2017. According to the Concert Party Agreement, Mr.
Gerald G Wong and Mr. Zhao Haibo shall act together in voting at Board meetings as Directors
and at general meetings through the Shareholders controlled by them. Mr. Gerald G Wong and
Mr. Zhao Haibo have agreed to fully communicate and negotiate their votes on an equal and
cooperative basis. In the event that an unanimous vote cannot be formed, the opinion of the
party with higher shareholding shall prevail. Immediately following the execution of the
Concert Party Agreement, Mr. Gerald G Wong (through CIG Cayman and CIG Holding) and
Mr. Zhao Haibo (through Kangling Technology) controlled in aggregate approximately 45.35%
equity interests in our Company.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 163 –


--- page 174 ---
Listing of A Shares in 2017
On November 10, 2017, our A Shares were listed on the Shanghai Stock Exchange (stock
code: 603083), pursuant to which we issued an aggregate of 24,467,889 A Shares, accounting
for approximately 25.00% of our Company’s share capital immediately following the Listing
of A Shares. Upon completion of the Listing of A Shares, the registered share capital of our
Company amounted to RMB97,871,555 and comprised 97,871,555 A Shares. The shareholding
structure of our Company immediately following the Listing of A Shares was as follows:
Shareholders Number of Shares
Shareholding
percentage
CIG Cayman /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821,682,575 22.15%
CIG Holding /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,076,675 5.19%
Kangling Technology /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,528,600 6.67%
Kangyiqiao /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814,179,200 14.49%
Kangguiqiao /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,538,375 2.59%
Kangwuqiao /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118761,475 0.78%
Other A Shareholders (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111847,104,655 48.13%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111897,871,555 100%
Note:
(1) Other A Shareholders’ shareholdings were relatively diversified, among which, no Shareholder held 5%
or more of the A Shares.
Immediately following the Listing of A Shares, Mr. Gerald G Wong (through CIG Cayman
and CIG Holding) and Mr. Zhao Haibo (through Kangling Technology) controlled in aggregate
approximately 34.01% equity interests in our Company.
Capital Reserve Capitalization in 2018
In October 2018, our Company completed the issuance of 29,361,467 A Shares to our then
Shareholders by capitalizing the capital reserve of our Company for the purpose of dividend
distribution on the basis of three additional A Shares for every ten existing A Shares. Upon
completion of the capital reserve capitalization, the registered share capital of our Company
amounted to RMB127,233,022 and comprised 127,233,022 A Shares.
Capital Reserve Capitalization in 2019
In September 2019, our Company completed the issuance of 38,634,007 A Shares to our
then Shareholders by capitalizing the capital reserve of our Company for the purpose of
dividend distribution on the basis of three additional A Shares for every ten existing A Shares.
Upon completion of the capital reserve capitalization, the registered share capital of our
Company amounted to RMB167,414,029 and comprised 167,414,029 A Shares.
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Non-public Issuance of A Shares in 2020
On April 21, 2020, we completed the Non-public Issuance of A Shares, pursuant to which,
we issued 24,224,806 new A Shares at an issue price of RMB30.96 per A Share to thirteen
subscribers, all of whom were Independent Third Parties. Upon completion of the Non-public
Issuance of A Shares, the registered share capital of our Company amounted to
RMB193,673,746 and comprised 193,673,746 A Shares. The shareholding structure of our
Company immediately following the Non-public Issuance of A Shares was as follows:
Shareholders Number of Shares
Shareholding
percentage
CIG Cayman /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111836,643,552 18.92%
Kangyiqiao /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111822,343,540 11.54%
Kangling Technology /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,033,334 5.70%
CIG Holding /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188,579,580 4.43%
Other A Shareholder 1/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118115,073,740 59.42%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118193,673,746 100%
Note:
(1) Other A Shareholders’ shareholdings were relatively diversified, among which, no Shareholder held 5%
or more of the A Shares.
Capital Reserve Capitalization in 2020
In November 2020, our Company completed the issuance of 58,204,746 A Shares to our
then Shareholders by capitalizing the capital reserve of our Company for the purpose of
dividend distribution on the basis of three additional A Shares for every ten existing A Shares.
Upon completion of the capital reserve capitalization, the registered share capital of our
Company amounted to RMB252,220,566 and comprised 252,220,566 A Shares.
Please refer to the section headed “Statutory and General Information — Further
Information about Our Group — Changes in Share Capital of Our Company” in Appendix VI
to this Prospectus for more details on recent share capital changes of our Company.
MAJOR ACQUISITIONS, DISPOSALS AND MERGERS
We had not carried out any major acquisitions as required to be disclosed under Rule
4.05A of the Listing Rules, disposals or mergers during the Track Record Period and up to the
Latest Practicable Date.
In August 2024, we had sold Cambridge Photonics Technologies Inc. to Hamilton
Technologies Inc., a Delaware-based company and an Independent Third Party, at a
consideration of USD0.88 million based on an arms-length negotiation. For further
information, please see the section headed “Financial Information — Description of key
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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components of our results of operations — Other gains/(loss), net” in this Prospectus. For the
avoidance of doubt, the disposal of Cambridge Photonics Technologies Inc. completed in
August 2024 was not a major disposal of our Group.
OUR LISTING OF A SHARES ON THE SHANGHAI STOCK EXCHANGE AND
REASONS FOR THE LISTING OF H SHARES ON THE HONG KONG STOCK
EXCHANGE
Since November 10, 2017, our A Shares have been listed on the Shanghai Stock
Exchange. Our Directors confirmed that, during the Track Record Period and up to the Latest
Practicable Date, we had no instance of material non-compliance with the rules of the Shanghai
Stock Exchange and other applicable securities laws and regulations of the PRC, and, to the
best knowledge of our Directors having made all reasonable enquiries, there was no material
matter that should be brought to the investors’ attention in relation to our compliance record
on the Shanghai Stock Exchange. Our PRC Legal Adviser advised us that during the Track
Record Period and up to the Latest Practicable Date, we have not been subject to any
substantial administrative penalties or regulatory measures imposed by PRC securities
regulatory authorities and we have complied with the relevant laws and regulations on A share
listings applicable to us in all material respects. Based on the independent due diligence
conducted by the Sole Sponsor, nothing has come to the Sole Sponsor’s attention that would
cause it to cast doubt on our Directors’ confirmation with regard to the compliance record of
our Company on the Shanghai Stock Exchange in any material respect.
Our Company seeks to be listed on the Hong Kong Stock Exchange in order to
(i) continue attracting top global talent, (ii) increase our R&D investment, (iii) optimize our
production capacity layout overseas and in China and continue to invest in intelligent
manufacturing, and (iv) further expand our sales network. Please refer to the sections headed
“Business — Our Future Strategies” and “Future Plans and Use of Proceeds” in this Prospectus
for details.
PUBLIC FLOAT AND FREE FLOAT
Satisfaction of the Public Float Requirement
Rule 19A.13A(2) of the Hong Kong Listing Rules provides that, where a new applicant
is a PRC issuer with other listed shares at the time of listing, this will normally mean that the
portion of H shares for which listing is sought that are held by the public, at the time of listing,
must (a) represent at least 10% of the issuer’s total number of issued shares in the class to
which H shares belong (excluding treasury shares); or (b) have an expected market value of not
less than HK$3,000,000,000.
Our A Shares are listed on the Shanghai Stock Exchange since 2017. The maximum
number of the H Shares to be issued pursuant to the Global Offering represents approximately
20.00% of the total issued shares of our Company (assuming that the Over-allotment Option
is not exercised, the options granted under the 2024 Share Option Incentive Scheme are not
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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exercised and that no changes are made to the issued share capital of our Company between
the Latest Practicable Date and Listing). Immediately upon completion of the Global Offering
(assuming the Over-allotment Option is not exercised, the options granted under the 2024
Share Option Incentive Scheme are not exercised and no changes are made to the issued share
capital of our Company between the Latest Practicable Date and Listing), the total number of
the H Shares expected to be held by the public represents approximately 20.00% of the total
issued shares of our Company (excluding treasury shares), which is higher than the prescribed
percentage of H Shares required to be held in public hands of 10.00% under Rule
19A.13A(2)(a) of the Hong Kong Listing Rules.
Satisfaction of the Free Float Requirement
Rule 19A.13C(2) of the Hong Kong Listing Rules provides that, where a new applicant
is a PRC issuer with other listed shares at the time of listing, this will normally mean that the
portion of H shares for which listing is sought that are held by the public and not subject to
any disposal restrictions (whether under contract, the Hong Kong Listing Rules, applicable
laws or otherwise), at the time of listing, must: (a) represent at least 5% of the total number
of issued shares in the class to which H shares belong at the time of listing (excluding treasury
shares), with an expected market value at the time of listing of not less than HK$50,000,000;
or (b) have an expected market value at the time of listing of not less than HK$600,000,000.
Each of the Cornerstone Investors has agreed to a lock-up period of six months following
the Listing Date. As such, the H Shares held by the Cornerstone Investors upon the Listing shall
not be counted towards the free float of the H Shares of our Company at the time of Listing.
Based on the maximum Offer Price of HK$68.88, the total number of Offer Shares as
subscribed by the Cornerstone Investors will be 32,762,750 H Shares, representing
approximately 9.78% of the total issued share capital of our Company (assuming that the
Over-allotment Option is not exercised, the options granted under the 2024 Share Option
Incentive Scheme are not exercised and no changes are made to the issued share capital of our
Company between the Latest Practicable Date and Listing). In this regard, the free float of our
Company will be 10.22%, which is substantially higher than the 5% threshold under Rule
19A.13C(2). Our Company will satisfy the free float requirement under Rule 19A.13C(2) of the
Hong Kong Listing Rules.
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OUR SHAREHOLDING AND CORPORATE STRUCTURE
Shareholding and Corporate structure immediately before the Global Offering
The following chart depicts a simplified shareholding and beneficial ownership structure of our Group immediately prior to the completion of
the Global Offering (assuming that no changes are made to the issued share capital of our Company between the Latest Practicable Date and Listing):
Cambridge Industries Group
Telecommunication Limited
(Hong Kong, PRC)
CIG Photonics Japan Limited
(Japan)
100%
100%
CIG OPTICS LIMITED
(Hong Kong, PRC)
CIG Tech Photonics Sdn. Bhd.
(Malaysia)
Actiontec Electronics, Inc.
(USA)
Actiontec Electronics Taiwan Inc.
(怩㘢⽖暣⫸偉ấ㚱旸℔⎠)
(Taiwan, PRC)
100% 100% 100%
100%
Mr. Gerald G Wong Mr. Zhao Haibo
CIG Cayman
(Cayman Islands)
Kangling Technology1
(PRC) Other A Shareholders3
Our Company
(PRC)
Actiontec
Electronics
(Shanghai),
Inc.* (怩㘢
⽖暣⫸(ᶲ
㴟)㚱旸℔
⎠)
(PRC)
CIG
Shanghai
Communication
Equipment
Co., Ltd.*
(ᶲ㴟∵
㧳忂妲姕
⁁㚱旸℔
⎠)
(PRC)
CIG Xi’an
Co., Ltd.*
( 大⬱∵
㧳䥹㈨㚱
旸℔⎠)
(PRC)
100% 80.00%
2.18% 85.87%
90.00%
19.80%
100% 100% 100% 100% 100% 100% 100% 100% 100% 66.67%
11.95%
Kangling Management
2
(PRC)
CIG Optical
Communication
Co., Ltd.*
(ᶲ㴟∵㧳
⃱忂ᾉ㈨埻
㚱旸℔⎠)
(PRC)
Shanghai
Cambridge
Communication
Technology
Co., Ltd.*
(ᶲ㴟∵㧳
忂妲㈨埻㚱
旸℔⎠)
(PRC)
CIG Wuhan
Co., Ltd.*
(ᶲ㴟∵㧳
䥹㈨(㬎㻊Ī
㚱旸℔⎠)
(PRC)
Cambridge
Industries USA
Inc.
(USA)
CIG
Photonics
Europe
GmbH
(Germany)
Cambridge
Industries
Group Limited
(Hong Kong,
PRC)
CIG
Zhejiang
Telecommunication
Equipment
Co., Ltd.*
(㴁㰇∵㧳
忂ᾉ姕⁁㚱
旸℔⎠)4
(PRC)
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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Notes:
(1) Kangling Technology is a limited partnership whose executive partner is Mr. Zhao Haibo (holding 19.80% partnership interest in it) and its limite d partners consist of Ms. Qin
Y an (Mr. Zhao Haibo’s spouse, holding 0.20% partnership interest in it) and Kangling Management (holding 80.00% partnership interest in it) as of the Latest Practicable Date.
As the executive partner of Kangling Technology, Mr. Zhao Haibo is responsible for the execution of partnership affairs and thus controls the voting p ower of it.
(2) Kangling Management is a limited partnership whose executive partner is Mr. Zhao Haibo (holding 90.00% partnership interest in it) and its limite d partner is Ms. Qin Y an
(Mr. Zhao Haibo’s spouse, holding 10.00% partnership interest in it) as of the Latest Practicable Date. As the executive partner of Kangling Manageme nt, Mr. Zhao Haibo is
responsible for the execution of partnership affairs and thus controls the voting power of it.
(3) Other A Shareholders’ shareholdings were relatively diversified, among which, no Shareholder held 5% or more of the A Shares as of the Latest Pract icable Date. There has
been no other group of Shareholders holding more interests in our Company than the Single Largest Group of Shareholders since January 1, 2024.
(4) CIG Zhejiang Telecommunication Equipment Co., Ltd.* (ʮ̡) is a company incorporated in the PRC on July 18, 2023. As of the Latest Practicable Date,
our Company and Jiashan Zhongxin Industrial Development Investment Company Limited* (ʮ̡) held approximately 66.67% and 33.33% equity
interest in it, respectively. Jiashan Finance Bureau* (҅), through its wholly-owned subsidiary Jiashan Shancheng Industrial Company Limited* ( ྗഛጤഛϓྼุ
ʮ̡), held 100% equity interest in Jiashan Zhongxin Industrial Development Investment Company Limited* (ʮ̡). Jiashan Zhongxin
Industrial Development Investment Company Limited* (ʮ̡) is a substantial shareholder of CIG Zhejiang Telecommunication Equipment Co.,
Ltd.* (ʮ̡), our significant subsidiary, and accordingly is our connected person.
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Shareholding and Corporate structure immediately following the Global Offering
The following chart depicts the shareholding and beneficial ownership structure of our Group immediately following the completion of the
Global Offering (assuming that the Over-allotment Option is not exercised, the options granted under the 2024 Share Option Incentive Scheme are
not exercised and that no changes are made to the issued share capital of our Company between the Latest Practicable Date and Listing):
Cambridge Industries Group
Telecommunication Limited
(Hong Kong, PRC)
CIG Photonics Japan Limited
(Japan)
100%
100%
CIG OPTICS LIMITED
(Hong Kong, PRC)
CIG Tech Photonics Sdn. Bhd.
(Malaysia)
Actiontec Electronics, Inc.
(USA)
Actiontec Electronics Taiwan Inc.
(怩㘢⽖暣⫸偉ấ㚱旸℔⎠)
(Taiwan, PRC)
100% 100% 100%
100%
Mr. Gerald G Wong
CIG Cayman
(Cayman Islands)
Kangling Technology1
(PRC) Other A Shareholders3 H Shareholders
Our Company
(PRC)
Actiontec
Electronics
(Shanghai),
Inc.* (怩㘢
⽖暣⫸(ᶲ
㴟)㚱旸℔
⎠)
(PRC)
CIG
Shanghai
Communication
Equipment
Co., Ltd.*
(ᶲ㴟∵
㧳忂妲姕
⁁㚱旸℔
⎠)
(PRC)
CIG Xi’an
Co., Ltd.*
( 大⬱∵
㧳䥹㈨㚱
旸℔⎠)
(PRC)
100%
100% 100% 100% 100% 100% 100% 100% 100% 100% 66.67%
Mr. Zhao Haibo
80.00%
90.00%
19.80%Kangling Management2
(PRC)
CIG Optical
Communication
Co., Ltd.*
(ᶲ㴟∵㧳
⃱忂ᾉ㈨埻
㚱旸℔⎠)
(PRC)
Shanghai
Cambridge
Communication
Technology
Co., Ltd.*
(ᶲ㴟∵㧳
忂妲㈨埻㚱
旸℔⎠)
(PRC)
CIG Wuhan
Co., Ltd.*
(ᶲ㴟∵㧳
䥹㈨(㬎㻊Ī
㚱旸℔⎠)
(PRC)
Cambridge
Industries USA
Inc.
(USA)
CIG
Photonics
Europe
GmbH
(Germany)
Cambridge
Industries
Group Limited
(Hong Kong,
PRC)
CIG
Zhejiang
Telecommunication
Equipment
Co., Ltd.*
(㴁㰇∵㧳
忂ᾉ姕⁁㚱
旸℔⎠)4
(PRC)
20.00%
68.69%1.75%9.56%
Notes (1) to (4): Please refer to the details contained in the preceding page.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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OVERVIEW
We are primarily engaged in designing, developing, and selling connectivity and data
transmission devices. During the Track Record Period, we generated our revenue primarily
from the sales of our products in (i) broadband; (ii) wireless; and (iii) photonics technologies.
According to F&S, we were one of the few global companies that offer products with these
three technologies. We also ranked 5th in the global integrated optical and wireless
connectivity devices (“ OWCD ”) industry in 2024, with a market share of 4.1%, in terms of
sales revenue.
The following chart demonstrates our achievements:
Among the first
to develop 800G and
1.6T photonics
products (1)
Among the first
to launch 25GPON
products(1)
Among the first
to mass-produce
Wi-Fi 7 products(1) of our products were sold(4)
42 million+
of our total workforce(3)
50%+
Our R&D staff formed
Global presence in
countries and regions(3)
52Top 5
Our customers include
global ICT
equipment providers
in R&D investments(4)
RMB1.4 billion+
of our revenue is derived
from overseas markets(2)
90%+
Notes:
1. In the global OWCD industry.
2. For 2024 and the six months ended June 30, 2025.
3. As of June 30, 2025.
4. During the Track Record Period.
Our expertise and products
We strive to advance our R&D and manufacturing expertise in order maintain our level
of competitiveness. Such focus has allowed us to leverage our capabilities in product
innovation and development to deliver products via our joint design manufacturing (“ JDM”)
and original design manufacturing (“ ODM”) models, and position ourselves beyond traditional
contract manufacturing models (which is often limited to executing predefined designs).
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Our JDM model, in particular, requires earning the trust of major customers, as it involves
collaboration and supervision throughout the process. This model entails a qualification
process during which customers demand adherence to certain standards, manufacturers must
demonstrate certain capabilities, and both parties need to show that they have dedicated
resources and investments to ensure that their expertise and capabilities are up to expectations.
Achieving the level of trust and integration required for JDM is a rare feat, and even
fewer can do so while meeting the requirements of customers in the United States and Europe.
During the Track Record Period, we had collaborated with several globally leading partners,
with whom we had maintained stable relationships for over ten years. Moreover, our customer
base as of June 30, 2025 comprised AI data centers, telecommunication operators, information
and communication technology (“ ICT”) equipment providers, multiple system operators
(“MSO”), and internet-of-things (“ IoT”) solutions providers, including those based in the
United States and Europe. For more information regarding our JDM and ODM models, please
refer to the subsection headed “— Our business model” in this section.
Our expertise spans a diverse range of products in photonics, broadband, and wireless
technologies, which enable efficient connectivity for the distribution and utilization of
computational power and data between computing clusters and user’ premises, between users’
premises and end-users’ smart devices, and within and between computing clusters and users.
Key features of our products include the following:
25GPON
GPON MDU
XGS-PON SFU
Our target customers
Data
centers
Telecommunication
operators ICT equipment
providers
MSO
IoT solutions
providers
ICT eq iuipment
li
l
 i
 i
Wi-Fi 7 Router
Enterprise AP
Wi-Fi 7 Mesh
G
1.6T optical modules
800G optical modules
400G optical modules and more
Our wireless products Our photonics productsOur broadband products
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Major areas
of connectivity
Major
applicable fields:
Network
topology
General description of
users/customers
Broadband /H1118/H1118/H1118Delivering efficient
data transmission
between computing
clusters and users’
premises
(i) FTTH and FTTB
deployments;
(ii) Multi-gigabit
broadband
infrastructure for
residential and
commercial use; and
(iii) Telecom and ISP
backbone upgrades
Point to
multi-point
over fiber
Telecommunications operators
and internet service
providers, municipal
broadband providers; or large
residential property
developers or campus
network operators.
Wireless /H1118/H1118/H1118/H1118Delivering high
bandwidth, fast
transmission
speeds, and low
network latency
between users’
premises and end-
users’ smart
devices
(i) Smart home and
smart office
environments;
(ii) Enterprise and
campus wireless
networking; (iii) and
Hospitality, retail,
and public venue
connectivity
Over the air Consumer electronics brands
and OEMs, enterprises
deploying large-scale
wireless network, or system
integrators and managed
service providers.
Photonics /H1118/H1118/H1118Delivering efficient
connectivity within
and between
computing clusters
(i) Data center
interconnect and
cloud infrastructure;
(ii) Connectivity in
relation to AI
computing clusters
and hyperscale
computing; (iii)
Connectivity in
relation to high-
performance
computing and
financial trading
networks
Point to point
over fiber
Hyperscale cloud service
providers (e.g., public cloud
platforms), data center
operators and co-location
providers, network
equipment manufacturers and
optical system integrators.
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In relation to our broadband products, with respect to XGS PON products, which form a
part of the mainstream in relation to 10GPON products in the wired broadband sector, our XGS
PON products accounted for over 30% of the global 10GPON market by shipping volume as
of December 31, 2024. We were among the first worldwide to achieve mass production of
25GPON and to pioneer the deployment of 50GPON. As of the Latest Practicable Date, our
25GPON was the fastest mass-produced product globally, while 50GPON is poised to become
the next generation mainstream technology. We are also contributing to the early-stage
evaluation of 100GPON, reinforcing our role in shaping the future of broadband.
In relation to our wireless products, our portfolio includes Wi-Fi products for unlicensed
spectrum ideal for households and small businesses and small cell products for licensed
spectrum applications such as cellular services and broadcasting. We were among the first in
the global OWCD industry to develop and mass-produce Wi-Fi 7 products, which offer high
bandwidth, fast transmission speeds, and low latency. In partnership with Google Fiber, we
launched the industry’s first 20G uplink Wi-Fi 7 gateway for home and small business users,
delivering network services exceeding 10Gb/s. We are also actively developing Wi-Fi 8, the
next-generation mainstream product.
In relation to our photonics products, our portfolio, which spans 100G, 400G, 800G, and
1.6T interconnection speeds, is adaptable to a wide range of industry standard form factors. We
were among the first globally to deploy 800G and 1.6T photonics products. Our pioneering
work in silicon photonics enables high transmission rates with low cost and power
consumption critical for supporting the exponential growth in computational power. We are
also advancing Linear-drive Pluggable Optics (“ LPO”) technology, which offers low power
consumption, low latency, and high performance, making it ideal for AI models and data
centers. To complement this, we are developing immersion liquid-cooled photonics to enhance
server efficiency and thermal management. Additionally, we are working on our packaged laser
and silicon photonics engine (i.e., ELS, external light source) for Co-Packaged Optics (“ CPO”)
technology, which integrates the network and photonic engine into a single slot, drastically
reducing signal transmission distance and latency ideal for AI training and inference.
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The following diagram illustrates a scenario that demonstrates the applications of our
products within a network system:
Computing
clusters
Data
storage
Data switches
Data centers
Computing
clusters
Data
storage
Data switches
Data centers
Internet
Optical network
terminals (“ONT”)
Access Points
(“AP”)
Computers, smartphones, and other IoT devices
Photonics
connectivity
Broadband
connectivity
Wireless
connectivity
Our R&D capabilities
We believe that continuous investment in R&D is a key to maintaining our current level
of success. Our R&D team comprised 673 members, representing over 50% of our total
workforce as of June 30, 2025. Our core team and R&D staff are drawn from institutions. Our
R&D expenses represented 7.1%, 8.9%, 8.8%, and 7.9% of our total revenue for 2022, 2023,
and 2024, and the six months ended June 30, 2025, respectively. Additionally, our cumulative
R&D investments during the Track Record Period exceeded RMB1.4 billion. As of June 30,
2025, we have R&D centers in China, the United States, and Japan. Our R&D team operates
across multiple centers worldwide. They will regularly engage in cross-functional teams,
sharing insights and expertise. We believe that this collaboration is essential in strengthening
our product development capabilities and intellectual property portfolio. We also believe that
our current success and our market position is attributable to our product development strategy,
which revolves around researching one generation, developing one generation, and producing
one generation. For research products, we closely monitor industry trends and increase
investment in forward-looking technologies to launch industry-leading innovations. For our
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products in development, we focus on refining and optimizing the designs to ensure they meet
the highest standards of performance and reliability. For mass-produced products, we
continuously invest in R&D to enhance cost efficiency and maintain the competitiveness of our
core offerings.
Our manufacturing capabilities
We primarily manufacture our products via (i) our co-location manufacturing model; and
(ii) our in-house manufacturing facilities. Under our co-location manufacturing model we are
responsible for the product design, key materials, core machinery, processes, and overall
management, while our co-location partners provide the factory space, workforce, basic
machinery, assistance on logistics and procurement, and handle local regulations. This setup
gives us better control over quality and consistency across all production sites. It also allows
us to quickly shift or scale production based on market needs. As we do not need to invest
heavily in co-location manufacturing facilities, we can expand more efficiently while still
maintaining high standards. We also benefit from our co-location partners’ experience and
logistics networks, which help us deliver products faster to nearby customers. As of the Latest
Practicable Date, we had entered into agreements with three co-location partners in China, and
three overseas, namely in Malaysia, the United States, and Europe. In addition, our in-house
manufacturing facilities (with the first one located in Shanghai and has been in operation since
2014, and the new facility located in Jiashan, near Shanghai, which has been in operation from
July 2025) are also considered essential to our production capabilities. We conduct pilot runs
in-house to optimize processes before replicating them at co-location sites, and we maintain
some production in-house as a benchmark for co-location operations. By leveraging the
intelligent manufacturing experience accumulated at our in-house facility, we have been able
to replicate our core production technologies and standardized production processes at our
global co-location sites, and quickly expand on our manufacturing capacity and capabilities.
Our presence overseas and in China
We are a company with a presence overseas and in China. Over the years, we have set up
six R&D centers in China, the United States, and Japan, engaged in multiple co-location
manufacturing arrangements with co-location partners in China, the United States, the
European Union, and Malaysia, and deployed sales personnel, across multiple countries and
regions.
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The following diagram highlights our R&D, manufacturing and sales layout overseas and
in China as of June 30, 2025:
Manufacturing facilities in
Germany and Poland, and
sales center in Italy CIG Headquarters
R&D, manufacturing and sales
centers
Japan
R&D center
CIG USA Headquarters
R&D, manufacturing and sales
centers
Malaysia
Manufacturing
center
European Union
We have also expanded our footprint through strategic acquisitions such as photonics
assets and R&D teams from MACOM and Lumentum, and software capabilities from
Actiontec. As of June 30, 2025, our customer base spanned across 52 countries and regions,
serving the world’s top five ICT equipment providers, and a majority of our revenue is
generated from overseas markets. For 2022, 2023, and 2024, and the six months ended June 30,
2025, our revenue generated from overseas markets represented 82.9%, 89.3%, 92.6%, and
94.0% of our total revenue, respectively.
Our market opportunities
According to F&S, the global OWCD market encompasses a comprehensive suite of
devices essential for the optical communication and wireless networking industry, including
photonics, wired broadband access, and wireless network access devices. From 2020 to 2024,
the global sales revenue of the OWCD industry increased from USD32.4 billion to USD54.6
billion, with a CAGR of 13.9%. It is projected to reach USD111.8 billion by 2029, representing
a CAGR of 15.4% from 2024 onwards Moreover, in relation to the market for broadband
products, most notably, PON devices, the global market size for PON devices by sales revenue
increased from USD6.2 billion in 2020 to USD7.8 billion in 2024, with a CAGR of
approximately 5.8%, and is projected to reach USD11.9 billion in 2029, with a CAGR of
approximately 8.8% from 2024. In relation to the market for Wi-Fi products, the global market
size for Wi-Fi devices, the global sales revenue of Wi-Fi devices rose from USD13.7 billion
in 2020 to approximately USD16.7 billion in 2024, with a CAGR of around 5.1%, and is
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projected to reach USD21.2 billion in 2029, with a CAGR of 4.9%. In relation to photonics
products, global sales revenue of photonics rose from USD11.2 billion in 2020 to USD17.8
billion in 2024, with a CAGR of 12.2%, and is expected to reach USD41.5 billion in 2029 with
a CAGR of 18.5%.
Furthermore, the recent growth of AI applications has created a challenge for the industry
in which we operate: to ensure that there is enough computational power and data transmission
capacity to meet future needs. This issue has drawn an interest in connectivity solutions that
ensure fast, low-latency, and high-capacity data transmission to support the future of AI
development. According to F&S, the following sets forth some notable developments in this
era of AI advancement:
 Large-scale investments and government support: It is estimated that there will be
significant investments in infrastructure in the coming years. For instance, in 2025,
the United States government launched the “Stargate Initiative” to expand the
country’s infrastructure that supports the development of AI, with a commitment to
invest USD500 billion over the next four years. Additionally, F&S estimates that
global tech giants are projected to invest over USD400 billion in AI infrastructure
within the next three years. Similarly, the PRC has introduced a series of supportive
policies, such as the “Guidance on the Construction of National Data
Infrastructure”, “Guideline for the Establishment of the National Comprehensive
Standardization System for the AI Industry (2024 V ersion)” and “Implementation
Opinions of Seven Ministries Including the MIIT on Promoting the Innovative
Development of Future Industries”.
 Decentralization of computing networks: The decentralization of computing
networks driven by lightweight AI models has increased the accessibility of AI
technology. This is largely due to the development of lightweight large models and
open-source ecosystems. For instance, in China, the creation of a particular
open-sourced AI has immediately spurred more AI growth. This advancement
empowers small and medium-sized enterprises globally to develop their own AI
models and establish local data centers, thereby diminishing their dependence on
external resources. As a result, this has driven the demand for small and
medium-sized data centers.
 Proliferation of applications: Recent increases in AI algorithm and reductions in
related costs have facilitated the adoption of large AI models, thereby driving the
demand for enterprise-grade broadband, wireless, and industrial IoT equipment.
For more information regarding our such market opportunities, please refer to the section
headed “Industry Overview” in this Prospectus.
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Our milestones
Our history dates back to 2005, when our founder, Mr. Gerald G Wong, along with his
colleagues, founded our telecommunication broadband access business in Silicon V alley,
United States. Since then, we have continued to develop and expand our business operations.
The following sets forth key milestones throughout our history:
Our business was
founded in Silicon
Valley
Major
expansions
in R&D,
manufacturing
and IT system
Successfully
completed the
acquisition of
MACOM’s
Japan asset. We
also advanced
our overseas
manufacturing
strategy by
establishing a
production base in
Malaysia
Acquired
Lumentum’s
Oclaro
Japan assets
We successfully
completed the
Non-public
Issuance of our
A Shares
We have
completed
the NPI for our
manufacturing
facility in the
United States
Phase I (2005 to 2017)
founded in Silicon Valley
Phase II (2017 to 2024)
one of industry leaders
to empower AI
Phase III (2024 up to present)
Deepening overseas
business development
2011
2005
2017
2018
2019
2020
2025
Our Company
was listed on
the Shanghai
Stock Exchange
We
successfully
acquired
Actiontec
Electronics
2022
We have
completed the
new product
introduction
(“NPI”) for our
manufacturing
facility in Germany
 and Poland
2024
For further information, please refer to the section headed “History, Development and
Corporate Structure” in this Prospectus.
OUR COMPETITIVE STRENGTHS
We believe that our achievements to date are driven by the following competitive
advantages:
Our capable management and R&D teams, with their international backgrounds and
industry insights, have driven us to achieve R&D breakthroughs.
We are led by a capable team of management team and R&D staff members. Most notably,
our founder and chairman, Mr. Gerald G Wong, is an MIT graduate with over 40 years of
industry experience. He was recently recognized as one of the Outstanding Entrepreneurs of
Minhang District by the People’s Government of Minhang District in Shanghai. In addition,
our core team and R&D members are drawn from institutions such as MIT, Stanford University,
California Institute of Technology, Columbia University, University of California, Berkeley,
Imperial College London, Tsinghua University, Peking University, Shanghai Jiao Tong
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University, and Zhejiang University. Equally significant are the years of practical experience
these professionals bring with them from top industry firms. Furthermore, we believe that our
corporate culture fosters innovation and collaboration, which can empower our team to reach
further success. To align employee interests with our long-term growth, we have implemented
five restricted share and share option incentive schemes since 2018. As of the Latest
Practicable Date, the 2024 Share Option Incentive Scheme was still in effect. Please refer to
the section headed “Statutory and General Information — Our Share Incentive Schemes” in
Appendix VI to this Prospectus for details.
As of June 30, 2025, we had 673 R&D personnel, accounting for over 50% of our total
workforce. During the Track Record Period, our cumulative R&D investments exceeded
RMB1.4 billion. Our dedicated R&D team operates across multiple R&D centers worldwide.
We believe that such commitment contributes to our product development capabilities and our
intellectual property portfolio. As of the Latest Practicable Date, we hold over 410 valid
patents and through our strategic acquisitions, we have gained access to over 580 patents via
licensing agreements, in China and overseas.
We are well-positioned in the OWCD market to capture future growth opportunities.
We believe that we are strongly positioned in the global OWCD industry, with a robust
presence across broadband, wireless, and photonics. Our leadership is not only reflected in our
current product portfolio but also in the next-generation technologies we are actively
developing. According to F&S, the global OWCD market which includes photonics,
broadband, and wireless devices expanded from USD32.4 billion in 2020 to USD54.6 billion
in 2024 (at a CAGR of 13.9%) and is expected to reach USD111.8 billion by 2029 (at a CAGR
of 15.4%). With our comprehensive product portfolio, deep technical expertise, and
commitment to innovation, we are exceptionally well-positioned to capture the full spectrum
of growth opportunities in this rapidly evolving industry. This comprehensive strength enables
us to align closely with market trends and seize the substantial growth opportunities ahead.
 In broadband , with respect to XGS PON products, which form part of the
mainstream in relation to 10GPON products in the wired broadband sector, our XGS
PON products accounted for over 30% of the global 10GPON market by shipping
volume as of December 31, 2024. We were among the first worldwide to achieve
mass production of 25GPON and to pioneer the deployment of 50GPON. As of the
Latest Practicable Date, our 25GPON was the fastest mass-produced product
globally, while 50GPON is poised to become the next-generation mainstream
technology. We are also contributing to the early-stage evaluation of 100GPON,
reinforcing our role in shaping the future of broadband. According to F&S, the
global PON device market grew from USD6.2 billion in 2020 to USD7.8 billion in
2024 (at a CAGR of 5.8%) and is projected to reach USD11.9 billion by 2029 (at a
CAGR of 8.8%), as the latest broadband products can act as the future access
terminals in the world’s critical infrastructure that supports AI development. Our
strong market share and forward-looking R&D position us to lead this growth and
capture such opportunities in relation to the development of AI.
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 In wireless , our portfolio includes Wi-Fi products for unlicensed spectrum ideal for
households and small businesses and small cell products for licensed spectrum
applications such as cellular services and broadcasting. We were among the first in
the global OWCD industry to develop and mass-produce Wi-Fi 7 products, which
offer high bandwidth, fast transmission speeds, and low latency. In partnership with
Google Fiber, we launched the industry’s first 20G uplink Wi-Fi 7 gateway for home
and small business users, delivering network services exceeding 10Gb/s. We are also
actively developing Wi-Fi 8, the next-generation mainstream product. According to
F&S, the global Wi-Fi device market grew from USD13.7 billion in 2020 to
approximately USD16.7 billion in 2024 (at a CAGR of 5.1%) and is expected to
reach USD 21.2 billion by 2029 (at a CAGR of 4.9%), as the latest Wi-Fi products
(such as Wi-Fi 7 and 8) can serve as the world’s future terminal infrastructure for
AI applications. Our early leadership in Wi-Fi 7 and ongoing R&D in Wi-Fi 8 ensure
we are well-positioned to meet the rising demand for faster, more reliable wireless
connectivity, and capture any growth opportunities in relation to the development of
AI technologies.
 In photonics , our portfolio, which spans 100G, 400G, 800G, and 1.6T
interconnection speeds, is adaptable to a wide range of industry-standard form
factors. We were among the first globally to deploy 800G and 1.6T photonics
products. Our pioneering work in silicon photonics enables high transmission rates
with low cost and power consumption critical for supporting the exponential growth
in computational power. We are also advancing LPO technology, which offers low
power consumption, low latency, and high performance, making it ideal for AI
models and data centers. To complement this, we are developing immersion
liquid-cooled photonics to enhance server efficiency and thermal management.
Additionally, we are working on packaged laser and silicon photonics engines for
CPO technology, which integrates the network and photonic engine into a single
slot, drastically reducing signal transmission distance and latency ideal for AI
training and inference. According to F&S, the global photonics market grew from
USD11.2 billion in 2020 to USD17.8 billion in 2024 (at a CAGR of 12.2%) and is
projected to reach USD41.5 billion by 2029 (at a CAGR of 18.5%), as the latest
photonics technology is considered crucial for the development of the world’s
critical infrastructure for AI computational models. Our leadership in advanced
photonics technologies positions us at the heart of this high-growth segment and
capture any growth opportunities in relation to the development of AI technologies.
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We are a company with a presence overseas and in China.
Our capabilities and overseas expansion strategy have enabled us to establish a
comprehensive structure across R&D, production, supply chain, and sales. By leveraging
available resources, we have maintained competitiveness in technology, products. This
approach has helped us remain differentiated within the OWCD industry. In particular:
 R&D: We operate R&D centers in China, the United States, and Japan, with local
teams that collaborate across regions. These teams complement each other’s
strengths to support product and technology development. For example, our Silicon
V alley R&D center works with the local sales team to stay aligned with customer
needs in the United States. Our Japan center maintains communication with optical
chip suppliers, while our China centers focus on photonics-related areas such as
thermal and RF simulation, reliability testing, and software development. Some
R&D staff also visit our Malaysia site to support manufacturing-related projects.
 Production and supply chain : Our co-location manufacturing model supports
operations in China, Malaysia, Europe, and the United States. Drawing on
experience from our in-house facility, we replicate core technologies and
standardized processes at co-location partner sites. This helps manage costs, adjust
capacity based on market conditions, and address regional risks and policy changes.
 Market expansion : As of June 30, 2025, we served customers in 52 countries and
regions across six continents. Our sales team and product range allow us to pursue
opportunities in various markets. We also locate R&D teams near key customers to
better understand their needs and support timely product development.
 Strategic acquisitions : Acquisitions have played a key role in shaping our
operations. In 2018, we acquired part of MACOM Japan’s assets, entering the TOSA
and ROSA sub-assembly segment. In 2019, we expanded further by acquiring part
of Lumentum’s Oclaro Japan assets. In 2022, we acquired Actiontec, strengthening
our R&D and sales presence in North America. These acquisitions have contributed
to the evolution of our operational capabilities.
Our success has been driven by flexible and efficient business models.
We provide customized products to our customers under flexible service models, namely,
our JDM and ODM models, both being commonly adopted models in the industry in which we
operate. Under our JDM model, we collaborate with top global customers in product R&D and
design, forming long-term and close partnerships. On the other hand, our ODM model, requires
comprehensive hardware and software R&D capabilities. Under this model, we independently
develop equipment hardware and software, with the products sold under a customer’s brand.
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We believe that with our expertise and experience, we are able to adopt such business
models which are built on the foundation of the trust we earned from our customers over the
years. This enables us to better serve our customers and maintain a competitive edge in the
market. According to F&S, during the Track Record Period, our customers included the world’s
top five information and communication technology equipment providers. One of them is a
leading global communication equipment provider, and another being a leading global
technology giant. The average duration of cooperation with our five largest customers in each
year/period of the the Track Record Period exceeded ten years.
We maintain an open-minded and innovative approach to our business models. For
instance, in certain advantageous regions and market segments, we are exploring the promotion
of our own brands as an enhancement to our ODM model. Additionally, we have endeavored
to empower our partners in North America through IP licensing arrangements, manufacturing
support, technical assistance, and other potential methods. This enables us to offer supply chain
diversification to prospective customers and markets, particularly in areas where we encounter
significant geopolitical challenges. We remain adaptable and flexible in modifying our
business models efficiently and effectively to maximize the benefits for our business.
We are capable of, and have successfully, scaled-up our manufacturing capabilities on a
global scale.
Our intelligent manufacturing capabilities are the foundation for achieving efficient,
stable, and replicable mass production. Our in-house facility, which is integrated with IT and
automated technologies, serves as a benchmark for intelligent manufacturing. It has received
awards and recognitions such as being recognized as the Innovative Enterprise Headquarters
of Shanghai, the Shanghai Intelligent Factory and Shanghai Top 100 Manufacturing
Enterprises. In addition, our new in-house facility in Jiashan, near Shanghai, has been in
operation from July 2025. According to F&S, we were among the first in the global OWCD
industry to establish intelligent manufacturing facilities. Such intelligent manufacturing
expertise accumulated at our in-house facility can be easily and rapidly replicated at our
overseas locations. This is achieved through our co-location manufacturing model, upon which
we would utilize co-location partners’ resources, provide core management personnel and
equipment, and replicate our intelligent manufacturing capabilities, by achieving efficient
control of core processes. Under this model, we can ensure that our co-location partners and
our in-house facilities will use identical production processes and intelligent manufacturing
systems, achieving the full-process control of production worldwide.
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OUR FUTURE STRATEGIES
We are committed to preserving our status as market leaders and to fostering our financial
and operational expansion via these future strategies:
We plan to continue attracting top global talent to enhance our overall competitiveness.
We firmly acknowledge that international talents are invaluable assets to our
organization. Over the years, we have attracted talents with industry experience from around
the world. This approach has enabled us to maintain our core competitiveness and achieve
consistent performance growth since our establishment. We believe that the diverse
perspectives and expertise brought by these international talents have been instrumental in our
sustained success. Moreover, our commitment to fostering a diverse workforce is unwavering,
and we actively promote inclusivity and fairness within our working environment. It is our
objective to ensure that every employee can realize their full potential, thereby driving the
continuous success of our Company.
Looking ahead, we plan to continue attracting top international talents and expanding our
team to further enhance our overall competitiveness. By leveraging the unique skills and
experiences of a diverse workforce, we aim to remain to continue to deliver value to our
stakeholders. To do so, we plan to use 5.5% of our net proceeds, or HK$90.0 million, for the
recruitment of 30 to 50 R&D professionals, covering all the fields in relation to photonics,
broadband and wireless technologies. For further details, please refer to the section titled
“Future Plans and Use of Proceeds” in this Prospectus. Our long-term vision is to create an
inclusive environment where every individual feels valued and empowered to contribute to our
collective success.
We will increase our R&D investment to maintain our competitive edge.
We believe that continuous investment in R&D is essential for maintaining the
competitiveness of our products. Since our inception, we have established a robust three-tier
system for product R&D, encompassing research, development, and mass production. Our core
development philosophy revolves around researching one generation, developing one
generation, and mass producing one generation. This systematic approach enables us to
continuously advance the productization of strategic reserve technologies, explore new
markets, and launch mass-produced products that meet customer needs while maintaining
strong competitive advantages.
Moving forward, we plan to use 9.5%, or HK$155.4 million, of our net proceeds to
support the continued R&D of our manufacturing technologies through acquiring advanced
machinery and software. We also plan to use 5.0%, or HK$81.8 million, of our net proceeds
for the acquisition of essential materials to support our R&D efforts. For further details, please
refer to the section titled “Future Plans and Use of Proceeds” in this Prospectus.
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In addition, we have begun implementing AI-enhanced manufacturing processes and
quality control mechanism, and we plan to continue expanding these initiatives. By integrating
AI into our operations, we aim to enhance efficiency, precision, and overall product quality.
Furthermore, we will continue to look for the latest technologies to stay ahead in the global
OWCD industry. This proactive strategy ensures that we can leverage our technological
advancements to sustain our growth.
The following illustrates our future R&D direction in relation to our products and
products:
 Broadband products: We plan to increase R&D investment towards the
technological evolution of 50GPON and 100GPON, thereby continuously leading
industry development and consolidating our leading position.
 Wireless products: We will develop high-end wireless products that can be
embedded with AI and collaborate with smart terminals for future AI applications,
thereby continuously expanding our competitive advantage. Additionally, we will
invest in the R&D of Wi-Fi 8 technology to further advance our market leadership.
 Photonics products: We aim to further expand our 800G optical modules product
matrix to serve more customers with diverse demands. We will continue to promote
the R&D and commercialization of 1.6T optical modules and further improve the
production process of our photonics products, and focus particularly on the silicon
photonics, LPO and CPO technologies in future generation products.
We aim to optimize our production capacity layout overseas and in China and continue
to invest in intelligent manufacturing to meet the demand of our customers.
A comprehensive production capacity layout overseas and in China is considered a core
competency in our industry. Such a layout enables us to meet the diverse product needs of
customers worldwide and respond effectively to complex international environments. Our
clients, who are industry leaders, require high-quality and reliable capacity matches. Therefore,
optimizing our production capacity layout overseas and in China is essential for securing key
orders from top global clients.
For such reasons, intelligent manufacturing is fundamental to optimizing our production
capacity overseas and in China. We adhere to a lean production philosophy and consistently
build intelligent facilities that integrate information technology and automation to high
standards.
As of the Latest Practicable Date, we have empowered our in-house facilities in Shanghai,
and those of all of our co-location partners with intelligent manufacturing capabilities. Looking
forward, we plan to further increase investment in intelligent manufacturing to enhance our
production intelligence and respond to the evolving demands of our customers. To this end, we
plan to use 50.0%, or HK$818.1 million, of our net proceeds to enhance production capacity
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at our facilities as well as our current and future co-location partners’ facilities. This includes
procuring and installing machinery and software tailored to the following types of products we
manufacture, and to collaborate with our co-location partners to increase the production
capacity. For further details, please refer to the section titled “Future Plans and Use of
Proceeds” in this Prospectus. This strategic focus will ensure that we can deliver exceptional
value and maintaining our competitive edge. Moreover, by driving an efficiency-oriented
innovation strategy, our intelligent manufacturing capabilities will remain capable of
supporting the implementation of our future overseas expansion production strategies.
We plan to further expand our sales network.
The global ICT infrastructure market is experiencing varying levels of advancement, with
governments globally consistently unveiling large-scale digital infrastructure initiatives.
According to F&S, the global markets for PON devices, Wi-Fi devices, and optical modules are
projected to reach USD11.9 billion, USD21.2 billion, and USD41.5 billion respectively by
2029. As different categories of fundamental telecommunications products continue to be
updated and iterated, regional development disparities present structural growth opportunities
for our diverse product portfolio.
As of June 30, 2025, our sales and marketing layout comprised a total staff size of 83,
spanning across Asia, Europe and the United States. Looking forward, we intend to further
expand our global sales network. To do so, we plan to use 4.7%, or HK$76.9 million, of our
net proceeds to enhance our sales and marketing team’s capabilities. This includes expanding
the size of our sales and marketing team, improving their sales and marketing skills, and other
general marketing activities. We also plan to use 0.3%, or HK$4.9 million, of our net proceeds
to enhance our brand and reputation through increasing our memberships to industry
associations and expand our market exposure and improve our customer reach by increasing
our participation at global industry events. For further details, please refer to the section titled
“Future Plans and Use of Proceeds” in this Prospectus. Our objective is to capture the
substantial growth opportunities available in various countries worldwide. By leveraging our
strengths in cost efficiency and technological innovation, we aim to meet the diverse needs of
our global clientele and respond effectively to the complexities of international markets. This
strategic expansion will enable us to maintain our competitive edge and drive sustained growth
in the ever-evolving telecommunications industry.
OUR PRODUCTS
Since our inception, we have been dedicated to providing customized products to meet the
needs of our customers. Our offerings comprise the provision of connectivity products, as well
as integrated solutions that encompass product design and development, as well as the
necessary software and support services to ensure effective implementation.
During the Track Record Period, we have been primarily designing, developing, and
selling (i) broadband products; (ii) wireless products; and (iii) photonics products to our
customers.
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The following tables set forth a breakdown of our sales volume, revenue, gross profit, and gross profit margin by such types of products for
the years/periods indicated:
For the year ended December 31,
2022 2023 2024
Sales volume Revenue
Gross
profit
Gross
profit
margin Sales volume Revenue
Gross
profit
Gross
profit
margin Sales volume Revenue
Gross
profit
Gross
profit
margin
Units’000 % RMB’000 % RMB’000 % Units’000 % RMB’000 % RMB’000 % Units’000 % RMB’000 % RMB’000 %
Broadband products /H1118/H1118/H1118/H1118/H1118/H111810,169 74.0 2,059,278 54.5 306,581 14.9 7,559 77.6 1,827,146 59.2 356,432 19.5 9,580 74.7 2,032,689 55.7 377,832 18.6
Wireless products /H1118/H1118/H1118/H1118/H1118/H1118/H11182,018 14.7 1,056,051 27.9 210,583 19.9 1,220 12.5 718,518 23.3 165,042 23.0 2,570 20.0 1,052,400 28.8 259,054 24.6
Photonics products /H1118/H1118/H1118/H1118/H1118/H1118/H1118890 6.5 478,215 12.6 131,886 27.6 587 6.0 446,680 14.5 130,166 29.1 356 2.8 491,527 13.5 119,063 24.2
Others (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118671 4.8 190,195 5.0 39,585 20.8 376 3.9 93,018 3.0 12,455 13.4 319 2.5 73,273 2.0 6,298 8.6
Total/overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813,748 100.0 3,783,739 100.0 688,635 18.2 9,742 100.0 3,085,362 100.0 664,095 21.5 12,825 100.0 3,649,889 100.0 762,247 20.9
Note:
1. Primarily included carrier-grade ethernet switches and edge computing products.
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For the six months ended June 30,
2024 2025
Sales volume Revenue Gross profit
Gross
profit
margin Sales volume Revenue Gross profit
Gross
profit
margin
Units’000 % RMB’000 % RMB’000 % Units’000 % RMB’000 % RMB’000 %
(Unaudited) (Unaudited)
Broadband products /H1118/H1118/H1118/H1118/H1118/H1118/H11185,143 77.4 975,732 55.4 199,613 20.5 5,286 80.4 1,192,642 58.6 229,259 19.2
Wireless products /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,228 18.5 551,193 31.3 143,647 26.1 928 14.1 415,166 20.4 84,915 20.5
Photonics products /H1118/H1118/H1118/H1118/H1118/H1118/H1118120 1.8 202,041 11.5 39,805 19.7 247 3.8 394,216 19.4 127,602 32.4
Others (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118153 2.3 32,442 1.8 101 0.3 117 1.7 31,999 1.6 2,804 8.8
Total/overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,644 100.0 1,761,408 100.0 383,166 21.8 6,578 100.0 2,034,023 100.0 444,580 21.9
Note:
1. Primarily included carrier-grade ethernet switches and edge computing products.
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In general, fluctuations in our revenue during the Track Record Period were primarily
driven by changes in industry-wide demand, while our international expansion strategy
supported revenue growth in specific markets. In 2023, our revenue declined due to an
industry-wide inventory destocking cycle, following elevated stockpiling during the pandemic
period which resulted in postponed demand. However, in 2024, this deferred demand
materialized, leading to a robust rebound in sales. This recovery was further bolstered by our
intensified international sales efforts, particularly in the United States and Europe, where we
expanded our commercial presence and developed stronger customer relationships. Overall,
our total sales volume decreased from 13.7 million units in 2022 to 9.7 million units in 2023,
and recovered to 12.8 million units in 2024. Similarly, our total revenue decreased from
RMB3,783.7 million in 2022 to RMB3,085.4 million in 2023, then increased to RMB3,649.9
million in 2024 and our revenue increased from RMB1,761.4 million to RMB2,034.0 million
for the six months ended June 30, 2024 and 2025.
To a lesser extent, we also generated a part of our income from the sale of other devices,
namely carrier-grade ethernet switches and edge computing products. These products are
mainly used for high-performance network routing, data processing at the network edge, and
real-time analytics, and are mostly used by customers in the telecommunications, industrial
automation, and enterprise IT infrastructure industries. During the Track Record Period, the
sales volume of such products decreased from 0.7 million units to 0.4 million units, 0.3 million
units, and 0.1 million units, respectively.
Our average selling price (“ ASP”) is calculated by dividing the revenue generated by our
key product lines by the total sales volume of each product line. Each product line may
comprise over hundreds of products, which may vary significantly in terms of pricing,
customer type, and timing of sales. During the Track Record Period, we did not experience a
concentration of revenue derived from any single product, with our top one product
contributing 10.9% of our total revenue for 2024. Given the wide variety of our products, we
adopt pricing strategies that are tailored to market conditions and customer needs. These
strategies are designed to safeguard and enhance our profitability. The following sets forth a
breakdown of the ASPs of our key product categories for the years/periods indicated:
For the year ended December 31,
For the six months
ended June 30,
2022 2023 2024 2024 2025
RMB/unit RMB/unit RMB/unit RMB/unit RMB/unit
Broadband products /H1118/H1118202.5 241.7 212.2 189.7 225.6
Wireless products /H1118/H1118/H1118523.3 588.9 409.5 448.8 447.4
Photonics products /H1118/H1118537.3 761.0 1,380.7 1,682.3 1,595.7
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118283.5 247.4 229.7 212.0 274.6
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118275.2 316.7 284.6 265.1 309.2
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 Our broadband products saw an increase in ASP from RMB202.5 per unit in 2022
to RMB241.7 in 2023, followed by a decline to RMB212.2 in 2024. This fluctuation
was primarily due to a shift in product mix toward newer, higher-functionality
models in 2023 (such as 10G PON devices), which allowed for higher pricing, while
in 2024, as the upgraded products entered broader commercial deployment, the unit
price declined slightly. For the six months ended June 30, 2024 and 2025, such ASP
increased from RMB189.7 to RMB225.6.
 Our wireless products followed a similar pattern, rising from RMB523.3 in 2022 to
RMB588.9 in 2023 as we launched Wi-Fi-6E devices. The decline in 2024 was
largely driven by market conditions. For the six months ended June 30, 2024 and
2025, such ASP remained stable.
 Our photonics products, on the other hand, showed a strong upward trend, with ASPs
increasing from RMB537.3 in 2022 to RMB761.0 in 2023, and then surging to
RMB1,380.7 in 2024. This was mainly due to the successful rollout of advanced,
high-value photonics products that met growing demand for cutting-edge optical
technologies. This sustained increase was also driven by growing shipments of 400G
products throughout 2023 and 2024. As the product line continues to evolve and
upgrade, the higher-performance 400G offerings have contributed to a higher overall
ASP . For the six months ended June 30, 2024 and 2025, such ASP decreased from
RMB1,682.3 to RMB1,595.7.
Broadband products
We have been involved in the design, production, and sale of broadband products based
on passive optical network (“ PON”) technologies. PON is an all-optical fiber network
infrastructure that utilizes a point-to-multipoint configuration, allowing a single optical fiber
to serve multiple residences. This architecture employs passive, unpowered optical splitters to
connect to residential, commercial, or industrial premises, thereby reducing equipment costs
compared to point-to-point networks.
Our broadband products provide users with stable and high-speed network access,
forming the foundational support for digital connectivity. They ensure stable data transmission
over long distances without interference from external wireless signals, offering reliable
network connections for homes, businesses, and institutions. Such products are applicable in
the fields of (i) FTTH and FTTB deployments; (ii) multi-gigabit broadband infrastructure for
residential and commercial use; and (iii) telecom and ISP backbone upgrades. Customers to
whom we provide such products may include telecommunications operators and Internet
service providers, municipal broadband providers; or large residential property developers or
campus network operators. These customers use broadband products to deliver high speed,
stable internet access to end-users, often in densely populated urban or suburban area.
Additionally, PON technologies play a crucial role in the development of smart cities,
providing a dependable network foundation for intelligent transportation, smart security, and
environmental monitoring. Over the past two decades, we have advanced the industry from the
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1G/2.5G generation of GPON and EPON to the 10GPON generation and beyond. This progress
not only enhances the quality and performance of connectivity for residential and enterprise
applications but also facilitates the integration of newly developed AI technologies from
remote data centers into daily life. Our continuous innovation ensures that our broadband
products the needs of our customers and the broader digital ecosystem.
According to F&S, the global OWCD market encompasses a comprehensive suite of
devices essential for the optical communication and wireless networking industry, including
photonics (optical transceivers/optical modules), wired broadband access, and wireless
network access devices. From 2020 to 2024, the global sales revenue of the integrated OWCD
industry increased from USD32.4 billion to USD54.6 billion, with a CAGR of 13.9% and is
expected to reach USD111.8 billion by 2029, representing a CAGR of 15.4% from 2024. We
believe that we are well-positioned in the industry in which we operate, with our connectivity
products and the technologies that we are currently developing, to capture the future growth
opportunities in this market.
During the Track Record Period, we sold 10.2 million, 7.6 million, 9.6 million, and 5.3
million broadband products, with a sales revenue of RMB2,059.3 million, RMB1,827.1
million, RMB2,032.7 million, and RMB1,192.6 million, respectively.
In general, products under our broadband portfolio cover these three types of PON:
50G/25GPON
50G/25GPON technology is the latest in PON technology. Our 25GPON supports
configurations such as 25Gb/s symmetrical and 25Gb/s downstream with 10Gb/s upstream.
Meanwhile, our 50GPON primarily offers two configurations: 50Gb/s symmetrical, 50Gb/s
downstream with 25Gb/s upstream. Our 25GPON products are in field trials with key
customers; we have volume orders from at least one customer, aiming for commercial
deployment by late 2025. Although the industry standard for 50GPON has just been finalized
recently in 2024, we are actively collaborating with industry partners on early-stage R&D, and
we aim to launch our 50GPON products within the timeframe of 2026/2027.
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Among the numerous types of products in our portfolio, the following table sets forth the
details of our 50G/25GPON products with the most advanced technologies, and their
characteristics, as of the Latest Practicable Date:
Product type Product picture and name Product features
50GPON /H1118/H1118/H1118/H1118/H1118/H1118
50GPON ONT
Our 50GPON product offers
high-speed internet connections
designed to meet modern
digital demands. On the local
network side, it features a
25GE optical interface and two
10GE electric interfaces. For
wider network connections, it
provides either a
50Gb/s-25Gb/s asymmetric
PON interface or a
50Gb/s-50Gb/s symmetric
interface. This product is ideal
for ultra-high-definition video,
immersive video, cloud
services for small and medium
enterprises, AI applications, 5G
wireless transport, and smart
power grids due to its
advanced security capabilities.
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Product type Product picture and name Product features
25GPON /H1118/H1118/H1118/H1118/H1118/H1118
25GPON ONT
Our 25GPON product is designed
to provide high-speed internet
connections. On the local
network side, it features one
25GE optical interface and one
10GE electric interface,
ensuring fast data transfer
within your network. For wider
network connections, it offers
a symmetric interface with
25Gb/s for both downloading
and uploading data. This
product is ideal for ultra-high-
definition video, immersive
video experiences, cloud
services for small and medium
enterprises, AI applications,
and 5G wireless transport. It
ensures that all these
demanding applications run
smoothly and efficiently.
XGS-PON/10G EPON
Simply put, XGS-PON is an advanced version of GPON that supports 10Gb/s speeds for
both upstream and downstream, and is widely adopted by telecom and Internet service
providers. Similarly, 10GEPON is the advanced version of EPON, also supporting 10Gb/s
speeds, and is mainly adopted by MSOs and cable network operators.
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Among the numerous types of products in our portfolio, the following table sets forth the
details of our XGS-PON/10G EPON products with the most advanced technologies, and their
characteristics, as of the Latest Practicable Date:
Product type Product picture and name Product features
XGS-PON /H1118/H1118/H1118/H1118/H1118
SFU
Our XGS-PON products come in
two port configurations,
namely single-port and multi-
port, and some of them are
equipped with a Wi-Fi button
and a Wi-Fi protected setup
button, integrating Wi-Fi 6
technology for high-speed
wireless networking. The XGS-
PON products feature equal
upload and download speeds,
making them ideal for video
conferencing, high-definition
content streaming, and large
file uploads.
10G EPON /H1118/H1118/H1118/H1118
SFU
Our 10G EPON products come in
two port configurations,
namely single-port and multi-
port, and are available with
both symmetrical and
asymmetrical options. Such
products are ideally used in
high speed internet access,
high-definition video, real-time
video and voice as well as AI
applications of different
devices.
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GPON/EPON
GPON and EPON are two types of PON technologies used for delivering high-speed
internet, voice, and video services over fiber optic cables. GPON is standardized by the
International Telecommunication Union (“ ITU-T ”) and uses asymmetrical data rates of
2.5Gb/s downstream and 1.25Gb/s upstream. This means it can deliver high download speeds
compared to upload speeds. GPON is widely deployed in Europe and parts of Asia, often used
by telecom operators who require high-speed internet and triple-play services (i.e., data, voice,
and video). EPON is standardized by the Institute of Electrical and Electronics Engineers
(“IEEE ”). It uses Ethernet frames for all types of data, making more compatible with existing
Ethernet networks. EPON provides symmetrical data rates of 1Gb/s for both downstream and
upstream, offering equal speeds for both directions. It is commonly deployed in North America,
favored by cable operators and internet service providers due to its compatibility with existing
ethernet infrastructure.
Among the numerous types of products in our portfolio, the following table sets forth the
details of our GPON/EPON products with the most advanced technologies, and their
characteristics, as of the Latest Practicable Date:
Product type Product picture and name Product features
GPON ONT /H1118/H1118/H1118/H1118
multiple dwelling units
(“ MDU”) (G-300)
We offer single-port MDU
products designed for fiber-to-
the-building applications,
which can cost-effectively
serve many users
simultaneously.
residential gateway unit
(“ RGU”) (G-97RG9)
We primarily offer RGU products
designed with an integrated
enhanced gateway function,
which can deliver superior
home networking services in
one box.
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Product type Product picture and name Product features
single family unit (“ SFU”)
(G-97V3)
Our SFU products come in two
port configurations, namely
single-port and multi-port, and
some of them are equipped
with a triplexer to enhance
functionality and support
multiple frequency bands. Such
products are designed for the
fiber-to-the-home applications.
GPON SFP /H1118/H1118/H1118/H1118
small form pluggable (“ SFP”)
(G-97S)
We primarily offer SFP products
with SC connectors and SFF
8472 two-wire interfaces,
suitable for end-users with
routers equipped with SFP
cages to ease the addition of
high-speed GPON access. Such
products are ideally used in
home router with SFP cage and
Ethernet Switch with SFP cage.
By doing this, the home router
and Ethernet Switch can be
transitioned to GPON terminal
and access the high-speed PON
network.
Wireless products
Our wireless products serve a broad customer base, including (i) major
telecommunication operators aiming to improve their network infrastructure and service
offerings; (ii) system integrators aiming to create comprehensive, customized network
deployments for various clients; and (iii) equipment manufacturers. Network solutions
providers have also worked with us to develop innovative networking solutions that will set the
latest industry standards. In general, our wireless products comprise (i) Wi-Fi products
designed for the free/unlicensed spectrum, which is particularly suitable for the connectivity
needs of households and small businesses; and (ii) small cell products that can help build RANs
operating in the licensed spectrum, used for tightly controlled activities such as cellular
services, radio stations, and television broadcasts. Such products are used to provide seamless,
high-speed wireless coverage across complex environments, supporting high device density
and low-latency applications, and they are applicable in the fields of (i) smart home and smart
office environments; (ii) enterprise and campus wireless networking; and (iii) hospitality,
retail, and public venue connectivity.
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According to F&S, the global Wi-Fi device industry, encompassing routers, APs,
gateways, and other wireless equipment, has grown steadily due to rising demand for faster,
more reliable wireless connectivity across homes, businesses, and industries. From 2020 to
2024, global sales revenue of Wi-Fi devices rose from USD13.7 billion to approximately
USD16.7 billion, with a CAGR of around 5.1%.
During the Track Record Period, we sold 2.0 million, 1.2 million, 2.6 million and 0.9
million wireless products, with a sales revenue of RMB1,056.1 million, RMB718.5 million,
RMB1,052.4 million, and RMB415.2 million, respectively.
Wi-Fi products
Wi-Fi primarily operates in the unlicensed spectrum, which is free and open to the public.
The unlicensed spectrum includes frequency bands such as 2.4 GHz, 5 GHz, and the recently
opened 6 GHz band. The key advantage of using the unlicensed spectrum is that it allows for
widespread and cost-effective deployment of Wi-Fi networks. However, because it is open to
everyone, it can become crowded, leading to potential interference from other devices like
Bluetooth gadgets, microwave ovens, and other Wi-Fi networks.
Our Wi-Fi product portfolio offers high-end enterprise-grade and carrier-grade Wi-Fi
equipment for large-scale deployments, ensuring reliability, scalability, and security. We also
offer intelligent home routers equipped with enhanced security protocols for a seamless home
networking experience.
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Among the numerous types of products in our portfolio, the following table sets forth the
details of our Wi-Fi products with the most advanced technologies, and their characteristics, as
of the Latest Practicable Date:
Product type Product picture and name Product features
Wi-Fi mesh /H1118/H1118/H1118/H1118
WF-80x
Our portfolio of Wi-Fi mesh
products covers Wi-Fi 6 and
Wi-Fi 7 standards, each
available in multiple
configurations to meet
different user needs.
 Our Wi-Fi 6/6E mesh
products feature dual/tri-
band technology, allowing
for the efficient use of
various frequency bands to
enhance performance and
optimize coverage for
mobile devices in indoor
environments.
 Our Wi-Fi 7 mesh products
are designed to improve
traffic management
efficiency and increase data
transmission capacity.
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Product type Product picture and name Product features
Enterprise-grade
Access Points
(“Enterprise
AP”)/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
WF-19x
Enterprise APs are advanced
wireless networking devices
designed to enhance Wi-Fi
coverage within large and
complex business
environments, such as
educational institutions,
healthcare facilities, corporate
office buildings, populated
shopping centers, and
communal areas of various
venues.
Our range of Enterprise AP
products is available in Wi-Fi
6 and Wi-Fi 7 standards, each
offering a variety of
configurations to address the
diverse requirements of
different deployment scenarios.
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Product type Product picture and name Product features
10 gigabit
router /H1118/H1118/H1118/H1118/H1118/H1118/H1118
WF-728
Our 10 gigabit router is a high-
performance networking
device, designed to support
data transfer rates of up to 10
gigabits per second. It focuses
on optimizing network
performance, enhancing system
reliability, and ensuring
uninterrupted connectivity.
Primarily deployed in small-
business environments and
residential settings, our 10
gigabit router excels in high-
speed, low-latency data
transfer. It also allows small
business owners to run AI
applications, manage
production factors, organize
complex business data, and
respond quickly to business
demands. Additionally, this
router is well-suited for smart
home applications, capable of
handling multiple IoT devices.
Small cell products
Small cell products typically operate on a licensed spectrum are part of an ecosystem
distinct from Wi-Fi products. Unlike the free spectrum, the licensed spectrum is reserved for
specific organizations that have obtained licenses from regulatory authorities. This spectrum is
used for tightly controlled activities such as cellular services, radio stations, and television
broadcasts. The primary benefit of using the licensed spectrum is that it offers a more reliable
communication channel with reduced external interference. Since only the licensee can use the
allocated frequencies, there is minimal risk of interference from other users.
Our small cell products also include RAN products, which are used in cellular and other
wireless communication systems, including 4G LTE, 5G, and O-RAN. These products enhance
the efficiency, speed, and reliability of wireless communication. Mobile operators may utilize
our RAN radio products to address the challenges of coverage in residential areas or rural
regions more effectively and efficiently. By providing small cell and RAN products, we enable
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our customers to achieve better network performance and coverage, ensuring that they can
meet the demands of the users. This approach allows us to support a wide range of applications
and use cases, from enhancing mobile network coverage to enabling advanced wireless
communication technologies.
Among the numerous types of products in our portfolio, the following table sets forth the
details of our small cell products with the most advanced technologies, and their
characteristics, as of the Latest Practicable Date:
Product type Product picture and name Product features
All-in-one small
cell /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
ASC-5xx
The all-in-one small cell is a
compact device that boosts
mobile signal and internet
speed in specific areas. It
combines several components
(e.g. radio, baseband, and
backhaul) into one unit,
making it easier to set up and
manage. This product can
connect to both 4G and 5G
networks at the same time,
which improves data speeds
and ensures a reliable
connection, even when many
people are using their devices.
In simple terms, it works like a
mini cell tower that helps users
stay connected with better
signal and faster internet.
Our all-in-one small cells are
typically deployed in private
networks or residential
markets. They are used to
improve connectivity,
providing users with a stable,
high-speed, and reliable
wireless experience for
business operations in private
networks or everyday internet
usage in residential areas.
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Product type Product picture and name Product features
Open radio
access
network
(“O-RAN ”)
radio unit /H1118/H1118/H1118/H1118
SC-7xx
The O-RAN radio products are
designed to substantially
improve the interoperability
and flexibility of mobile
networks, easing cross-vendor
integration and adaptation
within the intricate ecosystem
of contemporary
telecommunications.
The range of our O-RAN radio
products accommodates a
broad spectrum of bandwidths
from 10 to 100 MHz,
supporting up to 4T4R
configurations, and available
with either integrated or
external antennas.
In addition, our O-RAN radio
products are ideal for
production facilities, where
reliable communication and
real-time data transfer are
essential for efficient
manufacturing. Logistic
warehouses benefit from their
capabilities, enabling effective
inventory management and
automated operations.
Furthermore, in mineral fields
with challenging terrains and
hazardous conditions, the
robustness of our O-RAN radio
products ensures they can
withstand demanding
environments effectively.
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Photonics products
Our photonics products are capable of delivering efficient connectivity within and
between computing clusters. Such products are applicable in the fields of (i) data center
interconnect and cloud infrastructure; (ii) AI computing clusters and hyperscale computing;
and (iii) high-performance computing and financial trading networks. Our photonics products
are used by hyperscale cloud service providers (e.g., public cloud platforms), data center
operators and co-location providers, network equipment manufacturers and optical system
integrators. During the design and development stages, we would collaborate closely with them
to ensure that our products will meet their specific requirements. Key design parameters for
photonics products that we often would need to meet include:
 Power consumption: This is a significant cost factor for data center operators and
LLM developers as it affects heat generation and dissipation, posing substantial
challenges in maintaining a controlled environment within data centers.
 Size: This is a key parameter because the miniaturization of photonic components
allows for high integration density, which is crucial for data centers and
telecommunication networks. Smaller components mean more can be packed into a
given space, leading to more efficient use of physical infrastructure. Additionally,
reduced size can lead to lower power consumption and heat generation, which are
critical for maintaining the performance and reliability of optical communication
systems.
 Range: It determines the distance over which optical signals can be transmitted
without significant loss of signal quality. Effective range management ensures that
data can be transmitted reliably and efficiently, reducing the need for frequent signal
boosting or regeneration. We offer both single-mode and multi-mode optical
transceivers to our customers. Single-mode transceivers, while more costly, are
effective over longer distances. The customers can pick the best matching products
based on their specifications on range.
 Speed: High-speed data transmission is fundamental to meeting the growing demand
for bandwidth in modern communication networks. Photonics-based systems enable
high data rates and lower latency over long distances compared to traditional
electrical interconnects, making them critical for high-performance applications.
This is particularly relevant for large-scale data center operations, AI-driven
workloads, and real-time data processing, where throughput and latency are key
performance metrics.
Key products under our photonics portfolio include those reaching 100G, 400G, 800G,
and 1.6T interconnection speeds, and they typically use form factors that offer a high level of
adaptability to various data communication standards for ease of installation. Our products are
also adaptable to NVIDIA GPUs that are widely used in LLM training and inference, and they
can link buildings or data centers up to 10km apart. We have also developed photonics products
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with 1.6T interconnection speeds, with mass production planned to take place in 2026. A
prototype based on the latest 3 nm digital signal processing (“ DSP”) and silicon photonics
based module technology has been live-demonstrated at the Optical Networking and
Communication Conference and Exposition in San Francisco in April 2025. Such products are
intended to be used by large scale data centers and for LLM applications.
According to F&S, the market for photonics has grown steadily in recent years, driven by
demand for high-speed data transmission and data-intensive applications such as AI, cloud
computing and 5G. From 2020 to 2024, global sales revenue of photonics rose from USD11.2
billion to USD17.8 billion, with a CAGR of 12.2%. It is expected that the sales revenue of
global photonics industry will reach USD41.5 billion in 2029 with a CAGR of 18.5% from
2024.
During the Track Record Period, we sold 0.9 million, 0.6 million, 0.4 million, and 0.2
million photonics products, generating a sales revenue of RMB478.2 million, RMB446.7
million, RMB491.5 million, and RMB394.2 million, respectively.
Among the numerous types of products in our portfolio, the following table sets forth the
details of our photonics products with the most advanced technologies, and their
characteristics, as of the Latest Practicable Date:
Product type Product picture and name Product features
1.6T products /H1118/H1118
1.6T OSFP
We primarily offer 1.6T products
in the OSFP form factor,
supporting rates up to
1,600Gb/s, accommodating
different configurations and
range options of 500m or 2km
over single mode fiber. The
operating case temperature for
such products is between 0°C
and 70°C.
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Product type Product picture and name Product features
800G products /H1118/H1118
800G OSFP
We primarily offer two types of
800G products in the form
factors of OSFP and QSFP-
DD. Both support data rates of
up to 800Gb/s over single
mode fiber, and can
accommodate different
configurations.
800G QSFP-DD
Our 800G products are available
with range options of 500m,
2km, or 10km, and are
primarily used in enterprise
switches, data centers, and
LLM. The operating case
temperature for such products
is between 0°C and 70°C.
400G products /H1118/H1118
400G QSFP112
We primarily offer two types of
400G products in the form
factors of QSFP112 and
QSFP56-DD. Both support data
rates of up to 400Gb/s over
single mode fiber, and can
accommodate different
configurations.
400G QSFP56-DD
Our 400G products are available
with range options of 500m,
2km, or 10km, and are
primarily used in enterprise
switches, data centers, and
LLM. The operating case
temperature for such products
is between 0°C and 70°C.
In addition, we offer a comprehensive portfolio of 200G, 100G, 50G, and 25G products
to cater to diverse needs. This portfolio reflects our robust R&D capabilities and the
wide-ranging applications of our innovations.
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The development of photonics technologies has significantly enhanced network
transmission capacity and efficiency, providing robust technical support for digital
connectivity. These products can enable the rapid transmission of large volumes of data in a
short time, meeting the bandwidth and speed requirements of emerging technologies such as
cloud computing, big data, and artificial intelligence. Additionally, the advancement of
photonics technologies reduces network transmission costs and improves network reliability
and stability, fostering the widespread adoption and development of fiber optic communication
networks. Consequently, we anticipate that the market demand for photonics will continue to
rise in the future.
For further information on the market outlook for photonics products, please refer to the
section headed “Industry Overview” in this Prospectus.
OUR BUSINESS MODEL
We primarily operate our business under two models (namely, JDM and ODM) that aim
to cater to the different needs of our customers. Our JDM model involves high customer
involvement in providing detailed demands and specifications. Our customers will collaborate
with us on new production information, prototypes, and testing to meet their standards. In
contrast, our ODM model requires limited customer involvement in software and hardware
development, where software and hardware development are typically handled by us. Our
customers under the ODM model will most likely take our standard products or request limited
customization or the design changes.
The following table sets forth a breakdown of our revenue, gross profit, and gross profit
margins generated by both models for the years/periods indicated:
For the year ended December 31, For the six months ended June 30,
2022 2023 2024 2024 2025
Revenue
Gross
profit
Gross
profit
margin Revenue
Gross
profit
Gross
profit
margin Revenue
Gross
profit
Gross
profit
margin Revenue
Gross
profit
Gross
profit
margin Revenue
Gross
profit
Gross
profit
margin
RMB’000 RMB’000 % RMB’000 RMB’000 % RMB’000 RMB’000 % RMB’000 RMB’000 % RMB’000 RMB’000 %
(Unaudited)
JDM /H1118/H11182,187,589 393,306 18.0 1,639,179 298,608 18.2 1,950,263 360,558 18.5 977,804 195,631 20.0 933,385 181,022 19.4
ODM /H1118/H11181,596,150 295,329 18.5 1,446,183 365,487 25.3 1,699,626 401,689 23.6 783,604 187,535 23.9 1,100,638 263,558 23.9
Total /H1118/H11183,783,739 688,635 18.2 3,085,362 664,095 21.5 3,644,889 762,247 20.9 1,761,408 383,166 21.8 2,034,023 444,580 21.9
For further information on those two models, please refer to the section headed “Industry
Overview — Business model analysis of integrated optical and wireless connectivity devices
industry — JDM vs. ODM” in this Prospectus.
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Our JDM model
Our JDM model typically involves a collaborative approach to product design and
development between the equipment supplier and the partner, with a strong emphasis on
customization. This model focuses on joint efforts to create products that meet specific
requirements and preferences. Once we secure a customer project, our dedicated research and
development team works closely with the customer to design and develop the product. After
the customer confirms the product design specifications, they place a purchase order, and we
then procure the necessary materials and manufacture the product. According to F&S, the
process of certifying a JDM manufacturer usually takes one to two years, placing high demands
on the manufacturer in terms of financial and business positions.
The primary competitive advantage of JDM lies in its ability to provide high levels of
customization, fast market adaptation, and innovation through joint technology development.
This model allows for a tailored approach to product development, ensuring that the final
product aligns closely with the client’s vision and market demands. JDM is ideal for scenarios
that require high customization, joint development, and quick adaptation to changing demands.
It is suitable for clients who need unique products that stand out in the market and are willing
to invest in a collaborative development process. Our JDM customers mainly comprise
multinational digital communications technology conglomerates.
The following summarizes the salient terms of the agreements that we had entered with
our JDM customers:
Duration: The relevant agreements typically have a term of three
years and shall automatically renew for an additional one
year under the same terms, unless either party provides
written notice of termination no less than 60 days prior to
the expiration date. There is no limit on the number of such
renewals.
Roles of each party: We conduct R&D and production of customer-specified
products in accordance with the technical and functional
standards set out in our agreements. We provide required
documentation, complete product and third-party
certification testing, and deliver corresponding reports,
while meeting R&D and manufacturing quality standards
of our JDM customers. We also offer technical support and
maintenance services, and are responsible for verifying the
functionality, performance, and reliability of materials
provided by our JDM customers.
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Our customers typically provide us with detailed product
technical specifications, which set out the required
standards for technology, functionality, and quality across
both R&D and manufacturing processes. In certain cases,
our JDM customers also provide specific materials for use
in production. Under such circumstances, we are
responsible for comprehensive validation of the materials,
including assessments of their functionality, performance,
and reliability.
Intellectual property
rights:
The ownership and use of the intellectual property rights
of the products and solutions developed under a JDM
model will be determined on a case-by-case basis.
However, in most instances, any intellectual property
developed solely at our own cost shall remain our sole
property right, and the property right in respect of any
pre-existing intellectual property contributed by each party
shall remain unchanged.
We grant our JDM customers a worldwide, perpetual and
royalty-free license to use, sale, gift, lease, or assign
products under the collaboration of the relevant products
and services, as well as our underlying and/or newly
developed intellectual property under the collaboration.
We shall not use our JDM customers’ trademarks without
their prior written consent.
Credit terms and
payment:
Payment terms shall be determined on a customer-by-
customer basis, taking into account the nature of the
commercial relationship and the customer’s
creditworthiness. For long-standing customers with a
proven track record, we may offer extended credit terms or
preferential payment schedules.
Dispute resolution: In most instances, when a dispute arises in connection to
the agreements, the parties shall first seek to resolve the
matter through good faith discussions and negotiations. If
unresolved, the dispute shall be referred to arbitration
under with the seat of arbitration in a mutually agreed
jurisdiction. Notwithstanding the foregoing, either party
reserves the right to seek injunctive or equitable relief
through the courts where appropriate.
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Liability: Product liability shall be governed by the specific terms
applicable to each product category, including any
warranties separately agreed upon in writing. Liability for
indirect or consequential damages is excluded to the fullest
extent permitted by law.
Termination: In most cases, agreements may be terminated by either
party without cause by providing substantial prior written
notice. Termination for cause may be effected immediately
upon written notice if the other party commits a material
breach of the agreements entered, including but not limited
to non-payment, violation of confidentiality obligations, or
infringement of intellectual property rights
The following is a case study of a typical JDM project undertaken by us:
Case study: 800G OSFP DR8 photonics project with Customer X
Customer X is a company that sells routers, data center switches, and enterprise
switches. We developed a customized 800G OSFP DR8 Photonics to integrate with their
latest data center switches and routers for LLM and data center customers.
In a typical JDM project with Customer X, we start with a detailed, customized
product specification to ensure compatibility with their system. Unlike an ODM project,
both the customer and our Company form a project team to work closely together
throughout the project.
During the product design process, we maintain regular communication with the
customer’s project team and receive feedback to keep the technical design and schedule
on track. For example, when selecting key components like the DSP or laser, the
customer’s team provides valuable input based on their system design, helping us avoid
compatibility issues early on. We also leverage each other’s supply chain capabilities to
secure prioritized supplies at competitive costs.
The customer gains early access to our engineering samples for verification, while
we get early access to their system for our verification. We share test plans and results
to reduce duplicate efforts and improve test coverage. This collaboration helps us identify
and address potential interoperability issues early in the design phase.
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Collaboration continues from the project’s start through every step, especially
during the NPI and pilot production runs. This dual focus on schedule and quantity allows
us to optimize parts from trial runs for production process improvements, compliance and
reliability assessments, and marketing initiatives. Both teams also start mass production
planning early to ensure materials and equipment are ready for initial mass production
runs, aligning with market demands.
A key challenge in our JDM model is meeting the criteria for each gate point from
both the vendor and customer perspectives. We have developed expertise in
synchronizing our development and quality processes with the customer’s key project
milestones. This sets a high industry standard, requiring technical skills, an inclusive
culture, and strong project management capabilities.
Given the significant involvement required from the customer, this model poses
challenges in terms of substantial investment of resources and expertise required. Only
leading market players with strong technical skills and supply chain capabilities can
effectively implement this model.
Our revenue generated from JDM customers decreased by RMB548.4 million, or by
25.1%, from RMB2,187.6 million in 2022 to RMB1,639.2 million in 2023, and then increased
by RMB311.1 million, or by 19.0%, to RMB1,950.3 million in 2024. For the six months ended
June 30, 2024 and 2025, our revenue generated from JDM customers decreased by RMB44.4
million, or by 4.5%, from RMB977.8 million to RMB933.4 million. Such changes were mainly
in line with the market conditions that affected our overall revenue generation.
Our ODM model
On the other hand, our ODM model refers to one where the supplier designs and
manufactures products based on the client’s specifications. These products are typically
standardized but offer potential for customization to meet the client’s needs. Our ODM model
offers cost savings, short development times, and the advantage of the supplier’s production
scale. This model is efficient in production and can quickly bring products to market, making
it a cost-effective solution for clients. This model is ideal for clients who need standardized
products with limited customization, allowing for fast production and delivery.
Under our ODM model, the business process begins with our internal design project,
where we first complete the design and development, then market the fully developed
off-the-shelf product to potential customers. In general, the customer is able to test a prototype
of the developed product before placing a purchase order for us to begin procurement and
production.
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We maintain an open-minded and innovative approach to our business models. For
instance, in certain advantageous regions and market segments, we are exploring the promotion
of our own brands as an extension of our ODM model. Additionally, we have endeavored to
empower our partners in North America through IP licensing arrangements, manufacturing
support, technical assistance, and other potential methods.
The following summarizes the salient terms of the agreements that we had entered with
our ODM customers:
Duration: The duration differs on a case-by-case basis.
Roles of each party: We conduct R&D and production of products either in
accordance with the technical and functional standards as
requested by the ODM customer, or in accordance to our
internal specifications (in cases where ODM customers
would prefer to purchase products that we have already
designed internally).
Intellectual property rights: The ownership and use of the intellectual property rights
of the products and solutions developed will be
determined on a case-by-case basis. However, in most
instances, any intellectual property developed solely at
our own cost shall remain our sole property right, and the
property right in respect of any pre-existing intellectual
property contributed by each party shall remain
unchanged.
We grant our ODM customers a worldwide, perpetual and
royalty-free license to use, sale, gift, lease, or assign
products under the collaboration of the relevant products
and services, as well as our underlying and/or newly
developed intellectual property under the collaboration.
We shall not use our ODM customers’ trademarks, which
are usually marketing materials or labels attached onto
the products, without their prior written consent.
Credit terms and payment: Payment terms shall be determined on a customer-by-
customer basis, taking into account the nature of the
commercial relationship and the customer’s
creditworthiness. For long-standing customers with a
proven track record, we may offer extended credit terms
or preferential payment schedules.
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Dispute resolution: In most instances, when a dispute arises in connection to
the agreements, the parties shall first seek to resolve the
matter through good faith discussions and negotiations
between authorized representatives familiar with the
issues. If the dispute is not resolved through negotiation,
the dispute shall either (i) be submitted to non-binding
mediation prior to proceeding with arbitration or
litigation, or (ii) proceed directly to arbitration or
litigation, as stipulated in the Agreement.
Notwithstanding the foregoing, either party reserves the
right to seek injunctive or equitable relief through the
courts where appropriate.
Liability: Product liability shall be governed by the specific terms
applicable to each product category, including any
warranties separately agreed upon in writing. Liability
for indirect or consequential damages is excluded to the
fullest extent permitted by law.
The following is a case study of a typical ODM project undertaken by us:
Case study: XGS-PON ONT XG-99RG2 for Customer B, one of our five largest
customers during the Track Record Period
Customer B is a fiber access service provider in the United States. We have
partnered with Customer B on many of their ONT solutions over the years and regularly
collaborate to address their demands and network challenges.
Unlike JDM projects with detailed technical specifications, ODM projects with
Customer B typically start with innovative ideas based on common features or existing
products. In this case, Customer B wanted to embed an IoT interface to make the installation
process smarter and reduce truck rolls. Leveraging our expertise in ONT and router design,
we proposed a solution that addressed product appearance, optimal technology for interfacing
with installer tablets, and methods to ensure data security. We provided a technical guide for
Customer B to develop their tablet application to access the IoT interface and enhance
process efficiency. With our agreed-upon specifications, we shared a project plan
outlining timelines for engineering samples and mass production readiness.
Over the following months, we and Customer B worked independently. Customer B
focused on developing their application based on our interface instructions, while we
concentrated on hardware design and firmware development using our in-house expertise.
We periodically updated Customer B to keep the project on track as they relied on us for
product design.
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Upon completing the design and preparing for pilot production, we sent samples to
Customer B for verification and integration. In the ODM model, Customer B’s
verification focused primarily on their applications and user experience, while our
internal checks ensured fundamental system verification.
Another distinction from the JDM model is that we plan pilot runs and ramp-up
timelines based on our experience and predictions regarding Customer B’s plans. The
integration between our product and Customer B’s tablet application proceeded smoothly,
leading to a swift field trial. Due to our longstanding partnership, we managed the project
pace efficiently, providing sufficient product quantities for their field trials, which
resulted in a successful network launch. This project became one of the highest volume
broadband products that we sold to Customer B during the Track Record Period.
In the ODM model, our Group is able to strike a balance between design complexity
and cost efficiency in response to high-level customer requirements. ODM customers
typically focus only on specific features of our products that are closely aligned with their
own business needs, while showing limited interest or understanding of other aspects.
Leveraging our technical and design expertise, we often provide customers with a range
of technical trade-off options, helping them select the most suitable solution based on
factors such as design complexity, cost, development timeline, and efficiency. These
factors are not always immediately apparent to ODM customers. For example, when a
customer requests an increase in the number of interfaces, we advise on scenarios where
such changes can be implemented without significantly altering the product architecture,
and conversely, where such modifications would lead to major structural redesigns,
potentially delaying time-to-market and increasing costs. This type of implicit value-
added service enhances customer stickiness and deepens their reliance on our
capabilities, while also helping us build a distinctive brand reputation and expand our
reach to a broader customer base.
Many ODM projects involve only limited modifications or customizations, such as
minor changes in the number of interfaces that do not affect the product architecture,
cosmetic adjustments to the product’s appearance (including shape and color) that do not
alter its electrical characteristics or performance, or simple updates to labeling and
product naming to better align with the customer’s marketing and branding strategies.
These relatively minor design changes and customizations help accelerate development
cycles and are particularly well-suited for customers with smaller-scale demand or
limited technical resources. In fact, such light-touch customizations are very common in
our ODM projects. In some extreme cases, the only customization requested by the
customer is the application of their logo, with no changes made to any other aspect of our
product design.
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Our revenue generated from ODM customers decreased by RMB150.0 million, or by
9.4%, from RMB1,596.2 million in 2022 to RMB1,446.2 million in 2023, and then increased
by RMB253.4 million, or by 17.5%, to RMB1,699.6 million in 2024. Between the six months
ended June 30, 2024 and 2025, our revenue generated from ODM customers increased by
RMB317.0 million, or by 40.5%, from RMB783.6 million to RMB1,100.6 million. Such
changes were also in line with the market conditions that affected our overall revenue
generation.
RESEARCH AND DEVELOPMENT
We believe that R&D is fundamental to maintaining our competitiveness and sustaining
our future growth. We have therefore placed a strong emphasis on establishing and maintaining
advanced product planning and R&D capabilities. In 2022, 2023, and 2024, and the six months
ended June 30, 2025, our R&D expenses were RMB270.4 million, RMB275.8 million,
RMB320.4 million, RMB160.8 million, representing 7.1%, 8.9%, 8.8%, and 7.9% of our total
revenue respectively.
Our R&D efforts exemplify our overseas reach and strategic approach in acquiring top
talent from all over the world. As of June 30, 2025, our R&D teams comprise a total of 673
employees, accounting for more than half of our total workforce, including 55 overseas R&D
employees. We have established four R&D centers in China, and two R&D centers overseas,
in regions well-known for their local talents, fostering a strong culture that supports the
flourishing of expertise in our industry. These centers are strategically established to capture
the best talents, bringing them together to work collaboratively as one cohesive R&D team. For
instance, in Xi’an, our focus is primarily on algorithm-related work. The rich academic
environment in the region provides a solid foundation for our research and development
activities. Wuhan is a key location for our R&D efforts, focusing on optical technology, switch
business, and high-speed current design. The presence of universities with the relevant
expertise ensures a steady supply of talent. Additionally, Optics V alley in Wuhan is renowned
for its abundant talent and resources. Our R&D teams in Shanghai are responsible for the R&D
of various aspects of photonics, including thermal simulation, radio frequency simulation,
functional and reliability testing, and failure analysis. Moreover, our R&D center in New
Taipei City has traditionally been a hub for software and Wi-Fi-related R&D efforts. Our
in-house manufacturing facility is also responsible for the R&D regarding mass-produced
products (from prototype to customer certification and mass production) and production
(including the improvement of machinery and equipment, the development and implementation
of automation programs, and the tracking of production processes).
One of the key aspects of our R&D efforts overseas was the establishment our R&D
center in Japan, where we have acquired strong R&D capabilities through mergers and
acquisitions. Japan’s rich experience in optical component design is highly valued, and the
teams there are well-versed in photonics technology accumulation and product-related work.
Our R&D efforts overseas also comprised our R&D center in the United States, driven by our
business development needs in North America. Our office in the United States is strategically
located in Silicon V alley, an innovation hub known for its abundant top-tier talent resources.
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In addition, some of our R&D staff will occasionally visit our manufacturing site in Malaysia
and conduct R&D projects that can help us to improve our manufacturing capabilities. We
believe that the teams’ familiarity and understanding of the industry’s advantages has
contributed to our R&D success.
The collaborative nature of our R&D efforts is a cornerstone of our success. Our R&D
centers are not siloed; instead, they operate in a highly integrated manner. Researchers and
developers from different centers regularly engage in cross-functional teams, sharing insights
and expertise. This collaborative approach allows us to leverage the unique strengths of each
center, whether it be algorithm development in Xi’an, optical technology in Wuhan, software
and Wi-Fi expertise in New Taipei city, or photonics design in the United States or Japan. To
do so, we have established robust communication channels and collaborative platforms that
facilitate real-time information sharing and joint problem-solving. A leading R&D center
spearheads these efforts, ensuring that our projects are executed efficiently and effectively.
This collaboration overseas and in China not only enhances our innovation capabilities but also
accelerates the development and deployment of innovative technologies.
Throughout the R&D process, we maintain close communication with customers,
ensuring that their needs are well addressed. This collaboration extends to the marketing
process, where R&D-related communication plays a crucial role. Our R&D teams support sales
from the early stages of the business, ensuring a seamless integration of research and
development with market demands. This is also one of the reasons for establishing our R&D
centers in geographical proximity to our key markets.
By fostering a culture of collaboration and continuous learning, we ensure that our R&D
teams are well-equipped to tackle the challenges of our industry and drive our growth and
success. Our research and development efforts have produced notable technical achievements
and have a track record of developing intellectual property and industry knowledge that can be
applied to products. Please refer to the subsections headed “— Intellectual property” and “—
Our technologies” in this section.
Product design and development process
Our product design and development process begins with analyzing customer needs and
the competitive landscape to locate opportunities. Our R&D team then designs and tests the
product, working with other departments. We perform small-scale manufacturing and sample
testing, update the design, and move to trial production. Finally, we optimize for quality and
efficiency before mass production, achieving high design efficiency and utilization. Although
our R&D projects and product design and development vary due to different specifications and
customer demands, resulting in differing timeframes for completion, the average timeframe for
most of our R&D projects (from conceptualization to completion) would normally last six
months.
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The chart below summarizes the key steps of our product development process:
Product
concept
Product
requirements
and planning
R&D and
testing
Small batch
trial production
Ramp-up
production
Mass
production and
maintenance
Feedback to
previous stage
Product concept
Our product development process begins with the decision of our business unit
management on initiation of a project. Before making such a decision, we identify product
requirements or opportunities from customers and the market, determine a product framework
and concept, and then conduct a final evaluation.
Product requirements and planning
After the product concept stage, the project is officially launched with a kick-off meeting,
bringing together all stakeholders to align on objectives and expectations. It begins with the
definition of product specifications and the establishment of the project team. This phase is
crucial as it sets the foundation for the entire project. Project schedules, quality plans, and
resource budgets are meticulously developed to ensure a structured approach. Additionally,
initial risks are identified, and corresponding risk mitigation measures and contingency plans
are formulated to address potential challenges. While our JDM customers engage in each and
every stage of our product design and development process, this is one of the few stages where
our ODM customers are also involved. Their participation ensures that the product
requirements align with their specific needs and expectations.
During this stage, detailed documentation of product requirements is created and
reviewed to ensure clarity and completeness. The high-level architecture of the product is
designed, outlining the overall structure and key components. Resources and budgets are
allocated to ensure that the project has the necessary support and funding. A comprehensive
project plan is developed, detailing the timeline, milestones, and deliverables. Potential risks
are identified as well, and mitigating strategies are established.
R&D and testing
During this stage, product design, development, integration, and testing are conducted to
ensure the product meets the required specifications. This phase is critical as it involves the
release of early designs, which allows prototype production to commence. Necessary inputs for
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NPI and sample trial production are provided to ensure the readiness of R&D trial production
(i.e., the starting point of the design for manufacturing), and to ensure that a high yield rate can
be achieved later on. The stage is concluded with the production of a prototype for testing.
This stage involves several key activities. Hardware design and review are conducted to
ensure the product’s electronic components meet the required standards. Mechanical design
and review focus on the physical aspects of the product, ensuring it is robust and functional.
Thermal design and simulation are performed to ensure the product can operate efficiently
under various temperature conditions.
The bill of materials (“ BOM”) is released, detailing all the components required for the
product. Prototype builds are initiated, allowing for the creation of initial models for testing.
Engineering validation testing and design validation testing are conducted to verify the
product’s performance and design integrity. Customer sampling is carried out to gather
feedback and ensure the product meets customer expectations. Automated test equipment
development is undertaken to create testing systems that ensure the product’s quality and
functionality. Design for manufacturing reviews are conducted to ensure the product can be
manufactured efficiently and cost-effectively.
Firmware development is also a key part of this stage, involving the creation of low-level
control programs that manage the hardware components. This process includes writing code in
low-level programming languages, testing the firmware on the hardware, and debugging to
ensure optimal performance. Firmware updates are also planned to enhance functionality and
security. The integration of firmware ensures that the hardware operates as intended and
interfaces seamlessly with other software components, providing a stable foundation for the
product’s overall performance.
A trial run is conducted to test the manufacturing processes and ensure they are ready for
full-scale production. Process qualification is performed to validate the manufacturing
processes and ensure they meet the required standards. Preliminary qualification is the final
step, ensuring the product is ready for mass production and meets all necessary requirements.
This structured approach ensures that the product is thoroughly tested and validated, setting the
stage for successful mass production and market introduction.
Small batch trial production
Upon the completion of product development and testing, the product is ready for small
batch trial production. The purpose of this stage is to verify the manufacturability of the design,
production process, and testing procedures. Official process documents and standard operating
procedures are also released. While our JDM customers engage in each stage of this product
design and development process, this is one of the few stages where our ODM customers are
also involved.
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During this stage, full traceability is set up to ensure that every aspect of the production
process can be tracked and monitored. Process and manufacturing standardization are
implemented to ensure consistency and quality across all production runs. A pilot run is
conducted to test the production process and identify any potential issues. Full qualification is
performed to validate the product and ensure it meets all necessary standards and requirements.
Yield and statistical process control benchmarks are established to monitor and improve
production efficiency and quality. Certifications are obtained to ensure the product complies
with industry standards and regulations. A customer audit is conducted to verify that the
product meets customer expectations and requirements. V ariants and customizations are
developed to cater to specific customer needs and preferences. Finally, ongoing reliability
testing (“ ORT”) and ongoing reliability monitoring (“ ORM”) are set up to ensure the product’s
long-term reliability and performance.
Ramp-up production
During this stage, ramp-up production of the new product is conducted to optimize
production efficiency and yield. The primary goal is to ensure the capability for mass
production and supply chain assurance. This phase is critical as it transitions the product from
small batch production to full-scale manufacturing. The process begins with capacity planning
and ramp-up, where production capabilities are scaled to meet anticipated demand. This
involves careful planning and coordination to ensure that all necessary resources are in place.
The product is then transferred to the operation phase, where it enters regular production
cycles. ORT and ORM are implemented to continuously assess and ensure the product’s
reliability and performance. These measures help identify and address any potential issues
early in the production process. Setting up return material authorization (“ RMA”) capability
is another crucial aspect of this stage. This ensures that any defective products can be
efficiently returned, repaired, or replaced, maintaining customer satisfaction and product
quality. Yield improvement efforts are undertaken to enhance production efficiency and reduce
defects. This involves analyzing production data, identifying areas for improvement, and
implementing changes to optimize the manufacturing process.
By the end of this stage, the product is fully integrated into the mass production process,
with all necessary measures in place to ensure consistent quality and supply chain reliability.
Mass production and maintenance
In this stage, mass production of the product is conducted, and software and hardware
maintenance and technical support are provided.
OUR TECHNOLOGIES
Technology lies at the core of our product development and our success achieved to date,
which comprise (i) technologies used in our products; (ii) technologies used in our intelligent
manufacturing processes; and (iii) our IT infrastructure.
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Technologies used in our products
The key technologies that we have adopted in our product development include, but are
not limited to, the following:
 Silicon photonics based module technology: We were among the first in the
industry to develop silicon photonics based module technology, which enables data
transmission using photons instead of traditional electrical signals, offering higher
speeds and lower power consumption. This technology is designed to offer
high-speed optical connections in data centers and telecommunication networks.
 LPO: Power consumption is a critical concern in high-speed photonics, with
approximately 50% of the power usage attributed to DSP functions. We have
developed proprietary LPO technology by eliminating the DSP function from our
pluggable photonics. This innovation allows our photonics to achieve electrical
signal interconnection through a DSP interface embedded in the switch chip,
significantly reducing the cost and power consumption of photonic devices.
 CPO: We are currently in the process of developing our packaged laser and silicon
photonics engine (i.e., ELS, external light source) for CPO technology which can
offer substantial cost reductions while delivering exceptional performance. Such
technology can integrate the network and photonic engine into a single slot,
drastically reducing the distance between the switch chip and the photonic engine.
This proximity enables faster electrical signal transmission, making such technology
ideal for AI training and applications.
 High-Speed broadband technologies: We were among the first to achieve mass
production of 25GPON worldwide and we are among the pioneers in the industry to
be developing 50GPON. Our latest advancement, the 25GPON technology, is
available in various configurations, including a 25 Gb/s symmetrical connection, a
50 Gb/s downstream and 25 Gb/s upstream asymmetrical connection, and a 50 Gb/s
symmetrical connection.
 Energy Efficiency in Wi-Fi products: Through our dedicated R&D efforts, we have
successfully reduced the energy consumption per unit throughput of network
operations. The average power consumption per unit throughput of our Wi-Fi access
points has been lowered from 5.4 watts per gigabit to 3.6 watts per gigabit,
achieving a 50% energy savings. Our Wi-Fi cloud controller accurately detects
usage changes, directs devices to the same frequency band, and shuts down idle
channels to prevent unnecessary energy consumption. Field tests on a European
customer’s network showed that 84% of areas were in an efficient energy-saving
state for at least six hours daily, and 21% of areas for 12 hours daily. This helps
small and medium-sized enterprises reduce costs, increase efficiency, and move
towards smarter, more efficient, and greener development.
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Technologies used in our intelligent manufacturing processes
Our intelligent manufacturing spans the entire production process, leveraging advanced
equipment, technology, and management systems to achieve efficient, precise, and intelligent
production, thereby enhancing our competitiveness.
Our in-house and co-location manufacturing facilities are equipped with automated
equipment. Our in-house facility in Shanghai features nine surface mount technology (“ SMT”)
lines and six dual in-line package (“ DIP”) lines and is equipped with SPI and automatic optical
inspection (“ AOI”) automatic inspection equipment. The SMT lines use high-speed placement
machines from renowned brand, known for their speed and accuracy. Moreover, our facilities
are equipped with automated robotic arms, which are able to imitate the movement of human
arms in executing a wide variety of tasks. We believe these automated technologies promote
efficiency and precision in our manufacturing process and enhance consistency in the quality
of our products. In addition, the use of automated technologies can enhance workplace safety
and reduce labor costs by reducing human involvement in the manufacturing process.
We have introduced multiple information technology systems, including product lifecycle
management (“ PLM”), cyber-physical system (“ CPS”), supplier synergism management
(“SSM”), enterprise resource planning (“ ERP”), manufacturing execution system (“ MES”),
and warehouse management system (“ WMS”) to achieve closed-loop management covering
R&D, procurement, production, and sales to after-sales service, greatly enhancing operation
efficiency. For further details of our information technology systems, please refer to below.
We use technologies such as optical recognition, AOI, and X-Ray inspection for quality
control to improve inspection accuracy and efficiency. The utilization of radio frequency
identification (“ RFID ”) applications and the manufacturing traceability system enables
full-system traceability of products from raw material procurement and production processing
to product sales, facilitating quality control and problem detection. In addition, we have
applied industrial information technologies such as augmented reality and simulated reality in
the virtual verification to identify issues early, and augmented reality technology assists
workers in equipment operation and maintenance, improving work efficiency and accuracy.
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Set forth below are selective views of our manufacturing facilities:
Photonics production line
 Robotic assembly line
Control panel detailing aspects of our production
 Robotic arms used in production lines
Production line
 Production line
Production line
 Automated transport cars used in the production line
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Our IT infrastructure
We believe that high levels of automation, digitalization, and technology are essential for
maintaining our competitive position and supporting our strategic objectives. We utilize and
maintain IT systems that evolve in tandem with our business growth, ensuring they meet our
varied operational demands. These systems underpin key areas such as sales, R&D, supply
chain management, production, and after-sales services. Our main information technology
systems include the following:
 PLM system: Our product lifecycle management system, or PLM system, manages
product information flow, BOM, documents, and R&D processes. We use the PLM
system to provide a comprehensive and unified R&D collaborative management
platform for R&D design, processing plans, and technical documentation. Through
the PLM system, we have built and maintained a standardized and well-regulated
product database to promote the efficiency of our product customization process,
and achieve the integration of information technology, product R&D technology,
and management technology.
 ERP system: Our enterprise resource planning system, or ERP system, handles
finance, warehouse management, and supply chain management to regulate our
operations, inventory control, procurement, production, and sales management.
Timely access to inventory and sales data allows our management to monitor our
sales performance and make appropriate adjustments in response to market
conditions. It also facilitates our procurement, marketing strategies, and decision-
making process.
 MES: We utilize the manufacturing execution system, or MES, to support our
production process, including managing resource allocation, scheduling production
plans, and real-time monitoring of the production process. The MES system is
connected with our production equipment and records and transmits information
from our production lines, including production volume and time used, to our ERP
system, achieving digitalized production management, which improves the
management level of our production lines and production efficiency.
 CPS: Our cyber-physical system, or CPS, connects programmable logic controllers
(“PLC”), automated guided vehicles (“ AGV”), robots, and other intelligent devices
with IT systems, providing communication interfaces to support point control and
configuration monitoring. With CPS, we are able to introduce, collaborate, and
synergize the digitized information of each aspect in the whole process, conduct
analysis through massive data simulation based on project experience, realize
real-time monitoring, and achieve flexible manufacturing and customized
production driven by digitized data generated based on various demands of clients.
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 SSM system: Our supplier synergism management system, or SSM system, is a
horizontal integration platform for the supply chain, which digitizes the
procurement process and manages supplier inventory and pre-receipt management.
We utilize the SSM system to support business transactions and communications
between us and our suppliers.
 WMS: Our warehouse management system uses RFID and 2D barcode technologies
for material and product location management, material traceability, and error
prevention. We utilize the WMS to manage, control, and monitor our warehouse
operations. We also integrate the WMS with other systems, such as the ERP system
to streamline information flow and increase productivity.
We plan to strengthen our information technology systems to keep up with the growth of
our business. We believe such improved systems will strengthen supply chain managements as
well as improve our ability to develop products that meet the demands and preferences of our
customers.
During the Track Record Period and up to the Latest Practicable Date, we had not
experienced any material IT system failure or downtime that had a material adverse effect on
our business operations.
Cybersecurity measures
We use a multi-layered strategy to safeguard our systems and data. As of the Latest
Practicable Date, we have received the ISO: 27001 Information Security Management System
certification, indicating the strength of our systems. By combining the following technical
measures with a culture of security awareness, we believe that we can maintain a robust and
resilient IT infrastructure that safeguards our business operations:
 Strong access controls and authentication: We implement access controls and
authentication mechanisms to allow only authorized personnel to access sensitive
systems and data. We also use role-based access control to limit access based on the
user’s role within the organization. This minimizes the risk of unauthorized access
and ensures that employees only have access to the information necessary for their
job functions. Regular audits and reviews of access permissions help maintain the
integrity of our access control policies.
 Regular updates and patches: Keeping our software and hardware up to date is
crucial. We apply updates and patches to protect against known vulnerabilities. This
initiative-taking approach helps us mitigate the risk of cyberattacks that exploit
outdated software. We have a dedicated team that monitors for recent updates and
patches from vendors, and ensures they are applied promptly. Additionally, we test
updates in a controlled environment before deployment to try to ensure they do not
disrupt our operations.
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 Network monitoring and auditing: Continuous monitoring and auditing of network
activities help us detect and respond to suspicious activities promptly. We use
monitoring tools to track network traffic and identify anomalies that may indicate a
security threat. Real-time alerts enable our security team to take timely action when
potential issues are detected. Regular audits of network logs provide insights into
past activities and help us identify patterns that could signify a breach. This
comprehensive approach we believe helps us quickly address any security incidents
and minimize their impact.
 Data encryption: We encrypt sensitive data both in transit and at rest to prevent them
from any unauthorized access. Encryption converts data into a coded format that can
only be deciphered with the correct decryption key. This ensures that even if the data
is intercepted or accessed without authorization, it remains unreadable. We use
industry-standard protocols to secure our data. Additionally, we implement
encryption for all communication channels (including emails and file transfers), to
safeguard during transmission and regularly review our encryption practices to
manage evolving threats.
 Firewalls and intrusion detection systems: Implementing firewalls and intrusion
detection systems helps us prevent and detect unauthorized access attempts.
Firewalls function as a barrier between our internal network and external threats,
filtering incoming and outgoing traffic based on predefined security rules. These
systems monitor network traffic for suspicious activities and generate alerts when
potential threats are detected. Regular updates to our firewall rules and intrusion
detection system signatures allow them to remain effective against new and
emerging threats.
 Employee training: We hold regular security awareness training for our employees
so that they are knowledgeable about the latest security threats and best practices.
Training programs cover topics such as phishing, password management, and safe
internet usage. By educating employees on how to recognize and respond to security
threats, we hope to reduce the risk of human error, which is often a significant factor
in security breaches. We also conduct simulated phishing exercises to test
employees’ awareness and reinforce training. Continuous education and
reinforcement help create a security-conscious culture within our organization.
 Backup and disaster recovery: We perform regular data backups and test our disaster
recovery plans with respect to business continuity in case of a security incident.
Backups are stored in secure, offsite locations to protect against data loss due to
hardware failure, cyberattacks, or natural disasters. Our disaster recovery plans
outline the steps to restore operations quickly and efficiently following an incident.
We regularly test the effectiveness of these plans and prepare our team for any
incident. We believe our comprehensive approach helps minimize downtime and
data loss in the event we face a security breach.
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Our PRC Legal Adviser has confirmed that we complied with applicable PRC laws and
regulations on data privacy and security in all material respects during the Track Record Period
and up to the Latest Practicable Date. Furthermore, according to our PRC Legal Adviser, we
are not required to undergo a cybersecurity review under the Measures for Cybersecurity
Review as of the Latest Practicable Date.
Furthermore, according to our PRC Legal Adviser, we are not required to undergo a
cybersecurity review under the Measures for Cybersecurity Review as of the Latest Practicable
Date, for the following reasons:
(i) we did not receive any notification designating us as a critical information
infrastructure operator by the relevant authority responsible for the security of such
infrastructure, in accordance with the Regulations on the Security Protection of
Critical Information Infrastructure (ᚐૢԷ);
(ii) we do not possess the personal information of more than one million users;
(iii) the Listing does not constitute an overseas listing; and
(iv) our Company has not received any official notice from the cybersecurity review
authorities requiring us to undergo a cybersecurity review under the Measures for
Cybersecurity Review.
MANUFACTURING
Our manufacturing capabilities comprise utilizing our in-house facility in China, and the
engagement of co-location partners in both China and overseas. During the Track Record Period,
revenue generated from the sale of products manufactured at our in-house facilities represented
54.2%, 39.7%, 37.5%, and 34.8% of our total revenue, and revenue generated from the sale of
products manufactured at our co-location manufacturing facilities represented 45.8%, 60.3%,
62.5%, and 65.2% of our total revenue, respectively. The following table sets forth the revenue
generated from our co-location manufacturing facilities and our in-house facilities:
For the year ended December 31, For the six months ended June 30,
2022 2023 2024 2024 2025
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(Unaudited)
Co-location
manufacturing
facilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,733,450 45.8 1,859,757 60.3 2,282,375 62.5 1,029,430 58.4 1,326,988 65.2
In-house manufacturing
facilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,050,289 54.2 1,225,605 39.7 1,367,514 37.5 731,978 41.6 707,035 34.8
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,783,739 100.0 3,085,362 100.0 3,649,889 100.0 1,761,408 100.0 2,034,023 100.0
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Our co-location manufacturing model
We primarily adopt the co-location model for manufacturing our products, which is an
asset-light business model commonly used by manufacturers, and is also widely accepted by
customers, in the industry in which we operate. According to F&S, this is a commonly used
term in the industry. Unlike the conventional model of engaging OEM for manufacturing
capacity, our co-location model involves a more integrated approach. Under our co-location
manufacturing model, we are responsible for the product design, key materials, core
machinery, processes, and overall management, while our co-location partners provide the
factory space, workforce, basic machinery, assistance on logistics and procurement, and handle
local regulations including, for instance, local environmental protection regulations and quality
control standards in relation to our products, and our logistics, storage, manufacturing, and
inspection processes. In addition, our co-location partners are responsible for ensuring
compliance with local labor laws and for securing local necessary business licenses and
operational qualifications. For such services, in relation to our co-location partners in the PRC,
we would pay a processing fee (which forms a part of our manufacturing overheads under cost
of sales) multiplied by the quantity of products manufactured. Such processing fee is usually
determined based on the time required to manufacture a product and the products’ complexity.
For our overseas co-location partners, we would supply raw materials which they use to
manufacture finished products. These finished products are then sold to us and the costs of such
finished products are recorded as part of our “raw material” under our cost of sales. This setup
allows us to have direct involvement and greater quality control in the production process on
a global scale, and to ensure that the production processes and systems are the same across all
co-location partners and our in-house facilities. The co-location model also offers significant
flexibility, enabling us to quickly adjust production or relocate by engaging partners in other
countries based on strategic decisions and the latest market demand. Furthermore, real-time
monitoring under our co-location model enhances supply chain responsiveness and allows for
quick adjustments to production scale and processes based on market needs. Moreover, the
co-location model enables lower upfront investment in local facilities while maintaining
production overseas and in China consistency. Additionally, we benefit from our co-location
partners’ manufacturing facilities and experience in providing manufacturing services for other
industry peers, and we can utilize their logistics network to deliver products quickly to
customers in the vicinity. For further information on the benefits in adopting such co-location
manufacturing model, please refer to the section headed “Industry Overview — Business
model analysis of integrated optical and wireless connectivity devices industry — Contract
manufacturing (“ CM”) vs. Co-location manufacturing” in this Prospectus.
The following table summarizes the salient terms of the agreements that we had entered
with our co-location manufacturing partners:
Duration: The collaboration is effective for an initial term of two
years and will automatically renew for a term of 12 months
unless terminated.
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Scope of work: Our co-location partner accepts our need to provide them
with necessary personnel, material, equipment, services,
and facilities to manufacture products in accordance with
our requirements.
Design and intellectual
property:
We are responsible for the design and development of
products. We will also retain all the intellectual property
rights related to the manufacturing and testing processes,
establishing a technical moat against competitors.
Production, personnel,
and facilities:
Our co-location partner will be responsible for
manufacturing and assembling our products in strict
compliance with our established procedures and protocols.
They will provide the necessary labor, at our request and
specifications, and manage the workforce at the facilities.
They will also manage their own facilities, ensuring
compliance with local laws and regulations. We will also
send personnel to work with our co-location partners in
managing such facilities.
Supervision and quality
control:
We have a proprietary system for tracking and monitoring
every stage of the manufacturing process, ensuring real-
time updates and analysis. We supervise the manufacturing
process by assigning project managers, technical, and
quality engineers to regularly station at our co-location
partners’ facilities to ensure the quality and standard of our
products.
Procurement of raw
materials:
We would provide the core materials required for
production, ensuring consistency and quality, or we would
make specific requests on the type and cost of materials to
be procured and managed by the co-location partner.
Technology: We will supply specific equipment needed for production;
to be installed at the co-location partners’ facilities. This
will also include dedicated machinery for testing and
validation. We can also utilize the existing technology
infrastructure in our co-location partners’ facilities.
Credit terms and payment: Our co-location partner shall invoice us upon delivery and
we shall pay all invoices net 30 days from shipment
arriving. Our co-location partner shall withhold shipment
if the payment is overdue beyond 45 days. Our co-location
partner can impose late payment penalties.
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Dispute resolution: The indemnified party must promptly notify the
indemnifying party. The two parties must reach a
settlement, compromise, or discharge of the claim.
Liability: No party shall be liable to the other party, with the only
exception of the indemnification obligations related to
product liability.
Termination: Either party may terminate (i) for any reason upon 180
days’ prior written notification or (ii) 60 days after written
notification of material breach which is not cured within
such period.
As of the Latest Practicable Date, we had entered into agreements, which reflects the
aforementioned features, with three co-location partners in China, and three overseas, namely
in Malaysia, the United States, and Europe. Our Directors confirmed that all of such
co-location partners were Independent Third Parties as of the Latest Practicable Date.
According to F&S, the engagement of co-location partners under such arrangements is
considered an industry norm.
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The following table provides a summary of our production volume, planned production capacity, and utilization regarding our co-location
partners as of, and for the years/periods ended, the dates indicated:
For the year ended December 31, For the six months ended June 30,
2022 2023 2024 2024 2025
Co-location partner
Date of
commencement
of relationship
Production
lines GFA (2)
Planned
production
capacity (3)
Actual
production
volume
Utilization
rate (4)
Planned
production
capacity (3)
Actual
production
volume
Utilization
rate (4)
Planned
production
capacity (3)
Actual
production
volume
Utilization
rate (4)
Planned
production
capacity (3)
Actual
production
volume
Utilization
rate (4)
Planned
production
capacity (3)
Actual
production
volume
Utilization
rate (4)
(Sq.m.) (Units) (Units) (%) (Units) (Units) (%) (Units) (Units) (%) (Units) (Units) (%) (Units) (Units) (%)
Co-location Partner A, with
facilities based in Wuhan,
China /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
April 2018 Broadband,
Wireless
9,000 5,469,421 4,794,518 87.7 3,929,612 3,439,121 87.5 3,485,395 3,029,128 86.9 1,964,176 1,707,979 87.0 1,404,830 1,170,692 83.3
Co-location Partner B with
facilities based in Xi’an,
China /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
August 2018 Broadband,
Wireless
7,000 4,442,170 3,902,176 87.8 3,637,026 3,018,371 83.0 3,759,186 3,344,348 89.0 2,249,469 2,026,549 90.1 1,696,028 1,474,807 87.0
Co-location Partner C, with
facilities based in Nantong
China /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
December
2022
(1)
Broadband,
Wireless
4,000 – – – 471,981 413,338 87.6 2,498,720 2,237,271 89.5 1,030,441 928,325 90.1 1,063,843 967,130 90.9
Co-location Partner D, with
facilities based in Malaysia /H1118
November 2018 Photonics,
Broadband,
Wireless
18,000 1,203,424 1,084,589 90.1 1,440,288 1,279,725 88.9 2,267,836 1,885,825 83.2 810,742 692,942 85.5 1,501,683 1,365,166 90.9
Co-location Partner E, with
facilities based in Germany
and Poland
(5) /H1118/H1118/H1118/H1118/H1118/H1118
April 2024 Broadband,
Wireless
2,000 –––––– 1 12,860 3,255 2. 9––– 1 12,860 2,150 1.9
Co-location Partner F, with
facilities based in the United
States
(6) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
January 2025 Broadband 30 0–––––––––––– 6,000.0 1,000.0 16.7
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Notes:
1. Our engagement with this co-location partner commenced in late December 2022, with production commencing in the subsequent year.
2. As of the Latest Practicable Date, such GFA is calculated based on the floor space allocated to us, which is in-line with the production capacity and p roduction lines allocated
to us based on our agreed terms with the co-location partners. For such reasons, this GFA may fluctuate from time to time.
3. Refers to the maximum output or production capability, that had been allocated to us upon negotiation, operating ideal conditions where the facili ties operate with no major
breakdowns or bottlenecks. Such capacity of our co-location partners may change from time to time, as we would adjust the production lines required ba sed on commercial
needs, production planning and our agreements with such co-location partners.
4. Utilization rate is calculated by dividing actual production volume by planned production capacity for the relevant year.
5. As we had only commenced production at this site in October 2024, the relatively low utilization and production volume for the year ended December 31 , 2024 and the six
months ended June 30, 2025 were attributable to the time and resources required to establish and ramp-up the manufacturing capabilities at such an ear ly stage.
6. This facility commenced operations in June 2025. For such reasons, we had not generated any revenue from the sales of products from this co-location partner during the Track
Record Period.
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Our co-location manufacturing model is designed to be asset-light and highly adaptable
to changes in market conditions, enabling us to scale production capacity in response to actual
order volumes without the need for substantial capital investment in fixed assets. This
flexibility allows us to mitigate the risk of underutilization during periods of fluctuating market
demand and to respond swiftly to international trade uncertainties and geopolitical
developments by reallocating production capacity across different co-location facilities.
Our Group maintains a high degree of flexibility in adjusting the GFA and planned
production capacity of our co-location manufacturing facilities. This flexibility is made
possible by the adaptable nature of our production lines, which are capable of supporting a
wide range of products across different business units. In practice, we dynamically reallocate
production capacity within existing production lines based on market demand, allowing us to
respond swiftly to fluctuations without requiring major structural changes.
The determination of planned production capacity at co-location sites is based on regular
consultations between our Group and our co-location partners. These discussions assess
upcoming production requirements and form the basis for determining the appropriate GFA and
the number and type of production lines to be allocated. Once consensus is reached, designated
production lines are earmarked and dedicated exclusively to the manufacturing of our products.
This allocation process is dynamic and subject to periodic adjustment, guided by factors such
as anticipated market demand for specific product types, the availability and design capacity
of production lines at co-location partner facilities, and strategic decisions regarding the
distribution of manufacturing activities between co-location partners and our in-house
operations. All adjustments are planned and negotiated in advance to ensure alignment and
operational readiness. Our arrangements with co-location partners are non-exclusive and
managed on a rolling basis. We regularly provide feedback and market demand estimates to
support their production planning. For new products, we typically engage co-location partners
up to one year in advance, including during the research and development phase, to allow
sufficient time for equipment installation and workforce planning aligned with our technical
requirements. For existing products, depending on the specific production bottlenecks, we
generally issue requests for additional production capacity approximately four months in
advance. This lead time enables our partners to plan accordingly and allocate the necessary
resources.
It should be noted that these timeframes are indicative and subject to variation due to the
complexity of the production process. Factors influencing the timeline include the co-location
partner’s existing capacity, technical capabilities, equipment readiness, raw material
availability, and the nature of any technical challenges involved in manufacturing the product.
To ensure alignment and responsiveness, our Company maintains ongoing communication with
co-location partners through dedicated personnel who monitor developments and facilitate
timely planning.
In general, the allocation of production across our co-location partners and our in-house
facilities would depend on the type of products manufactured, which is based on, among other
factors, the evolving customer demand. For such reasons, products manufactured at our various
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facilities are, in general, not identical, and that our cost structure and the gross profit margins
of our products are not directly dependent on which manufacturing arrangement chosen. As our
co-location partners are governed by contractual agreements, their baseline costs are expected
to remain stable within the framework of the contract. Given this cost composition, the mode
of manufacturing arrangement, whether through our co-location partners or our in-house
facilities, has had a limited impact on our overall gross profit and gross profit margin. For
details of our cost structure, please see the section headed “Financial Information —
Description of key components of our results of operations — Cost of sales” in this Prospectus.
The success of this co-location model depends heavily on the careful selection of capable
and reliable co-location partners. In evaluating potential co-location partners, our Group applies
a comprehensive set of criteria. These include the co-location partner’s operational scale and
production capacity, their relationship with local institutions and business partners, and their
prior experience in contract manufacturing, particularly with products similar to ours. We also
assess the competitiveness of their processing fees, their compliance with industry standards, and
their ability to scale operations in response to demand fluctuations. Transparency in
communication, responsiveness to operational needs, and financial soundness are also key
considerations. In addition, we place emphasis on the co-location partner’s ability to maintain
consistent quality standards and to support our production objectives under tight timelines.
To safeguard production continuity, our Directors confirm that we have in place a
contingency plan, which includes having alternative co-location partners and manufacturing
facilities readily available to the Group on comparable terms, which is in line with industry
norm, according to F&S. Many of our existing co-location partners operate multiple facilities
concurrently, which provides redundancy and enables us to swiftly shift production to alternate
sites within the same partner network in the event of any disruption. This ensures uninterrupted
supply and reinforces our operational resilience. Through this robust and flexible co-location
framework, our Group is able to maintain high responsiveness to market changes while
optimizing production efficiency and risk management. Moreover, as the primary role of our
co-location partners is to provide production and/or processing services, while our Company
remains responsible for supplying the technical designs, proprietary software, and production
know-how, we believe there is limited incentive for these partners to claim ownership of or
infringe upon our intellectual property rights. All intellectual property rights associated with
the products manufactured by the co-location partners for us are solely owned by our Company,
and we do not license such rights to our co-location partners. We also adopts measures such
as including non-disclosure provisions in our agreements with the co-location partners and
filing intellectual property patents to proactively protect our intellectual property rights.
During the Track Record Period and up to the Latest Practicable Date, we had not
encountered any difficulties regarding our co-location partner unwilling or unable to commit
to the GFA, planned production capacity, or production lines allocation, nor had our
co-location manufacturing facilities experienced any material disruption, resulting in material
adverse impact on our production and results of operations. We are also open to engaging other
co-location partners that are capable and willing to work with us under this model and align
with our overseas expansion strategy.
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In our consolidated financial statements, costs paid to co-location partners are recorded
as part of our manufacturing overheads under the line item “cost of sales.” Where applicable,
and in accordance with our inventory accounting policy and relevant financial reporting
standards, certain costs that are directly attributable to the production of our products may be
capitalized into inventory. These manufacturing overheads represent payments for outsourced
manufacturing services provided by our co-location partners, which include the use of their
production lines, facilities, and labor in accordance with our production specifications and
schedules. Importantly, our Group retains ownership and control over the procurement of raw
materials, and the co-location partners do not assume inventory or production risk. As such, the
arrangement is treated as a service-based outsourcing model. Consequently, no property, plant,
or equipment related to the co-location facilities is recognized on our balance sheet.
In-house facilities
Our in-house manufacturing facilities are essential to our production capabilities. We
conduct pilot runs in-house to optimize processes before replicating them at co-location sites.
Additionally, we maintain some production in-house as a benchmark for co-location
operations. By doing so, we can ensure that we will have complete control over the entire
production for some of our products, allowing us to maintain even more stringent quality
standards and ensure that every aspect of production meets our needed specifications. In
contrast to the co-location model, an in-house factory provides direct oversight of every
production stage, leading to higher product quality and consistency. We also believe that
having some production capabilities in-house fosters innovation and continuous improvement,
as we can experiment with new technologies, processes, and materials without an over reliance
on external parties, encouraging a culture of innovation and collaboration.
The following pictures illustrate our in-house facilities as of the Latest Practicable Date:
Shanghai No. 1: Our in-house facility in
Shanghai, which has been in operation
since 2014.
Shanghai No. 2: Our new in-house facility,
in Jiashan, near Shanghai, which has been
in operation from July 2025.
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The following table provides a summary of our production volume, designed production capacity, and utilization regarding our in-house
facilities as of, and for the years/periods ended, the dates indicated:
For the year ended December 31, For the six months ended June 30,
2022 2023 2024 2024 2025
Facility
Production
commencement
Production
lines GFA (1)
Designed
production
capacity (2)
Actual
production
volume
Utilization
rate (3)
Designed
production
capacity (2)
Actual
production
volume
Utilization
rate (3)
Designed
production
capacity (2)
Actual
production
volume
Utilization
rate (3)
Designed
production
capacity (2)
Actual
production
volume
Utilization
rate (3)
Designed
production
capacity (2)
Actual
production
volume
Utilization
rate (3)
(Year) (Sq.m.) (Units) (Units) (%) (Units) (Units) (%) (Units) (Units) (%) (Units) (Units) (%) (Units) (Units) (%)
Shanghai No. 1 /H1118/H11182014 Photonics,
Broadband,
Wireless
33,000 4,929,480 4,373,236 88.7 1,669,658 1,520,143 91.0 2,640,747 2,216,864 83.9 1,417,657 1,201,404 84.7 1,400,937 1,197,382 85.5
Shanghai No. 2
(4) /H11182025 Photonics,
Broadband,
and
Wireless
100,000 –––––––––– – ––––
Notes:
1. As of the Latest Practicable Date.
2. Refers to the maximum output or production capability under ideal conditions where the facilities operate with no major breakdowns, however such c apacity will take into
account the bottlenecks that resulted from machinery and design restrictions.
3. Utilization rate is calculated by dividing actual production volume by designed production capacity for the relevant year.
4. Subsequent to the Track Record Period, our in-house Shanghai No. 2 facility located in Jiashan commenced production in July 2025. Our Company inten ds to progressively
ramp up both production volume and utilization in the near term. As of the Latest Practicable Date, we operate two in-house facilities — Shanghai No. 1 a nd Shanghai No. 2.
In line with our long-term operational strategy and in anticipation of the lease expiry of Shanghai No. 1 later this year, we plan to consolidate all in- house production activities
at the Shanghai No. 2 facility (the property of which is owned by the Company). Shanghai No. 2 is expected to absorb all personnel, materials, and equipm ent currently deployed
at Shanghai No. 1. The facility has been designed with expanded capacity to accommodate future growth and to ensure readiness for any potential surge i n customer demand
from the PRC and/or overseas market.
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During the Track Record Period, our in-house facility in Shanghai, reached an actual
production volume of 4.4 million units, 1.5 million units, 2.2 million units, and 1.2 million
units, with a design production capacity of 4.9 million, 1.7 million, and 2.6 million units, and
1.4 million units, at a utilization rate or 88.7%, 91.0%, 83.9%, and 85.5%, respectively. The
reasons for the decrease in such figures in 2023 were twofold: (i) machinery upgrades and
repairs; and (ii) reallocation of resources to target overseas markets.
The decrease in designed production capacity at our in-house facility in Shanghai reflects
our strategic shift aligned with our long-term international growth objectives, and our plans to
relocate our production capacity to Shanghai No. 2. Rather than being a response to weakening
domestic demand, this adjustment supports our proactive efforts to strengthen our presence in
overseas markets, and to utilize our Shanghai No. 2 facility in order to improve our overall
operational efficiency.
In 2023, overall revenue declined due to an industry-wide inventory destocking cycle,
following elevated stockpiling during the pandemic period which resulted in postponed
demand, resulting in a decrease in the production volumes across both in-house and co-location
facilities. However, as the deferred demand began to materialize in 2024, we saw a broad-based
recovery in sales volumes. Despite this rebound, the increase in production volume was more
pronounced at our co-location facilities, particularly those located overseas. This was a direct
outcome of our strategic push to expand internationally evidenced by our increased revenue
contribution from overseas customers. This also improved delivery efficiency. Accordingly,
while we made a modest upward adjustment to the designed production capacity of our
Shanghai facility in 2024 to accommodate the returning demand, we have been gradually
expanding our overseas efforts.
While machinery upgrades and repairs were also part of the operational adjustments
during this period, the primary driver behind the lower designed production capacity of our
in-house facilities in 2023 and 2024, as compared to 2022, and later in 2025 reflects the
strategic expansion of our overseas sales and marketing efforts, and the eventual relocation of
our production capacity to Shanghai No. 2.
Our Directors confirm that during the Track Record Period and up to the Latest
Practicable Date, our in-house facilities did not experience any material disruption that had led
to any severe adverse impact on our production capacity.
Our production process
Our production process is designed to promote high standards of quality while being able
to rapidly ramp up production to satisfy customers’ needs. We generally manufacture products
only after receiving a purchase order from the customer and after procuring all the raw
materials, components, and parts required for the purchase order. We conduct all of the
production processes internally at our in-house facilities or co-location sites and do not
outsource any work.
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During our production process, we use our ERP system to handle finance, warehouse
management, and supply chain management, while our MES connects our information systems,
manages resource allocation, job scheduling, and production process monitoring, ensuring
efficient coordination across all stages.
The following chart illustrates the principal steps in the production of our products:
Material
Incoming
Inspection
Material
Preparation SMT DIP
Calibration,
Functional
Test, and
Final
Assembly
Final Check,
Labeling,
and
Packaging
 Material incoming inspection: The production process begins with the inspection of
incoming materials to ensure they meet quality standards. This involves checking
for surface roughness, dimensions, and board thickness. Additionally, general
electrical inspections tests are conducted to ensure the materials are free from
defects and safe for further processing.
 Material preparation: Once the materials pass the initial inspection, they are
prepared for the production process. Solder paste is applied to the printed circuit
board (“ PCB”) using a stencil, ensuring precise application to prevent issues later
on. The application of solder paste is inspected to confirm its accuracy. Information
or markings are then printed on the PCB using an inkjet printer, providing necessary
identification and traceability, and ICs are programmed with the necessary firmware
or software.
 SMT: In this stage, surface mount components are placed directly onto the surface
of the PCB. This method allows for smaller, more efficient circuit designs and
high-speed automated assembly. The board is inspected before reflow soldering to
check for any placement errors. The PCB is then heated to melt the solder paste,
creating secure connections. 3D AOI is performed on a sample of PCBs to check for
hidden soldering defects.
 DIP: Components with DIPs are inserted into the PCB during this stage. The board
is passed over a wave of molten solder to solder the components securely.
 Calibration, functional test, and final assembly: The assembled PCBs undergo
various calibrations, inspections and tests to ensure they meet quality standards. The
optical and/or Wi-Fi functionality of the PCB is calibrated, and the board is tested
under thermal conditions to ensure it can withstand temperature variations.
Functional testing is performed to verify the PCB’s operation, including signal
processing, communication interfaces, and sensor calibration. Any necessary
manual adjustments or repairs are made, and the assembled PCB is stored.
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 Final check, labeling, and packaging: In the final stage, the product is assembled,
labeled, and prepared for shipping. Labels are applied to the cartons and pallets, and
the products are stored and retrieved for shipping. A final audit is conducted on a
batch of products before shipping to ensure they meet the specified quality
standards. The products are packed and tested one last time, and a final functional
test is conducted to ensure the product is ready for use. This stage ensures that the
final product is of high quality and ready for delivery to customers.
Maintenance
We carry out inspections and maintenance at our in-house facilities or at co-location sites
for our machinery and equipment on a periodic basis. We have developed and periodically
updated internal repair and maintenance protocols at these locations according to the
characteristics and requirements of the particular equipment and machinery to ensure that
production lines perform at optimal levels. During the Track Record Period and up to the Latest
Practicable Date, we did not experience any material or prolonged suspension of operations
due to failures of our machinery or equipment at these locations that resulted in material
adverse impacts on our results of operations or financial condition.
Quality control
Product quality is a key driver of our business success, and we aim to always provide
reliable products to customers while adhering to the relevant laws, regulations, and industry
standards. To achieve this, we have implemented a detailed product quality management
system. This system, which is led by our general managers as the key responsible persons,
includes creating a three-year annual quality plan, forming quality policies and objectives, and
establishing policies on key topics such as quality control, corrective and preventive
management procedures, and product recall management. A specialized quality control
department is responsible in overseeing the entire product quality control process and handles
quality-related issues such as customer complaints, supplier deliveries, routine and unexpected
quality issues, defective items, and quality incidents. This quality control process covers the
entire product lifecycle, from raw materials procurement, production, sales, and marketing to
aftersales services.
The following are the key aspects of such quality control process:
 Monitoring our products: We identify potential quality risks at various stages of the
product lifecycle and establish plans to address these situations. Periodic
evaluations are conducted to classify and assess these risks. Regular first article
inspection (“ FAI”) of products is performed, with products selected at random, and
formal rules and guidelines are established to ensure consistent quality monitoring.
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 Traceability: Appropriate methods for labeling products are implemented to ensure
quality traceability and prevent mix-ups or misuse. Batch numbers and serial
numbers are used to trace products, including those with design changes. Operations
for labeling and traceability are executed according to our product identification and
traceability management procedures. We have adopted specific traceability systems
for different phases of our product cycle, covering R&D, manufacturing, sales, and
post-sales. This enables us to accurately identify the affected units for any potential
quality risks related to the manufacturing process and to promptly implement
measures to mitigate any degradation of services delivered to customers and end
users.
 Production defects prevention: Throughout procurement, storage, processing, and
delivery stages, protective measures are taken to ensure product compliance. This
includes labeling, handling, packaging, storage, and protection. V erification of
packaging and labeling is governed by the product packaging operation standard
operating procedures (“ SOP”), utilizing barcodes, and packing list management
systems to ensure that products and accessories are packaged and labeled according
to the SOP . Additionally, preventative methods are implemented by software
development and IT departments for the detection, prevention, and removal of
software defects on deliverable products.
We believe that these measures, benchmarked against best-practices in the industry, will
help ensure the quality of our products while controlling costs and maintaining our
profitability. As of the Latest Practicable Date, we have obtained the ISO: 9001 Quality
Management System Certification in relation to our manufacturing processes, and the TL: 9000
Quality System Certification specifically for the telecommunications industry. During the
Track Record Period and up to the Latest Practicable Date, we did not experience any product
defects or recalls that resulted in material adverse impacts on our results of operations or
financial condition.
CUSTOMERS, SALES, AND COMPETITION
During the Track Record Period, our major customers comprise mostly information and
communication technology manufacturers. In 2022, 2023, and 2024, and the six months ended
June 30, 2025, our revenue generated from the five largest customers in each year/period of the
Track Record Period amounted to RMB2,398.5 million, RMB2,122.7 million,
RMB2,737.6 million, and RMB1,677.5 million, representing 63.5%, 68.8%, 74.9%, and
82.5%, of our total revenue, respectively.
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Our major customers
The following table sets forth details of our five largest customers in 2022:
Customer Revenue
Percentage of
total revenue
of our Group
Y ear of
commencement
of business
relationship
Type(s) of products
provided by us
Credit period
granted
by us
Payment
method
RMB’000 %
Customer A (1) /H1118/H1118/H1118/H1118/H1118/H1118/H11181,269,705 33.6 14 Broadband and
wireless products
90 days Telegraphic
transfer
Customer B (2) /H1118/H1118/H1118/H1118/H1118/H1118/H1118471,107 12.5 8 Broadband and
wireless products
60 days Telegraphic
transfer
Customer C (3) /H1118/H1118/H1118/H1118/H1118/H1118/H1118344,155 9.1 14 Photonics, broadband,
and wireless
products
60 days Telegraphic
transfer
Customer D
(4) /H1118/H1118/H1118/H1118/H1118/H1118/H1118174,021 4.6 14 Photonics and
broadband
products, and
others
30 days Telegraphic
transfer
Customer E
(5) /H1118/H1118/H1118/H1118/H1118/H1118/H1118139,510 3.7 8 Wireless products 45 days Telegraphic
transfer
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,398,498 63.5
Notes:
1. Customer A is a multinational data networking and telecommunications equipment company
headquartered in Finland. It is a listed company on the Nasdaq Helsinki and Euronext Paris and the New
Y ork Stock Exchange, and it operates in over 100 countries with over 90,000 staff members and a
registered capital of USD3 billion. Customer A is a JDM customer and it is also Supplier C, please refer
to the sub-section headed “— Overlapping Customers/suppliers” in this section.
2. Customer B is a telecommunications company providing broadband internet, digital television, and
computer technical support to residential and business customers in the United States. It is a listed
company on the NASDAQ Stock Market, and it has a staff size of over 15,000 staff members and a
registered capital of USD100 million. It is also an ODM customer.
3. Customer C is a company specializing in the design, production, and sales of electronic products and
integrated circuit products, headquartered in China. It is a listed company on the Hong Kong Stock
Exchange and the Shenzhen Stock Exchange, and it has over 70,000 staff members and a registered
capital of USD2 billion. It is also an ODM customer.
4. Customer D is a global provider of information and communications technology infrastructure and smart
devices, headquartered in China. It is a private company with around 190,000 staff members and a
registered capital of USD5 billion. It is also a JDM customer.
5. Customer E is a company specializing in small cell technology, based in South Korea. It is a private
company with a staff size of 200 and a registered capital of USD10 million. It is also a JDM customer.
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The following table sets forth details of our five largest customers in 2023:
Customer Revenue
Percentage of
total revenue
of our Group
Y ear of
commencement
of business
relationship
Type(s) of products
provided by us
Credit period
granted
by us
Payment
method
RMB’000 %
Customer A /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,114,738 36.1 14 Broadband and
wireless products
90 days Telegraphic
transfer
Customer B /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118630,150 20.4 8 Broadband and
wireless products
60 days Telegraphic
transfer
Customer F (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118141,359 4.6 8 Photonics, broadband
and wireless
products
45 days Telegraphic
transfer
Customer E /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118129,215 4.2 8 Wireless products 45 days Telegraphic
transfer
Customer G
(2) /H1118/H1118/H1118/H1118/H1118/H1118/H1118107,192 3.5 6 Wireless products 45 days Telegraphic
transfer
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,122,654 68.8
Notes:
1. Customer F is a fiber broadband internet service provider based in the United States. It is a private
company with a staff size of around 1,000 and a registered capital of USD50 million. It is also an ODM
customer.
2. Customer G is a company that provides consulting, application development, infrastructure/network
development, security, and outsourcing services, based in United States. It is a private company with
500 staff members and a registered capital of USD5 million. It is also a JDM customer.
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The following table sets forth details of our five largest customers in 2024:
Customer Revenue
Percentage of
total revenue
of our Group
Y ear of
commencement
of business
relationship
Type(s) of products
provided by us
Credit period
granted
by us
Payment
method
RMB’000 %
Customer A /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,525,833 41.8 14 Broadband and
wireless products
90 days Telegraphic
transfer
Customer F /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118471,561 12.9 8 Photonics, broadband,
and wireless
products
45 days Telegraphic
transfer
Customer B /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118318,520 8.7 8 Broadband and
wireless products
60 days Telegraphic
transfer
Customer H
(1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118249,852 6.8 1 Broadband and
wireless products
90 days Telegraphic
transfer
Customer G /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118171,818 4.7 6 Wireless products 45 days Telegraphic
transfer
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,737,584 74.9
Note:
1. Customer H is an engineering services firm which offers consulting, technical representation, and
project execution services, based in the United States. It is a private company with a registered capital
of USD1 million. It is also an ODM customer. We first established a business relationship with Customer
H via introductions from industry peers. Customer H, in providing engineering and consulting services,
would require connectivity products as a part of their services provided to their clients.
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The following table sets forth details of our five largest customers in the six months ended
June 30, 2025:
Customer Revenue
Percentage of
total revenue
of our Group
Y ear of
commencement
of business
relationship
Type(s) of products
provided by us
Credit period
granted
by us
Payment
method
RMB’000 %
Customer A /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118848,919 41.7 14 Broadband and
wireless products
90 days Telegraphic
transfer
Customer B /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118380,126 18.7 8 Broadband and
wireless products
60 days Telegraphic
transfer
Customer I (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118223,592 11.0 1 Photonics, broadband
and wireless
products
90 days Telegraphic
transfer
Customer F /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118174,652 8.6 8 Photonics, broadband
and wireless
products
45 days Telegraphic
transfer
Customer J
(2) /H1118/H1118/H1118/H1118/H1118/H1118/H111850,221 2.5 6 Broadband and
wireless product
60 days Telegraphic
transfer
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,677,510 82.5
Notes:
1. Customer I is a company that wholesales telecommunication products, based in United States. It is a
private company. It is also a ODM customer.
2. Customer J is a company that provides broadband internet services, based in United States. It is a private
company. It is also an ODM customer.
Our Directors confirm that, as of the Latest Practicable Date, the five largest customers
of our Group during each year/period of the Track Record Period were all Independent Third
Parties and, during the Track Record Period and up to the Latest Practicable Date, none of our
Directors or their respective close associates or any of our Shareholders, to the knowledge of
our Directors, owned more than 5% of our issued Shares, had any interest in any of such
customers. During the Track Record Period, to the best knowledge of our Directors, our Group
did not have any material disputes with our customers.
Relationship with our largest customer during the Track Record Period
Customer A is an Independent Third Party. During the Track Record Period, Customer A
was our largest customer and our revenue derived from Customer A amounted to RMB1,269.7
million, RMB1,114.7 million, RMB1,525.8 million, and RMB848.9 million, representing 33.6%,
36.1%, 41.8%, and 41.7% of our total revenue, respectively. Customer A is a multinational data
networking and telecommunications equipment company headquartered in Finland.
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Customer A and our Company have an established relationship of 14 years, demonstrating
our mutual dependence and strategic collaboration with Customer A. Customer A engages our
Group under a JDM model, which requires a high degree of customization, technical
coordination, and long-term commitment. According to F&S, the process of certifying a JDM
manufacturer typically takes one to two years. This process places significant demands on the
manufacturer’s financial strength, operational capabilities, and engineering expertise. In the
event of replacing a JDM manufacturer, substantial reinvestment would be required in
identifying, qualifying, and certifying a new manufacturer. This would involve restarting a
lengthy and costly certification process, which includes rigorous technical assessments,
operational audits, and close supervision throughout the onboarding phase. Such a transition
might also impose significant risks to product development timelines and supply chain
continuity. As such, maintaining a long-standing JDM business relationship could mutually
benefit the customer and the JDM manufacturer in terms of: (i) the customer gains a trusted and
proven manufacturing partner capable of delivering highly customized solutions with agility
and precision; and (ii) the JDM manufacturer benefits from stable, recurring business and early
visibility into the customer’s product roadmap, allowing advance planning and allocation of
resources effectively. Furthermore, such a long-standing JDM business relationship signifies
the customer’s recognition of the JDM manufacturer’s ability to deliver consistent, high-
quality, and tailored solutions. Our Group entered into framework agreements with Customer
A in 2016. These framework agreements are typically subject to renewal every 12 months.
Since our business relationship commenced with Customer A, such framework agreements
have been consistently renewed. The following sets forth the salient terms of the framework
agreements that we had entered into with Customer A:
Duration: The collaboration is effective for an initial term of 36
months and may extend the collaboration for 2 additional
renewal terms of 12 consecutive months each.
Scope of work: We shall provide and Customer A may purchase our
products, and may purchase, maintenance, support and
repair our services. Customer A may resell, sublicense,
demonstrate, or use our products in hosted services, but
orders are non-committal. Customer A is solely
responsible for its own orders, payments, and compliance.
We must provide quarterly spending reports, and Customer
A retain rights to warranty, indemnification, and pricing
terms. We cannot sell competing products. Customer A
may use alternative suppliers and are not obligated to
maintain purchase volumes. We grant Customer A limited
rights to maintain and repair our products, including
through third parties.
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Delivery: Flexible delivery arrangements are implemented through
collaborative forecasting with two options: Option 1
(being the default option) follows fixed lead times,
allowing Customer A to cancel or reschedule orders
without penalties if minimum notice is given; Option 2
defers to a separate logistics agreement. For delays, the
Customer A may cancel orders, extend deadlines, or claim
damages if late deliveries cause penalties from its end-user
customers.
Purchase orders: Purchase orders must be sent to our designated address and
contacts and must include certain required elements
including, among other things, product descriptions,
delivery terms, pricing, delivery/invoice addresses,
company contacts, order date/number, shipping
instructions, quantities, and payment terms. Hardware and
service cancellation and reschedule are flexible. Any order
changes require written, signed authorization from both
parties with agreed adjustments to pricing and schedules.
Credit terms and payment: Payments must be made in agreed currency. Standard
payment terms are 60 days from invoice date. Persistent
late payment will trigger good faith negotiations.
Electronic payments are required to our designated
account, with 60 days’ notice needed for any bank account
changes, and Customer A shall not be liable for
misdirected payments due to our failure to provide timely,
accurate banking information.
Dispute resolution: Both parties shall first attempt good-faith negotiations
before pursuing arbitration or legal action, while
preserving all applicable legal defenses during the
proceedings. The process begins with written notice and
informal discussions between representatives, escalates to
senior management if unresolved, and proceeds to
arbitration if no settlement is reached, with all statutes of
limitations tolled throughout the entire dispute resolution
period.
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Liability: Both parties’ liability are limited by excluding
responsibility for damages arising from purchase orders.
However, this does not apply to breaches of
confidentiality, improper use of branding, intellectual
property infringement, indemnification obligations, or
claims involving bodily injury, death, or property damage
where liability cannot legally be restricted.
Our Directors confirm that the transactions between Customer A and our Group during the
Track Record Period were on normal commercial terms, similar to the other JDM agreements
that we had entered into with other customers during the Track Record Period. Our Directors
firmly believe that such long-term commitment underscores the trust and reliability that both
parties have in each other, fostering a stable and predictable business environment. While
alterations in the partnership with Customer A could significantly affect our operations, we
have been employing a dual strategy of having one anchor customer supported by a large
number of diverse customers. This approach ensures that we are not overly dependent on a
single customer and can maintain operational stability even if changes occur. Our Directors
believe, and the Sole Sponsor concurs, that the likelihood of significant negative changes, or
the termination, of the relationship with Customer A is considered low. Factors contributing to
this low likelihood include the established trust, long-term agreements, and the mutual benefits
derived from a successful partnership between us.
Sales and marketing
Our sales and marketing team comprised of 83 personnel as of June 30, 2025, with most
members having at least six years of relevant experience. We have implemented a flexible
marketing strategy to serve a full range of customers, focusing on sales directly to ICT
equipment providers, telecommunications operators, cloud data center operators, internet
technology companies, and traditional intermediaries like system equipment manufacturers.
Our marketing activities primarily include trade shows and exhibitions, but we also reach
customers through forums and seminars.
Our team members are localized to multiple countries to be in close proximity to our
customers, bringing dedicated expertise and knowledge to them. We have established
region-focused sales and marketing teams for North America, Europe, China, and Southeast
Asia. Our team proactively identifies market opportunities and designs sales strategies to
capitalize on them. To fully serve our customers, we assign a marketing manager and establish
a team dedicated specifically to each major customer. The sales manager responsible for a
specific customer works closely with both the customer and our employees, including staff
from our research and development teams and product design and development engineers from
our manufacturing facilities, to develop products tailored to meet that customer’s specific
needs.
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We would also acquire customers by leveraging our brand reputation and industry
influence, established through long-term, comprehensive, and in-depth collaboration with
top-tier companies across the years. For instance, we have been a member of the Broadband
Forum for over a decade. This is a non-profit industry organization dedicated to designing
smarter and faster broadband networks, and is highly influential in the telecommunications
industry. In 2011, we became one of the first companies to achieve BBF.247 certification, a
significant program under the Broadband Forum, ensuring interoperability of GPON standards
from different manufacturers. We have also regularly attended the Network X Exhibition (the
former Broadband World Forum Exhibition), the very recent of which was held at the Paris
Expo Porte de V ersailles in 2024, where we demonstrated our latest technologies and products
to potential customers, and gained insights into the industry trends and the offerings of other
manufacturers. We have also regularly attended the Optical Fiber Communication Conference
and Exhibition, an annual industry event in the global optoelectronics and optical
communications field, jointly organized by the Optical Society of America, the IEEE
Communications Society, and the IEEE Lasers and Electro-Optics Society. By regularly
presenting our products at this event, we demonstrated our innovative capabilities and
leadership in the optoelectronics industry.
Pricing and payment
We set prices for our products primarily based on the estimated costs incurred in the
design and production of a product plus a profit margin that varies depending on the type of
product and the model sold, which we believe is in line with industry practice. We periodically
review our costs of production. The prices may be reviewed as necessary to meet our business
needs. For customers that require additional design and development work, we consider
additional costs needed to implement such modifications and report the new price to our
customer for approval or further discussion. Pricing may also depend upon the volume of the
order within a certain period. We may sometimes provide a more competitive price for large
bulk orders due to the higher efficiency and lower allocation of the fixed cost which results in
a lower average per-unit cost.
We do not consider ourselves to be heavily exposed to credit risks and payment collection
risks from our customers. Our standard practice is to request immediate payment from our
customers, while also providing them with a credit period ranging from 30 to 90 days. This credit
period is subject to various factors, including their background, reputation within the industry,
payment history, creditworthiness, and the duration of our business relationship with them.
Post-sales services
Our post-sales services cover product support, as well as repair, return and exchange of
defective products that were purchased from us, within certain time periods, in compliance
with regulatory requirements, the warranty terms with the customers, and policies on the
return, replacement and repair of products. We have established corrective and preventive
management procedures to analyze the causes of non-conformities that have occurred or may
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potentially occur within the product quality system. In the event that a batch of delivered
products might be found unsuitable post-delivery, we will strictly follow such procedures for
product recall and will promptly inform the relevant stakeholders.
Product defects and recalls
With years of experience in technical design and applications, we have established a
comprehensive product quality management system, obtaining eight major management system
certifications, including, among others, ISO: 9001 Quality Management System, TL: 9000
Telecommunications Quality Management System, QC: 080000 Hazardous Substance Process
Management System, and ISO: 27001 Information Security Management System.
The following flowchart sets forth a summary of such procedures in relation to defective
products and recalls:
Steps Responsible department
1. Analyze product quality issues and
provide relevant data.
Quality department
2. Decide on whether a recall is necessary. Business unit
3. a. Form a recall team to manage the
recall process.
b. Identify the products that need to be
recalled.
c. Confirm recall information.
d. Prepare necessary documentation.
Recall team
4. Communicate the recall information to
customers.
Sales department
5. a. Collect and dispose of recalled
products.
b. Review recall process and
management system for
improvements.
c. Prepare a summary report of the
recall.
Recall team
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Upon receiving a notification from a customer regarding a potential product defect which
may require a recall, our process begins with the quality control department analyzing the
product quality issues and providing relevant data. This department is responsible for
identifying any defects in the products and gathering all necessary information to understand
the extent and nature of the problem. Once the analysis is complete, the business unit leader
makes a decision on whether a recall is necessary. This decision is based on the severity of the
defects and the potential impact on customers and the commercial and warranty terms with the
customers.
If a recall is deemed necessary, a recall team is formed. This team is responsible for
managing the entire recall process. The first task of the recall team is to identify the products
that need to be recalled. This involves tracing the defective products and ensuring that all
affected items are accounted for. Once the products are identified, the recall team confirms the
recall information and prepares the necessary documentation. This documentation includes
details about the recall process, the reasons for the recall, and instructions for customers on
how to return the defective products.
The next step is to implement the recall. The sales department plays a crucial role in this
stage by communicating the recall information to customers. They ensure that all customers
who have purchased the defective products are informed about the recall and provided with
instructions on how to return the products. The recalled products are then collected and
disposed of appropriately. The recall team is responsible for overseeing this process and
ensuring that all recalled products are handled according to the established procedures.
After the recall is completed, we will focus on corrective and preventive actions. This
involves reviewing the recall process and the management system to identify any areas for
improvement. The goal is to optimize the design and production procedures and prevent similar
issues from occurring in the future. The recall team prepares a summary report of the recall,
which includes an analysis of the root cause, the effectiveness of the corrective actions, and any
recommendations for future improvements.
Customer relations and complaints
We also place a high priority on customer satisfaction and have implemented a
comprehensive internal system to record, track, and maintain our relationships with customers.
This system also allows us to analyze feedback received from end-users, enabling us to respond
to their needs efficiently and promptly. By leveraging insights generated from our system, we
continuously enhance the end-user experience. Key aspects of our customer communication
and complaint handling efforts include:
 Reception and registration: For urgent complaints, we provide an initial response
within 24 hours, while general complaints are addressed within 48 hours. The details
of each complaint, including the content, time, and contact information, are
meticulously recorded in a complaint registration form to ensure traceability.
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 Analysis and resolution: Relevant departments are tasked with analyzing and
investigating complaints to understand their root causes and essence. Based on the
nature of the problem and customer requirements, a resolution plan is formulated
and communicated with the customer for confirmation, ensuring timely resolution of
the issue.
 Rectification: We maintain a complaint database to record the details of each
complaint, including the handling process and outcome, for management and
analysis purposes. Regular statistical analysis of complaint data is conducted to
summarize complaint types, causes, and solutions. This information is used to
conduct business training, propose improvement measures, and prevent the
recurrence of similar issues.
During the Track Record Period and up to the Latest Practicable Date, we did not
experience any material sales returns, product recalls, or product liability claims due to quality
control issues, nor did we receive complaints from customers, that materially and adversely
affected our results of operations.
MARKET COMPETITION
According to F&S, the global integrated OWCD industry encompasses a comprehensive
suite of devices essential for the optical communication and wireless networking industry,
including photonics, wired broadband access, and wireless network access devices. From 2020
to 2024, the global sales revenue of the integrated OWCD industry increased from USD32.4
billion to USD54.6 billion, with a CAGR of 13.9% and is expected to reach USD111.8 billion
by 2029, representing a CAGR of 15.4% from 2024. In terms of market competition, the global
integrated OWCD industry is relatively competitive with total market size of USD12.4 billion
in 2024. The top five players had an aggregate of 29.0% of the market share in the industry in
terms of sales revenue. Our Company ranked 5
th among all players, with a market share of
4.1% in global integrated OWCD industry. Among the integrated OWCD industry, full-sector
coverage participants, including photonics, PON devices and wireless network access devices,
have the capability to provide end-to-end solutions. We are one of the few and the second
largest market participant in the global OWCD industry with full-sector coverage in 2024.
For further details, please refer to the section headed “Industry Overview” in this
Prospectus.
SUPPLIERS, PROCUREMENT, AND INVENTORY
Our suppliers primarily include, among others, semiconductor chip manufacturers and our
co-location partners. While each of our three solution categories may depend on specific
suppliers for their main chips, overall procurement risk is mitigated through diversification
across these segments. Suppliers are selected carefully, considering factors such as their
technologies, supply capacity, quality of their products, price, corporate history, number of
employees, ratio of technical quality staff, ISO: 9001 certifications, social responsibility,
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financial performance, industry position, and experience. We conduct regular monthly
assessments of suppliers’ quality, delivery, pricing, and service delivery to ensure they meet of
our standards. A database is maintained for suppliers who fail to meet these standards, and a
list of qualified suppliers is established for each type of raw material.
Our major suppliers
During the Track Record Period, our major suppliers comprise mostly providers of
telecommunications parts and components. In 2022, 2023, and 2024, and the six months ended
June 30, 2025, purchases from our five largest suppliers in each year/period of the Track
Record Period amounted to RMB1,130.5 million, RMB709.7 million, RMB1,089.4 million,
and RMB754.6 million, respectively, accounting for 34.0%, 35.3%, 38.8%, and 44.3% of our
total purchases for each of the same periods.
The following table sets forth details of our five largest suppliers in 2022:
Supplier
Purchase
amount
Percentage of
total purchase
Y ear of
commencement
of business
relationship Nature of purchase
Credit period
granted to us
Payment
method
RMB’000 %
Supplier A (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118282,536 8.5 13 BOSA and processing
services
60 days Telegraphic
transfer
Supplier B (2) /H1118/H1118/H1118/H1118/H1118/H1118/H1118263,037 7.9 10 Integrated circuit 90 days Telegraphic
transfer
Supplier C (3) /H1118/H1118/H1118/H1118/H1118/H1118/H1118239,380 7.2 14 Integrated circuit 60 days Telegraphic
transfer
Supplier D (4) /H1118/H1118/H1118/H1118/H1118/H1118/H1118176,794 5.3 13 Integrated circuit 90 days Telegraphic
transfer
Supplier E (5) /H1118/H1118/H1118/H1118/H1118/H1118/H1118168,703 5.1 11 Integrated circuit 90 days Telegraphic
transfer
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,130,450 34.0
Notes:
1. Supplier A is a company that specializes in the research and manufacturing of optical components,
headquartered in China. It is a listed company, with a staff size of about 500 and a registered capital of
USD50 million.
2. Supplier B is company headquartered in China, specializing in the wholesale distribution of electronic
parts and electronic communications equipment. It is a private company with a staff size of around 200
and a registered capital of USD10 million.
3. Supplier C is a multinational data networking and telecommunications equipment company
headquartered in Finland. It is a listed company that operates in over 100 countries, with a staff size
about 90,000 and a registered capital of USD3 billion. Supplier C is also Customer A of our Group,
please refer to the sub-section headed “— Overlapping Customers/suppliers” in this section.
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4. Supplier D is an electronics components distributor and application solutions provider, headquartered in
China. It is a private company with a staff size of around 300 and a registered capital of USD20 million.
5. Supplier E is a company operating electronic product distribution businesses, headquartered in based in
China. It is a private company with a staff size of around 150 and a registered capital of USD5 million.
The following table sets forth details of our five largest suppliers in 2023:
Supplier
Purchase
amount
Percentage of
total purchase
Y ear of
commencement
of business
relationship Nature of purchase
Credit period
granted to us
Payment
method
RMB’000 %
Supplier F (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118186,492 9.3 13 Integrated circuit 90 days Telegraphic
transfer
Supplier A /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118180,920 9.0 13 BOSA and processing
services
60 days Telegraphic
transfer
Supplier C /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118130,290 6.5 14 Integrated circuit 60 days Telegraphic
transfer
Supplier D /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118109,191 5.4 13 Integrated circuit 90 days Telegraphic
transfer
Supplier E /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118102,831 5.1 11 Integrated circuit 90 days Telegraphic
transfer
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118709,724 35.3
Note:
1. Supplier F is a company specializing in the distribution of electronic parts and components,
headquartered in China. It is a private company with a staff size of around 1,000 and a registered capital
of USD15 million.
The following table sets forth details of our five largest suppliers in 2024:
Supplier
Purchase
amount
Percentage of
total purchase
Y ear of
commencement
of business
relationship Nature of purchase
Credit period
granted to us
Payment
method
RMB’000 %
Supplier F /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118291,946 10.4 13 Integrated circuit 90 days Telegraphic
transfer
Supplier C /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118235,427 8.4 14 Integrated circuit 60 days Telegraphic
transfer
Supplier B /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118234,398 8.3 10 Integrated circuit 90 days Telegraphic
transfer
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Supplier
Purchase
amount
Percentage of
total purchase
Y ear of
commencement
of business
relationship Nature of purchase
Credit period
granted to us
Payment
method
RMB’000 %
Supplier A /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118165,061 5.9 13 BOSA and processing
services
60 days Telegraphic
transfer
Supplier E /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118162,572 5.8 11 Integrated circuit 90 days Telegraphic
transfer
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,089,404 38.8
The following table sets forth details of our five largest suppliers in the six months ended
June 30, 2025:
Customer
Purchase
amount
Percentage of
total purchase
Y ear of
commencement
of business
relationship Nature of purchase
Credit period
granted to us
Payment
method
RMB’000 %
Supplier F /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118272,976 16.0 13 Integrated circuits 90 days Telegraphic
transfer
Supplier C /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118168,460 9.9 14 Integrated circuits 60 days Telegraphic
transfer
Supplier E /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118121,264 7.1 11 Integrated circuits 90 days Telegraphic
transfer
Supplier B /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118105,148 6.2 10 Integrated circuits 90 days Telegraphic
transfer
Supplier A /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111886,708 5.1 13 BOSA and processing
services
60 days Telegraphic
transfer
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118754,556 44.3
Our Directors confirm that, as of the Latest Practicable Date, the five largest suppliers of
our Group during each year/period of the Track Record Period were all Independent Third
Parties and, during the Track Record Period and up to the Latest Practicable Date, none of our
Directors or their respective close associates or any of our Shareholders, to the knowledge of
our Directors, owned more than 5% of our issued Shares, had any interest in any of our such
suppliers. During the Track Record Period, to the best knowledge of our Directors, our Group
did not have any material disputes with our suppliers.
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Supply chain management
We place significant emphasis on supply chain management and we have put in place
internal measures that standardize the processes for supplier classification, development and
onboarding, material selection and certification, category management, audit management,
performance evaluation, supplier qualification cancellation, reinstatement, and other
procedures. These measures are designed to align supplier resources with our development
needs, stabilize the supply of products and services, and ensure the quality of the products
supplied.
Suppliers are categorized into three levels: core, important, and general, based on the
importance of the procured materials, each level has specific qualification requirements, which
include the number of employees, the ratio of technical personnel, ISO: 9001 certification,
social responsibility, supply chain security systems, and financial performance.
Before engaging new suppliers, relevant departments will conduct qualification
investigations and on-site audits as needed. Established suppliers are managed through our
supplier performance standards, with key material suppliers generally audited every two years.
For suppliers that fail such audits, corrective measures are tracked and verified. If requirements
are still not met, the supplier’s qualification is canceled after mutual agreement.
To mitigate supply chain risks, we usually enter into a general procurement agreement
with our suppliers. This agreement includes several key components: confidentiality
agreement, quality assurance agreement, declaration on conflict-free minerals, code of
conduct, supplier integrity and anti-corruption agreement.
The above measures help us ensure the effective implementation of following principles:
 Compliance with labor standards: our suppliers shall provide humane treatment to
their employees, prohibit discrimination, forced labor, child labor, or any other
human rights violations.
 Work safety: our suppliers shall ensure safety in workplace through appropriate
design, engineering and management control, preventive maintenance, safe
operating procedures, and continuous safety training to ensure employees’ health
and safety.
 Environmental protection: our supplier shall comply with environmental laws and
regulations, prevent pollution, conserve resources, and minimize the use of
hazardous substances.
 Adherence to business ethics standards: our suppliers are strictly prohibited of any
forms of corruption, extortion, and embezzlement, and shall implement, monitor and
enforce procedures to ensure compliance with anti-corruption rules and regulations.
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During the Track Record Period and up to the Latest Practicable Date, there had not been
any instances where our suppliers were in breach of such codes and agreements that had
resulted in a material and adverse impact on our results of operations and financial position.
Raw materials, parts, and components
We procure a wide variety of raw materials, parts, and components, such as integrated
circuit chips, structural components, transistors, and connectors from suppliers located in
Chinese Mainland, Hong Kong, Germany, Japan, India, South Korea, Malaysia, Singapore and
others.
During the Track Record Period, purchases of raw materials, parts, and components from
Chinese Mainland accounted for 56.3%, 52.8%, 53.9%, and 53.5% of our total purchases for
each of the same year/period.
During the Track Record Period, purchases of raw materials, parts, and components from
Hong Kong accounted for 33.2%, 34.0%, 37.6%, and 39.1% of our total purchases for each of
the same year/period.
During the Track Record Period, purchases of raw materials, parts, and components from
each other countries and regions accounted for less than 5% of our total purchases for each of
the same year/period.
During the Track Record Period and up to the Latest Practicable Date, we did not
experience any quality issues with, or shortage of, our raw materials, parts, or components that
had resulted in a material and adverse impact on our operations. A localized and stable supply
chain is one of our key priorities. To prepare for potential shortages, we have engaged in
discussions with qualified international suppliers to establish long-term strategic partnerships
and have broadened our supplier base, thus securing a stable supply of raw materials and
critical components. In the near future, most of our raw materials are not expected to face
long-term or short-term shortages. While there may be occasional temporary shortages of
specific materials, these instances are expected to be rare.
The following sets forth the salient terms of the raw materials procurement agreements
that we typically enter into with our suppliers:
Duration: It depends on the nature of the raw materials and the
supplier relationship, but typically these agreements have
a term of 12 months with options for renewal.
Scope of work: Generally includes the supply of specified raw materials in
agreed quantities and quality standards, along with any
associated logistics or compliance requirements.
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Roles and responsibilities
of each party:
The supplier is responsible for sourcing, quality assurance,
and timely delivery of raw materials. We will be
responsible for issuing purchase orders, providing
forecasts, and ensuring timely payment.
Delivery: Delivery happens after receiving the complete invoice and
acceptance of agreed account payment. The delivery date
is when all parts are delivered to the destination. Our
suppliers shall inform us two weeks before if they cannot
reach the delivery date.
Purchase orders: Purchase orders are typically issued monthly or quarterly
based on forecasted demand. They include item
descriptions, quantities, delivery dates, and pricing.
Credit terms and payment: Payment is due 90 days after the end of the month of
shipment.
Dispute resolution: It depends on the regions and the parties involved, but
generally include a clause for mediation followed by
arbitration under a recognized body.
Liability: It depends on the regions and the nature of the raw
materials, but typically the supplier assumes liability for
any defects, contamination, or non-conformance that result
in damage, loss, or regulatory penalties. The supplier may
be required to purchase product liability insurance and
indemnify us against third-party claims.
Termination: In most cases, either party may terminate the agreement by
writing upon giving a notice period. Immediate
termination may occur in cases of material breach,
insolvency, or failure to meet quality or delivery
obligations.
Inventory management
Effective inventory management is considered critical to our operational success, guided
by precise planning and accurate demand forecasting. By synchronizing our production
schedules with market demand, we optimize inventory levels to meet customer requirements
without overstocking or understocking. To achieve this objective, we have established
inventory management practices that include maintaining a strategic buffer stock of unfinished
goods that are ready to be utilized on short notice to fulfill customer orders. We provide our
suppliers with a forecast of our purchase needs several months in advance, followed by
individual purchase orders specifying product quantities and delivery terms. Typically, it takes
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approximately several weeks from placing a purchase order to receiving the products in our
warehouse. Additionally, we conduct regular inventory audits of these unfinished goods to
ensure an adequate and accurate stock level to support our operations. Monthly, quarterly, and
semi-annual audits are performed based on the types of materials stored, along with an annual
comprehensive audit of our entire inventory.
In terms of our finished goods, all of the items produced in our in-house facility in
Shanghai, or at our co-location partners’ facilities in China, will be first transported to a storage
area housed inside our in-house facility in Shanghai. Such storage area occupies a GFA of 2,500
sq.m., whereas items produced by our overseas co-location partners will be stored in a dedicated
storage area at their facilities. Such dedicated areas typically occupy a GFA between 2,000 sq.m.
and 2,500 sq.m.. As our customers generally have specific delivery destinations for their purchase
orders, we would coordinate and arrange transportation for the delivery of products via
third-party transportation services providers to ensure that the products reach these customers in
a timely manner. The costs and liability of products during transport can be borne by the
customer, or us, depending on the agreements made. In some instances, customers would also
arrange the collection of our products on their own accord. During the Track Record Period and
up to the Latest Practicable Date, we had not encountered any instances of inventory management
that had resulted in a material and adverse impact on our financial condition.
Technology also plays a pivotal role in our supply chain and inventory management
system. We leverage advanced tools and software to monitor inventory levels in real-time,
analyze trends, forecast future demands, and manage stock across our supply chain. These
technologies enable us to make data-driven decisions, improve accuracy in our inventory
counts, and enhance overall efficiency. For more information of such technologies, please refer
to the subsection headed “— Our technologies” in this section.
OVERLAPPING CUSTOMERS/SUPPLIERS
In-line with the common industry practice, during the course of our business operations,
we had designed products that cater to the needs of certain telecommunications conglomerates
from which we had to purchase specific raw materials necessary to manufacture the products
according to their specifications and quality control requirements. In 2022, 2023, and 2024,
and the six months ended June 30, 2025, we had three, one, one, and one of our five largest
customers during the Track Record Period that were also our suppliers, generating a revenue
of RMB1,753.4 million, RMB1,114.7 million, RMB1,525.8 million, and RMB848.9 million,
which represented 46.3%, 36.1%, 41.8%, and 41.7% of our total revenue, respectively. For the
same periods, the purchases from such overlapping customers/suppliers amounted to
RMB416.4 million, RMB130.3 million, RMB235.4 million, and RMB168.5 million, which
represented 12.6%, 6.5%, 8.4%, and 9.9% of our total purchases, respectively. One of such
overlapping customer/suppler which is also one of our five largest customers and suppliers
during the Track Record Period is Customer A/Supplier C. Our Directors also confirm that
none of the transactions between us and our overlapping customers/suppliers were inter-
connected or inter-conditional, and all of such overlapping customers/suppliers are
Independent Third Parties. Our Directors affirm that the prices of transactions with overlapping
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customers/suppliers are comparable to those of similar transactions conducted with other
customers/suppliers of our Group. We would only purchase raw materials for the purpose of
producing products intended for sale to the same customers from such suppliers, and then sell
finished products to such customers. Our Directors confirm that during the Track Record
Period and up to the Latest Practicable Date, none of our products that are sold to our
customers are then purchased by the Group, nor were there any raw materials sold to our Group
by our suppliers were then purchased by such suppliers. We also confirm that all products
provided to and products received from overlapping customers/suppliers during the Track
Record Period were conducted at arm’s length, under normal commercial terms, and in the
ordinary course of business.
INTELLECTUAL PROPERTY
We regard our proprietary domain names, copyrights, trademarks, trade secrets, and other
intellectual property as critical to our business operations and fundamental to our success and
competitiveness, and we devote significant time and resources to their development and
protection. We rely on a combination of patents, copyrights, trademarks, trade secret laws, and
restrictions on disclosure to protect our intellectual property. For detailed information about
our material intellectual property, please refer to “Appendix VI — Statutory and General
Information — Further Information About Our Business — Intellectual Property Rights” to this
Prospectus. During the Track Record and as of the Latest Practicable Date, we had not been
subject to any material dispute or claims for infringement upon third parties’ trademarks,
licenses, and other intellectual property rights that may result in a material and adverse impact
on our results of operations and financial position.
EMPLOYEES
As of June 30, 2025, we had a total of 1,281 full-time employees with 1,162 employees
based in China and 119 employees based overseas, including in the United States, Japan,
Germany, and Malaysia.
The following table shows the numbers and percentages of our full-time employees based
in China, by function, as of June 30, 2025:
Function/department
Number of
employees
% of total
employees
R&D /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118618 53.2
Production /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118350 30.1
Sales and marketing /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111855 4.7
Finance /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824 2.1
Admin and other general functions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118115 9.9
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,162 100.0
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The following table shows the numbers and percentages of our full-time employees based
overseas by function as of June 30, 2025:
Function/department
Number of
employees
% of total
employees
R&D /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111855 46.2
Production /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187 5.9
Sales and marketing /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111828 23.5
Finance /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185 4.2
Admin and other general functions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824 20.2
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118119 100.0
We believe that our employees are valuable assets that contribute to the success of our
Group. We recruit our employees based on a number of factors such as their industry
experience, their educational background, and our vacancy needs. We offer employees fair and
competitive compensation and benefits, and incentivize employees to improve their
performance with a performance-based compensation system. Our compensation system
includes base pay, performance-based salary, bonuses, project bonuses, and allowances and
subsidies, while our benefits system includes statutory benefits, supplementary commercial
insurance, leaves, health check-ups, and holiday benefits. We encourage employees to
participate in discussing and improving the system of compensation and benefits, keep abreast
of employees’ demands and expectations, and make appropriate adjustments based on actual
conditions. These efforts aim to ensure that the system of compensation and benefits meets
both employees’ demands and our Company’s development needs, and improve employee
satisfaction and recognition of the system. We typically enter into individual employment
contracts with our employees covering matters such as wages, employee benefits, employment
scope, and grounds for termination. As of the Latest Practicable Date, our employees had not
negotiated their terms of employment through any labor union or by way of collective
bargaining agreements.
We adhere to the principles of openness, fairness, impartiality, and merit-based selection,
set job positions based on actual needs, and ensure talent-post matching during employment.
We prohibit any form of forced or bonded labor, corporal punishment, imprisonment, or threats
of violence. The employment of child labor or minors under 18 years old and recruitment
through coercion or deception are also strictly forbidden. Our goal is to protect employees’
legal rights and interests and fulfill our responsibilities as an employer.
We also value workplace equality and diversity, ensuring that no employee is
discriminated against due to gender, race, marital status, surname, geographic origin, religious
beliefs, or other differences during employment. We safeguard employees’ right to equal
employment, foster a respectful work environment, and respect employees’ dignity and
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personality, ensuring that employees are not subjected to any form of physical, verbal,
psychological, or gender-based harassment or abuse. As of June 30, 2025, we had a total of
1,281 employees, with 33.8% female employees, 56.8% holding bachelor’s degrees or higher,
and 9.3% overseas employees.
Our Directors also confirm that during the Track Record Period and up until the Latest
Practicable Date, we had not received any fines, penalties, warnings, or administrative actions
against us by any local authorities in relation to our employees and any relevant local labor
laws or regulations.
Our employees undergo training to enhance their technical skills, knowledge of industry
quality standards, occupational health and safety standards, and applicable laws and
regulations. Our training follows principles of systemization, specialization, diversification,
and effectiveness. Our hierarchical training framework involves overall planning and
supervision by our Company, with implementation by functional departments, branches, and
subsidiaries. Training programs include internal training, external training, and self-directed
learning. We ensure continuous, systematic, and effective training through established policies.
We prioritize internal training while incorporating external courses selectively and adopt a
blended learning approach to meet diverse learning needs. To better support our business
expansion into the PRC and/or overseas markets and enhance our employees’ international
competencies, we conduct regular business English training for our employees every year.
We believe that we have maintained good working relationships with our employees.
During the Track Record Period and up to the Latest Practicable Date, we did not experience
any major labor disputes, work stoppages, or labor strikes that led to disruptions in our Group’s
operations.
Under PRC law, employers are required to participate in various employee benefit
programs, including the social insurance fund and housing provident fund, and to contribute
amounts equal to a specified percentage of employees’ salaries (including bonuses and
allowances), up to a cap set by local governments where the business operates. During the
Track Record Period, we engaged third-party agencies to make social insurance and housing
provident fund contributions on our behalf for approximately 132, 33, 7, and nil employees,
respectively. Our Group has obtained compliance certification documents confirming that our
Company has no record of being subjected to administrative penalties for any non-compliance
relating to social insurance and housing provident fund contributions. Our PRC Legal Adviser
confirms that the compliance certification documents are issued by competent authorities.
Furthermore, our PRC Legal Advisers has confirmed through telephone consultations with
competent authorities that entrusting third parties to process such contributions for designated
employees typically does not trigger rectification orders, retroactive payment requirements, or
administrative penalties against employers.
Regarding social insurance contributions, and as advised by our PRC Legal Advisor, the
relevant PRC authorities may require us to pay any outstanding contributions within a
stipulated deadline. We may be liable for a late payment fee equal to 0.05% of the outstanding
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amount for each day of delay. If we fail to make such payments within the prescribed period,
we may be subject to a fine of one to three times the amount of the outstanding contributions.
However, our PRC Legal Advisor has further advised that the risk and likelihood of us being
subject to these penalties is remote based on the following factors: (i) we entrusted third-party
companies to pay social insurance and housing provident fund for only limited number of
employees during the Track Record Period, and as of December 31, 2024, we have ceased such
practice; (ii) instead of failing to make the social insurance and housing providence
contributions as required by the law, we have fulfilled our oblation through third party; (iii) we
have obtained compliance certificates and conducted telephone consultations with the relevant
PRC social insurance authorities, which confirmed that we have not been penalised for any
violations of labor protection laws and regulations; and (iv) as of the Latest Practicable Date,
we have not received any notices from the authorities requesting retroactive payments, nor
involved in any major employee complaints or labor disputes regarding employment, social
insurance, or housing provident fund matters. During the Track Record Period, we made full
contributions to mandatory social insurance and housing provident fund for our employees in
accordance with relevant PRC laws and regulations.
Pursuant to the Interpretation II of the Supreme People’s Court of Issues Concerning the
Application of Law in the Trial of Labor Dispute Cases (ࣩ
༆ᙑ(ɚ)) enacted by the Supreme People’s Court on 31 July 2025 and
implemented on 1 September 2025, any agreement between an employer and an employee for
the non-payment of social insurance or any employee undertaking to waive such payment shall
be determined as void by the people’s court.
Considering (i) our Company and the relevant employees have never signed any
agreement that no payment of social insurance would be required to be made by our Company;
(ii) during the Track Record Period and up to the Latest Practicable Date, our Company has not
encountered any major complaints, reports, or labor disputes related to social insurance; and
(iii) even if relevant labor disputes arise, they only involve economic compensation, the
economic compensation amount does not have a significant financial impact on our Group’s
business operations, as of the Latest Practicable Date, our Directors believe that the
implementation of the aforementioned judicial interpretation would not have a material adverse
effect on our business or financial results.
Our PRC Legal Adviser is of the view that (i) the aforementioned judicial interpretation
does not expand our Company’s penalty exposure; (ii) the aforementioned judicial
interpretation does not repeal the social insurance laws and regulations currently in force of the
PRC; and (iii) during the Track Record Period and up to the Latest Practicable Date, our
Company has not encountered any major complaints, reports, or labor disputes related to social
insurance and therefore no pending litigation or arbitration of our Company is applicable to the
aforementioned judicial interpretations.
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INSURANCE
We consider our insurance coverage to be adequate, as we maintain all the mandatory
insurance policies required by the relevant laws and regulations and in accordance with the
commercial practices in our industry. We also maintain an insurance policy for our fixed assets
and an product liability insurance for products produced in China. In line with general market
practice, we do not maintain any business interruption insurance, which are not mandatory
under PRC laws. We do not maintain any “key man” insurance or insurance policies covering
damages to our information technology systems. We have also secured several insurance
policies to protect our overseas operations. Our general liability insurance provides
comprehensive coverage for general company liabilities and liabilities for products
manufactured overseas. We have property insurance that covers our office renovations, office
furniture and fixtures, R&D equipment, inventories, production equipment, and electronic
devices, ensuring they are safeguarded against potential damages or losses. To protect against
claims of negligence or inadequate work, we have errors and omissions Insurance. Our cargo
insurance insures the liability for goods shipped and delivered, protecting against potential
losses or damages during transit. In relation to our overseas employees, our employment
practices liability insurance covers claims related to employment practices, such as wrongful
termination, discrimination, and harassment, ensuring that we are protected against
employment-related lawsuits. Our employees in the United States will also be protected by a
worker’s compensation program.
During the Track Record Period, we did not make any material insurance claims in
relation to our business.
PROPERTIES
Owned properties
As of the Latest Practicable Date, we owned six properties in China, with a total GFA of
approximately 110,424.30 sq.m.. We use these properties as premises for R&D, production, and
other ancillary purposes. As of the Latest Practicable Date, we had obtained the title certificates
for all our owned properties. Our PRC Legal Adviser is of the view that we have legal title to
these properties and the land use rights for the land occupied by these buildings. As of June
30, 2025, we did not have any single property with a book value accounting for 15% or more
of our total assets. According to Chapter 5 of the Hong Kong Listing Rules and section 6(2)
of the Companies Ordinance (Exemption of Companies and Prospectuses from Compliance
with Provisions) Notice, this Prospectus is exempt from the requirements of section 342(1) of
the Companies (Winding Up and Miscellaneous Provisions) Ordinance to include all interests
in land or buildings in a valuation report as described under paragraph 34(2) of the Third
Schedule of the Companies (Winding Up and Miscellaneous Provisions) Ordinance.
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Leased properties
As of the Latest Practicable Date, we leased multiple properties in China and overseas
from Independent Third Parties, with an aggregated GFA of approximately 34,842.29 sq.m.,
which are primarily used as office buildings, R&D, and production. We did not experience any
material difficulties in negotiating a renewal of our leases with our landlords during the Track
Record Period and up to the Latest Practicable Date.
As of the Latest Practicable Date, two out of our five leased properties in China, with a
combined gross floor area of approximately 1,087.69 sq.m., had not been registered or filed
with the relevant land and real estate administration bureaus in the PRC. According to our PRC
Legal Adviser, while the absence of registration does not affect the validity of the lease
agreements, the relevant authorities may require us to complete the registration within a
prescribed period. Failure to do so may result in a fine ranging from RMB1,000 to RMB10,000
per unregistered lease. Accordingly, the maximum potential penalty for such non-compliance
during the Track Record Period would be up to RMB20,000. As advised by our PRC Legal
Adviser, the two unregistered leased properties we occupy are fully compliant with local safety
requirements, including fire safety, on the basis that: (i) these properties are not illegal or
irregular constructions, and there are no legal obstacles or potential risks that affect our ability
to lawfully use the premises for office purposes; (ii) the lessor has provided us with supporting
documents, including the construction permit, completion acceptance record form, and pre-sale
permit for commercial housing; (iii) the primary use of these properties is for office operations,
and we have not received any notifications or rectification requirements from local regulatory
authorities regarding non-compliance with safety regulations.
LEGAL PROCEEDINGS AND COMPLIANCE
Legal proceedings
We may from time to time be subject to various legal or administrative claims and
proceedings arising from the ordinary course of business. Litigation or any other legal or
administrative proceeding, regardless of the outcome, is likely to result in substantial cost and
diversion of our resources, including our management’s time and attention. In particular:
 An individual initiated a civil lawsuit which involved Mr. Gerald G Wong, a member
of the Single Largest Group of Shareholders, concerning a contractual dispute.
Concerning alleged share-based payments owe to him, as a result of a previous
employment. On September 27, 2023, our Company was served with legal
documents by the Shanghai Financial Court, which has accepted a civil action
instituted by the plaintiff against Gerald G Wong and our Company concerning
alleged share-based payments owe to the plaintiff. On April 18, 2024, the plaintiff
applied for our Company’s status to be changed from an original defendant to a third
party in the proceeding. Accordingly, our Company ceased to be one of the
defendants as of April 18, 2024. The case proceeded through the first-instance trial
at the Shanghai Financial Court, which on December 30, 2024, issued a judgment
ordering Gerald G Wong to pay approximately RMB25.2 million to the plaintiff.
Consequently, on January 24, 2025, he filed an appeal seeking to overturn the
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first-instance judgment or have the case remanded for retrial. As of the Latest
Practicable Date, the first-instance judgment has not yet taken legal effect, the
appellate court is reviewing the case. Our Directors confirm that none of the
companies within our Group is a party in this lawsuit, no provision for contingent
liability has been made, and there had been no material or adverse impact on our
business, financial condition, share capital or results of operations in relation to
these proceedings.
 CIG USA is currently involved in a patent infringement lawsuit filed in the United
States District Court for the Northern District of California. The plaintiff alleges that
CIG USA infringed on eight U.S. patents related to optical module technologies. The
court had initially scheduled a jury trial to take place June 2026. However, in April
2025, such litigation was stayed by the court after being informed that CIG USA had
initiated inter partes review (“ IPR”) proceedings with the U.S. Patent and
Trademark Office’s Patent Trial and Appeal Board (“ PTAB”) in January 2025 in
relation to five of the eight patents. In April 2025, the plaintiff then filed a motion
to deny these five IPR petitions. By late August 2025, four of these petitions were
denied, and one was granted (with oral arguments scheduled in June 2026). Our
Directors confirm that, to the best of their knowledge, CIG USA is requesting a
rehearing regarding two of the denied petitions, and is also preparing to file a writ
of mandamus to the U.S. Court of Appeals for the Federal Circuit seeking to reverse
the decisions regarding the other two denied petitions. To the best knowledge of our
Directors, the court will only reschedule the litigation proceedings after the PTAB
has issued its rulings all of these IPR cases. For such reasons, no provisions for
contingent liability has been made. Our Directors consider that, from the perspective
of business operations, since our products and technologies are under constant
iteration, the optical module technologies that are subject to the infringement
lawsuit is expected to be, and will be gradually, replaced and eliminated in the
normal course of our Company’s R&D process. As the lawsuit remains ongoing and
the court will only reschedule the proceedings after the PTAB has issued its rulings
in all of the IPR cases, and given that the plaintiff has not specified, and is unlikely
to specify in the near term, any claim amount, such amount will only be determined
upon judgment. Therefore, coupled with the timeline of the abovementioned lawsuit,
our Directors are of the view, and the Sole Sponsor concurs, that such lawsuit have
not had, and is not expected to have, any material adverse effect on our Company.
Our Company has formulated an Intellectual Property Management Manual,
Intellectual Property Risk Management and Control Procedures, and Intellectual
Property System Dispute Resolution and Control Procedures to: (i) strengthen
intellectual property management, enhance product added value and reduce
intellectual property risk; (ii) promptly identify and monitor any infringement of our
Company’s intellectual property and prevent or mitigate any potential adverse
impact on our Company; and (iii) avoid or reduce the risk that our Company’s
production and office equipment, software and products may infringe the
intellectual property rights of others, and safeguard the security of our Company’s
intangible assets. In addition, our Company will ensure the timely registration of its
core patents.
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Please also refer to the section headed “Risk Factors — Risks relating to our business and
industry — We may from time to time be subject to claims, disputes, lawsuits and other legal
and administrative proceedings.” in this Prospectus. Even taking into account the cases
mentioned above, in view of (i) the fact that our Company ceased to be one of the defendants
in the lawsuit concerning the alleged share-based payments claimed by the plaintiff as of April
18, 2024, and is therefore not subject to any outcome of such lawsuit; and (ii) to the best
knowledge of our Directors, the plaintiff’s claims are without merit and lack sufficient
supporting evidence, and our Company will take all reasonable steps to safeguard its
commercial interests, our Directors believe that, during the Track Record Period and up to the
Latest Practicable Date, there was no material litigation or arbitration pending or threatened
against us or our Directors that could, individually or in the aggregate, have a material and
adverse effect on our business, financial condition, or results of operations.
Legal compliance
Our Directors confirm that our Group has complied, in all material respects, with all
relevant laws and regulations in the PRC and overseas, and there was no non-compliance
incident that had materially and adversely affected our business, financial position, or results
of operations during the Track Record Period and up to the Latest Practicable Date.
IMPACT OF THE 2025 U.S. TARIFF REGIME ON OUR GROUP’S BUSINESS MODEL
In early 2025, the United States government enacted a series of EO that significantly
altered the tariff landscape for imports from various jurisdictions. Among the most impactful
measures were: (i) the imposition of a fluctuating range of tariff at rates from 55% to 145% on
imports originating from the PRC, (which became effective April 10, 2025 and followed with
reductions later on); and (ii) the repeal of the De Minimis Exemption under the United States
Tariff Act of 1930, which previously allowed duty-free treatment for PRC-origin goods valued
under USD800 per person per day, effective May 2, 2025. Subsequently, on May 12, 2025, the
PRC and U.S. governments agreed to reduce the additional tariff rate to 54% (with 34% in
relation to reciprocal tariffs and 20% in relation to fentanyl-related tariffs) on imports from the
PRC and Hong Kong, with 24% of this tariff subject to a temporary suspension for an initial
90-day period, which had been extended multiple times until November 10, 2025. There is no
certainty whether such a suspension would be extended or lifted after this date. Additionally,
the tariff on goods that would have previously qualified under the De Minimis Exemption was
adjusted to either 54% or USD200 per item, whichever is lower. According to our adviser as
to U.S. tariffs laws and regulations, as of the Latest Practicable Date, for products originating
from the PRC and shipped to the United States, the applicable tariffs may include: (i) a tariff
of 30% (comprising 20% fentanyl-related, and 10% reciprocal tariff); (ii) “Section 301” tariffs
that have been imposed since 2019 (ranging from 7.5% to 25%); and (iii) standard customs
duties (i.e., MFN duties). For products that are classified under the HTSUS code 8517.62.0090,
the applicable tariff, totalling at 27.5%, will include (i) a “Section 301” tariff of 7.5%; and (ii)
a 20% fentanyl-related tariff, where the 10% reciprocal tariff with not apply due to an
exemption under EO 14257 for HTSUS 8517.62.0090. Such U.S. tariffs remain fluid, and we
will continue to monitor the evolving trade policies and potential second-order effects.
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Despite these developments, our Directors are of the view, and the Sole Sponsor concurs,
that the imposition of these tariffs has not had, and is not expected to have, a material adverse
effect on our Group’s operations, financial performance, or relationships with key customers
and suppliers. This assessment is based on the following key factors:
 Strategic overseas development and diversified production capacity: Our Group
has long pursued an overseas development strategy aimed at reducing reliance on
any single geographical region. Over the years, we have strategically expanded our
production footprint to include facilities in Malaysia, the United States, Germany,
and Poland. As of the Latest Practicable Date, the production capacity of our
co-location partners in Malaysia can fully meet the sales volume of products to be
sold to the United States. We have secured an allocated GFA of 18,000 sq.m. in
Malaysia, with a planned annual production capacity of approximately 2.3 million
units in 2024 and 1.5 million units for the six months ended June 30, 2025. This
facility is capable of producing all product types across our three business lines.
 Tariff-free access via Malaysian production: Our co-location manufacturing model
is designed to be asset-light and highly adaptable to changes in market conditions,
enabling us to scale production capacity in response to actual order volumes without
the need for substantial capital investment in fixed assets. This flexibility allows us
to mitigate the risk of underutilization during periods of fluctuating market
demand and to respond swiftly to international trade uncertainties and geopolitical
developments by reallocating production capacity across different co-location
facilities. Currently, products manufactured outside of the PRC and shipped to the
United States are not subject to the Section 301 tariffs and fentanyl-related tariffs
applicable to PRC-origin goods if they (i) are manufactured, produced, or grown in
another country (e.g., Malaysia); (ii) qualify under the “substantial transformation”
test; or (iii) satisfy any other applicable U.S. country-of-origin rules in another
country. If the country of origin is not designated as the PRC, the tariffs applicable
to that country will apply instead. To this end, we believe that as long as our
products are correctly classified under HTSUS 8517.62.0090 (as discussed below),
the country of origin of our products is correctly determined as Malaysia, and
exemptions under Executive Order 14257 (as discussed below) apply, our products
should not be subject to any tariffs.
o In relation to the substantial transformation test, U.S. Customs duties and
tariffs are imposed based on a product’s country of origin, which, for Malaysia,
is determined currently by the “substantial transformation test”, the analysis of
which is based on considerations of name, character, and use by examining the
totality of evidence produced. Such substantial transformation means that a
product would have had to have undergone a fundamental change in form,
appearance, nature, character, or use, normally occurring as a result of
substantial processing or manufacturing in the country claiming origin.
Assembly or combining components will not always constitute a substantial
transformation. U.S. Customs would also look at other factors such as (i) the
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complexity and nature of the operations performed; (ii) if the change adds to
the good’s value at an amount or percentage that is significant, compared to the
value which the good (or its components or materials) had when exported from
the country where it was first made or grown; or (iii) while not controlling,
changes in tariff classification affected by a particular manufacturing
operation. To this end, Our Directors confirm that, to the best of their
knowledge, as the raw materials used by our co-location partners in Malaysia
(no matter whether the raw materials come from the Chinese Mainland, Hong
Kong or other countries) would go through the full manufacturing process and
satisfy such a “substantial transformation test”, the country of origin of
products produced by our co-location partners in Malaysia would be
designated as Malaysia (instead of Chinese Mainland or Hong Kong or other
countries).
o In addition, our adviser as to U.S. tariffs laws and regulations is of the view
that based on the current technical specifications and comparable CBP rulings,
our U.S.-bound products manufactured and produced in Malaysia and shipped
to the United States would be classified under HTSUS code 8517.62.0090 for
tariff purposes. Our adviser as to U.S. tariffs laws and regulations also
confirmed that, according to EO 14257 of April 2, 2025 and the U.S.
President’s memorandum dated April 11, 2025, imports falling under HTSUS
code 8517.62.00, which includes HTSUS 8517.62.0090, are currently exempt
from any reciprocal tariffs imposed under the Trump administration. However,
they are not exempt from other tariffs that the administration may or threaten
to impose in the future.
o According to our adviser as to U.S. tariffs laws and regulations, the applicable
U.S. duty rate for such U.S.-bound products manufactured and produced in
Malaysia is 0% as of the Latest Practicable Date.
o Furthermore, EO 14326 of July 31, 2025 introduced a new 40% tariff for
“transshipment”, where if an article for import is determined by U.S. Customs
to have been transshipped, it will be subject to an additional tariff of 40%, and
any other applicable or appropriate fine or penalty, and any other U.S. duties,
fees, taxes, exactions, or charges applicable to goods of the country of origin.
Our Directors confirm that, to the best of their knowledge, as of the Latest
Practicable Date, none of our products had been subject to such additional
tariffs in relation to transshipments.
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 Customer cost stability and competitive positioning: Leveraging our Malaysia
co-location manufacturing facilities, our products remain cost-stable. In such cases,
our customers may increase their procurement from us or expand the scope of
collaboration to stabilize their own cost structures and supply chains. This dynamic
may indirectly benefit our Group’s business growth and market share.
 Limited role of U.S.-based facilities: Our U.S.-based co-location facilities currently
have limited production capacity and contributed no revenue during the Track
Record Period, they are positioned to support future localised demand. This
localized demand may be driven by a growing preference among certain customers
for domestically produced goods, or by the potential introduction of favourable
government policies aimed at supporting local manufacturing in the United States.
Our U.S.-based co-location facilities are also positioned as an alternative under U.S.
tariff and trade policies. Moreover, products that are produced in the United States,
for example, those from our co-location partners in the United States, would not be
subject to import tariffs when sold in the U.S.. Nevertheless, our utilization of the
co-location partner in the United States positions us well to capture such future
localized demand. The pricing of products from these facilities already reflects local
production costs and any applicable trade-related considerations. Since there were
no sales from these facilities during the Track Record Period, they had no direct or
indirect impact on our Group’s financial performance.
Looking ahead, we will continue to enhance our global supply chain to maintain cost
advantages and ensure capacity utilization. This includes meeting customer demand for
localized production and further diversifying our sourcing and manufacturing footprint. Our
Directors confirm, that we have not received any notifications from major customers or
suppliers indicating changes to their procurement arrangements as a result of the trade war.
During the Track Record Period, purchases of raw materials, parts, and components from
suppliers based in the U.S. accounted for less than 5% of our total purchases for each of the
same year/period.
Our Directors confirm that there have been no significant changes in our export sales
arrangements with U.S. customers during the Track Record Period, before and after our
Company began relying solely on its co-location manufacturing facility in Malaysia. We
operate with a flexible deployment model across our in-house facilities and co-location
partners in the PRC, Malaysia, Germany, Poland, and the United States. This operational
approach allows us to determine the most suitable production location, either in the PRC or
Malaysia, based on a comprehensive evaluation of landed costs. These costs include labor
rates, logistics expenses, tariff implications, production efficiency, supply chain resilience, and
prevailing economic conditions. During the Track Record Period and up to the Latest
Practicable Date, our export sales to U.S. customers have primarily been conducted under Free
On Board (“ FOB”) or Free Carrier (“ FCA”) terms. Under this arrangement, we fulfil our
delivery obligations once the goods are loaded onto a vessel at the port of shipment or handed
over to the carrier designated by the customer at the agreed location. Following the imposition
of elevated tariffs on PRC-origin goods and the removal of the De Minimis Exemption in 2025,
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our U.S. customers have borne, or will bear, the impact of these increased tariffs. While we are
contractually able to pass on these additional costs to our customers under the FOB and FCA
terms, doing so may adversely affect our customers’ competitiveness in the U.S. market. In
response, we strategically reallocated our production capacity to Malaysia. This shift enables
our customers to maintain their business competitiveness and avoid the fluctuations of the
customers’ demand caused by the significant tariff increase. Consequently, we have
manufactured products intended for U.S.-bound exports using our co-location manufacturing
facility in Malaysia. The cost advantages associated with tariff-free imports (assuming the
exemptions as discussed above apply) from Malaysia have been well received by our U.S.
customer base, allowing us to continue meeting customer expectations following this
transition.
While our Group has thus far remained resilient, we acknowledge that U.S. tariff and
trade policies are subject to frequent changes driven by geopolitical dynamics, economic
priorities, and regulatory agendas, which have become increasingly complex and
unpredictable. These policies may be amended, expanded, or replaced with little or no notice.
Potential second-order effects include (i) intensified competition in non-U.S. markets as global
players shift focus; (ii) retaliatory tariffs by other countries on PRC-origin products; (iii)
reduced demand from price-sensitive customers due to higher retail prices; and (iv) broader
economic impacts such as slower global growth or contractions. Although the potential impacts
of these second-order effects cannot be quantified at this stage, we remain vigilant and
adaptive. We cannot assure that we will not be subject to stricter tariff rules or trade restrictions
in the future. For more details, see “Risk Factors — Risks relating to our Business and Industry
— Our results of operations are exposed to risks in relation to escalating trade tensions.”
BUSINESS ACTIVITIES THAT MAY BE SUBJECT TO INTERNATIONAL
SANCTIONS
During the Track Record Period, our Group has sold optical and wireless connectivity
devices to non-sanctioned customers in the Relevant Regions, for which none of the Relevant
Regions a Sanctioned Countries because these regions are not subject to general and
comprehensive export, import, financial or investment embargo under sanctions related law or
regulation of the Relevant Jurisdiction, these regions are subject to a rather limited sets of
sanctions targeting certain sanctioned entities and sectors or prohibited activities within such
regions. In particular, during the Track Record Period, our revenue generated from Hong Kong
amounted to RMB60.0 million, RMB21.6 million, RMB1.9 million, and RMB1.4 million; our
revenue generated from Iraq amounted to RMB114,000, nil, RMB37,000, and RMB2.4 million;
and our revenue generated from Lebanon amounted to RMB55,000, RMB75,000, nil, and nil,
respectively. During the Track Record Period, we did not sell any of our products and/or services
to Balkan region, including Serbia. As advised by our International Sanctions Legal Advisors
after performing the procedures they consider necessary, these transactions involving Relevant
Regions did not involve any sanctioned entities or exports or transactions of any items subject
to the EAR, and hence did not represent a Primary Sanctioned Activity or violation of
International Sanctions; and, the risk of these transactions being viewed as a Secondary
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Sanctionable Activity is low because there were no activities targeted by extra-territorial
provisions of sanctions law or regulation in the Relevant Jurisdictions. Our Directors, and the
Sole Sponsor, concur with such views from the International Sanctions Legal Advisers.
During the Track Record Period, our Group has also provided design and manufacturing
services to Customer D, being designated on the Entity List maintained by the BIS and to
which certain export restrictions are applicable, domestically in China, transactions were
denominated in RMB and did not involve exports or transactions outside the Chinese border.
During the Track Record Period, our revenue generated from customer D amounted to
RMB174.0 million, RMB104.1 million, RMB112.0 million, and RMB45.7 million,
respectively. For our Group to provide the design and manufacturing services, Customer D
provided raw materials and accessories to our Company, none of the raw materials and
accessories are subject to the EAR, our Company then delivered the finished products to
Customer D after manufacturing. As advised by our International Sanctions Legal Advisors
after performing the procedures they consider necessary, given the nature of the transactions
involving Customer D stated above, including that our Group was not engaged in any exports
or transactions of any items subject to the EAR to Customer D, export restrictions applicable
to Customer D being designated on the Entity List maintained by the BIS were not implicated
and such transactions did not represent a Primary Sanctioned Activity or a violation of
International Sanctions; and, the risk of these transactions being viewed as a Secondary
Sanctionable Activity is low because there were no activities targeted by extra-territorial
provisions of sanctions law or regulation in the Relevant Jurisdictions. Our Directors, and the
Sole Sponsor, concur with this view from the International Sanctions Legal Advisers, and are
of the view that there had been no material or adverse impact on our business, financial
condition, or results of operations in relation to the relevant sanction risk.
We have undertaken to the Stock Exchange that we will not use the proceeds from the
Global Offering, as well as any other funds raised through the Stock Exchange, to finance or
facilitate, directly or indirectly, activities or business with, or for the benefit of, any
Comprehensively Sanctioned Countries or any other government, individual or entity
sanctioned by the United States, the European Union, the United Nations, the United Kingdom
overseas territories or Australia, including, without limitation, any government, individual or
entity that is specifically identified on the SDN List maintained by OFAC or other restricted
parties lists maintained by the United States, the European Union, the United Nations, the
United Kingdom overseas territories and Australia that would cause us to violate International
Sanctions. Further, we have undertaken not to use the proceeds from the Global Offering to pay
any damages for terminating or transferring any contract that violates International Sanctions.
In addition, we have undertaken not to enter into any future business that would cause us, the
Stock Exchange, HKSCC, HKSCC Nominees or our Shareholders and investors to violate or
become a target of international sanctions laws by the United States, the European Union, the
United Nations, the United Kingdom overseas territories or Australia. We will also disclose on
the respective websites of the Stock Exchange and our Group if we believe that the transactions
our Group entered into in Countries subject to International Sanctions or with Sanctioned
Targets would put our Group or our Shareholders and investors to risks of being sanctioned,
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and in our annual reports or interim reports (i) details of any new activities in Countries subject
to International Sanctions or with Sanctioned Targets; (ii) our efforts on monitoring our
business exposure to sanctions risks; and (iii) the status of, and the anticipated plans for any
new activities in Countries subject to International Sanctions and with Sanctioned Targets. 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.
BUSINESS ACTIVITIES THAT ARE SUBJECT TO OECD TRANSFER PRICING
GUIDELINES
Our Group has established subsidiaries and carried out operations in multiple countries
including China, the United States, and Japan. The ultimate shareholder and its subsidiaries
perform different functions based on regional strengths, including contract manufacturing,
market-oriented production, high-end R&D, technical services, and local delivery support. We
confirm that the transactions among the subsidiaries within our Group are implemented on an
arm’s-length basis according to the transfer pricing guidelines for multinational enterprises and
tax administrations (the “ OECD Transfer Pricing Guidelines ”) promulgated by the
Organization for Economic Cooperation and Development (the “ OECD ”), an international
organization of international cooperation.
The following flowchart illustrates the transaction flow in relation to our business:
CIG Wuhan Co., Ltd.*
(ʮ̡)
(PRC)
CIG Xi'an Co., Ltd.*
(ʮ̡)
(PRC)
Our Company
(PRC)
CIG Shanghai Communication
Equipment Co., Ltd.*
(ʮ̡)
(PRC)
Sale of component
Sale of finished goods
Provision of services
Cambridge Industries Group
Telecommunication Limited
(Hong Kong, PRC)
Actiontec Electronics
Taiwan Inc.
(ʮ̡)
(New Taipei City)
Cambridge Industries
USA Inc.
(USA)
CIG Photonics
Japan Limited
(Japan)
CIG Photonics
Europe GmbH
(Germany)
We have also engaged the Transfer Pricing Adviser to review, analyze and evaluate the
potential risks from perspectives of the OECD Transfer Pricing Guideline, and the applicable
laws and regulations related to transfer pricing in the jurisdictions involved in the transfer
pricing arrangements. Based on its assessment of the transfer pricing arrangements of our
Group during the Track Record Period and up to the Latest Practicable Date, the Transfer
Pricing Adviser is of the view, and our Directors concur, that, during the Track Record Period
and up to the Latest Practicable Date, the transfer pricing arrangements were consistent with
the arm’s length principle under both OECD Transfer Pricing Guidelines and the applicable
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local laws and regulations related to transfer pricing in the relevant jurisdictions in all material
respects, and the risk for our Group to conduct material transfer pricing adjustment and pay
additional tax can be considered as low. During the Track Record Period and up to the Latest
Practicable Date, we were not aware of any inquiry, audit, investigation, or challenge by any
relevant tax authorities in the jurisdictions on the intercompany transactions of our Group.
PROVISIONS PERTAINING TO U.S. INVESTMENTS IN CERTAIN NATIONAL
SECURITY TECHNOLOGIES AND PRODUCTS IN COUNTRIES OF CONCERN
According to Thompson Hine LLP , our Company does not engage in activities that would
be a “prohibited transaction” as defined under the Provisions Pertaining to U.S. Investments in
Certain National Security Technologies and Products in Countries of Concern” issued on
October 28, 2024 by the U.S. Treasury Department (the “ Outbound Rules ”). Under the
Outbound Rules, our Company does not constitute a covered foreign person because it does not
engage in covered activities identified in Sections 850.217 and 850.224.
Our Company does not: (i) develop or fabricate integrated circuits or advanced
packaging, (ii) develop quantum computers or produce any of the critical components required
to produce a quantum computer; (iii) does not develop any AI systems designed for military
end use or government intelligence or mass-surveillance end use. Further, our Company is not
on any U.S. Department of Commerce or U.S. Department of the Treasury list of sanctioned
entities. While there is a lower threshold for “notifiable transactions,” given that our Company
does not engage in any of the above areas (i.e., design, fabricate or package integrated circuits,
or develop any AI systems), it does not engage in activities requiring notification to the U.S.
Department of the Treasury.
Therefore, based on the advice of Thompson Hine LLP , our Directors are of the view and
the Sole Sponsor concurs that investments in our Company’s publicly traded securities will not
be prohibited or subject to reporting requirements under the Outbound Rules.
LICENSES, APPROV AL AND PERMITS
As of the Latest Practicable Date, we had obtained all material licenses and permits
required for our business operations in the China and overseas.
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The following table sets forth details of our other material licenses and permits:
License/permit Holder Issuing authority Grant date Expiration date
Receipt on the
Registration of Pollution
Discharge for Fixed
Pollution Sources (֛
๕રϮ೮াΫੂ) /H1118/H1118
Shanghai branch of
Our Company
N/A August 31, 2023 August 30, 2028
Receipt on the
Registration of Pollution
Discharge for Fixed
Pollution Sources (֛
๕રϮ೮াΫੂ) /H1118/H1118
CIG Xi’an Co., Ltd.*
(ࠢ
ʮ̡)
N/A February 16, 2023 February 15, 2028
Receipt on the
Registration of Pollution
Discharge for Fixed
Pollution Sources (֛
๕રϮ೮াΫੂ) /H1118/H1118
CIG Wuhan Co., Ltd.*
(Ҧ(ဏ)
ʮ̡)
N/A October 17, 2023 October 16, 2028
Customs import and
export goods consignee
and consignor filing ( ऎ
ϗ೯஬ɛ
ࣩ)H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Our Company Longwu Customs of
Shanghai ( Ꮂюऎᗫ)
N/A N/A
Customs import and
export goods consignee
and consignor filing ( ऎ
ϗ೯஬ɛ
ࣩ)H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
CIG Shanghai
Communication
Equipment Co.,
Ltd.* ( ɪऎᄏ዗ஷৃ
ʮ̡)
Longwu Customs of
Shanghai ( Ꮂюऎᗫ)
N/A N/A
Customs import and
export goods consignee
and consignor filing ( ऎ
ϗ೯஬ɛ
ࣩ)H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
CIG Zhejiang
Telecommunication
Equipment Co.,
Ltd.* (ڦ
ʮ̡)
Jiashan office of
Customs of Jiaxing
(ྗᗫഛ፬)
N/A N/A
Customs import and
export goods consignee
and consignor filing ( ऎ
ϗ೯஬ɛ
ࣩ)H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
CIG Xi’an Co., Ltd.*
(ࠢ
ʮ̡)
Guanzhong Customs
(ᗫʕऎᗫ)
N/A N/A
Customs import and
export goods consignee
and consignor filing ( ऎ
ϗ೯஬ɛ
ࣩ)H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Actiontec Electronics
(Shanghai), Inc.* ( ᒕ
౽ฆཥɿ(ɪऎ)ࠢ
ʮ̡)
Longwu Customs of
Shanghai ( Ꮂюऎᗫ)
N/A N/A
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A W ARDS AND RECOGNITION
The following table sets forth notable awards and recognition in respect of our business
achievements, technology, and innovation:
Y ear Award/recognition Awarding institution/authority
2025 /H1118/H1118Outstanding Entrepreneurs of
Minhang District
People’s Government of Minhang
District, Shanghai
Innovative Enterprise Headquarters
of Shanghai
Office of the Leading Group for
Strategic Emerging Industries of
Shanghai
2024 /H1118/H1118Top 100 Shanghai Private
Manufacturing Enterprises (Rank:
54)
Shanghai Enterprise Confederation,
Shanghai Entrepreneurs Association,
Jiefang Daily
Top 100 Shanghai Emerging
Industry Enterprises (Rank: 61)
Shanghai Enterprise Confederation,
Shanghai Entrepreneurs Association,
Jiefang Daily
Top 100 Shanghai Manufacturing
Enterprises (Rank 79)
Shanghai Enterprise Confederation,
Shanghai Entrepreneurs Association,
Shanghai Federation of Economic
Organizations, Jiefang Daily
Top 100 Shanghai Specialized and
New Enterprises Brand V alue List
China Brand Economy (Shanghai)
Forum Organizing Committee,
Shanghai Enterprise Culture and
Brand Research Institute
2023 /H1118/H1118AAA-level Management System
Certification for Integration of
Informatization and
Industrialization
Ministry of Industry and Information
Technology of the People’s Republic
of China
2022 /H1118/H1118Top 100 Shanghai Private
Manufacturing Enterprises
Shanghai Enterprise Confederation,
Shanghai Entrepreneurs Association,
Jiefang Daily
Top 100 Shanghai Manufacturing
Enterprises
Shanghai Enterprise Confederation,
Shanghai Entrepreneurs Association,
Shanghai Federation of Economic
Organizations, Jiefang Daily
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Y ear Award/recognition Awarding institution/authority
Top 100 Shanghai Emerging
Industry Enterprises
Shanghai Enterprise Confederation,
Shanghai Entrepreneurs Association,
Jiefang Daily
2021 /H1118/H1118Certificate of Multinational
Corporation R&D Center
Shanghai Municipal Commission of
Commerce
Minhang District Intelligent Factory Minhang District Economic
Commission
Lingang Park Leading Star Lingang Group
Top 100 Shanghai Private
Manufacturing Enterprises (Rank:
44)
Shanghai Enterprise Confederation,
Shanghai Entrepreneurs Association,
Jiefang Daily
Top 100 Shanghai Emerging
Industry Enterprises (Rank: 50)
Shanghai Enterprise Confederation,
Shanghai Entrepreneurs Association,
Jiefang Daily
Top 100 Shanghai Manufacturing
Enterprises (Rank: 68)
Shanghai Enterprise Confederation,
Shanghai Entrepreneurs Association,
Jiefang Daily
2020 /H1118/H1118Shanghai Intelligent Factory Shanghai Municipal Commission of
Economy and Informatization
Recognized Foreign-funded R&D
Center
Shanghai Municipal Commission of
Commerce
Top 100 Shanghai Private
Manufacturing Enterprises (Rank:
32)
Shanghai Enterprise Confederation,
Shanghai Entrepreneurs Association,
Jiefang Daily
Top 100 Shanghai Manufacturing
Enterprises (Rank: 56)
Shanghai Enterprise Confederation,
Shanghai Entrepreneurs Association,
Jiefang Daily
Top 100 Shanghai Private
Enterprises (Rank: 87)
Shanghai Enterprise Confederation,
Shanghai Entrepreneurs Association
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ENVIRONMENT, SOCIAL AND GOVERNANCE (“ESG”) MATTERS
ESG governance
We are dedicated to creating sustainable value for our stakeholders, including investors,
government agencies, employees, suppliers, customers, and the communities in which we
operate, through our ESG practices. Our objective is to achieve long-term positive impacts by
integrating ESG governance into our strategic decision-making process.
We have established a three-tier ESG governance framework, consisting of the decision-
making level, the management level, and the execution level. The decision-making level
assumes the ultimate responsibility for overseeing and making decisions on ESG matters, as
well as reviewing ESG strategic goals. The management level breaks down the ESG strategic
goals and coordinates the implementation of such goods among the various departments. The
execution level integrates ESG performance indicators into daily operations and management.
We have also established a set of internal policies to guide our management on
ESG-related issues. In particular,
 Environmental matters: In alignment with ISO: 14001 Environmental Management
System standards, our policies cover energy conservation, carbon emission
reduction, and the treatment of exhaust gas, wastewater, and solid waste.
 Social matters: In alignment with ISO: 45001 Occupational Health and Safety
Management and ISO: 9001 Quality Management System standards, our policies
cover employee health and workplace safety, product quality and recalls, employee
promotion, compensation, benefits, and training, as well as corporate philanthropy
and charitable initiatives.
 Governance matters: We have formulated a code of business ethics for employees
that includes policies on conflict of interest, information confidentiality, and
anti-corruption. Employees receive regular compliance training to strengthen
internal regulatory compliance and ethical business practices. Our ESG governance
body is responsible for monitoring our compliance with these policies and
procedures and updating them based on changes in ESG-related policies and
standards.
Following our listing, the Board of Directors confirms that we will stay focused on and
strictly adhere to Appendix C1 and Appendix C2 to the Listing Rules, while ensuring full
compliance with all ESG-related rules and regulations. Additionally, we will publish an ESG
report annually to disclose our significant ESG issues, risk management practices, fulfillment
of objectives, and overall performance. We also maintain effective communication with key
stakeholders through various communication channels.
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For the years ended December 31, 2022, 2023, and 2024, our costs incurred in relation
to the compliance of environmental protection regulations amounted to RMB0.2 million,
RMB0.6 million, and RMB0.5 million, respectively.
Environmental compliance
We always adhere to a sustainable development strategy, making rational use of energy
and resources, reducing consumption, and pursuing harmonious development among the
environment, nature, and society. We strictly comply with national laws and regulations such
as the Environmental Protection Law of the People’ s Republic of China (ʕശɛ͏΍ձ਷ᐑྤ
جthe Atmospheric Pollution Prevention and Control Law (ԣ
جطand the Law on the Prevention and Control of Environmental Pollution by Solid Wastes
(جطBased on these, we have established a systematic
internal environmental management and control system that enhances the efficiency of
sustainable development through a standardized and process-based management mechanism.
Social responsibility
We firmly believe that social responsibility and business success complement each other.
We actively fulfil our social responsibilities and give back to society through public welfare
projects such as educational assistance. At the same time, we are deeply involved in rural
revitalization, helping to improve rural education and living conditions, and promoting social
harmony and progress through practical actions.
Corporate governance
We have established a sound operating system for internal governance bodies and
continuously standardize the operations and decision-making processes of the shareholders’
meeting, board of directors, and other institutions. This ensures efficient cooperation and
mutual checks and balances among the power-exercising, decision-making, and supervisory
bodies. We strictly comply with relevant laws and regulations such as the Company Law of the
People’ s Republic of China (جthe Securities Law of the People’ s
Republic of China (جand the Code of Corporate Governance for Listed
Companies (ۆWe regularly update and improve our corporate governance
documents, standardize our organizational operations, and protect the legitimate rights and
interests of our shareholders and creditors.
As advised by our PRC Legal Adviser, we have complied, in all material aspects, with all
ESG-related laws and regulations that significantly impact our business and operations during
the Track Record Period.
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ESG risks management and strategy
ESG risks management
Material topics serve as the cornerstone of our sustainability management and ESG risk
identification and assessment. We establish a comprehensive database for ESG topics through
an in-depth analysis of our Group’s activities and business relationships, and we extensively
solicit the opinions of various stakeholders via questionnaires. These topics are then ranked
based on their materiality, allowing us to allocate resources efficiently and develop mitigation
strategies to address the major risks identified, thereby enhancing our ability to manage
ESG-related issues effectively.
We also identify the laws, regulations, and industry standards applicable to our Company,
covering various risks such as those in relation to climate change, employee welfare, supply
chain management, anti-corruption, in order to ensure compliance with the relevant legal
requirements and the alignment with or exceeding industry benchmarks.
ESG opportunities
As global environmental protection policies continue to advance and customers’ ESG
awareness and expectations increase, market preferences are shifting toward eco-friendly
products. This trend is creating new opportunities for the adoption of green technologies. In
response, we have utilized our extensive expertise in the R&D of green products to meet our
customers’ diverse environmental needs.
Our approach involves systematically integrating green innovations into our daily
processes, such as optimizing our production processes, developing circular packaging
solutions, and collaborating with supply chain partners to reduce our carbon emissions. These
initiatives can help create a product design and development process that can match our
customers’ recycling needs and provide a technological foundation for capturing emerging
market opportunities.
Additionally, by enhancing ESG management within our supply chain, we not only
strengthen its resilience against ESG risks but also comply with international customer
standards through sustainable procurement practices, thereby reinforcing our brand credibility.
By adopting forward-thinking technological strategies and upgraded governance models, we
can position ourselves to transform ESG capabilities into a differentiated market barrier,
against existing and potential competitors, and drive long-term growth.
ESG risks mitigation strategies
We believe that our proactive approach to ESG risks mitigation ensures that we not only
address potential risks but also seize opportunities to enhance our ESG performance, thereby
driving value creation and fostering a sustainable future for our Company and stakeholders. To
do so, we have implemented a series of mitigation strategies based on the concepts of risk
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avoidance, risk reduction, risk transfer and risk acceptance. These include establishing a robust
internal ESG management system to enhance our monitoring and early warning capabilities,
conducting regular risk assessments to ensure timely identification of potential issues, and
formulating targeted countermeasures.
Our mitigation measures involve optimizing production processes to minimize
environmental pollution, improving employee benefits to strengthen our social responsibility,
and refining corporate governance structures to increase transparency our and accountability.
By systematically integrating these measures, we aim to reduce ESG risks, promote sustainable
development, bolster investor confidence, and reinforce corporate social responsibility, thereby
laying a solid foundation for long-term business growth.
To effectively implement such risks mitigation strategies, we plan to develop specific
measures based on the urgency and potential impact of risks:
Relevant risk Potential impact Mitigation measures
Extreme climate /H1118/H1118/H1118/H1118/H1118Climate change increases extreme weather
events, leading to physical risks with
financial consequences. For example,
natural disasters and power outages
caused by climate change may lead to the
depreciation of our fixed assets, loss of
labor, or instability in production.
Monitor the impact of extreme weather,
establish emergency management
mechanisms and contingency plans in
advance, and provide employees with
emergency drill training.
Health and safety
incidents /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Employee health and safety risks may bring
legal litigation, financial losses,
production disruptions, and reputational
damage to our Company, leading to stock
price volatility and development setbacks.
Promote occupational health check-ups,
set up a committee on workplace
safety, enforce the accountability
system for workplace safety, enhance
safety awareness of all staff, and
provide emergency safety equipment
and training for employees.
Regulatory risk. /H1118/H1118/H1118/H1118/H1118Stricter regulation on sustainable
development such as carbon emission
regulation may impose pressures on our
Company. Examples include the
compliance requirements for China’s
carbon peaking and carbon neutrality
goals and the EU’s Carbon Border
Adjustment Mechanism. Transitioning to a
sustainable development model may
require us to explore lower-carbon
products and reduce non-environmentally
friendly packaging materials, which may
increase our operational costs.
Stay informed on environmental policies
and regulations, and provide
employees with environmental
education and training on the latest
policies.
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Relevant risk Potential impact Mitigation measures
Low-carbon technology
risk /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Against the backdrop of global customers
accelerating the shift toward green
procurement. If our low-carbon
technology research and development
efforts fail to keep pace, this could
severely weaken our market
competitiveness.
Integrate environmental requirements
across all stages of the product
lifecycle, including development,
design, procurement, manufacturing,
packaging, transportation, and usage,
to create sustainable products and
promote product carbon footprint
certification.
Employee well-being /H1118/H1118Our Company may face multifaceted risks
when hiring talent, such as labor disputes,
business disruption or project delays
caused by talent attrition, legal and
reputational risks caused by employee
misconduct, financial risks brought by
excessive labor costs, and efficiency and
innovation risks due to skill-job
mismatches.
Set job positions according to actual
needs, ensure talent-post matching, and
provide employees with an equal,
inclusive, fair, and open workplace.
Supply chain
management /H1118/H1118/H1118/H1118/H1118/H1118
Delivery delays, supply disruptions, price
fluctuations, and inconsistent product
quality from suppliers may increase our
procurement costs. Additionally, ESG
compliance risks among suppliers are
becoming more pronounced. Failure to
conduct effective supplier audits may lead
to unfair or unethical practices of the
suppliers that harm our reputation.
Strengthen the role of the supplier
platform as an online monitoring tool
and enhance ESG assessments and
audits of suppliers to ensure their
compliance with our ESG standards.
Corporate compliance
and governance. /H1118/H1118/H1118
Lack of corporate governance mechanisms
may lead to issues such as deficiencies in
transparency, weakened accountability and
unethical business practices. Additionally,
failure to comply with relevant laws and
regulations may result in regulatory
penalties, legal disputes and business
restrictions.
Develop and implement a comprehensive
corporate governance system, promote
internal and external audits, and ensure
compliance with laws and regulations
in our operations.
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Environment matters
Environmental management
We stay committed to a sustainable development strategy. By rationally using energy and
resources and minimizing consumption, we aim to pursue harmony between the environment,
nature, and society. We rigorously comply with the environmental protection laws and
regulations in the areas where we operate. Based on these laws and regulations, we have
established a systematic internal environmental management framework, enhancing the
effectiveness of sustainability through standardized and process-oriented management
mechanisms.
To improve our environmental governance, we have established an environmental
management system that complies with ISO: 14001 standards and is certified by a third party.
This system follows a “goal, action, and verification” approach, which means we set annual
environmental targets, take specific actions to achieve these targets, and then verify the results.
We systematically identify potential environmental risks through comprehensive
environmental impact assessments. For high-risk scenarios, such as hazardous chemical leaks
or sudden pollution incidents, we have established multi-tiered emergency response plans.
These plans outline emergency procedures, resource allocation, and role responsibilities. We
also conduct regular emergency drills to enhance employee preparedness, ensuring that our risk
prevention capabilities are aligned with our business expansion efforts.
We actively foster a green workplace culture, encouraging all employees to adopt
low-carbon practices. Our initiatives include implementing refined water and electricity
conservation management, advancing waste sorting, and promoting a paperless office
environment. Additionally, we provide environmental awareness training for all employees,
promoting sustainable habits in daily operations to reduce our carbon footprint while
enhancing environmental benefits and organizational efficiency. In 2024, our investments in
environmental protection totaled RMB481,300.
Emissions
We strictly adhere to national laws and regulations on environmental protection as well
as national emission standards and ensure rigorous controls over wastewater, exhaust gas,
waste, and noise emissions. Our goal is to guarantee compliant discharge of all pollutants,
minimize emissions, and reduce negative impacts on the environment and surrounding
communities.
In terms of wastewater management, domestic sewage, which is our primary wastewater
source, is discharged into the municipal sewage pipe network via factory sewage pipelines. We
conduct annual third-party testing of discharged domestic sewage on a regular basis to ensure
compliance with the standards that are aligned with the latest environmental protection laws
and regulations.
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In terms of exhaust gas management, exhaust gas generated during our production process
is properly collected and treated before discharge. A comprehensive control plan for volatile
organic compounds has been implemented to ensure that exhaust gas emissions comply with
the concentration requirements in the standards that are aligned with the latest environmental
protection laws and regulations.
In terms of waste management, both non-hazardous and hazardous solid wastes are
generated in our production. All hazardous waste is centrally collected and managed, with
storage facilities designed to prevent leakage, rainwater, and loss. The designated storage area
is equipped with explosion-proof facilities and clear warning labels, and dedicated personnel
is responsible for maintaining detailed records of waste entry and exit logs. A hazardous waste
management plan is formulated annually and submitted to local regulatory authorities for
filing, and qualified third-party agencies are commissioned for regular waste collection and
disposal. All hazardous waste disposal records are retained for at least five years. For
non-hazardous waste, we entrust qualified recyclers for collection and disposal, with details
reported to the environmental regulatory body via an online filing system.
In terms of noise management, noise may be generated during the operation of production
equipment. We have adopted soundproofing and vibration-damping measures and installed
soundproof doors and windows in our factories to minimize the noise level generated by
machinery and equipment and reduce the impact of noise.
The table below presents quantitative data on our pollutant management for the specified
period:
Unit 2022 2023 2024
Total exhaust gas emissions /H1118/H1118/H111810,000 cubic meters 38,414.7 40,105.35 56,314.8
Intensity of exhaust gas
emissions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
10,000 cubic meters
per RMB10,000
of revenue
0.1015 0.1299 0.1542
– V olatile Organic Compounds
(VOCs) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
kg 448.155 2,513.295 474.66
Total domestic wastewater
discharge /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
cubic meters 27,263 14,787 19,438.2
Intensity of domestic
wastewater discharge /H1118/H1118/H1118/H1118/H1118/H1118/H1118
cubic meters per
RMB10,000 of
revenue
0.0720 0.0479 0.0532
Total waste generation /H1118/H1118/H1118/H1118/H1118/H1118/H1118tons 170.9 105.557 93.829
Intensity of waste generation /H1118/H1118tons per RMB10,000
of revenue
0.00045 0.00034 0.00026
– Hazardous waste /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118tons 5.671 3.983 5.322
– Non-hazardous recyclable
waste /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
tons 165.229 101.574 88.507
Note: The statistical scope of our pollutant-related indicators includes companies and branches located in
Shanghai.
BUSINESS
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Resource use
We continuously enhance our sustainability capabilities and reduce environmental impact
by eliminating resource waste. Our primary energy consumption arises from power
consumption by machinery and equipment in our production. Fluctuations in electricity prices
may impact business costs, and our electricity consumption is also a major source of
greenhouse gas (“ GHG”) emissions. To enhance energy efficiency and reduce electricity costs,
we have implemented energy-saving projects such as LED lighting replacements and air
compressor modifications.
The table below presents quantitative data on our energy consumption for the specified
period:
Unit 2022 2023 2024
Electricity consumption /H1118/H1118/H1118/H1118kWh 16,696,300 14,674,400 17,438,776.81
Diesel consumption /H1118/H1118/H1118/H1118/H1118/H1118/H1118Liters 2,748 2,174 3,168
Note: The statistical scope of our energy consumption-related indicators includes companies and branches
located in Shanghai.
Regarding water usage, we, as a labor-intensive enterprise, mainly consume water in the
daily lives of employees. We promote water conservation among our employees by regulating
faucet flow and posting water-saving reminders at all water-using points.
The table below presents quantitative data on our water resource consumption and
discharge for the specified period:
Unit 2022 2023 2024
Total water consumption /H1118/H1118/H1118/H1118/H1118cubic meters 3,068.8 1,675.6 2,159.8
Total water consumption
density /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
cubic meters per
RMB10,000
0.008 0.005 0.006
Total water discharge /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118cubic meters 27,619.2 15,080.4 19,438.2
Note: The statistical scope of our water resource-related indicators includes companies and branches located
in Shanghai.
We require suppliers to prioritize recyclable, eco-friendly packaging solutions such as
recycled plastics and corrugated cardboard, and strictly regulate excessive packaging. We
prioritize the use of reusable packaging bags and pallets whenever possible during production
to minimize packaging waste.
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Climate change
To enhance carbon emission management and adapt to and address climate change better,
we plan to set the carbon emission reduction targets of group-wide, and annual carbon
emissions reduction projects to meet our targets. Meanwhile, each department assists in
advancing these projects. In the future, we will gradually expand the boundaries of our
inventory, and we plan to complete and disclose to the public the GHG emissions inventory of
our other subsidiaries and those covering the upstream and downstream of our supply chain
(Scope 3).
Our Company’s total GHG emissions in 2024 amounted to 10,417.93 tons of CO
2
equivalent (covering Scope 1 and Scope 2), with an emission intensity of 0.0285 tons of CO 2
equivalent per RMB10,000 of revenue.
The table below presents quantitative data on our GHG emissions for the specified period:
Unit 2022 2023 2024
Total GHG emissions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118tons of CO 2
equivalent
10,177.77 8,806.01 10,417.93
Intensity of total GHG
emissions . /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
tons of CO 2
equivalent per
RMB10,000
of revenue
0.0269 0.0285 0.0285
– GHG emissions (Scope 1) /H1118/H1118/H1118tons of CO
2
equivalent
1,218.53 931.72 1,060.28
– GHG emissions (Scope 2) /H1118/H1118/H1118tons of CO 2
equivalent
8,959.24 7,874.29 9,357.65
Note: The calculation scope of our GHG emission-related indicators only includes companies and branches
located in Shanghai.
Social matters
We are committed to fulfilling our responsibilities and giving back to society. While
improving corporate management and promoting sustainable development, we also focus on
our social responsibilities as a corporate citizen. We advocate for integrity and compliance in
business operations, strengthen customer relationships, enhance service capabilities, promote
employee development, support public welfare and charity, and foster beneficial partnerships.
Our goal is to create greater value for society and all stakeholders.
BUSINESS
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Employment
We comply with the labor management laws and regulations in the areas where we operate
during recruitment. We have established policies in relation to employee recruitment
management and anti-discrimination, and an employee’s handbook to ensure legal and
compliant employment practices. For details on our employment practices and management,
please refer to the subsection headed “— Our employees” in this section.
Occupational health and safety
We are dedicated to providing employees with a healthy and safe working environment.
We have maintained our certification under the ISO: 45001 Occupational Health and Safety
Management System. This demonstrates our ability to meet international occupational health
and safety standards, minimize occupational health and safety risks, and ensure the health and
safety of employees.
Focusing on occupational health, we set key targets at the beginning of each year and
conduct occupational hazard factor testing in relevant workplaces according to relevant
requirements. Employees engaging in positions involving occupational hazards are provided
with regular occupational health check-ups before taking up the post, while working in the
post, and after leaving the post. Dedicated personnel are assigned to manage occupational
health records, with each employee having a separate health tracking record.
As for work safety, we have established a work safety management framework which is
responsible for employee training, hazard identification, hazard rectification and follow-ups,
among other tasks. We have signed work safety responsibility agreements with managers at all
levels to enforce accountability for work safety management. We also conduct regular
employee safety training and inspections to enhance safety awareness of all staff and ensure
that corrective measures are effectively implemented.
In terms of emergency management, we have formulated emergency response plans and
we will regular emergency drills to ensure prompt and effective responses of all departments
to safety emergencies. Additionally, we have set up a volunteer firefighting team equipped with
emergency supplies and conduct regular training sessions. Medical kits are placed in
designated areas and managed by assigned personnel, while automated external defibrillators
are installed to protect the health and safety of employees. During the Track Record Period, and
up to the Latest Practicable Date, there had not been any major incidents that resulted in severe
work injuries.
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Development and training
We focus on a talent-centric approach, emphasizing people-oriented practices, teamwork,
and continuous learning. We provide clear career promotion channels and diverse training
programs to enhance employees’ skills and competencies. For details of our employee
development and training programs, please refer to the subsection headed “— Our employees”
in this section.
Supply chain management
For details on our supply chain management, please refer to the subsection headed
“— Suppliers, procurement, and inventory — Supply chain management” in this section.
Product responsibility
With years of experience in technical design and applications, we have established a
comprehensive product quality management system, obtaining eight major management system
certifications, including ISO: 9001 Quality Management System, TL: 9000
Telecommunications Quality Management System, QC: 080000 Hazardous Substance Process
Management System, and ISO: 27001 Information Security Management System.
We are committed to providing customers with the best products and services,
continuously improving our product and service quality and enhancing customers satisfaction.
We have established quality policies and objectives, while consistently improving our quality
management system, to ensure product quality in an all-round way across R&D, production and
material management. Additionally, our quality team works closely with core suppliers to
effectively improve material quality and achieve better quality performance together with our
partners. In the event of a batch defect of products after delivery, we initiate product recalls
to avoid or minimize adverse impacts. For details please refer to the subsection headed “—
Customers, Sales, and Competition — Post-sales services — Product defects and recalls” in
this section.
We have established a management system for customers communication and complaint
resolution, incorporating diversified communication channels such as phone, email, social
media, and interviews to gather customers’ feedback. Moreover, a clear process and response
timeline for handling customers complaints and feedback are in place to ensure timely
resolution. For details, please refer to the subsection headed “— Customers, Sales and,
Competition — Post-sales services — Customer relations and complaints” in this section.
To protect customers privacy and information security, we have set up an information
management center to protect the security of data generated during or related to business
operations. We maintain three core cybersecurity elements — personnel security, policy-based
security and technical security — to ensure the safety of equipment and software while
supporting stable business operations. For details, please refer to the subsection headed “—
Our technologies — Our IT infrastructure” in this section.
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Anti-corruption
In compliance with anti-corruption laws and regulations in the jurisdictions where we
operate, we have established systems and codes such as a code of business ethics for employees
and an employee grievance, complaint, and whistleblowing system, which clearly define
various aspects of business ethics. We conduct regular anti-corruption and business ethics
training for all employees and require each business unit to carry out periodic or ad hoc internal
anti-corruption audits. Additionally, we organize annual self-inspections, summarizations, and
management improvements to ensure ongoing monitoring and control of corruption and
business ethics risks, supporting our Company’s sound operations.
We have clarified the whistleblowing mechanism and handling process for corrupt
practices and established a mutual supervision mechanism among employees, as well as a
reporting system for suppliers and customers. We also maintain strict confidentiality regarding
whistleblower information to safeguard their legitimate rights and interests.
Social charitable efforts
We prioritize corporate social responsibility alongside business success, believing that
long-term development is linked to societal contributions. Our public welfare initiatives focus
on education support, health promotion, and environmental protection, guided by the principle
of “working together to create and share value.”
RISK MANAGEMENT AND INTERNAL CONTROL
Our Board of Directors and senior management are responsible for devising and
supervising the execution and efficacy of our internal control framework. This framework is
meticulously structured to guarantee continuous adherence to pertinent legal and regulatory
mandates that govern our business activities and corporate governance, thereby preventing any
compliance failures. Our conviction remains firm that the existing internal control mechanisms
and procedures are adequate in scope, feasibility, and operational effectiveness.
In the regular course of our business activities, we are inherently exposed to a range of
risks, encompassing operational, market, and financial risks. Recognizing these exposures, we
firmly believe that implementing robust and adaptable risk management strategies is essential
to our long-term success. Through this approach, we aim to mitigate risks, safeguard our
operations against potential adversities, and secure our competitive edge and financial stability.
For details on these risks, please refer to the section headed “Risk factors — Risks relating to
our business and industry” in this Prospectus.
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For the purpose of effective risk management, we will adopt or have put in place the
following measures:
 Our Board of Directors is tasked with the comprehensive assessment of risks
inherent to our Group’s operations, ensuring that all major decisions with significant
risk implications are subjected to their scrutiny and consent. This includes the
critical evaluation of transactions with non-approved suppliers;
 Through the cultivation of strong, positive relationships with our established
suppliers and customers, we aim to periodically broaden our customer and supplier
base, thereby mitigating operational risks associated with dependency on a singular
entity;
 In alignment with our Group’s interests and where it proves economically feasible,
we proactively seek to forge diverse agreements that expand our supplier network;
 Our management team is committed to vigilantly observing market trends, including
fluctuations in raw material and component pricing, to consistently benchmark our
procurement expenses against prevailing market rates, ensuring competitive access
to raw materials, parts, and components;
 We uphold stringent IT controls to significantly reduce the likelihood of IT system
failures, safeguarding our operational integrity;
 To attract and retain skilled professionals, we regularly evaluate and adjust our
compensation structures for management and staff, ensuring they remain
competitive and congruent with the Group’s strategic growth;
 Our Directors maintain diligent oversight of our Group’s liquidity and financial
health, prepared to secure financing to support our business activities and expansion
initiatives when deemed necessary and advantageous; and
 Upon Listing, the Audit Committee will comprise three members, namely Mr. Y ao
Minglong (chairman), Mr. Liu Guisong and Ms. Y uen Shuk Y ee, with Ms. Y uen Shuk
Y ee also being our Director appropriately qualified as required under Rules 3.10(2)
and 3.21 of the Hong Kong Listing Rules.
BUSINESS
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OUR SINGLE LARGEST GROUP OF SHAREHOLDERS
As of the Latest Practicable Date, (i) Mr. Gerald G Wong indirectly controlled
approximately 11.95% of our A Shares held by CIG Cayman (a company wholly owned by Mr.
Gerald G Wong); (ii) Mr. Zhao Haibo indirectly controlled approximately 2.18% of our A
Shares held by Kangling Technology. The executive partner of Kangling Technology is Mr.
Zhao Haibo (holding 19.80% partnership interest in it), and its limited partners consist of Ms.
Qin Y an (Mr. Zhao Haibo’s spouse, holding 0.20% partnership interest in it) and Kangling
Management (a limited partnership holding 80.00% partnership interest in it). The executive
partner of Kangling Management is Mr. Zhao Haibo (holding 90.00% partnership interest in it)
and its limited partner is Ms. Qin Y an (Mr. Zhao Haibo’s spouse, holding 10.00% partnership
interest in it). As the executive partner of Kangling Technology and Kangling Management, Mr.
Zhao Haibo is responsible for the execution of partnership affairs and thus ultimately controls
the voting power of Kangling Technology and Kangling Management, respectively; and (iii)
Mr. Gerald G Wong and Mr. Zhao Haibo are parties acting in concert pursuant to the Concert
Party Agreement. For details of the Concert Party Agreement, see “History, Development and
Corporate Structure — Major Shareholding Changes in Our Company — Concert Party
Agreement in 2017”.
Pursuant to the PRC Company Law and related regulations promulgated by the CSRC,
CIG Cayman is our controlling Shareholder and its sole shareholder, Mr. Gerald G Wong, is our
de facto controller. Pursuant to the Hong Kong Listing Rules and Chapter 1.1C of the Guide
for New Listing Applicants, Mr. Gerald G Wong, CIG Cayman, Mr. Zhao Haibo, Ms. Qin Y an,
Kangling Technology and Kangling Management constitute our Single Largest Group of
Shareholders, holding in aggregate approximately 14.13% of our A Shares as of the Latest
Practicable Date.
Immediately following the completion the Global Offering, the Single Largest Group of
Shareholders will in aggregate hold approximately 11.31% of our Shares (assuming the
Over-allotment Option is not exercised, the options granted under the 2024 Share Option
Incentive Scheme are not exercised and no changes are made to the issued share capital of our
Company between the Latest Practicable Date and Listing). Therefore, upon Listing, they will
remain as our Single Largest Group of Shareholders and our Company will not have any
controlling shareholder as defined under the Hong Kong Listing Rules.
Apart from their respective investment (directly or indirectly) in our Company, none of
the Single Largest Group of Shareholders has engaged in other business or operation.
INDEPENDENCE FROM OUR SINGLE LARGEST GROUP OF SHAREHOLDERS
Having considered the following factors, our Directors are satisfied that we are capable
of carrying on our business independently from our Single Largest Group of Shareholders and
their close associates after Listing.
RELATIONSHIP WITH OUR SINGLE LARGEST GROUP OF SHAREHOLDERS
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Management Independence
We are able to conduct our business independently from the Single Largest Group of
Shareholders from a management perspective. Our Board consists of eight Directors, including
four executive Directors and four independent non-executive Directors. Mr. Gerald G Wong
and Mr. Zhao Haibo, who are members of the Single Largest Group of Shareholders, are also
our executive Directors.
Our Directors are of the view that our Company is able to function independently from
the Single Largest Group of Shareholders for the following reasons:
1. our daily management and operations are carried out by all our executive Directors
and the senior management with assistance from our core technical staff, all of
whom have substantial experience in the industry in which our Company is engaged,
and will therefore be able to make business decisions that are in the best interests
of our Group. Saved for Mr. Gerald G Wong and Mr. Zhao Haibo, none of the other
Directors or senior management of our Company are members of the Single Largest
Group of Shareholders or hold any position in the Single Largest Group of
Shareholders. For details of the industry experience of our executive Directors and
the senior management, see “Directors and Senior Management”;
2. each Director is aware of his/her fiduciary duties as a director which require, among
other things, that he/she acts for the benefit and in the interest of our Company and
does not allow any conflict between his/her duties as a Director and his/her personal
interests;
3. we have four independent non-executive Directors and certain matters of our
Company must always be referred to the independent non-executive Directors for
review; and
4. we have adopted a series of corporate governance measures to manage conflicts of
interest, if any, between our Group and the Single Largest Group of Shareholders
which would support our independent management. Please refer to the subsection
headed “— Corporate Governance” in this section for details.
Based on the above, our Directors believe that our Board as a whole and together with our
senior management are able to perform the managerial role in our Group independently from
the Single Largest Group of Shareholders and their close associates after the Listing.
RELATIONSHIP WITH OUR SINGLE LARGEST GROUP OF SHAREHOLDERS
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Operational Independence
We do not rely on the Single Largest Group of Shareholders and their close associates for
our operations. While we are led by our executive Directors (two out of whom are also
members of the Single Largest Group of Shareholders) and other senior management, we have
our own departments specializing in business development, research and development,
administration, finance, internal audit, information technology, sales and marketing, human
resources, legal and compliance, and company secretarial functions. Such departments
specialize in these respective areas which have been in operation and are expected to continue
to operate separately and independently from the Single Largest Group of Shareholders and
their close associates. In addition, we have our own headcount of employees for our operations
and management for human resources.
We have independent access to suppliers and customers and an independent management
team to handle our day-to-day operations. We are also in possession of all relevant licenses
necessary to conduct and operate our principal businesses and we have sufficient operational
capacity in terms of capital and employees to operate independently.
As of the Latest Practicable Date, we did not expect to have any continuing connected
transactions in the ordinary and usual course of business with any of the Single Largest Group
of Shareholders or their respective associates upon Listing.
Based on the above, our Directors believe that we are able to operate independently from
the Single Largest Group of Shareholders and their close associates.
Financial Independence
We have an independent financial system and make financial decisions according to our
Group’s own business needs. We have internal control and accounting systems and an
independent finance department. We do not expect to rely on the Single Largest Group of
Shareholders and their close associates for financing after the Listing as we expect that our
working capital will be funded by the cash, cash equivalent on hand as well as the proceeds
from the Global Offering.
No loan or guarantee has been provided by, or granted to, the Single Largest Group of
Shareholders or their close associates during the Track Record Period and as of the Latest
Practicable Date.
Based on the above, our Directors are of the view that we are able to maintain financial
independence from our Single Largest Group of Shareholders and their close associates.
RELATIONSHIP WITH OUR SINGLE LARGEST GROUP OF SHAREHOLDERS
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Independence undertaking
On May 20, 2016, Mr. Gerald G Wong, CIG Cayman, CIG Holding, Mr. Zhao Haibo and
Kangling Technology respectively executed a letter of undertaking in favor of our Company
with irrevocable effect from the date of the letter to avoid competition with our business,
pursuant to which, each of the above undertaking parties had undertaken that:
1. he/it and the enterprises that he/it holds and (or) participates in, other than our
Company and its controlling enterprises, are not currently engaged in any business
or activities, in any form, that constitute or may constitute direct or indirect
competition with the principal business of our Company and its controlling
enterprises.
2. after the A Shares listing of our Company, he/it and the controlling enterprises that
he/it holds and (or) participates in, other than our Company and its controlling
enterprises, will not: (i) engage in any business or activities, in any form, that
constitute or may constitute direct or indirect competition with the principal
business currently or in the future carried out by our Company and its controlling
enterprises; (ii) support, in any form, any enterprises other than our Company and
its controlling enterprises to engage in business or activities that constitute or may
constitute competition with the principal business currently or in the future carried
out by our Company and its controlling enterprises; or (iii) otherwise interfere in
any business or activities that constitute or may constitute competition with the
principal business currently or in the future carried out by the issuer and its
controlling enterprises.
3. in addition to the above commitments, he/it further undertakes to: (i) ensure, in
accordance with relevant laws and regulations, the independence of our Company in
terms of assets, business, personnel, finance and organizational structure; (ii) take
lawful and effective measures to procure that any companies, enterprises, or other
economic organizations under his/its control do not directly or indirectly engage in
the same or similar business as that of our Company; and (iii) refrain from using
his/its position as the controlling shareholder of our Company to engage in any
activities that would harm the interests of the issuer and other shareholders.
Furthermore, he/it is willing to be liable for any economic losses caused to our
Company as a result of any breach of the above commitments and undertakings.
INTERESTS OF OUR SINGLE LARGEST GROUP OF SHAREHOLDERS IN OTHER
BUSINESSES
Each member of the Single Largest Group of Shareholders confirms that as of the Latest
Practicable Date, he/she/it 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,
which would require disclosure under Rule 8.10 of the Listing Rules.
RELATIONSHIP WITH OUR SINGLE LARGEST GROUP OF SHAREHOLDERS
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CORPORATE GOVERNANCE
Our Company will comply with the provisions of the CG Code, which sets out principles
of good corporate governance, upon Listing.
Our Directors recognize the importance of good corporate governance in protecting our
Shareholders’ interests. We would adopt the following measures to safeguard good corporate
governance standards and to avoid potential conflict of interests between our Group and the
Single Largest Group of Shareholders:
1. where a Shareholders’ meeting is to be held for considering proposed transactions
in which the Single Largest Group of Shareholders or any of their respective
associates has a material interest, the Single Largest Group of Shareholders will not
vote on the resolutions and shall not be counted in the quorum in the voting;
2. our Company has established internal control mechanisms to identify connected
transactions. Upon Listing, if our Company enters into connected transactions with
a member of the Single Largest Group of Shareholders or any of their respective
associates, our Company will comply with the applicable Listing Rules;
3. we are committed that our Board shall include a balanced composition of executive
Directors and independent non-executive Directors. We have appointed four
independent non-executive Directors, and believe our independent non-executive
Directors (i) possess sufficient and diverse experiences, (ii) are free of any business
or other relationship which could interfere in any material manner with the exercise
of their independent judgment, and (iii) will be able to provide an impartial and
external opinion to protect the interests of our Shareholders as a whole;
4. where our Directors reasonably request the advice of independent professionals,
such as financial advisers, valuers or legal advisers, the appointment of such
independent professionals will be made at our Company’s expenses; and
5. we have appointed the Compliance Adviser to provide advice and guidance to us in
respect of compliance with the Hong Kong Listing Rules, including various
requirements relating to corporate governance.
Based on the above, our Directors are satisfied that sufficient corporate governance
measures have been put in place to manage any conflicts of interest between our Group and the
Single Largest Group of Shareholders, and to protect minority Shareholders’ interests after the
Listing.
RELATIONSHIP WITH OUR SINGLE LARGEST GROUP OF SHAREHOLDERS
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OVERVIEW
Our Board currently consists of eight Directors, comprising four executive Directors and
four independent non-executive Directors. Our Directors are appointed for a term of three years
and are eligible for re-election upon expiry of their term of office.
Our senior management is responsible for the daily operations of our Company.
DIRECTORS
The following table provides information about our Directors:
Name Age Position(s)
Date of joining
our Group
Date of
appointment as a
Director Roles and responsibilities
Mr. Gerald
G Wong /H1118/H1118/H1118/H1118/H1118/H1118
72 Executive Director,
chairman of our
Board and
general manager
(chief executive
officer)
May 2005 October 29,
2010
Formulating the overall
development strategies
and overseeing the daily
operations of our Group
Mr. Zhao Haibo
(΋͛) /H1118/H1118/H1118
51 Executive Director,
deputy general
manager, chief
technology
officer
August 2005 December 7,
2011
Participating in the
strategic decision-
making; formulating and
executing technical
strategies and leading
our technical team
Mr. Zhao Hongwei
(Ⴛ҃ਃ΋͛) /H1118/H1118/H1118
53 Executive Director,
chief operating
officer, manager
of hardware
R&D division
and procurement
officer
December 2005 May 17, 2024 Responsible for
procurement, planning,
IT and hardware
platform management
Mr. Zhang Jie
(ੵ௫΋͛) /H1118/H1118/H1118/H1118
45 Executive Director,
manager of
broadband
products division
October 2009 June 28, 2022 Participating in the
material decision-
making; formulating
product strategies and
business objectives and
managing daily
operations of the
division
DIRECTORS AND SENIOR MANAGEMENT
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Name Age Position(s)
Date of joining
our Group
Date of
appointment as a
Director Roles and responsibilities
Mr. Qin Guisen
(ಌ΋͛) /H1118/H1118/H1118
48 Independent
non-executive
Director
May 2021 May 28, 2021 Supervising and providing
independent opinions
and advice to our Board
Mr. Liu Guisong
(΋͛) /H1118/H1118/H1118
52 Independent
non-executive
Director
January 2020 January 13,
2020
Supervising and providing
independent opinions
and advice to our Board
Mr. Y ao Minglong
(Ꮂ΋͛) /H1118/H1118/H1118
62 Independent
non-executive
Director
May 2021 May 28, 2021 Supervising and providing
independent opinions
and advice to our Board
Ms. Y uen Shuk Y ee
(঺ૺᄃɾɻ) /H1118/H1118/H1118
54 Independent
non-executive
Director
April 2025 April 28, 2025,
with effect
from the
Listing Date
Supervising and providing
independent opinions
and advice to our Board
Executive Directors
Mr. Gerald G Wong , aged 72, is our founder, an executive Director, the chairman of our
Board, and the general manager (chief executive officer) of our Company, primarily
responsible for formulating the overall development strategies and overseeing the daily
operations of our Group. Mr. Wong founded our Group in May 2005 and has been our Director
since October 2010, the chairman of our Board and the general manager (chief executive
officer) of our Company since December 2011. He concurrently holds the positions of
executive director, chairman, and/or general manager of the fifteen subsidiaries of our
Company, and is a director of CIG Cayman (one of our Single Largest Group of Shareholders)
and CIG Holding (a then Shareholder).
Mr. Wong has over 40 years of experience in the telecommunications and communications
industry. Before joining our Group, he served at A T&T Bell Labs (later became Lucent
Technologies Bell Labs) and a vice president of Lucent Technologies from 1984 to 2000, where
he was responsible for developing and managing network department products. In 2000, Mr.
Wong co-founded Photonic Bridges China Co., Ltd.* (Ҧ(ʕ਷)ʮ̡), a company
specializing in the research, development, production, and sales of SDH optical transmission
products for optical communication, and served as the company’s legal representative from
2000 to 2005, during which he led operations, team management, and financial and business
risk control.
Mr. Wong earned both his bachelor’s and master’s degrees in electrical engineering and
computer science from the Massachusetts Institute of Technology (MIT) in June 1985.
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Mr. Zhao Haibo (΋͛), aged 51, is an executive Director, the deputy general
manager, and chief technology officer of our Company, primarily responsible for participating
in the strategic decision-making, formulating and executing technical strategies, and leading
our technical team. Mr. Zhao joined our Group in August 2005 and has been the chief
technology officer of our Company since March 2006, our Director since December 2011 and
our deputy general manager since June 2012. He also serves as the executive partner of
Kangling Technology and Kangling Management.
Before joining our Group, Mr. Zhao served as a manager of Shanghai Jiaoda Withub
Information Industrial Company Limited, a company listed on the Hong Kong Stock Exchange
(stock code: 8205) from March 1999 to September 2001. He then served as a manager at
Photonic Bridges China Co., Ltd.* (Ҧ(ʕ਷)ʮ̡), a company specializing in the
research, development, production, and sales of SDH optical transmission products for optical
communication, from October 2001 to September 2005.
Mr. Zhao obtained a bachelor’s degree in communication engineering from Shanghai Jiao
Tong University in July 1996, and a master’s degree in communications and information
systems from the same university in March 1999.
Mr. Zhao Hongwei ( Ⴛ҃ਃ΋͛), aged 53, is an executive Director, the manager of
hardware R&D division, the procurement officer and the chief operating officer of our
Company, primarily responsible for procurement, planning, IT and hardware platform
management. Mr. Zhao joined our Group in December 2005 and has been the manager of
hardware R&D division since March 2006, the procurement officer since September 2018, our
Director since May 2024 and the chief operating officer of our Company since June 2024.
Before joining our Group, Mr. Zhao served as a hardware research and development
manager at ZTE Corporation, a company listed on the Hong Kong Stock Exchange (stock code:
763) and the Shenzhen Stock Exchange (stock code: 000063), from August 2000 to August
2005, where he was primarily responsible for managing the 3G wireless network controller
hardware team. From August 2005 to December 2005, Mr. Zhao worked for Luminous
Networks Technology (Shanghai) Co., Ltd.* (ၣഖҦஔ(ɪऎ)ʮ̡).
Mr. Zhao obtained a bachelor’s degree in chemical equipment and machinery from
Qiqihar University (formerly known as Qiqihar Light Industry College) in July 1995, a
master’s degree in electromechanical control and automation from Harbin Institute of
Technology in July 1997, and a doctorate in mechatronics engineering from Harbin Institute of
Technology in July 2000.
Mr. Zhang Jie ( ੵ௫΋͛), aged 45, is an executive Director and the manager of
broadband products division of our Company, primarily responsible for participating in the
material decision-making, formulating product strategies and business objectives, and
managing the daily operations of the broadband products division. Mr. Zhang joined our Group
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in October 2009 and successively served as the product line manager, the manager of product
management division, the deputy manager and the manager of broadband products division
since then, and has been our Director since June 2022.
Prior to joining our Group, from September 2007 to November 2007, Mr. Zhang served
as an embedded software engineer and a broadband product system engineer at Shanghai
research and development center of ZTE Corporation, a company listed on the Hong Kong
Stock Exchange (stock code: 763) and the Shenzhen Stock Exchange (stock code: 000063),
where he was responsible for the development of embedded software for network equipment
and the design of hardware and software system architecture for network equipment. From
December 2007 to September 2009, Mr. Zhang worked as a product line manager at Dare
Power Dekor Home Co., Ltd.* (ʮ̡, formerly known as Daya
Technology Co., Ltd.* (ʮ̡)), a company listed on the Shenzhen Stock
Exchange (stock code: 000910), where he oversaw product line planning, life cycle
management, and product promotion for network equipment.
Mr. Zhang received a bachelor’s degree in electronic science and technology from
Southeast University in June 2001, and a master’s degree in physical electronics from the same
university in May 2004.
Independent non-executive Directors
Mr. Qin Guisen (ಌ΋͛), aged 48, has been an independent Director of our
Company since May 2021, primarily responsible for supervising and providing independent
opinions and advice to our Board. Mr. Qin is currently a lawyer and partner at Grandall Law
Firm (Shanghai), where he specializes in capital markets practice.
From September 2003 to June 2006, Mr. Qin served as a clerk and judge at the Qingdao
Maritime Court.
Mr. Qin obtained a bachelor’s degree in law from Party School of the Central Committee
of the Communist Party of China in July 1999, and a master’s degree in law from Y antai
University in July 2003. He was granted a lawyer’s practice qualification certificate by the
Shanghai Municipal Bureau of Justice in June 2006 and an independent director qualification
certificate by the Shanghai Stock Exchange in April 2014.
Mr. Liu Guisong (΋͛, former name was࣭ؒaged 52, has been an
independent Director of our Company since January 2020, primarily responsible for
supervising and providing independent opinions and advice to our Board. Mr. Liu is currently
the dean of the School of Computer and Artificial Intelligence at Southwestern University of
Finance and Economics, where he oversees the development and financial management of the
computer science discipline.
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From September 2015 to December 2015, Mr. Liu was a visiting scholar at the
Department of Computer Science at Humboldt University in Germany. From March 2019 to
March 2021, he served as the dean of the School of Computer Science at Zhongshan Institute,
University of Electronic Science and Technology of China, overseeing the development and
financial management of the computer science discipline. From April 2000 to December 2020,
Mr. Liu held various academic roles at the University of Electronic Science and Technology of
China, including associate professor, professor, and doctoral supervisor, with a focus on
scientific research and talent development.
Mr. Liu obtained a bachelor’s degree in engineering mechanics from Xi’an Jiaotong
University in July 1995, a master’s degree in control theory and control engineering from the
University of Electronic Science and Technology of China in April 2000, and a doctorate in
computer system architecture from the same university in December 2007. Mr. Liu was
awarded the title of Professor by the University of Electronic Science and Technology of China
in July 2017. Mr. Liu is also a member of the Institute of Electrical and Electronics Engineers
and the China Computer Federation (CCF), a member of the University Computer Teaching
Steering Committee of the Ministry of Education, an expert of engineering education
accreditation in China, and a correspondence review expert of China Academic Degrees and
Graduate Education Development Center.
Mr. Y ao Minglong (Ꮂ΋͛), aged 62, has been an independent Director of our
Company since May 2021, primarily responsible for supervising and providing independent
opinions and advice to our Board. Mr. Y ao is currently an associate professor of the Department
of Accounting at the School of Management, Zhejiang University.
Mr. Y ao has served as an independent director of Hangzhou HOTA M&E Industry Co.,
Ltd. (ʮ̡), a company listed on the Shenzhen Stock Exchange (stock
code: 001225), since October 2020, and as an independent director of Hengdian Entertainment
Co., Ltd. (ʮ̡), a company listed on the Shanghai Stock Exchange (stock
code: 603103), since June 2021. Mr. Y ao served as an independent director of Apeloa
Pharmaceutical Co., Ltd. (ʮ̡), a company listed on the Shenzhen Stock
Exchange (stock code: 000739), from May 2015 to April 2021.
Mr. Y ao obtained a doctorate in agricultural economics and management from Zhejiang
Agricultural University in July 1997. He was awarded the title of Associate Professor by
Zhejiang University in December 1996.
Ms. Yuen Shuk Y ee ( ঺ૺᄃɾɻ), aged 54, was appointed as an independent non-
executive Director of our Company in April 2025 with effect from the Listing Date, primarily
responsible for supervising and providing independent opinions and advice to our Board.
Ms. Y uen has over 20 years of experience in overseeing financial planning, internal
control, tax analysis, financial reporting, corporate governance practices and corporate
restructuring. From 2001 to 2008, Ms. Y uen held various managerial positions in the
accounting department of China Daye Non-Ferrous Metals Mining Limited (formerly known as
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China National Resources Development Holdings Limited), a company listed on the Hong
Kong Stock Exchange (stock code: 661) with her last position as chief financial officer. Ms.
Y uen served as a financial controller and company secretary of DT Capital Limited (formerly
known as Incutech Investments Limited), a company listed on the Hong Kong Stock Exchange
(stock code: 356) from 2008 to 2014; a financial controller and company secretary of Kirin
Group Holdings Limited (formerly known as Creative Energy Solutions Holdings Limited), a
company then listed on the Hong Kong Stock Exchange (then stock code: 8109 and delisted in
2023) from 2010 to 2011 and from 2014 to 2015; a financial controller and company secretary
of China Huandao Group Hong Kong Limited* (ʮ̡) from 2016 to
2017, as appointed by its fully owned shareholder China Chengtong Development Group
Limited, a company listed on the Hong Kong Stock Exchange (stock code: 217); and a financial
manager of China Uptown Group Company Limited, a company listed on the Hong Kong Stock
Exchange (stock code: 2330) from 2023 to 2024.
Ms. Y uen obtained an honours diploma in accounting from Hong Kong Shue Y an
University (formerly known as Hong Kong Shue Y an College) in July 1995. Ms. Y uen has been
an associate member and a fellow member of the Association of International Accountants
since October 2001 and November 2014, respectively; and an associate member of the Hong
Kong Institute of Certified Public Accountants since January 2003.
SENIOR MANAGEMENT
The following table provides information about members of our senior management:
Name Age Positions
Date of joining
our Group
Date of
appointment as a
member of senior
management Roles and Responsibilities
Mr. Gerald G Wong /H111872 Executive Director,
chairman of our
Board and
general manager
(chief executive
officer)
May 2005 December 7,
2011
Formulating the overall
development strategies
and overseeing the daily
operations of our Group
Mr. Zhao Haibo
(΋͛) /H1118/H1118/H1118
51 Executive Director,
deputy general
manager, chief
technology
officer
August 2005 June 26, 2012 Participating in the
strategic decision-
making; formulating and
executing technical
strategies and leading
our technical team
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Name Age Positions
Date of joining
our Group
Date of
appointment as a
member of senior
management Roles and Responsibilities
Mr. Jin Zeqing
(ዣ૶΋͛) /H1118/H1118/H1118
53 Deputy general
manager,
secretary to our
Board, and
strategic
consultant
May 2024 May 17, 2024 Responsible for securities
affairs, public relations,
internal audit, and legal
affairs of our Group
Mr. Cheng Gucheng
(೻ԋϓ΋͛) /H1118/H1118/H1118
36 Deputy general
manager,
financial officer
January 2020 January 6, 2020 Responsible for financial
management,
accounting, and
supervision,
coordinating financial
planning, budgeting,
cost, and tax matters,
participating in major
decision-making and
daily operations
For the biographies of Mr. Gerald G Wong and Mr. Zhao Haibo, see the subsection headed
“— Directors — Executive Directors” above.
Mr. Jin Zeqing (ዣ૶΋͛), aged 53, has served as the deputy general manager,
secretary to our Board, and a strategic consultant of our Company since May 2024, primarily
responsible for the securities affairs, public relations, internal audit, and legal affairs of our
Group. Mr. Jin is currently also an executive director and the chief financial officer of Shanghai
Shangjin Huiqun Enterprise Management Consulting Co., Ltd.* (ᅆ໊Άุ၍ଣፔ༔
ʮ̡).
From July 2006 to November 2009, Mr. Jin served as the head of the human resources
department at Zhejiang Huayou Cobalt Co., Ltd.* (ʮ̡), a company
listed on the Shanghai Stock Exchange (stock code: 603799), where he was mainly responsible
for personnel management and worked as an expatriate employee in Africa. From January 2010
to July 2011, Mr. Jin served as the deputy manager of the human resources and administration
department at Shanghai Pengxin Mining Investment Co., Ltd.* (ʮ̡),
a company primarily engaged in mining, non-ferrous metal smelting, and manufacturing, where
he was responsible for organizing expatriate assignments to Africa. From March 2013 to June
2018, he served as a director, the vice president, and the secretary to the board of Deluxe
Family Co., Ltd.* (ʮ̡), a company listed on the Shanghai Stock Exchange
(stock code: 600503), where he was mainly responsible for securities, auditing, and investment
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matters. From July 2018 to May 2024, he served as the chief strategic consultant at Beijing
Ruize Hengye Investment Management Co., Ltd.* (ʮ̡), a
company engaged in investment business, where he was responsible for investment
management.
Mr. Jin obtained a bachelor’s degree in law (distance learning) from The Open University
of China (formerly known as China Central Radio and TV University) in July 2006 and a
master’s degree in business administration (distance learning) from The Open University of
Hong Kong in December 2009. He was granted the qualifications of board secretary and
independent director by the Shanghai Stock Exchange in November 2014 and April 2017,
respectively. In April 2020, he also received the qualification of independent director for the
STAR Market from the corporate training department of the Shanghai Stock Exchange.
Throughout his career, Mr. Jin has received numerous honors, including “Excellent Board
Secretary”, “Best Board Secretary”, “Gold Board Secretary”, and “Most Innovative Board
Secretary” awarded by securities and economic media.
Mr. Cheng Gucheng ( ೻ԋϓ΋͛), aged 36, joined our Group in January 2020 and
served as the deputy general manager and the financial officer of our Company (up to his
resignation in November 2021 due to personal work arrangement). In August 2024, Mr. Cheng
was re-appointed as the deputy general manager and the financial officer of our Company,
primarily responsible for financial management, accounting and supervision, coordinating
financial planning, budgeting, cost, tax matters, participating in major decision-making and
daily operations.
From October 2011 to January 2020, Mr. Cheng served as an assistant audit manager and
audit manager at KPMG Huazhen LLP Shanghai Branch, primarily responsible for managing
on-site PRC statutory audits and overseeing overseas group reporting audit services, and
providing consulting services related to accounting and financial management in daily
operations. During this period, Mr. Cheng was assigned and worked at KPMG AZSA LLC
(Osaka Branch), from September 2015 to September 2018, as an assistant audit manager where
he was responsible for on-site management and overall communication for Japan statutory
audits and PRC subsidiary group reporting audit services, as well as providing consulting
services in accounting and management. From December 2021 to July 2024, Mr. Cheng served
as the financial director at Shanghai Dafugui Restaurant Co., Ltd.* (ʮ̡),
a catering company specializing in specialty snacks, dim sum, cooked food, Shanghai-style
Anhui cuisine, and selected new retail products, where he was responsible for the company’s
financial management, accounting, and supervision, coordinating financial planning,
budgeting, cost management, and taxation, and also participated in major decision-making,
provided financial support, and assisted in managing daily operations.
Mr. Cheng obtained a bachelor’s degree in international economics and trade (Japanese)
from the School of Japanese Studies at Shanghai International Studies University in July 2011.
He obtained the qualification of Certified Public Accountant in China from the Shanghai
Institute of Certified Public Accountants in 2014, and the qualification of Certified Public
Accountant in Australia from CPA Australia in February 2021.
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None of our Directors and members of senior management is related to other Directors
or members of senior management. Save as disclosed in this section, (i) none of our Directors
and members of senior management held any directorships in public companies, the securities
of which are listed on any securities market in Hong Kong or overseas in the last three years
immediately preceding the date of this Prospectus; (ii) to the best knowledge, information and
belief of our Directors having made all reasonable inquiries, there were no other matters with
respect to the appointment of our Directors that need to be brought to the attention of our
Shareholders and there was no information relating to our Directors that is required to be
disclosed pursuant to Rule 13.51(2) of the Hong Kong Listing Rules.
JOINT COMPANY SECRETARIES
Mr. Jin Zeqing and Ms. So Lai Shan have been appointed as our joint company
secretaries. See “— Senior Management” above for Mr. Jin Zeqing’s biography.
Ms. So Lai Shan joined Vistra Corporate Services (HK) Limited since May 2021 and is
currently serving as a manager of corporate services. Ms. So has over 10 years of experience
in the corporate services industry. Currently, she is a joint company secretary of Beijing Airdoc
Technology Co., Ltd, a company listed on the Hong Kong Stock Exchange (stock code: 2251)
and the company secretary of Haichang Ocean Park Holdings Ltd., a company listed on the
Hong Kong Stock Exchange (stock code: 2255). Ms. So obtained a master of corporate
governance from Hong Kong Metropolitan University (formerly known as The Open
University of Hong Kong). She has been an associate member of The Chartered Governance
Institute in United Kingdom and The Hong Kong Chartered Governance Institute since
November 2014.
CONFIRMATION FROM OUR DIRECTORS
Rule 3.09D of the Hong Kong Listing Rules
Each of our Directors confirms that he or she (i) has obtained the legal advice referred
to under Rule 3.09D of the Hong Kong Listing Rules in April 2025, and (ii) understands his
or her obligations as a director of a listed issuer under the Hong Kong Listing Rules.
Rule 3.13 of the Hong Kong Listing Rules
Each of the independent non-executive Directors has confirmed (i) his or her
independence as regards each of the factors referred to in Rules 3.13(1) to (8) of the Hong
Kong Listing Rules, (ii) he or she has no past or present financial or other interest in the
business of our Company or its subsidiaries or any connection with any core connected person
of our Company under the Hong Kong Listing Rules as of the Latest Practicable Date, and (iii)
that there are no other factors that may affect his or her independence at the time of his/her
appointments.
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DISCLOSURE UNDER RULE 8.10(2) OF THE HONG KONG LISTING RULES
As of the Latest Practicable Date, none of our Directors had interests in any business,
which competes or is likely to compete directly or indirectly with our business for the purpose
of Rule 8.10(2) of the Hong Kong Listing Rules.
MANAGEMENT AND CORPORATE GOVERNANCE
Board Committees
We have established four board committees in accordance with the relevant laws and
regulations in Chinese Mainland, the Articles of Association and the CG Code, namely the
Strategy and ESG Committee, the Audit Committee, the Nomination Committee and the
Remuneration and Evaluation Committee. The functions of the four committees are
summarized as follows:
Strategy and ESG Committee
We have established a Strategy and ESG Committee with written terms of reference. The
primary duties of the Strategy and ESG Committee are to research and make recommendations
on our medium and long term development strategies, major investment decisions and
sustainable development strategies, and ensure ESG factors are fully taken into account in our
strategic planning and decision-making process. The Strategy and ESG Committee comprises
five members, namely Mr. Gerald G Wong (chairman), Mr. Zhao Haibo, Mr. Zhang Jie, Mr.
Zhao Hongwei and Mr. Qin Guisen.
Audit Committee
We have established the Audit Committee with written terms of reference in compliance
with Rule 3.21 of the Hong Kong Listing Rules and the CG Code. The primary duties of the
Audit Committee are to assist the Board in independently reviewing our financial status and the
implementation and effectiveness of the internal control system, and be responsible for
compliance control of our operation management and investment business, reviewing and
supervising our internal audit work, as well as independent communication, supervision and
verification with the internal auditor and external auditor. The Audit Committee currently
comprises three members, namely Mr. Y ao Minglong (chairman), Mr. Liu Guisong and Mr.
Zhang Jie. Upon Listing, the Audit Committee will comprise three members, namely Mr. Y ao
Minglong (chairman), Mr. Liu Guisong and Ms. Y uen Shuk Y ee, with Ms. Y uen Shuk Y ee also
being our Director appropriately qualified as required under Rules 3.10(2) and 3.21 of the
Hong Kong Listing Rules.
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Nomination Committee
We have established a Nomination Committee with written terms of reference in
compliance with Rule 3.27A of the Hong Kong Listing Rules and the CG Code. The primary
duties of the Nomination Committee are to select and make recommendations on the
candidates, selection criteria and procedures for our Directors and senior management. The
Nomination Committee currently comprises three members, namely Mr. Qin Guisen
(chairman), Mr. Zhao Haibo and Mr. Liu Guisong. Upon Listing, the Nomination Committee
will comprise three members, namely Mr. Qin Guisen (chairman), Mr. Zhao Haibo and Ms.
Y uen Shuk Y ee.
Remuneration and Evaluation Committee
We have established the Remuneration and Evaluation Committee with written terms of
reference in compliance with Rule 3.25 of the Hong Kong Listing Rules and the CG Code. The
primary duties of the Remuneration and Evaluation Committee are to formulate the evaluation
criteria for our senior management and conduct assessments, formulate and review the
compensation policies and plans for our Directors and senior management. The Remuneration
and Evaluation Committee comprises three members, namely Mr. Liu Guisong (chairman), Mr.
Gerald G Wong and Mr. Y ao Minglong.
CG Code
We aim to implement a high standard of corporate governance, which we believe is
crucial to safeguard the interests of our Shareholders. To accomplish this, we expect to comply
with the CG Code after the Listing, save that Mr. Gerald G Wong will serve as both our
chairman and chief executive as discussed below.
Pursuant to code provision C.2.1 of the CG Code, companies listed on the Hong Kong
Stock Exchange are expected to comply with, but may choose to deviate from the requirement
that the roles of chairman and chief executive should be separate and should not be performed
by the same individual. We do not have a separate chairman and chief executive and Mr. Gerald
G Wong currently performs these two roles. We believe that vesting the roles of both chairman
and chief executive in the same person has the benefit of ensuring consistent leadership within
our Group and enables more effective and efficient overall strategic planning for our Group.
We consider that the balance of power and authority for the present arrangement will not be
impaired, and this structure will enable our Company to make and implement decisions
promptly and effectively. Our Board will continue to review and consider splitting the roles of
chairman of our Board and the chief executive of our Company if and when it is appropriate
taking into account the circumstances of our Group as a whole.
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Board Diversity
We have adopted our board diversity policy (the “ Board Diversity Policy ”) which sets
out the objective and approach to achieve and maintain diversity on our Board. Our Board
Diversity Policy provides that our Company should endeavor to ensure that our Board members
have the appropriate balance of skills, experience and diversity of perspectives that are
required to support the execution of its business strategy. Pursuant to our Board Diversity
Policy, we seek to achieve Board diversity through the consideration of a number of factors,
including but not limited to professional experience, skills, knowledge, gender, age, cultural
and education background, ethnicity and length of service. Our Nomination Committee is
delegated by our Board to be responsible for compliance with relevant code governing board
diversity under the CG Code. After Listing, our Nomination Committee will review our Board
Diversity Policy from time to time to ensure its continued effectiveness and we will disclose
in our corporate governance report about the implementation of our Board Diversity Policy on
an annual basis.
Our Board comprises eight members, including four executive Directors and four
independent non-executive Directors. Our Directors have a balanced mix of experiences,
including overall management and strategic development, business and risk management, and
finance and accounting experiences. Our Directors, ranging from 44 years old to 72 years old,
are able to bring a balance of diversity perspectives to our Board. We have taken steps to
promote gender diversity of our Board and currently one of our Directors is female. Going
forward, we will continue to apply the principle of appointments based on merits with
reference to our Board Diversity Policy as a whole. In particular, taking into account the
business needs of our Group and changing circumstances from time to time that may affect our
Group’s business plans, we will actively identify female individuals suitably qualified to
become our Board members and we aim to maintain at least one female Director on our Board,
subject to our Directors: (i) being satisfied with the competence and experience of the relevant
candidates after a comprehensive review process based on reasonable criteria; and (ii) fulfilling
their fiduciary duties to act in the best interests of our Company and our Shareholders as a
whole when deliberating on the appointment. Our Board and our Nomination Committee will
assess our Board composition annually in accordance with the CG Code. We are also
committed to adopting a similar approach to promote diversity of the management (including
but not limited to the senior management) of our Company to further enhance the effectiveness
of our corporate governance. Going forward and with a view to developing a pipeline of
potential successors to our Board that may meet the targeted gender diversity ratio set out
above, we will: (i) make appointments based on merits with reference to board diversity as a
whole; (ii) take steps to promote gender diversity at all levels of our Group by recruiting staff
of different gender; (iii) consider the possibility of nominating female management members
who have the necessary skills and experience to our Board; and (iv) provide career
development opportunities and more resources in training female staff with the aim of
promoting them to senior management or our Board so that we will have a pipeline of female
senior management and potential successors to our Board in a few years’ time. After due
consideration, our Board believes that based on the meritocracy of our Directors, the
composition of our Board satisfies our Board Diversity Policy.
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W AIVERS GRANTED BY THE HONG KONG STOCK EXCHANGE
We have applied to the Hong Kong Stock Exchange for, and the Hong Kong Stock
Exchange has granted (i) a waiver from strict compliance with Rule 8.12 and Rule 19A.15 of
the Hong Kong Listing Rules in relation to the requirement of management presence in Hong
Kong, and (ii) a waiver from strict compliance with Rules 3.28 and 8.17 of the Hong Kong
Listing Rules in relation to the academic or professional qualifications of our Company’s joint
company secretaries. See “Waivers from Strict Compliance with the Hong Kong Listing Rules
and Exemptions from Strict Compliance with the Companies (Winding Up and Miscellaneous
Provisions) Ordinance” for further details.
REMUNERATION
Our Directors and senior management receive their remuneration in the form of basic annual
payments and performance-related annual payments, including fees, salaries, wages, share-based
compensation, contributions to pension plans, benefits-in-kind and discretionary bonuses.
For the years ended December 31, 2022, 2023, and 2024 and the six months ended June
30, 2025, the total emoluments paid to our then Directors amounted to approximately RMB7.3
million, RMB7.7 million, RMB7.3 million and RMB3.6 million, respectively.
For the years ended December 31, 2022, 2023, and 2024 and the six months ended June
30, 2025, the total emoluments paid to the five highest paid individuals (including one, one,
one and one Director) by us amounted to RMB13.5 million, RMB13.6 million, RMB11.9
million and RMB6.2 million, respectively.
Based on the current arrangements in force as of the Latest Practicable Date, it is
estimated that the total remuneration for our Directors (including independent non-executive
Directors) for the year ending December 31, 2025 will be approximately RMB7.2 million. The
actual total remuneration of Directors for the year ending December 31, 2025 may be different
from the expected remuneration as the discretionary bonuses will be determined based on the
results of our Company for the year ending December 31, 2025.
During the Track Record Period, no remuneration was paid by us to, or receivable by, our
Directors or the five highest paid individuals as an inducement to join or upon joining our
Company. No compensation was paid by us to, or receivable by, our Directors or the five
highest-paid individuals for each of the Track Record Period for the loss of any office in
connection with the management of the affairs of any members of our Group. Furthermore,
none of our Directors had waived or agreed to waive any emoluments during the same periods.
Our Board will review and determine the remuneration and compensation packages of our
Directors and senior management which, following the Listing, will receive recommendation
from the Remuneration and Evaluation Committee which will take into account salaries paid
by comparable companies, time commitment and responsibilities of our Directors and senior
management and performance of our Group.
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SHARE INCENTIVE SCHEMES
In order to improve corporate governance structure and incentivize our employees, we
adopted various share incentive schemes since the Listing of A Shares. As of the Latest
Practicable Date, the 2024 Share Option Incentive Scheme was still in effect. See “Statutory
and General Information — Our Share Incentive Schemes” in Appendix VI to this Prospectus
for details.
COMPLIANCE ADVISER
We have appointed Guotai Junan Capital Limited as our compliance adviser pursuant to
Rule 3A.19 of the Hong Kong Listing Rules. The compliance adviser will provide us with
guidance and advice as to compliance with the requirements under the Hong Kong Listing
Rules and applicable Hong Kong laws. Pursuant to Rule 3A.23 of the Hong Kong Listing
Rules, the compliance adviser will advise our Company, among others, in the following
circumstances:
(a) before the publication of any regulatory announcement, circular, or financial report;
(b) where a transaction, which might be a notifiable or connected transaction, is
contemplated, including share issues and share repurchases;
(c) where we propose to use the proceeds of the Global Offering in a manner different
from that detailed in this Prospectus or where the business activities, development
or results of our Group deviate from any forecast, estimate or other information in
this Prospectus; and
(d) where the Hong Kong Stock Exchange makes an inquiry to our Company regarding
unusual movements in the price or trading volume of its listed securities or any other
matters in accordance with Rule 13.10 of the Hong Kong Listing Rules.
The term of appointment of the compliance adviser shall commence on the Listing Date
and is expected to end on the date on which we comply with Rule 13.46 of the Hong Kong
Listing Rules in respect of our financial results for the first full financial year commencing
after the Listing Date.
DIRECTORS AND SENIOR MANAGEMENT
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SUBSTANTIAL SHAREHOLDERS
So far as our Directors are aware, immediately following completion of the Global
Offering and assuming no other changes are made to the issued share capital of our Company
between the Latest Practicable Date and Listing, the following persons will have an interest or
short position (as applicable) in our Shares or underlying Shares which would be required to
be disclosed to us 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 issued voting shares of our
Company:
Assuming that the Over-allotment Option
is not exercised
Assuming that the Over-allotment Option
is fully exercised
Name of
Shareholder Nature of interest
Number and class
of Shares held
Shareholding in
our total issued
Shares as of
the Latest
Practicable Date
Shareholding in
our A Shares
immediately after
the Global
Offering
Shareholding in
our total issued
Shares immediately
after the Global
Offering
Shareholding in
our A Shares
immediately after
the Global
Offering
Shareholding in
our total issued
Shares immediately
after the Global
Offering
Mr. Gerald G
Wong /H1118/H1118/H1118
(i) Interest in
controlled
corporation
1
32,025,735
A Shares
11.95% 11.95% 9.56% 11.95% 9.28%
(ii) Interest held
jointly with
other persons
2
5,850,476
A Shares
2.18% 2.18% 1.75% 2.18% 1.70%
CIG Cayman /H1118Beneficial owner 1 32,025,735
A Shares
11.95% 11.95% 9.56% 11.95% 9.28%
Mr. Zhao
Haibo /H1118/H1118/H1118
(i) Interest in
controlled
corporation
3
5,850,476
A Shares
2.18% 2.18% 1.75% 2.18% 1.70%
(ii) Interest held
jointly with
other persons
2
32,025,735
A Shares
11.95% 11.95% 9.56% 11.95% 9.28%
Notes:
(1) Mr. Gerald G Wong was interested in 32,025,735 A Shares held by CIG Cayman, a company wholly owned
by Mr. Gerald G Wong.
(2) Mr. Gerald G Wong and Mr. Zhao Haibo are parties acting in concert pursuant to the Concert Party Agreement.
(3) Kangling Technology is a limited partnership whose executive partner is Mr. Zhao Haibo (holding 19.80%
partnership interest in it) and its limited partners consist of Ms. Qin Y an (Mr. Zhao Haibo’s spouse, holding
0.20% partnership interest in it) and Kangling Management (holding 80.00% partnership interest in it). As the
executive partner of Kangling Technology and Kangling Management, Mr. Zhao Haibo is responsible for the
execution of partnership affairs and thus ultimately controls the voting power of Kangling Technology and
Kangling Management, respectively. Thus, Mr. Zhao Haibo, by virtue of his role as the executive partner, and
Kangling Management, by virtue of its role as the limited partner held more than 30% partnership interest, was
deemed to be interested in all the A Shares held by Kangling Technology (i.e., 5,850,476 A Shares).
SUBSTANTIAL SHAREHOLDERS
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For further information on any other person who will be, immediately following
completion of the Global Offering, directly or indirectly, interested in 10% or more of the
issued voting shares of any other member of our Group, see “Statutory and General
Information — Further Information About Our Directors and Substantial Shareholders —
Disclosure of Interests — Interests of the Substantial Shareholders” in Appendix VI to this
Prospectus.
SUBSTANTIAL SHAREHOLDERS
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BEFORE THE GLOBAL OFFERING
As of the Latest Practicable Date, the total issued share capital of our Company was
268,019,841 A Shares of nominal value of RMB1.00 each, which were all listed on the main
board of the Shanghai Stock Exchange.
Description of Shares Number of Shares
Approximate % of
issued share capital
A Shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118268,019,841 100%
UPON COMPLETION OF THE GLOBAL OFFERING
Immediately following completion of the Global Offering (assuming that the Over-
allotment Option is not exercised, the options granted under the 2024 Share Option Incentive
Scheme are not exercised and no changes are made to the issued share capital of our Company
between the Latest Practicable Date and Listing), the share capital of our Company will be as
follows:
Description of Shares Number of Shares
Approximate % of
issued share capital
A Shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118268,019,841 80.00%
H Shares to be issued pursuant to the Global
Offering /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111867,010,500 20.00%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118335,030,341 100%
Immediately following completion of the Global Offering (assuming that the Over-
allotment Option is fully exercised, the options granted under the 2024 Share Option Incentive
Scheme are not exercised and no changes are made to the issued share capital of our Company
between the Latest Practicable Date and Listing), the share capital of our Company will be as
follows:
Description of Shares Number of Shares
Approximate % of
issued share capital
A Shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118268,019,841 77.67%
H Shares to be issued pursuant to the Global
Offering /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111877,062,000 22.33%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118345,081,841 100%
SHARE CAPITAL
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OUR SHARES
Upon completion of the Global Offering, our Shares will consist of A Shares and H
Shares. The A Shares and H Shares are all ordinary Shares in the share capital of our Company.
Apart from certain qualified domestic institutional investors in Chinese Mainland, the qualified
investors in Chinese Mainland under the Shanghai-Hong Kong Stock Connect and the
Shenzhen-Hong Kong Stock Connect (if our H Shares are eligible securities for that purpose)
and other persons who are entitled to hold our H Shares pursuant to relevant PRC Law or upon
approvals of any competent authorities, H Shares generally cannot be subscribed for by or
traded between legal or natural persons in Chinese Mainland.
Shanghai-Hong Kong Stock Connect has established a stock connect mechanism between
Chinese Mainland and Hong Kong. Our A Shares can be subscribed for and traded by investors
in Chinese Mainland, qualified foreign institutional investors or qualified foreign strategic
investors and must be traded in Renminbi. As our A Shares are eligible securities under the
Northbound Trading Link, they can also be subscribed for and traded by Hong Kong and other
overseas investors pursuant to the rules and limits of Shanghai-Hong Kong Stock Connect. If
our H Shares are eligible securities under the Southbound Trading Link, they can also be
subscribed for and traded by investors in Chinese Mainland in accordance with the rules and
limits of Shanghai-Hong Kong Stock Connect or Shenzhen-Hong Kong Stock Connect.
RANKING
Our A Shares and H Shares are regarded as one class of Shares under the Articles of
Association and will rank pari passu with each other in all other respects and, in particular, will
rank equally for all dividends or distributions declared, paid or made after the date of this
Prospectus. All dividends in respect of our H Shares are to be paid by us in Hong Kong dollars
whereas all dividends in respect of our A Shares are to be paid by us in Renminbi. In addition
to cash, dividends may also be distributed in the form of Shares. Holders of our H Shares will
receive share dividends in the form of H Shares, and holders of our A Shares will receive share
dividends in the form of A Shares.
NO CONVERSION OF OUR A SHARES INTO H SHARES FOR LISTING AND
TRADING ON THE HONG KONG STOCK EXCHANGE
Our A Shares and our H Shares are generally neither interchangeable nor fungible, and the
market prices of our A Shares and our H Shares may be different after the Global Offering. The
Guidelines on Application for “Full Circulation” of Domestic Unlisted Shares of H-share
Companies ( H΅͡ሗ“ஷ”ˏ) announced by the CSRC are
not applicable to companies dual listed in the PRC and on the Hong Kong Stock Exchange. As
of the Latest Practicable Date, there were no relevant rules or guidelines from the CSRC
providing that A Shareholders may convert A shares held by them into H shares for listing and
trading on the Hong Kong Stock Exchange.
SHARE CAPITAL
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APPROV AL FROM HOLDERS OF A SHARES REGARDING THE GLOBAL OFFERING
Approval from holders of A Shares is required for our Company to issue H Shares and
seek the listing of H Shares on the Hong Kong Stock Exchange. Such approval was obtained
by us at the Shareholders’ general meeting of our Company held on April 28, 2025 and is
subject to the following conditions:
(a) Size of the offer . The maximum number of H Shares to be issued before the exercise
of the Over-allotment Option shall be approximately 20% of the enlarged share
capital of our Company upon completion of the Global Offering and granting the
Underwriters the Over-allotment Option of no more than 15% of the above number
of H Shares to be issued.
(b) Method of offering . The method of offering shall be by way of an international
offering to institutional investors and a public offer for subscription in Hong Kong.
(c) Target investors . The H Shares shall be issued to public investors in Hong Kong
under the Hong Kong Public Offering and international investors, qualified domestic
institutional investors in Chinese Mainland and other investors who are approved by
mainland Chinese regulatory bodies to invest abroad in International Offering.
(d) Price determination basis . The issue price of the H Shares will be determined,
among others, after due consideration of the interests of existing Shareholders of our
Company, acceptance of investors and the risks related to the offering, according to
international practice, through the demands for orders and book building process,
subject to the domestic and overseas capital market conditions and by reference to
the valuation level of comparable companies in domestic and overseas markets.
(e) V alidity period . The issue of H Shares and listing of H Shares on the Hong Kong
Stock Exchange shall be completed within eighteen months from the date when the
Shareholders’ general meeting was held on April 28, 2025.
There are no other approved offering plans for our Shares except the Global Offering.
SHAREHOLDERS’ GENERAL MEETINGS
For details of circumstances under which our Shareholders’ general meeting is required,
see “Summary of Articles of Association — Shareholders and Shareholders’ Meetings” in
Appendix V to this Prospectus.
2024 SHARE OPTION INCENTIVE SCHEME
We have adopted the 2024 Share Option Incentive Scheme, the principal terms of which
are summarized in “Statutory and General Information — Our Share Incentive Schemes —
2024 Share Option Incentive Scheme” in Appendix VI to this Prospectus.
SHARE CAPITAL
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You should read the following discussion and analysis in conjunction with our
audited consolidated financial information as of and for the Track Record Period,
together with the accompanying notes, as included in the Accountants’ Report set out in
Appendix I to this prospectus. Our consolidated financial information has been prepared
in accordance with the IFRS Accounting Standards.
The following discussion and analysis contain forward-looking statements that
reflect our current views with respect to future events and financial performance that
involve risks and uncertainties. These statements are based on our assumptions and
analysis in light of our experience and perception of historical events, current conditions
and expected future developments, as well as other factors we believe are appropriate
under the circumstances. However , our actual results may differ significantly from those
projected in the forward-looking statements as a result of various factors, including but
not limited to those discussed in the section headed “Risk Factors” and elsewhere in this
Prospectus.
OVERVIEW
We are primarily engaged in designing, developing, and selling connectivity and data
transmission devices. During the Track Record Period, we generated our revenue primarily
from the sales of our products in (i) broadband; (ii) wireless; and (iii) photonics technologies.
According to F&S, we were one of the few global companies that offer products across these
three technologies. We also ranked 5th in the global integrated optical and wireless
connectivity devices (“ OWCD ”) industry in 2024, with a market share of 4.1%, in terms of
sales revenue.
During the Track Record Period, we had collaborated with several globally leading
partners, with whom we had maintained stable relationships for over 10 years. Moreover, our
customer base as of June 30, 2025 comprised AI data centers, telecommunication operators,
ICT equipment providers, MSO, and IoT solutions providers. A significant portion of our
operations and revenue is derived from international markets, including markets in the United
States, Europe, and the Asia-Pacific. In 2022, 2023, and 2024, and the six months ended June
30, 2025, our revenue generated from overseas markets represented 82.9%, 89.3%, 92.6%, and
94.0% of our total revenue, respectively.
As of June 30, 2025, our R&D team comprised 673 members, representing over 50% of
our total workforce, and we have established R&D centers in China, the United States, and
Japan. During the Track Record Period, our R&D expenses represented 7.1%, 8.9%, 8.8%, and
7.9% of our total revenue, respectively, and our cumulative R&D investments during the Track
Record Period exceeded RMB1.4 billion.
We primarily manufacture our products via (i) the co-location manufacturing model; and
(ii) our in-house manufacturing facility. Our co-location manufacturing model is a lean,
flexible approach commonly used in our industry. We are responsible for the product design,
FINANCIAL INFORMATION
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key materials, core machinery, processes, and overall management, while our local partners
provide the factory space, workforce, and handle local regulations. As of the Latest Practicable
Date, we had entered into agreements with three co-location partners in China, and three
overseas, namely in Malaysia, the United States, and Europe. Our in-house manufacturing
facilities (with the first one located in Shanghai and has been in operation since 2014, and the
new facility located in Jiashan, near Shanghai, which has been in operation from July 2025) are
also considered essential to our production capabilities. We conduct pilot runs in-house to
optimize processes before replicating them at co-location sites, and we maintain some
production in-house as a benchmark for co-location operations.
In terms of our financial performance, during the Track Record Period, we had generated
a revenue of RMB3,783.7 million, RMB3,085.4 million, RMB3,649.9 million, and
RMB2,034.0 million, with a gross profit of RMB688.6 million, RMB664.1 million, RMB762.2
million, and RMB444.6 million, at a gross profit margin of 18.2%, 21.5%, 20.9%, and 21.9%,
respectively. During the same years/periods, we had a net profit of RMB171.1 million,
RMB95.0 million, RMB167.0 million, and RMB117.5 million, at a net profit margin of 4.5%,
3.1%, 4.6%, and 5.8%, respectively.
BASIS OF PREPARATION
Our consolidated financial information has been prepared in accordance with the IFRS
Accounting Standards issued by the International Accounting Standards Board. All standards,
amendments, interpretations and annual improvements which are effective for the accounting
period commencing from January 1, 2025 have been applied by the Group in the preparation
of the historical financial information throughout the Track Record Period. The historical
financial information has been prepared under the historical cost convention, except for certain
financial assets which have been measured at fair value through profit or loss.
The preparation of our consolidated financial information in conformity with IFRS
Accounting Standards 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 our consolidated financial information are disclosed in Note 4 of
the Accountants’ Report set out in the Appendix I to this Prospectus.
KEY FACTORS AFFECTING OUR RESULTS OF OPERATIONS
The following factors are the principal factors that have affected and, we expect, will
continue to affect our business, financial condition, results of operations and prospects.
Market demand for optical and wireless connectivity devices (“OWCD”)
Our business expansion and revenue growth have depended, and will continue to depend,
on the global market demand of OWCD, a comprehensive suite of devices supporting critical
stages across optical communication and wireless networking industry, which mainly include
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(i) wired broadband access devices; (ii) wireless network access devices; and (iii) photonics
(optical transceivers/optical modules). According to F&S, we are ranked 5th with a market
share of 4.1% in the global integrated OWCD industry terms of revenue in 2024. During the
Track Record Period, our revenue generated from the sales of photonics products, broadband
products and wireless products amounted to RMB3,593.5 million, RMB2,992.3 million,
RMB3,576.6 million and RMB2,002.0 million, accounting for 95.0%, 97.0%, 98.0% and
98.4% of our total revenue, respectively. According to F&S, the sales revenue of the global
OWCD industry increased from USD32.4 billion in 2020 to USD54.6 billion in 2024, and is
expected to further increase to USD111.8 billion in 2029, representing a CAGR of 15.4% from
2024 to 2029, driven by strong customer needs for data transmission, wired broadband access
and wireless network access products. It is also expected that (i) the sales revenue of global
photonics industry would reach USD41.5 billion in 2029 with a CAGR of 18.5% from 2024;
(ii) the market size of global PON device industry would increase to USD11.9 billion in 2029,
with a CAGR of approximately 8.8% from 2024; and (iii) the global Wi-Fi device sales revenue
increased from USD13.7 billion to approximately USD16.7 billion, with a CAGR of around
5.1%, from 2020 to 2024. We believe that we are well-positioned to capitalize such market
growth potential by leveraging our competitive edge and industry leadership.
Ability to continuously upgrade and expand our products portfolio
Our ability to continue to upgrade and expand our products portfolio is one of the most
important factors affecting our results of operations and financial conditions. Product design,
development, innovation and iteration is often a complex, time-consuming and costly process
involving significant investment in R&D. In 2022, 2023, and 2024, and the six months ended
June 30, 2025, our R&D investments amounted to RMB408.0 million, RMB400.2 million,
RMB408.6 million, and RMB219.1 million, respectively. As of June 30, 2025, our R&D team
comprised 673 employees, including 55 from overseas, which accounted for over 50% of our
total workforce. Due to our continuous R&D efforts, we successfully launched a series of new
products during the Track Record Period, including 800G photonic products, 10GPON
products and Wi-Fi 7 products. With the capability to design, develop and roll out upgraded and
new products in a timely and efficient manner, we are able to respond swiftly to the changing
market conditions and offer high caliber products to our customers.
The products that we provide are also among the primary factors that affect our revenue
and profitability. Given the rapid rate of technological change in our industry, our customers’
requirements evolve quickly. Newer generations of products drive new market demand. In
addition, we customize our products for many of our customers to satisfy their particular needs.
Consequently, we offer a wide range of products at different prices in respect of each of our
products. As a result, our overall gross profit margin is materially affected by product mix.
Ability to control costs and improve operational efficiency
Our ability to manage costs and enhance operational efficiency will impact the results of
our operations. In 2022, 2023, and 2024, and the six months ended June 30, 2025, our cost of
sales was RMB3,095.1 million, RMB2,421.3 million, RMB2,887.6 million, and RMB1,589.4
FINANCIAL INFORMATION
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million, respectively, accounting for 81.8%, 78.5%, 79.1%, and 78.1% of our revenue for the
same years/periods. Our cost of sales consists of cost of raw materials, staff costs, and
manufacturing overhead. Changes in any major component of our cost of sales would affect our
overall cost structure which, in turn, could have an impact on our gross profit and gross profit
margins. In particular, our cost of raw materials accounted for 84.8%, 85.1%, 85.7%, and
84.3%, of our total cost of sales in 2022, 2023, and 2024, and the six months ended June 30,
2025, respectively. The procurement costs for raw materials may fluctuate due to a number of
factors beyond our control, such as supply chain disruptions and inflation. We continuously
improve cost efficiency in raw material procurement through adopting a localized and stable
supply chain that supports our manufacturing capabilities overseas and in China. Moreover, we
continuously enhance cost efficiency in manufacturing through strategic initiatives, including:
(i) implementing lean manufacturing and automated production processes; (ii) standardizing
components and management processes across manufacturing facilities overseas and in China;
and (iii) leveraging management talent and intelligent manufacturing expertise to enhance the
operational efficiency.
Moreover, our operating expenses during the Track Record Period consisted of expenses
in relation to R&D, selling and marketing, and administrative activities. Our total operating
expenses amounted to RMB534.8 million, RMB563.8 million, RMB618.7 million, and
RMB324.0 million in 2022, 2023, and 2024, and the six months ended June 30, 2025,
accounting for 14.1%, 18.3%, 17.0%, and 15.9% of our total revenue during the same
years/periods, respectively. Our ability to effectively manage our operating expenses may
affect our profitability.
Foreign currency fluctuations
Due to the presence overseas and in China of our business, our results of operations are
affected by foreign exchange rate movements, both on a transactional and translational basis.
Our Group’s subsidiaries mainly operate in the PRC, the United States, and Japan and the
majority of our transactions are settled in RMB, USD, and JPY , which are the functional
currencies of our Group entities to which the transactions relate. Foreign currency risk arises
when future commercial transactions and recognised assets and liabilities are denominated in
a currency that is not the respective functional currency of our Group’s subsidiaries.
Consequently, we are exposed to risks arising from fluctuations in the exchange rates of RMB
and foreign currencies and may record gains or losses from these currency conversion
transactions and translations.
Foreign exchange gains or losses resulting from the settlement of such transactions and
from the reporting date retranslation of monetary assets and liabilities are recognised in profit
or loss. As a result, fluctuations in the exchange rates of RMB and foreign currencies could
affect our results of operations. In 2022, 2023, and 2024, and the six months ended June 30,
2025, we recorded net foreign exchange gains of RMB35.0 million, RMB31.8 million,
RMB14.4 million, and RMB13.7 million, respectively. The value of foreign currencies may
fluctuate due to a number of factors, all of which are beyond our control. We may need to use
hedging arrangements to mitigate the impact of foreign exchange rate fluctuations. However,
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we may not be able to fully mitigate the risk of foreign exchange loss, if any, through these
arrangements and such arrangement may also incur additional costs. Please refer to the section
headed “Risk Factors — Risks relating to doing business in the jurisdictions where we operate
— Fluctuations in exchange rates may have a material adverse effect on our results of
operations, financial condition and your investment” in this Prospectus.
During the Track Record Period, our Group did not engage in any formal hedging
arrangements to mitigate the impact of foreign exchange rate fluctuations. Instead, we
maintained a portion of our funds in USD, either in circulation or in bank savings accounts, to
meet payment obligations, rather than converting them back to RMB. This was an opportunistic
decision influenced by the prevailing interest rate environment, where USD deposit rates were
significantly more favorable than those for RMB. Given that a substantial portion of our
procurement payments were denominated in USD, holding USD deposits not only aligned with
our payment needs but also enabled us to benefit from higher interest income. This selective
use of financial instruments was consistent with our broader treasury strategy, which
emphasizes flexibility, cost-effectiveness, and efficient fund deployment.
In summary, we did not establish a formal hedging policy for two main reasons. Firstly,
a substantial portion of our Group’s revenue and procurement activities were denominated in
the same functional currencies. This constituted a natural hedge, thereby mitigating our
exposure to currency mismatches. Secondly, our Group adhered to a prudent treasury policy
focused on preserving liquidity and maintaining cost efficiency. Consequently, we managed
foreign exchange risks primarily through operational practices and continuous monitoring
instead of structured hedging contracts. Additionally, we would employ different financial
instruments as needed under varying circumstances to optimize risk mitigation.
MATERIAL ACCOUNTING POLICIES, ESTIMATES AND JUDGEMENTS
We have identified certain accounting policies that are significant to the preparation of
our consolidated financial statements and the understanding of our financial condition and
results of operations. We have also made certain accounting judgements and assumptions in the
process of applying our accounting policies. Estimates and judgements are continually
evaluated and are based on historical experience and other factors, including expectations of
future events that are believed to be reasonable under the circumstances. Since the use of
estimates is an integral component of the financial reporting process, our actual results could
differ from those estimates and expectations.
Set out below is a summary of the material accounting policies, estimates and judgements
which we believe are critical for understanding the results of operation and financial condition
of our Group. Please refer to Notes 2 and 4 to the Accountants’ Report in Appendix I to this
Prospectus for a detailed description of our material accounting policies, judgments and
estimates.
FINANCIAL INFORMATION
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Revenue recognition
Our revenue arises mainly from the sales of goods. To determine whether to recognize
revenue, our Group follows a five-step process: (i) identifying the contract with a customer; (ii)
identifying the performance obligations; (iii) determining the transaction price; (iv) allocating
the transaction price to the performance obligations; and (v) recognizing revenue when/as
performance obligation(s) are satisfied. In all cases, the total transaction price for a contract is
allocated amongst the various performance obligations based on their relative stand-alone
selling prices. The transaction price for a contract excludes any amounts collected on behalf
of third parties. Our revenue is recognized at a point in time, when our Group satisfies
performance obligations by transferring the promised goods to the customers.
Where the contract contains a financing component which provides a significant
financing benefit to the customer for more than 12 months, 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 with the customer, and interest income is accrued separately
under the effective interest method. Where the contract contains a financing component which
provides a significant financing benefit to our Group, revenue recognized under that contract
includes the interest expense accreted on the contract liability under the effective interest
method.
Revenue from the sale of goods for a fixed fee is recognized when or as we transfer
control of the assets to the customer. For non-cross-border sales, revenue is recognized when
the products have been dispatched and the customer has signed for acceptance. For
cross-border sales, revenue is recognized when the goods are delivered to the customer’s
designated location and upon receipt of export declaration from the customs and corresponding
bill of lading.
Our standard sales terms are generally non-cancellable and non-returnable, other than for
defective merchandise covered under our standard warranty provision, which covers a one to
two-year period depending on the product. We do not offer any extended warranties for
purchase and warranty is recorded in cost of sales. Sales-related warranties cannot be
purchased separately and are served as an assurance that the products sold comply with
agreed-upon specifications (i.e. assurance-type warranties). Accordingly, we account for
warranties in accordance with IAS 37 “Provisions, Contingent Liabilities and Contingent
Assets”.
Property, plant, and equipment
Property, plant, and equipment are stated at cost less accumulated depreciation and
accumulated impairment losses, if any.
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Depreciation is recognized so as to write off the cost of assets (other than construction in
progress) less their residual values over their estimated useful lives, using the straight-line
method over their estimated useful lives as following:
Buildings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820 years
Machinery and equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185-10 years
Computer equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183 years
Motor vehicles /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184 years
Leasehold improvements /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Over the lease term
Office equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185 years
Accounting policy for depreciation of right-of-use assets is set out in Note 2.14 to the
Accountants’ Report in Appendix I to this Prospectus. Estimates of residual value and useful
life are reviewed, and adjusted if appropriate, at each reporting date. Gain or loss arising on
retirement or disposal is determined as the difference between the sales proceeds and the
carrying amount of the asset and is recognized in profit or loss.
Intangible assets (other than Goodwill) and research and development activities
Intangible assets (other than goodwill)
Acquired intangible assets are recognized initially at cost. After initial recognition,
intangible assets with finite useful lives are carried at cost less accumulated amortization and
any accumulated impairment losses. Amortization for intangible assets with finite useful lives
is provided on straight-line basis over their estimated useful lives. Amortization commences
when the intangible assets are available for use. The following useful lives are applied:
Patent /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186.75 years
Software /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810 years
Deferred development cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185 years
The assets’ amortization methods and useful lives are reviewed, and adjusted if
appropriate, at each reporting date. Intangible assets are tested for impairment as described in
Note 2.20 to the Accountants’ Report in Appendix I to this Prospectus.
Research and development costs
Costs associated with research activities are expensed in profit or loss as they incur. Costs
that are directly attributable to development activities are recognized as intangible assets
provided they meet all of the following recognition requirements:
(i) demonstration of technical feasibility of the prospective product for internal use or
sale;
(ii) there is intention to complete the intangible asset and use or sell it;
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(iii) our Group’s ability to use or sell the intangible asset is demonstrated;
(iv) the intangible asset will generate probable economic benefits through internal use or
sale;
(v) sufficient technical, financial and other resources are available for completion; and
(vi) the expenditure attributable to the intangible asset can be reliably measured.
Direct costs include employee costs incurred on development activities along with an
appropriate portion of relevant overheads. The costs of development of internally generated
software, products or know-how that meet the above recognition criteria are recognized as
intangible assets. They are subject to the same subsequent measurement method as acquired
intangible assets. All other development costs are expensed as incurred.
Inventories
Inventories are carried at the lower of cost and net realizable value. Net realizable value
is the estimated selling price in the ordinary course of business less the estimated cost of
completion and applicable selling expenses. Cost is determined using the first-in first-out basis,
and in the case of work in progress and finished goods, comprise direct materials, direct labor
and an appropriate proportion of overheads.
When inventories are sold, the carrying amount of those inventories is recognized as an
expense in the period in which the related revenue is recognized. The amount of any
write-down of inventories to net realizable value and all losses of inventories are recognized
as an expense in the period the write-down or loss occurs. The amount of any reversal of any
write-down of inventories is recognized as a reduction in the amount of inventories recognized
as an expense in the period in which the reversal occurs.
Impairment of non-financial assets
The following assets are subject to impairment testing:
 Goodwill;
 Intangible assets;
 Property, plant and equipment (including right-of-use assets and deposits for
acquisition of property, plant and equipment, and intangible assets);
 Prepaid lease payments; and
 Investments in subsidiaries in our Company’s statements of financial position.
FINANCIAL INFORMATION
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Goodwill and intangible assets those not yet available for use are tested for impairment
at least annually, irrespective of whether there is any indication that they are impaired. All
other assets are tested for impairment whenever there are indications that the asset’s carrying
amount may not be recoverable.
An impairment loss is recognized as an expense immediately for the amount by which the
asset’s carrying amount exceeds its recoverable amount. Recoverable amount is the higher of
fair value, reflecting market conditions less costs of disposal, and value in use. In assessing
value in use, the estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessment of time value of money and the
risk specific to the asset.
For the purposes of assessing impairment, where an asset does not generate cash inflows
largely independent of those from other assets, the recoverable amount is determined for the
smallest group of assets that generate cash inflows independently (i.e. a cash-generating unit).
As a result, some assets are tested individually for impairment and some are tested at
cash-generating unit level. Corporate assets are allocated to individual cash-generating units,
when a reasonable and consistent basis of allocation can be identified, or otherwise they are
allocated to the smallest group of cash-generating units for which a reasonable and consistent
allocation basis can be identified.
Goodwill in particular is allocated to those cash-generating units that are expected to
benefit from synergies of the related business combination and represent the lowest level
within the Group at which the goodwill is monitored for internal management purpose and not
be larger than an operating segment.
Impairment losses recognized for cash-generating units, to which goodwill has been
allocated, are credited initially to the carrying amount of goodwill. Any remaining impairment
loss is charged pro rata to the other assets in the cash-generating unit, except that the carrying
value of an asset will not be reduced below its individual fair value less cost of disposal, or
value in use, if determinable.
An impairment loss on goodwill is not reversed in subsequent periods. In respect of other
assets, an impairment loss is reversed if there has been a favorable change in the estimates used
to determine the asset’s recoverable amount and only to the extent that the asset’s carrying
amount does not exceed the carrying amount that would have been determined, net of
depreciation or amortization, if no impairment loss had been recognized.
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Estimation of impairment of trade and bills receivables, and deposits and other
receivables
We make allowances on items subjects to ECL (including trade and bills receivables, and
deposits and other receivables and other financial assets measured at amortized cost) based on
assumptions about risk of default and expected loss rates. We use judgement in making these
assumptions and selecting the inputs to the impairment calculation, based on the our past
history, existing market conditions as well as forward-looking estimates.
As of December 31, 2022, 2023, and 2024, and June 30, 2025, the aggregate carrying
amounts of our trade and bills receivables, and deposits and other receivables amounted to
RMB1,611.3 million, RMB1,124.0 million, RMB1,252.8 million, and RMB1,591.9 million, net
of loss allowance of RMB23.4 million, RMB18.7 million, RMB20.1 million, and RMB25.7
million, respectively.
When the actual future cash flows are different from expected, such difference will
impact the carrying amount of trade and bills receivables, and deposits and other receivables
and related credit losses in the periods in which such estimate has been changed.
Current and deferred income taxes
Our Group is subject to income taxes in several jurisdictions. There are many transactions
and events for which the ultimate tax determination is uncertain during the ordinary course of
business. Significant judgement is required from our Group in determining the provision for
income taxes in each of these jurisdictions. Where the final tax outcome of these matters is
different from the amounts that were initially recorded, such differences will impact the income
tax and deferred tax provisions in the period in which such determination is made.
Net realizable value of inventories
Net realizable value of inventories is based on estimated selling price less any estimated
costs to be incurred to completion and disposal with reference to prevailing market
information. These estimates are based on the current market condition and the historical
experience in selling goods of similar nature. It could change significantly as a result of
changes in market conditions. Our Group reassesses the estimation at each reporting date. The
provision for inventories, net, amounting to RMB18.5 million, RMB3.7 million, RMB4.1
million, and RMB3.4 million have been provided in 2022, 2023, and 2024, and the six months
ended June 30, 2025, respectively.
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RESULTS OF OPERATIONS
The following table sets forth a summary, for the years/periods indicated, of our consolidated
results of operations. Each item has also been expressed as a percentage of our revenue.
For the year ended December 31, For the six months ended June 30,
2022 2023 2024 2024 2025
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(Unaudited)
Revenue /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,783,739 100.0 3,085,362 100.0 3,649,889 100.0 1,761,408 100.0 2,034,023 100.0
Cost of sales /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(3,095,104) (81.8) (2,421,267) (78.5) (2,887,642) (79.1) (1,378,242) (78.2) (1,589,443) (78.1)
Gross profit /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118688,635 18.2 664,095 21.5 762,247 20.9 383,166 21.8 444,580 21.9
Other income, net /H1118/H1118/H1118/H1118/H111820,006 0.5 18,882 0.6 49,663 1.4 38,900 2.2 14,427 0.7
Other gains/(loss), net /H1118/H1118/H111834,776 0.9 31,133 1.0 24,458 0.7 (7,091) (0.4) 13,965 0.7
Research and development
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(270,376) (7.1) (275,799) (8.9) (320,368) (8.8) (149,005) (8.5) (160,785) (7.9)
Selling and marketing
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(58,106) (1.5) (70,484) (2.3) (90,065) (2.5) (43,144) (2.4) (52,042) (2.5)
General and administrative
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(206,271) (5.5) (217,488) (7.0) (208,259) (5.7) (103,234) (5.9) (111,199) (5.5)
Reversal/(Provision) of
expected credit loss, net 27,751 0.7 4,698 0.2 (1,351) (0.1) (4,288) (0.3) (5,587) (0.3)
Operating profit /H1118/H1118/H1118/H1118/H1118/H1118236,415 6.2 155,037 5.1 216,325 5.9 115,304 6.5 143,359 7.1
Finance costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(57,903) (1.5) (61,123) (2.0) (52,890) (1.4) (32,132) (1.8) (24,263) (1.2)
Profit before income tax /H1118178,512 4.7 93,914 3.1 163,435 4.5 83,172 4.7 119,096 5.9
Income tax
(expense)/credit /H1118/H1118/H1118/H1118/H1118(7,406) (0.2) 1,051 0.0 3,606 0.1 1,407 0.1 (1,550) (0.1)
Profit for the period /H1118/H1118/H1118171,106 4.5 94,965 3.1 167,041 4.6 84,579 4.8 117,546 5.8
Other comprehensive
expenses items that may
be reclassified to profit
or loss:
Exchange differences on
translation of financial
statements of foreign
operations /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(8,922) (0.2) (3,403) (0.1) (1,845) (0.1) (4,660) (0.3) 1,930 0.1
Total comprehensive
income for the period /H1118162,184 4.3 91,562 3.0 165,196 4.5 79,919 4.5 119,476 5.9
Profit/(Loss) for the
period attributable to:
Owners of the Company /H1118/H1118171,106 4.5 95,018 3.1 166,681 4.6 80,004 4.5 120,905 6.0
Non-controlling interests /H1118/H1118 – 0.0 (53) (0.0) 360 0.0 4,575 0.3 (3,359) (0.2)
171,106 4.5 94,965 3.1 167,041 4.6 84,579 4.8 117,546 5.8
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DESCRIPTION OF KEY COMPONENTS OF OUR RESULTS OF OPERATIONS
Revenue
Revenue by products category
During the Track Record Period, we primarily generated revenue from the sales of (i)
broadband products; (ii) wireless products; and (iii) photonics products. The following table
sets forth our revenue breakdown by products category, both in absolute amounts and as
percentages of our total revenue, for the years/periods indicated:
For the year ended December 31, For the six months ended June 30,
2022 2023 2024 2024 2025
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(Unaudited)
Broadband products /H1118/H1118/H1118/H11182,059,278 54.5 1,827,146 59.2 2,032,689 55.7 975,732 55.4 1,192,642 58.6
Wireless products /H1118/H1118/H1118/H1118/H11181,056,051 27.9 718,518 23.3 1,052,400 28.8 551,193 31.3 415,166 20.4
Photonics products /H1118/H1118/H1118/H1118478,215 12.6 446,680 14.5 491,527 13.5 202,041 11.5 394,216 19.4
Others (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118190,195 5.0 93,018 3.0 73,273 2.0 32,442 1.8 31,999 1.6
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,783,739 100.0 3,085,362 100.0 3,649,889 100.0 1,761,408 100.0 2,034,023 100.0
Note:
1. Primarily included carrier-grade ethernet switches and edge computing products.
In general, fluctuations in our revenue during the Track Record Period were primarily
driven by changes in industry-wide demand, while our international expansion strategy
supported revenue growth in specific markets. In 2023, overall revenue declined due to an
industry-wide inventory destocking cycle, following elevated stockpiling during the pandemic
period which resulted in postponed demand. However, in 2024, this deferred demand
materialized, leading to a robust rebound in sales. This recovery was further bolstered by our
intensified international sales efforts, particularly in the United States and Europe, where we
expanded our commercial presence and developed stronger customer relationships. Our total
sales volume decreased from 13.7 million units in 2022 to 9.7 million units in 2023, and
recovered to 12.8 million units in 2024. For the six months ended June 30, 2024 and 2025, our
total sales volume remained stable at around 6.6 million units. Similarly, our total revenue
decreased from RMB3,783.7 million in 2022 to RMB3,085.4 million in 2023, then increased
to RMB3,649.9 million in 2024. For the six months ended June 30, 2024 and 2025, our total
revenue increased from RMB1,761.4 million to RMB2,034.0 million.
To a lesser extent, we also generated a part of our income from the sale of other devices,
namely carrier-grade Ethernet switches and edge computing products. These products are
mainly used for high-performance network routing, data processing at the network edge, and
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real-time analytics, and are mostly used by customers in the telecommunications, industrial
automation, and enterprise IT infrastructure industries. For 2022, 2023, and 2024, the sales
volume of such products decreased from 0.6 million units to 0.3 million units and 0.3 million
units, and from 0.2 million units to 0.1 million units for the six months ended June 30, 2024
and 2025, respectively.
Our average selling price (“ ASP”) is calculated by dividing the revenue generated by our
key product lines by the total sales volume of each product line. Each product line may
comprise over hundreds of products, which may vary significantly in terms of pricing,
customer type, and timing of sales. During the Track Record Period, we did not experience a
concentration of revenue derived from any single product, with our top one product
contributing 10.9% of our total revenue for 2024. Given the wide variety of our products, we
adopt pricing strategies that are tailored to market conditions and customer needs. These
strategies are designed to safeguard and enhance our profitability. The following sets forth a
breakdown of the ASPs of our key product categories for the years/periods indicated:
For the year ended December 31,
For the six months
ended June 30,
2022 2023 2024 2024 2025
RMB/unit RMB/unit RMB/unit RMB/unit RMB/unit
Broadband products /H1118/H1118202.5 241.7 212.2 189.7 225.6
Wireless products /H1118/H1118/H1118523.3 588.9 409.5 448.8 447.4
Photonics products /H1118/H1118537.3 761.0 1,380.7 1,682.3 1,595.7
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118283.5 247.4 229.7 212.0 274.6
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118275.2 316.7 284.6 265.1 309.2
 Our broadband products saw an increase in ASP from RMB202.5 per unit in 2022
to RMB241.7 in 2023, followed by a decline to RMB212.2 in 2024. This fluctuation
was primarily due to a shift in product mix toward newer, higher-functionality
models in 2023 (such as 10G PON devices), which allowed for higher pricing, while
in 2024, as upgraded products entered broader commercial deployment, the unit
price declined slightly. The ASP of our broadband products increased from
RMB189.7 to RMB225.6 for the six months ended June 30, 2024 and 2025.
 Our wireless products followed a similar pattern, rising from RMB523.3 in 2022 to
RMB588.9 in 2023 as we launched Wi-Fi-6E devices. The decline in 2024 was
largely driven by market conditions. For the six months ended June 30, 2024 and
2025, the ASP remained relatively stable at RMB448.8 and RMB447.4.
 Our photonics products, on the other hand, showed a strong upward trend, with ASPs
increasing from RMB537.3 in 2022 to RMB761.0 in 2023, and then surging to
RMB1,380.7 in 2024. This was mainly due to the successful rollout of advanced,
high-value photonics products that met growing demand for cutting-edge optical
FINANCIAL INFORMATION
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technologies. This sustained increase was also driven by growing shipments of 400G
products throughout 2023 and 2024. As the product line continues to evolve and
upgrade, the higher-performance 400G offerings have contributed to a higher overall
ASP . For the six months ended June 30, 2024 and 2025, the ASP decreased from
RMB1,682.3 to RMB1,595.7.
Revenue by geographical region
Our products are sold to customers located in more than 50 countries and regions
worldwide. The following table sets forth the breakdown of our revenue by geographical region
in which our customers are located for the years/periods indicated:
For the year ended December 31, For the six months ended June 30,
2022 2023 2024 2024 2025
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
North America
– United States /H1118/H1118/H11181,187,244 31.4 1,161,500 37.6 1,448,139 39.7 691,922 39.3 980,454 48.2
– Mexico /H1118/H1118/H1118/H1118/H1118/H111832,046 0.8 14,523 0.5 6,744 0.2 7,101 0.4 – –
– Canada /H1118/H1118/H1118/H1118/H1118/H1118109,843 2.9 25,741 0.8 1,097 0.0 9 0.0 642 0.0
– Others /H1118/H1118/H1118/H1118/H1118/H1118/H111827,208 0.7 22,201 0.7 942 0.0 650 0.0 – –
Sub-total /H1118/H1118/H1118/H1118/H1118/H1118/H11181,356,341 35.8 1,223,965 39.7 1,456,922 39.9 699,682 39.7 981,096 48.2
Europe
– Finland /H1118/H1118/H1118/H1118/H1118/H11181,257,194 33.2 1,115,094 36.1 1,515,843 41.5 731,271 41.5 788,646 38.8
– Others (1) /H1118/H1118/H1118/H1118/H1118103,004 2.7 75,107 2.5 57,721 1.6 24,949 1.4 24,242 1.2
Sub-total /H1118/H1118/H1118/H1118/H1118/H1118/H11181,360,198 35.9 1,190,201 38.6 1,573,564 43.1 756,220 42.9 812,888 40.0
Chinese Mainland /H1118/H1118/H1118647,799 17.1 331,358 10.7 270,360 7.4 133,832 7.6 121,824 6.0
Asia (excluding
Chinese Mainland) /H1118414,705 11.0 331,895 10.8 341,101 9.3 165,657 9.4 117,020 5.8
Others (2) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,696 0.1 7,943 0.3 7,942 0.2 6,017 0.4 1,195 0.0
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,783,739 100.0 3,085,362 100.0 3,649,889 100.0 1,761,408 100.0 2,034,023 100.0
Note:
1. Primarily included Denmark, the Netherlands, and the United Kingdom.
2. Primarily included countries in South America, South Africa and Oceania.
Our revenue from North America decreased from RMB1,356.3 million in 2022 to
RMB1,224.0 million in 2023, before rising to RMB1,456.9 million in 2024. Similarly, our
revenue from Europe declined from RMB1,360.2 million in 2022 to RMB1,190.2 million in
2023, and then increased to RMB1,573.6 million in 2024. The declines in 2023 in both regions
primarily reflected an industry-wide inventory destocking cycle, following elevated
stockpiling during the pandemic period. In 2024, this deferred demand materialized, and our
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intensified sales efforts, particularly in the United States and key European markets, led to a
strong recovery. For the six months ended June 30, 2024 and 2025, our revenue from North
America increased from RMB699.7 million to RMB981.1 million for similar reasons.
Our revenue from Chinese Mainland declined steadily from RMB647.8 million in 2022
to RMB331.4 million in 2023, and further to RMB270.4 million in 2024. While the 2023
decline was partially influenced by the broader post-pandemic inventory cycle, the continued
decrease in 2024 reflected our strategic expansion of our overseas sales and marketing efforts.
For the six months ended June 30, 2024 and 2025, our revenue from Chinese Mainland
declined from RMB133.8 million to RMB121.8 million for similar reasons.
Our products are marketed and sold mainly in overseas markets. We expect that we will
continue to generate the majority of revenue from sales in overseas markets in the future.
Revenue by business model
We deliver products to customers through either Joint Design Manufacturing (“ JDM”) or
Original Design Manufacturing (“ ODM”) models. Under the JDM model, we work closely
with customers from the early stages of product design and development. JDM projects
typically involve a longer lead time often one to two years for certification due to the high level
of customization and the need for strong financial and operational capabilities. Our JDM
customers are mainly large multinational digital communications companies. In contrast, our
ODM model is more streamlined. We design and develop products internally and then offer
these readily available products to customers. This model offers faster time-to-market and cost
efficiency, making it ideal for clients who prefer proven, off-the-shelf products with minimal
development time.
The following sets forth the revenue generated from such models during the Track Record
Period:
For the year ended December 31, For the six months ended June 30,
2022 2023 2024 2024 2025
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(Unaudited)
JDM /H1118/H1118/H1118/H11182,187,589 57.8 1,639,179 53.1 1,950,263 53.4 977,804 55.5 933,385 45.9
ODM /H1118/H1118/H11181,596,150 42.2 1,446,183 46.9 1,699,626 46.6 783,604 44.5 1,100,638 54.1
Total /H1118/H1118/H1118/H11183,783,739 100.0 3,085,362 100.0 3,644,889 100.0 1,761,408 100.0 2,034,023 100.0
In general, there was no distinct factor differentiating the revenue fluctuations between
our JDM and ODM customers. During the Track Record Period, revenue from JDM customers
decreased by RMB548.4 million, or by 25.1%, from RMB2,187.6 million in 2022 to
RMB1,639.2 million in 2023. Similarly, revenue from ODM customers declined by RMB150.0
million, or by 9.4%, from RMB1,596.2 million in 2022 to RMB1,446.2 million in 2023. These
FINANCIAL INFORMATION
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declines were primarily due to an industry-wide inventory destocking cycle, following elevated
stockpiling during the pandemic period which resulted in postponed demand across both JDM
and ODM segments. In 2024, this deferred demand began to recover. Coupled with our
enhanced sales and marketing efforts, especially in overseas markets, demand from both JDM
and ODM customers rebounded. Consequently, revenue from JDM customers increased by
RMB311.1 million, or by 19.0%, to RMB1,950.3 million, while revenue from ODM customers
rose by RMB253.4 million, or by 17.5%, to RMB1,699.6 million. For the six months ended
June 30, 2024 and 2025, our revenue from JDM customers decreased from RMB977.8 million
to RMB933.4 million, and our revenue from ODM customers increased from RMB783.6
million to RMB1,100.6 million.
Revenue by manufacturing model
We primarily manufacture our products via: (i) the co-location manufacturing model; and
(ii) our in-house manufacturing facility. Our co-location manufacturing model leverages the
local infrastructure, skill sets, networks and know-how of co-location partners, whereas our
in-house manufacturing facility relies on our internal capabilities. As of the Latest Practicable
Date, we had entered into agreements with three co-location partners in China, and three
overseas, namely in Malaysia, the United States, and Europe. As of the same date, we have in
place our first in-house manufacturing facility Shanghai (which has been in operation since
2014) and a new facility located in Jiashan, near Shanghai (which has been in operation from
July 2025). The following table sets forth a breakdown of our revenue generated by the sale
of products that were manufactured by our co-location manufacturing partners and those by our
in-house manufacturing facility during the periods indicated:
For the year ended December 31, For the six months ended June 30,
2022 2023 2024 2024 2025
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(Unaudited)
Co-location
manufacturing
facilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,733,450 45.8 1,859,757 60.3 2,282,375 62.5 1,029,430 58.4 1,326,988 65.2
In-house manufacturing
facilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,050,289 54.2 1,225,605 39.7 1,367,514 37.5 731,978 41.6 707,035 34.8
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,783,739 100.0 3,085,362 100.0 3,649,889 100.0 1,761,408 100.0 2,034,023 100.0
Our revenue generated from the sale of products manufactured at our co-location facilities
increased from RMB1,733.5 million in 2022 to RMB1,859.8 million in 2023, and further to
RMB2,282.4 million in 2024. This growth was primarily driven by our strategy to expand
internationally. For the six months ended June 30, 2024 and 2025, such revenue increased from
RMB1,029.4 million to RMB1,327.0 million, for similar reasons.
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Revenue from our in-house manufacturing facilities, based in Shanghai, decreased from
RMB2,050.3 million in 2022 to RMB1,226.5 million in 2023, before recovering to
RMB1,367.5 million in 2024. The initial decline in 2023 was largely due to an industry-wide
inventory destocking cycle, following elevated stockpiling during the pandemic period which
resulted in postponed demand. In 2024, as this deferred demand materialized, overall sales
increased. However, with our strategic emphasis on international markets, a larger share of
production was allocated to co-location facilities overseas, leading to a more modest recovery
in revenue from our in-house operations. For the six months ended June 30, 2024 and 2025,
such revenue slightly decreased from RMB732.0 million to RMB707.0 million.
Cost of sales
Our cost of sales mainly consists of (i) raw materials; (ii) manufacturing overhead; and
(iii) staff costs. Our raw materials mainly include integrated circuits, structural components,
transistors, and connectors. In 2022, 2023, and 2024, and the six months ended June 30, 2025
our cost of sales amounted to RMB3,095.1 million, RMB2,421.3 million, RMB2,887.6 million,
and RMB1,589.4 million, representing 81.8%, 78.5%, 79.1%, and 78.1% of our total revenue
for the same years, respectively.
The following table sets forth a breakdown of cost of sales by nature, expressed as an
absolute amount and as a percentage of our total cost of sales, for the years/periods indicated:
For the year ended December 31, For the six months ended June 30,
2022 2023 2024 2024 2025
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(Unaudited)
Raw materials /H1118/H1118/H1118/H1118/H1118/H1118/H11182,623,804 84.8 2,060,027 85.1 2,475,270 85.7 1,176,140 85.3 1,339,652 84.3
Manufacturing overhead
– In-house facilities /H1118/H1118286,986 9.2 212,123 8.7 230,801 8.0 102,572 7.5 145,896 9.2
– Processing fees /H1118/H1118/H1118/H1118119,783 3.9 102,914 4.3 123,179 4.3 70,150 5.1 50,716 3.2
Sub-total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118406,769 13.1 315,037 13.0 353,980 12.3 172,722 12.6 196,612 12.4
Staff costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111864,531 2.1 46,203 1.9 58,392 2.0 29,380 2.1 53,179 3.3
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,095,104 100.0 2,421,267 100.0 2,887,642 100.0 1,378,242 100.0 1,589,443 100.0
The primary component of cost of sales is raw materials, which typically account for over
80% of the total cost of sales during the Track Record Period. Remaining less than 20%
accounts for manufacturing overhead, comprising both the production costs at our in-house
facilities and the processing fees charged by our co-location partners in the PRC. For further
details, please see the section headed “Business — Manufacturing — Our co-location
manufacturing model” in this Prospectus.
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The following table sets forth our a breakdown of cost of sales by products category, both
in absolute amounts and as percentages of our total cost of sales, for the years/periods indicated:
For the year ended December 31, For the six months ended June 30,
2022 2023 2024 2024 2025
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(Unaudited)
Broadband products /H1118/H1118/H1118/H11181,752,697 56.6 1,470,714 60.7 1,654,857 57.3 776,119 56.3 963,383 60.6
Wireless products /H1118/H1118/H1118/H1118/H1118845,468 27.3 553,476 22.9 793,346 27.5 407,546 29.6 330,251 20.8
Photonics products /H1118/H1118/H1118/H1118346,329 11.2 316,514 13.1 372,464 12.9 162,236 11.8 266,614 16.8
Others (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118150,610 4.9 80,563 3.3 66,975 2.3 32,341 2.3 29,195 1.8
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,095,104 100.0 2,421,267 100.0 2,887,642 100.0 1,378,242 100.0 1,589,443 100.0
Note:
1. Primarily included carrier-grade ethernet switches and edge computing products.
Gross profit and gross profit margin
Our gross profit represents revenue less cost of sales, and our gross profit margin
represents gross profit divided by revenue. In 2022, 2023, and 2024, and the six months ended
June 30, 2025, our gross profit amounted to RMB688.6 million, RMB664.1 million, RMB762.2
million, and RMB444.6 million, respectively, and our gross profit margin was 18.2%, 21.5%,
20.9%, and 21.9% for the same years/periods.
The following table sets forth a breakdown of our gross profit and gross profit margin by
products category for the years/periods indicated:
For the year ended December 31, For the six months ended June 30,
2022 2023 2024 2024 2025
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)
Broadband products /H1118/H1118/H1118306,581 14.9 356,432 19.5 377,832 18.6 199,613 20.5 229,259 19.2
Wireless products /H1118/H1118/H1118/H1118210,583 19.9 165,042 23.0 259,054 24.6 143,647 26.1 84,915 20.5
Photonics products /H1118/H1118/H1118131,886 27.6 130,166 29.1 119,063 24.2 39,805 19.7 127,602 32.4
Others (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111839,585 20.8 12,455 13.4 6,298 8.6 101 0.3 2,804 8.8
Total/overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118688,635 18.2 664,095 21.5 762,247 20.9 383,166 21.8 444,580 21.9
Note:
1. Primarily included carrier-grade ethernet switches and edge computing products.
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During the Track Record Period, our gross profit and gross profit margins were generally
lower in 2022 due to elevated raw material costs. These were driven by industry-wide supply
chain disruptions that persisted from the pandemic period, which limited our ability to procure
materials cost-effectively. As these disruptions eased in 2023, procurement costs normalized,
contributing to a recovery in gross profit margins. This trend continued into 2024 and 2025,
supported by both improved cost structures and a favorable product mix, particularly as we
rolled out more sophisticated, high-margin photonics products. Looking ahead, we remain
focused on sustaining revenue growth while continuing to introduce advanced products that
enhance our profitability profile.
The following table sets forth a breakdown of our gross profit and gross profit margin by
JDM and ODM customers for the years/periods indicated:
For the year ended December 31, For the six months ended June 30,
2022 2023 2024 2024 2025
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)
JDM /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118393,306 18.0 298,608 18.2 360,558 18.5 195,631 20.0 181,022 19.4
ODM /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118295,329 18.5 365,487 25.3 401,689 23.6 187,535 23.9 263,558 23.9
Total/overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118688,635 18.2 664,095 21.5 762,247 20.9 383,166 21.8 444,580 21.9
In terms of profitability, under the JDM model, customers often participate in the
development process by providing specific features such as firmware modules. In contrast, the
ODM model grants us full responsibility for feature development and enables us to deliver
more value-added components, such as software and interworking capabilities. This generally
supports higher margins. It is worth noting that the relatively lower gross profit margins from
ODM in 2022 was primarily due to our Group’s strategic decision to pay a premium for
securing critical materials amid shortages, in order to maintain delivery commitments. This
was considered a necessary trade-off to uphold customer trust and continuity.
Other income, net
Our other income, net mainly consists of (i) government subsidies, which are mostly
unconditional, and non-recurring, such subsidies include financial supports that we received
from local governments in recognition of our contribution to technology innovation and
regional business development; (ii) interest income; and (iii) other income primarily consisting
of rental income. In 2022, 2023, and 2024, and the six months ended June 30, 2025, our other
income, net amounted to RMB20.0 million, RMB18.9 million, RMB49.7 million, and
FINANCIAL INFORMATION
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RMB14.4 million, respectively. The following table sets forth a breakdown of our other
income, net for the years/periods indicated:
For the year ended December 31,
Six months ended
June 30,
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Government subsidies (1) /H1118/H1118/H1118/H1118/H1118/H111816,575 10,096 30,950 26,758 9,570
Interest income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,411 7,293 16,399 11,023 3,527
Others (2) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,020 1,493 2,314 1,119 1,330
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820,006 18,882 49,663 38,900 14,427
During the Track Record Period, our Group experienced a substantial increase in interest
income, driven by a combination of favorable financial performance, strategic treasury
management, and effective deployment of surplus funds. In 2023, the increase was primarily
attributable to our Company’s proactive engagement with banking institutions, through which
we successfully negotiated higher deposit interest rates. This initiative coincided with a period
of strong profitability in both 2022 and 2023, resulting in sustained net cash inflows.
Consequently, our Group maintained higher average daily deposit balances, which significantly
contributed to the growth in interest income. In 2024, interest income continued to rise,
supported by a further increase in average daily cash balances. Additionally, a portion of the
interest from USD-denominated deposits placed in 2023 was settled and recognized in 2024,
further boosting the year’s interest income. This timing effect, combined with our Group’s
continued focus on liquidity management, reinforced the upward trend. Throughout the Track
Record Period, our Group adopted a prudent and disciplined treasury strategy. Leveraging
improved operating cash flows, largely driven by enhanced sales performance, we strategically
allocated idle funds into interest-bearing deposits and low-risk financial instruments. This
approach enabled us to optimize returns on surplus cash while preserving operational
flexibility. The increase in interest income reflects our Group’s commitment to financial
efficiency and effective capital utilization. Between the six months ended June 30, 2024 and
2025, there was decline in interest income, which mainly attributable to our strategic
redeployment of a portion of surplus funds to support business expansion and operational
investments. Additionally, the interest rate environment has become less favourable, with
deposit rates trending downward compared to the elevated levels seen in 2023. The timing
effect that boosted 2024 interest income (namely, the settlement of USD-denominated deposits
placed in 2023) will not recur in 2025, further contributing to the expected decrease.
Notes:
1. In addition to the government subsidies received in relation to the acquisition and/or construction of
property, plant, and equipment, we also received unconditional government grants for supporting our
operation. In 2024, we received an investment subsidy of RMB15 million upon the funds are in place
from the Commission of China-Singapore Jiashan Modern Industrial Park for our local operation.
2. Primarily include rental income.
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Other gains/(loss), net
In 2022, 2023, and 2024, and the six months ended June 30, 2025, our other gains, net
amounted to RMB34.8 million, RMB31.1 million, RMB24.5 million, and RMB14.0 million,
respectively. Our other gains, net mainly consist of foreign exchange gains, primarily
attributable to fluctuations in foreign exchange rates. In 2022, 2023, and 2024, and the six
months ended June 30, 2025, we recorded exchange gains, net of RMB35.0 million, RMB31.8
million, RMB14.4 million, and RMB13.7 million, respectively, mainly as a result of the
fluctuation of USD and JPY . The following table sets forth a breakdown of our other gains, net
for the years/periods indicated:
For the year ended December 31,
For the six months
ended June 30,
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Exchange gains/(loss), net /H1118/H1118/H1118/H111835,010 31,790 14,436 (10,142) 13,652
Gain on disposal of
subsidiary (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 6,281 – –
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(234) (657) 3,741 3,051 313
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111834,776 31,133 24,458 (7,091) 13,965
Note:
1. In August 2024, we had sold Cambridge Photonics Technologies Inc. (“ CPT”) to Hamilton Technologies
Inc., a Delaware-based company and an Independent Third Party, (“ Hamilton ”), at a consideration of
USD0.88 million (the “ Transaction ”). Prior to the transaction, Hamilton and our Group entered into
commercial negotiations to form a business relationship which would involve, among others, the
licensing of the IP in relation to some of our photonics products, and we would sell such products to
them. As a result of this negotiation, both parties agreed that we will set up CPT as a special purpose
vehicle to which the relevant IP has been licensed for an undefined term while we will still own the IP
rights, and Hamilton will acquire CPT as a means to obtain the license concerned, and Hamilton has
become one of our customers. Our Directors confirm that, immediately prior to the Transaction, CPT
was solvent and did not have any material operations or assets except for the said license to the IP rights,
and did not have any material non-compliance with relevant laws and regulations or any material
litigation during the Track Record Period. Following the Transaction and up to the Latest Practicable
Date, the IP licensing agreements between CPT and us remained in force.
FINANCIAL INFORMATION
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Research and development expenses
Our research and development expenses mainly consist of (i) staff costs related to our
R&D personnel; (ii) depreciation and amortization expenses; (iii) service fees related to R&D
services provided by independent third parties; and (iv) material costs. The following table sets
forth a breakdown of our research and development expenses for the years/periods indicated:
For the year ended December 31, For the six months ended June 30,
2022 2023 2024 2024 2025
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(Unaudited)
Staff costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118144,733 53.5 141,976 51.5 164,617 51.4 76,949 51.6 84,527 52.6
Depreciation and
amortization expenses /H111887,338 32.3 98,805 35.8 112,167 35.0 53,176 35.7 60,649 37.7
Service fees /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111817,951 6.7 16,254 5.9 21,752 6.8 9,370 6.3 8,278 5.1
Material costs /H1118/H1118/H1118/H1118/H1118/H1118/H111812,516 4.6 6,755 2.4 10,642 3.3 5,052 3.4 4,969 3.1
Other expenses /H1118/H1118/H1118/H1118/H1118/H11187,838 2.9 12,009 4.4 11,190 3.5 4,458 3.0 2,362 1.5
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118270,376 100.0 275,799 100.0 320,368 100.0 149,005 100.0 160,785 100.0
During the Track Record Period, our R&D service fees, primarily consisted of outsourced
R&D personnel service fees paid to (i) a company established in the United States that
specializes in providing outsourced research and development staffing services, offering
technical personnel to support client innovation and engineering teams; and (ii) a company
based in the United States that focuses on the development and sales of wireless
communication products, such as technologies such as Wi-Fi, Bluetooth, and IoT solutions, and
is involved in both R&D and commercialization of its offerings. As and when specific skillset
or technical know-how is needed for specific R&D projects, our R&D team would engage R&D
outsourced personnel services from the said companies. We provide our requests for types of
personnel to such service providers and the service providers will provide us with outsourced
personnel to work on-site with our R&D team. When the R&D projects complete, the outsource
arrangement ends and the outsourced personnel will no longer work with us. We pay service
fee to the service providers and are not responsible for any salary or benefit of the outsourced
personnel. Such fees declined from RMB18.0 million in 2022 to RMB16.3 million in 2023,
increased to RMB21.8 million in 2024, and declined from RMB9.4 million to RMB8.3 million
between the six months ended June 30, 2024 and 2025. Our Directors confirm that these
fluctuations were not directly correlated with our overall revenue or internal R&D spending
levels. Instead, they reflected the specific nature and timing of R&D work that required
external support during each respective year.
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Selling and marketing expenses
Our selling and marketing expenses mainly consist of (i) staff costs related to our sales
and marketing personnel; (ii) office expenses; (iii) travel expenses; (iv) maintenance expenses;
(v) service fees related to industrial association membership; and (vi) business development
expenses. In 2022, 2023, and 2024, and the six months ended June 30, 2025, our selling and
marketing expenses amounted to RMB58.1 million, RMB70.5 million, RMB90.1 million, and
RMB52.0 million, respectively. The following table sets forth a breakdown of our selling and
marketing expenses for the years/periods indicated:
For the year ended December 31, For the six months ended June 30,
2022 2023 2024 2024 2025
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(Unaudited)
Staff costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111842,512 73.2 51,672 73.3 62,994 69.9 29,201 67.7 35,135 67.5
Office expenses /H1118/H1118/H1118/H1118/H1118/H11183,894 6.7 5,011 7.1 9,015 10.0 4,072 9.4 5,554 10.7
Travel expenses /H1118/H1118/H1118/H1118/H1118/H11181,198 2.1 4,000 5.7 4,722 5.3 2,431 5.6 2,996 5.8
Maintenance expenses /H1118/H11181,695 2.9 1,492 2.1 2,950 3.3 1,610 3.7 2,471 4.7
Service fees /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,423 2.4 2,121 3.0 2,156 2.4 1,996 4.6 1,165 2.2
Business development
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,642 2.8 1,795 2.6 2,103 2.3 850 2.0 1,006 1.9
Other expenses (1) /H1118/H1118/H1118/H1118/H11185,742 9.9 4,393 6.2 6,125 6.8 2,984 7.0 3,715 7.2
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111858,106 100.0 70,484 100.0 90,065 100.0 43,144 100.0 52,042 100.0
Note:
1. Primarily included insurance expenses, sampling fees, and other miscellaneous expenses.
General and administrative expenses
Our general and administrative expenses mainly consist of (i) staff costs; (ii) depreciation
and amortization expenses; (iii) professional service fees for consulting services mostly for the
purposes of acquiring market consulting services and insights into the latest market trends and
developments in order to support our strategic decision-making and commercial planning; (iv)
share-based payment; (v) office expenses; and (vi) travel expenses. In 2022, 2023 and 2024,
and the six months ended June 30, 2025, our general and administrative expenses amounted to
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RMB206.3 million, RMB217.5 million, RMB208.3 million, and RMB111.2 million,
respectively. The following table sets forth a breakdown of our general and administrative
expenses for the years/periods indicated:
For the year ended December 31, For the six months ended June 30,
2022 2023 2024 2024 2025
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(Unaudited)
Staff costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111876,359 37.0 75,606 34.8 85,090 40.9 38,375 37.2 46,982 42.3
Depreciation and
amortization expenses /H111863,509 30.8 67,675 31.1 54,236 26.0 31,222 30.3 28,029 25.2
Professional service fees /H111813,247 6.4 9,989 4.6 22,106 10.6 7,992 7.7 12,782 11.5
Share-based payment /H1118/H1118/H111820,596 10.0 35,027 16.1 12,034 5.8 5,042 4.9 3,499 3.1
Office expenses /H1118/H1118/H1118/H1118/H1118/H11187,164 3.5 7,331 3.4 7,602 3.7 3,024 2.9 3,695 3.3
Travel expenses /H1118/H1118/H1118/H1118/H1118/H11182,357 1.1 3,117 1.4 4,067 2.0 1,258 1.2 2,733 2.5
Other expenses (1) /H1118/H1118/H1118/H1118/H111823,039 11.2 18,743 8.6 23,124 11.0 16,321 15.8 13,479 12.1
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118206,271 100.0 217,488 100.0 208,259 100.0 103,234 100.0 111,199 100.0
Note:
1. Primarily included fees related to software services, lease expense, insurance, and other miscellaneous
expenses.
During the Track Record Period, our professional service fees declined from RMB13.2
million in 2022 to RMB10.0 million in 2023, and increased to RMB22.1 million in 2024.
Whilst the fees remained relatively stable in 2022 and 2023, the increase in 2024 was attributed
to our strategic decision to increase our sales efforts in overseas markets. For the six months
ended June 30, 2024 and 2025, such fees increased from RMB8.0 million to RMB12.8 million,
for similar reasons.
Reversal/(Provision) of expected credit loss, net
We make provisions for, or reversal of expected credit loss on trade and other receivables
based on the expected credit losses of our trade and bills receivables, deposits and other
receivables, in accordance with the relevant accounting policies. Please refer to Note 2.10 of
the Accountants’ Report in Appendix I to this Prospectus. We recorded reversal of expected
credit loss of RMB27.8 million and RMB4.7 million in 2022 and 2023, respectively, and
provision for expected credit loss of RMB1.4 million in 2024, and RMB5.6 million for the six
months ended June 30, 2025.
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Finance costs
Our finance costs mainly consist of (i) interest on bank borrowings; (ii) interests on other
borrowings; and (iii) interests on lease liabilities. In 2022, 2023, and 2024, and the six months
ended June 30, 2025, our finance costs amounted to RMB57.9 million, RMB61.1 million,
RMB52.9 million, and RMB24.3 million, respectively.
Income tax (expense)/credit
Our income tax expenses/credits mainly represented the current period’s taxable income
based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred
income tax assets and liabilities attributable to temporary differences and to unused tax losses.
We recorded income tax expense of RMB7.4 million in 2022 and RMB1.6 million for the six
months ended June 30, 2025, and income tax credit of RMB1.1 million and RMB3.6 million
in 2023 and 2024, respectively. We are subject to income tax on an entity basis on profits
arising in or derived from the jurisdictions in which our subsidiaries are domiciled and operate.
We are subject to various rates of income tax under different jurisdictions. During the Track
Record Period, our effective tax rate was (4.1%), 1.1%, 2.2% and (1.3%), respectively, which
was mainly due to the preferential tax policy in the PRC, under which 200% of eligible R&D
expenditures incurred by PRC entities are tax-deductible. The following set forth our principal
applicable taxes and tax rates:
PRC
We are subject to EIT Law of the PRC and our income tax expense is calculated based
on the applicable tax rate of 25% on the assessable profits of the subsidiaries in accordance
with PRC tax laws and regulations for the Track Record Period. Our Company was accredited
as a high and new technology enterprise (“ HNTE ”) and was entitled to a preferential tax rate
of 15% for the qualified period. The HNTE certificate needs to be renewed every three years
to enjoy the preferential EIT rate. In addition, PRC companies engaging in research and
development activities are entitled to claim 200% of their R&D expenses so incurred as tax
deductible expenses when determining their assessable profits for the relevant year according
to the applicable laws and regulations in the PRC.
United States
Our subsidiaries in the United States are subject to income tax rates between 4% and
8.99% at the state level, and 21% at the federal level, during the Track Record Period.
Japan
Our subsidiary in Japan is subject to corporate income tax include national corporate
income tax, inhabitants tax and enterprise tax, which are calculated on the estimated assessable
profit for the year/period. During the Track Record Period, the aggregated rates of national
corporate income tax, inhabitants tax, and enterprise tax resulted in statutory income tax rates
of 35%.
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Hong Kong
During the Track Record Period, no Hong Kong profit tax has been provided as our Group
has no assessable profit during the Track Record Period.
Germany
Germany taxes its corporate residents on their worldwide income. Corporation tax is
levied at a uniform rate of 15% and is subject to a surcharge (solidarity surcharge). This results
in a total tax rate of 19%.
Malaysia
During the Track Record Period, our subsidiary in Malaysia did not have any operations
nor was it involved in the business transactions with our co-location partner in Malaysia.
Hence, our subsidiary in Malaysia did not generate any income. Therefore, our Group did not
have any tax exposure in Malaysia.
Profit for the period
In light of the above, our profit for the period amounted to RMB171.1 million, RMB95.0
million, RMB167.0 million, and RMB117.5 million, respectively, at a net profit margin of
4.5%, 3.1%, 4.6%, and 5.8% in 2022, 2023, and 2024, and the six months ended June 30, 2025,
respectively.
PERIOD-TO-PERIOD COMPARISON OF RESULTS OF OPERATIONS
Revenue
Our revenue increased by RMB272.6 million, or by 15.5%, from RMB1,761.4 million for
the six months ended June 30, 2024 to RMB2,034.0 million for the six months ended June 30,
2025. This was primarily due to increases in the revenue from the sales of our broadband and
photonics products.
 Our revenue from broadband products increased by RMB216.9 million, or by
22.2%, from RMB975.7 million for the six months ended June 30, 2024 to
RMB1,192.6 million for the six months ended June 30, 2025, which was in line with
the corresponding increase in sales volume from 5.1 million units to 5.3 million
units.
 Our revenue from wireless products decreased by RMB136.0 million, or by 24.7%,
from RMB551.2 million for the six months ended June 30, 2024 to RMB415.2
million for the six months ended June 30, 2025, which was in line with the
corresponding decrease in sales volume from 1.2 million units to 0.9 million units.
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 Our revenue from photonics products increased by RMB192.2 million, or by 95.1%,
from RMB202.0 million for the six months ended June 30, 2024 to RMB394.2
million for the six months ended June 30, 2025, which was in line with the
corresponding increase in sales volume from 120.1 million units to 247.0 million
units.
Cost of sales
Our cost of sales increased by RMB211.2 million, or by 15.3%, from RMB1,378.2 million
for the six months ended June 30, 2024 to RMB1,589.4 million for the six months ended June
30, 2025. This was mainly in line with the increase in revenue.
Gross profit and gross profit margin
Our gross profit increased by RMB61.4 million, or by 16.0%, from RMB383.2 million for
the six months ended June 30, 2024 to RMB444.6 million for the six months ended June 30,
2025. This was primarily due to the growth in revenue. Similarly, our gross profit margin
remained relatively stable at 21.8% and 21.9% respectively.
 Our gross profit from broadband products increased by RMB29.7 million, or by
14.9%, from RMB199.6 million for the six months ended June 30, 2024 to
RMB229.3 million for the six months ended June 30, 2025, which was in line with
the corresponding increase in our revenue generated from broadband products. For
the same periods, our gross profit margin from broadband products remained
relatively stable at 20.5% and 19.2% respectively.
 Our gross profit from wireless products decreased by RMB58.7 million, or by
40.9%, from RMB143.6 million for the six months ended June 30, 2024 to RMB84.9
million for the six months ended June 30, 2025. Our gross profit margin from
wireless products dropped from 26.1% to 20.5% as we were in the process of
transition certain wireless products from a previous generation, which used to have
higher gross profit margins. During the lead-up to the launch of the new generation,
customers tended to defer purchases of existing wireless products in anticipation of
the new release. As a result of such transition, we sold fewer of these products that
used to have a higher gross profit margin, whilst the next generation of such
products had not been launched to the market.
 Our gross profit from photonics products increased by RMB87.8 million, or by
220.6%, from RMB39.8 million for the six months ended June 30, 2024 to
RMB127.6 million for the six months ended June 30, 2025. Our gross profit margin
from photonics products increased from 19.7% to 32.4%. This improvement in the
gross profit and gross profit margin for our photonics products in 2025 was
primarily attributable to completion of the product iteration process, and the market
acceptance and large-scale commercialization of our 800G products. These products
carried improved margins, contributing to an increase in both our gross profit and
gross profit margins for the period.
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Other income, net
Our other income, net decreased by RMB24.5 million, or by 63.0%, from RMB38.9
million for the six months ended June 30, 2024 to RMB14.4 million for the six months ended
June 30, 2025. This was mainly due to a one-off government investment subsidy for our
Shanghai No. 2 facility which we received in the six months ended June 30, 2024 upon the
investment funds are in place.
Other gains/(loss), net
Our other gains/(loss), net increased by RMB21.1 million, from a loss of RMB7.1 million
for the six months ended June 30, 2024 to a gain of RMB14.0 million for the six months ended
June 30, 2025. This was primarily due to favorable exchange rate movements and the absence
of one-off losses recorded in the prior period, and a disposal of assets in 2024.
Research and development expenses
Our research and development expenses increased by RMB11.8 million, or by 7.9%, from
RMB149.0 million for the six months ended June 30, 2024 to RMB160.8 million for the six
months ended June 30, 2025. This was mainly due to an increase number of research and
development staff members.
Selling and marketing expenses
Our selling and marketing expenses increased by RMB8.9 million, or by 20.6%, from
RMB43.1 million for the six months ended June 30, 2024 to RMB52.0 million for the six
months ended June 30, 2025. This was primarily due to an increased number of selling and
marketing staff members.
General and administrative expenses
Our general and administrative expenses increased by RMB8.0 million, or by 7.8%, from
RMB103.2 million for the six months ended June 30, 2024 to RMB111.2 million for the six
months ended June 30, 2025. This was mainly due to an increased number of general and
administrative staff members.
Reversal/(provision) for expected credit losses, net
Our provision for expected credit losses increased by RMB1.3 million, or by 30.2%, from
RMB4.3 million for the six months ended June 30, 2024 to RMB5.6 million for the six months
ended June 30, 2025. This was mainly due to an increase in trade receivables.
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Finance costs
Our finance costs decreased by RMB7.8 million, or by 24.3%, from RMB32.1 million for
the six months ended June 30, 2024 to RMB24.3 million for the six months ended June 30,
2025. This was mainly due to reduced interest rates.
Income tax (expense)/credit
Our income tax position changed from a credit of RMB1.4 million for the six months
ended June 30, 2024 to an expense of RMB1.6 million for the six months ended June 30, 2025.
This was mainly due to higher taxable profits in the current period.
Profit for the period
For the above reasons, our profit for the period increased by RMB32.9 million, or by 38.9%,
from RMB84.6 million for the six months ended June 30, 2024 to RMB117.5 million for the six
months ended June 30, 2025, and we have achieved a net profit margin of 4.8% and 5.8%,
respectively.
Y ear ended December 31, 2024 compared to the year ended December 31, 2023
Revenue
Our revenue increased by RMB564.5 million or by 18.3% from RMB3,085.4 million in
2023 to RMB3,649.9 million in 2024, primarily due to the increase in revenue from all of our
three major products, driven by the increase in their corresponding sales volume.
 Our revenue from broadband products increased by RMB205.6 million or by 11.3%
from RMB1,827.1 million in 2023 to RMB2,032.7 million in 2024, primarily due to
the increase in sales volume of broadband products from 7.6 million units to 9.6
million units, driven by the increased customers’ demand of our broadband
products, particularly our 10GPON products. Nevertheless, the ASP of broadband
products decreased from RMB241.7 to RMB212.2.
 Our revenue from wireless products increased by RMB333.9 million or by 46.5%
from RMB718.5 million in 2023 to RMB1,052.4 million in 2024, primarily due to
the increased sales volume of wireless products from 1.2 million units to 2.6 million
units, as a result of our continual product upgrade and iteration, particularly our
high-end Wi-Fi 6E products. Nevertheless, the ASP of wireless products decreased
from RMB588.9 to RMB409.5.
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 Our revenue from photonics products increased by RMB44.8 million or by 10.0%
from RMB446.7 million in 2023 to RMB491.5 million in 2024, primarily due to the
increased sales volume of high-priced products, i.e. 400G and 800G products, driven
by our enhanced marketing efforts. During the same period, the ASP of photonics
products increased from RMB 761.0 to RMB1,380.7.
Cost of sales
Our cost of sales increased by RMB466.3 million or by 19.3% from RMB2,421.3 million
in 2023 to RMB2,887.6 million in 2024, which was generally in line with the increase in the
sales of our products, and in our revenue during the year.
Gross profit and gross profit margin
Our gross profit increased by RMB98.1 million or by 14.8% from RMB664.1 million in
2023 to RMB762.2 million in 2024, primarily due to the increase in the gross profit for our
wireless products. Our gross profit margin decreased from 21.5% to 20.9%, primarily due to
the decrease in gross profit margin of broadband products and photonic products, partially
offset by an increase in gross profit margin of wireless products.
 Our gross profit of broadband products increased by RMB21.4 million or by 6.0%
from RMB356.4 million in 2023 to RMB377.8 million in 2024, primarily due to the
increase in revenue from broadband products. Our gross profit margin for broadband
products remained relatively stable at 19.5% in 2023 compared to 18.6% in 2024.
 Our gross profit of wireless products increased by RMB94.1 million or by 57.0%
from RMB165.0 million in 2023 to RMB259.1 million in 2024, primarily due to the
increase in revenue from wireless products. Our gross profit margin for wireless
products remained relatively stable at 23.0% in 2023 and 24.6% in 2024.
 Our gross profit of photonics products decreased by RMB11.1 million or by 8.5%
from RMB130.2 million in 2023 to RMB119.1 million in 2024 and our gross profit
margin for photonics products decreased from 29.1% in 2023 to 24.2% in 2024,
primarily due to strategic changes to the Company’s product mix with products of
lower gross profit margins continuing to represent a significant share for the purpose
of enhancing market share and capturing growth opportunities. Specifically, the
sales volume for higher-margin products decreased, resulting in a less favorable
sales mix and a corresponding reduction in our overall gross profit margin.
Based on our business models,
 Our gross profit from our JDM customers increased by RMB61.9 million or by
20.7% from RMB298.6 million in 2023 to RMB360.6 million in 2024, which was
because of the increased sales for higher-end products from our JDM customers.
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 Our gross profit from our ODM customers increased by RMB36.2 million or by
9.9% from RMB365.5 million in 2023 to RMB401.7 million in 2024, which was
because of the relatively lower costs incurred in the procurement of raw materials,
as compared to the peak of 2022.
Other income, net
Our other income, net increased by RMB30.8 million or by 163.0% from RMB18.9
million in 2023 to RMB49.7 million in 2024, primarily due to increases in (i) government
subsidies; and (ii) interest income.
Other gains, net
Our other gains, net decreased by RMB6.6 million or by 21.2% from RMB31.1 million
in 2023 to RMB24.5 million in 2024, primarily due to the decrease in net foreign exchange
gains which is primarily attributable to fluctuations in foreign exchange rates, especially in
USD and JPY .
Research and development expenses
Our research and development expenses increased by RMB44.6 million or by 16.2% from
RMB275.8 million in 2023 to RMB320.4 million in 2024, primarily due to increases in (i) staff
costs as a result of the increase in the number of our R&D personnel; and (ii) depreciation and
amortization expenses in connection with R&D activities.
Selling and marketing expenses
Our selling and marketing expenses increased by RMB19.6 million or by 27.8% from
RMB70.5 million in 2023 to RMB90.1 million in 2024, primarily due to the increase in staff
costs as a result of the increase in the number of our sales and marketing personnel.
General and administrative expenses
Our general and administrative expenses decreased by RMB9.2 million or by 4.2% from
RMB217.5 million in 2023 to RMB208.3 million in 2024, primarily due to the decrease in
share-based payment.
Finance costs
Our finance costs decreased by RMB8.2 million or by 13.4% from RMB61.1 million in
2023 to RMB52.9 million in 2024, primarily due to the decrease in interests on bank
borrowings as a result of the decrease in the outstanding amount of our bank loans.
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Income tax credit
Our income tax credit increased by RMB2.5 million from RMB1.1 million in 2023 to
RMB3.6 million in 2024.
Profit for the year
As a result of the foregoing, our profit for the year increased by RMB72.0 million or by
75.8% from RMB95.0 million in 2023 to RMB167.0 million in 2024.
Y ear ended December 31, 2023 compared to the year ended December 31, 2022
Revenue
In 2023, with gradual post-pandemic recovery of global economy, the industry was still
in the process of consumption of the inventories accumulated during the pandemic, which in
turn resulted in a postponed demand for our products. Our revenue decreased by RMB698.3
million, or by 18.5%, from RMB3,783.7 million in 2022 to RMB3,085.4 million in 2023. In
particular, our revenue from broadband products decreased by RMB232.2 million or by 11.3%
from RMB2,059.3 million in 2022 to RMB1,827.1 million in 2023. Our revenue from wireless
products decreased by RMB337.6 million, or by 32.0%, from RMB1,056.1 million in 2022 to
RMB718.5 million in 2023. Our revenue from photonics products decreased by RMB31.5
million, or by 6.6%, from RMB478.2 million in 2022 to RMB446.7 million in 2023. In terms
of sales volume, those of our broadband products decreased from 10.2 million units to 7.6
million units, the sales volume of our wireless products decreased from 2.0 million units to 1.2
million units, and the sales volume of our photonics products decreased from 0.9 million to 0.6
million. In terms of ASP , those of our broadband products increased from RMB202.5 to
RMB241.7, the ASP of our wireless products increased from RMB523.3 to RMB588.9, and the
ASP of our photonics products from RMB537.3 to RMB761.0, respectively.
Cost of sales
Our cost of sales decreased by RMB673.8 million, or by 21.8%, from RMB3,095.1
million in 2022 to RMB2,421.3 million in 2023, primarily as a result of the decrease in sales
of our products. The decrease in cost of sales was generally in line with the decrease in our
revenue during the same year.
Gross profit and gross profit margin
Our gross profit decreased by RMB24.5 million, or by 3.6%, from RMB688.6 million in
2022 to RMB664.1 million in 2023, primarily due to the decrease gross profit of wireless
products and photonics products as a result of decrease in revenue from these products,
partially offset by the increase in gross profit of broadband products as a result of the decreased
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costs for broadband products. Our gross profit margin increased from 18.2% to 21.5%,
primarily due to the increases in gross profit margin of all of broadband products, wireless
products and photonics products.
 Our gross profit of broadband products increased by RMB49.8 million, or by 16.2%,
from RMB306.6 million in 2022 to RMB356.4 million in 2023, primarily due to the
decrease of costs for key component of our broadband products despite the decrease
in the revenue from broadband products. Our gross profit margin of broadband
products increased from 14.9% to 19.5%, primarily due to increased cost efficiency,
in particular for certain key components.
 Our gross profit of wireless products decreased by RMB45.6 million, or by 21.7%,
from RMB210.6 million in 2022 to RMB165.0 million in 2023, primarily due to the
decrease in revenue from our wireless products. Our gross profit margin for wireless
products increased from 19.9% to 23.0%, primarily due to increased cost efficiency.
 Our gross profit of photonics products slightly decreased from RMB131.9 million in
2022 to RMB130.2 million in 2023. Our gross profit for photonics products
increased from 27.6% to 29.1%, primarily due to increased cost efficiency.
Based on our business models,
 Our gross profit from our JDM customers decreased by RMB94.7 million, or by
24.1%, from RMB393.3 million in 2022 to RMB298.6 million in 2023, which was
due to the increased raw material costs.
 Our gross profit from our ODM customers increased by RMB70.2 million, or by
23.8%, from RMB295.3 million in 2022 to RMB365.5 million in 2023, as we were
able to negotiate more favorable prices on certain raw materials, as a result to an
increased pool of comparable suppliers, in order to maintain our costs at a relatively
lower level.
Other income, net
Our other income, net decreased by RMB1.1 million, or by 5.5%, from RMB20.0 million
in 2022 to RMB18.9 million in 2023, primarily due to the decrease in government subsidies,
partially offset by the increase in interest income.
Other gains, net
Our other gains, net decreased by RMB3.7 million, or by 10.6%, from RMB34.8 million
in 2022 to RMB31.1 million in 2023, primarily due to the decrease in foreign exchange gains,
net, which is primarily attributable to fluctuations in foreign exchange rates.
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Research and development expenses
Our research and development expenses increased by RMB5.4 million, or by 2.0%, from
RMB270.4 million in 2022 to RMB275.8 million in 2023, primarily due to the increase in
depreciation and amortization expenses, partially offset by the decreases in (i) staff costs and
(ii) material costs related to R&D activities.
Selling and marketing expenses
Our selling and marketing expenses increased by RMB12.4 million, or by 21.3%, from
RMB58.1 million in 2022 to RMB70.5 million in 2023, primarily due to the increase in staff
costs as a result of the increase in the number of our sales and marketing personnel.
General and administrative expenses
Our general and administrative expenses increased by RMB11.2 million, or by 5.4%, from
RMB206.3 million in 2022 to RMB217.5 million in 2023, primarily due to the increase in
share-based payment.
Finance costs
Our finance costs increased by RMB3.2 million, or by 5.5%, from RMB57.9 million in
2022 to RMB61.1 million in 2023, primarily due to the increase in interests on bank
borrowings as a result of the increase in the outstanding amount of our bank borrowings.
Income tax (expense)/credit
We recorded an income tax expense of RMB7.4 million in 2022 and an income tax credit
of RMB1.1 million in 2023.
Profit for the year
As a result of the foregoing, our profit for the year decreased by RMB76.1 million or by
44.5% from RMB171.1 million in 2022 to RMB95.0 million in 2023.
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DISCUSSION OF CERTAIN KEY ITEMS OF CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION
Non-current assets and non-current liabilities
The following table sets forth the components of our non-current assets and non-current
liabilities as of the dates indicated:
As of December 31,
As of
June 30,
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Non-current assets
Property, plant and
equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118612,417 525,089 655,566 957,242
Right-of-use assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111879,315 181,312 148,705 138,857
Prepaid lease payments /H1118/H1118/H1118/H1118/H1118– 35,506 34,795 34,439
Goodwill /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111898,969 98,969 98,969 98,969
Intangible assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118579,417 591,424 543,698 547,692
Other financial assets /H1118/H1118/H1118/H1118/H1118/H11184,560 14,560 14,560 14,560
Deposits for acquisition of
property, plant and
equipment, and intangible
assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118384 3,035 26,902 36,301
Deferred tax assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111830,216 31,137 32,448 32,265
1,405,278 1,481,032 1,555,643 1,860,325
Non-current liabilities
Bank borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 91,900 78,000
Other borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111893,88 1–––
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111836,999 145,887 135,938 126,320
Deferred income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111830,281 29,622 42,513 35,142
Deferred tax liabilities /H1118/H1118/H1118/H1118/H1118/H111835,024 34,305 28,470 26,971
196,185 209,814 298,821 266,433
FINANCIAL INFORMATION
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--- page 357 ---
Property, plant, and equipment
Our property, plant, and equipment primarily consists of (i) buildings; (ii) machinery and
equipment; (iii) computer equipment; (iv) leasehold improvements; (v) motor vehicles; (vi)
office equipment; and (vii) construction in progress. The following table sets forth a
breakdown of our property, plant and equipment as of the dates indicated:
As of December 31,
As of
June 30,
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Buildings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111855,934 51,305 46,676 249,494
Machinery and equipment /H1118/H1118/H1118464,503 429,436 367,672 364,604
Computer equipment /H1118/H1118/H1118/H1118/H1118/H1118/H11188,266 6,670 5,046 6,396
Leasehold improvements /H1118/H1118/H1118/H111824,483 13,213 4,969 2,588
Motor vehicles /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111859 54 1,110 493
Office equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,264 486 2,726 2,633
Construction in progress /H1118/H1118/H1118/H111857,908 23,925 227,367 331,034
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118612,417 525,089 655,566 957,242
Our property, plant and equipment decreased by RMB87.3 million from RMB612.4
million as of December 31, 2022 to RMB525.1 million as of December 31, 2023, primarily due
to the depreciation of machinery and equipment, leasehold improvements. Our property, plant
and equipment increased by RMB130.5 million to RMB655.6 million as of December 31, 2024,
and the RMB957.2 million as of June 30, 2025, primarily due to the increase in construction
in progress as a result of construction of our second in-house facility in Jiashan, near Shanghai.
Intangible assets
Our intangible assets primarily consist of (i) patent; (ii) software; and (iii) deferred
development cost. Our deferred development cost represents our capitalized R&D projects. The
following table sets forth a breakdown of our intangible assets as of the dates indicated:
As of December 31,
As of
June 30,
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Patent /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111829,155 19,437 9,718 4,859
Software /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111880,042 64,300 51,001 44,117
Deferred development cost /H1118/H1118470,220 507,687 482,979 498,716
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118579,417 591,424 543,698 547,692
FINANCIAL INFORMATION
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--- page 358 ---
Our intangible assets increased by RMB12.0 million from RMB579.4 million as of
December 31, 2022 to RMB591.4 million as of December 31, 2023, primarily due to the
increase in deferred development cost in respect of R&D activities, partially offset by the
amortization of software. Our intangible assets decreased by RMB47.7 million from
RMB591.4 million as of December 31, 2023 to RMB543.7 million as of December 31, 2024,
and RMB547.7 million as of June 30, 2025, primarily due to the amortization of deferred
development cost and software.
Our Directors confirm that certain intangible assets were not yet available for use. These
intangible assets primarily consist of deferred development costs arising from research and
development projects that had not yet reached completion. As such, they are not subject to
amortisation. As of December 31, 2022, 2023, and 2024, and June 30, 2025, the carrying
amounts of these deferred development costs not yet available for use were RMB256.6 million,
RMB286.5 million, and RMB133.1 million, and RMB143.1 million, respectively. Our
Company has carried out an impairment review of the carrying amounts of intangible assets not
yet available for use as of December 31, 2022, 2023 and 2024 and no provision for impairment
has been made.
The recoverable amounts of the intangible assets not yet available for use are determined
based on value in use calculations. The calculation of the recoverable amounts of the intangible
assets not yet available for use uses cash flow projections based on the financial estimates on
each intangible asset not yet available for use, defined as separate cash-generating unit
(“CGU”) made by us, with reference to the timing of commercial operation of the products and
the prevailing market conditions. The recoverable amounts of each intangible asset not yet
available for use based on the estimated value-in-use calculations was higher than the
respective carrying amount as of December 31, 2022, 2023 and 2024, and June 30, 2025.
Accordingly, no provision for impairment loss for intangible assets not yet available for use is
considered necessary.
The following table sets forth key assumptions on which we have based our cash flow
projections to undertake impairment testing of respective intangible assets not yet available for
use as of December 31, 2022, 2023 and 2024:
As of December 31, As of June 30,
2022 2023 2024 2025
Average annual
revenue growth
rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810%-50% 10%-330% 0%-330% 18%-97%
Pre-tax discount rate /H1118
12.92%-
15.09%
14.14%-
15.15%
13.24%-
14.55%
13.32%-
15.50%
FINANCIAL INFORMATION
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--- page 359 ---
Based on the result of the impairment testing, the proportion of the estimated recoverable
amount of the intangible assets not yet available for use exceeded their carrying amount (“ the
headroom ”) to their carrying amount was as follows:
As of December 31, As of June 30,
2022 2023 2024 2025
Headroom /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
13.29%-
19.28%
17.28%-
588.00%
21.86%-
228.55%
78.36%-
162.85%
We have performed a sensitivity test by decreasing 5% of expected revenue or increasing
1% of discount rate, with all other key assumptions held constant, the recoverable amount of
the intangible assets not yet available for use would have exceeded their carrying amount.
We believe that any reasonable possible change in any of the key assumptions would not
cause the carrying amounts of the intangible assets not yet available for use to exceed its
recoverable amount. We also concluded that no provision for impairment on the intangible
assets not yet available for use has to be recognized as of December 31, 2022, 2023 and 2024,
and June 30, 2025.
Right-of-use assets
Our right-of-use assets increased from RMB79.3 million as of December 31, 2022 to
RMB181.3 million as of December 31, 2023, primarily due to the renewal of property lease by
our subsidiary in the United States. Our right-of-use assets decreased from RMB181.3 million
as of December 31, 2023 to RMB148.7 million as of December 31, 2024, and RMB138.9
million as of June 30, 2025, primarily due to depreciation charged during the year.
Goodwill
Our goodwill arises from the acquisition of Actiontec Electronics. Our goodwill remained
at RMB99.0 million as of December 31, 2022, 2023, and 2024, and June 30, 2025. Impairment
testing for goodwill was conducted for 2022, 2023, and 2024, and June 30, 2025. The
assessment was based on cash flow projections derived from historical performance and
forward-looking expectations, including anticipated efficiency improvements and new product
developments. A total of RMB98.97 million in goodwill was allocated to the respective CGUs
of the acquired subsidiaries for the purpose of impairment testing. We engaged an independent
external valuer to assess the recoverable amounts of the goodwill as of December 31, 2022,
2023 and 2024, and June 30, 2025. The recoverable amount of the CGUs is determined based
on value in use calculations based on five-year financial budgets. We did not assume any
growth to the cash flows subsequent to the five-year period. The following table sets forth each
FINANCIAL INFORMATION
– 349 –


--- page 360 ---
key assumptions of CGUs on which management has based its cash flow projections to
undertake impairment testing of goodwill:
For the year ended December 31,
For the
six months
ended
June 30,
2022 2023 2024 2025
Revenue annual growth
rate during the
forecast period
(1) /H1118/H1118/H1118/H1118
(11.63%)-
14.01%
0%-
14.01%
0%-
73.30%
0%-
21.91%
Pre-tax discount rate /H1118/H1118/H111817.88% 18.97% 19.83% 18.04%
Note:
1. In preparation of impairment assessment as of December 31, 2022, management considered the major
customers has still in the process of consumption of the inventories accumulated during the pandemic,
negative revenue annual growth rate adopted for the expected revenue generated during the year ended
December 31, 2023.
As of December 31, 2022, 2023 and 2024, and June 30, 2025, based on the value-in-use
calculations, the recoverable amount exceeded the carrying amount by RMB5,691,000,
RMB30,468,000, RMB449,311,000, and RMB456,989,000, respectively.
Key assumptions for value in use calculations
Assumptions used in the value-in-use calculations for CGUs during the Track Record
Period were based on a combination of internal and external factors that influence projected
revenue growth and discount rates. These assumptions underpin the cash flow projections used
by management to assess goodwill impairment. The key assumptions applied in the
value-in-use assessments are described below and reflect management’s expectations regarding
operational performance, market conditions, and strategic developments:
 Annual growth rates of our revenue: The basis used to determine revenue annual
growth rates is the average results achieved in the year immediately before the
budget year, increased for expected efficiency improvements, and expected product
and market development. The expected revenue annual growth rates increased
significantly is mainly due to new products development.
 Pre-tax discount rates: The cash flow projections are discounted using pre-tax
discount rate of 17.88%, 18.97%, 19.83%, and 18.04% as of December 31, 2022,
2023, and 2024, respectively. The discount rates reflect the current market
assessments of the time value of money and are based on the estimated cost of
capital.
FINANCIAL INFORMATION
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--- page 361 ---
Sensitivity analysis
We have performed a sensitivity test by decreasing 2% of revenue annual growth rates or
increasing 1% of discount rate, with all other key assumptions held constant. The impacts on
the amount by which CGU’s recoverable amount exceed its carrying amount are as follows:
As of December 31,
As of
June 30,
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Revenue annual growth rates
decreased by 2% /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(4,918) (7,024) (29,683) (33,272)
Pre-tax discount rate
increased by 1% /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(3,630) (4,918) (21,359) (22,370)
The headroom corresponding to the impact of the above key assumptions are as follows:
As of December 31,
As of
June 30,
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Headroom – decreasing
revenue annual growth
rates by 2% /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118773 23,444 419,628 423,717
Headroom – increasing
pre-tax discount rate by
1% /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,061 25,550 427,952 434,619
Based on the headroom of the impairment assessment for the Track Record Period, we
believe that any reasonably possible change in any of the key assumptions would not result in
an impairment provision of goodwill.
These sensitivity analyses are based on changing the relevant assumption while holding
other assumptions constant. In practice, this is unlikely to occur and changes in some of the
assumptions may be correlated. Considering there was still sufficient headroom based on the
assessment, we believe there was no impairment for the goodwill as of December 31, 2022,
2023, and 2024, and June 30, 2025.
Based on the results of the abovementioned assessments as conducted by our management
and the independent external valuer, our Directors conclude that no impairment loss on the
aforementioned goodwill is required to be recognised as of December 31, 2022, 2023, and
2024, and June 30, 2025. Please refer to Note 17 of the Accountants’ Report in Appendix I to
this Prospectus for further details.
FINANCIAL INFORMATION
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--- page 362 ---
Other financial assets
Our other financial assets mainly comprised financial investment funds. Our other
financial assets increased from RMB4.6 million as of December 31, 2022 to RMB14.6 million
as of December 31, 2023 and remained at that level as of December 31, 2024, and as of
June 30, 2025. This increase was primarily attributable to a strategic investment made by our
Company in 2023 in a domestic chip manufacturing enterprise and also one of our suppliers.
During the Track Record Period, we had procured a small quantity of chips from the enterprise,
with a cumulative purchase amount of RMB12,350. Our Directors confirm that all transactions
were conducted on normal commercial terms and at an arm’s length basis. As of June 30, 2025,
we hold 1.3171% of its total equity interests. The investment reflects our Group’s long-term
commitment to strengthening upstream semiconductor capabilities and enhancing supply chain
resilience. Rather than being driven by short-term financial operations, this increase in other
financial assets was the result of a deliberate capital allocation decision aligned with our
industrial development strategy. It also demonstrates our Group’s proactive approach to
supporting key sectors that are critical to our operational ecosystem and national technological
advancement.
Net current assets
As of December 31,
As of
June 30,
As of
August 31,
2022 2023 2024 2025 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Current assets
Inventories /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,729,540 1,573,454 1,685,544 1,978,295 2,331,606
Trade and bills
receivables /H1118/H1118/H1118/H1118/H1118/H1118/H11181,606,878 1,115,577 1,238,116 1,580,191 1,552,094
Deposits,
prepayments and
other receivables /H1118/H1118101,287 77,936 130,807 179,049 203,404
Tax recoverable /H1118/H1118/H1118/H1118/H11183,980 49,942 51,363 53,321 53,060
Pledged deposits /H1118/H1118/H1118/H111835,500 20,000 20,000 20,000 20,000
Cash and cash
equivalents /H1118/H1118/H1118/H1118/H1118/H1118/H1118354,707 417,977 507,341 588,231 445,918
3,831,892 3,254,886 3,633,171 4,399,087 4,606,082
FINANCIAL INFORMATION
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--- page 363 ---
As of December 31,
As of
June 30,
As of
August 31,
2022 2023 2024 2025 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Current liabilities
Trade and bills
payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,780,381 864,443 1,234,954 1,594,909 1,662,743
Other payables and
accruals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118180,566 137,203 148,472 112,570 115,506
Contract liabilities /H1118/H1118/H111811,925 45,391 33,363 24,787 6,540
Bank borrowings /H1118/H1118/H1118/H1118913,014 1,111,827 991,700 1,696,058 1,981,412
Other borrowings /H1118/H1118/H1118/H1118175,090 41,60 9–––
Lease liabilities /H1118/H1118/H1118/H1118/H111844,927 37,670 20,134 21,445 21,628
Income tax payable /H1118/H11189,565 – 381 – –
3,115,468 2,238,143 2,429,004 3,449,769 3,787,829
Net current assets /H1118/H1118716,424 1,016,743 1,204,167 949,318 818,253
Our net current assets were at RMB818.3 million as of August 31, 2025.
Our net current assets decreased from RMB1,204.2 million as of December 31, 2024 to
RMB949.3 million as of June 30, 2025, primarily due to the increase in our bank borrowing
of RMB704.4 million and the increase in our trade and bills payables of RMB360.0 million.
Our net current assets increased from RMB1,016.7 million as of December 31, 2023 to
RMB1,204.2 million as of December 31, 2024, primarily due to the increase in our inventories
of RMB112.1 million and an increase in our trade and bills receivables of RMB122.5 million.
Such increase was partially offset by an increase in trade and bills payables of RMB370.5
million.
Our net current assets increased from RMB716.4 million as of December 31, 2022 to
RMB1,016.7 million as of December 31, 2023, primarily due to the decrease in our current
liabilities outpacing the decrease in our current assets. The decrease in current assets was
mainly due to the decrease in trade and bills receivables of RMB491.3 million. The decrease
in current liabilities was mainly due to a decrease of trade and bills payables of RMB916.0
million.
FINANCIAL INFORMATION
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--- page 364 ---
Inventories
Our inventories primarily consist of (i) raw materials; (ii) work in progress; (iii) finished
goods; and (iv) goods in transit. The following table sets forth details of our inventories as of
the dates indicated:
As of December 31,
As of
June 30,
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Raw materials /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,163,158 995,704 1,054,035 1,309,215
Work in progress /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118391,076 313,073 397,008 458,773
Finished goods /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118207,155 291,369 269,097 206,824
Goods in transit /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,254 13,372 9,582 51,030
1,767,643 1,613,518 1,729,722 2,025,842
Less: Provision for
inventories /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(38,103) (40,064) (44,178) (47,547)
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,729,540 1,573,454 1,685,544 1,978,295
The following table sets forth an aging analysis of our inventory as of the dates indicated:
As of December 31,
As of
June 30,
2022 2023 2024 2025
Raw materials
– Within 6 months /H1118/H1118/H1118/H1118/H1118/H1118/H11181,040,584 919,354 854,266 1,021,309
– 7 to 12 months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111898,804 30,487 157,205 219,479
– Over 1 year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111823,770 45,863 42,564 68,427
Sub-total as of year end /H1118/H1118/H1118/H11181,163,158 995,704 1,054,035 1,309,215
Work in progress
– Within 6 months /H1118/H1118/H1118/H1118/H1118/H1118/H1118343,947 275,049 370,146 398,286
– 7 to 12 months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819,448 15,795 12,701 34,893
– Over 1 year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111827,681 22,229 14,161 25,594
Sub-total as of year end /H1118/H1118/H1118/H1118391,076 313,073 397,008 458,773
Finished goods
– Within 6 months /H1118/H1118/H1118/H1118/H1118/H1118/H1118176,035 248,335 242,811 187,018
– 7 to 12 months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,498 3,524 1,763 8,527
– Over 1 year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,131 7,238 24,523 11,279
Sub-total as of year end /H1118/H1118/H1118/H1118183,664 259,097 269,097 206,824
FINANCIAL INFORMATION
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--- page 365 ---
As of December 31,
As of
June 30,
2022 2023 2024 2025
Goods in transit
– Within 6 months /H1118/H1118/H1118/H1118/H1118/H1118/H111829,745 45,645 9,582 51,030
– 7 to 12 months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––
– Over 1 year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––
Sub-total as of year end /H1118/H1118/H1118/H111829,745 45,645 9,582 51,030
Total
– Within 6 months /H1118/H1118/H1118/H1118/H1118/H1118/H11181,590,311 1,488,383 1,476,805 1,657,643
– 7 to 12 months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118120,750 49,806 171,669 262,899
– Over 1 year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111856,582 75,330 81,248 105,300
Total as of year end /H1118/H1118/H1118/H1118/H1118/H1118/H11181,767,643 1,613,519 1,729,722 2,025,842
During the Track Record Period, the ageing profile of our Group’s inventory remained
relatively stable, with the majority of inventory consistently falling within the “within 6
months” category. This structure reflects our operational strategy of maintaining a healthy level
of working inventory to support ongoing production and customer delivery schedules. The
inventory aged under six months primarily consists of advance stockpiling for customer orders
and strategic reserves of key raw materials. These materials are often procured ahead of time
to mitigate risks associated with supply chain disruptions, long lead times, or limited
production capacity, particularly for critical components such as functional chips. As a result,
while there may be minor fluctuations in the absolute values of inventory across different age
brackets and years, these changes are largely attributable to timing differences in procurement
and production cycles rather than shifts in policy or inefficiencies. The consistency in the
ageing profile underscores our Group’s disciplined inventory management practices and our
proactive approach to ensuring supply continuity and responsiveness to customer demand.
Our inventories decreased by RMB156.0 million from RMB1,729.5 million as of
December 31, 2022 to RMB1,573.5 million as of December 31, 2023, and increased by
RMB112.0 million to RMB1,685.5 million as of December 31, 2024, and RMB1,978.3 million
as at June 30, 2025, primarily due to the movement in raw materials and work in progress as
we proactively manage our inventory level based on the market conditions at the relevant time.
FINANCIAL INFORMATION
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--- page 366 ---
The following table sets forth our inventory turnover days for the years/periods indicated:
For the year ended December 31,
For the
six months
ended
June 30,
2022 2023 2024 2025
Inventory turnover days (1) /H1118/H1118/H1118171 246 203 207
Note:
1. Calculated using the average of opening and closing balances of the inventories for such years/periods
divided by cost of sales for the relevant years/periods and multiplied by 360/180 days.
During the Track Record Period, our Group’s inventory turnover days fluctuated from 171
days in 2022 to 246 days in 2023, before declining to 203 days in 2024 and 207 days for the
six months ended June 30, 2025. These changes were primarily driven by shifts in customer
delivery cycles and procurement lead times, which are common across the industry and reflect
broader market dynamics. In 2023, the sharp increase in turnover days was largely due to a
destocking trend among industry, which led to a significant decline in demand and revenue.
This downturn resulted in slower inventory movement and a corresponding rise in turnover
days. However, in 2024 and in 2025, as industry demand began to recover and our Group’s
revenue improved compared to the previous year, inventory turnover days decreased
accordingly. Beyond these market-driven factors, our Group’s internal procurement and
inventory strategies also played a role. We proactively build up stock for certain general-
purpose materials beyond immediate production forecasts to mitigate supply chain risks. In
particular, due to ongoing constraints in the production capacity and delivery timelines of
certain functional chips, we have strategically pre-stocked key raw materials. This approach,
while necessary for operational continuity, contributed to a higher year-end inventory balance
and thus influenced turnover metrics.
Regarding inventory impairment, our Group has implemented a robust and disciplined
approach to ensure that sufficient provisions are made for items with low future utilization. As
of December 31, 2022, 2023 and 2024, and June 30, 2025, the majority of our inventory was
aged under six months, indicating healthy turnover. Inventory aged over one year primarily
consisted of strategic reserve materials, which we maintain to ensure supply chain resilience
in light of macroeconomic uncertainties. To manage potential impairment risks, our Company
conducts quarterly reviews of inventory status, assessing the condition and usage expectations
of all stock items. These reviews are supported by regular inventory impairment testing
procedures. Based on the outcomes of these evaluations, we make appropriate provisions for
inventory write-downs in accordance with accounting standards. This ensures that our financial
statements accurately reflect the realizable value of our inventory and that we maintain a
prudent buffer against potential obsolescence or underutilization. Through this process, our
Group has made sufficient and timely provisions to address any impairment risks associated
with slow-moving or excess inventory.
FINANCIAL INFORMATION
– 356 –


--- page 367 ---
As of August 31, 2025, RMB1,002.8 million or 49.5% of our inventories as of June 30,
2025, had been sold or utilized.
Trade and bills receivables
Our trade and bills receivables primarily consist of (i) trade receivables, primarily
representing receivables due from our customers in respect of purchasing our products, net of
ECL allowance and (ii) bills receivable, net of ECL allowance. The following table sets forth
details of our trade and bills receivables as of the dates indicated:
As of December 31, As of June 30,
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Trade receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,623,429 1,112,223 1,244,428 1,598,872
Less: ECL allowance /H1118/H1118/H1118/H1118/H1118/H1118(17,551) (12,687) (14,314) (18,681)
1,605,878 1,099,536 1,230,114 1,580,191
Bills receivable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,000 16,196 8,060 –
Less: ECL allowance /H1118/H1118/H1118/H1118/H1118/H1118– (155) (58) –
1,000 16,041 8,002 –
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,606,878 1,115,577 1,238,116 1,580,191
Our trade and bills receivables decreased by RMB491.3 million from RMB1,606.9
million as of December 31, 2022 to RMB1,115.6 million as of December 31, 2023, primarily
due to the decrease in trade receivables as a result of the decrease in sales volume of our
products in 2023. Our trade and bills receivables increased by RMB122.5 million to
RMB1,238.1 million as of December 31, 2024, and RMB1,580.2 million as of June 30, 2025,
primarily due to the sales of our products.
We generally grant credit terms ranging from 30 days to 90 days to our customers. During
the Track Record Period, the majority of our trade and bills receivables were outstanding for
less than one year. The following table sets forth the aging analysis of our trade and bills
receivables as of the dates indicated:
As of December 31, As of June 30,
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Within 1 year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,597,534 1,112,547 1,228,544 1,568,010
1 to 2 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189,312 3,030 8,876 11,248
2 to 3 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111832 – 696 933
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,606,878 1,115,577 1,238,116 1,580,191
FINANCIAL INFORMATION
– 357 –


--- page 368 ---
The following table sets forth our trade and bills receivables turnover days for the periods
indicated:
For the year ended December 31,
For the
six months
ended
June 30,
2022 2023 2024 2025
Trade and bills receivables
turnover days (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118144 159 116 125
Note:
1. Calculated using the average of opening and closing balances of the trade and bills receivables for such
years/periods divided by the total revenue for the relevant years/periods and multiplied by 360/180 days.
Our trade and bills receivables turnover days increased from 144 days in 2022 to 159 days
in 2023, and decreased to 116 days in 2024, primarily due to a temporary extension of credit
terms to certain customers in 2023 in consideration of our strategic cooperation with these
customers. Such turnover remained relatively stable at 125 days for the six months ended June
30, 2025. Our Company is of the view that there was no material recoverability issues with the
outstanding trade and bills receivables, primarily because (i) the outstanding balance was
generally within the credit period granted to our customers or in accordance with relevant
settlement procedures implemented by either us or our customers; (ii) our customers displayed
good creditworthiness with steady business and financial performance in the past; (iii) we have
not had any material collection issue with our customers; and (iv) we have provided sufficient
provisions in relation to our trade and bills receivables during the Track Record Period.
As of August 31, 2025, RMB909.9 million, or 56.9%, of our trade and bills receivables
as of June 30, 2025, had been settled.
FINANCIAL INFORMATION
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--- page 369 ---
Trade and bills payables
Our trade and bills payables primarily consist of (i) trade payables, primarily representing
payables due to our suppliers in respect of procurement of raw materials such as integrated
circuit, structured components, transistors and connectors; and (ii) bills payable. The following
table sets forth details of our trade and bills payables as of the dates indicated:
As of December 31, As of June 30,
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Trade payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,564,927 750,096 1,115,412 1,533,007
Bills payable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118215,454 114,347 119,542 61,902
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,780,381 864,443 1,234,954 1,594,909
Our trade and bills payables decreased by RMB916.0 million from RMB1,780.4 million
as of December 31, 2022 to RMB864.4 million as of December 31, 2023. This decline was
primarily due to a reduction in our procurement of raw materials, which was in turn driven by
a temporary postponement of purchases by one of the five largest customers of the Group
during 2023. In particular, such customer delayed its orders as a result of weakened market
demand and a short-term liquidity constraint. During this period, such customer entered into
discussions with us and requested an extension of its payment schedule. By 2024, such
customer had fulfilled all outstanding payments in accordance with the agreed extended terms.
All payments from this customer have been made in line with the original credit terms, and no
overdue balances remain. Our trade and bills payables increased by RMB370.6 million to
RMB1,235.0 million as of December 31, 2024, and then by RMB359.9 million to RMB1,594.9
million as of June 30, 2025, mainly as a result of the increase in our procurement of raw
materials driven by the increased market demand.
The trade and bills payables are normally settled within 60 days. The following table sets
forth the aging analysis of our trade and bills payables as of the dates indicated:
As of December 31, As of June 30,
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Within 1 year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,776,369 861,516 1,230,901 1,584,342
1 to 2 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,456 241 1,353 8,807
2 to 3 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118308 1,644 43 56
Over 3 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,248 1,042 2,657 1,704
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,780,381 864,443 1,234,954 1,594,909
FINANCIAL INFORMATION
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--- page 370 ---
The following table sets forth our trade and bills payables turnover days for the
years/periods indicated:
For the year ended December 31,
For the
six months
ended
June 30,
2022 2023 2024 2025
Trade and bills payables
turnover days (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118158 197 131 160
Note:
1. Calculated using the average of opening and closing balances of the trade and bills payables for such
years/periods divided by the cost of sales for the relevant years/periods and multiplied by 360/180 days.
Our trade and bills payables turnover days increased from 158 days in 2022 to 197 days
in 2023 primarily due to increase in our procurement of raw materials for preparation of
production at the end of 2023. Our trade and bills payables turnover days decreased to 131 days
in 2024, and 160 days for the six months ended June 30, 2025, primarily due to increase in our
procurement of raw materials as well as our efforts to accelerate the payment to our suppliers.
As of August 31, 2025, RMB1,145.9 million, or 71.9%, of our trade and bills payables as
of June 30, 2025, had been settled.
LIQUIDITY AND CAPITAL RESOURCES
During the Track Record Period and up to the Latest Practicable Date, we have
historically funded our cash requirements principally from proceeds from our business
operations, capital contributions from shareholders and bank borrowings. After the Global
Offering, we intend to finance our future capital requirements through cash generated from our
business operations and the net proceeds from the Global Offering. We do not anticipate any
changes in the availability of financing to fund our operations in the future.
FINANCIAL INFORMATION
– 360 –


--- page 371 ---
Cash flows
The following table sets forth selected cash flow data from our consolidated statements
of cash flows for the years/periods indicated:
For the year ended December 31,
For the six months
ended June 30,
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Net cash generated
from/(used in)
operating activities /H1118/H1118/H111856,255 142,942 561,970 330,171 (189,867)
Net cash used in
investing activities /H1118/H1118/H1118(193,641) (204,545) (293,948) (132,161) (324,601)
Net cash generated
from/(used in)
financing activities /H1118/H1118/H1118231,772 93,083 (200,733) (61,166) 585,103
Net increase in cash and
cash equivalents /H1118/H1118/H1118/H1118/H111894,386 31,480 67,289 136,844 70,635
Cash and cash
equivalents, beginning
of period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118225,311 354,707 417,977 417,977 507,341
Effect of exchange rate
changes on cash and
cash equivalents /H1118/H1118/H1118/H1118/H111835,010 31,790 22,075 24,254 10,255
Cash and cash
equivalents, end of
period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118354,707 417,977 507,341 579,075 588,231
Net cash generated from/(used in) operating activities
Our cash flows generated from operating activities reflect our profit before taxation
adjusted for: (i) non-cash and non-operating items (such as depreciation of non-current assets
and interest income); (ii) the effects of movement in working capital (such as inventories,
receivables and payables); and (iii) other cash items (such as income taxes paid).
For the six months ended June 30, 2025, we had net cash used in operating activities of
RMB189.9 million, which primarily represented our profit before income tax of RMB119.1
million, adjusted by (i) non-cash and non-operating items, which primarily consisted of
depreciation of RMB70.8 million; and (ii) movements in working capital, mainly consisting of
increase in inventories of RMB296.1 million, increase in trade and other receivables of
RMB389.3 million. We anticipate an improvement in our operating cash flow as profitability
increases. This will be driven by (i) growing revenue and enhancing gross profit margins; (ii)
FINANCIAL INFORMATION
– 361 –


--- page 372 ---
strengthening cost and expense controls by fully leveraging economies of scale; and (iii)
continuously optimizing working capital through proactive management of trade receivables,
trade payables, and inventory turnover, alongside deeper collaboration with our suppliers. For
instance, we are actively adjusting our product mix to favour items with higher gross margins.
As our business scales, procurement volumes rise, which enhances our bargaining power to
secure better pricing, credit terms, and supplier rebates. Additionally, our smart supply chain
management system expands our sourcing channels and helps us manage product costs
effectively. Looking ahead, we expect our liquidity needs to be met through a combination of
operating cash flow, bank balances, and net proceeds from the Global Offering.
For the six months ended June 30, 2024, we had net cash generated in operating activities
of RMB330.2 million, which primarily represented our profit before income tax of RMB83.2
million, adjusted by (i) non-cash and non-operating items such as depreciation of RMB84.9
million; and movements in working capital including a decrease in trade and other receivables
of RMB139.9 million and increase in trade and other payables of RMB65.4 million.
In 2024, we had net cash generated from operating activities of RMB562.0 million, which
primarily represented our profit before income tax of RMB163.4 million, adjusted by (i)
non-cash and non-operating items, which primarily consisted of depreciation of RMB166.4
million, amortization of intangible assets of RMB127.8 million and finance cost of RMB52.9
million; and (ii) movements in working capital, mainly consisting of an increase in trade and
other payables of RMB380.2 million, which was partially offset by an increase in inventories
of RMB116.2 million and an increase in trade and other receivables of RMB191.4 million.
In 2023, we had net cash generated from operating activities of RMB142.9 million, which
primarily represented our profit before income tax of RMB93.9 million, adjusted by (i)
non-cash and non-operating items, which primarily consisted of depreciation of RMB181.3
million, amortization of intangible assets of RMB112.8 million and finance cost of RMB61.1
million; and (ii) movements in working capital, mainly consisting of a decrease in inventories
of RMB152.3 million and a decrease in trade and other receivables of RMB473.5 million,
offset by a decrease in trade and other payables of RMB911.9 million.
In 2022, we had net cash generated from operating activities of RMB56.3 million, which
primarily represented our profit before income tax of RMB178.5 million, adjusted by (i)
non-cash and non-operating items, which primarily consisted of depreciation of RMB191.1
million, amortization of intangible assets of RMB103.3 million and finance cost of RMB57.9
million; and (ii) movements in working capital, mainly consisting of an increase in trade and
other payables of RMB785.7 million, offset by an increase in inventories of RMB507.5 million
and an increase in trade and other receivables of RMB727.7 million.
Net cash used in investing activities
For the six months ended June 30, 2025, our net cash flow used in investing activities was
RMB324.6 million, which was primarily attributable to payments and deposits for acquisition
of property plant and equipment, and intangible assets of RMB326.4 million.
FINANCIAL INFORMATION
– 362 –


--- page 373 ---
For the six months ended June 30, 2024, our net cash flow used in investing activities was
RMB132.2 million, which was primarily attributable to payments and deposits for acquisition
of property plant and equipment, and intangible assets of RMB113.6 million
In 2024, our net cash flow used in investing activities was RMB293.9 million, which was
primarily attributable to (i) payments and deposits for acquisition of property plant and
equipment, and intangible assets of RMB306.6 million; and (ii) payments for investment in a
swap contract of RMB20.3 million, and was partially offset by (i) proceeds from investment
in a swap contract upon maturity of RMB20.4 million; (ii) proceeds from disposal of property,
plant and equipment of RMB6.3 million; and (iii) proceeds from disposal of a subsidiary of
RMB6.3 million.
In 2023, our net cash flow used in investing activities was RMB204.5 million, which was
primarily attributable to (i) payments and deposits for acquisition of property plant and
equipment, and intangible assets of RMB167.6 million; (ii) payments for other financial assets
of RMB10.0 million; and (iii) payments for acquisition of prepaid lease payment of RMB35.6
million, and was partially offset by proceeds from disposal of property, plant and equipment
of RMB8.6 million.
In 2022, our net cash flow used in investing activities of RMB193.6 million, which was
primarily attributable to (i) payments and deposits for acquisition of property plant and
equipment, and intangible assets of RMB179.7 million; and (ii) payments for acquisition of
subsidiaries of RMB21.5 million, and was partially offset by proceeds from disposal of
property, plant and equipment of RMB7.6 million.
Net cash (used in)/generated from financing activities
For the six months ended June 30, 2025, we had our net cash generated from financing
activities of RMB585.1 million, which was primarily attributable to proceeds from bank
borrowings of RMB1,313.1 million, and was partially offset by repayments of bank borrowings
of RMB623.9 million.
For the six months ended June 30, 2024, we had net cash used in financing activities of
RMB61.2 million, which was primarily attributable to proceeds from bank borrowings of
RMB795.8 million, and was partially offset by repayments of bank borrowings of RMB760.5
million and repayments of other borrowings of RMB37.7 million.
In 2024, our cash flow used in financing activities was RMB200.7 million, which was
primarily attributable to (i) repayments of bank borrowings of RMB1,668.6 million; and (ii)
repayments of other borrowings of RMB43.1 million, and was partially offset by proceeds from
bank borrowings of RMB1,640.6 million.
In 2023, we had net cash generated from financing activities of RMB93.1 million, which
was primarily attributable to proceeds from bank borrowings of RMB1,727.9 million, and was
partially offset by repayment of bank borrowings of RMB1,530.2 million.
FINANCIAL INFORMATION
– 363 –


--- page 374 ---
In 2022, we had net cash generated from financing activities of RMB231.8 million, which
was primarily attributable to (i) proceeds from bank borrowings of RMB1,432.7 million; and
(ii) proceeds from other borrowings of RMB265.6 million, and was partially offset by (i)
repayment of bank borrowings of RMB1,253.8 million; and (ii) repayment of other borrowings
of RMB184.6 million.
WORKING CAPITAL CONFIRMATION
Taking into account the financial resources available to us, including cash and cash
equivalents, available banking facilities, cash flows from operating activities and 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 at least the next 12 months from the
date of this prospectus.
INDEBTEDNESS
As of December 31, 2022, 2023, and 2024, June 30, 2025, and August 31, 2025, our
indebtedness included bank borrowings, other borrowings, and lease liabilities. The following
table sets forth a breakdown of our indebtedness as of the dates indicated:
As of December 31,
As of
June 30,
As of
August 31,
2022 2023 2024 2025 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Current
Bank borrowings /H1118/H1118/H1118/H1118913,014 1,111,827 991,700 1,696,058 1,981,412
Other borrowings /H1118/H1118/H1118/H1118175,090 41,60 9–––
Lease liabilities /H1118/H1118/H1118/H1118/H111844,927 37,670 20,134 21,445 21,628
Non-current
Bank borrowings /H1118/H1118/H1118/H1118– – 91,900 78,000 127,400
Other borrowings /H1118/H1118/H1118/H111893,88 1––––
Lease liabilities /H1118/H1118/H1118/H1118/H111836,999 145,887 135,938 126,320 121,507
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,263,911 1,336,993 1,239,672 1,921,823 2,251,947
Our Directors confirm 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 covenant during the
Track Record Period and up to the Latest Practicable Date. Our Directors further confirm that
our Group did not experience any difficulty in obtaining bank borrowings and other
borrowings, default in payment of bank borrowings and other borrowings, or breach of
covenants, during the Track Record Period and up to the Latest Practicable Date.
FINANCIAL INFORMATION
– 364 –


--- page 375 ---
Bank borrowings
As of December 31, 2022, 2023, 2024, June 30, 2025, and August 31, 2025, we had bank
borrowings of RMB913.0 million, RMB1,111.8 million, RMB1,083.6 million, RMB1,774.1
million, and RMB2,102.9 million, respectively, which were unsecured and unguaranteed bank
loans primarily to finance our working capital and capital expenditure. Our bank borrowings
are denominated in RMB and USD. The effective interest rate on our bank loans ranged from
3.2% to 5.4%, 2.9% to 4.4%, 2.5% to 3.7%, and 2.5% to 3.5%, per annum as of December 31,
2022, 2023, and 2024, and June 30, 2025, respectively. Please refer to Note 27 of the
Accountants’ Report in Appendix I to this Prospectus. As of August 31, 2025, our unutilized
banking facilities amounted to RMB1,574.4 million.
Other borrowings
As of December 31, 2022, 2023, 2024, June 30, 2025, and August 31, 2025, we had other
borrowings of RMB269.0 million, RMB41.6 million, nil, nil, and, nil, respectively. We entered
into financing arrangements with financial institutions and we are entitled to purchase back the
machinery and equipment at a minimal consideration upon maturity of respective leases, or to
purchase back the machinery and equipment from this financial institution at fair value upon
the end of the lease period. In 2022, 2023, and 2024, June 30, 2025, and August 31, 2025, we
raised RMB265.6 million, nil, nil, nil, and nil of borrowings in respect of such sale and
leaseback arrangements. Please refer to Note 28 of the Accountants’ Report in Appendix I to
this Prospectus.
Lease liabilities
As of December 31, 2022, 2023, 2024, June 30, 2025, and August 31, 2025, our lease
liabilities amounted to RMB81.9 million, RMB183.6 million, RMB156.1 million, RMB147.8
million, and RMB143.1 million, respectively.
Contingent liabilities
As of December 31, 2022, 2023, 2024, June 30, 2025, and August 31, 2025, we did not
have any material contingent liabilities. Our Directors confirm that there had been no material
change in our contingent liabilities since August 31, 2025 and up to the Latest Practicable Date.
Indebtedness statement
Except as disclosed in the subsection titled “— Indebtedness” in this section, as of August
31, 2025, being the latest practicable date for determining our indebtedness, we did not have
any outstanding mortgages, charges, debentures, other issued debt capital, bank overdrafts,
borrowings, liabilities under acceptance or other similar indebtedness, hire purchase
commitments, guarantees or other material contingent liabilities. Our Directors have confirmed
that there had been no material change in our indebtedness since August 31, 2025 and up to the
Latest Practicable Date.
FINANCIAL INFORMATION
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--- page 376 ---
OFF-BALANCE SHEET TRANSACTIONS
We had not entered into any material off-balance sheet transactions or arrangements as of
the Latest Practicable Date.
CAPITAL EXPENDITURES
During the Track Record Period, our capital expenditures were used for property, plant
and equipment, which amounted to RMB34.9 million, RMB52.2 million, RMB259.5 million,
and RMB361.7 million, respectively. We funded these expenditures mainly with cash generated
from our business operations.
CAPITAL COMMITMENTS
Our capital commitments as of December 31, 2022, 2023, and 2024, and June 30, 2025,
were RMB19.8 million, RMB234.9 million, RMB144.0 million, and RMB210.0 million
attributable to purchase of property, plant and equipment. We have funded and expect to continue
to fund our capital commitments with our cash flow generated from operating activities.
RELATED PARTY TRANSACTIONS
We enter into transactions with our related parties from time to time. Please refer to Note
35 to the Accountants’ Report in Appendix I to this Prospectus. Our Directors believe that these
transactions were conducted in the ordinary and usual course of business on an arm’s length
basis, and the transactions were conducted on an arm’s length basis. Such transactions did not
distort our results of operations or make our historical results unreflective of our future
performance.
KEY FINANCIAL RATIOS
The following table set forth our key financial ratios as of the date or for the period
indicated:
As of/for the year ended December 31,
As of/for the
six months
ended
June 30,
2022 2023 2024 2025
Return on equity (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189.3% 4.5% 7.0% 4.8%
Return on assets (2) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183.8% 1.9% 3.4% 2.1%
Gearing ratio (3) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111865.6% 58.4% 50.4% 75.6%
Gross profit margin (4) /H1118/H1118/H1118/H1118/H1118/H111818.2% 21.5% 20.9% 21.9%
Net profit margin (5) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184.5% 3.1% 4.6% 5.8%
R&D to revenue ratio (6) /H1118/H1118/H1118/H1118/H11187.1% 8.9% 8.8% 7.9%
FINANCIAL INFORMATION
– 366 –


--- page 377 ---
Notes:
(1) Return on equity is calculated based on the profit for the year/period attributable to owners of our
Company divided by the arithmetic mean of the opening and closing balances of the total equity and
multiplied by 100%.
(2) Return on assets is calculated based on the profit for the year/period attributable to owners of our
Company divided by the arithmetic mean of the opening and closing balances of the total assets and
multiplied by 100%.
(3) Gearing ratio is calculated based on total indebtedness (including bank borrowings, other borrowings
and lease liabilities) divided by total equity and multiplied by 100%.
(4) Gross profit margin equals gross profit for the year/period divided by revenue for the year/period and
multiplied by 100%.
(5) Net profit margin equals net profit for the year/period divided by revenue for the year/period and
multiplied by 100%.
(6) Calculated by dividing our R&D expenses by our revenue for the year/period and multiplied by 100%.
Return on equity and return on assets
Our return on equity decreased from 9.3% in 2022 to 4.5% in 2023, primarily due to the
decrease in our net profit. Our return on equity increased to 7.0% in 2024, primarily due to the
increase in our net profit outpacing the increase in our total equity. Our return on equity
remained at 4.8% for the six months ended June 30, 2025.
Our return on assets decreased from 3.8% in 2022 to 1.9% in 2023, primarily due to the
decrease in our net profit. Our return on assets increased to 3.4% in 2024, primarily due to the
increase in our net profit outpacing the increase in our total assets. Our return on assets
remained at 2.1% for the six months ended June 30, 2025.
Gearing ratio
Our gearing ratio decreased from 65.6% as of December 31, 2022 to 58.4% as of
December 31, 2023, primarily due to the increase in our total assets outpacing the growth of
our borrowings and lease liabilities. Our gearing ratio further decreased from 58.4% as of
December 31, 2023 to 50.4% as of December 31, 2024, primarily due to the increase in our
total assets as well as the decrease in our borrowings and lease our gearing ratio increased to
75.6% as of June 30, 2025 as we had increased our borrowing.
Gross profit margin and net profit margin
Please refer to the subsection headed “— Period-to-period comparison of results of
operations” for a discussion of the factors affecting our gross profit margin and net profit
margin during the Track Record Period.
FINANCIAL INFORMATION
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FINANCIAL RISKS MANAGEMENT
We are exposed to a variety of financial risks, including foreign currency risk, interest
rate risk, credit risk and liquidity risk. Our overall risk management strategy seeks to minimize
potential adverse effects of the aforesaid risks on our financial performance. For details, please
refer to Note 39 to the Accountant’s Report in Appendix I to this Prospectus.
Foreign currency risk
Our subsidiaries mainly operate in China, the United States, and Japan. The majority of
our transactions are settled in RMB, USD, and JPY , which are the functional currency of the
our entities to which the transactions relate. Foreign currency risk arises when future
commercial transactions and recognised assets and liabilities are denominated in a currency
that is not the respective functional currency of our subsidiaries.
The following table sets forth a summary of our exposure to foreign currency risk:
Exposure to foreign currencies as of December 31, 2022
USD JPY
Other
currencies Total
RMB’000 RMB’000 RMB’000 RMB’000
Assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,722,078 3,007 6,015 1,731,100
Liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(510,265) (11,672) – (521,937)
Net exposure /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,211,813 (8,665) 6,015 1,209,163
Exposure to foreign currencies as of December 31, 2023
USD JPY
Other
currencies Total
RMB’000 RMB’000 RMB’000 RMB’000
Assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,211,165 6,749 8,836 1,226,750
Liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(289,431) (7,127) (7) (296,565)
Net exposure /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118921,734 (378) 8,829 930,185
Exposure to foreign currencies as of December 31, 2024
USD JPY
Other
currencies Total
RMB’000 RMB’000 RMB’000 RMB’000
Assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,497,795 11,333 3,951 1,513,079
Liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(471,109) (3,491) (125) (474,725)
Net exposure /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,026,686 7,842 3,826 1,038,354
FINANCIAL INFORMATION
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Exposure to foreign currencies as of June 30, 2025
USD JPY
Other
currencies Total
RMB’000 RMB’000 RMB’000 RMB’000
Assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,009,309 13,717 4,632 2,027,658
Liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(632,062) (3,603) (1,659) (637,324)
Net exposure /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,377,247 10,114 2,973 1,390,334
As of December 31, 2022, 2023, and 2024, and June 30, 2025, if the RMB appreciates or
depreciates by 5% against the USD, the net profit of our Group will increase or decrease by
RMB60,591,000, RMB46,087,000, RMB51,334,000 and RMB68,862,000. We believe that 5%
is within a reasonable range of fluctuation in the RMB against the USD.
Other changes in foreign exchange rates have no significant impact on foreign currency
risk.
Interest rate risk
Our bank borrowings bears floating rates expose us to cash flow interest rate risk. Other
than the interest-bearing bank deposits, we have no other significant interest-bearing assets
bearing variable interest rates. It is not anticipated there is any significant impact to these
interest-bearing assets resulted from the changes in interest rates because the interest rates of
bank balances are not expected to change significantly. Based on the balance of our
interest-bearing borrowings as of December 31, 2022, 2023, and 2024, and June 30, 2025, it
is estimated that should there be a general increase/decrease of 100 basis point change in
interest rates, our profit for the year/period ended December 31, 2022, 2023, and 2024, and
June 30, 2025, would decrease/increase by approximately RMB561,000, RMB582,000,
RMB1,784,000, and RMB3,137,000, respectively.
Credit risk
Credit risk refers to the risk that the counterparty to a financial instrument would fail to
discharge its obligation under the terms of the financial instrument and cause a financial loss
to the Group. Our credit risk is primarily attributable to trade receivables and other financial
assets at amortized cost.
Trade receivables from third parties
Our Group’s policy is to deal with credit worthy counterparties. Credit terms are granted
to new customers after a credit worthiness assessment. When considered appropriate,
customers may be requested to provide proof as to their financial position. Where available at
reasonable cost, external credit ratings and/or reports on customers are obtained and used.
FINANCIAL INFORMATION
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Shorter or no credit terms are granted to the customers who are not considered creditworthy are
required to pay on delivery of goods and services. Payment record of customers is closely
monitored. It is not the Group’s policy to request collateral from its customers.
As of December 31, 2022, 2023, and 2024, and June 30, 2025, in terms of gross carrying
amounts, 39.1%, 28.2%, 42.6%, and 38.5% of the total trade receivables was due from our
Group’s largest customer, and 62.7%, 69.3%, 68.8%, and 67.4% of the total trade receivables
were due from the Group’s top five customers.
We applied the simplified approach to provide for impairment for ECL prescribed by
IFRS 9, which permits the use of the lifetime expected loss provision for impairment of all
trade receivables. For trade receivables, we assesses ECL under IFRS 9 based on shared credit
risk characteristics and aging as well as the corresponding historical credit losses during that
period. Trade receivables are written off (i.e. derecognized) when there is no reasonable
expectation of recovery. Failure to engage with the Group on alternative payment arrangement
is considered indicators of no reasonable expectation of recovery.
Other financial assets at amortized cost
Other financial assets at amortized cost include deposits, other receivables, pledged
deposits and cash at bank.
In order to minimize the credit risk of deposits and other receivables, the management
would make periodic collective and individual assessment on the recoverability of other
receivables based on historical settlement records and past experience as well as current
external information, and adjusted to reflect probability-weighted forward-looking
information, including the default rate where the relevant debtors operates. Other monitoring
procedures are in place to ensure that follow-up action is taken to recover overdue debts.
Our Group applies the IFRS 9 three-stage approach to measure ECL for deposits and other
receivables.
As of December 31, 2022, 2023, and 2024, and June 30, 2025, since the credit risk of
deposits and other receivables of RMB4.1 million, RMB4.9 million, RMB9.5 million, and
RMB5.9 million is considered not significantly increased since initial recognition, therefore
the impairment provision is determined as 12 months ECL, and ECL rates of 5%, 5%, 5%, and
5% were provided.
As of December 31, 2022, 2023, and 2024, and June 30, 2025, our Group determined that
the credit risk of deposits and other receivables of RMB0.6 million, RMB4.3 million, RMB8.1
million, and RMB10.0 million, is considered significantly increased since initial recognition,
therefore the impairment provision is determined as lifetime ECL (non-credited impaired), and
ECL rates of 10.49%, 11.35%, 30.52%, and 39.32% were provided, while RMB5.6 million,
FINANCIAL INFORMATION
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RMB5.2 million, RMB2.7 million, and RMB2.7 million is determined as lifetime ECL
(credited impaired) respectively, therefore, full provision was provided as of December 31,
2022, 2023, and 2024 and June 30, 2025.
To manage the risk arising from pledged deposits and cash at banks, our Group mainly
transacts with banks with high credit rating. There has been no recent history of default in
relation to these financial institutions and therefore the expected credit loss is minimal.
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and cash
equivalents. Due to the dynamic nature of the underlying business, we aim to maintain
flexibility in funding by maintaining adequate cash and cash equivalents.
DIVIDEND
As of the Latest Practicable Date, we did not maintain any fixed dividend payout policy.
Pursuant to PRC laws and regulations, including the PRC Company Law ( ʕശɛ͏΍ձ਷
) and the No. 3 Guideline for the Supervision of Listed Companies — Cash Dividend
Distribution of Listed Companies (2025 Revision) (ˏୋ 3໮ — ɪ̹ʮ̡ତ
ߎ2025ࠈࡌ)) and Articles of Association, within any three consecutive years, our
distributed cumulative profits in cash shall not be less than 30% of the average distributable
profits realized in the latest three years. The specific dividend ratios shall be determined by our
Board according to relevant regulations and our operating conditions, and shall be considered
and resolved at our general shareholders’ meeting.
Future profit distributions may be carried out in the form of cash dividends or stock
dividends or a combination of cash dividends and stock dividends. Any proposed distribution
of dividends is subject to the discretion of our Board and the approval at our Shareholders’
meetings. Our Board may recommend a distribution of dividends in the future after taking into
account our results of operations, financial condition, operating requirements, capital
requirements, shareholders’ interests and any other conditions that our Board may deem
relevant.
During the Track Record Period, we had declared and paid interim dividends totalling
RMB8.0 million and final dividends totalling RMB35.7 million to our A Shareholders for 2024.
For further information, please refer to Note 12 of the Accountants’ Report in Appendix I to
this Prospectus. We had declared dividends of RMB0.22 per share, totalling RMB59.0 million
for 2024, which had been paid as of June 30, 2025. We had declared interim dividends totalling
RMB12.1 million for the six months ended June 30, 2025, which had been paid as of the Latest
Practicable Date.
FINANCIAL INFORMATION
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DISTRIBUTABLE RESERVES
As of June 30, 2025, we had retained earnings of RMB596.7 million. Our retained
earnings represented the distributable reserves available for distribution to our Shareholders.
UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET
TANGIBLE ASSETS
See Appendix II — Unaudited Pro Forma Financial Information to this prospectus for
details of our unaudited pro forma adjusted consolidated net tangible assets.
LISTING EXPENSES
Listing expenses represent professional fees, underwriting commission and other fees
incurred in connection with the Global Offering. Assuming the Over-allotment Option is not
exercised and based on the maximum Offer Price of HK$68.88 per Offer Share, listing
expenses to be borne by us are estimated to be HK$135.7 million, comprising: (i) underwriting
commissions, sponsor fees, SFC transaction levy, Stock Exchange trading fees and AFRC
transaction levy of HK$104.9 million; and (ii) non-underwriting-related expenses of HK$30.8
million, which are further categorized into: (a) fees and expenses of legal advisers and
accountants of HK$20.8 million; and (b) other fees and expenses of HK$10.0 million. Amongst
the listing expenses, HK$9.6 million was charged or is expected to be charged to our
consolidated statements of profit or loss, and HK$126.1 million is expected to be deducted
from equity upon the completion of the Global Offering. The listing expenses are expected to
represent approximately 3.0% of the gross proceeds of the Global Offering, assuming the
maximum Offer Price of HK$68.88 per Offer Share and that the Over-allotment Option is not
exercised. The listing expenses above are the latest practicable estimate for reference only, and
the actual amount may differ from this estimate.
NO MATERIAL ADVERSE CHANGE
Our Directors confirm that, up to the date of this Prospectus, there had been no material
adverse change in our business, financial condition and results of operations since June 30,
2025, which is the end date of the years reported on in the Accountants’ Report as set out in
Appendix I to this prospectus, and there is no event since June 30, 2025, which would
materially affect the information in the Accountants’ Report as set out in Appendix I to this
Prospectus.
DISCLOSURE REQUIRED UNDER THE LISTING RULES
We confirm that, as of the Latest Practicable Date, there were no circumstances that
would give rise to a disclosure requirement under Rule 13.13 to 13.19 of the Listing Rules.
FINANCIAL INFORMATION
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FUTURE PLANS
For further details of our future plans, see the sections headed “Business — Our future
strategies” in this Prospectus.
USE OF PROCEEDS
We estimate the net proceeds of the Global Offering which we will receive, based on the
maximum Offer Price of HK$68.88 per Offer Share, will be approximately HK$4,480.0
million, after the deduction of underwriting fees and commissions and estimated expenses
payable by us in connection with the Global Offering, and assuming that the Over-allotment
Option is not exercised.
In line with our future strategies, we intend to use our proceeds from the Global Offering
for the following purposes:
Enhancing our production capacity for our photonics, broadband, and wireless products
 We intend to use approximately 50.0% of the net proceeds, or HK$2,240.0 million, to
enhance production capacity at our facilities as well as our current and future co-location
partners’ facilities. This includes procuring and installing machinery and software
tailored to the following types of products we manufacture, and to collaborate with our
co-location partners to increase the production capacity:
Our broadband products
/H18537We intend to allocate 12.0% of the net proceeds, or approximately HK$537.6
million, towards our broadband products, including our 50G/25GPON products.
/H18537According to F&S, the market for PON devices is projected to experience significant
growth, reaching USD11.9 billion by 2029, with a CAGR of approximately 8.8%
from 2024. Notably, the combined 50G/25GPON market is expected to reach
USD5.7 billion by 2029, with a CAGR of 99.8% from 2024, positioning these
technologies as key drivers of next-generation broadband infrastructure.
/H18537In light of these projections, we will allocate resources towards the procurement and
installation of machinery and software tailored to our broadband products. Notable
machinery may include (i) pick-and-place machines used for placing components
onto PCBs with high accuracy; (ii) automatic insertion machines used for inserting
components into PCBs automatically; (iii) automatic optical inspection machines for
inspecting solder joints before reflow soldering; (iv) reflow ovens for soldering
components onto PCBs by heating them to a specific temperature; and (v) screen
printers used for applying solder paste onto PCBs. Additionally, we may collaborate
FUTURE PLANS AND USE OF PROCEEDS
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with co-location partners to expand production lines and increase capacity for
broadband products. By enhancing our capabilities in broadband products, we aim
to capitalize on the high-growth market opportunities and sustain our growth
trajectory.
Our wireless products
/H18537We intend to allocate 13.0% of the net proceeds, or approximately HK$582.4
million, towards our wireless products, including our Wi-Fi 7 and Wi-Fi 8 products.
/H18537According to F&S, the global wireless network access device industry is expected
to continue its growth, driven by technological advancements in Wi-Fi standards, the
continuous rollout of 5G networks, and the increasing demand for connected
devices. Moreover, Wi-Fi 7 products are anticipated to become a foundational
technology to meet the rising demands of both consumers and businesses,
positioning their market trajectory for substantial growth. The global sales revenue
of Wi-Fi 7 products is projected to reach USD13.8 billion by 2029, representing a
CAGR of 82.2% from 2024.
/H18537In light of these projections, we will allocate resources towards the procurement and
installation of machinery and software tailored to our wireless products. Notable
machinery may include (i) fully automatic dual-track transfer machines used for
transferring PCBs between different stages of the production line; (ii) high-speed
placement machines used for placing components onto PCBs with high precision;
and (iii) automated optical inspection machines used for inspecting PCBs for defects
using 3D measurement technology. Additionally, we may collaborate with co-
location partners to expand production lines and increase capacity for wireless
products. By enhancing our capabilities in wireless products, we aim to maintain our
competitive market position and seize the upcoming opportunities.
Our photonics products
/H18537We intend to allocate approximately 25.0% of the net proceeds, or HK$1,120.0
million, towards our photonics products, including our 800G/1.6T photonics
products.
/H18537According to F&S, the photonics industry is projected to experience sustained
growth due to the rising global demand for high-speed data transmission and the
expansion of data-intensive applications. It is anticipated that the sales revenue of
the global photonics industry will reach USD41.5 billion by 2029, with a CAGR of
18.5% from 2024. Specifically, 800G photonics, which exhibited a remarkable
CAGR of approximately 188.1% from 2020 to 2024, is expected to maintain its
rapid growth, with a projected CAGR of 19.1% from 2024 to 2029. Concurrently,
1.6T photonics is forecasted to undergo explosive growth from 2024 to 2029, with
an anticipated CAGR of 180.0%.
FUTURE PLANS AND USE OF PROCEEDS
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/H18537In light of these projections, we will allocate resources towards the procurement and
installation of machinery and software, tailored to our photonics products. Notable
machinery may include (i) high-precision equipment used for attaching
semiconductor chips to substrates; (ii) high-reliability bonding equipment used in
semiconductor packaging; (iii) high-precision alignment equipment used for
aligning optical components; (iv) automated high-precision measurement tools; (v)
automated systems used for testing the reliability and performance of packaged
chips; and (vi) other testing equipment used for various optical and electrical tests
on photonics components. Additionally, we may collaborate with co-location
partners to expand production lines and increase capacity for photonics products. By
enhancing our capabilities in photonics, we aim to capitalize on the high-growth
market opportunities identified.
Enhance our R&D talents and skills to achieve more breakthroughs
 We intend to allocate approximately 20.0% of the net proceeds, or HK$896.0 million, to
further enhance our R&D talents and skills to achieve more R&D breakthroughs. We
believe that continuous investment in R&D is crucial for maintaining our technological
and product leadership. Our R&D expenses represented 7.1%, 8.9%, 8.8%, and 7.9% of
our total revenue for the years ended December 31, 2022, 2023, and 2024, and the six
months ended June 30, 2025 respectively. Additionally, our cumulative R&D investments
during the Track Record Period exceeded RMB1.4 billion. In order to fuel our future
growth and to enhance our overall competitiveness, we intend to increase our R&D
commitment through the following specific strategies:
Recruitment of R&D talents
/H18537We intend to use 5.5% of the net proceeds, or approximately HK$246.4 million, to
be used for the recruitment of specialized R&D professionals.
/H18537We recognize that international talents are invaluable assets to our organization.
Over the years, we have successfully attracted numerous top global talents with
extensive industry experience. As of June 30, 2025, our R&D team consisted of 673
members, making up over 50% of our total workforce. Our core team and R&D staff
hail from some of the world’s most prestigious institutions.
/H18537Moving forward, we will continue to lead the market by investing in R&D and
recruiting top talents. To this end, we will allocate resources to recruit a total of
between 30 and 50 R&D professionals, covering all the fields in relation to
photonics, broadband and wireless technologies. Our future R&D recruitment will
focus on the following positions and qualifications: (i) senior optical engineers with
degrees in optical engineering or related fields, and extensive experience in optical
design and testing; (ii) senior firmware development engineers with degrees in
computer science or electrical engineering, and experience in firmware development
and hardware-software integration; (iii) project managers with business or
FUTURE PLANS AND USE OF PROCEEDS
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engineering degrees and significant project management experience; (iv) senior
hardware engineers with degrees in electrical or computer engineering, and
experience in hardware design; (v) senior radio frequency engineers, with
engineering degrees and experience in radio frequency; (vi) senior technical support
engineers with IT or computer science degrees and experience in IT; (vii) senior
automation test engineers with engineering degrees and software engineering
backgrounds and experience in the automation test development; and (viii) process
engineers with degrees in chemical or mechanical engineering and process
improvement experience. These experts will be recruited from or be strategically
placed in our R&D centers in, the United States, Europe or Asia.
Upgrades on machinery and software to support our R&D efforts
/H18537We will also use approximately 9.5% of the net proceeds, or around HK$425.6
million, to support the continued R&D of our manufacturing technologies through
acquiring advanced machinery and software.
/H18537The focus will be on intelligentization and automation, driving efficiency and
innovation in our production processes. Notable machinery may include: (i)
high-precision optical testing devices used for evaluating and analyzing the quality
and performance of optical signals; (ii) electrical testing device used for assessing
the quality and performance of electrical signals; (iii) electrical jitter test kits for
measuring and analyzing the jitter characteristics of electrical signals; and (iv)
high-precision flip chip bonding equipment used for high-precision chip bonding,
suitable for advanced packaging technologies, among other technologies that may
emerge in the market that we consider essential to push our future R&D efforts.
Materials used to support our R&D efforts
/H18537Furthermore, approximately 5.0% of the net proceeds, or approximately HK$224.0
million, will be used for the acquisition of essential materials to support our R&D
efforts. This investment will support our cutting-edge research projects and
technological advancements.
Enhance our business promotion and marketing efforts
 We will use approximately 5.0% of the net proceeds, or HK$224.0 million, for business
promotion and marketing, by executing the following sales and marketing strategies:
Recruitment of sales and marketing talents
/H18537We will use approximately 4.7% of the net proceeds, or approximately HK$210.6
million, to enhance our sales and marketing team’s capabilities. This includes
expanding the size of our sales and marketing team, improving their sales and
marketing skills, and other general marketing activities.
FUTURE PLANS AND USE OF PROCEEDS
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/H18537We have established regional sales and marketing teams for North America, Europe,
China, and Southeast Asia. As of June 30, 2025, the size of our sales and marketing
team reached a total of 83 personnel, localized to various markets around the world,
mostly in proximity of existing or potential key customers. Our team identifies
market opportunities and designs sales strategies to capitalize on them. Each major
customer has a dedicated marketing manager and team. The sales manager works
closely with the customers, R&D staff, and design engineers to create tailored
products.
/H18537Moving forward, we intend to recruit a total of between 20 and 40 sales and
marketing staff, covering both existing and emerging markets.
Industry associations and global events
/H18537We intend to use approximately 0.3% of the net proceeds, or approximately
HK$13.4 million, to enhance our brand and reputation through increasing our
memberships to industry associations and expand our market exposure and improve
our customer reach by increasing our participation at global industry events.
/H18537We have been a member of many organizations and industry associations, signifying
our leadership and influence in the industry, which has greatly benefited our
business. For instance, we have been a member of the Broadband Forum for over a
decade, a non-profit industry organization dedicated to designing smarter and faster
broadband networks, and highly influential in the telecommunications industry. In
2011, we became one of the first companies to achieve BBF.247 certification, a
significant program under the Broadband Forum, ensuring interoperability of GPON
standards from different manufacturers. We will continue such memberships and
expand our scope to increase our exposure.
/H18537Our marketing activities primarily include trade shows and exhibitions, but we also
reach customers through forums and seminars. These platforms allow us to increase
our exposure and showcase our technologies and products to potential customers.
We often sponsor major events and participate as exhibitors with our dedicated
booth, staffed with R&D, sales, and key personnel to showcase our technology and
products. For example, we have regularly attended the Network X Exhibition at the
Paris Expo Porte de V ersailles in 2024, where we demonstrated our latest
technologies and products to potential customers and gained insights into industry
trends and the offerings of other manufacturers. We have also regularly attended the
Optical Fiber Communication Conference and Exhibition, an annual industry event
jointly organized by the Optical Society of America, the IEEE Communications
Society, and the IEEE Lasers and Electro-Optics Society. By regularly presenting
our products at such events, we demonstrated our innovative capabilities and
leadership in the optoelectronics industry.
FUTURE PLANS AND USE OF PROCEEDS
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/H18537Moving forward, we will continue our push to showcase our products to a larger
audience by exhibiting and sponsoring more such, or similar, events.
Strategic investments
 We will use approximately 15.0% of the net proceeds, or HK$672.0 million, to be used
for overseas strategic investments to achieve our long-term growth strategy.
 Our Company’s future investment strategy is focused on supporting long-term growth by
targeting businesses that demonstrate strong synergies with our operations. Investment
methods may include equity participation whether through majority or minority stakes
depending on strategic alignment, joint ventures, and asset acquisitions. As of the date of
this Prospectus, our preferred approach is to invest in minority stakes. Over the next three
to five years, we aim to invest in one to five suitable targets to diversify our portfolio and
maximize strategic and operational synergies.
 We are particularly interested in upstream and downstream companies, both overseas and
within our industry value chain. Priority will be given to businesses involved in optical
devices, chips, and core ICs, as these components can enhance our technological
capabilities, strengthen supply chain resilience, and support a broader range of
application scenarios. We are also actively seeking downstream companies with strong
market coverage and sales capabilities, whose complementary supply chains can help us
expand our market presence and increase market share.
 Target companies should have experienced management, technical, and sales teams with
deep industry knowledge. They should demonstrate a proven track record of success,
including a positive EBITDA in the most recent financial year. In addition, we will
prioritize companies with no material non-compliance issues and no off-balance sheet
indebtedness or contingent liabilities.
 We are also open to investing in startups operating in adjacent product and technology
fields, or in suppliers of peripheral products that complement our offerings. These
startups should possess cutting-edge technologies or innovative business models that
align with our strategic direction.
 According to F&S, there are over 300 companies that meet our selection criteria. Some
of these are existing partners within our upstream and downstream networks. Taking this
into account, and based on F&S’s assessment, our Directors are confident that suitable
targets are available.
 Through these investments, we expect to realize several key benefits, such as (i) enhanced
technological synergies that accelerate R&D for next-generation products; (ii) improved
supply chain delivery capacity and strategic assurance, and (iii) expanded product
offerings and faster market penetration through stronger sales and distribution
capabilities.
FUTURE PLANS AND USE OF PROCEEDS
– 378 –


--- page 389 ---
Working capital
 Lastly, we will use approximately 10.0% of the net proceeds, or HK$448.0 million, for
general corporate purposes, including working capital needs.
The following table sets forth a summary of the timeframe regarding the above future
expansion plans:
Amount of the net proceeds to be utilized
for the year ending December 31,
2026 2027 2028 2029 2030
(HKD’ million)
Enhancing our production capacity
In relation to our broadband products, including
our 50G/25GPON products /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118268.8 268. 8–––
In relation to for our wireless products, including
our Wi-Fi 7 and Wi-Fi 8 products /H1118/H1118/H1118/H1118/H1118/H1118291.2 291. 2–––
In relation to our photonic products, including
our 800G/1.6T products /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118560.0 560. 0–––
Enhance our R&D talents and skills to achieve
more breakthroughs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118342.8 372.8 60.1 60.1 60.1
Enhance our business promotion and
marketing efforts /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814.3 26.6 44.1 59.1 79.9
To the extent that the net proceeds from the Global Offering (including the net proceeds
from the exercise of the Over-allotment Option) are either more or less than expected, we may
adjust our allocation of the net proceeds for the above purposes on a pro rata basis.
To the extent that the net proceeds of the Global Offering are not immediately used for
the above purposes or if we are unable to put into effect any part of our plan as intended, we
will only deposit such net proceeds into short-term interest-bearing accounts at licensed
commercial banks and/or other authorized financial institutions (as defined under the SFO or
the applicable laws and regulations in other jurisdictions). In such event, we will comply with
the appropriate disclosure requirements under the Listing Rules.
FUTURE PLANS AND USE OF PROCEEDS
– 379 –


--- page 390 ---
THE CORNERSTONE PLACING
We have entered into cornerstone investment agreements (each a “ Cornerstone
Investment Agreement ” and collectively, the “ Cornerstone Investment Agreements ”) with
the cornerstone investors set out below (each a “ Cornerstone Investor ” and collectively, the
“Cornerstone Investors ”), pursuant to which the Cornerstone Investors have agreed to,
subject to certain conditions, subscribe, or cause their designated entities (including qualified
domestic institutional investor(s) (“ QDII(s) ”) to subscribe, at the Offer Price for such number
of Offer Shares (rounded down to the nearest whole board lot of 50 H Shares) that may be
purchased for an aggregate amount of US$290.00 million or HK$2,256.72 million, calculated
based on the conversion rate of US$1.00 to HK$7.7818 (the “ Cornerstone Placing ”). The
aggregate amount of the investment contributed by the Cornerstone Investors does not include
brokerage, SFC transaction levy, AFRC transaction levy and Hong Kong Stock Exchange
trading fee which the Cornerstone Investors will pay in respect of the International Offer
Shares to be subscribed by them.
Based on the Offer Price of HK$68.88 per H Share, being the maximum Offer Price, the
total number of Offer Shares to be subscribed by the Cornerstone Investors (including those to
be subscribed through QDIIs) would be 32,762,750 Offer Shares, representing approximately
(i) 48.89% of the H Shares to be issued pursuant to the Global Offering (assuming that the
Over-allotment Option is not exercised); (ii) 9.78% of the total issued Shares immediately upon
completion of the Global Offering (assuming that the Over-allotment Option is not exercised
and the options granted under the 2024 Share Option Incentive Scheme are not exercised and
that no other changes are made to the issued share capital of our Company between the Latest
Practicable Date and Listing); and (iii) 9.49% of the total issued Shares immediately upon
completion of the Global Offering and the full exercise of the Over-allotment Option (assuming
that the options granted under the 2024 Share Option Incentive Scheme are not exercised).
Our Company is of the view that the Cornerstone Investment will enhance our profile and
demonstrate the investors’ confidence in our business development. Having considered the
primary business sectors of these investors, it is expected that our Company will benefit from
the cornerstone investment. Our connection with each of the Cornerstone Investors arose from
our ordinary course of business or through introductions by our business partners or the Joint
Global Coordinators.
The Cornerstone Placing will form part of the International Offering, and save as
otherwise obtained consent by the Hong Kong Stock Exchange, the Cornerstone Investors will
not subscribe for any Offer Shares under the Global Offering other than pursuant to the
Cornerstone Investment Agreements. The Offer Shares to be subscribed by the Cornerstone
Investors (including those to be subscribed through QDIIs) will rank pari passu in all respects
with the fully paid Shares in issue and all the H Shares to be subscribed by the cornerstone
investors will be counted towards the public float for the purpose of Rule 19A.13A(2) of the
Hong Kong Listing Rules. Immediately following the completion of the Global Offering, the
Cornerstone Investors will not have any Board representation in our Company by virtue of their
cornerstone investments; and none of the Cornerstone Investors will become a substantial
CORNERSTONE INVESTORS
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--- page 391 ---
shareholder of our Company. The Cornerstone Investors do not have any preferential rights in
the Cornerstone Investment Agreements compared with other public Shareholders, other than
a guaranteed allocation of the relevant Offer Shares at the Offer Price.
As confirmed by each of the Cornerstone Investors, there are no side arrangements or
agreements between our Company and the Cornerstone Investors or any benefit, direct or
indirect, conferred on the Cornerstone Investors by virtue of or in relation to the Listing, other
than a guaranteed allocation of the relevant Offer Shares at the final Offer Price, following the
principles as set out in Chapter 4.15 of the Guide for New Listing Applicants.
All Cornerstone Investors have agreed to pay in full for the relevant Offer Shares that they
have subscribed before dealings in our Company’s H Shares commence on the Hong Kong
Stock Exchange. Certain Cornerstone Investors have agreed that our Company and the Sole
Sponsor-OC in their sole discretion may defer the delivery of all or part of the Offer Shares
in full it will subscribe to on a date later than the Listing Date. Such delayed delivery
arrangement is in place to facilitate the over-allocation in the International Offering. There will
be no delayed delivery if there is no over-allocation in the International Offering. Where
delayed delivery takes place, (i) there would be delayed delivery of Offer Shares to some of
the Cornerstone Investors based on commercial negotiations with the Cornerstone Investors,
(ii) the delayed delivery date should be no later than five business days following the last day
on which the Over-allotment Option may be exercised, (iii) no extra payment will be made to
the relevant Cornerstone Investors for the purpose of the delayed delivery arrangement, and
(iv) each of the Cornerstone Investors has agreed that it shall nevertheless pay for the relevant
Offer Shares in full before the Listing. As such, there will not be any deferred settlement in
payment by the Cornerstone Investors.
Among the Cornerstone Investors, Morgan Stanley & Co. International plc and Taikang
Life Insurance Co., Ltd are either Existing Minority Shareholders or their respective close
associates. The Hong Kong Stock Exchange has granted a waiver from strict compliance with
the requirements under Rule 10.04 and consent under Paragraph 1C(2) of Appendix F1 to the
Hong Kong Listing Rules and paragraph 5 of Chapter 4.15 of the Guide for New Listing
Applicants to permit H Shares in the International Offering to be placed to certain Existing
Minority Shareholders. For further details, see “Waivers from Strict Compliance with Hong
Kong Listing Rules and Exemption from Strict Compliance with the Companies (Winding Up
and Miscellaneous Provisions) Ordinance – Allocation of H Shares to Existing Minority
Shareholders and their Close Associates.”
To the best of the knowledge, information and belief of our Company, (i) other than the
Cornerstone Investors who are the Existing Minority Shareholders or their respective close
associates, each of the Cornerstone Investors is independent of our Company, its connected
persons and their respective associates; (ii) other than the Cornerstone Investors who are the
Existing Minority Shareholders or their respective close associates, none of the Cornerstone
Investor is accustomed to take and has not taken instructions from our Company, our Directors,
chief executive, substantial Shareholders, existing Shareholders, supervisors of our
subsidiaries or any of its subsidiaries or their respective close associates in relation to the
CORNERSTONE INVESTORS
– 381 –


--- page 392 ---
acquisition, disposal, voting or other disposition of the Offer Shares; and (iii) other than the
Cornerstone Investors who are the Existing Minority Shareholders or their respective close
associates, none of the subscription of the Offer Shares by the Cornerstone Investors is directly
or indirectly financed by our Company, our Directors, chief executive, substantial
Shareholders, existing Shareholders, supervisors of our subsidiaries or any of its subsidiaries
or their respective close associates.
To the best knowledge of our Company and the Sole Sponsor-OC, and based on the
indicative interest of investment of the Cornerstone Investors and/or their close associates as
of the date of this Prospectus, certain Cornerstone Investors and/or their close associates may
participate in the International Offering as placees and subscribe for further Offer Shares in the
Global Offering, subject to the consent of the Hong Kong Stock Exchange and without
obtaining any preferential treatment. Our Company will seek the Hong Kong Stock Exchange’s
consent and/or waiver to allow the Cornerstone Investors and/or their close associates to
participate in the International Offering as placees pursuant to Chapter 4.15 of the Guide for
New Listing Applicants. Whether such Cornerstone Investors and/or their close associates will
place orders in the International Offering are uncertain and will be subject to the final
investment decisions of such investors and the terms and conditions of the Global Offering.
To the best knowledge of our Company, the Cornerstone Investors make independent
investment decisions, and their subscriptions under the Cornerstone Investment Agreements
would be financed by their own internal resources, financial resources of its shareholders or (in
the case of Cornerstone Investors which are funds or investment managers) the assets managed
for its investors as its source of funding for the subscription of the Offer Shares, and they have
sufficient funds to settle their respective investment under the Cornerstone Placing. Each of the
Cornerstone Investors has confirmed that all necessary approvals have been obtained with
respect to the Cornerstone Placing, and that no specific approval from any stock exchange (if
relevant) or its shareholders is required for the relevant cornerstone investment. In addition, to
the best knowledge of our Company, save as otherwise disclosed, each of the Cornerstone
Investors is independent from each other and makes independent investment decisions.
Details of the actual number of Offer Shares to be allocated to the Cornerstone Investors
will be disclosed in the allotment results announcement of our Company to be published on or
around Monday, October 27, 2025.
CORNERSTONE INVESTORS
– 382 –


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The table below sets forth the details of the Cornerstone Placing, based on the Offer Price
of HK$68.88, being the maximum Offer Price:
Assuming the Over-allotment
Option is not exercised
Assuming the Over-allotment
Option is fully exercised
Cornerstone Investors
Total
Investment
Amount (1)
Number of
Offer Shares (2)
Approximate
%o ft h e
Offer Shares
Approximate
%o fo u r
total issued
share
capital (3)
Approximate
%o ft h e
Offer Shares
Approximate
%o fo u r
total issued
share
capital (3)
(US$ in million)
Barings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820.00 2,259,500 3.37% 0.67% 2.93% 0.65%
MSIP /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820.00 2,259,500 3.37% 0.67% 2.93% 0.65%
HCEP Master Fund
and HCEP Long
Only Master Fund /H1118/H111820.00 2,259,500 3.37% 0.67% 2.93% 0.65%
Arc Avenue /H1118/H1118/H1118/H1118/H1118/H111810.00 1,129,750 1.69% 0.34% 1.47% 0.33%
CloudAlpha Capital /H1118/H111830.00 3,389,250 5.06% 1.01% 4.40% 0.98%
Funds managed by
Weiss Asset
Management LP /H1118/H1118/H111830.00 3,389,250 5.06% 1.01% 4.40% 0.98%
Cithara Fund /H1118/H1118/H1118/H1118/H1118/H111830.00 3,389,250 5.06% 1.01% 4.40% 0.98%
3W Fund /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820.00 2,259,500 3.37% 0.67% 2.93% 0.65%
GMF and IRMF /H1118/H1118/H1118/H111820.00 2,259,500 3.37% 0.67% 2.93% 0.65%
Infini /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810.00 1,129,750 1.69% 0.34% 1.47% 0.33%
Alpine /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820.00 2,259,500 3.37% 0.67% 2.93% 0.65%
DAMSIMF /H1118/H1118/H1118/H1118/H1118/H1118/H111810.00 1,129,750 1.69% 0.34% 1.47% 0.33%
Aqua Ocean /H1118/H1118/H1118/H1118/H1118/H111820.00 2,259,500 3.37% 0.67% 2.93% 0.65%
Martis Fund, L.P . /H1118/H1118/H111810.00 1,129,750 1.69% 0.34% 1.47% 0.33%
Taikang Life /H1118/H1118/H1118/H1118/H1118/H111810.00 1,129,750 1.69% 0.34% 1.47% 0.33%
ICBC WM /H1118/H1118/H1118/H1118/H1118/H1118/H111810.00 1,129,750 1.69% 0.34% 1.47% 0.33%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118290.00 32,762,750 48.89% 9.78% 42.51% 9.49%
Notes:
(1) Exclusive of brokerage, the SFC transaction levy, the Hong Kong Stock Exchange trading fee and the AFRC
transaction levy, and to be converted to Hong Kong dollars based on the exchange rate as disclosed in this
Prospectus.
(2) Subject to rounding down to the nearest whole board lot of 50 H Shares.
(3) Assuming the options granted under the 2024 Share Option Incentive Scheme are not exercised.
(4) If the final Offer Price is less than the maximum Offer Price of HK$68.88, in accordance with the terms of
the Cornerstone Investment Agreements and to satisfy the relevant requirements under the Listing Rules, each
Cornerstone Investor’s investment amount shall be deducted on a pro rata basis at the sole and absolute
discretion of the Sole Sponsor, the Sole Sponsor-Overall Coordinator and our Company, so that the number of
Offer Shares to be acquired by each Cornerstone Investor remain the same with the table above.
CORNERSTONE INVESTORS
– 383 –


--- page 394 ---
THE CORNERSTONE INVESTORS
The information about our Cornerstone Investors set forth below has been provided by
our Cornerstone Investors in connection with the Cornerstone Placing.
Barings
Baring Asset Management (Asia) Limited (“ Barings ”) is an over US$470 billion global
asset management firm that partners with institutional, insurance, and intermediary clients, and
supports leading businesses with flexible financing solutions. Barings is a subsidiary of
MassMutual, seeks to deliver excess returns by leveraging its global scale and capabilities
across public and private markets in fixed income, real assets and capital solutions.
MSIP
Morgan Stanley & Co. International plc (“ MSIP ”) is a company incorporated in the
United Kingdom. The ultimate parent undertaking and controlling entity is Morgan Stanley.
Morgan Stanley together with its subsidiary undertakings forms the “Morgan Stanley Group”.
Morgan Stanley is a global financial services firm authorised as a Financial Holding Company
and regulated by the Board of Governors of the Federal Reserve System in the United States
of America. The Morgan Stanley Group operates within the financial services industry and is
subject to extensive supervision and regulation.
The principal activity of the Morgan Stanley Group is the provision of financial services
to a global client base consisting of corporations, governments and financial institutions.
Financial services include investment banking, sales and trading, and other services to clients.
HCEP Master Fund and HCEP Long Only Master Fund
Each of HCEP Master Fund and HCEP Long Only Master Fund is an exempted company
with limited liability incorporated under the laws of the Cayman Islands. The investment
manager of them is HCEP Management Limited (“ HCEP Management ”), which is in turn
wholly-owned by HCEP Management Holding Limited. Each of HCEP Master Fund and HCEP
Long Only Master Fund is an investment fund whose primary purpose is to make China-related
equity investments. HCEP Management was incorporated under the laws of Hong Kong in
2020. There is no single ultimate beneficial owner holding 30% or more participating interests
in HCEP Master Fund or HCEP Long Only Master Fund.
Arc Avenue
Arc Avenue Asset Management Pte. Ltd. (“ Arc Avenue ”) is a fund management company
incorporated in Singapore and regulated by the Monetary Authority of Singapore (“ MAS”). It
holds an Accredited/Institutional Licensed Fund Management Company (A/I LFMC) license,
authorizing it to manage investment funds exclusively for accredited and institutional
investors. The firm specializes in asset management, with a primary focus on equity investment
CORNERSTONE INVESTORS
– 384 –


--- page 395 ---
funds. Arc Avenue Asset Management Pte. Ltd. serves as investment manager to Enreal China
Master Fund and Forreal China V alue Fund. These two funds are focused on investing in
technology-driven opportunities in China. Specifically, they invest in the Hong Kong/mainland
China equity market as well as ADRs, and mainly covers sectors including TMT, Advanced
Manufacturing, Consumer and Healthcare etc. The ultimate beneficial owner of Enreal China
Master Fund and Forreal China V alue Fund holding 30% or more of its interest is a global
institutional investor with several hundred billion US$ in assets under management, and not an
individual investor.
CloudAlpha Capital
CloudAlpha Capital Management Limited (“ CloudAlpha Capital ”) was founded in 2014
and is now a global-leading hedge fund manager that focuses on investment in technologies.
CloudAlpha Capital is headquartered in Hong Kong, with teams also spread across Shenzhen,
Shanghai, Taipei, Hsinchu, and Tokyo. CloudAlpha Capital currently manages equity long-
short hedge funds with total assets under management of approximately US$2 billion.
CloudAlpha Capital is fully controlled by Y ang Jin, Wang Y en Kang and Y an Peide, all of
whom are Independent Third Parties.
Weiss Asset Management
Weiss Asset Management LP (“ WA M”) is a Delaware limited partnership registered as an
investment adviser with the United States Securities and Exchange Commission.
Headquartered in Boston, with offices in New Y ork, Hong Kong, and San Francisco, W AM is
a global, multi-strategy investment manager with a track record of developing proprietary
strategies designed to deliver risk-adjusted returns to its investors.
W AM manages over US$4 billion in assets across two private investment funds:
Brookdale International Partners, L.P ., a New Y ork limited partnership, and Brookdale Global
Opportunity Fund, a Cayman Islands exempted company (together, the “ Brookdale Funds ”).
Turing International Limited (“ Turing”) is a Cayman Islands exempted company and is
indirectly wholly owned by the Brookdale Funds.
W AM’s investors include leading institutional allocators such as pension plans, family
offices, endowments, and foundations. No investor holds a 30% or greater interest in the
Brookdale Funds or Turing.
Cithara Fund
Cithara Global Multi-Strategy SPC – Bosideng Industry Investment Fund SP (“ Cithara
Fund ”) is an exempted segregated portfolio company incorporated in the Cayman Islands in
2021. The Cithara Fund’s objective is to deliver risk adjusted absolute return with a focus on
long-term capital preservation. The investment manager of Cithara Fund is Cithara Investment
International Limited (“ Cithara ”), a company incorporated in Hong Kong in 2016 and licensed
to conduct Type 4 (advising on securities) and Type 9 (asset management) of the regulated
CORNERSTONE INVESTORS
– 385 –


--- page 396 ---
activities as defined under the SFO. Cithara is ultimately wholly owned by Zhang Jun who is
an Independent Third Party. Song Y an, an Independent Third Party, is the ultimate beneficial
owner of Cithara Fund with more than 30% of beneficial interest. No other ultimate beneficial
owner of Cithara Fund holds 30% or more of beneficial interest.
3W Fund
3W Fund Management Limited (“ 3W Fund ”) is incorporated in Hong Kong with limited
liability and licensed by the SFC to carry out Type 9 (asset management) regulated activity. 3W
Fund, which is ultimately wholly owned by an Independent Third Party, has agreed to procure
3W Global Fund, over which 3W Fund has discretionary investment management power, to
subscribe for such number of the Offer Shares. 3W Global Fund pursues to maximize absolute
return and seek long-term capital growth primarily through fundamental investment principle
with value approach. No single investor holds 30% or more interests in 3W Global Fund.
GMF and IRMF
Schonfeld Strategic Advisors (Hong Kong) Limited (“ SSA Hong Kong ”) acts as a
sub-investment manager to (i) Schonfeld Global Master Fund L.P . (“ GMF”) on behalf of its
principal investment manager, Schonfeld Strategic Advisors LLC (“ SSA LLC ”) and (ii)
Schonfeld IR Master Fund Pte. Ltd. (“ IRMF ”) on behalf of its principal investment manager,
Schonfeld Strategic Advisors Pte. Ltd. (“ SSA Singapore ”). GMF and IRMF are the cornerstone
investors. SSA Hong Kong is one of the investment management entities in the Schonfeld
Group (SSA Hong Kong, together with SSA LLC, SSA Singapore and its affiliated entities, are
collectively referred to herein as (“ Schonfeld ”). Schonfeld is a global, diversified alternative
investment management firm and seeks to pursue a diverse range of investment strategies
across industry sectors, asset classes and geographies. GMF is incorporated in the Cayman
Islands and IRMF is incorporated in Singapore. SSA Hong Kong is licensed by the SFC. The
ultimate beneficial owner of the GMF and IRMF is Schonfeld Strategic Partners Fund LLC
which, as of 1 March 2025, owns 70.00% of GMF and 99.77% of IRMF.
Infini
Infini Global Master Fund (“ Infini ”) is a multi-strategy discretionary investment fund
with wide investor base, managed by Infini Capital Management Limited (ࠢ
ʮ̡)( “ Infini Capital ”). With dual headquarters in Hong Kong and Abu Dhabi, Infini Capital
is licensed by the SFC and the Abu Dhabi Global Market (ADGM) Financial Services
Regulatory Authority (FSRA). Infini Capital is wholly-owned by Infini Capital Global, a
Cayman Island holding company and the ultimate beneficial owner of the Infini Capital is Tony
Chin, the founder and Chairman of Infini Capital. None of the investor holds 30% or more
interests in the fund.
CORNERSTONE INVESTORS
– 386 –


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Alpine
Alpine Flagship Fund (“ Alpine ”) is an exempted company incorporated with limited
liability under the laws of the Cayman Islands. There is no investor holding 30% or above
interest in the fund. Alpine Investment Management Limited is the investment manager of
Alpine. It holds a licence granted by SFC to carry on Type 9 (Asset Management) regulated
activities. The ultimate beneficial owner of the Alpine Investment Management Limited is
Tony Tianyuan Song, an Independent Third Party. None of other shareholders hold 30% or
more interest in Alpine Investment Management Limited.
DAMSIMF
Dymon Asia Multi-Strategy Investment Master Fund (“ DAMSIMF ”) is an investment
fund established in the Cayman Islands. The investors in DAMSIMF are Dymon Asia
Multi-Strategy Investment Fund and Dymon Asia Multi-Strategy Investment (US) Fund.
DAMSIMF is a multi-manager, multi-asset class fund which seeks to generate absolute
consistent uncorrelated returns with minimal volatility. Asset classes traded are: FX, Fixed
Income/Rates, Equities, Credit and Commodities. DAMSIMF is managed by Dymon Asia
Capital (Singapore) Pte. Ltd. (“ DACS ”). DACS is a wholly-owned subsidiary of and directly
controlled by Dymon Asia Capital Ltd, whose shareholders Danny Y ong and Keith Tan each
holds more than 10% interests therein, with Danny Y ong having the controlling stake of Dymon
Asia Capital Ltd. DACS is headquartered in Singapore with an affiliate in Hong Kong that is
licensed by the SFC to carry out Type 9 (asset management) and Type 1 (dealing in securities)
regulated activities. Save for an Australian sovereign wealth fund who holds over 30% interest
in DAMSIMF, no other single ultimate beneficial owner holds 30% or more interest in
DAMSIMF.
Aqua Ocean
Aqua Ocean Limited (“ Aqua Ocean ”) is a company incorporated under the laws of the
British Virgin Islands and a controlled subsidiary of Boyu Capital Opportunities Master Fund.
Boyu Capital Opportunities Master Fund is an exempted company incorporated under the laws
of the Cayman Island and an investment fund managed by Boyu Capital Management
(Singapore) Pte. Ltd. (“ Boyu ”). Boyu holds a capital markets services license and is regulated
by the Monetary Authority of Singapore. Boyu provides growth and transformational capital
for leading companies in sectors including high technology, healthcare, consumer and business
services. Boyu is 100% indirectly owned by Boyu Group, LLC, which is in turn ultimately
controlled by Mr. Xiaomeng Tong, an Independent Third Party. There is no single investor
holding 30% or more interest in Aqua Ocean through Boyu Capital Opportunities Master Fund.
CORNERSTONE INVESTORS
– 387 –


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Martis Fund, L.P.
Martis Fund, L.P . is an exempted limited partnership registered under the laws of Cayman
Islands, focusing on healthcare, telecommunication, media, technology and consumer
industries investment. The general partner of Martis Fund, L.P . is Pulsating Star GP Limited,
which is 100% ultimately controlled by Mr. Eric Li, an Independent Third Party. No limited
partner holds 30% or more partnership interest in Martis Fund, L.P . Mr. Eric Li is a Hong Kong
citizen with extensive experience in the investment industry. Through several investment funds
he ultimately controls, Mr. Eric Li focuses on the investment in healthcare, telecommunication,
media, technology and consumer industries, and has successfully invested in several companies
listed in Hong Kong, including Giant Biogene (stock code: 2367), WL Delicious (stock code:
9985) and SF Intra-City (stock code: 9699) as pre-IPO investor, Guming (stock code: 1364),
Sanhua (stock code: 2050) and Chery Auto (stock code: 9973) as cornerstone investor.
Taikang Life
Taikang Life Insurance Co., Ltd (“ Taikang Life ”), a company incorporated in China, is
a wholly owned subsidiary of Taikang Insurance Group Inc. There is no shareholder holding
30% or more in Taikang Insurance Group Inc. Taikang Life provides a full range of personal
security and investment and wealth management products and services for individuals and
families. The products on offer correspond to the different requirements of customers in terms
of market segments such as the children and teenagers, females and high-income population
groups. They also meet multidimensional demands regarding health care and accident cover,
pensions and wealth management, among others. Taikang Insurance Group Inc. is an insurance
and financial service conglomerate focused on insurance, asset management and health and
elderly care as main businesses. The Beijing-headquartered company consists of several
subsidiaries including Taikang Life, Taikang AMC, Taikang Pension, Taikang Healthcare,
Taikang Health, and TK.CN. Its product offering covers life insurance, internet-based financial
insurance, enterprise annuity, asset management, health and elderly care, health management
and commercial real estate, among others.
ICBC WM
ICBC Wealth Management Co., Ltd. (“ ICBC WM ”) was established in May 2019 in
Beijing, with a registered capital of RMB16 billion. It is a wholly-owned subsidiary of
Industrial and Commercial Bank of China Limited, a company listed on the Shanghai Stock
Exchange (stock code: 601398) and the Hong Kong Stock Exchange (stock code: 1398). The
business scope of ICBC WM is public issuance of wealth management products to the general
public, investment and management of entrusted assets for investors; non-public issuance of
wealth management products to qualified investors, investment and management of entrusted
assets for investors; wealth management advisory and consulting services; and other businesses
as approved by the banking regulatory authority under the State Council.
As confirmed by ICBC WM, the subscription of the Offer Shares as a cornerstone investor
will be made by it through QDIIs.
CORNERSTONE INVESTORS
– 388 –


--- page 399 ---
CLOSING CONDITIONS
The obligation of each of the Cornerstone Investors to subscribe for the Offer Shares
(including those to be subscribed through QDIIs) under the respective Cornerstone Investment
Agreement is subject to, among other things, the following closing conditions:
(i) the Hong Kong Underwriting Agreement and the International Underwriting
Agreement 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 Hong Kong Underwriting Agreement and the International Underwriting
Agreement, and neither the Hong Kong Underwriting Agreement nor the
International Underwriting Agreement having been terminated;
(ii) the Offer Price having been agreed upon between our Company and the Sole
Sponsor-OC (for itself and on behalf of the underwriters of the Global Offering);
(iii) the Listing Committee of the Hong Kong Stock Exchange having granted the
approval for the listing of, and permission to deal in, the H Shares (including the H
Shares under the Cornerstone Placing) 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 Hong Kong Stock Exchange;
(iv) no laws shall have been enacted or promulgated which prohibits the consummation
of the transactions contemplated in the Global Offering or the respective
Cornerstone Investment Agreement, and there being no orders or injunctions from
a court of competent jurisdiction in effect precluding or prohibiting consummation
of such transactions; and
(v) the respective agreements, representations, warranties, undertakings, confirmations
and acknowledgements of the Cornerstone Investors under the respective
Cornerstone Investment Agreement are accurate and true in all respects and not
misleading and that there is no breach of the respective Cornerstone Investment
Agreement on the part of the relevant Cornerstone Investor.
RESTRICTIONS ON THE CORNERSTONE INVESTORS
Each of the Cornerstone Investors has agreed that without the prior written consent of our
Company, the Sole Sponsor and the Sole Sponsor-OC, it will not, whether directly or indirectly,
at any time during the period commencing from (and inclusive of) the Listing Date and ending
on (and inclusive of) the date falling six (6) months after the Listing Date (the “ Lock-up
Period ”), dispose of, in any way, any of the Offer Shares it has purchased, pursuant to the
respective 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 INVESTORS
– 389 –


--- page 400 ---
HONG KONG UNDERWRITERS
Guotai Junan Securities (Hong Kong) Limited
CLSA Limited
DBS Asia Capital Limited
Star River Securities Limited
UNDERWRITING ARRANGEMENTS AND EXPENSES
Hong Kong Public Offering
Hong Kong Underwriting Agreement
Pursuant to the Hong Kong Underwriting Agreement, our Company is offering 6,701,050
Hong Kong Offer Shares (subject to re-allocation described below) for subscription by the
public in Hong Kong on, and subject to, the terms and conditions set out in this Prospectus and
the Hong Kong Underwriting Agreement at the Offer Price.
Subject to: (a) the Listing Committee granting the listing of, and permission to deal in,
our H Shares in issue and to be issued as mentioned in this Prospectus and such listing and
permission not subsequently having been revoked prior to the commencement of dealings in
the H Shares on the Hong Kong Stock Exchange; and (b) certain other conditions set out in the
Hong Kong Underwriting Agreement (including but not limited to the Offer Price being agreed
upon between us and the Sole Sponsor-Overall Coordinator (for itself and on behalf of the
Underwriters)), the Hong Kong Underwriters have agreed severally, and not jointly, to
subscribe for, or procure subscribers for, the Hong Kong Offer Shares which are being offered
but are not taken up under the Hong Kong Public Offering, on the terms and conditions set out
in this Prospectus and the Hong Kong Underwriting Agreement. If, for any reason, the Offer
Price is not agreed between us and the Sole Sponsor-Overall Coordinator (for itself and on
behalf of the Underwriters), the Global Offering will not proceed and will lapse.
The Hong Kong Underwriting Agreement is conditional upon and subject to the
International Underwriting Agreement having been entered into and becoming unconditional
and not having been terminated.
UNDERWRITING
– 390 –


--- page 401 ---
Grounds for termination
The respective obligations of the Hong Kong Underwriters to subscribe for, or procure
subscribers for, the Hong Kong Offer Shares under the Hong Kong Underwriting Agreement
are subject to termination. The Sole Sponsor and the Sole Sponsor-Overall Coordinator (for
itself and on behalf of the Hong Kong Underwriters) may in its sole and absolute discretion,
by notice in writing to our Company, terminate the Hong Kong Underwriting Agreement with
immediate effect at any time at or prior to 8:00 a.m. on the Listing Date (the “ Termination
Time ”) if any of the following events shall occur prior to the Termination Time:
(a) there develops, occurs, exists or comes into effect:
(i) any event, circumstance, or series of events, in the nature of force majeure
(including, without limitation, any acts of government, declaration of a
national or international emergency or war, calamity, crisis, epidemic,
pandemic, adverse mutation or aggravation of infectious diseases,
comprehensive sanctions, strikes, lock-outs, other industrial actions, fire,
explosion, flooding, earthquake, tsunami, volcanic eruption, civil commotion,
riots, rebellion, public disorder, acts of war, outbreak or escalation of
hostilities (whether or not war is declared), acts of God, acts of terrorism
(whether or not responsibility has been claimed), paralysis in government
operations, interruptions in transportation) or other state of emergency in
whatever form, in or affecting, directly or indirectly the PRC, Hong Kong,
Japan, the United States, the United Kingdom, the European Union (or any
member thereof) or any other jurisdiction relevant to our Group (each a
“Relevant Jurisdiction ” and collectively, the “ Relevant Jurisdictions ”); or
(ii) any change or development involving a prospective change or development, or
any event, circumstance or series of events likely to result in or likely to result
in a change or development involving a prospective change, in local, national,
regional or international financial, economic, political, military, industrial,
fiscal, legal, regulatory, currency, credit or market matters or conditions, equity
securities or exchange control or any monetary or trading settlement system or
other financial markets (including, without limitation, conditions in the stock
and bond markets, money and foreign exchange markets, the interbank markets
and credit markets), in or affecting any Relevant Jurisdictions; or
(iii) any moratorium, suspension or restriction in or on trading in securities
generally on the Hong Kong Stock Exchange, the New Y ork Stock Exchange,
the NASDAQ Global Market, the London Stock Exchange, the Tokyo Stock
Exchange, the Shenzhen Stock Exchange and the Shanghai Stock Exchange; or
UNDERWRITING
– 391 –


--- page 402 ---
(iv) any general moratorium on commercial banking activities in any Relevant
Jurisdictions (declared by any relevant competent authority) or any disruption
in commercial banking or foreign exchange trading or securities settlement or
clearing services, procedures or matters in or affecting any of the Relevant
Jurisdictions; or
(v) the commencement by any governmental authority or other regulatory or
political body or organization of any public action or investigation against any
member of our Group or a director, supervisor or senior management member
of any member of our Group in his/her capacity as such or announcing an
intention to take any such action; or
(vi) any new law, or any change or any development involving a prospective
change or any event or circumstance likely to result in a change or a
development involving a prospective change in (or in the interpretation or
application by any court or other competent authority of) existing laws, in each
case, in or affecting any of the Relevant Jurisdictions; or
(vii) the imposition of sanctions or export controls in whatever form, directly or
indirectly, on any member of our Group by or on any Relevant Jurisdiction, or
the withdrawal of trading privileges which existed on the date of the Hong
Kong Underwriting Agreement, in whatever form, directly or indirectly, by, or
for, any of the Relevant Jurisdictions; or
(viii) any valid demand by creditors for repayment of 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
(ix) any non-compliance of this Prospectus (or any other documents used in
connection with the contemplated offering, allotment, issue, subscription or
sale of any of the Offer Shares), the CSRC Filings (as defined in the Hong
Kong Underwriting Agreement) or any aspect of the Global Offering with the
Listing Rules or any other applicable laws; or
(x) any change or development involving a prospective change or amendment in
or affecting taxes or exchange control, currency exchange rates or foreign
investment regulations (including, without limitation, a material devaluation of
the RMB, Hong Kong dollar or the USD against any foreign currencies, a
change in the system under which the value of the Hong Kong dollar is linked
to that of the USD or RMB is linked to any foreign currency or currencies), or
the implementation of any exchange control, in any of the Relevant
Jurisdictions or affecting an investment in the Offer Shares;; or
UNDERWRITING
– 392 –


--- page 403 ---
(xi) any litigation, dispute, legal action, claim, or regulatory proceeding being
threatened or instigated against any member of our Group, any Director, any
member of the senior management of our Company as named in this
Prospectus; or
(xii) any contravention by any member of our Group or any Director or any member
of the senior management of our Company as named in this Prospectus of any
applicable laws including the Listing Rules; or
(xiii) any change or prospective change or development, or any materialization of
any of the risks set out in the section headed “Risk Factors” in this Prospectus;
or
(xiv) other than with the prior written consent of the Sole Sponsor-Overall
Coordinator, the issue or requirement to issue by our Company of a supplement
or amendment to this Prospectus or other documents in connection with the
offer and sale of the Offer Shares pursuant to the Companies (Winding Up and
Miscellaneous Provisions) Ordinance or the Listing Rules or upon any
requirement or request of the Stock Exchange and/or the SFC; or
which, individually or in the aggregate, in the sole and absolute opinion of the Sole
Sponsor and the Sole Sponsor- Overall Coordinator (for itself and on behalf of the
Hong Kong Underwriters):
(i) have or will have or may have a material adverse change, or any development
involving a prospective material adverse change, in or affecting the assets,
liabilities, business, general affairs, management, prospects, shareholders’
equity, profitability, results of operations, position or condition (financial or
otherwise) or performance of the Group, taken as a whole (the “ Material
Adverse Change ”); or
(ii) has or will have 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
(iii) makes or will make or may make it inadvisable or inexpedient or impracticable
for the Global Offering to proceed or to market the Global Offering or the
delivery or distribution of the Offer Shares on the terms and in the manner
contemplated by the Offer Related Documents (as defined below); or
(iv) has or will have or may have the effect of making any part of the Hong Kong
Underwriting Agreement (including underwriting) incapable of performance in
accordance with its terms or preventing or delaying the processing of
applications and/or payments pursuant to the Global Offering or pursuant to
the underwriting thereof; or
UNDERWRITING
– 393 –


--- page 404 ---
(b) any of the Sole Sponsor and the Sole Sponsor- Overall Coordinator (for itself and
on behalf of the Hong Kong Underwriters and the Capital Market Intermediaries)
shall become aware of the fact that
(i) any statement contained in any of this Prospectus, the post hearing information
pack of our Company, the formal notice, the preliminary offering circular, the
pricing information set out in the International Underwriting Agreement, and
the final offering circular, the CSRC Filings and/or in any notices,
announcements, advertisements, communications or other documents
(including any announcement, circular, document or other communication
pursuant to the Hong Kong Underwriting Agreement) in connection with the
Global Offering (including any supplement or amendment thereto) (the “ Offer
Related Documents ”) was, when it was issued, or has become, untrue,
incorrect, incomplete, misleading or deceptive in any material respect, or that
any forecast, estimate, expression of opinion, intention or expectation
contained in any such documents, when it was issued, or has become, is not fair
and honest in any material respect and based on reasonable assumptions or
reasonable grounds, when taken as a whole; or
(ii) 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
omission from, or material misstatement in, any of Offer Related Documents
(including any supplement or amendment thereto); or
(iii) any breach of, or any event or circumstance rendering untrue or incorrect,
incomplete or misleading in any respect, any of the Warranties; or
(iv) any event, act or omission which gives rise or is likely to give rise to any
liability of our Company pursuant to Clause 13; or
(v) any material breach of any of the obligations or undertakings imposed upon
any party to the Hong Kong Underwriting Agreement or the International
Underwriting Agreement (other than upon any of the Hong Kong Underwriters
or the International Underwriters); or
(vi) that any executive Director or any member of senior management of our
Company named in this Prospectus seeks to retire, or is removed from office
or vacating his/her office; or
UNDERWRITING
– 394 –


--- page 405 ---
(vii) any Director or any member of senior management of our Company named in
this Prospectus is being charged with an indictable offense or prohibited by
operation of law or otherwise disqualified from taking part in the management
or taking directorship of a company;
(viii) any Material Adverse Change; or
(ix) the approval by the Listing Committee of the Hong Kong Stock Exchange of
the listing of, and permission to deal in, the H Shares to be issued or sold
(including any additional H Shares that may be issued or sold pursuant to the
exercise of the Over-allotment Option) under the Global Offering is refused or
not granted (other than subject to customary conditions), on or before the date
of the Listing, or if granted, the approval is subsequently withdrawn, cancelled,
qualified (other than by customary conditions), revoked or withheld; or
(x) the CSRC Filings, the notice of acceptance of the CSRC filings issued by the
CSRC and/or the published filing results in respect of the CSRC Filings on its
website have been revoked, withdrawn, rejected or terminated; or
(xi) other than with the prior written consent of the Sole Sponsor and the Sole
Sponsor-Overall Coordinator, the issue or requirement to issue by our
Company of a supplement or amendment to the CSRC filings pursuant to the
CSRC Rules (as defined in the Hong Kong Underwriting Agreement) or upon
any requirement or request of the CSRC; or
(xii) our Company withdraws this Prospectus (and/or any other Offer Related
Documents) or the Global Offering;
(xiii) any of (a) the Reporting Accountants, (b) the Industry Consultant, (c) the PRC
Lawyer, (d) Thompson Hine LLP , (e) Hogan Lovells International LLP , (f)
Zhitong (Beijing) Registered Tax Agents Co., Ltd. Shanghai Branch, (g)
Commerce & Finance Law Offices LLP has withdrawn its consent to the issue
of this Prospectus with the inclusion of its report, letters, and/or opinions (as
the case may be) and references to its name included in the form and context
in which it respectively appears;
(xiv) any prohibition on our Company for whatever reason from offering, allotting,
issuing or selling any of the Offer Shares (including pursuant to any exercise
of the Over-allotment Option) pursuant to the terms of the Global Offering; or
UNDERWRITING
– 395 –


--- page 406 ---
(xv) any person (other than any of the Sole Sponsor) has withdrawn its consent to
the issue of this Prospectus with the inclusion of its reports, letters and/or legal
opinions (as the case may be) and references to its name included in the form
and context in which it respectively appears;
(xvi) an order or petition is presented for the winding-up of any member of our
Group, or any composition or arrangement made by any member of our Group
with its creditors or a scheme of arrangement entered into by any member of
our Group or any resolution for the winding-up of any member of our Group
or the appointment of a provisional liquidator, receiver or manager over all or
a material part of the material assets or undertaking of any member of our
Group or anything analogous thereto occurs in respect of any member of our
Group; or
(xvii) a material portion of the orders placed or confirmed in the book-building
process has been withdrawn, terminated or cancelled.
Undertakings given to the Hong Kong Stock Exchange pursuant to the Listing Rules
By our Company
Pursuant to Rule 10.08 of the Listing Rules, we have undertaken to the Hong Kong Stock
Exchange that, except for the Offer Shares to be issued pursuant to the Global Offering and any
A Shares which may be issued pursuant to the 2024 Share Option Incentive Scheme or under
any of the circumstances provided under Rule 10.08 of the Listing Rules, within six months
from the Listing Date, no further Shares or securities convertible into equity securities of our
Company (whether or not of a class already listed) shall be issued by our Company or form the
subject of any agreement 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).
Undertakings given to the Hong Kong Underwriters
Undertakings by our Company
Our Company has undertaken to each of the Sole Sponsor, the Sole Sponsor-Overall
Coordinator, the Joint Overall Coordinators, the Joint Global Coordinators, the Joint
Bookrunners, the Joint Lead Managers, the CMIs and the Hong Kong Underwriters not to
(except for the offer, allotment and issue of the Offer Shares pursuant to the Global Offering,
including any exercise of the Over-allotment Option and the A Shares to be issued under the
employee incentive scheme of our Company which is disclosed in this Prospectus, at any time
during the period commencing on the date of the Hong Kong Underwriting Agreement and
ending on, and including, the date that is six months after the Listing Date (the “ First
Six-Month Period ”), without the prior written consent of the Sole Sponsor and the Sole
UNDERWRITING
– 396 –


--- page 407 ---
Sponsor-Overall Coordinator (for itself and on behalf of the Hong Kong Underwriters) and
unless in compliance with the requirements of the Listing Rules (including pursuant to the
exceptions set out in Rule 10.08 of the Listing Rules):
(a) allot, issue, sell, accept subscription for, offer to allot, issue or sell, contract or agree
to allot, issue or sell, assign, 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 any claim, charge, mortgage, lien, option, equitable
right, power of sale, pledge, hypothecation, retention of title, right of pre-emption,
right of first refusal or other encumbrance, third party right or security interest of
any kind or an agreement, arrangement or obligation to create any of the foregoing
(the “ Encumbrance ”) over, or agree to transfer or dispose of or create an
Encumbrance over, either directly or indirectly, conditionally or unconditionally,
any H Shares or any other equity securities of our Company, or any interest in any
of the foregoing (including, without limitation, any equity securities convertible into
or exchangeable or exercisable for or that represent the right to receive, or any
warrants or other rights to purchase, any H Shares), or deposit any Shares or other
equity securities of our Company, as applicable, with a depositary in connection
with the issue of depositary receipts; or
(b) enter into any swap or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of H Shares or any other
equity securities of our Company, or any interest in any of the foregoing (including,
without limitation, any equity securities convertible into or exchangeable or
exercisable for or that represent the right to receive, or any warrants or other rights
to purchase, any H Shares);
(c) enter into any transaction with the same economic effect as any transaction specified
in Clause 10.1.1(i) or (ii) above; or
(d) offer to or agree to or announce any intention to effect any transaction specified in
(a), (b) or (c) above,
in each case, whether any of the transactions specified in (a), (b) or (c) above is to be
settled by delivery of H Shares or such other equity securities of our Company, or in cash
or otherwise (whether or not the issue of H Shares or such other equity securities will be
completed within the First Six-Month Period).
UNDERWRITING
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--- page 408 ---
Underwriters’ interests in our Group
Save for their respective obligations under the Hong Kong Underwriting Agreement and
the International Underwriting Agreement or as otherwise disclosed in this Prospectus, as of
the Latest Practicable Date, none of the Underwriters was interested directly or indirectly in
any of our H Shares or securities or any shares or securities of any other member of our Group
or had any right or option (whether legally enforceable or not) to subscribe for, or to nominate
persons to subscribe for, any of our H Shares or securities or any shares or securities of any
other member of our Group.
Following the completion of the Global Offering, the Underwriters and their affiliated
companies may hold a certain portion of our H Shares as a result of fulfilling their respective
obligations under the Hong Kong Underwriting Agreement and International Underwriting
Agreement.
The Sole Sponsor’s Independence
The Sole Sponsor satisfies the independence criteria applicable to sponsors set out in Rule
3A.07 of the Listing Rules.
The International Offering
International Offering
In connection with the International Offering, we expect to enter into the International
Underwriting Agreement on the Price Determination Date with the International Underwriters
and the Capital Market Intermediaries. Under the International Underwriting Agreement, the
International Underwriters would, subject to certain conditions, severally and not jointly, agree
to purchase the International Offer Shares or procure purchasers for the International Offer
Shares initially being offered pursuant to the International Offering. See “Structure of the
Global Offering — The International Offering” in this Prospectus.
Under the International Underwriting Agreement, we intend to grant to the International
Underwriters the Over-allotment Option, exercisable in whole or in part at one or more times,
at the sole and absolute discretion of the Sole Sponsor-Overall Coordinator (for itself and on
behalf of the International Underwriters) from the Listing Date until 30 days from the last day
for the lodging of applications under the Hong Kong Public Offering to require us to issue and
allot up to an aggregate of 10,051,500 additional Offer Shares, representing approximately
15.0% of the Offer Shares initially available under the Global Offering and at the Offer Price,
to cover, among other things, any over-allocations in the International Offering, if any.
UNDERWRITING
– 398 –


--- page 409 ---
Total Commission and Expenses
The Underwriters will receive an underwriting commission (the “ Fixed Fees ”) of 1.0%
of the aggregate Offer Price of the Offer Shares (including any Offer Shares to be issued
pursuant to the exercise of the Over-allotment Option). In addition, we will pay to the
Underwriters a discretionary incentive fee (the “ Incentive Fees ”) of up to 1.2% of the
aggregate Offer Price of the Offer Shares (including any Offer Shares to be issued pursuant to
the exercise of the Over-allotment Option).
As of the date of this Prospectus, the allocation of a portion of the Fixed Fees remains
subject to the Company’s discretion. According to the Listing Rules, any unallocated portion
of the Fixed Fees will be regarded as discretionary fees. Accordingly, assuming the Incentive
Fees will be paid in full, the ratio of the Fixed Fees and Incentive Fees (as classified under and
for the purpose of Rule 3A.34 of the Listing Rules) payable by the Company to all
Underwriters (both before and after the exercise of the Over-allotment Option, if any) is
expected to be approximately 0.88%:1.32%, or approximately 40:60.
Assuming the Over-allotment Option is not exercised and based on the maximum Offer
Price of HK$68.88, the aggregate commissions and estimated expenses, together with the Hong
Kong Stock Exchange listing fee, SFC transaction levy, AFRC transaction levy, Hong Kong
Stock Exchange trading fee, legal and other professional fees, printing and other fees and
expenses relating to the Global Offering, are estimated to amount to approximately HK$135.7
million in total.
Indemnity
Our Company has undertaken to indemnify and keep indemnified on demand (on an
after-tax basis) and hold harmless each of the Sole Sponsor, the Joint Overall Coordinators, the
Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, and the Hong
Kong Underwriters and the Capital Market Intermediaries (for itself and on trust for its
directors, officers, employees, agents, assignees and affiliates) from and against certain losses
which they may suffer, including losses arising from their performance of their obligations
under the Hong Kong Underwriting Agreement and any breach by us or any of the other
Warrantors of the Hong Kong Underwriting Agreement.
Restrictions on the Offer Shares
No action has been taken to permit a public offer of the Offer Shares, other than in Hong
Kong, or the distribution of this Prospectus in any jurisdiction other than Hong Kong.
Accordingly, 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.
UNDERWRITING
– 399 –


--- page 410 ---
Over-allotment
Details of the arrangements relating to the Over-allotment Option, if any, are set forth in
the section headed “Structure of the Global Offering — Over-allotment Option”.
ACTIVITIES BY SYNDICATE MEMBERS
The underwriters of the Hong Kong Public Offering and the International Offering and the
Capital Market Intermediaries (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 the
ordinary course of their various business activities, the Syndicate Members and their respective
affiliates may purchase, sell or hold a broad array of investments and actively trade securities,
derivatives, loans, commodities, currencies, credit default swaps and other financial
instruments for their own account and for the accounts of their customers. Such investment and
trading activities may involve or relate to assets, securities and/or instruments our Company
and/or persons and entities with relationships with our Company and may also include swaps
and other financial instruments entered into for hedging purposes in connection with our
Group’s loans and other debt.
In relation to 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.
UNDERWRITING
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--- page 411 ---
In relation to issues by Syndicate Members or their affiliates of any listed securities
having the H Shares as their underlying securities, whether on the Hong Kong Stock Exchange
or on any other stock exchange, the relevant rules of the exchange may require the issuer of
those securities (or one of its affiliates or agents) to act as a market maker or liquidity provider
in the security, and this will also result in hedging activity in the H Shares in most cases.
All such activities may occur both during and after the end of the stabilizing period
described in the section headed “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;
(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; and
(c) Certain of the Syndicate Members or their respective affiliates have provided from
time to time, and expect to provide in the future, investment banking and other
services to our Company and its affiliates for which such Syndicate Members or
their respective affiliates have received or will receive customary fees and
commissions.
UNDERWRITING
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--- page 412 ---
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:
 the Hong Kong Public Offering of initially 6,701,050 Offer Shares (subject to
reallocation as mentioned below) in Hong Kong as described below in the paragraph
headed “— The Hong Kong Public Offering”; and
 the International Offering of initially 60,309,450 Offer Shares (subject to
reallocation and the Over-allotment Option as described below) outside the United
States (including to professional and institutional investors within Hong Kong) in
offshore transactions in reliance on Regulation S, as described in “— The
International Offering” below.
Investors may either:
 apply for the Hong Kong Offer Shares under the Hong Kong Public Offering; or
 apply for or indicate an interest for the International Offer Shares under the
International Offering,
but may not do both.
The 67,010,500 Offer Shares in the Global Offering will represent approximately 20.0%
of our enlarged share capital immediately after the completion of the Global Offering, without
taking into account the exercise of the Over-allotment Option and the options granted under the
2024 Share Option Incentive Scheme. If the Over-allotment Option is exercised in full, the
Offer Shares will represent approximately 22.3% of our enlarged share capital immediately
following the completion of the Global Offering.
References to applications, application monies or procedure for applications relate solely
to the Hong Kong Public Offering.
THE HONG KONG PUBLIC OFFERING
Number of Hong Kong Offer Shares initially offered
We are initially offering for subscription by the public in Hong Kong 6,701,050 Hong
Kong Offer Shares, representing 10.0% of the total number of Offer Shares initially available
under the Global Offering. Subject to the reallocation of Offer Shares between the International
Offering and the Hong Kong Public Offering, the number of Offer Shares offered under the
Hong Kong Public Offering will represent approximately 2.0% of our enlarged issued share
capital immediately after completion of the Global Offering, assuming the Over-allotment
Option and options granted under the 2024 Share Option Incentive Scheme are not exercised.
STRUCTURE OF THE GLOBAL OFFERING
– 402 –


--- page 413 ---
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 that regularly invest in shares and other
securities.
Completion of the Hong Kong Public Offering is subject to the conditions as set forth
below in “Conditions of the Global Offering” in this section.
Allocation
Allocation of 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
could mean that some applicants may receive a higher allocation than others who have applied
for the same number of Hong Kong Offer Shares, and those applicants who are not successful
in the ballot may not receive any Hong Kong Offer Shares.
For allocation purposes only, the total number of Hong Kong Offer Shares available under
the Hong Kong Public Offering (after taking into account any reallocation referred to below)
will be divided equally into two pools: pool A and pool B, with any odd board lots being
allocated to Pool A. The Hong Kong Offer Shares in pool A will be allocated on an equitable
basis to applicants who have applied for Hong Kong Offer Shares with an aggregate
subscription price of HK$5 million (excluding the brokerage, the SFC transaction levy, the
AFRC transaction levy and the Hong Kong Stock Exchange trading fee payable) or less. The
Hong Kong Offer Shares in pool B will be allocated on an equitable basis to applicants who
have applied for Hong Kong Offer Shares with an aggregate subscription price of more than
HK$5 million (excluding the brokerage, the SFC transaction levy, the AFRC transaction levy
and the Hong Kong Stock Exchange trading fee payable) and up to the total value in pool B.
Investors should be aware that applications in pool A and applications in pool B may
receive different allocation ratios. If any Hong Kong Offer Shares in one (but not both) of the
pools are unsubscribed, such unsubscribed Hong Kong Offer Shares will be transferred to the
other pool to satisfy demand in that other pool and be allocated accordingly. Applicants can
only receive an allocation of Hong Kong Offer Shares from either pool A or pool B and not
from both pools. Multiple or suspected multiple applications under the Hong Kong Public
Offering and any application for more than 3,350,500 Hong Kong Offer Shares (being
approximately 50% of the Hong Kong Offer Shares initially available under the Hong Kong
Public Offering) is liable to be rejected.
STRUCTURE OF THE GLOBAL OFFERING
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--- page 414 ---
Reallocation
The Offer Shares to be offered in the Hong Kong Public Offering and the International
Offering may, in certain circumstances, be reallocated as between these offerings at the
discretion of the Sole Sponsor-Overall Coordinator, in accordance with Chapter 4.14 of the
Guide for New Listing Applicants, following below mechanism:
(a) where the Hong Kong Offer Shares are fully subscribed or oversubscribed
irrespective of the number of times, and the International Offer Shares are fully
subscribed or oversubscribed or undersubscribed, then up to 3,350,500 Offer Shares
may be reallocated from the International Offering to the Hong Kong Public
Offering, so that the total number of Offer Shares available for subscription under
the Hong Kong Public Offering will increase up to 10,051,550 Offer Shares,
representing approximately 15% of the number of Offer Shares initially available
under the Global Offering (before any exercise of the Over-allotment Option); and
(b) where the Hong Kong Offer Shares are undersubscribed:
(i) if the International Offering Shares are fully subscribed or oversubscribed, the
Sole Sponsor-Overall Coordinator has the authority to reallocate all or any
unsubscribed Hong Kong Offer Shares to the International Offering, in such
proportions as the Sole Sponsor-Overall Coordinator deems appropriate; and
(ii) if the International Offering Shares are undersubscribed, the Global Offering
will not proceed unless the Underwriters would subscribe for or procure
subscribers for their respective applicable proportions of the Offer Shares
being offered which are not taken up under the Global Offering on the terms
and conditions of this prospectus and the Underwriting Agreements.
Given the initial allocation of the Offer Shares to the Hong Kong Public Offering and the
International Offering, no clawback mechanism will be adopted in accordance with the
provision of Paragraph 4.2(b) of Practice Note 18 of the Listing Rules.
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, and such applicant’s application in the International
Offering is liable to be rejected if the said undertaking and/or confirmation is breached and/or
untrue (as the case may be) or it has been or will be placed or allocated International Offer
Shares under the International Offering.
STRUCTURE OF THE GLOBAL OFFERING
– 404 –


--- page 415 ---
Applicants under the Hong Kong Public Offering may be required to pay, on application
(subject to application channels), maximum Offer Price of HK$68.88 per Offer Share in
addition to 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% on each Offer Share,
amounting to a total of HK$3,478.73 for one board lot of 50 H Shares. If the Offer Price, as
finally determined on the Price Determination Date in the manner as described below in the
paragraph headed “— Pricing of the Global Offering”, is less than the maximum Offer Price
of HK$68.88 per Offer Share, appropriate refund payments (including brokerage, SFC
transaction levy, AFRC transaction levy and Hong Kong Stock Exchange trading fee
attributable to the surplus application monies) will be made to successful applicants (subject
to application channels), without interest. For further details, see “How to Apply for Hong
Kong Offer Shares” in this Prospectus.
THE INTERNATIONAL OFFERING
Number of Offer Shares Initially Offered
We will be initially offering for subscription under the International Offering 60,309,450
Offer Shares, representing 90.0% of the Offer Shares under the Global Offering. Subject to the
reallocation of Offer Shares between the International Offering and the Hong Kong Public
Offering, the number of Offer Shares offered under the International Offering will represent
approximately 18.0% of our enlarged issued share capital immediately after completion of the
Global Offering, assuming the Over-allotment Option and the options granted under the 2024
Share Option Incentive Scheme are not exercised.
Allocation
The International Offering will include selective marketing of Offer Shares to
institutional and professional investors and other investors anticipated to have a sizeable
demand for such Offer Shares in Hong Kong and other jurisdictions outside the United States
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 that regularly invest in shares and other securities.
Allocation of Offer Shares pursuant to the International Offering will be effected in accordance
with the “book-building” process described in the subsection 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 H Shares and/or
hold or sell its H Shares after the Listing. Such allocation is intended to result in a distribution
of the H Shares on a basis which would lead to the establishment of a solid professional and
institutional shareholder base to the benefit of our Company and its Shareholders as a whole.
STRUCTURE OF THE GLOBAL OFFERING
– 405 –


--- page 416 ---
The Sole Sponsor-Overall Coordinator (for itself and on behalf of the Underwriters) may
require any investor who has been offered Offer Shares under the International Offering and
who has made an application under the Hong Kong Public Offering to provide sufficient
information to the Sole Sponsor-Overall Coordinator so as to allow them to identify the
relevant applications under the International Offering and to ensure that they are excluded from
any allocation of Offer Shares under the International Offering.
Reallocation
The total number of Offer Shares to be issued pursuant to the International Offering may
change as a result of the arrangement as described above in the paragraph headed “— The Hong
Kong Public Offering — Reallocation” 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, it is expected that we will grant the Over-
allotment Option to the International Underwriters.
Pursuant to the Over-allotment Option, the International Underwriters will have the right,
exercisable by the Sole Sponsor-Overall Coordinator (for itself and on behalf of the
International Underwriters) at any time from the Listing Date until 30 days after the last day
for lodging applications under the Hong Kong Public Offering, to require our Company to issue
up to 10,051,500 Offer Shares, representing approximately 15.0% of the Offer Shares initially
available under the Global Offering, to, among other things, cover over-allocations in the
International Offering, if any.
If the Over-allotment Option is exercised in full, the additional Offer Shares to be issued
pursuant thereto will represent approximately 2.91% of our enlarged issued 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.
STABILIZATION
Stabilization is a practice used by underwriters in some markets to facilitate the
distribution of securities. To stabilize, the underwriters may bid for, or purchase, the securities
in the secondary market, during a specified period of time, to retard and, if possible, prevent
a decline in the initial public market price of the securities below the offer price. Such
transactions may be effected in all jurisdictions where it is permissible to do so, in each case
in compliance with all applicable laws and regulatory requirements, including those of Hong
Kong. In Hong Kong, the price at which stabilization is effected is not permitted to exceed the
offer price.
STRUCTURE OF THE GLOBAL OFFERING
– 406 –


--- page 417 ---
In connection with the Global Offering, the Stabilizing Manager, or any person acting for
it, on behalf of the Underwriters, may over-allocate or effect transactions with a view to
stabilizing or supporting the market price of our H Shares at a level higher than that which
might otherwise prevail in the open market for a limited period after the Listing Date.
However, there is no obligation on the Stabilizing Manager or any persons acting for it to
conduct any such stabilizing action. Such stabilizing action, if taken, will be conducted at the
absolute discretion of the Stabilizing Manager or any person acting for it and may be
discontinued at any time, and is required to be brought to an end on Saturday, November 22,
2025, being the 30th day after the last day for lodging applications under the Hong Kong Public
Offering.
Stabilization action permitted in Hong Kong under the Securities and Futures (Price
Stabilizing) Rules of the SFO includes (i) over-allocating for the purpose of preventing or
minimizing any reduction in the market price of our H Shares, (ii) selling or agreeing to sell
our H Shares so as to establish a short position in them for the purpose of preventing or
minimizing any reduction in the market price of our H Shares, (iii) purchasing, or agreeing to
purchase, our H Shares pursuant to the Over-allotment Option in order to close out any position
established under (i) or (ii) above, (iv) purchasing, or agreeing to purchase, any of our H Shares
for the sole purpose of preventing or minimizing any reduction in the market price of our H
Shares, (v) selling or agreeing to sell any H Shares in order to liquidate any position
established as a result of those purchases, and (vi) offering or attempting to do anything as
described in (ii), (iii), (iv) or (v) above.
Stabilization actions by the Stabilizing Manager, or any person acting for it shall be
entered into in accordance with the laws, rules and regulations in place in Hong Kong on
stabilization.
Specifically, prospective applicants for and investors in the H Shares should note that:
 the Stabilizing Manager (or any person acting for it) may, in connection with the
stabilizing action, maintain a long position in the H Shares;
 there is no certainty as to the extent to which and the time or period for which the
Stabilizing Manager (or any person acting for it) will maintain such a long position;
 liquidation of any such long position by the Stabilizing Manager (or any person
acting for it) and selling in the open market may have an adverse impact on the
market price of the H Shares;
 no stabilizing action can be taken to support the price of the H Shares for longer than
the stabilizing period which will begin on the Listing Date and is expected to end
on Saturday, November 22, 2025, being the 30th day after the last day for lodging
applications under the Hong Kong Public Offering. After this date, when no further
action may be taken to support the price of the H Shares, demand for the H Shares,
and therefore the price of the H Shares, could fall;
STRUCTURE OF THE GLOBAL OFFERING
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--- page 418 ---
 the price of the H Shares cannot be assured to stay at or above the Offer Price by
the taking of any stabilizing action; and
 stabilizing bids or transactions effected in the course of the stabilizing action may
be made at any price at or below the Offer Price, which means that stabilizing bids
or transactions effected may be made at a price below the price paid by applicants
for, or investors in, the Offer Shares.
Our Company will ensure or procure that an announcement in compliance with the
Securities and Futures (Price Stabilizing) Rules of the SFO will be made within seven days of
the expiration of the stabilization period.
OVER-ALLOCATION
Following any over-allocation of H Shares in connection with the Global Offering, the
Stabilizing Manager (or any person acting for it) may cover such over-allocations by (among
other methods) exercising the Over-allotment Option in full or in part, using H Shares
purchased by the Stabilizing Manager (or any person acting for it) in the secondary market at
prices that do not exceed the Offer Price, or through the stock borrowing arrangement as
detailed below or a combination of these means.
PRICING OF THE GLOBAL OFFERING
The Offer Price for the purposes of the various offerings under the Global Offering will
be fixed by agreement between the Sole Sponsor-Overall Coordinator (for itself and on behalf
of the Underwriters) and us on the Price Determination Date. The Price Determination Date is
expected to be on or around Friday, October 24, 2025 (Hong Kong time) and in any event no
later than 12:00 noon on Friday, October 24, 2025, and the allocation of the International Offer
Shares under the International Offering will be determined shortly thereafter.
We will determine the Offer Price by reference to, among other factors, the closing price
of the A Shares on the Shanghai Stock Exchange on the last trading day on or before the Price
Determination Date (which is accessible to the Shareholders and potential investors
at https://www.sse.com.cn/assortment/stock/list/info/company/index.shtml?COMPANY_CODE=
603083), and the Offer Price will not be more than HK$68.88. The historical prices of our A
Shares and trading volume on Shanghai Stock Exchange are set out below.
Period High Low ADTV (1)
(RMB) (RMB) (A Shares)
For the year ended December 31, 2022 /H1118/H111816.25 8.73 7,938,835
For the year ended December 31, 2023 /H1118/H111878.60 11.07 37,477,055
For the year ended December 31, 2024 /H1118/H111860.50 24.76 24,754,993
Y ear of 2025 (up to the Latest
Practicable Date) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118142.50 27.56 27,052,993
STRUCTURE OF THE GLOBAL OFFERING
– 408 –


--- page 419 ---
Note:
(1) Average daily trading volume (“ ADTV ”) represents daily average number of the A Shares of our
Company traded over the relevant period.
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.
The Offer Price will not be more than HK$68.88 per Offer Share unless to be otherwise
announced, as further explained below, not later than the morning of the last day for lodging
applications under the Hong Kong Public Offering. Prospective investors should be aware that
the Offer Price to be determined on the Price Determination Date may be, but is not expected
to be, lower than the indicative Offer Price range stated in this Prospectus.
The Sole Sponsor and the Sole Sponsor-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 our Company, reduce the number of Offer Shares offered in the Global
Offering and/or the indicative Offer Price stated below in this Prospectus at any time on or
prior to the morning of the last day for lodging applications under the Hong Kong Public
Offering. In such a case, our Company will, as soon as practicable following the decision to
make such reduction, and in any event not later than the morning of the day which is the last
day for lodging applications under the Hong Kong Public Offering, cause there to be posted on
the website of the Hong Kong Stock Exchange at www.hkexnews.hk and our website at
www.cigtech.com notices of the reduction. Upon issue of such a notice, the number of Offer
Shares offered in the Global Offering and/or the revised Offer Price range will be final and
conclusive and the offer price, if agreed upon by the Company and the Sole Sponsor-Overall
Coordinator (for itself and on behalf of the Underwriters), will be fixed within such revised
Offer Price range.
Supplemental listing documents will also be issued by our Company in the event of a
reduction in the number of Offer Shares or the Offer Price. Such supplemental listing
documents will also include confirmation or revision, as appropriate, of the working capital
statement and the Global Offering statistics as currently set out in this Prospectus, and any
other financial information which may change as a result of any such reduction. In the absence
of any such notice so published, the number of Offer Shares and/or the Offer Price will not be
reduced.
STRUCTURE OF THE GLOBAL OFFERING
– 409 –


--- page 420 ---
If the number of Offer Shares being offered under the Global Offering or the indicative
Offer Price range is so reduced, applicants who have already submitted an application will be
notified that they are required to confirm their applications. All applicants who have already
submitted an application need to confirm their applications in accordance with the procedures
set out in the announcement and all unconfirmed applications will not be valid.
Before submitting applications for the Hong Kong Offer Shares, applicants should have
regard to the possibility that any announcement of a reduction in the number of Offer Shares
or the indicative Offer Price range may not be made until the day which is the last day for
lodging applications under the Hong Kong Public Offering. Such notice will also include such
information as agreed with the Hong Kong Stock Exchange which may change materially as
a result of any such reduction. In the absence of any such notice of reduction published as
described in this paragraph, the number of Offer Shares will not be reduced and/or the Offer
Price, if agreed upon with our Company and the Sole Sponsor-Overall Coordinator (for itself
and on behalf of the Underwriters), will under no circumstances be set outside the Offer Price
range as stated in this Prospectus.
In the event of a reduction in the number of Offer Shares being offered under the Global
Offering, the Sole Sponsor-Overall Coordinator may at their discretion reallocate the number
of Offer Shares to be offered under the Hong Kong Public Offering and the International
Offering, provided that the number of the initial Hong Kong Offer Shares shall not be less than
10% of the total number of Offer Shares in the Global Offering. The International Offer Shares
to be offered in the International Offering and the Offer Shares to be offered in the Hong Kong
Public Offering may, in certain circumstances, be reallocated as between these offerings at the
discretion of the Sole Sponsor-Overall Coordinator.
The final Offer Price, the 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 announced on Monday, October 27, 2025 on
the website of the Hong Kong Stock Exchange at www.hkexnews.hk and our website at
www.cigtech.com .
If there is any change to the offer size due to change in the number of Offer Shares offered
in the Global Offering (other than pursuant to the reallocation mechanism as disclosed in this
Prospectus), or change to the Offer Price as stated in this Prospectus, or if our Company
becomes aware that there has been a significant change affecting any matter contained in this
Prospectus or a significant new matter has arisen, the inclusion of information in respect of
which would have been required to be in this Prospectus if it had arisen before this Prospectus
was issued, after the issue of this Prospectus and before the commencement of dealings in our
H Shares as prescribed under Rule 11.13 of the Listing Rules, we are required to cancel the
Global Offering and relaunch the offer with a supplemental prospectus or a new prospectus in
FINI.
STRUCTURE OF THE GLOBAL OFFERING
– 410 –


--- page 421 ---
The final Offer Price, the level of indications of interest in the International Offering, the
level of applications in the Hong Kong Public Offering, the basis of allocations of the Hong
Kong Offer Shares and the results of allocations in the Hong Kong Public Offering are
expected to be made available through a variety of channels in the manner described in the
paragraph headed “How to Apply for Hong Kong Offer Shares — B. Publication of Results”
in this Prospectus.
CONDITIONS OF THE GLOBAL OFFERING
Acceptance of all applications for Offer Shares is conditional on, among other things:
 the Listing Committee granting approval for the listing of, and permission to deal in,
our H Shares in issue and to be issued as described in this Prospectus (including any
additional H Shares that may be issued or sold pursuant to the exercise of the
Over-allotment Option) under the Global Offering;
 the Offer Price having been agreed between us and the Sole Sponsor-Overall
Coordinator (for itself and on behalf the Underwriters);
 the execution and delivery of the International Underwriting Agreement on or before
the Price Determination Date; and
 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 unconditional and not having been
terminated in accordance with the terms of the respective agreements,
in each case on or before the dates and times specified in the Hong Kong Underwriting
Agreement and/or the International Underwriting Agreement, as the case may be (unless and
to the extent such conditions are validly waived on or before such dates and times) and in any
event not later than Wednesday, November 19, 2025, being the 30th date after the date of this
Prospectus.
If, for any reason, the Offer Price is not agreed between us and the Sole Sponsor-Overall
Coordinator (for itself and on behalf of the Underwriters) on or before 12:00 noon on Friday,
October 24, 2025, the Global Offering will not proceed and will lapse.
The consummation of each of the Hong Kong Public Offering and the International
Offering is conditional upon, among other things, each other offering becoming unconditional
and not having been terminated in accordance with its respective terms. If the above conditions
are not fulfilled or waived prior to the times and dates specified, the Global Offering will lapse
and the Hong Kong Stock Exchange will be notified immediately. Notice of the lapse of the
Hong Kong Public Offering will be published by our Company on the website of the
Hong Kong Stock Exchange at www.hkexnews.hk and our website at www.cigtech.com on the
next day following such lapse. In such an event, all application monies will be returned,
STRUCTURE OF THE GLOBAL OFFERING
–4 1 1–


--- page 422 ---
without interest (subject to application channels), on the terms set out in “How to Apply for
Hong Kong Offer Shares — D. Despatch/Collection of H Share Certificate and Refund of
Application Monies” in this Prospectus. In the meantime, all application monies will be held
in separate bank account(s) with the receiving banks or other bank(s) in Hong Kong licensed
under the Banking Ordinance (Chapter 155 of the Laws of Hong Kong).
UNDERWRITING AGREEMENTS
The Hong Kong Public Offering is fully underwritten by the Hong Kong Underwriters
under the terms of the Hong Kong Underwriting Agreement and is subject to, among other
conditions, us and the Sole Sponsor-Overall Coordinator (for itself and on behalf of the
Underwriters) agreeing on the Offer Price on the Price Determination Date.
We expect to enter into the International Underwriting Agreement relating to the
International Offering on the Price Determination Date.
Certain terms of the underwriting arrangements, the Hong Kong Underwriting Agreement
and the International Underwriting Agreement, are summarized in the section headed
“Underwriting” in this Prospectus.
DEALING ARRANGEMENTS
Assuming that the Hong Kong Public Offering becomes unconditional at or before 8:00
a.m. in Hong Kong on Tuesday, October 28, 2025, it is expected that dealings in our H Shares
on the Hong Kong Stock Exchange will commence at 9:00 a.m. on Tuesday, October 28, 2025.
The H Shares will be traded in board lots of 50 H Shares each.
STRUCTURE OF THE GLOBAL OFFERING
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--- page 423 ---
IMPORTANT NOTICE TO INVESTORS
OF HONG KONG OFFER SHARES
FULLY ELECTRONIC APPLICATION PROCESS
We have adopted a fully electronic application process for the Hong Kong
Public Offering. Below are the procedures for application.
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.cigtech.com.
The contents of this Prospectus are identical to the prospectus as registered with the
Registrar of Companies in Hong Kong pursuant to Section 342C of the Companies
(Winding Up and Miscellaneous Provisions) Ordinance.
A. APPLICATION FOR HONG KONG OFFER SHARES
1. Who Can Apply
Y ou can apply for Hong Kong Offer Shares if you or the person(s) for whose benefit you
are applying for:
 are 18 years of age or older;
 have a Hong Kong address (for the HK eIPO White Form service only) ; and
 are outside the United States, and are not a U.S. Person (as defined in Regulation S).
Unless permitted by the Listing Rules or a waiver and/or consent has been granted by the
Hong Kong Stock Exchange to us, you cannot apply for any Hong Kong Offer Shares if you
or the person(s) for whose benefit you are applying for:
 are an existing Shareholder or close associates (as defined in the Listing Rules); or
 are a Director or any of his/her close associates.
2. Application Channels
The Hong Kong Public Offering period will begin at 9:00 a.m. on Monday, October 20,
2025 and end at 12:00 noon on Thursday, October 23, 2025 (Hong Kong time).
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 424 ---
To apply for Hong Kong Offer Shares, you may use one of the following application
channels:
Application
Channel Platform Target Investors Application Time
HK eIPO
White
Form
service /H1118/H1118
www.hkeipo.hk
Investors who would
like to receive a
physical H Share
certificate. Hong
Kong Offer Shares
successfully applied
for will be allotted
and issued in your
own name.
From 9:00 a.m. on
Monday, October 20,
2025 to 11:30 a.m.
on Thursday,
October 23, 2025,
Hong Kong time.
The latest time for
completing full
payment of
application monies
will be 12:00 noon
on Thursday,
October 23, 2025,
Hong Kong time.
HKSCC
EIPO
channel /H1118/H1118
Y our broker or
custodian who is a
HKSCC Participant
will submit an EIPO
application on your
behalf through
HKSCC’s FINI
system in
accordance with
your instruction.
Investors who would
not like to receive a
physical H Share
certificate. Hong
Kong Offer Shares
successfully applied
for will be allotted
and issued in the
name of HKSCC
Nominees, deposited
directly into CCASS
and credited to your
designated HKSCC
Participant’s stock
account.
Contact your broker
or custodian for the
earliest and latest
time for giving such
instructions, as this
may vary by broker
or custodian .
The HK eIPO White Form service and the HKSCC EIPO channel are facilities subject
to capacity limitations and potential service interruptions and you are advised not to wait until
the last day of the application period to apply for Hong Kong Offer Shares.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 414 –


--- page 425 ---
For those applying through the HK eIPO White Form service, once you complete
payment in respect of any application instructions given by you or for your benefit through the
HK eIPO White Form service to make an application for Hong Kong Offer Shares, an actual
application shall be deemed to have been made. If you are a person for whose benefit the
electronic application instructions are given, you shall be deemed to have declared that only
one set of electronic application instructions has been given for your benefit. If you are an
agent for another person, you shall be deemed to have declared that you have only given one
set of electronic application instructions for the benefit of the person for whom you are an
agent and that you are duly authorized to give those instructions as an agent.
For the avoidance of doubt, giving an application instruction under the HK eIPO White
Form service more than once and obtaining different payment reference numbers without
effecting full payment in respect of a particular reference number will not constitute an actual
application.
If you apply through the HK eIPO White Form service, you are deemed to have
authorized the HK eIPO White Form Service Provider to apply on the terms and conditions
in this Prospectus, as supplemented and amended by the terms and conditions of the HK eIPO
White Form service.
By instructing your broker or custodian to apply for the Hong Kong Offer Shares on
your behalf through the HKSCC EIPO channel, you (and, if you are joint applicants, each of
you jointly and severally) are deemed to have instructed and authorized HKSCC to cause
HKSCC Nominees (acting as nominee for the relevant HKSCC Participants) to apply for Hong
Kong Offer Shares on your behalf and to do on your behalf all the things stated in this
Prospectus and any supplement to it.
For those applying through HKSCC EIPO channel, an actual application will be deemed
to have been made for any application instructions given by you or for your benefit to HKSCC
(in which case an application will be made by HKSCC Nominees on your behalf) provided such
application instruction has not been withdrawn or otherwise invalidated before the closing time
of the Hong Kong Public Offering.
HKSCC Nominees will only be acting as a nominee for you and neither HKSCC nor
HKSCC Nominees shall be liable to you or any other person in respect of any actions taken by
HKSCC or HKSCC Nominees on your behalf to apply for Hong Kong Offer Shares or for any
breach of the terms and conditions of this Prospectus.
If you apply for Hong Kong Offer Shares, then you may not apply for or indicate an
interest for International Offer Shares.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 426 ---
3. Information Required to Apply
Y ou must provide the following information with your application:
For Individual Applicants For Corporate Applicants
 Full name(s) 2 as shown on your
identity document
 Full name(s) 2 as shown on your
identity document
 Identity document’s issuing country
or jurisdiction
 Identity document’s issuing country
or jurisdiction
 Identity document type, with order
of priority:
i. Hong Kong identity (“ HKID ”)
card; or
ii. National identification
document; or
iii. Passport; and
 Identity document type, with order
of priority:
i. Legal entity identifier (“ LEI”)
registration document; or
ii. Certificate of incorporation; or
iii. Business registration
certificate; or
iv. Other equivalent document; and
 Identity document number  Identity document number
Notes:
1. If you are applying through the HK eIPO White Form service, you are required to provide a valid
e-mail address, a contact telephone number and a Hong Kong address. Y ou are also required to declare
that the identity information provided by you follows the requirements as described in Note 2 below. In
particular, where you cannot provide a HKID number, you must confirm that you do not hold a HKID
card. The number of joint applicants may not exceed four. If you are a firm, the applicant must be in
the individual members’ names.
2. The applicant’s full name as shown on their identity document must be used and the surname, given
name, middle and other names (if any) must be input in the same order as shown on the identity
document. If an applicant’s identity document contains both an English and Chinese name, both English
and Chinese names must be used. Otherwise, either English or Chinese names will be accepted. The
order of priority of the applicant’s identity document type must be strictly followed and where an
individual applicant has a valid HKID card (including both Hong Kong Residents and Hong Kong
Permanent Residents), the HKID number must be used when making an application to subscribe for
shares in a public offer. Similarly for corporate applicants, a LEI number must be used if an entity has
a LEI certificate.
3. If the applicant is a trustee, the client identification data (“ CID”) of the trustee, as set out above, will
be required. If the applicant is an investment fund (i.e. a collective investment scheme, or CIS), the CID
of the asset management company or the individual fund, as appropriate, which has opened a trading
account with the broker will be required, as above.
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4. The maximum number of joint account holders on FINI is capped at four in accordance with market
practice.
5. If you are applying as a nominee, you must provide: (i) the full name (as shown on the identity
document), the identity document’s issuing country or jurisdiction, the identity document type; and (ii),
the identity document number, for each of the beneficial owners or, in the case(s) of joint beneficial
owners, for each joint beneficial owner. If you do not include this information, the application will be
treated as being made for your benefit.
6. If you are applying as an unlisted company and (i) the principal business of that company is dealing in
securities; and (ii) you exercise statutory control over that company, then the application will be treated
as being for your benefit and you should provide the required information in your application as stated
above.
“Unlisted company” means a company with no equity securities listed on the Hong Kong Stock
Exchange or any other stock exchange.
“Statutory control” means you:
 control the composition of the board of directors of the company;
 control more than half of the voting power of the company; or
 hold more than half of the issued share capital of the company (not counting any part of it which
carries no right to participate beyond a specified amount in a distribution of either profits or
capital).
For those applying through HKSCC EIPO channel, and making an application under a
power of attorney, we and the Sole Sponsor-Overall Coordinator, as our agent, have discretion
to consider whether to accept it on any conditions we think fit, including evidence of the
attorney’s authority.
Failing to provide any required information may result in your application being rejected.
4. Permitted Number of Hong Kong Offer Shares for Application
Board lot size /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118: 50 H Shares
Permitted number of Hong
Kong Offer Shares for
application and amount
payable on
application/successful
allotment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
: Hong Kong Offer Shares are available for
application in specified board lot sizes only. Please
refer to the amount payable associated with each
specified board lot size in the table below.
The maximum Offer Price is HK$68.88 per Offer
Share.
If you are applying through the HKSCC EIPO
channel, your broker or custodian may require you
to pre-fund your application, in such amount as
determined by the broker or custodian, based on
the applicable laws and regulations in Hong Kong.
Y ou are responsible for complying with any such
pre-funding requirement imposed by your broker
or custodian with respect to the Hong Kong Public
Offer Shares you applied for.
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By instructing your broker or custodian to apply
for the Hong Kong Offer Shares on your behalf
through the HKSCC EIPO Channel, you (and, if
you are joint applicants, each of you jointly and
severally) are deemed to have instructed and
authorized HKSCC to cause HKSCC Nominees
(acting as nominee for the relevant HKSCC
Participants) to arrange payment of the final Offer
Price, brokerage, SFC transaction levy, the Hong
Kong Stock Exchange trading fee and the AFRC
transaction levy by debiting the relevant nominee
bank account at the Designated Bank for your
broker or custodian.
If you are applying through the HK eIPO White
Form service, you may refer to the table below for
the amount payable for the number of Offer Shares
you have selected. Y ou must pay the respective
maximum amount payable on application in full
upon application for Hong Kong Offer Shares.
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
HK$ HK$ HK$ HK$
50 3,478.73 800 55,659.72 7,000 487,022.58 100,000 6,957,465.48
100 6,957.47 900 62,617.18 8,000 556,597.24 200,000 13,914,930.95
150 10,436.20 1,000 69,574.65 9,000 626,171.90 300,000 20,872,396.45
200 13,914.93 1,500 104,361.98 10,000 695,746.55 400,000 27,829,861.92
250 17,393.66 2,000 139,149.31 20,000 1,391,493.10 500,000 34,787,327.40
300 20,872.40 2,500 173,936.64 30,000 2,087,239.64 600,000 41,744,792.88
350 24,351.13 3,000 208,723.97 40,000 2,782,986.19 700,000 48,702,258.35
400 27,829.86 3,500 243,511.29 50,000 3,478,732.75 800,000 55,659,723.85
450 31,308.60 4,000 278,298.62 60,000 4,174,479.29 900,000 62,617,189.32
500 34,787.33 4,500 313,085.94 70,000 4,870,225.83 1,000,000 69,574,654.80
600 41,744.80 5,000 347,873.28 80,000 5,565,972.39 2,000,000 139,149,309.60
700 48,702.25 6,000 417,447.93 90,000 6,261,718.93 3,350,500
(1) 233,109,880.91
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Notes:
(1) Maximum number of Hong Kong Offer Shares you may apply for and this is approximately 50% of the Hong
Kong Offer Shares initially offered.
(2) The amount payable is inclusive of brokerage, SFC transaction levy, the Stock Exchange trading fee and AFRC
transaction levy. If your application is successful, brokerage will be paid to the Exchange Participants (as
defined in the Listing Rules) or to the HK eIPO White Form Service Provider (for applications made through
the application channel of the HK eIPO White Form service) while the SFC transaction levy, the Stock
Exchange trading fee and the AFRC transaction levy will be paid to the SFC, the Stock Exchange and the
AFRC, respectively.
5. Multiple Applications Prohibited
Y ou or your joint applicant(s) shall not make more than one application for your own
benefit, except where you are a nominee and provide the information of the underlying investor
in your application as required under the paragraph headed “ — A. Applications for Hong Kong
Offer Shares — 3. Information Required to Apply ” in this section. If you are suspected of
submitting or cause to submit more than one application, all of your applications will be
rejected.
Multiple applications made either through (i) the HK eIPO White Form service, (ii)
HKSCC EIPO channel, or (iii) both channels concurrently are prohibited and will be rejected.
If you have made an application through the HK eIPO White Form service or HKSCC EIPO
channel, you or the person(s) for whose benefit you have made the application shall not apply
further for any Offer Shares in the Global Offering.
The H Share Registrar would record all applications into its system and identify suspected
multiple applications with identical names and identification document numbers according to
the Best Practice Note on Treatment of Multiple/Suspected Multiple Applications (“ Best
Practice Note ”) issued by the Federation of Share Registrars Limited.
Since applications are subject to personal information collection statements,
identification document numbers displayed are redacted.
6. Terms and Conditions of An Application
By applying for Hong Kong Offer Shares through the HK eIPO White Form service or
HKSCC EIPO channel, you (or as the case may be, HKSCC Nominees will do the following
things on your behalf):
(i) undertake to execute all relevant documents and instruct and authorize us and/or the
Sole Sponsor-Overall Coordinator, as our agents, to execute any documents for you
and to do on your behalf all things necessary to register any Hong Kong Offer Shares
allocated to you in your name or in the name of HKSCC Nominees as required by
HOW TO APPLY FOR HONG KONG OFFER SHARES
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the Articles of Association, and (if you are applying through the HKSCC EIPO
channel) to deposit the allotted Hong Kong Offer Shares directly into CCASS for the
credit of your designated HKSCC Participant’s stock account on your behalf;
(ii) confirm that you have read and understand the terms and conditions and application
procedures set out in this Prospectus and the designated website of the HK eIPO
White Form service (or as the case may be, the agreement you entered into with
your broker or custodian), and agree to be bound by them;
(iii) (if you are applying through the HKSCC EIPO channel) agree to the arrangements,
undertakings and warranties under the participant agreement between your broker or
custodian and HKSCC and observe the General Rules of HKSCC and HKSCC
Operational Procedures for giving application instructions to apply for Hong Kong
Offer Shares;
(iv) confirm that you are aware of the restrictions on offers and sales of shares set out
in this Prospectus and they do not apply to you, or the person(s) for whose benefit
you have made the application;
(v) confirm that you have read this Prospectus and any supplement to it and have relied
only on the information and representations contained therein in making your
application (or as the case may be, causing your application to be made) and will not
rely on any other information or representations;
(vi) agree that the Sole Sponsor, the Joint Overall Coordinators, the Joint Global
Coordinators, the Joint Bookrunners, and the Joint Lead Managers, the Underwriters
and any of their or the Company’s respective directors, supervisors, officers,
employees, partners, agents, advisers and any other parties involved in the Global
Offering (the “ Relevant Persons ”), the H Share Registrar and HKSCC will not be
liable for any information and representations not in this Prospectus and any
supplement to it;
(vii) agree to disclose the details of your application and your personal data and any other
personal data which may be required about you and the person(s) for whose benefit
you have made the application to us, the Relevant Persons, the H Share Registrar,
HKSCC, HKSCC Nominees, the Hong Kong Stock Exchange, the SFC and any other
statutory regulatory or governmental bodies or otherwise as required by laws, rules
or regulations, for the purposes under the paragraph headed “ — G. Personal Data
— 3. Purposes ” and “ — 4. Transfer of personal data ” in this section;
(viii) agree (without prejudice to any other rights which you may have once your
application (or as the case may be, HKSCC Nominees’ application) has been
accepted) that you will not rescind it because of an innocent misrepresentation;
HOW TO APPLY FOR HONG KONG OFFER SHARES
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(ix) agree that subject to Section 44A(6) of the Companies (Winding Up and
Miscellaneous Provisions) Ordinance, any application made by you or HKSCC
Nominees on your behalf cannot be revoked once it is accepted, which will be
evidenced by the notification of the result of the ballot by the H Share Registrar by
way of publication of the results at the time and in the manner as specified in the
paragraph headed “— B. Publication of Results” in this section;
(x) confirm that you are aware of the situations specified in the paragraph headed “ —
C. Circumstances In Which You Will Not Be Allocated Hong Kong Offer Shares ”i n
this section;
(xi) agree that your application or HKSCC Nominees’ application, any acceptance of it
and the resulting contract will be governed by and construed in accordance with the
laws of Hong Kong;
(xii) agree to comply with the Companies Ordinance, the Companies (Winding Up and
Miscellaneous Provisions) Ordinance, the Articles of Association and laws of any
place outside Hong Kong that apply to your application and that neither we nor the
Relevant Persons nor any of their respective officers or advisers will breach any law
inside and/or outside Hong Kong as a result of the acceptance of your offer to
purchase, or any action arising from your rights and obligations under the terms and
conditions contained in this Prospectus;
(xiii) confirm that (a) your application or HKSCC Nominees’ application on your behalf
is not financed directly or indirectly by our Company, any of the directors, chief
executives, substantial Shareholder(s) or existing shareholder(s) of our Company or
any of its subsidiaries or any of their respective close associates; and (b) you are not
accustomed or will not be accustomed to taking instructions from our Company, any
of the directors, chief executives, substantial shareholder(s) or existing
shareholder(s) of our Company or any of its subsidiaries or any of their respective
close associates in relation to the acquisition, disposal, voting or other disposition
of the H Shares registered in your name or otherwise held by you;
(xiv) warrant that the information you have provided is true and accurate;
(xv) represent, warrant and undertake that the Offer Shares have not been and will not be
registered under the U.S. Securities Act and you and any person for whose benefit
you are applying for the Offer Shares are located outside the United States at the
time the offer for such Offer Shares was made and when the buy order for such Offer
Shares was originated and have not purchased such Offer Shares for the account or
benefit of any person in the United States or entered into any arrangement for the
transfer of such Offer Shares or any economic interest therein to any person in the
United States;
HOW TO APPLY FOR HONG KONG OFFER SHARES
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(xvi) confirm that you understand that we and the Sole Sponsor-Overall Coordinator will
rely on your declarations and representations in deciding whether or not to allocate
any Hong Kong Offer Shares to you and that you may be prosecuted for making a
false declaration;
(xvii) agree to accept Hong Kong Offer Shares applied for or any lesser number allocated
to you under the application;
(xviii) 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;
(xix) (if the application is made for your own benefit) warrant that no other application
has been or will be made for your benefit by giving electronic application
instructions to HKSCC directly or indirectly or through the application channel of
the HK eIPO White Form service or by any one as your agent or by any other
person; and
(xx) (if you are making the application as an agent for the benefit of another person)
warrant that (1) no other application has been or will be made by you as agent for
or for the benefit of that person or by that person or by any other person as agent
for that person by giving electronic application instructions to HKSCC and the
HK eIPO White Form Service Provider and (2) you have due authority to give
electronic application instructions on behalf of that other person as its agent.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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B. PUBLICATION OF RESULTS
Results of Allocation
Y ou can check whether you are successfully allocated any Hong Kong Offer Shares
through:
Platform Date/Time
Applying through the HK eIPO White Form service, or
HKSCC EIPO channel service:
Website /H1118/H1118/H1118/H1118from “Allotment Results” page on the
designated results of allocations website at
www.tricor.com.hk/ipo/result or
www.hkeipo.hk/IPOResult with a “search
by ID” function.
The full list of (i) wholly or partially
successful applicants using the HK eIPO
White Form service and HKSCC EIPO
channel, and (ii) the number of Hong
Kong Offer Shares conditionally allotted
to them, among other things, will be
displayed at www.hkeipo.hk/IPOResult or
www.tricor.com.hk/ipo/result .
24 hours, from 11:00
p.m. on Monday,
October 27, 2025 to
12:00 midnight on
Sunday, November 2,
2025 (Hong Kong
time)
The Hong Kong Stock Exchange’s website at
www.hkexnews.hk and our website at
www.cigtech.com which will provide links
to the abovementioned websites of the H
Share Registrar.
No later than 11:00 p.m.
on Monday, October
27, 2025 (Hong Kong
time).
Telephone /H1118/H1118+852 3691 8488 — the allocation results
telephone enquiry line provided by the H
Share Registrar
between 9:00 a.m. and
6:00 p.m., from
Tuesday, October 28,
2025 to Monday,
November 3, 2025
(Hong Kong time)
(excluding Saturday,
Sunday and public
holidays in Hong
Kong)
For those applying through HKSCC EIPO channel, you may also check with your
broker or custodian from 6:00 p.m. on Friday, October 24, 2025 (Hong Kong time).
HOW TO APPLY FOR HONG KONG OFFER SHARES
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HKSCC Participants can log into FINI and review the allotment result from 6:00 p.m. on
Friday, October 24, 2025 (Hong Kong time) on a 24-hour basis and should report any
discrepancies on allotments to HKSCC as soon as practicable.
Allocation Announcement
We expect to announce the results of the final Offer Price, the level of indications of
interest in the Global Offering, the level of applications in the Hong Kong Public Offering and
the basis of allocations of Hong Kong Offer Shares on the Hong Kong Stock Exchange’s
website at www.hkexnews.hk and our website at www.cigtech.com by no later than 11:00 p.m.
on Monday, October 27, 2025 (Hong Kong time).
C. CIRCUMSTANCES IN WHICH YOU WILL NOT BE ALLOCATED HONG KONG
OFFER SHARES
Y ou should note the following situations in which Hong Kong Offer Shares will not be
allocated to you or the person(s) for whose benefit you are applying for:
1. If your application is revoked:
Y our application or the application made by HKSCC Nominees on your behalf may be
revoked pursuant to Section 44A(6) of the Companies (Winding Up and Miscellaneous
Provisions) Ordinance.
2. If we or our agents exercise our discretion to reject your application:
We, the Sole Sponsor-Overall Coordinator, the H Share Registrar and their respective
agents and nominees have full discretion to reject or accept any application, or to accept only
part of any application, without giving any reasons.
3. If the allocation of Hong Kong Offer Shares is void:
The allocation of Hong Kong Offer Shares will be void if the Hong Kong 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 Hong Kong Stock Exchange notifies
us of that longer period within three weeks of the closing date of the application
lists.
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4. If:
 you make multiple applications or suspected multiple applications. Y ou may refer to
the paragraph headed “ — A. Applications for Hong Kong Offer Shares — 5. Multiple
Applications Prohibited ” in this section on what constitutes multiple applications;
 your application instruction is incomplete;
 your payment (or confirmation of funds, as the case may be) is not made correctly;
 the Underwriting Agreements do not become unconditional or are terminated;
 we or the Sole Sponsor-Overall Coordinator believe that by accepting your
application, it or we would violate applicable securities or other laws, rules or
regulations.
5. If there is money settlement failure for allotted Offer Shares:
Based on the arrangements between HKSCC Participants and HKSCC, HKSCC
Participants will be required to hold sufficient application funds on deposit with their
Designated Bank before balloting. After balloting of Hong Kong Offer Shares, the Receiving
Bank will collect the portion of these funds required to settle each HKSCC Participant’s actual
Hong Kong Offer Share allotment from their Designated Bank.
There is a risk of money settlement failure. In the extreme event of money settlement
failure by a HKSCC Participant (or its Designated Bank), who is acting on your behalf in
settling payment for your allotted Offer Shares, HKSCC will contact the defaulting HKSCC
Participant and its Designated Bank to determine the cause of failure and request such
defaulting HKSCC Participant to rectify or procure to rectify the failure.
However, if it is determined that such settlement obligation cannot be met, the affected
Hong Kong Offer Shares will be reallocated to the Global Offering. Hong Kong Offer Shares
applied for by you through the broker or custodian may be affected to the extent of the
settlement failure. In the extreme case, you will not be allocated any Hong Kong Offer Shares
due to the money settlement failure by such HKSCC Participant. None of us, the Relevant
Persons, the H Share Registrar and HKSCC is or will be liable if Hong Kong Offer Shares are
not allocated to you due to the money settlement failure.
D. DESPATCH/COLLECTION OF H SHARE CERTIFICATES AND REFUND OF
APPLICATION MONIES
Y ou will receive one H Share certificate for all Hong Kong Offer Shares allotted to you
under the Hong Kong Public Offering (except pursuant to applications made through the
HKSCC EIPO channel where the H Share certificates will be deposited into CCASS as
described below).
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No temporary document of title will be issued in respect of the H Shares. No receipt will
be issued for sums paid on application.
H Share certificates will only become valid evidence of title at 8:00 a.m. on Tuesday,
October 28, 2025 (Hong Kong time), provided that the Global Offering has become
unconditional and the right of termination described in the section headed “Underwriting” has
not been exercised. Investors who trade H Shares prior to the receipt of H Share certificates
or the H Share certificates becoming valid evidence of title do so entirely at their own risk.
The right is reserved to retain any H Share certificate(s) and (if applicable) any surplus
application monies pending clearance of application monies.
The following sets out the relevant procedures and time:
HK eIPO White Form service HKSCC EIPO channel
Despatch/collection of H Share certificate (1)
For application of
1,000,000 Hong
Kong Offer Shares
or more /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Collection in person at the H
Share Registrar, Tricor Investor
Services Limited, at 17/F, Far
East Finance Centre, 16
Harcourt Road, Hong Kong
Time: 9:00 a.m. to 1:00 p.m. on
Tuesday, October 28, 2025
(Hong Kong time)
If you are an individual, you must
not authorize any other person
to collect for you. If you are a
corporate applicant, your
authorized representative must
bear a letter of authorization
from your corporation stamped
with your corporation’s chop.
H Share certificate(s) will
be issued in the name
of HKSCC Nominees,
deposited into CCASS
and credited to your
designated HKSCC
Participant’s stock
account. No action by
you is required.
Both individuals and authorized
representatives must produce, at
the time of collection, evidence
of identity acceptable to the
H Share Registrar.
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HK eIPO White Form service HKSCC EIPO channel
Note: If you do not collect your H
Share certificate(s) personally
within the time above, it/they
will be sent to the address
specified in your application
instructions by ordinary post at
your own risk.
For application of
less than 1,000,000
Hong Kong Offer
Shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Y our H Share certificate(s) will be
sent to the address specified in
your application instructions by
ordinary post at your own risk
Date: Monday, October 27, 2025
Refund mechanism for surplus application monies paid by you
Date /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Tuesday, October 28, 2025 Subject to the
arrangement between
you and your broker or
custodian
Responsible party /H1118/H1118/H1118H Share Registrar Y our broker or
custodian
Application monies
paid through single
bank account /H1118/H1118/H1118/H1118/H1118
e-Auto Refund payment
instructions to your designated
bank account
Y our broker or
custodian will arrange
refund to your
designated bank
account subject to the
arrangement paid
between you and it
Application monies
paid through
multiple bank
accounts /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Refund check(s) will be
despatched to the address as
specified in your application
instructions by ordinary post at
your own risk
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--- page 438 ---
Note:
(1) Except in the event of a tropical cyclone warning signal number 8 or above, a black rainstorm warning
and/or an “extreme conditions” announcement issued after a super typhoon in force in Hong Kong in
the morning on Monday, October 27, 2025 rendering it impossible for the relevant H Share certificates
to be dispatched to HKSCC in a timely manner, our Company shall procure the H Share Registrar to
arrange for delivery of the supporting documents and H Share certificates in accordance with the
contingency arrangements as agreed between them. Y ou may refer to “ — E. Severe Weather
Arrangements ” in this section.
E. SEVERE WEATHER ARRANGEMENTS
The Opening and Closing of the Application Lists
The application lists will not open or close on Thursday, October 23, 2025 if, there is:
 a tropical cyclone warning signal number 8 or above;
 a black rainstorm warning; and/or
 Extreme Conditions, (collectively, “ Severe Weather Signals ”),
in force in Hong Kong at any time between 9:00 a.m. and 12:00 noon on Thursday, October
23, 2025.
Instead they will open between 11:45 a.m. and 12:00 noon and/or close at 12:00 noon on
the next business day which does not have Severe Weather Signals in force at any time between
9:00 a.m. and 12:00 noon.
Prospective investors should be aware that a postponement of the opening/closing of the
application lists may result in a delay in the listing date. Should there be any changes to the
dates mentioned in the section headed “Expected Timetable” in this Prospectus, an
announcement will be made and published on the Hong Kong Stock Exchange’s website at
www.hkexnews.hk and our website at www.cigtech.com of the revised timetable.
If a Severe Weather Signal is hoisted on Monday, October 27, 2025, the H Share Registrar
will make appropriate arrangements for the delivery of the H Share certificates to the CCASS
Depository’s service counter so that they would be available for trading on Tuesday, October
28, 2025.
If a Severe Weather Signal is hoisted on Monday, October 27, 2025, for application of
less than 1,000,000 Offer Shares, the despatch of H Share certificate(s) will be made by
ordinary post when the post office re-opens after the Severe Weather Signal is lowered or
canceled (e.g. in the afternoon of Monday, October 27, 2025 or on Tuesday, October 28, 2025).
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If a Severe Weather Signal is hoisted on Tuesday, October 28, 2025, for application of
1,000,000 Offer Shares or more, the H Share certificate(s) will be available for collection in
person at the H Share Registrar’s office after the Severe Weather Signal is lowered or canceled
(e.g. in the afternoon of Tuesday, October 28, 2025 or on Thursday, October 30, 2025).
Prospective investors should be aware that if they choose to receive physical H Share
certificates issued in their own name, there may be a delay in receiving the H Share
certificates.
F. ADMISSION OF THE H SHARES INTO CCASS
If the Hong Kong Stock Exchange grants the listing of, and permission to deal in, the H
Shares on the Hong Kong Stock Exchange and we comply with the stock admission
requirements of HKSCC, the H Shares will be accepted as eligible securities by HKSCC for
deposit, clearance and settlement in CCASS with effect from the date of commencement of
dealings in the H Shares or any other date HKSCC chooses. Settlement of transactions between
Exchange Participants is required to take place in CCASS on the second settlement day after
any trading day.
All activities under CCASS are subject to the General Rules of HKSCC and HKSCC
Operational Procedures in effect from time to time.
All necessary arrangements have been made enabling the H Shares to be admitted into
CCASS.
Y ou should seek the advice of your broker or other professional advisor for details of the
settlement arrangement as such arrangements may affect your rights and interests.
G. PERSONAL DATA
The following Personal Information Collection Statement applies to any personal data
collected and held by our Company, the H Share Registrar, the receiving banks and the
Relevant Persons about you in the same way as it applies to personal data about applicants
other than HKSCC Nominees. This personal data may include client identifier(s) and your
identification information. By giving application instructions to HKSCC, you acknowledge
that you have read, understood and agree to all of the terms of the Personal Information
Collection Statement below.
1. Personal Information Collection Statement
This Personal Information Collection Statement informs the applicant for, and holder of,
Hong Kong Offer Shares, of the policies and practices of our Company and the H Share
Registrar in relation to personal data and the Personal Data (Privacy) Ordinance (Chapter 486
of the Laws of Hong Kong).
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2. Reasons for the collection of your personal data
It is necessary for applicants and registered holders of Hong Kong Offer Shares to ensure
that personal data supplied to our Company or its agents and the H Share Registrar is accurate
and up-to-date when applying for Hong Kong Offer Shares or transferring Hong Kong Offer
Shares into or out of their names or in procuring the services of the H Share Registrar.
Failure to supply the requested data or supplying inaccurate data may result in your
application for Hong Kong Offer Shares being rejected, or in the delay or the inability of our
Company or the H Share Registrar to effect transfers or otherwise render their services. It may
also prevent or delay registration or transfers of Hong Kong Offer Shares which you have
successfully applied for and/or the despatch of H Share certificate(s) to which you are entitled.
It is important that applicants for and holders of Hong Kong Offer Shares inform our Company
and the H Share Registrar immediately of any inaccuracies in the personal data supplied.
3. Purposes
Y our personal data may be used, held, processed, and/or stored (by whatever means) for
the following purposes:
 processing your application and refund check, HK eIPO White Form e-Auto
Refund payment instruction(s), verification of compliance with the terms and
application procedures set out in this Prospectus and announcing results of
allocation of Hong Kong Offer Shares;
 compliance with applicable laws and regulations in Hong Kong and elsewhere;
 registering new issues or transfers into or out of the names of the holders of the H
Shares including, where applicable, HKSCC Nominees;
 maintaining or updating the register of members of our Company;
 verifying identities of applicants for and holders of the H Shares and identifying any
duplicate applications for the H Shares;
 facilitating Hong Kong Offer Shares balloting;
 establishing benefit entitlements of holders of the H Shares, such as dividends,
rights issues, bonus issues, etc.;
 distributing communications from our Company and its subsidiaries;
 compiling statistical information and profiles of the holder of the H Shares;
 disclosing relevant information to facilitate claims on entitlements; and
HOW TO APPLY FOR HONG KONG OFFER SHARES
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 any other incidental or associated purposes relating to the above and/or to enable our
Company and the H Share Registrar to discharge their obligations to applicants and
holders of the H Shares and/or regulators and/or any other purposes to which
applicants and holders of the H Shares may from time to time agree.
4. Transfer of personal data
Personal data held by our Company and the H Share Registrar relating to the applicants
for and holders of Hong Kong Offer Shares will be kept confidential but our Company and the
H Share Registrar may, to the extent necessary for achieving any of the above purposes,
disclose, obtain or transfer (whether within or outside Hong Kong) the personal data to, from
or with any of the following:
 our Company’s appointed agents such as financial advisers, receiving banks and
overseas principal share registrar;
 HKSCC or HKSCC Nominees, who will use the personal data and may transfer the
personal data to the H Share Registrar, in each case for the purposes of providing its
services or facilities or performing its functions in accordance with its rules or
procedures and operating FINI and CCASS (including where applicants for the
Hong Kong Offer Shares request a deposit into CCASS);
 any agents, contractors or third-party service providers who offer administrative,
telecommunications, computer, payment or other services to our Company or the H
Share Registrar in connection with their respective business operation;
 the Hong Kong Stock Exchange, the SFC and any other statutory regulatory or
governmental bodies or otherwise as required by laws, rules or regulations,
including for the purpose of the Hong Kong Stock Exchange’s administration of the
Listing Rules and the SFC’s performance of its statutory functions; and
 any persons or institutions with which the holders of Hong Kong Offer Shares have
or propose to have dealings, such as their bankers, solicitors, accountants or brokers
etc.
5. Retention of personal data
Our Company and the H Share Registrar will keep the personal data of the applicants and
holders of Hong Kong Offer Shares for as long as necessary to fulfill the purposes for which
the personal data were collected. Personal data which is no longer required will be destroyed
or dealt with in accordance with the Personal Data (Privacy) Ordinance (Chapter 486 of the
Laws of Hong Kong).
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6. Access to and correction of personal data
Applicants for and holders of Hong Kong Offer Shares have the right to ascertain whether
our Company or the H Share Registrar hold their personal data, to obtain a copy of that data,
and to correct any data that is inaccurate. Our Company and the H Share Registrar have the
right to charge a reasonable fee for the processing of such requests. All requests for access to
data or correction of data should be addressed to our Company and the H Share Registrar, at
their registered address disclosed in the section headed “Corporate Information” in this
Prospectus or as notified from time to time, for the attention of the company secretary, or the
H Share Registrar for the attention of the privacy compliance officer.
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The following is the text of a report received from the reporting accountants of the
Company, Grant Thornton Hong Kong Limited, Certified Public Accountants, Hong Kong, for
the purposes of incorporation in this prospectus.
ACCOUNTANTS’ REPORT ON HISTORICAL FINANCIAL INFORMATION TO THE
DIRECTORS OF CIG SHANGHAI CO., LTD. AND GUOTAI JUNAN CAPITAL
LIMITED
Introduction
We report on the historical financial information of CIG Shanghai Co., Ltd. (the
“Company”) and its subsidiaries (together, the “Group”) set out on pages I-4 to I-85, which
comprises the consolidated statements of financial position of the Group as at 31 December
2022, 2023, 2024 and 30 June 2025, the statements of financial position of the Company as at
31 December 2022, 2023, 2024 and 30 June 2025, and the consolidated statements of profit or
loss and other comprehensive income, the consolidated statements of changes in equity and the
consolidated statements of cash flows for each of the years ended 31 December 2022, 2023,
2024 and six months ended 30 June 2025 (the “Track Record Period”) and material accounting
policy information and other explanatory information (together, the “Historical Financial
Information”). The Historical Financial Information set out on pages I-4 to I-85 forms an
integral part of this report, which has been prepared for inclusion in the prospectus of the
Company dated 20 October 2025 (the “Prospectus”) in connection with the initial listing of H
shares of the Company on the Main Board of The Stock Exchange of Hong Kong Limited (the
“Stock Exchange”).
Directors’ responsibility for the Historical Financial Information
The directors of the Company are responsible for the preparation of the Historical
Financial Information that gives a true and fair view in accordance with the basis of preparation
set out in Note 2.1 to the Historical Financial Information, and for such internal control as the
directors of the Company 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” as issued by the Hong Kong Institute of
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 444 ---
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.
Our work involved performing procedures to obtain evidence about the amounts and
disclosures in the Historical Financial Information. The procedures selected depend on the
reporting accountants’ judgement, including the assessment of risks of material misstatement
of the Historical Financial Information, whether due to fraud or error. In making those risk
assessments, the reporting accountants consider internal control relevant to the entity’s
preparation of the Historical Financial Information that gives a true and fair view in accordance
with the basis of preparation set out in Note 2.1 to the Historical Financial Information in order
to design procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control. Our work also
included evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by the directors of the Company, as well as evaluating the overall
presentation of the Historical Financial Information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Opinion
In our opinion, the Historical Financial Information gives, for the purposes of the
accountants’ report, a true and fair view of the Group’s financial position as at 31 December
2022, 2023, 2024 and 30 June 2025, the Company’s financial position as at 31 December 2022,
2023, 2024 and 30 June 2025 and of the Group’s financial performance and its cash flows for
the Track Record Period in accordance with the basis of preparation set out in Note 2.1 to the
Historical Financial Information.
Review of stub period comparative financial information
We have reviewed the stub period comparative financial information of the Group which
comprises the consolidated statement of profit or loss and other comprehensive income, the
consolidated statement of changes in equity and the consolidated statement of cash flows for
the six months ended 30 June 2024 and other explanatory information (the “Stub Period
Comparative Financial Information”). The directors of the Company are responsible for the
presentation and preparation of the Stub Period Comparative Financial Information in
accordance with the basis of preparation set out in Note 2.1 to the Historical Financial
Information. Our responsibility is to express a conclusion on the Stub Period Comparative
Financial Information based on our review. We conducted our review in accordance with
International Standard on Review Engagements 2410 “Review of Interim Financial
Information Performed by the Independent Auditor of the Entity” as issued by the International
Auditing and Assurance Standards Board (“IAASB”). 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
APPENDIX I ACCOUNTANTS’ REPORT
– I-2 –


--- page 445 ---
in accordance with International 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 Stub Period Comparative
Financial Information, for the purposes of the accountant’s report, is not prepared, in all
material respects, in accordance with the basis of preparation set out in Note 2.1 to the
Historical Financial Information.
Report on matters under the Rules Governing the Listing of Securities on the Stock
Exchange and the Companies (Winding Up and Miscellaneous Provisions) Ordinance
Adjustments
In preparing the Historical Financial Information, no adjustments to the Underlying
Financial Statements as defined on page I-4 have been made.
Dividends
We refer to Note 12 to the Historical Financial Information which contains information
about dividend paid by the Company in respect of the Track Record Period.
Grant Thornton Hong Kong Limited
Certified Public Accountants
11th Floor, Lee Garden Two
28 Y un Ping Road
Causeway Bay
Hong Kong SAR
20 October 2025
Han Pui Y u
Practising Certificate No.: P07101
APPENDIX I ACCOUNTANTS’ REPORT
– I-3 –


--- page 446 ---
HISTORICAL FINANCIAL INFORMATION OF THE GROUP
Preparation of Historical Financial Information
Set out below is the historical financial information as at 31 December 2022, 2023, 2024
and 30 June 2025 and for the years/period then ended (the “Track Record Period”) (the
“Historical Financial Information”) which forms an integral part of this accountants’ report.
The consolidated financial statements of the Group for the Track Record Period, on which
the Historical Financial Information is based, were audited by Grant Thornton Hong Kong
Limited in accordance with International Standards on Auditing issued by the International
Auditing and Assurance Standards Board (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 447 ---
Consolidated statements of profit or loss and other comprehensive income
Y ear ended 31 December
Six months ended
30 June
Notes 2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Revenue /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185 3,783,739 3,085,362 3,649,889 1,761,408 2,034,023
Cost of sales /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(3,095,104) (2,421,267) (2,887,642) (1,378,242) (1,589,443)
Gross profit /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118688,635 664,095 762,247 383,166 444,580
Other income, net /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186 20,006 18,882 49,663 38,900 14,427
Other gains/(loss), net /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186 34,776 31,133 24,458 (7,091) 13,965
Research and development expenses /H1118/H1118/H1118/H1118(270,376) (275,799) (320,368) (149,005) (160,785)
Selling and marketing expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118(58,106) (70,484) (90,065) (43,144) (52,042)
General and administrative expenses /H1118/H1118/H1118/H1118(206,271) (217,488) (208,259) (103,234) (111,199)
Reversal/(Provision) of expected credit
loss, net /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188 27,751 4,698 (1,351) (4,288) (5,587)
Operating profit /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118236,415 155,037 216,325 115,304 143,359
Finance costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187 (57,903) (61,123) (52,890) (32,132) (24,263)
Profit before income tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188 178,512 93,914 163,435 83,172 119,096
Income tax (expense)/credit /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189 (7,406) 1,051 3,606 1,407 (1,550)
Profit for the year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118171,106 94,965 167,041 84,579 117,546
Other comprehensive expenses items that
may be reclassified to profit or loss:
Exchange differences on translation of
financial statements of foreign
operations /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(8,922) (3,403) (1,845) (4,660) 1,930
Total comprehensive income for the
year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118162,184 91,562 165,196 79,919 119,476
Profit/(Loss) for the year/period
attributable to:
Owners of the Company /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118171,106 95,018 166,681 80,004 120,905
Non-controlling interests /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (53) 360 4,575 (3,359)
171,106 94,965 167,041 84,579 117,546
Total comprehensive income/(expense)
attributable to:
Owners of the Company /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118162,184 91,615 164,836 75,344 122,835
Non-controlling interests /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (53) 360 4,575 (3,359)
162,184 91,562 165,196 79,919 119,476
Earnings per share: 13
– Basic (RMB) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11180.68 0.37 0.63 0.30 0.46
– Diluted (RMB) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11180.65 0.35 0.61 0.30 0.44
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 448 ---
Consolidated statements of financial position
As at 31 December
As at
30 June
Notes 2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Non-current assets
Property, plant and equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814 612,417 525,089 655,566 957,242
Right-of-use assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111815 79,315 181,312 148,705 138,857
Prepaid lease payments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111816 – 35,506 34,795 34,439
Goodwill /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111817 98,969 98,969 98,969 98,969
Intangible assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818 579,417 591,424 543,698 547,692
Other financial assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,560 14,560 14,560 14,560
Deposits for acquisition of property, plant
and equipment, and intangible assets /H1118/H1118/H111822 384 3,035 26,902 36,301
Deferred tax assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111831 30,216 31,137 32,448 32,265
1,405,278 1,481,032 1,555,643 1,860,325
Current assets
Inventories /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820 1,729,540 1,573,454 1,685,544 1,978,295
Trade and bills receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821 1,606,878 1,115,577 1,238,116 1,580,191
Deposits, prepayments and other
receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111822 101,287 77,936 130,807 179,049
Tax recoverable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,980 49,942 51,363 53,321
Pledged deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111823 35,500 20,000 20,000 20,000
Cash and cash equivalents /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111823 354,707 417,977 507,341 588,231
3,831,892 3,254,886 3,633,171 4,399,087
Current liabilities
Trade and bills payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824 1,780,381 864,443 1,234,954 1,594,909
Other payables and accruals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825 180,566 137,203 148,472 112,570
Contract liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826 11,925 45,391 33,363 24,787
Bank borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111827 913,014 1,111,827 991,700 1,696,058
Other borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111828 175,090 41,609 – –
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111830 44,927 37,670 20,134 21,445
Income tax payable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189,565 – 381 –
3,115,468 2,238,143 2,429,004 3,449,769
Net current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118716,424 1,016,743 1,204,167 949,318
Total assets less current liabilities /H1118/H1118/H1118/H1118/H11182,121,702 2,497,775 2,759,810 2,809,643
Non-current liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Bank borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111827 – – 91,900 78,000
Other borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111828 93,88 1–––
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111830 36,999 145,887 135,938 126,320
Deferred income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111829 30,281 29,622 42,513 35,142
Deferred tax liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111831 35,024 34,305 28,470 26,971
196,185 209,814 298,821 266,433
Net assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,925,517 2,287,961 2,460,989 2,543,210
EQUITY
Share capital /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111832 261,573 268,105 268,042 268,042
Reserves /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111833 1,663,944 1,869,909 2,042,640 2,128,220
Equity attributable to owners of the
Company /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,925,517 2,138,014 2,310,682 2,396,262
Non-controlling interests /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 149,947 150,307 146,948
Total equity /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,925,517 2,287,961 2,460,989 2,543,210
APPENDIX I ACCOUNTANTS’ REPORT
– I-6 –


--- page 449 ---
Statements of financial position of the Company
As at 31 December
As at
30 June
Notes 2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Non-current assets
Investments in subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819 149,701 449,701 748,391 748,962
Property, plant and equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814 597,120 528,477 481,492 599,273
Right-of-use assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111836,649 16,687 – 1,528
Intangible assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818 244,783 233,370 228,309 234,411
Other financial assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 10,000 10,000 10,000
Deposits for acquisition of property, plant
and equipment, and intangible assets /H1118/H1118/H111822 384 1,364 14,456 31,004
Deferred tax assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111830,191 30,916 32,363 31,986
1,058,828 1,270,515 1,515,011 1,657,164
Current assets
Inventories /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820 1,535,006 1,372,600 1,590,832 1,856,382
Trade and bills receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821 2,184,261 1,907,594 1,758,283 2,224,129
Deposits, prepayments and other
receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111822 92,132 39,066 257,734 291,825
Pledged deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111823 35,500 20,000 20,000 20,000
Cash and cash equivalents /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111823 292,439 290,707 340,366 400,670
4,139,338 3,629,967 3,967,215 4,793,006
Current liabilities
Trade and bills payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824 1,751,191 967,528 1,382,399 1,758,881
Other payables and accruals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825 141,376 143,027 256,492 113,425
Contract liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826 1,813 329,406 284,432 226,640
Bank borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111827 913,014 1,111,827 991,700 1,696,058
Other borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111828 175,090 41,609 – –
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820,427 17,817 – 236
3,002,911 2,611,214 2,915,023 3,795,240
Net current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,136,427 1,018,753 1,052,192 997,766
Total assets less current liabilities /H1118/H1118/H1118/H1118/H11182,195,255 2,289,268 2,567,203 2,654,930
Non-current liabilities
Bank borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111827 – – 91,900 78,000
Other borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111828 93,88 1–––
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111817,692 42 – 1,063
Deferred income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111829 30,281 29,622 40,143 32,772
Deferred tax liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826,554 28,489 25,582 25,349
168,408 58,153 157,625 137,184
Net assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,026,847 2,231,115 2,409,578 2,517,746
EQUITY
Share capital /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111832 261,573 268,105 268,042 268,042
Reserves /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111833 1,765,274 1,963,010 2,141,536 2,249,704
Total equity /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,026,847 2,231,115 2,409,578 2,517,746
APPENDIX I ACCOUNTANTS’ REPORT
– I-7 –


--- page 450 ---
Consolidated statements of changes in equity
Equity attributable to owners of the Company
Share
capital
Capital
reserve*
Shares
held for
restricted
shares
incentive
scheme*
Statutory
reserves*
Retained
earnings*
Translation
reserve* Total
Non-
controlling
interests
Total
equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Balance as at
1 January 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118252,221 1,257,154 – 59,293 174,769 (700) 1,742,737 – 1,742,737
Transactions with owners:
Issuance of shares in respect of
restricted share incentive scheme
(note 34(a)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189,352 49,648 (59,000) ––––––
V esting of awarded shares under
restricted shares incentive scheme
(note 34(a)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 15,620 –––– 15,620 – 15,620
Share-based payment expense in
respect of share options
(note 34(b)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 4,976 –––– 4,976 – 4,976
Appropriation to statutory reserves /H1118/H1118 – – – 3,749 (3,749) ––––
9,352 70,244 (59,000) 3,749 (3,749) – 20,596 – 20,596
Profit for the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––– 171,106 – 171,106 – 171,106
Other comprehensive expense /H1118/H1118/H1118/H1118––––– (8,922) (8,922) – (8,922)
Total comprehensive income /H1118/H1118/H1118/H1118–––– 171,106 (8,922) 162,184 – 162,184
Balance as at 31 December 2022
and 1 January 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118261,573 1,327,398 (59,000) 63,042 342,126 (9,622) 1,925,517 – 1,925,517
Transactions with owners:
Exercise of share options
(note 34(b)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,650 79,205 –––– 85,855 – 85,855
Repurchase of awarded shares under
restricted shares incentive scheme
(note 34(a)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(118) (651) 769 ––––––
V esting of awarded shares under
restricted shares incentive scheme
(note 34(a)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 34,037 –––– 34,037 – 34,037
Share-based payment expense in
respect of share options
(note 34(b)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 9 9 0–––– 9 9 0– 9 9 0
Capital injection in a subsidiary /H1118/H1118/H1118––––––– 150,000 150,000
Appropriation to statutory reserves /H1118/H1118 – – – 8,321 (8,321) ––––
6,532 113,581 769 8,321 (8,321) – 120,882 150,000 270,882
Profit for the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––– 95,018 – 95,018 (53) 94,965
Other comprehensive expense /H1118/H1118/H1118/H1118––––– (3,403) (3,403) – (3,403)
Total comprehensive income /H1118/H1118/H1118/H1118–––– 95,018 (3,403) 91,615 (53) 91,562
Balance as at 31 December 2023 /H1118/H1118268,105 1,440,979 (58,231) 71,363 428,823 (13,025) 2,138,014 149,947 2,287,961
APPENDIX I ACCOUNTANTS’ REPORT
– I-8 –


--- page 451 ---
Equity attributable to owners of the Company
Share
capital
Capital
reserve*
Shares
held for
restricted
shares
incentive
scheme*
Statutory
reserves*
Retained
earnings*
Translation
reserve* Total
Non-
controlling
interests
Total
equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Balance as at 1 January 2024 /H1118/H1118/H1118268,105 1,440,979 (58,231) 71,363 428,823 (13,025) 2,138,014 149,947 2,287,961
Transactions with owners:
Dividends declared /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––– (43,691) – (43,691) – (43,691)
Repurchase of awarded shares under
restricted shares incentive scheme
(note 34(a)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(63) (327) 390 ––––––
V esting of awarded shares under
restricted shares incentive scheme
(note 34(a)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 9,610 –––– 9,610 – 9,610
Release of awarded shares under
restricted shares incentive scheme /H1118 – – 39,490 – – – 39,490 – 39,490
Share-based payment expense in
respect of share options
(note 34(b)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 2,424 –––– 2,424 – 2,424
Appropriation to statutory reserves /H1118/H1118 – – – 17,063 (17,063) ––––
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– ( 1 ) –––– ( 1 ) – ( 1 )
(63) 11,706 39,880 17,063 (60,754) – 7,832 – 7,832
Profit for the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––– 166,681 – 166,681 360 167,041
Other comprehensive expense /H1118/H1118/H1118/H1118––––– (1,845) (1,845) – (1,845)
Total comprehensive income /H1118/H1118/H1118/H1118–––– 166,681 (1,845) 164,836 360 165,196
Balance as at 31 December 2024 /H1118/H1118268,042 1,452,685 (18,351) 88,426 534,750 (14,870) 2,310,682 150,307 2,460,989
APPENDIX I ACCOUNTANTS’ REPORT
– I-9 –


--- page 452 ---
Equity attributable to owners of the Company
Share
capital
Capital
reserve*
Shares
held for
restricted
shares
incentive
scheme*
Statutory
reserve*
Retained
earnings*
Translation
reserves* Total
Non-
controlling
interests Total equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Balance as at 1 January 2024 /H1118/H1118/H1118268,105 1,440,979 (58,231) 71,363 428,823 (13,025) 2,138,014 149,947 2,287,961
Transactions with owners:
Dividend declared /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––– (35,650) – (35,650) – (35,650)
Repurchase of awarded shares under
restricted share incentive scheme /H1118 (63) (327) 390 ––––––
V esting of awarded shares under
restricted shares incentive scheme /H1118 – 5,042 –––– 5,042 – 5,042
(63) 4,715 390 – (35,650) – (30,608) – (30,608)
Profit for the period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––– 80,004 – 80,004 4,575 84,579
Other comprehensive expense /H1118/H1118/H1118/H1118––––– (4,660) (4,660) – (4,660)
Total comprehensive
income/(expense) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––– 80,004 (4,660) 75,344 4,575 79,919
Balance as at 30 June 2024 /H1118/H1118/H1118/H1118268,042 1,445,694 (57,841) 71,363 473,177 (17,685) 2,182,750 154,522 2,337,272
Equity attributable to owners of the Company
Share
capital
Capital
reserve*
Shares
held for
restricted
shares
incentive
scheme*
Statutory
reserve*
Retained
earnings*
Translation
reserves* Total
Non-
controlling
interests Total equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Balance as at 1 January 2025 /H1118/H1118/H1118268,042 1,452,685 (18,351) 88,426 534,750 (14,870) 2,310,682 150,307 2,460,989
Transactions with owners:
Dividend declared /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––– (58,969) – (58,969) – (58,969)
Release of awarded shares under
restricted shares incentive scheme /H1118 – – 18,215 – – – 18,215 – 18,215
Share-based payment expense in
respect of share options
(note 34(b)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 3,499 –––– 3,499 – 3,499
– 3,499 18,215 – (58,969) – (37,255) – (37,255)
Profit for the period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––– 120,905 – 120,905 (3,359) 117,546
Other comprehensive income /H1118/H1118/H1118/H1118––––– 1,930 1,930 – 1,930
Total comprehensive income /H1118/H1118/H1118/H1118–––– 120,905 1,930 122,835 (3,359) 119,476
Balance as at 30 June 2025 /H1118/H1118/H1118/H1118268,042 1,456,184 (136) 88,426 596,686 (12,940) 2,396,262 146,948 2,543,210
* These reserves accounts comprise the Group’s reserves of RMB1,663,944,000, RMB1,869,909,000,
RMB2,042,640,000 and RMB2,128,220,000 as at 31 December 2022, 2023, 2024 and 30 June 2025
respectively.
APPENDIX I ACCOUNTANTS’ REPORT
– I-10 –


--- page 453 ---
Consolidated statements of cash flows
Y ear ended 31 December
Six months ended
30 June
Notes 2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Cash flows from operating activities
Profit before income tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118178,512 93,914 163,435 83,172 119,096
Adjustments for:
Depreciation of property, plant and
equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814 141,714 130,583 123,951 63,168 58,743
Depreciation of right-of-use assets /H1118/H1118/H1118/H111815 49,396 50,688 42,470 21,698 12,066
Amortisation of prepaid lease payment /H1118/H111816 – 59 711 356 356
Amortisation of intangible assets /H1118/H1118/H1118/H1118/H111818 103,341 112,791 127,825 67,886 69,232
Exchange gains/(loss), net /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186 (35,010) (31,790) (14,436) 10,142 (13,652)
Finance costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187 57,903 61,123 52,890 32,132 24,263
Provision for inventories, net /H1118/H1118/H1118/H1118/H1118/H1118/H11188 18,512 3,741 4,114 1,785 3,369
Share-based payment expense /H1118/H1118/H1118/H1118/H1118/H1118/H111834 20,596 35,027 12,034 5,042 3,499
(Reversal)/provision for ECL allowances 8 (27,751) (4,698) 1,351 4,288 5,587
Gain on disposal of a subsidiary /H1118/H1118/H1118/H1118/H11186 – – (6,281) – –
Gain on investment in a swap contract /H1118/H1118 – – (64) – –
Loss/(Gain) on disposal of property,
plant and equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118466 188 (2,005) (1,932) (26)
507,679 451,626 505,995 287,737 282,533
Operating profit before working capital
changes:
(Increase)/Decrease in inventories /H1118/H1118/H1118/H1118/H1118/H1118(507,486) 152,345 (116,204) (145,398) (296,120)
(Increase)/Decrease in trade and other
receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(727,825) 473,542 (191,365) 139,871 (389,281)
Increase/(Decrease) in trade and other
payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118785,682 (911,921) 380,152 65,383 226,782
Increase/(Decrease) in contract liabilities /H1118/H1118 4,670 33,466 (12,028) (16,478) (8,576)
Cash generated from operating activities /H1118/H1118 62,720 199,058 566,550 331,115 (184,662)
Income tax paid /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(6,465) (56,116) (4,580) (944) (5,205)
Net cash generated from/(used in)
operating activities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111856,255 142,942 561,970 330,171 (189,867)
APPENDIX I ACCOUNTANTS’ REPORT
– I-11 –


--- page 454 ---
Y ear ended 31 December
Six months ended
30 June
Notes 2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Cash flows from investing activities
Payments and deposits for acquisition of
property, plant and equipment, and
intangible assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(179,718) (167,596) (306,583) (113,646) (326,418)
Payments for acquisition of prepaid lease
payment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (35,565) – – –
Payments for acquisition of subsidiaries /H1118/H1118 (21,510) ––––
Proceeds from disposal of a subsidiary /H1118/H1118/H1118 – – 6,281 – –
Proceeds from disposal of property,
plant and equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,587 8,616 6,290 1,771 1,817
Payments for other financial assets /H1118/H1118/H1118/H1118/H1118– (10,000) – – –
Proceeds from investment in a swap
contract upon maturity /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 20,350 – –
Payments for investment in a swap
contract /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (20,286) (20,286) –
Net cash used in investing activities /H1118/H1118/H1118/H1118(193,641) (204,545) (293,948) (132,161) (324,601)
Cash flows from financing activities
Proceeds from bank borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H11181,432,719 1,727,924 1,640,585 795,755 1,313,148
Repayments of bank borrowings /H1118/H1118/H1118/H1118/H1118/H1118(1,253,841) (1,530,185) (1,668,561) (760,547) (623,863)
Proceeds from other borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118265,55 0––––
Repayments of other borrowings /H1118/H1118/H1118/H1118/H1118/H1118(184,559) (249,303) (43,107) (37,718) –
Payments of lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(52,707) (57,359) (43,778) (31,800) (13,595)
Interest paid /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(34,390) (33,849) (43,891) (26,856) (19,692)
Issuance of awarded shares under restricted
shares incentive scheme /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111859,00 0––––
Exercise of share options /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 85,85 5–––
Capital injection from non-controlling
interest /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819(a) – 150,00 0–––
Dividend paid /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (41,981) – (60,054)
Payments of deferred listing expenses /H1118/H1118/H1118 –––– (10,841)
Net cash generated from/(used in)
financing activities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118231,772 93,083 (200,733) (61,166) 585,103
Net increase in cash and cash
equivalents /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111894,386 31,480 67,289 136,844 70,635
Cash and cash equivalents,
at the beginning of the year/period /H1118/H1118/H1118 225,311 354,707 417,977 417,977 507,341
Effect of exchange rate changes on cash
and cash equivalents /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111835,010 31,790 22,075 24,254 10,255
Cash and cash equivalents,
at the end of the year/period /H1118/H1118/H1118/H1118/H1118/H111823 354,707 417,977 507,341 579,075 588,231
APPENDIX I ACCOUNTANTS’ REPORT
– I-12 –


--- page 455 ---
NOTES TO THE HISTORICAL FINANCIAL INFORMATION
1. GENERAL INFORMATION
CIG Shanghai Co., Ltd. (the “Company”) was incorporated in March 2006 as a limited liability company in
Shanghai, the People’s Republic of China (the “PRC”). In June 2012, the Company was transformed into a joint stock
limited liability company. In November 2017, the Company’s A shares were listed on the Shanghai Stock Exchange.
The Company and its subsidiaries (the “Group”) are principally engaged in the research and development,
production and sales of telecommunications, digital communication and enterprise network terminal equipment and
high-speed optical module products.
In the opinion of the directors, the Company is controlled by the Single Largest Group of Shareholders.
APPENDIX I ACCOUNTANTS’ REPORT
– I-13 –


--- page 456 ---
The Company has direct and indirect interests in the following subsidiaries. Details of the principal subsidiaries are as follows:
Name of company
Place of
establishment/
incorporation and
place of business Type of legal entity
Particulars of
issued and
paid up capital/
registered capital
Percentage of equity interest
Principal activities
As at 31 December As at 30 June
As at the date of
this report2022 2023 2024 2025
Direct Indirect Direct Indirect Direct Indirect Direct Indirect Direct Indirect
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
CIG Shanghai Communication
Equipment Co., Ltd.* ( ɪऎ
ʮ̡) (note
a) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
The PRC Limited company RMB205,000,000 100% N/A 100% N/A 100% N/A 100% N/A 100% N/A Trading
Actiontec Electronic
(Shanghai), Inc.* (“Actiontec
Shanghai”) ( ᒕ౽ฆཥɿ(ɪ
ऎ)ʮ̡) (note a) /H1118/H1118/H1118/H1118
The PRC Limited company RMB1,654,595 100% N/A 100% N/A 100% N/A 100% N/A 100% N/A Research and
development
CIG Xi’an Co., Ltd.* ( Гτᄏ
ʮ̡) (note e) /H1118/H1118
The PRC Limited company RMB10,000,000 100% N/A 100% N/A 100% N/A 100% N/A 100% N/A Research and
development
CIG Wuhan Co., Ltd.* ( ɪऎᄏ
Ҧ(ဏ)ʮ̡) (note
a) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
The PRC Limited company RMB10,000,000 100% N/A 100% N/A 100% N/A 100% N/A 100% N/A Manufacturing
Cambridge Industries Group
Telecommunication Limited
(note b) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Hong Kong Limited company HK$1 N/A 100% N/A 100% N/A 100% N/A 100% N/A 100% Trading
CIG Photonics Japan Limited
(note f) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Japan Limited company JPY10,000 N/A 100% N/A 100% N/A 100% N/A 100% N/A 100% Research and
development
CIG Zhejiang
Telecommunication
Equipment Co., Ltd.* ( एϪ
ʮ̡)
(“CIG ZJ”) (note d) /H1118/H1118/H1118/H1118/H1118
The PRC Limited company RMB450,000,000 N/A N/A 66.67% N/A 66.67% N/A 66.67% N/A 66.67% N/A Manufacturing
APPENDIX I ACCOUNTANTS’ REPORT
– I-14 –


--- page 457 ---
Name of company
Place of
establishment/
incorporation and
place of business Type of legal entity
Particulars of
issued and
paid up capital/
registered capital
Percentage of equity interest
Principal activities
As at 31 December As at 30 June
As at the date of
this report2022 2023 2024 2025
Direct Indirect Direct Indirect Direct Indirect Direct Indirect Direct Indirect
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
CIG Optical Communication
Co., Ltd.*
(ʮ
̡) (note a) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
The PRC Limited company RMB5,000,000 100% N/A 100% N/A 100% N/A 100% N/A 100% N/A Manufacturing
CIG Photonics Europe GmbH
(note f) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Germany Limited company EUR25,000 100% N/A 100% N/A 100% N/A 100% N/A 100% N/A Trading
Cambridge Industries USA Inc.
(“CIG US”) ( ᄏ዗ʈุ(਷)
ʮ̡) (note c) /H1118/H1118/H1118/H1118/H1118/H1118
USA Limited company US$42,000,010 100% N/A 100% N/A 100% N/A 100% N/A 100% N/A Research and
development, and
trading
Actiontec Electronic, Inc.
(“AEI”)
(note f) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
USA Limited company US$10 N/A 100% N/A 100% N/A 100% N/A 100% N/A 100% Research and
development, and
trading
Actiontec Electronics Taiwan
Inc.
(ʮ̡)
(note f) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Taiwan Limited company TWD9,999,290 N/A N/A N/A N/A N/A 100% N/A 100% N/A 100% Research and
development
CIG Optics Limited (note f) /H1118/H1118Hong Kong Limited Company HK$10,000 N/A 100% N/A 100% N/A 100% N/A 100% N/A 100% Trading
CIG Tech Photonics Sdn. Bhd.
(note f) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Malaysia Limited Company MYR1,000 N/A 100% N/A 100% N/A 100% N/A 100% N/A 100% Trading
APPENDIX I ACCOUNTANTS’ REPORT
– I-15 –


--- page 458 ---
Notes:
(a) These subsidiaries are limited liability companies. The financial statements of these entities for the years
ended 31 December 2022, 2023 and 2024 were prepared in accordance with Accounting Standards for
Business Enterprises issued by the Ministry of Finance of the PRC. The financial statements for the
years ended 31 December 2022 and 2023 were audited by BDO China Shu Lun Pan Certified Public
Accountants LLP*ה(౷ஷΥྫ). The financial statements for the year ended 31
December 2024 were audited by Grant Thornton Zhitong Certified Public Accountants LLP*ࠇ
ה(౷ஷΥྫ).
(b) This subsidiary is a limited company. The financial statements for the years ended 31 December 2022,
2023 and 2024 were prepared in accordance with Hong Kong Financial Reporting Standard for Private
Entities issued by The Hong Kong Institute of Certified Public Accountants. The financial statements
for the years ended 31 December 2022, 2023 and 2024 were audited by W.L. HO CPA Limited.
(c) The subsidiary is a limited liability company. The financial statements for the years ended 31 December
2022, 2023 and 2024 were prepared in accordance with accounting principles generally accepted in the
United States of America (the “USA”) and were audited by UHY LLP .
(d) This subsidiary is limited liability company. The financial statements of this entity for the years ended
31 December 2023 and 2024 were prepared in accordance with Accounting Standards for Business
Enterprises issued by the Ministry of Finance of the PRC. The financial statements for the year ended
31 December 2023 and 2024 were audited by BDO China Shu Lun Pan Certified Public Accountants
LLP*ה(౷ஷΥྫ) and Grant Thornton Zhitong Certified Public Accountants
LLP*ה(౷ஷΥྫ), respectively.
(e) The subsidy is a limited liability company. No audited statutory financial statements for the years ended
31 December 2022 and 2023 of this entity have been prepared as it is not subject to statutory audit
requirements under relevant rules and regulations in the PRC. The financial statements for the year
ended 31 December 2024 were prepared in accordance with Accounting Standards for Business
Enterprises issued by the Ministry of Finance in the PRC. The financial statements for the year ended
31 December 2024 were audited by Grant Thornton Zhitong Certified Public Accountants LLP*Ν
ה(౷ஷΥྫ).
(f) No audited statutory financial statements have been prepared as it is not subject to statutory audit
requirements under relevant rules and regulations in the jurisdiction of incorporation.
* English for identification only
2. SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION
2.1 Basis of preparation
The Historical Financial Information have been prepared in accordance with the International Financial
Reporting Standards, which collective term includes all applicable individual IFRS Accounting Standards,
International Accounting Standards (“IASs”) and Interpretations as issued by the International Accounting Standards
Board (“IASB”) (“IFRS Accounting Standards”).
All standards, amendments, interpretations and annual improvements which are effective for the accounting
period beginning from 1 January 2025 are consistently adopted by the Group during the Track Record Period.
The material accounting policies that have been used in the preparation of these Historical Financial
Information are summarised below. These policies have been consistently applied to all the years presented unless
otherwise stated.
These Historical Financial Information have been prepared on a going concern basis, under the historical cost
convention, except for certain financial assets at fair value through profit or loss (“FVTPL”) which are carried at fair
value.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 459 ---
It should be noted that accounting estimates and assumptions are used in preparation of the Historical Financial
Information. Although these estimates are based on management’s best knowledge and judgement of current events
and actions, actual results may ultimately differ from those estimates. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates are significant to the Historical Financial
Information are disclosed in note 4.
2.2 Basis of consolidation
The Historical Financial Information incorporate the financial statements of the Company and its subsidiaries
for the Track Record Period.
Subsidiaries are entities controlled by the Group. The Group controls an entity when the Group is exposed, or
has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through
its power over the entity. When assessing whether the Group has power over the entity, only substantive rights
relating to the entity (held by the Group and others) are considered.
The Group includes the income and expenses of a subsidiary in the Historical Financial Informational from the
date it gains control until the date when the Group ceases to control the subsidiary.
Intra-group transactions, balances and unrealised gains and losses on transactions between group companies
are eliminated in preparing the Historical Financial Information. Where unrealised losses on sales of intra-group asset
are reversed on consolidation, the underlying asset is also tested for impairment from the Group’s perspective.
Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure
consistency with the accounting policies adopted by the Group.
Non-controlling interests represent the equity on a subsidiary not attributable directly or indirectly to the
Company, and in respect of which the Group has not agreed any additional terms with the holders of those interests
which would result in the Group as a whole having a contractual obligation in respect of those interests that meets
the definition of a financial liability. For each business combination, the Group can elect to measure any
non-controlling interests either at fair value or at their proportionate share of the subsidiary’s net identifiable assets.
Non-controlling interests are presented in the consolidated statements of financial position within equity,
separately from the equity attributable to the owners of the Company. Non-controlling interests in the results of the
Group are presented on the face of the consolidated statements of profit or loss and other comprehensive income as
an allocation of the total profit or loss and total comprehensive income for the Track Record Period between
non-controlling interests and the owners of the Company.
Changes in the Group’s interests in subsidiaries that do not result in a loss of control are accounted for as
equity transactions, whereby adjustments are made to the amounts of controlling interests within consolidated equity
to reflect the change in relative interests, but no adjustments are made to goodwill and no gain or loss is recognised.
When the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference
between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest
and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any
non-controlling interests. Where certain assets of the subsidiary are measured at revalued amounts or fair values and
the related cumulative gain or loss has been recognised in other comprehensive income and accumulated in equity,
the amounts previously recognised in other comprehensive income and accumulated in equity are accounted for as
if the Group had directly disposed of the related assets (i.e., reclassified to profit or loss or transferred directly to
retained earnings). The fair value of any investment retained in the former subsidiary at the date when control is lost
is regarded as the fair value on initial recognition for subsequent accounting under IFRS 9 “Financial Instruments”
(“IFRS 9”) or, when applicable, the cost on initial recognition of an investment in an associate or a joint venture.
In the Company’s statements of financial position, subsidiaries are carried at cost less any impairment loss (see
note 2.20) unless the subsidiary is held for sale or included in a disposal group. Cost is adjusted to reflect changes
in consideration arising from contingent consideration amendments. Cost also includes direct attributable costs of
investment.
The results of subsidiaries are accounted for by the Company on the basis of dividends received and receivable
at each reporting date. All dividends whether received out of the investee’s pre or post-acquisition profits are
recognised in the Company’s profit or loss.
APPENDIX I ACCOUNTANTS’ REPORT
– I-17 –


--- page 460 ---
2.3 Acquisition of subsidiaries
Business combinations
Business combinations are accounted for using the acquisition method. The consideration transferred in
a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair
values of the assets transferred by the Group, liabilities incurred 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. Acquisition-
related costs are recognised in profit or loss as incurred.
The Group determines that it has acquired a business when the acquired set of activities and assets
include an input and a substantive process that together significantly contribute to the ability to create outputs.
The acquired process is considered substantive if it is critical to the ability to continue producing outputs, and
the inputs acquired include an organised workforce with necessary skills, knowledge, or experience to perform
that process or it significantly contributes to the ability to continue producing outputs and is considered unique
or scarce or cannot be replaced without significant cost, effort, or delay in the ability to continue producing
outputs.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination
are, with limited exceptions, measured initially at their fair values at the acquisition date. Consideration
transferred as part of a business combination does not include amounts related to the settlement of pre-existing
relationships. The gain or loss on the settlement of any pre-existing relationship is recognised in profit or loss.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any
non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity in the
acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and liabilities
assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and
liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling
interests in the acquiree and the fair value on the acquirer’s previously held interest in the acquiree (if any),
the excess is recognised immediately in profit or loss as bargain purchase gain.
Where the consideration the Group transferred in a business combination includes assets or liabilities
resulting from a contingent consideration arrangement, the contingent consideration is measured at its
acquisition-date fair value and considered as part of the consideration transferred in a business combination.
Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are
adjusted retrospectively, with the corresponding adjustments being made against goodwill or gain on bargain
purchase. Measurement period adjustments are adjustments that arise from additional information obtained
during the measurement period about facts and circumstances that existed as of the acquisition date.
Measurement period does not exceed one year from the acquisition date. The subsequent accounting for
changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments
depends on how the contingent consideration is classified. Contingent consideration classified as equity is not
subsequently remeasured and its subsequent settlement is accounted for within equity. Contingent
consideration classified as a financial liability is subsequently remeasured at each reporting dates at fair value
with changes in fair value recognised in profit or loss.
Changes in the value of the previously held equity interest recognised in other comprehensive income
and accumulated in equity before the acquisition date are reclassified to profit or loss when the Group obtains
control over the acquiree. If the initial accounting for a business combination is incomplete by each reporting
date in which the combination occurs, the Group reports provisional amounts for the items for which the
accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see above),
or additional assets or liabilities are recognised, to reflect new information obtained about facts and
circumstances that existed as of the acquisition date that, if known, would have affected the amounts
recognised as of that date.
APPENDIX I ACCOUNTANTS’ REPORT
– I-18 –


--- page 461 ---
2.4 Foreign currency translation
The Historical Financial Information are presented in Renminbi (“RMB”), which is also the functional
currency of the Company.
In the individual financial statements of the consolidated entities, foreign currency transactions are translated
into the functional currency of the individual entity using the exchange rates prevailing at the dates of the
transactions. At each reporting date, monetary assets and liabilities denominated in foreign currencies are translated
at the foreign exchange rates ruling at that date. Foreign exchange gains or losses resulting from the settlement of
such transactions and from the reporting date retranslation of monetary assets and liabilities are recognised in profit
or loss.
Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates
prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of
historical cost in a foreign currency are not retranslated (i.e. only translated using the exchange rates at the
transaction date).
In the Historical Financial Information, all individual financial statements of foreign operations, originally
presented in a currency different from the Group’s presentation currency, have been converted into RMB. Assets and
liabilities have been translated into RMB at the closing rates at each reporting date. Income and expenses have been
converted into RMB at the exchange rates ruling at the transaction dates. Any differences arising from this procedure
have been recognised in the consolidated statements of profit or loss and other comprehensive income and
accumulated separately in the translation reserve in equity.
2.5 Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment
losses (see note 2.20), if any.
Depreciation is recognised so as to write off the cost of assets (other than construction in progress) less their
residual values over their estimated useful lives, using the straight-line method over their estimated useful lives as
follows:
Buildings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820 years
Machinery and equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185 to 10 years
Computer equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183 years
Motor vehicles /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184 years
Leasehold improvements /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Over the lease term
Office equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185 years
Accounting policy for depreciation of right-of-use assets is set out in note 2.14.
Estimates of residual value and useful life are reviewed, and adjusted if appropriate, at each reporting date.
Gain or loss arising on retirement or disposal is determined as the difference between the sales proceeds and
the carrying amount of the asset and is recognised in profit or loss.
Construction in progress represents property, plant and equipment under construction and is stated at cost less
any impairment losses. Cost includes cost of construction and other direct costs (such as costs of materials, direct
labour and borrowing costs).
No provision for depreciation has been provided for construction in progress until such time relevant assets
are available for use, at which time they will be transferred to appropriate category of property, plant and equipment.
APPENDIX I ACCOUNTANTS’ REPORT
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2.6 Prepaid lease payments
“Prepaid lease payments” (which meet the definition of right-of-use assets) represent the upfront payment for
long-term land lease in which the payment can be reliably measured. It is stated at cost less accumulated depreciation
and any accumulated impairment losses. Depreciation is calculated on a straight-line basis over the term of the
lease/right-of-use except where an alternative basis is more representative of the time pattern of benefits to be derived
by the Group from use of the land.
2.7 Goodwill
Set out below are the accounting policies on goodwill arising on acquisition of a subsidiary.
Goodwill arising in a business combination is recognised as an asset at the date that control is acquired (the
acquisition date). Goodwill is measured as the excess of the aggregate of the fair value of the consideration
transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously
held equity interest in the acquiree (if any) over the Group’s interest in the net fair value of the acquiree’s identifiable
assets and liabilities measured as at the acquisition date.
If, after reassessment, the Group’s interest in the fair value of the acquiree’s identifiable net assets exceeds the
sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value
of the acquirer’s previously held equity interest in the acquiree (if any), the excess is recognised immediately in profit
or loss as a bargain purchase gain.
Goodwill is stated at cost less accumulated impairment losses. Goodwill is allocated to cash-generating units
and is tested at least annually for impairment (see note 2.20).
On subsequent disposal of a subsidiary, the attributable amount of goodwill capitalised is included in the
determination of the amount of gain or loss on disposal.
2.8 Intangible assets (other than goodwill) and research and development activities
Intangible assets (other than goodwill)
Acquired intangible assets are recognised initially at cost. After initial recognition, intangible assets
with finite useful lives are carried at cost less accumulated amortisation and any accumulated impairment
losses (see note 2.20). Amortisation for intangible assets with finite useful lives is provided on straight-line
basis over their estimated useful lives. Amortisation commences when the intangible assets are available for
use. The following useful lives are applied:
Patent /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186.75 years
Software /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810 years
Deferred development cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185 years
The assets’ amortisation methods and useful lives are reviewed, and adjusted if appropriate, at each
reporting date.
Intangible assets, with finite and indefinite useful lives, are tested for impairment as described below
in note 2.20.
Research and development costs
Costs associated with research activities are expensed in profit or loss as they incur. Costs that are
directly attributable to development activities are recognised as intangible assets provided they meet all of the
following recognition requirements:
(i) demonstration of technical feasibility of the prospective product for internal use or sale;
(ii) there is intention to complete the intangible asset and use or sell it;
(iii) the Group’s ability to use or sell the intangible asset is demonstrated;
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(iv) the intangible asset will generate probable economic benefits through internal use or sale;
(v) sufficient technical, financial and other resources are available for completion; and
(vi) the expenditure attributable to the intangible asset can be reliably measured.
Direct costs include employee costs incurred on development activities along with an appropriate
portion of relevant overheads. The costs of development of internally generated software, products or
know-how that meet the above recognition criteria are recognised as intangible assets. They are subject to the
same subsequent measurement method as acquired intangible assets.
All other development costs are expensed as incurred.
2.9 Financial instruments
Recognition and derecognition
Financial assets and financial liabilities are recognised when the Group becomes a party to the
contractual provisions of the financial instrument.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset
expire, or when the financial asset and substantially all of its risks and rewards are transferred. A financial
liability is derecognised when it is extinguished, discharged, cancelled or expires.
Financial assets
Classification and initial measurement of financial assets
Except for those trade receivables that do not contain a significant financing component and are
measured at the transaction price in accordance with IFRS 15 “Revenue from Contracts with Customers”
(“IFRS 15”), all financial assets are initially measured at fair value, in case of a financial asset not at FVTPL,
plus transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs
of financial assets carried at FVTPL are expensed in profit or loss.
Financial assets, other than those designated and effective as hedging instruments, are classified into the
following categories:
– amortised cost; or
– FVTPL; or
The classification is determined by both:
– the entity’s business model for managing the financial asset; and
– the contractual cash flow characteristics of the financial asset.
All income and expenses relating to financial assets that are recognised in profit or loss are presented
within finance costs, interest income or other financial items, except for expected credit losses (“ECL”) of
trade and other receivables which is presented as separate line item in the consolidated statements of profit or
loss and other comprehensive income.
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Subsequent measurement of financial assets
Debt investments
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are not
designated as FVTPL):
– they are held within a business model whose objective is to hold the financial assets and collect
its contractual cash flows; and
– the contractual terms of the financial assets give rise to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
After initial recognition, these are measured at amortised cost using the effective interest method.
Interest income from these financial assets is included in other income. Discounting is omitted where the effect
of discounting is immaterial. The Group’s cash and cash equivalents, pledged deposits, trade and other
receivables fall into this category of financial instruments.
Financial assets at FVTPL
Financial assets that are held within a different business model other than “hold to collect” or “hold to
collect and sell’ are categorised at FVTPL. Further, irrespective of business model, financial assets whose
contractual cash flows are not solely payments of principal and interest are accounted for at FVTPL. All
derivative financial instruments fall into this category, except for those designated and effective as hedging
instruments, for which the hedge accounting requirements under IFRS 9 apply.
Financial liabilities
Classification and measurement of financial liabilities
The Group’s financial liabilities include bank and other borrowings, leases liabilities and trade and bills
payables, other payables and accruals.
Financial liabilities other than lease liabilities are initially measured at fair value, and, where applicable,
adjusted for transaction costs.
Subsequently, financial liabilities other than lease liabilities are measured at amortised cost using the
effective interest method which are carried subsequently at fair value with gains or losses recognised in profit
or loss.
All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in
profit or loss are included in financial costs or other income.
Accounting policies of lease liabilities are set out in note 2.14.
Bank and other borrowings
Bank and other borrowings are recognised initially at fair value, net of transaction costs incurred. Bank
and other borrowings are subsequently stated at amortised cost; any difference between the net of transaction
costs and the redemption value is recognised in profit or loss over the period of the bank and other borrowings
using the effective interest method.
Bank and other borrowings are classified as current liabilities unless as at each reporting date, the Group
has a right to defer settlement of the liability for at least twelve months after each reporting date.
Trade and bills payables and other payables and accruals
Trade and bills payables and other payables and accruals are recognised initially at their fair value and
subsequently measured at amortised cost, using the effective interest method.
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2.10 Impairment of financial assets
IFRS 9’s impairment requirements use more forward-looking information to recognise ECL — the “ECL
model”. Instruments within the scope included loans and other debt-type financial assets measured at amortised cost
and trade receivables.
The Group considers a broader range of information when assessing credit risk and measuring ECL, including
past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the
future cash flows of the instrument.
In applying this forward-looking approach, a distinction is made between:
– financial instruments that have not deteriorated significantly in credit quality since initial recognition
or that have low credit risk (“Stage 1”); and
– financial instruments that have deteriorated significantly in credit quality since initial recognition and
whose credit risk is not low (“Stage 2”).
“Stage 3” would cover financial assets that have objective evidence of impairment at each reporting date.
“12-month ECL” are recognised for the Stage 1 category while “lifetime ECL” are recognised for the Stage
2 category.
Measurement of the ECL is determined by a probability-weighted estimate of credit losses over the expected
life of the financial instrument.
Trade and bills receivables
For trade and bills receivables, the Group applies a simplified approach in calculating ECL and
recognises a loss allowance based on lifetime ECL at each reporting date. These are the expected shortfalls in
contractual cash flows, considering the potential default at any point during the life of the financial assets. For
trade receivables, the Group assesses ECL under IFRS 9 based on shared credit risk characteristics and aging
as well as the corresponding historical credit losses during that period, and adjusted for forward-looking
factors specific to the debtors and the economic environment.
The Group writes off trade and bills receivables when there is information indicating that the debtor is
in severe financial difficulty and there is no realistic prospect of recovery, e.g. when the debtor has been placed
under liquidation or has entered into bankruptcy proceedings.
Other financial assets measured at amortised cost
The Group measures the loss allowance for deposits and other receivables equal to 12-month ECL,
unless when there has been a significant increase in credit risk since initial recognition, the Group recognises
lifetime ECL. The assessment of whether lifetime ECL should be recognised is based on significant increase
in the likelihood of risk of default occurring since initial recognition.
In assessing whether the credit risk has increased significantly since initial recognition, the Group
compares the risk of a default occurring on the financial assets at each reporting date with the risk of default
occurring on the financial assets at the date of initial recognition. In making this assessment, the Group
considers both quantitative and qualitative information that is reasonable and supportable, including historical
experience and forward-looking information that is available without undue cost or effort.
In particular, the following information is taken into account when assessing whether credit risk has
increased significantly:
– an actual or expected significant deterioration in the financial instrument’s external (if available)
or internal credit rating;
– significant deterioration in external market indicators of credit risk, e.g. a significant increase in
the credit spread, the credit default swap prices for the debtor;
– existing or forecast adverse changes in business, financial or economic conditions that are
expected to cause a significant decrease in the debtor’s ability to meet its debt obligations; and
– an actual or expected significant deterioration in the operating results of the debtor.
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Detailed analysis of the ECL assessment of trade and bills receivables and other financial assets
measured at amortised cost are set out in note 39.5.
Despite the aforegoing, the Group assumes that the credit risk on a debt instrument has not increased
significantly since initial recognition if the debt instrument is determined to have low credit risk at each
reporting date. A debt instrument is determined to have low credit risk if it has a low risk of default, the
borrower has strong capacity to meet its contractual cash flow obligations in the near term and adverse changes
in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the
borrower to fulfil its contractual cash flow obligations.
For internal credit risk management, the Group considers an event of default occurs when information
developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors,
including the Group, in full (without taking into account any collateral held by the Group).
2.11 Inventories
Inventories are carried at the lower of cost and net realisable value. Net realisable value is the estimated selling
price in the ordinary course of business less the estimated cost of completion and applicable selling expenses. Cost
is determined using the first-in first-out basis, and in the case of work in progress and finished goods, comprise direct
materials, direct labour and an appropriate proportion of overheads.
When inventories are sold, the carrying amount of those inventories is recognised as an expense in the period
in which the related revenue is recognised. The amount of any write-down of inventories to net realisable value and
all losses of inventories are recognised as an expense in the period the write-down or loss occurs. The amount of any
reversal of any write-down of inventories is recognised as a reduction in the amount of inventories recognised as an
expense in the period in which the reversal occurs.
2.12 Cash and cash equivalents
Cash and cash equivalents include cash at banks and on hand, demand deposits with banks and short term
highly liquid investments with original maturities of three months or less that are readily convertible into known
amounts of cash and which are subject to an insignificant risk of changes in value.
2.13 Contract liabilities
A contract liability is recognised when the customer pays consideration before the Group recognises the related
revenue. A contract liability would also be recognised if the Group has an unconditional right to receive consideration
before the Group recognises the related revenue. In such cases, a corresponding receivable would also be recognised.
2.14 Leases
(a) Definition of a lease and the Group as lessee
At inception of a contract, the Group considers whether a contract is, or contains, a lease. A lease is defined
as a contract, or part of a contract, that conveys the right to use an identified asset (the underlying asset) for a period
of time in exchange for consideration. To apply this definition, the Group assesses whether the contract meets three
key evaluations which are whether:
– the contract contains an identified asset, which is either explicitly identified in the contract or implicitly
specified by being identified at the time the asset is made available to the Group;
– the Group has the right to obtain substantially all of the economic benefits from use of the identified
asset throughout the period of use, considering its rights within the defined scope of the contract; and
– the Group has the right to direct the use of the identified asset throughout the period of use. The Group
assess whether it has the right to direct ‘how and for what purpose’ the asset is used throughout the
period of use.
For contracts that contains a lease component and one or more additional lease or non-lease components, the
Group allocates the consideration in the contract to each lease and non-lease component on the basis of their relative
stand-alone prices.
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At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the consolidated
statements of financial position. The right-of-use asset is measured at cost, which is made up of the initial
measurement of the lease liability, any initial direct costs incurred by the Group, an estimate of any costs to dismantle
and remove the underlying asset at the end of the lease, and any lease payments made in advance of the lease
commencement date (net of any lease incentives received).
The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the
earlier of the end of the useful life of the right-of-use asset or the end of the lease term unless the Group is reasonably
certain to obtain ownership at the end of the lease term. The Group also assesses the right-of-use asset (except for
those meeting the definition of investment properties) for impairment when such indicator exists.
At the commencement date, the Group measures the lease liability at the present value of the lease payments
unpaid at that date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined,
the Group’s incremental borrowing rate.
Lease payments included in the measurement of the lease liability are made up of fixed payments (including
in-substance fixed payments) less any lease incentives receivable, variable payments based on an index or rate, and
amounts expected to be payable under a residual value guarantee. The lease payments also include the exercise price
of a purchase option reasonably certain to be exercised by the Group and payment of penalties for terminating a lease,
if the lease term reflects the Group exercising the option to terminate.
Subsequent to initial measurement, the liability will be reduced for lease payments made and increased for
interest cost on the lease liability. It is remeasured to reflect any reassessment or lease modification, or if there are
changes in in-substance fixed payments. The variable lease payments that do not depend on an index or a rate are
recognised as expense in the period on which the event or condition that triggers the payment occurs.
The Group remeasures lease liabilities whenever:
– there are changes in lease term or in the assessment of exercise of a purchase option, in which case the
related lease liability is remeasured by discounting the revised lease payments using a revised discount
rate at the date of reassessment;
– the lease payments changes due to changes in market rental rates following a market rent
review/expected payment under a guaranteed residual value, in which cases the related lease liability is
remeasured by discounting the revised lease payments using the initial discount rate.
For lease modification that is not accounted for as a separate lease, the Group remeasures the lease liability
based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate
at the effective date of modification.
When the lease is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit or
loss if the right-of-use asset is already reduced to zero.
The Group has elected to account for short-term leases and leases of low-value assets using the practical
expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these leases are
recognised as an expense in profit or loss on a straight-line basis over the lease term. Short-term leases are leases
with a lease term of 12 months or less.
On the consolidated statements of financial position, right-of-use assets have been presented as a separate item.
The prepaid lease payments for leasehold land are presented as “Prepaid lease payments” under non-current assets.
Refundable rental deposits paid are accounted for under IFRS 9 and initially measured at fair value.
Adjustments to fair value at initial recognition are considered as additional lease payments and included in the cost
of right-of-use assets.
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(b) The Group as lessor
As a lessor, the Group classifies its leases as either operating or finance leases.
A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to
ownership of the underlying asset, and classified as an operating lease if it does not.
When the Group is an intermediate lessor, it accounts for the head lease and the sub-leases as two separate
contracts. The sub-leases are classified as a finance or operating lease with reference to the right-of-use asset arising
from the head lease, not with reference to the underlying asset. If the head lease is a short-term lease to which the
Group applies the short-term lease exemption, then the Group classifies the sub-lease as an operating lease.
The Group sub-leases some of its properties and the sub-lease contracts are classified as operating leases.
Rental income is recognised on a straight-line basis over the term of the lease.
(c) Sale and leaseback transactions
The Group as a seller-lessee
For a transfer that satisfies the requirements as a sale in accordance with IFRS 15, the Group as a
seller-lessee measures the right-of-use asset arising from the leaseback at the proportion of the previous
carrying amount of the asset and recognises any gain or loss that relates to the rights transferred to the
buyer-lessor only. Right-of-use asset and lease liability with fixed payments are subsequently measured in
accordance with the Group’s accounting policies above.
2.15 Provisions and contingent liabilities
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past
event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable
estimate of the amount of the obligation can be made. Where the time value of money is material, provisions are
stated at the present value of the expenditure expected to settle the obligation.
All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate.
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be
estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic
benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence
of one or more future uncertain events not wholly within the control of the Group, are also disclosed as contingent
liabilities unless the probability of outflow of economic benefits is remote.
Contingent liabilities assumed in a business combination which are present obligations at the date of
acquisition are initially recognised at fair value, provided the fair value can be reliably measured. After the initial
recognition at fair value, such contingent liabilities are recognised at the higher of the amount initially recognised,
less accumulated amortisation where appropriate, and the amount that would be recognised in a comparable provision
as described above. Contingent liabilities assumed in a business combination that cannot be reliably fair valued or
were not present obligations at the date of acquisition are disclosed as per above.
2.16 Share capital
Ordinary shares are classified as equity. Share capital is determined using the nominal value of shares that have
been issued at each reporting date. Any transaction costs associated with the issuing of shares are deducted from
capital reserve (net of any related income tax benefit) to the extent that they are incremental costs directly attributable
to such equity transaction.
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2.17 Revenue recognition
Revenue arises mainly from the sales of goods.
To determine whether to recognise revenue, the Group follows a 5-step process:
1. Identifying the contract with a customer
2. Identifying the performance obligations
3. Determining the transaction price
4. Allocating the transaction price to the performance obligations
5. Recognising revenue when/as performance obligation(s) are satisfied
In all cases, the total transaction price for a contract is allocated amongst the various performance obligations
based on their relative stand-alone selling prices. The transaction price for a contract excludes any amounts collected
on behalf of third parties. Revenue is recognised at a point in time, when the Group satisfies performance obligations
by transferring the promised goods to its customers.
Where the contract contains a financing component which provides a significant financing benefit to the
customer for more than 12 months, 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 with the customer, and interest
income is accrued separately under the effective interest method. Where the contract contains a financing component
which provides a significant financing benefit to the Group, revenue recognised under that contract includes the
interest expense accreted on the contract liability under the effective interest method.
Further details of the Group’s revenue and other income recognition policies are as follows:
Sale of goods
Revenue from the sale of goods for a fixed fee is recognised when or as the Group transfers control of
the assets to the customer. For non-cross-border sales, revenue is recognised when the products have been
dispatched and the customer has signed for acceptance. For cross-border sales, revenue is recognised when the
goods are delivered to the customer’s designated location and upon receipt of export declaration from the
customs and corresponding bill of lading.
The Group’s standard sales terms are generally non-cancellable and non-returnable, other than for
defective merchandise covered under the Group’s standard warranty provision, which covers a one to two-year
period depending on the product. The Group does not offer any extended warranties for purchase and warranty
is recorded in cost of sales.
Sales-related warranties cannot be purchased separately and are served as an assurance that the products
sold comply with agreed-upon specifications (i.e. assurance-type warranties). Accordingly, the Group accounts
for warranties in accordance with IAS 37 “Provisions, Contingent Liabilities and Contingent Assets”.
Interest income
Interest income is recognised on a time proportion basis using the effective interest method. The
financial assets measured at amortised costs that are not credit-impaired, the effective interest rate is applied
to the gross carrying amount of the asset.
Rental income
Accounting policies for rental income are set out in note 2.14.
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2.18 Government grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the
grant will be received and the Group will comply with all attached conditions. Government grants are deferred and
recognised in profit or loss over the period necessary to match them with the costs that the grants are intended to
compensate. Government grants relating to the purchase of assets are included in liabilities as “deferred income” in
the consolidated statements of financial position and are recognised in profit or loss on a straight-line basis over the
expected lives of the related assets/deducted from the carrying amount of the asset and consequently are effectively
recognised in profit or loss over the useful life of the asset by way of reduced depreciation expense.
Government grants relating to income is presented in gross under “other income” in the consolidated
statements of profit or loss and other comprehensive income.
2.19 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the consolidated statements of
financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention
to settle on a net basis, or realise the assets and settle the liabilities simultaneously. The legally enforceable right must
not be contingent on future events and must be enforceable in the normal course of business and in the event of
default, insolvency or bankruptcy of the Group or the counterparty.
2.20 Impairment of non-financial assets
The following assets are subject to impairment testing:
 Goodwill;
 Intangible assets;
 Property, plant and equipment (including right-of-use assets and deposits for acquisition of property,
plant and equipment, and intangible assets);
 Prepaid lease payments; and
 Investments in subsidiaries in the Company’s statements of financial position.
Goodwill and intangible assets those not yet available for use are tested for impairment at least annually,
irrespective of whether there is any indication that they are impaired. All other assets are tested for impairment
whenever there are indications that the asset’s carrying amount may not be recoverable.
An impairment loss is recognised as an expense immediately for the amount by which the asset’s carrying
amount exceeds its recoverable amount. Recoverable amount is the higher of fair value, reflecting market conditions
less costs of disposal, and value in use. In assessing value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market assessment of time value of money and
the risk specific to the asset.
For the purposes of assessing impairment, where an asset does not generate cash inflows largely independent
of those from other assets, the recoverable amount is determined for the smallest group of assets that generate cash
inflows independently (i.e. a cash-generating unit). As a result, some assets are tested individually for impairment
and some are tested at cash-generating unit level. Corporate assets are allocated to individual cash-generating units,
when a reasonable and consistent basis of allocation can be identified, or otherwise they are allocated to the smallest
group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Goodwill in particular is allocated to those cash-generating units that are expected to benefit from synergies
of the related business combination and represent the lowest level within the Group at which the goodwill is
monitored for internal management purpose and not be larger than an operating segment.
Impairment losses recognised for cash-generating units, to which goodwill has been allocated, are credited
initially to the carrying amount of goodwill. Any remaining impairment loss is charged pro rata to the other assets
in the cash-generating unit, except that the carrying value of an asset will not be reduced below its individual fair
value less cost of disposal, or value in use, if determinable.
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An impairment loss on goodwill is not reversed in subsequent periods. In respect of other assets, an impairment
loss is reversed if there has been a favourable change in the estimates used to determine the asset’s recoverable
amount and only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have
been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
2.21 Employee benefits
Retirement benefit
The Group contributes to defined contribution retirement plans which are available to eligible
employees.
Contributions to the plans by the Group are calculated as a percentage of employees’ basic salaries. The
retirement benefit plan cost charged to profit or loss represents contributions payable by the Group to the
funds.
During the Track Record Period, no forfeited contributions were utilised by the Group to reduce its
contributions. The Group has no plan to utilise any amount from forfeited contributions to reduce its
contributions for the future years either.
The Group’s contributions to the defined contribution retirement scheme are expensed as incurred.
Housing funds, medical insurances and other social insurances
Employees of the Group in the PRC are entitled to participate in various government-supervised housing
funds, medical insurances and other social insurance plan. The Group contributes on a monthly basis to these
funds based on certain percentages of the salaries of the employees, subject to certain ceiling. The Group’s
liability in respect of these funds is limited to the contributions payable at each reporting date.
Contributions to the housing funds, medical insurances and other social insurances are expensed as
incurred.
Short-term employee benefits
Employee entitlements to annual leave are recognised when they accrue to employees. A provision is
made for the estimated liability for annual leave as a result of services rendered by employees up to each
reporting date.
Non-accumulating compensated absences such as sick leave and maternity leave are not recognised until
the time of leave.
Termination benefits
Termination benefits are recognised at the earlier of when the Group can no longer withdraw the offer
of those benefits and when it recognises costs for any related restructuring.
Share-based employee compensation
The Group operates restricted shares incentive schemes and share options schemes which are
equity-settled share-based compensation plans for remuneration of its employees.
Restricted shares incentive schemes
The amount to be expensed as share-based payment expense is determined by reference to the fair value
of the restricted shares granted. The total expense is recognised on a straight-line basis over the relevant
vesting periods, with a corresponding credit to a “capital reserve” under equity.
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For those restricted shares which are amortised over the vesting periods, the Group revises its estimates
of the number of restricted shares that are expected to ultimately vest based on the vesting conditions at each
reporting date. Any resulting adjustment to the cumulative fair value recognised in prior years is
charged/credited to share-based payment expense in the current year, with a corresponding adjustment to the
capital reserve.
For grant of restricted shares, shares held by the Group’s trustee are disclosed as “Shares held for
restricted shares incentive scheme” and deducted from equity.
Share option scheme
From the perspective of the Company, the grants of its equity instruments to employees of its
subsidiaries are made in exchange for their services related to the subsidiaries. Accordingly, the share-based
payment expenses are treated as part of the “Investments in subsidiaries” in the Company’s statements of
financial position.
All employee services received in exchange for the grant of any share-based compensation are measured
at their fair values. These are indirectly determined by reference to the fair value of the equity instruments
granted. This fair value is appraised at the grant date and excludes the impact of any non-market vesting
conditions (for example, profitability and sales growth targets and performance conditions).
All share-based compensation is recognised as an expense in profit or loss over the vesting period if
vesting conditions apply, or recognised as an expense in full at the grant date when the equity instruments
granted vest immediately unless the compensation qualifies for recognition as asset, with a corresponding
increase in the “capital reserve” in equity. If vesting conditions apply, the expense is recognised over the
vesting period based on the best available estimate of the number of equity instruments expected to vest.
Non-market vesting conditions are included in assumptions about the number of equity instruments that are
expected to become exercisable. Estimates are subsequent revised, if there is any indication that the number
of equity instruments expected to vest differs from previous estimates. Any adjustment to cumulative
share-based compensation resulting from a revision is recognised in the current period. The number of vested
options ultimately exercised by holders does not impact the expense recorded in any period.
If the share options and award shares granted are cancelled or settled during the vesting period (other
than a grant cancelled by forfeiture when the vesting conditions are not satisfied), the cancellation or
settlement is accounted for as an acceleration of vesting, and the amount that otherwise would have been
recognised for services receive over the remainder of the vesting period is recognised immediately in profit
or loss.
At the time when the share options are exercised, the amount previously recognised in “capital reserve”
will be transferred to “share capital”. After vesting date, when the vested share options are later forfeited or
are still not exercised at the expiry date, the amount previously recognised in “capital reserve” will be
transferred to “retained earnings”.
2.22 Borrowing costs
Borrowing costs are recognised in profit or loss when they are incurred.
2.23 Accounting for income taxes
Income tax comprises current tax and deferred tax.
Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities
relating to the current or prior reporting period, that are unpaid at each reporting date. They are calculated according
to the tax rates and tax laws applicable to the fiscal periods to which they relate, based on the taxable profit for the
year. All changes to current tax assets or liabilities are recognised as a component of tax expense in profit or loss.
Deferred tax is calculated using the liability method on temporary differences at each reporting date between
the carrying amounts of assets and liabilities in the Historical Financial Information and their respective tax bases.
Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are
APPENDIX I ACCOUNTANTS’ REPORT
– I-30 –


--- page 473 ---
recognised for all deductible temporary differences, tax losses available to be carried forward as well as other unused
tax credits, to the extent that it is probable that taxable profit, including existing taxable temporary differences, will
be available against which the deductible temporary differences, unused tax losses and unused tax credits can be
utilised.
Deferred tax assets and liabilities are not recognised if the temporary difference arises from goodwill or from
initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither
taxable nor accounting profit or loss and does not give rise to equal taxable and deductible temporary differences.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries
except where the Group is able to control the reversal of the temporary differences and it is probable that the
temporary differences will not reverse in the foreseeable future.
For leasing transactions in which the tax deductions are attributable to the lease liabilities, the Group applies
the requirements in IAS 12 “Income Taxes” (“IAS 12”) to the lease liabilities and the related assets separately. The
Group recognises a deferred tax asset related to the lease liabilities to the extent that it is probable that taxable profit
will be available against which the deductible temporary difference can be utilised and a deferred tax liability for all
taxable temporary differences.
Deferred tax is calculated, without discounting, at tax rates that are expected to apply in the period the liability
is settled or the asset realised, provided they are enacted or substantively enacted at each reporting date.
Changes in deferred tax assets or liabilities are recognised in profit or loss, or in other comprehensive income
or directly in equity if they relate to items that are charged or credited to other comprehensive income or directly in
equity.
When different tax rates apply to different levels of taxable income, deferred tax assets and liabilities are
measured using the average tax rates that are expected to apply to the taxable income of the periods in which the
temporary differences are expected to reverse.
The determination of the average tax rates requires an estimation of (i) when the existing temporary differences
will reverse and (ii) the amount of future taxable profit in those years. The estimate of future taxable profit includes:
– income or loss excluding reversals of temporary differences; and
– reversals of existing temporary differences.
Current tax assets and current tax liabilities are presented in net if, and only if:
(a) the Group has the legally enforceable right to set off the recognised amounts; and
(b) intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
The Group presents deferred tax assets and deferred tax liabilities in net if, and only if:
(a) the entity has a legally enforceable right to set off current tax assets against current tax liabilities; and
(b) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation
authority on either:
(i) the same taxable entity; or
(ii) 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.
APPENDIX I ACCOUNTANTS’ REPORT
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2.24 Segment reporting
The Group identifies operating segments and prepares segment information based on the regular internal
financial information reported to the chief operating decision maker (“CODM”) for their decisions about resources
allocation to the Group’s business components and for their review of the performance of those components.
2.25 Related parties
For the purposes of these Historical Financial Information, 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 if 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.
(b) the party is an entity and if 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 an associate or joint venture of
a member of a group of which the other entity is a member).
(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).
(viii) the entity, or any member of a company of which it is a part, provides key management personnel
services to the Group or to the parent of the Group.
Close members of the family of a group are those family members who may be expected to influence, or be
influenced by, that person in their dealings with the entity.
3. ISSUED BUT NOT YET EFFECTIVE IFRS ACCOUNTING STANDARDS
At the date of authorisation of these Historical Financial Information, certain new and amended IFRS
Accounting Standards have been published but are not yet effective, and have not been adopted early by the Group.
Amendments to IFRS 9 and IFRS 7 /H1118/H1118/H1118/H1118/H1118/H1118/H1118Amendments to the Classification and Measurement of
Financial Instruments
1
Amendments to IFRS 9 and IFRS 7 /H1118/H1118/H1118/H1118/H1118/H1118/H1118Contracts Referencing Nature – Dependent Electricity 1
IFRS 18 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Presentation and Disclosure in Financial Statements 2
IFRS 19 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Subsidiaries without Public Accountability: Disclosures 2
Amendments to IFRS Accounting Standards /H1118/H1118Annual Improvements to IFRS Accounting Standards –
V olume 111
Amendments to IFRS 10 and IAS 28 /H1118/H1118/H1118/H1118/H1118/H1118Sale or Contribution of Assets between an Investor and
its Associate or Joint V enture 3
APPENDIX I ACCOUNTANTS’ REPORT
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1 Effective for annual periods beginning on or after 1 January 2026
2 Effective for annual periods beginning on or after 1 January 2027
3 Effective date not yet determined
The directors anticipate that all of the pronouncements will be adopted in the Group’s accounting policy for
the first annual period beginning on or after the effective date of the pronouncement.
IFRS 18 “Presentation and Disclosure in Financial Statements”, which sets out requirements on presentation
and disclosures in financial statements, will replace IAS 1 “Presentation of Financial Statements” (“IAS 1”). This
new IFRS Accounting Standard, while carrying forward many of the requirements in IAS 1, introduces new
requirements to present specified categories and defined subtotals in the statement of profit or loss; provide
disclosures on management-defined performance measures in the notes to the consolidated financial statements and
improve aggregation and disaggregation of information to be disclosed in the consolidated financial statements. In
addition, some IAS 1 paragraphs have been moved to IAS 8 “Accounting Policies, Changes in Accounting Estimates
and Errors” and IFRS 7 “Financial Instruments: Disclosures”. Minor amendments to IAS 7 “Statement of Cash
Flows” and IAS 33 “Earnings per Share” are also made.
IFRS 18 and amendments to other standards, will be effective for annual periods beginning on or after
1 January 2027, with early application permitted. The application of the new standard is expected to affect the
presentation of the statement of profit or loss and disclosures in the future financial statements which, the directors
of the Company anticipate, the impact will not be material.
Except as described above, the Directors anticipate that the application of the amendments to IFRS Accounting
Standards will have no material impact on the Group’s financial position and performance in the foreseeable future.
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
4.1 Estimation uncertainty
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will,
by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are
discussed below:
Estimation of impairment of trade and bills receivables, and deposits and other receivables
The Group makes allowances on items subjects to ECL (including trade and bills receivables, and
deposits and other receivables and other financial assets measured at amortised cost) based on assumptions
about risk of default and expected loss rates. The Group uses judgement in making these assumptions and
selecting the inputs to the impairment calculation, based on the Group’s past history, existing market
conditions as well as forward-looking estimates at each reporting date as set out in note 2.10.
As at 31 December 2022, 2023, 2024 and 30 June 2025, the aggregate carrying amounts of trade and
bills receivables, and deposits and other receivables amounted to RMB1,611,338,000, RMB1,124,018,000,
RMB1,252,776,000 and RMB1,591,911,000, net of loss allowance of RMB23,422,000, RMB18,724,000,
RMB20,075,000 and RMB25,662,000 respectively.
When the actual future cash flows are different from expected, such difference will impact the carrying
amount of trade and bills receivables, and deposits and other receivables and related credit losses in the periods
in which such estimate has been changed.
APPENDIX I ACCOUNTANTS’ REPORT
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Current and deferred income taxes
The Group is subject to income taxes in several jurisdictions. There are many transactions and events
for which the ultimate tax determination is uncertain during the ordinary course of business. Significant
judgement is required from the Group in determining the provision for income taxes in each of these
jurisdictions. Where the final tax outcome of these matters is different from the amounts that were initially
recorded, such differences will impact the income tax and deferred tax provisions in the period in which such
determination is made.
Net realisable value of inventories
Net realisable value of inventories is based on estimated selling price less any estimated costs to be
incurred to completion and disposal with reference to prevailing market information. These estimates are based
on the current market condition and the historical experience in selling goods of similar nature. It could change
significantly as a result of changes in market conditions. The Group reassesses the estimation at each reporting
date. During the Track Record Period, the provision for inventories, net, amounting to RMB18,512,000,
RMB3,741,000, RMB4,114,000 and RMB3,369,000 have been provided during the years ended 31 December
2022, 2023, 2024 and six months ended 30 June 2025, respectively.
Impairment of non-financial assets
Items of property, plant and equipment, right-of-use assets, prepaid lease payments, deposits for
acquisition of property, plant and equipment, and intangible assets and investments in subsidiaries in the
Company’s statements of financial position and intangible assets are tested for impairment if there is any
indication that the carrying value of these assets may not be recoverable and the assets are subject to an
impairment loss. This process requires management’s estimate of future cash flows generated by each
cash-generating unit (“CGU”). For any instance where this evaluation process indicates impairment, the
relevant asset’s carrying amount is written down to the recoverable amount and the amount of the write-down
is charged against the consolidated statements of profit or loss and other comprehensive income. The
recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use.
Business combinations
Business combinations other than under common control are accounted for under the acquisition
method. The determination and allocation of fair values to the identifiable assets acquired, which mainly
include determination of goodwill, is based on various assumptions and valuation methodologies requiring
considerable management judgement. The most significant variables in these valuations are discount rates as
well as the assumptions and estimates used to determine the cash inflows and outflows. The Group determines
discount rates to be used based on the risk inherent in the related activity’s current business model of the
acquired business and the industry comparisons. Although the Group believes that the assumptions applied in
the determination are reasonable based on information available at the date of acquisition, actual results may
differ from the forecasted amounts and the difference could be material. Details are disclosed in notes 17 and
38.
Impairment of goodwill
The Group tests annually whether goodwill has suffered any impairment in accordance with the
accounting policy stated in note 2.20. The recoverable amounts of CGU have been determined based on
value-in-use calculations. These calculations require the use of estimates about future cash flows and discount
rates. In the process of estimating expected future cash flows management makes assumptions about future
revenue and profits. These assumptions relate to future events and circumstances. The actual results may vary
and may cause a material adjustment to the carrying amount of goodwill within the next financial year.
Determining the appropriate discount rate involves estimating the appropriate adjustment for market risk and
for asset specific risk factors. In addition, the estimated cash flows and discount rate are subject to higher
degree of estimation uncertainties due to uncertainty on how the trends in inflation and market interest rates
may progress or evolve. Details of the estimates of the recoverable amounts of CGU containing goodwill are
disclosed in note 17.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 477 ---
Useful lives of property, plant and equipment (other than right-of-use assets) and intangible assets
The Group depreciates the property, plant and equipment (other than right-of-use assets) and intangible
assets over the estimated useful lives, using the straight-line method, commencing from the date the property,
plant and equipment and intangible assets are available for use. The estimated useful life reflects the directors’
estimates of the periods that the Group intends to derive future economic benefits from the use of the Group’s
property, plant and equipment (other than right-of-use assets) and intangible assets. The Group assesses
annually the useful lives of property, plant and equipment (other than right-of-use assets) and intangible assets,
and if the expectation differs from the original estimate, such a difference may impact the depreciation for the
Track Record Period and the future period.
Estimation of fair value of share option at the date of grant
The Company used the Black-Scholes Option Pricing Model to determine the fair value of the share
options as at the grant date, which is to be recorded in profit or loss over the vesting period. The model inputs
are set out in note 34(b). During the years ended 31 December 2022, 2023, 2024 and six months ended 30 June
2025, RMB4,976,000, RMB990,000, RMB2,424,000 and RMB3,499,000 of employee compensation expenses,
have been recognised in profit or loss respectively.
Estimation of fair value of other financial assets
As at 31 December 2022, 2023, 2024 and 30 June 2025, financial assets at FVTPL that are not traded
in an active market including unlisted equity investments were carried at fair value of RMB4,560,000,
RMB14,560,000, RMB14,560,000 and RMB14,560,000 respectively. The fair values are determined by using
valuation techniques, details of which are set out in note 39.7. This involves developing estimates and
assumptions consistent with how market participants would price the instrument. The Group bases its
assumptions on observable data as far as possible but this is not always available. In that case the Group uses
the best information available. Estimated fair values may vary from the actual prices that would be achieved
in an arm’s length transaction at each reporting date.
4.2 Critical accounting judgements
Capitalisation of research and development activities
Determining the development costs, including the time and costs for individual projects, to be
capitalised requires estimations and assumptions based on the expected future economic benefits to be
generated by the products resulting from these development costs. Other important estimations and
assumptions in this assessment process are the feasibility of mass production, the distinction between research
and development and the estimated useful life.
Careful judgement by the Group’s management is applied when deciding whether the recognition
requirements for development costs have been met. This is necessary as the economic success of any product
development is uncertain and may be subject to future technical problems at the time of recognition.
Judgements are based on the best information available at each reporting date. In addition, all internal
activities related to the research and development of new software, products or know how are continuously
monitored by the Group’s management.
Determination of the lease term in lease contracts and discount rate
In determining the lease term, management considers all facts and circumstances that create an
economic incentive to exercise an extension options, or not exercise a termination option. Factors considered
include:
– contractual terms and conditions for the optional periods compared with market rates (e.g.
whether the amount of payments in the optional periods is below the market rates);
– the extent of leasehold improvements undertaken by the Group;
– costs relating to termination of the lease (e.g. relocation costs, costs of identifying another
underlying asset suitable for the Group’s needs); and
APPENDIX I ACCOUNTANTS’ REPORT
– I-35 –


--- page 478 ---
– extension options (or periods after termination options) are only included in the lease term if the
lease is reasonably certain to be extended (or not terminated), which in turn affect the carrying
amounts of lease liabilities and corresponding right-of-use assets.
In determining the discount rate, the Group is required to exercise considerable judgement in relation
to determining the discount rate taking into account the nature of the underlying assets and the terms and
conditions of the leases, at both the commencement date and effective date of the modification.
5. REVENUE AND SEGMENT INFORMATION
5.1 Revenue
During the Track Record Period, the Group was mainly engaged in the design, manufacture, and sale of
broadband, wireless, and photonics products. Revenue from contracts with customers recognised at a point in time.
Y ear ended 31 December
Six months ended
30 June
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Types of goods
– Broadband products /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,059,278 1,827,146 2,032,689 975,732 1,192,642
– Wireless products /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,056,051 718,518 1,052,400 551,193 415,166
– Photonics products /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118478,215 446,680 491,527 202,041 394,216
– Others (note) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118190,195 93,018 73,273 32,442 31,999
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,783,739 3,085,362 3,649,889 1,761,408 2,034,023
Note: Primarily included carrier-grade ethernet switches and edge computing products.
The Group has also applied the practical expedient in paragraph 121(a) of IFRS 15 to its sales contracts such
that the above information does not include information about revenue that the Group will be entitled to when it
satisfies the remaining performance obligations under the contracts for sales of products that had an original expected
duration of one year or less.
5.2 Segment information
During the Track Record Period, the executive directors of the Company, being the CODM reviews the overall
results of the Group as a whole to make decisions about resources allocation. Accordingly, other than the entity-wide
disclosure, no segment analysis is presented.
Geographical information
The following table sets out the geographical information of the Group’s revenue during the Track
Record Period, which was determined based on geographical region of the customers.
Y ear ended 31 December
Six months ended
30 June
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Geographical markets
Chinese Mainland /H1118/H1118/H1118/H1118/H1118/H1118647,799 331,358 270,360 133,832 121,824
Other countries/other
regions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,135,940 2,754,004 3,379,529 1,627,576 1,912,199
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,783,739 3,085,362 3,649,889 1,761,408 2,034,023
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 479 ---
The following table sets out information about the Group’s property, plant and equipment, right-of-use
assets, prepaid lease payments, goodwill, intangible assets and deposits for acquisition of property, plant and
equipment and intangible assets (“specified non-current assets”). The geographical location of the specified
non-current assets is based on the physical location of the assets or the location of operations. In the case of
property, plant and equipment, prepaid lease payments, deposits for acquisition of property, plant and
equipment, and right-of-use assets, the physical location of the assets, in the case of goodwill and intangible
assets and deposits for acquisition of intangible assets, the location of operations.
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Geographical locations
Chinese Mainland /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118848,294 786,837 914,338 1,212,240
Other countries/other regions /H1118 522,208 648,498 594,297 601,260
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,370,502 1,435,335 1,508,635 1,813,500
Information about major customers
The following table sets out the revenue from the Group’s customers which individually contributed
over 10% of the Group’s revenue during the Track Record Period.
Y ear ended 31 December
Six months ended
30 June
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Customer A /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,269,705 1,114,738 1,525,833 736,344 848,919
Customer B /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118471,107 630,150 N/A* 184,532 380,126
Customer C /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118N/A* N/A* 471,561 229,460 N/A*
Customer D /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118N/A* N/A* N/A* N/A* 223,592
* Revenue from the customer during the year/period did not individually exceeds 10% of the
Group’s revenue.
6. OTHER INCOME AND OTHER GAINS/(LOSS), NET
Y ear ended 31 December
Six months ended
30 June
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Other income
Government subsidies (note a) /H1118/H1118/H1118/H1118/H1118/H111816,575 10,096 30,950 26,758 9,570
Interest income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,411 7,293 16,399 11,023 3,527
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,020 1,493 2,314 1,119 1,330
20,006 18,882 49,663 38,900 14,427
Other gains/(loss), net
Exchange gains/(loss), net /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111835,010 31,790 14,436 (10,142) 13,652
Gain on disposal of subsidiary (note b) – – 6,281 – –
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(234) (657) 3,741 3,051 313
34,776 31,133 24,458 (7,091) 13,965
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 480 ---
Notes:
a. In addition to the government subsidies received in relation to the acquisition and/or construction of
property, plant and equipment, the Group also received government grants for supporting the Group’s
operation unconditionally. During the year ended 31 December 2024, the Group received
RMB15,000,000 from the Commission of China-Singapore Jiashan Modern Industrial Park for its
operation.
b. During the year ended 31 December 2024, the Group disposed a wholly-owned subsidiary.
7. FINANCE COSTS
Y ear ended 31 December
Six months ended
30 June
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Interests on bank borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H111839,115 34,923 43,640 27,058 20,865
Interests on other borrowings /H1118/H1118/H1118/H1118/H1118/H111813,247 21,941 1,498 1,104 –
Interests on lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,541 4,259 7,752 3,970 3,398
57,903 61,123 52,890 32,132 24,263
8. PROFIT BEFORE INCOME TAX
Profit before income tax is arrived at after charging/(crediting):
Y ear ended 31 December
Six months ended
30 June
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Auditors’ remuneration /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,918 3,096 3,147 1,643 1,415
Depreciation:
– Owned assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118141,714 130,583 123,951 63,168 58,743
– Right-of-use assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111849,396 50,688 42,470 21,698 12,066
Total depreciation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118191,110 181,271 166,421 84,866 70,809
Amortisation of intangible assets /H1118/H1118/H1118/H1118/H1118103,341 112,791 127,825 67,886 69,232
Amortisation of prepaid lease payment /H1118 – 59 711 356 356
Cost of inventories recognised as an
expense /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,605,292 2,056,286 2,471,156 1,175,488 1,308,116
Listing expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––– 2,147
Provision for inventories /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818,512 3,741 6,510 1,979 5,124
Reversal of provision for inventories /H1118/H1118 – – (2,396) (194) (1,755)
Total provision, net /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818,512 3,741 4,114 1,785 3,369
Lease charges:
– Short-term leases /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,009 3,871 5,888 2,184 14,621
Reversal of ECL allowances on bills
receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (97) (155) (58)
ECL allowances on bills receivables /H1118/H1118 – 1 5 5–––
Reversal of ECL allowances on trade
receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(25,353) (4,864) – – –
ECL allowances on trade receivables /H1118/H1118 – – 1,627 2,274 4,367
Reversal of ECL allowances on
deposits and other receivables /H1118/H1118/H1118/H1118(2,398) – (179) – –
ECL allowances on deposits and other
receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 11 – 2,169 1,278
Total (reversal)/provision, net /H1118/H1118/H1118/H1118/H1118/H1118(27,751) (4,698) 1,351 4,288 5,587
APPENDIX I ACCOUNTANTS’ REPORT
– I-38 –


--- page 481 ---
9. INCOME TAX EXPENSE/(CREDIT)
Y ear ended 31 December
Six months ended
30 June
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Current tax
PRC enterprise income tax (“EIT”) /H1118/H1118/H11183,650 84 303 11 –
US income tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,135 1,816 3,205 – 2,723
Japan corporate income tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,732 (1,321) 82 – –
Germany income tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 1 0–––
13,517 589 3,590 11 2,723
(Over)/Under provision for prior year
PRC EIT /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (80) – 83
US income tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–– 3 0– 6 0
– – (50) – 143
13,517 589 3,540 11 2,866
Deferred taxation
Origination and reversal of temporary
difference (note 31) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(6,111) (1,640) (7,146) (1,418) (1,316)
Income tax expense/(credit) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,406 (1,051) (3,606) (1,407) 1,550
(a) PRC EIT
The Company was accredited as High and New Technology Enterprise on 12 December 2020 and 15 November
2023, and therefore entitled to a preferential tax rate of 15% for three years ended 15 November 2023 and 15
November 2026, respectively. The Group’s other PRC subsidiaries are subject to the PRC enterprise income tax at
the standard rate of 25% on the estimated assessable profits.
In addition, according to relevant laws and regulations in the PRC, enterprises engaging in research and
development activities are entitled to claim 200% of the research and development expenses so incurred as tax
deductible expenses when determining their assessable profits for that year.
(b) US income tax
The applicable state income tax rate in the United States, where the Company’s subsidiaries have significant
operations for the years ended 31 December 2022, 2023, 2024 and six months ended 30 June 2025, ranges from
4%-8.99%, while the federal income tax rate is 21%.
(c) Japan corporate income tax
Japan corporate income tax include national corporate income tax, inhabitants tax, and enterprise tax, and has
been calculated on the estimated assessable profit for the year. During the Track Record Period, the aggregated rates
of national corporate income tax, inhabitants tax, and enterprise tax resulted in statutory income tax rate of 35%.
(d) Hong Kong profit tax
During the Track Record Period, no Hong Kong profit tax has been provided as the Company’s subsidiaries
have no assessable profit for the years ended 31 December 2022, 2023, 2024 and six months ended 30 June 2025.
(e) Germany income tax
Germany taxes its corporate residents on their worldwide income. Corporation tax is levied at a uniform rate
of 15% and is then subject to a surcharge (solidarity surcharge). This results in a total tax rate of 19%.
APPENDIX I ACCOUNTANTS’ REPORT
– I-39 –


--- page 482 ---
Reconciliation between tax expense/(credit) and accounting profit at applicable tax rates is as follow:
Y ear ended 31 December
Six months ended
30 June
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Profit before income tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118178,512 93,914 163,435 83,172 119,096
Tax on profit before income tax,
calculated at the Company’s rate,
15% /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826,777 14,087 24,515 12,476 17,864
Tax effect of non-deductible expenses /H1118 102 461 117 752 50
Tax effect of tax losses/deductible
temporary differences not
recognised /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814,278 15,922 7,275 5,615 15,258
Utilisation of tax losses previously not
recognised /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(42,751) (2,723) (3,568) (3,019) (9,726)
Effect of different tax rates of
subsidiaries operating in other
jurisdictions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111830,522 (1,274) (2,816) (2,801) (2,203)
Research and development expenses
and other additional deduction as
required by taxation laws /H1118/H1118/H1118/H1118/H1118/H1118/H1118(21,262) (28,887) (29,510) (14,266) (14,880)
(Over)/Under-provision in prior year /H1118/H1118 – – (50) – 143
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(260) 1,363 431 (164) (4,956)
Income tax expense/(credit) /H1118/H1118/H1118/H1118/H1118/H1118/H11187,406 (1,051) (3,606) (1,407) 1,550
10. EMPLOYEE BENEFIT EXPENSES (INCLUDING DIRECTORS’ EMOLUMENTS)
Y ear ended 31 December
Six months ended
30 June
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Wages, salaries and bonuses /H1118/H1118/H1118/H1118/H1118/H1118/H1118322,449 309,979 289,967 155,489 167,529
Share based payment expenses /H1118/H1118/H1118/H1118/H1118/H111820,596 35,027 12,034 5,042 3,499
Contribution to retirement benefit
schemes /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111836,388 29,818 49,637 24,141 28,687
Other employee benefits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111842,788 33,323 50,300 26,790 28,258
422,221 408,147 401,938 211,462 227,973
11. DIRECTORS’ EMOLUMENTS AND FIVE HIGHEST PAID INDIVIDUALS
11.1 Directors’ Emoluments
The emoluments paid or payable to each of the directors and supervisors were as follows:
Y ear ended 31 December 2022
Fees
Salaries and
other benefits
Retirement
benefit scheme
contributions
Equity-settled
share-based
payment
expenses Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Executive directors
Gerald G Wong (chairman) /H1118/H1118/H1118/H1118– 2,610 – – 2,610
Zhao Haibo /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 1,707 65 – 1,772
APPENDIX I ACCOUNTANTS’ REPORT
– I-40 –


--- page 483 ---
Y ear ended 31 December 2022
Fees
Salaries and
other benefits
Retirement
benefit scheme
contributions
Equity-settled
share-based
payment
expenses Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Wang Zhibo (i) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 389 20 11 420
Xie Chong (ii) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 1,410 – 177 1,587
Zhang Jie (iii) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 514 35 131 680
Independent non-executive
directors
Liu Guisong /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188 0––– 8 0
Qin Guisen /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188 0––– 8 0
Y ao Minglong /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188 0––– 8 0
Supervisors
Ge Y unrui (v) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 121 18 – 139
Li Peng (iv) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 2 43– 2 7
Y ang Xudi (ix) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 639 65 – 704
Zhang Deyong (ix) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 705 65 – 770
240 8,119 271 319 8,949
Y ear ended 31 December 2023
Fees
Salaries and
other benefits
Retirement
benefit scheme
contributions
Equity-settled
share-based
payment
expenses Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Executive directors
Gerald G Wong (chairman) /H1118/H1118/H1118/H1118– 2,610 – – 2,610
Xie Chong (ii) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 1,464 – 249 1,713
Zhang Jie (iii) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 985 70 255 1,310
Zhao Haibo /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 1,711 70 – 1,781
Independent non-executive
directors
Liu Guisong /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188 0––– 8 0
Qin Guisen /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188 0––– 8 0
Y ao Minglong /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188 0––– 8 0
Supervisors
Y uan Y uan (vi) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–9 11 2 – 1 0 3
Li Peng (iv) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 5 46– 6 0
Y ang Xudi (ix) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 713 70 – 783
Zhang Deyong (ix) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 705 70 – 775
240 8,333 298 504 9,375
APPENDIX I ACCOUNTANTS’ REPORT
– I-41 –


--- page 484 ---
Y ear ended 31 December 2024
Fees
Salaries and
other benefits
Retirement
benefit scheme
contributions
Equity-settled
share-based
payment
expenses Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Executive directors
Gerald G Wong (chairman) /H1118/H1118/H1118/H1118– 2,611 – – 2,611
Xie Chong (ii) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 552 – 29 581
Zhao Haibo /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 1,711 73 – 1,784
Zhao Hongwei (vii) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 775 46 12 833
Zhang Jie (iii) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 1,081 73 75 1,229
Independent non-executive
directors
Liu Guisong /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189 2––– 9 2
Qin Guisen /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189 2––– 9 2
Y ao Minglong /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189 2––– 9 2
Supervisors
Yin Ying (viii) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 132 14 – 146
Y ang Xudi (ix) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 313 27 – 340
Y uan Y uan (vi) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 155 19 – 174
Wang Huan (viii) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 120 14 – 134
Zhang Deyong (ix) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 328 27 – 355
276 7,778 293 116 8,463
Six months ended 30 June 2024 (unaudited)
Fees
Salaries and
other benefits
Retirement
benefit scheme
contributions
Equity-settled
share-based
payment
expenses Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Executive directors
Gerald G Wong (chairman) /H1118/H1118/H1118/H1118– 1,306 – – 1,306
Xie Chong (ii) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 552 – 29 581
Zhao Haibo /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 856 36 – 892
Zhao Hongwei (vii) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 183 36 5 224
Zhang Jie (iii) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 537 36 34 607
Independent non-executive
directors
Liu Guisong /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184 2––– 4 2
Qin Guisen /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184 2––– 4 2
Y ao Minglong /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184 2––– 4 2
Supervisors
Yin Ying (viii) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 2 73– 3 0
Y ang Xudi (ix) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 313 27 – 340
Y uan Y uan (vi) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 7 49– 8 3
Wang Huan (viii) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 2 93– 3 2
Zhang Deyong (ix) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 328 27 – 355
126 4,205 177 68 4,576
APPENDIX I ACCOUNTANTS’ REPORT
– I-42 –


--- page 485 ---
Six months ended 30 June 2025
Fees
Salaries and
other benefits
Retirement
benefit scheme
contributions
Equity-settled
share-based
payment
expenses Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Executive directors
Gerald G Wong (chairman) /H1118/H1118/H1118/H1118– 1,305 – – 1,305
Zhao Haibo /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 855 37 – 892
Zhao Hongwei (vii) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 619 37 15 671
Zhang Jie (iii) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 548 37 15 600
Independent non-executive
directors
Liu Guisong /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185 0––– 5 0
Qin Guisen /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185 0––– 5 0
Y ao Minglong /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185 0––– 5 0
Supervisors
Yin Ying (viii) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 100 11 – 111
Y uan Y uan (vi) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–7 11 0 –8 1
Wang Huan (viii) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–9 51 2 – 1 0 7
150 3,593 144 30 3,917
(i) Wang Zhibo was resigned as director of the Company on 28 April 2022.
(ii) Xie Chong was resigned as director of the Company on 14 June 2024.
(iii) Zhang Jie was appointed as director of the Company on 28 June 2022.
(iv) Li Peng was appointed and resigned as supervisor on 31 October 2022 and 25 April 2023 respectively.
(v) Ge Y unrui was resigned as supervisor on 31 October 2022.
(vi) Y uan Y uan was appointed as supervisor on 25 April 2023.
(vii) Zhao Hongwei was appointed as director of the Company on 14 June 2024.
(viii) Yin Ying and Wang Huan were appointed as supervisor on 17 May 2024.
(ix) Y ang Xudi and Zhang Deyong were resigned as supervisor on 17 May 2024.
(x) On 16 June 2025, at an extraordinary shareholders’ meeting, resolution was made to dismiss the
supervisory board.
APPENDIX I ACCOUNTANTS’ REPORT
– I-43 –


--- page 486 ---
11.2 Five highest paid individuals emoluments
The five individuals whose emoluments were the highest in the Group for the years ended 31 December 2022,
2023, 2024 and six months ended 30 June 2024 and 2025 include 1, 1, 1, 1 and 1 director whose emoluments were
disclosed in Note 11.1 above. The aggregate of the emoluments of the remaining 4, 4, 4, 4 and 4 individuals for the
years ended 31 December 2022, 2023 and 2024 and six months ended 30 June 2024 and 2025 were as follows:
Y ear ended 31 December
Six months ended
30 June
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Wages, salaries and bonuses /H1118/H1118/H1118/H1118/H1118/H1118/H111810,885 10,859 9,101 4,551 4,790
Share based payment expenses /H1118/H1118/H1118/H1118/H1118/H111839 179 182 55 67
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810,924 11,038 9,283 4,606 4,857
The above individuals’ emoluments are within the following band:
Y ear ended 31 December
Six months ended
30 June
2022 2023 2024 2024 2025
(Unaudited)
HK$2,000,001 to HK$2,500,000 /H1118/H1118/H1118/H1118––333
HK$2,500,001 to HK$3,000,000 /H1118/H1118/H1118/H111821111
HK$3,000,001 to HK$3,500,000 /H1118/H1118/H1118/H111813–––
HK$3,500,001 to HK$4,000,000 /H1118/H1118/H1118/H1118–––––
HK$4,000,001 to HK$4,500,000 /H1118/H1118/H1118/H11181––––
No director or the five highest paid individual received any emoluments from the Group as an inducement to
join or upon joining the Group or as compensation for loss of office during the Track Record Period. No director or
the five highest paid individual has waived or agreed to waive any emoluments during the Track Record Period.
12. DIVIDENDS
(a) Dividends attributable to the Track Record Period
Y ear ended 31 December
Six months ended
30 June
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Ordinary A shares
Interim dividend of RMB0.3
per 10 shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 8,041 – –
(b) Dividends attributable to the previous financial year, approved and paid during the Track Record Period
Y ear ended 31 December Six months ended 30 June
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Ordinary A shares
Final dividend in respect of the
previous financial year, of
– RMB1.33 per 10 shares /H1118/H1118/H1118/H1118/H1118/H1118– – 35,650 35,650 –
– RMB0.22 per share /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––– 58,969
APPENDIX I ACCOUNTANTS’ REPORT
– I-44 –


--- page 487 ---
The final dividend of RMB1.33 per 10 shares, totaling RMB35,650,000, for the year ended 31 December 2023
proposed after the 31 December 2023 has not been recognised as a liability as at 31 December 2023.
The final dividend of RMB0.22 per share, totaling RMB58,969,000, for the year ended 31 December 2024
proposed after the 31 December 2024 has not been recognised as a liability as at 31 December 2024.
13. EARNINGS PER SHARE
(a) Basic
Basic earnings per share (“EPS”) is calculated by dividing the profit attributable to owners of the Company
by the weighted average number of ordinary shares in issue excluding shares held for share award schemes during
the Track Record Period.
Y ear ended 31 December
Six months ended
30 June
2022 2023 2024 2024 2025
(Unaudited)
Profit attributable to owners of the
Company (RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118171,106 95,018 166,681 80,004 120,905
Weighted average number of ordinary
shares in issue excluding shares held
for share award schemes (thousand
shares) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118252,221 258,347 264,417 263,719 265,593
Basic EPS (RMB per share) /H1118/H1118/H1118/H1118/H1118/H1118/H11180.68 0.37 0.63 0.30 0.46
(b) Diluted
The restricted shares incentive and shares options schemes (see note 34) granted by the Company have
potential dilutive effect on the EPS. Diluted EPS is calculated by adjusting the weighted average number of ordinary
shares outstanding by the assumption of the conversion of all potential dilutive ordinary shares arising from share
schemes (collectively forming the denominator for computing the diluted EPS).
Y ear ended 31 December
Six months ended
30 June
2022 2023 2024 2024 2025
(Unaudited)
Profit attributable to owners of the
Company (RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118171,106 95,018 166,681 80,004 120,905
Weighted average number of ordinary
shares in issue excluding shares held
for share award schemes (thousand
shares) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118252,221 258,347 264,417 263,719 265,593
Adjustments for share options and
awarded shares (thousand shares) /H1118/H11189,352 9,504 7,247 2,964 11,764
Weighted average number of ordinary
shares used in calculating diluted
EPS (thousand shares) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118261,573 267,851 271,664 266,683 277,357
Diluted EPS (RMB per share) /H1118/H1118/H1118/H1118/H1118/H11180.65 0.35 0.61 0.30 0.44
APPENDIX I ACCOUNTANTS’ REPORT
– I-45 –


--- page 488 ---
14. PROPERTY, PLANT AND EQUIPMENT
The Group
Building
Machinery and
equipment
Computer
equipment
Leasehold
improvements Motor vehicles
Office
equipment
Construction
in progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at 1 January 2022
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111892,581 937,291 61,382 111,617 1,013 6,982 119,672 1,330,538
Accumulated depreciation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(32,018) (435,309) (55,110) (76,523) (1,013) (5,015) – (604,988)
Net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111860,563 501,982 6,272 35,094 – 1,967 119,672 725,550
Y ear ended 31 December 2022
Opening net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111860,563 501,982 6,272 35,094 – 1,967 119,672 725,550
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 27,072 3,643 411 – 219 3,551 34,896
Additions through acquisition of
subsidiaries (note 38) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 101 – 59 6 – 166
Transfer /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 63,298 2,01 0––7 (65,315) –
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (6,267) (135) – – (79) – (6,481)
Depreciation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(4,629) (121,582) (3,625) (11,022) – (856) – (141,714)
Closing net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111855,934 464,503 8,266 24,483 59 1,264 57,908 612,417
As at 31 December 2022 and
1 January 2023
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111892,581 1,006,620 64,150 112,028 1,072 6,900 57,908 1,341,259
Accumulated depreciation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(36,647) (542,117) (55,884) (87,545) (1,013) (5,636) – (728,842)
Net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111855,934 464,503 8,266 24,483 59 1,264 57,908 612,417
Y ear ended 31 December 2023
Opening net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111855,934 464,503 8,266 24,483 59 1,264 57,908 612,417
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 8,846 317 – – 14 43,014 52,191
Transfer /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 74,891 2,074 – – 32 (76,997) –
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (8,491) (409) – – (36) – (8,936)
Depreciation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(4,629) (110,313) (3,578) (11,270) (5) (788) – (130,583)
Closing net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111851,305 429,436 6,670 13,213 54 486 23,925 525,089
APPENDIX I ACCOUNTANTS’ REPORT
– I-46 –


--- page 489 ---
Building
Machinery and
equipment
Computer
equipment
Leasehold
improvements Motor vehicles
Office
equipment
Construction
in progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at 31 December 2023 and
1 January 2024
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111892,581 1,041,679 63,791 112,028 1,072 6,703 23,925 1,341,779
Accumulated depreciation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(41,276) (612,243) (57,121) (98,815) (1,018) (6,217) – (816,690)
Net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111851,305 429,436 6,670 13,213 54 486 23,925 525,089
Y ear ended 31 December 2024
Opening net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111851,305 429,436 6,670 13,213 54 486 23,925 525,089
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 21,492 1,810 3,047 1,057 3,102 228,999 259,507
Transfer /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 24,773 705 – – 79 (25,557) –
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (3,265) (962) – – (172) – (4,399)
Depreciation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(4,629) (104,255) (3,143) (11,291) (1) (632) – (123,951)
Exchange differences /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (509) (34) – – (137) – (680)
Closing net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111846,676 367,672 5,046 4,969 1,110 2,726 227,367 655,566
As at 31 December 2024 and
1 January 2025
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111892,581 1,028,575 55,777 115,075 2,129 7,199 227,367 1,528,703
Accumulated depreciation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(45,905) (660,903) (50,731) (110,106) (1,019) (4,473) – (873,137)
Net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111846,676 367,672 5,046 4,969 1,110 2,726 227,367 655,566
Six months ended 30 June 2025
Opening net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111846,676 367,672 5,046 4,969 1,110 2,726 227,367 655,566
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 13,640 1,764 121 9 16 346,135 361,685
Transfer /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118205,133 36,482 830 – – 23 (242,468) –
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (1,231) (5) – (555) – – (1,791)
Depreciation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(2,315) (52,256) (1,285) (2,502) (71) (314) – (58,743)
Exchange differences /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 297 46 – – 182 – 525
Closing net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118249,494 364,604 6,396 2,588 493 2,633 331,034 957,242
As at 30 June 2025
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118297,714 1,076,984 57,628 115,196 1,583 7,403 331,034 1,887,542
Accumulated depreciation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(48,220) (712,380) (51,232) (112,608) (1,090) (4,770) – (930,300)
Net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118249,494 364,604 6,396 2,588 493 2,633 331,034 957,242
APPENDIX I ACCOUNTANTS’ REPORT
– I-47 –


--- page 490 ---
The Company
Building
Machinery and
equipment
Computer
equipment
Leasehold
improvements Motor vehicles
Office
equipment
Construction in
progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at 1 January 2022
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111892,581 791,791 54,675 95,653 1,013 2,343 114,884 1,152,940
Accumulated depreciation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(32,018) (360,772) (49,857) (66,664) (1,013) (2,327) – (512,651)
Net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111860,563 431,019 4,818 28,989 – 16 114,884 640,289
Y ear ended 31 December 2022
Opening net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111860,563 431,019 4,818 28,989 – 16 114,884 640,289
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 19,189 2,752 411 – 7 48,799 71,158
Transfer /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 63,141 7 1––– (63,212) –
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (3,701) (82) –––– (3,783)
Depreciation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(4,629) (93,736) (2,938) (9,232) – (9) – (110,544)
Closing net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111855,934 415,912 4,621 20,168 – 14 100,471 597,120
As at 31 December 2022 and
1 January 2023
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111892,581 857,171 54,813 96,064 1,013 2,115 100,471 1,204,228
Accumulated depreciation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(36,647) (441,259) (50,192) (75,896) (1,013) (2,101) – (607,108)
Net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111855,934 415,912 4,621 20,168 – 14 100,471 597,120
Y ear ended 31 December 2023
Opening net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111855,934 415,912 4,621 20,168 – 14 100,471 597,120
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 8,846 31 7––– 34,034 43,197
Transfer /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 65,551 1,757 – – 556 (67,864) –
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (4,798) (67) –––– (4,865)
Depreciation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(4,629) (90,708) (2,684) (8,949) – (5) – (106,975)
Closing net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111851,305 394,803 3,944 11,219 – 565 66,641 528,477
APPENDIX I ACCOUNTANTS’ REPORT
– I-48 –


--- page 491 ---
Building
Machinery and
equipment
Computer
equipment
Leasehold
improvements Motor vehicles
Office
equipment
Construction in
progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at 31 December 2023 and
1 January 2024
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111892,581 901,832 54,502 96,064 1,013 2,553 66,641 1,215,186
Accumulated depreciation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(41,276) (507,029) (50,558) (84,845) (1,013) (1,988) – (686,709)
Net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111851,305 394,803 3,944 11,219 – 565 66,641 528,477
Y ear ended 31 December 2024
Opening net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111851,305 394,803 3,944 11,219 – 565 66,641 528,477
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 13,618 1,810 – 1,055 15 101,159 117,657
Transfer /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 68,383 229 – – 79 (68,691) –
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (56,076) (574) – – (79) – (56,729)
Depreciation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(4,629) (91,689) (2,576) (9,007) – (12) – (107,913)
Closing net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111846,676 329,039 2,833 2,212 1,055 568 99,109 481,492
As at 31 December 2024 and
1 January 2025
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111892,581 870,781 46,868 96,064 1,716 2,507 99,109 1,209,626
Accumulated depreciation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(45,905) (541,742) (44,035) (93,852) (661) (1,939) – (728,134)
Net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111846,676 329,039 2,833 2,212 1,055 568 99,109 481,492
Six months ended 30 June 2025
Opening net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111846,676 329,039 2,833 2,212 1,055 568 99,109 481,492
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 12,412 1,555 – 9 16 171,634 185,626
Transfer /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 30,512 830 – – 22 (31,364) –
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (15,348) (318) – (555) – – (16,221)
Depreciation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(2,314) (46,051) (978) (2,212) (63) (6) – (51,624)
Closing net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111844,362 310,564 3,922 – 446 600 239,379 599,273
As at 30 June 2025
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111892,581 893,562 48,111 96,064 1,170 2,418 239,379 1,373,285
Accumulated depreciation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(48,219) (582,998) (44,189) (96,064) (724) (1,818) – (774,012)
Net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111844,362 310,564 3,922 – 446 600 239,379 599,273
APPENDIX I ACCOUNTANTS’ REPORT
– I-49 –


--- page 492 ---
15. RIGHT-OF-USE ASSETS
The Group
Premises and building
RMB’000
As at 1 January 2022
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118170,605
Accumulated depreciation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(53,295)
Net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118117,310
Y ear ended 31 December 2022
Opening net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118117,310
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,401
Depreciation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(49,396)
Closing net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111879,315
As at 31 December 2022 and 1 January 2023
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118182,006
Accumulated depreciation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(102,691)
Net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111879,315
Y ear ended 31 December 2023
Opening net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111879,315
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118154,731
Early termination of a lease /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(2,046)
Depreciation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(50,688)
Closing net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118181,312
As at 31 December 2023 and 1 January 2024
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118308,452
Accumulated depreciation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(127,140)
Net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118181,312
Y ear ended 31 December 2024
Opening net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118181,312
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188,541
Early termination of a lease /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(162)
Depreciation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(42,470)
Exchange differences /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,484
Closing net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118148,705
As at 31 December 2024 and 1 January 2025
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118239,137
Accumulated depreciation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(90,432)
Net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118148,705
Six months ended 30 June 2025
Opening net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118148,705
Addition /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,569
Modifications /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118753
Depreciation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(12,066)
Exchange differences /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(104)
Closing net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118138,857
As at 30 June 2025
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118241,028
Accumulated depreciation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(102,171)
Net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118138,857
APPENDIX I ACCOUNTANTS’ REPORT
– I-50 –


--- page 493 ---
16. PREPAID LEASE PAYMENTS
The Group
The prepaid lease payments represent prepayments in relation to leases of land in the PRC. The prepaid lease
payments fall into the scope of IFRS 16 “Leases” as it meets the definition of right-of-use assets. The movements
in their net carrying amounts are analysed as follows:
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Opening net carrying amount /H1118/H1118/H1118/H1118/H1118– – 35,506 34,795
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 35,565 – –
Amortisation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (59) (711) (356)
Closing net carrying amount /H1118/H1118/H1118/H1118/H1118– 35,506 34,795 34,439
17. GOODWILL
The Group
RMB’000
At 1 January 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–
Arising on acquisition through business combination (note 38) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111898,969
At 31 December 2022, 1 January 2023, 31 December 2023, 1 January 2024, 31
December 2024, 1 January 2025 and 30 June 2025 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111898,969
Note: During the year ended 31 December 2022, the Group completed the acquisition of subsidiaries (see note
38).
Goodwill of RMB98,969,000 has been allocated to respective CGU of the subsidiaries acquired for impairment
testing. Management assess the recoverable amounts of the goodwill as of December 31, 2022, 2023, 2024 and 30
June 2025. The recoverable amount of the CGUs is determined based on value in use calculations based on five-year
financial budgets. The management did not assume any growth to the cash flows subsequent to the five-year period.
The following table sets forth each key assumptions of CGUs on which management has based its cash flow
projections to undertake impairment testing of goodwill:
As at 31 December As at 30 June
2022 2023 2024 2025
Revenue annual growth rate
during the forecast period
(note) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(11.63%)-14.01% 0%-14.01% 0%-73.30% 0%-21.91%
Pre-tax discount rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111817.88% 18.97% 19.83% 18.04%
Note: In preparation of impairment assessment as at 31 December 2022, management considered the major
customers has still in the process of consumption of the inventories accumulated during the pandemic,
negative revenue annual growth rate adopted for the expected revenue generated during the year ended
31 December 2023.
As of December 31, 2022, 2023, 2024 and 30 June 2025, based on the value-in-use calculations, the
recoverable amount exceeded the carrying amount by RMB5,691,000, RMB30,468,000, RMB449,311,000 and
RMB456,989,000, respectively.
APPENDIX I ACCOUNTANTS’ REPORT
– I-51 –


--- page 494 ---
Key assumptions for value in use calculations
Assumptions were used in the value-in-use calculation of the CGUs for the Track Record Period. The
key assumptions used in the value in use calculations reflect a combination of internal and external factors
impacting revenue annual growth rates and discount rates. The following describes each key assumption on
which management has based its cash flow projections to undertake impairment testing of goodwill:
Revenue annual growth rates — The basis used to determine revenue annual growth rates is the average
results achieved in the year immediately before the budget year, increased for expected efficiency
improvements, and expected product and market development. The expected revenue annual growth rates
increased significantly is mainly due to new products development.
Pre-tax discount rate — The cash flow projections are discounted using pre-tax discount rate of 17.88%,
18.97%, 19.83% and 18.04% as at 31 December 2022, 2023, 2024 and 30 June 2025, respectively. The discount
rates reflect the current market assessments of the time value of money and are based on the estimated cost
of capital.
Sensitivity analysis
Management of the Company has performed sensitivity test by decreasing 2% of revenue annual growth
rates or increasing 1% of discount rate, with all other key assumptions held constant. The impacts on the
amount by which CGU’s recoverable amount exceed its carrying amount (“headroom”) are as below:
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Revenue annual growth rates
decreased by 2% /H1118/H1118/H1118/H1118/H1118/H1118/H1118(4,918) (7,024) (29,683) (33,272)
Pre-tax discount rate
increased by 1% /H1118/H1118/H1118/H1118/H1118/H1118/H1118(3,630) (4,918) (21,359) (22,370)
The headroom corresponding to the impact of the above key assumptions are as follows:
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Headroom – decreasing
revenue annual growth rates
by 2% /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118773 23,444 419,628 423,717
Headroom – increasing pre-
tax discount rate by 1% /H1118/H1118/H11182,061 25,550 427,952 434,619
Based on the headroom of the impairment assessment for the Track Record Period, management of the
Company believes that any reasonably possible change in any of the key assumptions would not result in an
impairment provision of goodwill.
These sensitivity analyses are based on changing the relevant assumption while holding other
assumptions constant. In practice, this is unlikely to occur and changes in some of the assumptions may be
correlated. Considering there was still sufficient headroom based on the assessment, the management believes
there was no impairment for the goodwill as at 31 December 2022, 2023, 2024 and 30 June 2025.
Based on the results of the abovementioned assessments as conducted by management and the
independent external valuer, the directors of the Company conclude that no impairment loss on the
aforementioned goodwill is required to be recognised as at 31 December 2022, 2023, 2024 and 30 June 2025.
APPENDIX I ACCOUNTANTS’ REPORT
– I-52 –


--- page 495 ---
18. INTANGIBLE ASSETS
The Group
Patent Software
Deferred
development cost Total
RMB’000 RMB’000 RMB’000 RMB’000
As at 1 January 2022
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111865,600 156,624 610,833 833,057
Accumulated amortisation and
impairment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(26,726) (70,207) (201,596) (298,529)
Net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111838,874 86,417 409,237 534,528
Y ear ended 31 December 2022
Opening net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H111838,874 86,417 409,237 534,528
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 10,310 137,617 147,927
Additions from acquisition of a
subsidiaries (note 38) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 303 – 303
Amortisation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(9,719) (16,988) (76,634) (103,341)
Closing net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H111829,155 80,042 470,220 579,417
As at 31 December 2022 and
1 January 2023
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111865,600 167,237 748,450 981,287
Accumulated amortisation and
impairment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(36,445) (87,195) (278,230) (401,870)
Net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111829,155 80,042 470,220 579,417
Y ear ended 31 December 2023
Opening net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H111829,155 80,042 470,220 579,417
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 1,591 124,396 125,987
Amortisation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(9,718) (17,306) (85,767) (112,791)
Exchange difference /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (27) (1,162) (1,189)
Closing net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H111819,437 64,300 507,687 591,424
As at 31 December 2023 and
1 January 2024
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111865,600 168,712 871,040 1,105,352
Accumulated amortisation and
impairment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(46,163) (104,412) (363,353) (513,928)
Net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819,437 64,300 507,687 591,424
Y ear ended 31 December 2024
Opening net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H111819,437 64,300 507,687 591,424
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 1,903 88,207 90,110
Amortisation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(9,719) (15,117) (102,989) (127,825)
Exchange difference /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (85) (9,926) (10,011)
Closing net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H11189,718 51,001 482,979 543,698
As at 31 December 2024 and
1 January 2025
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111865,600 170,387 945,927 1,181,914
Accumulated amortisation and
impairment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(55,882) (119,386) (462,948) (638,216)
Net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189,718 51,001 482,979 543,698
Six months ended 30 June 2025
Opening net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H11189,718 51,001 482,979 543,698
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 678 58,349 59,027
Amortisation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(4,859) (7,496) (56,877) (69,232)
Exchange difference /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (66) 14,265 14,199
Closing net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H11184,859 44,117 498,716 547,692
As at 30 June 2025
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111865,600 171,245 1,023,944 1,260,789
Accumulated amortisation and
impairment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(60,741) (127,128) (525,228) (713,097)
Net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,859 44,117 498,716 547,692
APPENDIX I ACCOUNTANTS’ REPORT
– I-53 –


--- page 496 ---
The Company
Software
Deferred
development cost Total
RMB’000 RMB’000 RMB’000
As at 1 January 2022
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111856,766 404,248 461,014
Accumulated amortisation and impairment /H1118/H1118/H1118/H1118/H1118(27,022) (195,191) (222,213)
Net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111829,744 209,057 238,801
Y ear ended 31 December 2022
Opening net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111829,744 209,057 238,801
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118247 76,421 76,668
Amortisation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(5,272) (65,414) (70,686)
Closing net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824,719 220,064 244,783
As at 31 December 2022 and 1 January 2023
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111857,013 480,669 537,682
Accumulated amortisation and impairment /H1118/H1118/H1118/H1118/H1118(32,294) (260,605) (292,899)
Net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824,719 220,064 244,783
Y ear ended 31 December 2023
Opening net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824,719 220,064 244,783
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 70,548 70,548
Amortisation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(4,832) (77,129) (81,961)
Closing net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819,887 213,483 233,370
As at 31 December 2023 and 1 January 2024
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111857,013 551,217 608,230
Accumulated amortisation and impairment /H1118/H1118/H1118/H1118/H1118(37,126) (337,734) (374,860)
Net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819,887 213,483 233,370
Y ear ended 31 December 2024
Opening net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819,887 213,483 233,370
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,478 56,827 58,305
Amortisation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(4,736) (58,630) (63,366)
Closing net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111816,629 211,680 228,309
As at 31 December 2024 and
1 January 2025
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111858,491 608,044 666,535
Accumulated amortisation and impairment /H1118/H1118/H1118/H1118/H1118(41,862) (396,364) (438,226)
Net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111816,629 211,680 228,309
Six months ended 30 June 2025
Opening net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111816,629 211,680 228,309
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118678 36,616 37,294
Amortisation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(2,345) (28,847) (31,192)
Closing net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814,962 219,449 234,411
As at 30 June 2025
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111859,169 644,660 703,829
Accumulated amortisation and impairment /H1118/H1118/H1118/H1118/H1118(44,207) (425,211) (469,418)
Net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814,962 219,449 234,411
APPENDIX I ACCOUNTANTS’ REPORT
– I-54 –


--- page 497 ---
During the years ended 31 December 2022, 2023, 2024 and six months ended 30 June 2025, no amortisation
has been charged to cost of goods sold in the consolidated statements of profit or loss and other comprehensive
income.
Included in intangible assets, deferred development costs not yet available for use and not subject to
amortisation were RMB256,610,000, RMB286,498,000, RMB133,124,000 and RMB143,136,000 as at 31 December
2022, 2023, 2024 and 30 June 2025, respectively.
Intangible assets not yet available for use are derived from the deferred development cost incurred in research
and development projects that have not yet been completed. The Company has carried out an impairment review of
the carrying amounts of intangible assets not yet available for use as at 31 December 2022, 2023, 2024 and 30 June
2025 and no provision for impairment has been made.
The recoverable amounts of the intangible assets not yet available for use are determined based on value in
use calculations. The calculation of the recoverable amounts of the intangible assets not yet available for use uses
cash flow projections based on the financial estimates on each intangible asset not yet available for use, defined as
separate CGU made by management of the Company, with reference to the timing of commercial operation of the
products and the prevailing market conditions. The recoverable amounts of each intangible asset not yet available for
use based on the estimated value-in-use calculations was higher than the respective carrying amount at 31 December
2022, 2023, 2024 and 30 June 2025. Accordingly, no provision for impairment loss for intangible assets not yet
available for use is considered necessary.
The following table sets forth key assumptions on which management has based its cash flow projections to
undertake impairment testing of respective intangible assets not yet available for use as at 31 December 2022, 2023,
2024 and 30 June 2025:
As at 31 December As at 30 June
2022 2023 2024 2025
Average annual revenue
growth rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810%-50% 10%-330% 0%-330% 18%-97%
Pre-tax discount rate /H1118/H1118/H1118/H111812.92%-15.09% 14.14%-15.15% 13.24%-14.55% 13.32-15.50%
Based on the result of the impairment testing, the proportion of the estimated recoverable amount of the
intangible assets not yet available for use exceeded their carrying amount (“the headroom”) to their carrying amount
was as follows:
As at 31 December As at 30 June
2022 2023 2024 2025
Headroom /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813.29%-19.28% 17.28%-588.00% 21.86%-228.55% 78.36%-162.85%
Management of the Company has performed sensitivity test by decreasing 5% of expected revenue or
increasing 1% of discount rate, with all other key assumptions held constant, the recoverable amount of the intangible
assets not yet available for use would have exceeded their carrying amount.
The management believes that any reasonable possible change in any of the key assumptions would not cause
the carrying amounts of the intangible assets not yet available for use to exceed its recoverable amount.
The management of the Company concluded that no provision for impairment on the intangible assets not yet
available for use has to be recognised as at 31 December 2022, 2023, 2024 and 30 June 2025.
APPENDIX I ACCOUNTANTS’ REPORT
– I-55 –


--- page 498 ---
19. INVESTMENTS IN SUBSIDIARIES
The carrying amount of investments in subsidiaries of the Company is as follows:
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Unlisted investments at cost /H1118/H1118/H1118/H1118149,701 449,701 748,391 748,962
Note:
(a) On 17 April 2023, the Company entered into a co-operation agreement with Jiashan Zhongxin Industrial
Development Investment Company Limited* (“Jiashan Zhongxin”) (ʮ
̡) an independent third party for setting-up CIG ZJ. Pursuant to the agreement, the Company and
Jiashan Zhongxin invest RMB300,000,000 and RMB150,000,000 to CIG ZJ respectively. The Group
includes a subsidiary, CIG ZJ, with material non-controlling interests (“NCI”), the details and the
recognised financial information, before intragroup eliminations, are as follows:
Period from 17
April 2023 to 31
December 2023
Y ear ended
31 December
2024
Six months ended
30 June
2025
RMB’000 RMB’000 RMB’000
Proportion of ownership interests and
voting rights held by the NCI /H1118/H1118/H1118/H1118/H1118/H1118/H111833.33% 33.33% 33.33%
Current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111852,811 234,506 134,340
Non-current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118397,489 529,857 623,720
Current liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(460) (311,073) (314,847)
Non-current liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (2,370) (2,370)
Net assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118449,840 450,920 440,843
Carrying amount of NCI /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118149,947 150,307 146,948
Revenue /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118119 43,960 14,847
Other income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 15,000 67
Total expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(279) (57,880) (24,990)
(Loss)/Profit and total comprehensive
(loss)/income for the year/period /H1118/H1118/H1118/H1118/H1118(160) 1,080 (10,076)
(Loss)/Profit attributable to NCI /H1118/H1118/H1118/H1118/H1118/H1118/H1118(53) 360 (3,359)
Net cash flows from/(used in) operating
activities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118201 187,548 (6,256)
Net cash flows (used in)/from investing
activities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(397,548) (219,219) (1,921)
Net cash flows from financing activities /H1118/H1118 450,000 – –
Net increase/(decrease) in cash and cash
equivalents /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111852,653 (31,671) (8,177)
(b) On 13 July 2023, a board resolution has been resolved to inject US$42,000,000 (equivalent to
RMB298,272,000) into CIG US. The capital injection was completed during the year ended 31
December 2024.
APPENDIX I ACCOUNTANTS’ REPORT
– I-56 –


--- page 499 ---
20. INVENTORIES
The Group
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Raw materials /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,163,158 995,704 1,054,035 1,309,215
Work in progress /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118391,076 313,073 397,008 458,773
Finished goods /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118207,155 291,369 269,097 206,824
Goods in transit /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,254 13,372 9,582 51,030
1,767,643 1,613,518 1,729,722 2,025,842
Less: Provision for inventories /H1118/H1118/H1118/H1118(38,103) (40,064) (44,178) (47,547)
1,729,540 1,573,454 1,685,544 1,978,295
The Company
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Raw materials /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,040,571 906,801 1,009,752 1,238,290
Work in progress /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118365,389 289,892 381,751 443,019
Finished goods /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118121,868 188,888 232,382 181,013
Goods in transit /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111845,039 26,837 10,875 41,358
1,572,867 1,412,418 1,634,760 1,903,680
Less: Provision for inventories /H1118/H1118/H1118/H1118(37,861) (39,818) (43,928) (47,298)
1,535,006 1,372,600 1,590,832 1,856,382
The following table summarises the changes in the provision of impairment loss of inventories during the
Track Record Period:
The Group
Y ear ended 31 December Six months ended 30 June
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
At beginning of the year/period /H1118 33,175 38,103 40,064 40,064 44,178
Provision for inventories /H1118/H1118/H1118/H1118/H111818,512 3,741 6,510 1,979 5,124
Reversal of provision for
inventories /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (2,396) (194) (1,755)
Written off /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(13,584) (1,780) – – –
At end of the year/period /H1118/H1118/H1118/H1118/H111838,103 40,064 44,178 41,849 47,547
The Company
Y ear ended 31 December Six months ended 30 June
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
At beginning of the year/period /H1118 32,952 37,861 39,818 39,818 43,928
Provision for inventories /H1118/H1118/H1118/H1118/H111818,493 3,737 6,506 1,978 5,124
Reversal of provision for
inventories /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (2,396) (194) (1,754)
Written off /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(13,584) (1,780) – – –
At end of the year/period /H1118/H1118/H1118/H1118/H111837,861 39,818 43,928 41,602 47,298
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 500 ---
21. TRADE AND BILLS RECEIV ABLES
The Group
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Trade receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,623,429 1,112,223 1,244,428 1,598,872
Less: ECL allowance /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(17,551) (12,687) (14,314) (18,681)
1,605,878 1,099,536 1,230,114 1,580,191
Bills receivable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,000 16,196 8,060 –
Less: ECL allowance /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (155) (58) –
1,000 16,041 8,002 –
1,606,878 1,115,577 1,238,116 1,580,191
The Company
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Trade receivables
– Third parties /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118531,893 335,524 430,476 493,915
– Group entities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,656,897 1,574,173 1,324,797 1,735,750
2,188,790 1,909,697 1,755,273 2,229,665
Less: ECL allowance /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(5,529) (3,507) (4,992) (5,536)
2,183,261 1,906,190 1,750,281 2,224,129
Bills receivable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,000 1,404 8,060 –
Less: ECL allowance /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (58) –
1,000 1,404 8,002 –
2,184,261 1,907,594 1,758,283 2,224,129
Certain bills issued by third parties are further endorsed by the Group and Company with recourse for
settlement of payables. The Group and Company continues to recognise their full carrying amount at each reporting
date. All bills receivable held by the Group and Company are with a maturity period of less than 1 year.
The directors of the Company consider that the fair values of trade receivables which are expected to be
recovered during the Track Record Period are not materially different from their carrying amounts because these
balances have short maturity periods on their inception.
APPENDIX I ACCOUNTANTS’ REPORT
– I-58 –


--- page 501 ---
The ageing analysis of the trade and bills receivables based on invoice date, net of ECL allowances, were as
follows:
The Group
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Within 1 year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,597,534 1,112,547 1,228,544 1,568,010
1 to 2 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189,312 3,030 8,876 11,248
2 to 3 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111832 – 696 933
1,606,878 1,115,577 1,238,116 1,580,191
The Company
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Within 1 year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,165,999 1,741,402 1,713,890 2,176,559
1 to 2 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,934 147,659 15,372 12,588
2 to 3 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810,328 7,743 10,225 11,399
Over 3 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 10,790 18,796 23,583
2,184,261 1,907,594 1,758,283 2,224,129
The movement in the ECL allowance of trade and bills receivables during the Track Record Period were as
follows:
The Group
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
At the beginning of the year/period /H1118 42,904 17,551 12,842 14,372
ECL allowance recognised during
the year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 155 1,627 4,367
ECL allowance reversed during
the year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(25,353) (4,864) (97) (58)
At the end of the year/period /H1118/H1118/H1118/H1118/H111817,551 12,842 14,372 18,681
The Company
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
At the beginning of the year/period /H1118 19,822 5,529 3,507 5,050
ECL allowance recognised during
the year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 1,543 544
ECL allowance reversed during
the year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(14,293) (2,022) – (58)
At the end of the year/period /H1118/H1118/H1118/H1118/H11185,529 3,507 5,050 5,536
APPENDIX I ACCOUNTANTS’ REPORT
– I-59 –


--- page 502 ---
22. DEPOSITS, PREPAYMENTS AND OTHER RECEIV ABLES
The Group
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Deposits for acquisition of property,
plant and equipment, and
intangible assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118384 3,035 26,902 36,301
V alue-added tax (“V A T”)
recoverable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111852,715 39,739 90,145 94,213
Japan consumption tax recoverable /H1118 10,984 4,813 1,621 1,103
Prepayments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111833,128 24,943 24,381 58,873
Deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189,272 13,604 19,381 17,789
Deferred listing expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 13,140
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,059 719 982 912
107,542 86,853 163,412 222,331
Less: ECL allowance /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(5,871) (5,882) (5,703) (6,981)
101,671 80,971 157,709 215,350
Analysed as
Current /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118101,287 77,936 130,807 179,049
Non-current /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118384 3,035 26,902 36,301
101,671 80,971 157,709 215,350
The Company
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Deposits for acquisition of property,
plant and equipment, and
intangible assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118384 1,364 14,456 31,004
V alue-added tax recoverable /H1118/H1118/H1118/H1118/H1118/H111829,307 18,065 38,627 36,345
Prepayments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826,687 16,743 7,978 31,060
Deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,319 3,655 4,722 2,687
Deferred listing expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 13,140
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118568 104 104 4
Amounts due from group entities /H1118/H1118 35,015 2,833 208,958 210,948
95,280 42,764 274,845 325,188
Less: ECL allowance /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(2,764) (2,334) (2,655) (2,359)
92,516 40,430 272,190 322,829
Analysed as
Current /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111892,132 39,066 257,734 291,825
Non-current /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118384 1,364 14,456 31,004
92,516 40,430 272,190 322,829
The directors of the Company consider that the fair values of deposits, prepayment and other receivables which
are expected to be recovered during the Track Record Period are not materially different from their carrying amounts
because these balances have short maturity periods on their inception.
The amounts due from group entities in the statements of financial position of the Company are unsecured,
interest-free and repayable on demand.
APPENDIX I ACCOUNTANTS’ REPORT
– I-60 –


--- page 503 ---
The movement in the ECL allowance of other receivables during the Track Record Period were as follows:
The Group
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
At the beginning of the year/period /H1118 8,269 5,871 5,882 5,703
ECL allowance recognised during
the year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 11 – 1,278
ECL allowance reversed during the
year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(2,398) – (179) –
At the end of the year/period /H1118/H1118/H1118/H1118/H11185,871 5,882 5,703 6,981
The Company
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
At the beginning of the year/period /H1118 5,083 2,764 2,334 2,655
ECL allowance recognised during
the year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 321 –
ECL allowance reversed during the
year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(2,319) (430) – (296)
At the end of the year/period /H1118/H1118/H1118/H1118/H11182,764 2,334 2,655 2,359
23. CASH AND CASH EQUIV ALENTS
The Group
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Cash at banks and on hand /H1118/H1118/H1118/H1118/H1118/H1118354,707 417,977 507,341 588,231
Pledged deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111835,500 20,000 20,000 20,000
390,207 437,977 527,341 608,231
Less: Pledged deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(35,500) (20,000) (20,000) (20,000)
Cash and cash equivalents /H1118/H1118/H1118/H1118/H1118/H1118/H1118354,707 417,977 507,341 588,231
As at 31 December 2022, 2023, 2024 and 30 June 2025, included in bank balances and cash of the Group of
RMB181,306,000, RMB193,287,000, RMB191,960,000 and RMB105,403,000 are bank balances denominated in
RMB placed with banks in the PRC respectively.
APPENDIX I ACCOUNTANTS’ REPORT
– I-61 –


--- page 504 ---
The Company
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Cash at banks and on hand /H1118/H1118/H1118/H1118/H1118/H1118292,439 290,707 340,366 400,670
Pledged deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111835,500 20,000 20,000 20,000
327,939 310,707 360,366 420,670
Less: Pledged deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(35,500) (20,000) (20,000) (20,000)
Cash and cash equivalents /H1118/H1118/H1118/H1118/H1118/H1118/H1118292,439 290,707 340,366 400,670
As at 31 December 2022, 2023, 2024 and 30 June 2025, included in bank balances and cash of the Company
of RMB180,137,000, RMB139,372,000, RMB167,004,000 and RMB88,251,000 are bank balances denominated in
RMB placed with banks in the PRC respectively.
RMB is not a freely convertible currency. Under the PRC’s Foreign Exchange Control Regulations and
Administration of Settlement and Sales and Payment of Foreign Exchange Regulations, the Group and the Company
is permitted to exchange RMB for foreign currencies through banks that are recognised to conduct foreign exchange
business.
24. TRADE AND BILLS PAYABLES
The Group
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Trade payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,564,927 750,096 1,115,412 1,533,007
Bills payable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118215,454 114,347 119,542 61,902
1,780,381 864,443 1,234,954 1,594,909
The Group presented bills to relevant creditors for settlement and remained outstanding as at 31 December
2022, 2023, 2024 and 30 June 2025. It also contains obligations arising from endorsing bills with recourse with an
aggregate amount of RMBnil, RMB15,443,000, RMB2,260,000 and RMBnil as at 31 December 2022, 2023, 2024 and
30 June 2025. All bills presented by the Group is aged within 1 year and not yet due as at 31 December 2022, 2023,
2024 and 30 June 2025, respectively.
The Company
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Trade payables
– Third parties /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,349,133 688,437 949,062 1,320,168
– Group entities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118186,604 179,529 313,795 376,811
1,535,737 867,966 1,262,857 1,696,979
Bills payable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118215,454 99,562 119,542 61,902
1,751,191 967,528 1,382,399 1,758,881
APPENDIX I ACCOUNTANTS’ REPORT
– I-62 –


--- page 505 ---
The Company presented bills to relevant creditors for settlement and remained outstanding as at 31 December
2022, 2023, 2024 and 30 June 2025. It also contains obligations arising from endorsing bills with recourse with an
aggregate amount of RMBnil, RMB658,000, RMB2,260,000 and RMBnil as at 31 December 2022, 2023, 2024 and
30 June 2025. All bills presented by the Group is aged within 1 year and not yet due as at 31 December 2022, 2023,
2024 and 30 June 2025, respectively.
Majority amounts are short term and hence the carrying amounts of the Group’s trade and bills payables
considered to be a reasonable approximation of fair value.
The Group and the Company are granted by its suppliers the credit period from 60 to 90 days. Based on the
invoice date, the ageing analysis of the trade and bills payables is as follows:
The Group
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Within 1 year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,776,369 861,516 1,230,901 1,584,342
1 to 2 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,456 241 1,353 8,807
2 to 3 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118308 1,644 43 56
Over 3 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,248 1,042 2,657 1,704
1,780,381 864,443 1,234,954 1,594,909
The Company
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Within 1 year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,740,625 890,253 1,216,077 1,749,200
1 to 2 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188,987 74,225 114,661 8,106
2 to 3 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118430 2,076 50,035 56
Over 3 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,149 974 1,626 1,519
1,751,191 967,528 1,382,399 1,758,881
25. OTHER PAYABLES AND ACCRUALS
The Group
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Payables in relation to restricted
shares incentive scheme /H1118/H1118/H1118/H1118/H1118/H1118/H111858,374 57,984 18,228 –
Payroll payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111871,320 40,713 37,678 39,293
Other payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111817,382 9,675 24,187 11,023
Other tax payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111817,169 21,054 10,760 8,833
Accrued expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,711 6,746 7,483 7,350
Sub-contracting fee payables /H1118/H1118/H1118/H1118/H11184,610 1,031 3,517 11,960
Construction payable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 44,909 33,485
Dividend payable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 1,710 626
180,566 137,203 148,472 112,570
APPENDIX I ACCOUNTANTS’ REPORT
– I-63 –


--- page 506 ---
The Company
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Payables in relation to restricted
shares incentive scheme /H1118/H1118/H1118/H1118/H1118/H1118/H111858,374 57,984 18,228 –
Payroll payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111847,548 20,023 20,407 20,610
Other payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111817,245 42,568 37,207 30,700
Accrued expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,000 5,536 6,455 7,319
Sub-contracting fee payables /H1118/H1118/H1118/H1118/H11184,610 1,031 3,270 11,654
Other tax payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,599 2,137 2,764 2,705
Dividend payable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 1,710 626
Amounts due to group entities /H1118/H1118/H1118/H1118– 13,748 166,451 39,811
141,376 143,027 256,492 113,425
The amounts due to group entities in the statements of financial position of the Company are unsecured,
interest-free and repayable on demand.
Majority amounts are short term and hence the carrying amounts of the Group’s other payables and accruals
are considered to be a reasonable approximation of fair value.
26. CONTRACT LIABILITIES
The Group
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Receipt in advances from customers
for sales of goods /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,925 45,391 33,363 24,787
The Company
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Receipt in advances from customers
for sales of goods
– Third parties /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,813 4,390 3,147 1,636
– Group entities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 325,016 281,285 225,004
1,813 329,406 284,432 226,640
Contract liabilities comprise advanced payments received from customers as well as the Group’s right to
receive consideration in advance pursuant to the terms of the relevant contracts.
The increase in contract liabilities as at 31 December 2023 is mainly due to increase in deposits received as
a result of more sales orders received before 31 December 2023. The decrease in contract liabilities as at 31
December 2024 and 30 June 2025 is mainly due to the decrease in the deposits received as a result of fewer sales
orders received from customers before 31 December 2024 and 30 June 2025, respectively.
All contract liabilities included in the carrying amount as at 31 December 2022, 2023, 2024 and 30 June 2025,
were transferred to operating revenue in following year.
APPENDIX I ACCOUNTANTS’ REPORT
– I-64 –


--- page 507 ---
27. BANK BORROWINGS
The Group and the Company
At 31 December 2022, 2023, 2024 and 30 June 2025, the Group’s and the Company’s bank borrowings were
repayable as follows:
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Carrying amount repayable
Within one year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118913,014 1,111,827 991,700 1,696,058
In the second year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 91,900 78,000
Total carrying amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118913,014 1,111,827 1,083,600 1,774,058
Amount due within one year /H1118/H1118/H1118/H1118/H1118(913,014) (1,111,827) (991,700) (1,696,058)
Carrying amount shown under
non-current liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 91,900 78,000
All bank borrowings are unsecured and unguaranteed. Bank borrowing include accrued interest amounting to
RMB1,215,000, RMB2,288,000, RMB2,037,000 and RMB3,210,000 as at 31 December 2022, 2023, 2024 and 30
June 2025 respectively.
Except for the loans of RMB314,299,000 are denominated in US$ as at 31 December 2022, all loans are
denominated in RMB as at 31 December 2022, 2023, 2024 and 30 June 2025.
As at 31 December 2022, 2023, 2024 and 30 June 2025, the loans are interest bearing at rates ranging from
3.2% to 5.41%, 2.9% to 4.35%, 2.5% to 3.65% and 2.5% to 3.5% per annum respectively.
28. OTHER BORROWINGS
The Group and the Company
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Current /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118175,090 41,609 – –
Non-current /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111893,88 1–––
268,971 41,609 – –
At 31 December 2022, 2023, 2024 and 30 June 2025, the Group’s and the Company’s other borrowings were
repayable as follows:
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Carrying amount repayable
Within one year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118175,090 41,609 – –
In the second year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111875,63 1–––
In the third year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818,25 0–––
Total carrying amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118268,971 41,609 – –
Amount due within one year /H1118/H1118/H1118/H1118/H1118(175,090) (41,609) – –
Carrying amount shown under
non-current liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111893,88 1–––
APPENDIX I ACCOUNTANTS’ REPORT
– I-65 –


--- page 508 ---
The Company entered into financing arrangements with financial institutions with lease terms ranging from 2
to 3 years, with legal title of the respective equipment transferred to the financial institutions. The Company
continued to operate and manage the relevant machinery and equipment during the lease term without any
involvement from the financial institutions, and the Company is entitled to purchase back the equipment at a minimal
consideration upon maturity of respective leases, or to purchase back the equipment from this financial institution
at fair value upon the end of the lease period.
The Company applies the requirements of IFRS 15 to assess whether sale and leaseback transactions constitute
a sale. To better manage the Company’s capital structure and financing needs, the Company sometimes enters into
sale and leaseback arrangements in relation to machinery and equipment leases. These legal transfer does not satisfy
the requirements of IFRS 15 to be accounted for as a sale of machinery and equipment. Despite the arrangement
involves a legal form of a lease while it does not constitute a sale and leaseback transaction, the Company accounted
for the arrangement as a collateralised borrowing at amortised cost using effective interest method in accordance with
the substance of the arrangement. During the years ended 31 December 2022, 2023, 2024 and six months ended 30
June 2025, the Company has raised RMB265,550,000, RMBnil, RMBnil and RMBnil of borrowings in respect of
such arrangements.
29. DEFERRED INCOME
Deferred income mainly represents the government subsidies received from Shanghai Municipal Commission
of Economy and Information in relation to the acquisition and/or construction of certain property, plant and
equipment. These subsidies were amortised over 1 to 10 years in accordance with the depreciable life of the assets.
Movements in deferred income during the Track Record Period were as follows:
The Group
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
At the beginning of the year/period /H1118 35,637 30,281 29,622 42,513
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,940 1,476 22,659 –
Charged to profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(13,296) (2,135) (9,768) (7,371)
At the end of the year/period /H1118/H1118/H1118/H1118/H111830,281 29,622 42,513 35,142
The Company
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
At the beginning of the year/period /H1118 35,637 30,281 29,622 40,143
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,940 1,476 20,289 –
Charged to profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(13,296) (2,135) (9,768) (7,371)
At the end of the year/period /H1118/H1118/H1118/H1118/H111830,281 29,622 40,143 32,772
APPENDIX I ACCOUNTANTS’ REPORT
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30. LEASE LIABILITIES
The Group
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Total minimum lease payments
Within one year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111847,820 45,715 26,688 27,592
After one but within second year /H1118/H1118 37,844 23,770 27,005 27,433
After second but within fifth year /H1118/H1118 – 73,728 77,595 78,239
After the fifth year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 72,800 50,363 36,692
85,664 216,013 181,651 169,956
Future finance charges on leases
liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(3,738) (32,456) (25,579) (22,191)
Present value of leases liabilities /H1118/H1118/H111881,926 183,557 156,072 147,765
Present value of minimum lease
payments
Within one year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111844,927 37,670 20,134 21,445
After one but within second year /H1118/H1118 36,999 17,569 21,347 22,242
After second but within fifth year /H1118/H1118 – 60,189 66,351 68,536
After the fifth year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 68,129 48,240 35,542
81,926 183,557 156,072 147,765
Less: Portion due within one year
included under current liabilities /H1118 (44,927) (37,670) (20,134) (21,445)
Portion due after one year included
under non-current liabilities /H1118/H1118/H1118/H111836,999 145,887 135,938 126,320
During the years ended 31 December 2022, 2023, 2024 and 30 June 2025 the total cash outflows for the leases
amounted to RMB57,716,000, RMB61,230,000, RMB49,666,000 and RMB28,216,000 respectively.
As at 31 December 2022, 2023, 2024 and 30 June 2025 the Group has entered into leases agreements for use
of premises with terms ranging from 2 to 10 years, 1.16 to 10 years, 1 to 10 years and 1.75 to 10 years respectively.
These leases do not contain option to renew the lease and are subjected to monthly fixed rental payment.
As at 31 December 2022, 2023, 2024 and 30 June 2025, the Group had 9, 5, 6 and 7 leases under IFRS 16 for
premises and building with remaining lease term of 0.2 to 8.8 years, 0.3 to 7.8 years, 0.2 to 6.8 years and 0.3 to 6.3
years respectively. These leases do not contain option to renew the lease and are subjected to monthly fixed rental
payment.
APPENDIX I ACCOUNTANTS’ REPORT
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31. DEFERRED TAX
The movements in the deferred tax assets during the Track Record Period and its components as at 31
December 2022, 2023, 2024 and 30 June 2025 were as follows:
The Group
Deferred
income
Expected
credit losses
Provision for
inventories Tax losses
Lease
liabilities Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2022 /H1118/H1118/H1118/H11185,346 3,736 4,946 7,558 8,921 30,507
Recognised in profit or
loss (note 9) /H1118/H1118/H1118/H1118/H1118/H1118/H1118(804) (2,470) 736 5,842 (3,595) (291)
At 31 December 2022
and 1 January 2023 /H1118/H11184,542 1,266 5,682 13,400 5,326 30,216
Recognised in profit or
loss (note 9) /H1118/H1118/H1118/H1118/H1118/H1118/H1118(99) (340) 294 3,544 (2,478) 921
At 31 December 2023
and 1 January 2024 /H1118/H11184,443 926 5,976 16,944 2,848 31,137
Recognised in profit or
loss (note 9) /H1118/H1118/H1118/H1118/H1118/H1118/H11181,578 312 617 1,652 (2,848) 1,311
At 31 December 2024
and 1 January 2025 /H1118/H11186,021 1,238 6,593 18,596 – 32,448
Recognised in profit or
loss (note 9) /H1118/H1118/H1118/H1118/H1118/H1118(1,105) 78 505 – 339 (183)
At 30 June 2025 /H1118/H1118/H1118/H1118/H11184,916 1,316 7,098 18,596 339 32,265
The movements in the deferred tax liabilities during the Track Record Period and its components as at 31
December 2022, 2023, 2024 and 30 June 2025 were as follows:
The Group
Right-of-use
assets
Accelerated
depreciation
allowance Intangible assets Total
RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188,730 21,402 11,294 41,426
Recognised in profit or loss (note 9) /H1118/H1118/H1118(3,233) (345) (2,824) (6,402)
At 31 December 2022 and 1 January
2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,497 21,057 8,470 35,024
Recognised in profit or loss (note 9) /H1118/H1118/H1118(2,825) 4,929 (2,823) (719)
At 31 December 2023 and 1 January
2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,672 25,986 5,647 34,305
Recognised in profit or loss (note 9) /H1118/H1118/H1118(2,608) (404) (2,823) (5,835)
At 31 December 2024 and
1 January 2025 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111864 25,582 2,824 28,470
Recognised in profit or loss (note 9) /H1118/H1118 375 (462) (1,412) (1,499)
At 30 June 2025 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118439 25,120 1,412 26,971
As at 31 December 2022, 2023 and 2024 and 30 June 2025, the Group did not recognised deferred
tax assets arising from tax losses of RMB286,645,000, RMB410,140,000, RMB349,953,000 and
RMB357,014,000 respectively. Under the current tax legislation, as at 31 December 2022, 2023 and 2024 and
30 June 2025, tax losses of RMB283,406,000, RMB398,388,000, RMB337,286,000 and RMB313,287,000 can
be carried forward for ten years from the year when the loss is incurred. The remaining tax losses can be
carried forward for five years from the year when the loss is incurred.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 511 ---
32. SHARE CAPITAL
Number of shares RMB’000
Issued and fully paid:
At 1 January 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118252,220,566 252,221
Issuance of shares for restricted shares incentive scheme (note
34(a)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189,352,260 9,352
At 31 December 2022 and 1 January 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118261,572,826 261,573
Issuance of shares for restricted shares incentive scheme (note
34(b)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,650,115 6,650
Repurchase and cancellation of shares under restricted share
incentive scheme (note 34(a)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(118,000) (118)
At 31 December 2023 and 1 January 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118268,104,941 268,105
Repurchase and cancellation of shares under restricted share
incentive scheme (note 34(a)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(63,100) (63)
At 31 December 2024, 1 January 2025 and 30 June 2025 /H1118/H1118 268,041,841 268,042
33. RESERVES
The Company
The movement of the Company’s reserves during the Track Record Period are as follows:
Capital reserve
Shares held for
restricted
shares incentive
scheme
Statutory
reserves
Retained
earnings Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H11181,263,282 – 59,257 393,639 1,716,178
Transactions with owners:
Issuance of shares in respect
of restricted shares
incentive scheme /H1118/H1118/H1118/H1118/H1118/H1118/H111849,648 (59,000) – – (9,352)
V esting of awarded shares
under restricted shares
incentive scheme
(note 34(a)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111815,62 0––– 15,620
Share-based payment expense
in respect of share options
(note 34(b)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,97 6––– 4,976
Appropriation to statutory
reserves /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 3,785 (3,785) –
70,244 (59,000) 3,785 (3,785) 11,244
Profit and total
comprehensive income for
the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 37,852 37,852
At 31 December 2022 and
1 January 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H11181,333,526 (59,000) 63,042 427,706 1,765,274
Transactions with owners:
Exercise of share option /H1118/H1118/H1118/H111879,20 5––– 79,205
Repurchase of awarded shares
under restricted shares
incentive scheme /H1118/H1118/H1118/H1118/H1118/H1118/H1118(651) 769 – – 118
APPENDIX I ACCOUNTANTS’ REPORT
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Capital reserve
Shares held for
restricted
shares incentive
scheme
Statutory
reserves
Retained
earnings Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
V esting of awarded shares
under restricted shares
incentive scheme
(note 34(a)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111834,03 7––– 34,037
Share-based payment expense
in respect of share options
(note 34(b)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189 9 0––– 9 9 0
Appropriation to statutory
reserves /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 8,339 (8,339) –
113,581 769 8,339 (8,339) 114,350
Profit and total
comprehensive income for
the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 83,386 83,386
At 31 December 2023 and 1
January 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,447,107 (58,231) 71,381 502,753 1,963,010
Transactions with owners:
Repurchase of awarded
shares under restricted
shares incentive scheme
(note 34(a)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(327) 390 – – 63
V esting of awarded shares
under restricted shares
incentive scheme
(note 34(a)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189,61 0––– 9,610
Share-based payment expense
in respect of share options
(note 34(b)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,42 4––– 2,424
Release of awarded shares
under restricted shares
incentive scheme /H1118/H1118/H1118/H1118/H1118/H1118/H1118– 39,490 – – 39,490
Appropriation to statutory
reserves /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 17,063 (17,063) –
Dividend declared /H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – (43,691) (43,691)
11,707 39,880 17,063 (60,754) 7,896
Profit and total
comprehensive income for
the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 170,630 170,630
At 31 December 2024 and
1 January 2025 /H1118/H1118/H1118/H1118/H1118/H1118/H11181,458,814 (18,351) 88,444 612,629 2,141,536
Transactions with owners:
Share-based payment expense
in respect of share options
(note 34(b)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,49 9––– 3,499
Release of awarded shares
under restricted shares
incentive scheme /H1118/H1118/H1118/H1118/H1118/H1118/H1118– 18,215 – – 18,215
Dividend declared /H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – (58,969) (58,969)
3,499 18,215 – (58,969) (37,255)
Profit and total
comprehensive income for
the period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 145,423 145,423
At 30 June 2025 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,462,313 (136) 88,444 699,083 2,249,704
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 513 ---
Capital reserve
Shares held for
restricted
shares incentive
scheme
Statutory
reserves
Retained
earnings Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Balance as at 31 December
2023 and 1 January 2024 /H1118/H11181,447,107 (58,231) 71,381 502,753 1,963,010
Transactions with owners:
Dividend declared /H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – (35,650) (35,650)
Repurchase of awarded
shares under restricted
shares incentive scheme
(note 34(a)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(327) 390 – – 63
V esting of awarded
shares under restricted
shares incentive scheme
(note 34(a)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,04 2––– 5,042
4,715 390 – (35,650) (30,545)
Profit and total
comprehensive income for
the period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 107,713 107,713
Balance as at 30 June 2024 /H1118/H11181,451,822 (57,841) 71,381 574,816 2,040,178
The Group
During the Track Record Period, the amounts of the Group’s reserves and the changes therein are presented
in the consolidated statements of changes in equity.
Capital reserve
Capital reserve mainly represents the excess of the net proceeds from issuance of shares of the Company
over its par value.
Capital reserve also includes (i) the difference between the consideration to acquire additional interest
in subsidiaries and the respective share of the carrying amounts of net assets acquired, (ii) the reserve for
difference between the market price value at the grant date and grant price value of the restricted shares and
(iii) the fair value of share options granted to directors and employees and is dealt with in accordance with the
accounting policy set out in note 2.21.
Shares held for restricted shares incentive scheme
Shares held for restricted shares incentive scheme are determined using the grant price value of
restricted shares that have been granted, which are held by the Group’s trustee.
Statutory reserves
Statutory reserves represent the amounts set aside from the retained earnings by certain subsidiaries
incorporated in the PRC. In accordance with the relevant regulations and their articles of association, the
Company’s subsidiaries incorporated in the PRC are required to allocate at least 10% of their after-tax profit
according to the PRC accounting standards and regulations to legal reserves until such reserves have reached
50% of registered capital. These reserves can only be used for specific purposes and are not distributable or
transferable to loans, advances and cash dividends.
Translation reserve
Translation reserve comprise all foreign exchange differences arising from translating the financial
statements of foreign operations. The reserve is treated in accordance with the accounting policy in note 2.4.
APPENDIX I ACCOUNTANTS’ REPORT
– I-71 –


--- page 514 ---
34. SHARE-BASED PAYMENT
(a) Restricted shares incentive scheme
Pursuant to the restricted shares incentive scheme in 2021 (the “Restricted Share Incentive Scheme 2021”) and
2022 (the “Restricted Share Incentive Scheme 2022”), 3,361,000 and 5,991,260 restricted shares were granted to the
selected participants in 2021 and 2022 respectively. The respective grant dates of Restricted Shares Incentive Scheme
2021 and 2022 are 5 January 2022 and 1 December 2022 respectively.
The selected participants are entitled to the related distribution derived from the relevant restricted shares
during the period from the date of the issue of the restricted shares to the vesting date (both dates inclusive) of such
restricted shares, which shall however only be vested by the selected participants on the vesting date subject to
fulfilment of vesting conditions of the restricted shares.
The selected participants include certain directors of the Company, certain members of senior management and
employees of the Group who subscribed for the restricted shares at RMB6.52 per share under the terms of the
Restricted Share Incentive Scheme 2021 and RMB6.19 per share under the terms of the Restricted Share Incentive
Scheme 2022.
Under the terms of the restricted shares incentive schemes, if the vesting conditions: (a) performance target
of the Company and (b) individual performance evaluation requirement on selected participants are fulfilled, the
restricted shares shall be vested by 50% and 50% on each of the vesting period, respectively. During the years ended
31 December 2022, 2023, 2024 and six months ended 30 June 2025, nil, 118,000, 63,100 and 22,000 unvested
restricted shares were forfeited respectively as certain vesting conditions were not fulfilled.
For the selected participants who do not meet the vesting conditions, the unvested restricted shares remaining
at the end of the Restricted Share Incentive Scheme 2021 and Restricted Share Incentive Scheme 2022 are to be
forfeited.
As at 31 December As at 30 June
2022 2023 2024 2025
Number of restricted shares
Restricted Share Incentive Scheme
2021
At the beginning of the year/period /H1118 – 3,361,000 1,610,500 –
Granted during the year/period /H1118/H1118/H1118/H11183,361,000 – – –
Forfeited during the year/period /H1118/H1118/H1118 – (118,000) – –
Released during the year/period /H1118/H1118/H1118 – (1,632,500) (1,610,500) –
At the end of the year/period /H1118/H1118/H1118/H1118/H11183,361,000 1,610,500 – –
As at 31 December As at 30 June
2022 2023 2024 2025
Number of restricted shares
Restricted Share Incentive Scheme
2022
At the beginning of the year/period /H1118 – 5,991,260 5,991,260 2,964,632
Granted during the year/period /H1118/H1118/H1118/H11185,991,260 – – –
Forfeited during the year/period
(note) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (63,100) (22,000)
Released during the year/period /H1118/H1118/H1118 – – (2,963,528) (2,942,632)
At the end of the year/period /H1118/H1118/H1118/H1118/H11185,991,260 5,991,260 2,964,632 –
Note: In May 2025, 22,000 restricted shares were forfeited due to failure to meet the performance conditions.
The cancellation of forfeited restricted shares were completed on 24 July 2025.
APPENDIX I ACCOUNTANTS’ REPORT
– I-72 –


--- page 515 ---
The fair value of the restricted shares issued was assessed based on the difference of the market price of the
Company’s shares at the respective grant date and the subscription price. The weighted average fair value of restricted
shares granted during the year ended 31 December 2022 under Restricted Share Incentive Scheme 2021 and
Restricted Share Incentive Scheme 2022 were approximately RMB6.76 and RMB6.10 per share respectively.
During the years ended 31 December 2022, 2023, 2024 and six months ended 30 June 2025, the Group’s trustee
transferred nil, 1,632,500, 4,574,028 and 2,942,632 ordinary shares of the Company to the share awardees upon
vesting of the awarded shares.
The Group recognised the expense of RMB15,620,000, RMB34,037,000, RMB9,610,000 and RMBnil for the
years ended 31 December 2022, 2023, 2024 and six months ended 30 June 2025 in relation to the restricted share
incentive schemes respectively.
(b) Share options
The Company has share option schemes which were adopted in February 2021 (the “Share Option Scheme
2021”) and August 2024 (the “Share Option Scheme 2024”) respectively. Pursuant to Share Option Scheme 2021 and
Share Option Scheme 2024, the directors of the Company are recognised, at their discretion, to invite employees of
the Group, including directors of any company in the Group, to take up options at nil consideration to subscribe for
shares of the Company.
On 4 March 2021 and 26 August 2024, the Company granted 15,620,000 and 15,593,000 share options to the
employees and directors under the Share Option Scheme 2021 and Share Option Scheme 2024 respectively. Each
share option entitles the holder to subscribe for one share of the Company at an exercise price of RMB12.91 and
RMB29.48 under the Share Option Scheme 2021 and Share Option Scheme 2024 respectively. The contractual life
of these share options is the period from the date on which an option certificate is issued after acceptance by the
grantees and expiring on 3 March 2024 and 25 August 2027 respectively.
50% and 50% of the options vest at first and second anniversary date of grant date and then exercisable within
a period of twelve months. Options granted may have certain performance requirements in addition to services. If the
performance conditions are not satisfied, the options are forfeited. Each option gives the holder the right to subscribe
for one ordinary share in the Company.
All share options will be settled in equity. The Group has no legal or constructive obligation to repurchase or
settle the options other than by issuing the Company’s ordinary shares.
The terms and conditions of the grants are as follows:
Number of options Vesting period
Contractual life of
options
Share Option Scheme 2021
Options granted to directors
4 March 2021 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111850,000 1 year from the
date of grant
2 years
50,000 2 years from
the date of
grant
3 years
Options granted to senior management
4 March 2021 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111835,000 1 year from the
date of grant
2 years
35,000 2 years from
the date of
grant
3 years
Options granted to employee
4 March 2021 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,725,000 1 year from the
date of grant
2 years
7,725,000 2 years from
the date of
grant
3 years
APPENDIX I ACCOUNTANTS’ REPORT
– I-73 –


--- page 516 ---
Number of options Vesting period
Contractual life of
options
Share Option Scheme 2024
Options granted to directors
26 August 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111875,000 1 year from the
date of grant
2 years
75,000 2 years from
the date of
grant
3 years
Options granted to senior management
26 August 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111837,500 1 year from the
date of grant
2 years
37,500 2 years from
the date of
grant
3 years
Options granted to employee
26 August 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,684,000 1 year from the
date of grant
2 years
7,684,000 2 years from
the date of
grant
3 years
Share options and weighted average exercise price are as follows for Track Record Period presented:
As at 31 December As at 30 June
2022 2023 2024 2025
Number
Weighted
average
exercise
price Number
Weighted
average
exercise
price Number
Weighted
average
exercise
price Number
Weighted
average
exercise
price
RMB RMB RMB RMB
Outstanding at the
beginning of the
year/period /H1118/H1118/H1118/H1118/H1118/H111815,620,000 12.91 15,620,000 12.91 – – 15,593,000 29.48
Granted /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – – 15,593,000 29.48 – –
Cancelled /H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (8,969,885) 12.91 – – – –
Exercised /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (6,650,115) 12.91 – – – –
Outstanding at the end
of the year/period /H1118/H111815,620,000 12.91 – – 15,593,000 29.48 15,593,000 29.48
Exercisable at the end
of the year/period /H1118/H1118 –– –– –– ––
The options outstanding at 31 December 2022 and 2024, and 30 June 2025 had a weighted average remaining
contractual life of 1.17 years, 2.66 years and 2.16 years respectively.
The fair values of options granted were determined using the Black-Scholes Option Pricing model that takes
into account factors specific to the share incentive plans. The following principal assumptions were used in the
valuation:
Share Option Scheme 2021
Share price /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118RMB11.79
Expected volatility /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818.63%-18.95%
Expected option life /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181-2 years
Dividend yield /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11180%
Risk-free interest rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181.50%-2.10%
Fair value at grant date /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118RMB0.52-1.01
Exercise price /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118RMB12.91
APPENDIX I ACCOUNTANTS’ REPORT
– I-74 –


--- page 517 ---
Share Option Scheme 2024
Share price /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118RMB26.07
Expected volatility /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812.88%-12.92%
Expected option life /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181-2 years
Dividend yield /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11180%
Risk-free interest rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181.50%-2.10%
Fair value at grant date /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118RMB0.4-1.07
Exercise price /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118RMB29.48
The underlying expected volatility was determined by reference to historical data, calculated based on
expected life of share options. Expectations of early exercise were incorporated into the Black-Scholes Option
Pricing model. No special features pertinent to the options granted were incorporated into measurement of fair value.
In total, RMB4,976,000, RMB990,000, RMB2,424,000 and RMB3,499,000 of employee compensation
expense has been recognised in profit or loss for the years ended 31 December 2022, 2023, 2024 and six months
ended 30 June 2025, respectively. The corresponding amount of which has been credited to “capital reserve”. No
liability was recognised due to share options.
35. RELATED PARTY TRANSACTIONS
Other than disclosed in note 11, the Group had the following transactions with its related parties:
Compensation of key management personnel
Key management of the Group are the executive directors. The emoluments of directors were determined by
the Remuneration Committee having regard to the performance of individual and market trends. The remuneration
of key management personnel during the Track Record Period were as follows:
Y ear ended 31 December
Six months ended
30 June
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Wages, salaries and bonuses /H1118/H1118/H1118/H1118/H1118/H1118/H11186,503 6,624 6,541 3,323 3,219
Share based payment expenses /H1118/H1118/H1118/H1118/H1118/H1118319 504 116 68 30
Contribution to retirement benefit
schemes /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118120 140 192 108 111
Other employee benefit /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118127 146 189 111 108
7,069 7,414 7,038 3,610 3,468
36. COMMITMENTS
36.1 Capital Commitments
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Contracted but not provided for:
– Acquisition of property, plant and
equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819,807 234,927 143,979 210,032
APPENDIX I ACCOUNTANTS’ REPORT
– I-75 –


--- page 518 ---
36.2 Lease Commitments
As a lessee
As at 31 December 2022, 2023, 2024 and 30 June 2025, the lease commitments for non-cancellable
short-term leases are as follows:
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Within 1 year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118540 540 21,979 8,101
As lessor
The Group had future aggregate minimum lease receivables under non-cancellable operating leases in
respect of land and buildings as follows:
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Within 1 year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118992 924 1,031 308
37. RECONCILIATIONS OF LIABILITIES ARISING FROM FINANCING ACTIVITIES
The table below set out the reconciliation of liabilities arising from financing activities.
Bank borrowings Other borrowings Lease liabilities Total
RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118733,676 174,733 117,691 1,026,100
Cash flows
– Repayment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,253,841) (184,559) – (1,438,400)
– Proceeds /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,432,719 265,550 – 1,698,269
– Interest paid /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(34,390) – – (34,390)
– Capital element of lease paid /H1118/H1118/H1118/H1118– – (47,166) (47,166)
– Interest element of lease paid /H1118/H1118/H1118 – – (5,541) (5,541)
Non-cash transactions
– New leases /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 11,401 11,401
– Finance costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111839,115 13,247 5,541 57,903
– Exchange difference /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(4,265) – – (4,265)
At 31 December 2022 and
1 January 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118913,014 268,971 81,926 1,263,911
Cash flows
– Repayment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,530,185) (249,303) – (1,779,488)
– Proceeds /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,727,924 – – 1,727,924
– Interest paid /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(33,849) – – (33,849)
– Capital element of lease paid /H1118/H1118/H1118/H1118– – (53,100) (53,100)
– Interest element of lease paid /H1118/H1118/H1118 – – (4,259) (4,259)
Non-cash transactions
– New leases /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 154,731 154,731
– Finance costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111834,923 21,941 4,259 61,123
APPENDIX I ACCOUNTANTS’ REPORT
– I-76 –


--- page 519 ---
Bank borrowings Other borrowings Lease liabilities Total
RMB’000 RMB’000 RMB’000 RMB’000
At 31 December 2023 and
1 January 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,111,827 41,609 183,557 1,336,993
Cash flows
– Repayment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,668,561) (43,107) – (1,711,668)
– Proceeds /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,640,585 – – 1,640,585
– Interest paid /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(43,891) – – (43,891)
– Capital element of lease paid /H1118/H1118/H1118/H1118– – (36,026) (36,026)
– Interest element of lease paid /H1118/H1118/H1118 – – (7,752) (7,752)
Non-cash transactions
– New leases /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 8,541 8,541
– Finance costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111843,640 1,498 7,752 52,890
At 31 December 2024 and
1 January 2025 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,083,600 – 156,072 1,239,672
Cash flows
– Repayment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(623,863) – – (623,863)
– Proceeds /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,313,148 – – 1,313,148
– Interest paid /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(19,692) – – (19,692)
– Capital element of lease rentals
paid /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (10,197) (10,197)
– Interest element of lease rentals
paid /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (3,398) (3,398)
Non-cash transactions
– New lease /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 1,569 1,569
– Modifications /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118753 753
– Finance costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820,865 – 3,398 24,263
– Exchange difference /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (432) (432)
At 30 June 2025 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,774,058 – 147,765 1,921,823
(Unaudited)
At 1 January 2024 1,111,827 41,609 183,557 1,336,993
Cash flows
– Repayment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(760,547) (37,718) – (798,265)
– Proceeds /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118795,755 – – 795,755
– Interest paid /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(26,856) – – (26,856)
– Capital element of lease paid /H1118/H1118/H1118/H1118– – (27,830) (27,830)
– Interest element of lease paid /H1118/H1118/H1118 – – (3,970) (3,970)
Non-cash transactions
– New leases /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 8,541 8,541
– Finance costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111827,058 1,104 3,970 32,132
– Exchange difference /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 286 286
At 30 June 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,147,237 4,995 164,554 1,316,786
38. BUSINESS COMBINATIONS
(a) Acquisition of AEI
On 20 December 2021, the Group had entered into a sales and purchase agreement to acquire 100% equity
interest of AEI, a Delaware corporation who was mainly engaged in trading and research and development activities.
The consideration for the acquisition was US$7,300,000 (equivalents to approximately RMB46,535,000) and the
acquisition was completed on 31 January 2022. The acquisition was made with the aims to enhance business scale
of the Group and expand market scope of the Group.
APPENDIX I ACCOUNTANTS’ REPORT
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(b) Acquisition of Actiontec Shanghai
On 20 December 2021, the Group had entered into share transfer agreement to acquire 100% equity interest
of Actiontec Shanghai, a company incorporated in the PRC who was mainly engaged in research and development
activities. The cash consideration for the acquisition was approximately RMB1,970,000 and the acquisition was
completed on 31 January 2022. The acquisition was made with the aims to enhance business scale of the Group and
expand market scope of the Group.
Details of the aggregate fair values of the identifiable assets and liabilities of the acquirees as at the date of
acquisition are as follows:
AEI Actiontec Shanghai Total
RMB’000 RMB’000 RMB’000
Property, plant and equipment (note 14) /H1118/H1118/H1118/H1118/H1118/H111825 141 166
Intangible assets (note 18) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118303 – 303
Inventories /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111827,881 – 27,881
Trade receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111828,124 1,622 29,746
Prepayments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,094 – 3,094
Cash and cash equivalents /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,994 642 5,636
Trade payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(106,486) – (106,486)
Contract liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,906) – (1,906)
Other payables and accruals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(8,463) (435) (8,898)
Net (liabilities)/assets acquired /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(52,434) 1,970 (50,464)
Less: cash considerations /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(46,535) (1,970) (48,505)
Goodwill (note 17) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(98,969) – (98,969)
Deposits paid in December 2021 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821,359 – 21,359
Consideration paid during the year ended
31 December 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825,176 1,970 27,146
Total cash consideration /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111846,535 1,970 48,505
Less: Cash and cash equivalents acquired /H1118/H1118/H1118/H1118/H1118(4,994) (642) (5,636)
Cash outflows arising on acquisition through
business combinations /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111841,541 1,328 42,869
 Acquired receivables
The fair value of acquired trade receivables and prepayments as at the date of acquisition were approximately
RMB32,840,000. The gross contractual amount for trade receivables, due was approximately RMB29,746,000 on
acquisition.
 Revenue and profit contribution
Since the acquisition date, AEI and Actiontec Shanghai had contributed US$57,161,000 (equivalents to
approximately RMB381,274,000) and RMB10,635,000 to revenue and US$1,852,000 (equivalents to approximately
RMB12,324,000) and loss of RMB2,477,000 to profit for the year ended 31 December 2022 respectively.
If the acquisition of AEI had occurred on 1 January 2022, consolidated pro-forma revenue and profit for the
year ended 31 December 2022 would have been increased by approximately RMB21,508,000 and decreased by
approximately RMB15,215,000 respectively.
If the acquisition of Actiontec Shanghai had occurred on 1 January 2022, consolidated pro-forma revenue and
profit for the year ended 31 December 2022 would had been increased by approximately RMB3,197,000 and
RMB2,122,000 respectively.
APPENDIX I ACCOUNTANTS’ REPORT
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 Goodwill
Goodwill arose from the acquisition of AEI because the consideration paid included amounts in relation to the
revenue growth and future market development of the business acquired. These benefits were not recognised
separately from goodwill, because they did not meet the recognition criteria for identifiable intangible assets.
Goodwill arising from the acquisitions were not expected to be deductible for tax purpose.
39. FINANCIAL RISK MANAGEMENT AND FAIR V ALUE MEASUREMENTS
The Group is exposed to financial risks through its use of financial instruments in its ordinary course of
operations and in its investment activities. The financial risks include market risk (including foreign currency risk,
interest rate risk and other price risk), credit risk and liquidity risk. The Group’s overall risk management strategy
seeks to minimise potential adverse effects on the Group’s financial performance. Risk management is carried out by
the senior management of the Group.
There has been no change to the types of the Group’s exposure in respect of financial instruments or the
manner in which it manages and measures the risks.
39.1 Categories of financial assets and liabilities
The Group
The carrying amounts presented in the consolidated statements of financial position relate to the following
categories of financial assets and financial liabilities:
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Financial assets at amortised cost
Trade and bills receivables /H1118/H1118/H1118/H1118/H1118/H11181,606,878 1,115,577 1,238,116 1,580,191
Deposits and other receivables /H1118/H1118/H1118/H11184,460 8,441 14,660 11,720
Pledged deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111835,500 20,000 20,000 20,000
Cash and cash equivalents /H1118/H1118/H1118/H1118/H1118/H1118/H1118354,707 417,977 507,341 588,231
2,001,545 1,561,995 1,780,117 2,200,142
Financial assets at FVTPL
Other financial assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,560 14,560 14,560 14,560
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Financial liabilities measured at
amortised cost
Trade and bills payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,780,381 864,443 1,234,954 1,594,909
Other payables and accruals /H1118/H1118/H1118/H1118/H1118/H1118180,566 137,203 148,472 112,570
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111881,926 183,557 156,072 147,765
Bank borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118913,014 1,111,827 1,083,600 1,774,058
Other borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118268,971 41,609 – –
3,224,858 2,338,639 2,623,098 3,629,302
APPENDIX I ACCOUNTANTS’ REPORT
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39.2 Foreign currency risk
The Group’s subsidiaries mainly operate in the PRC, the USA and Japan and majority of the transactions are
settled in RMB, USD and JPY , being the functional currency of the Group entities to which the transactions relate.
Foreign currency risk arises when future commercial transactions and recognised assets and liabilities are
denominated in a currency that is not the respective functional currency of the Group’s subsidiaries.
The summary quantitative data about the Group’s exposure to currency risk as reported to the management of
the Group is as follows:
Exposure to foreign currencies as at 31 December 2022
USD JPY Other currencies Total
RMB’000 RMB’000 RMB’000 RMB’000
Assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,722,078 3,007 6,015 1,731,100
Liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(510,265) (11,672) – (521,937)
Net exposure /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,211,813 (8,665) 6,015 1,209,163
Exposure to foreign currencies as at 31 December 2023
USD JPY Other currencies Total
RMB’000 RMB’000 RMB’000 RMB’000
Assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,211,165 6,749 8,836 1,226,750
Liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(289,431) (7,127) (7) (296,565)
Net exposure /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118921,734 (378) 8,829 930,185
Exposure to foreign currencies as at 31 December 2024
USD JPY Other currencies Total
RMB’000 RMB’000 RMB’000 RMB’000
Assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,497,795 11,333 3,951 1,513,079
Liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(471,109) (3,491) (125) (474,725)
Net exposure /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,026,686 7,842 3,826 1,038,354
Exposure to foreign currencies as at 30 June 2025
USD JPY Other currencies Total
RMB’000 RMB’000 RMB’000 RMB’000
Assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,009,309 13,717 4,632 2,027,658
Liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(632,062) (3,603) (1,659) (637,324)
Net exposure /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,377,247 10,114 2,973 1,390,334
As at 31 December 2022, 2023, 2024 and 30 June 2025, if RMB appreciates or depreciates by 5% against the
USD, the net profit of the Group will increase or decrease by RMB60,591,000, RMB46,087,000, RMB51,334,000 and
RMB68,862,000. Management believes that 5% is a reasonable range of possible changes in the RMB against the
USD.
Other change in foreign exchange rates have no significant impact on foreign currency risk.
39.3 Interest rate risk
Other than the interest-bearing bank deposits, the Group has no other significant interest-bearing assets bearing
variable rates. It is not anticipated there is any significant impact to these interest-bearing assets resulted from the
changes in interest rates, because the interest rates of bank balances are not expected to change significantly.
The Group’s bank borrowings bearing floating rates expose the Group to cash flow interest rate risk. The
Group has not hedged against such a risk as it does not see the benefit in so doing.
APPENDIX I ACCOUNTANTS’ REPORT
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Based on the balance of its interest-bearing borrowings as at 31 December 2022, 2023, 2024 and six months
ended 30 June 2025, it is estimated that should there be a general increase/decrease of 100 basis point change in
interest rates, the Group’s results of operations profits for the years ended 31 December 2022, 2023, 2024 and 30 June
2025 would be affected by approximately RMB561,000, RMB582,000, RMB1,784,000 and RMB3,137,000,
respectively.
39.4 Price risk
The Group is not exposed to significant price risk as there has been no involvement with equity investment
on an active market.
39.5 Credit Risk
Credit risk refers to the risk that the counterparty to a financial instrument would fail to discharge its obligation
under the terms of the financial instrument and cause a financial loss to the Group.
The Group’s maximum exposure to credit risk for the components of the consolidated statements of financial
position at 31 December 2022, 2023, 2024 and 30 June 2025 is the carrying amount as disclosed in note 39.1.
Trade receivables from third parties
The Group’s policy is to deal with credit worthy counterparties. Credit terms are granted to new
customers after a credit worthiness assessment. When considered appropriate, customers may be requested to
provide proof as to their financial position. Where available at reasonable cost, external credit ratings and/or
reports on customers are obtained and used. Shorter or no credit terms are granted to the customers who are
not considered creditworthy are required to pay on delivery of goods and services. Payment record of
customers is closely monitored. It is not the Group’s policy to request collateral from its customers.
As at 31 December 2022, 2023, 2024 and 30 June 2025, in terms of gross carrying amounts, 39.1%,
28.2%, 42.6% and 38.5% of the total trade receivables was due from the Group’s largest customer, and 62.7%,
69.3%, 68.8% and 67.4% of the total trade receivables were due from the Group’s top five customers.
The Group applied the simplified approach to provide for impairment for ECL prescribed by IFRS 9,
which permits the use of the lifetime expected loss provision for impairment of all trade receivables.
For trade receivables, the Group assesses ECL under IFRS 9 based on shared credit risk characteristics
and aging as well as the corresponding historical credit losses during that period. The Directors assessed these
relevant information of the debtors as at 31 December 2022, 2023, 2024 and 30 June 2025. Based on the
assessment, the Directors considered that there was no material change of the credit risk on the Group’s trade
receivables as at 31 December 2022, 2023, 2024 and 30 June 2025. As at 31 December 2022, 2023 and 2024,
loss rate of 1.02%, 10%, 50% and 100% were adopted by the Group for the trade receivables aged within 1
year, 1 to 2 years, 2 to 3 years and over 3 years, respectively. As at 30 June 2025, loss rate of 1.04%, 10%,
50% and 100% were adopted by the Group for the trade receivables aged within 1 year, 1 to 2 years, 2 to 3
years and over 3 years, respectively.
Trade receivables are written off (i.e. derecognised) when there is no reasonable expectation of recovery.
Failure to engage with the Group on alternative payment arrangement amongst other is considered indicators
of no reasonable expectation of recovery.
Other financial assets at amortised cost
Other financial assets at amortised cost include deposits, other receivables, pledged deposits and cash
at bank.
In order to minimise the credit risk of deposits and other receivables, the management would make
periodic collective and individual assessment on the recoverability of other receivables based on historical
settlement records and past experience as well as current external information, and adjusted to reflect
probability-weighted forward-looking information, including the default rate where the relevant debtors
operates. Other monitoring procedures are in place to ensure that follow-up action is taken to recover overdue
debts.
The Group applies the IFRS 9 three-stage approach to measure ECL for deposits and other receivables.
APPENDIX I ACCOUNTANTS’ REPORT
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As at 31 December 2022, 2023, 2024 and 30 June 2025, since the credit risk of deposits and other
receivables of approximately RMB4,135,000, RMB4,900,000, RMB9,491,000 and RMB5,941,000 is
considered not significantly increased since initial recognition, therefore the impairment provision is
determined as 12-month ECL, and ECL rates of 5%, 5%, 5% and 5%, were provided.
As at 31 December 2022, 2023, 2024 and 30 June 2025, the Group determines that the credit risk of
deposits and other receivables of approximately RMB592,000, RMB4,271,000, RMB8,123,000 and
RMB10,013,000 is considered significantly increased since initial recognition, therefore the impairment
provision is determined as lifetime ECL (non-credited impaired), and ECL rates of 10.49%, 11.35%, 30.52%
and 39.32%, were provided, while RMB5,604,000, RMB5,152,000, RMB2,749,000 and RMB2,747,000 is
determined as lifetime ECL (credited impaired) respectively, therefore, full provision was provided as at 31
December 2022, 2023, 2024 and 30 June 2025.
To manage this risk arising from pledged deposits and cash at banks, the Group mainly transacts with
banks with high credit rating. There has been no recent history of default in relation to these financial
institutions. The expected credit loss is minimal.
39.6 Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents. Due to the
dynamic nature of the underlying business, the Group aims to maintain flexibility in funding by maintaining adequate
cash and cash equivalents.
The contractual maturity analysis below is based on the undiscounted cash flows of the financial liabilities.
The Group
Within
1 year or on
demand
After 1 but
within
2 years
After 2 but
within
5 years After 5 years
Total
undiscounted
cash flow
Total
carrying
amount
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at 31 December 2022
Non-derivative financial
liabilities
Trade and bills payables /H11181,780,381 – – – 1,780,381 1,780,381
Other payables and
accruals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118180,566 – – – 180,566 180,566
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H111847,820 37,844 – – 85,664 81,926
Bank borrowings /H1118/H1118/H1118/H1118/H1118927,260 – – – 927,260 913,014
Other borrowings /H1118/H1118/H1118/H1118/H1118196,241 96,055 18,593 – 310,889 268,971
3,132,268 133,899 18,593 – 3,284,760 3,224,858
Within
1 year or on
demand
After 1 but
within
2 years
After 2 but
within
5 years After 5 years
Total
undiscounted
cash flow
Total
carrying
amount
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at 31 December 2023
Non-derivative financial
liabilities
Trade and bills payables /H1118 864,443 – – – 864,443 864,443
Other payables and
accruals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118137,203 – – – 137,203 137,203
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H111845,715 23,770 73,728 72,800 216,013 183,557
Bank borrowings /H1118/H1118/H1118/H1118/H11181,134,174 – – – 1,134,174 1,111,827
Other borrowings /H1118/H1118/H1118/H1118/H111843,107 – – – 43,107 41,609
2,224,642 23,770 73,728 72,800 2,394,940 2,338,639
APPENDIX I ACCOUNTANTS’ REPORT
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Within
1 year or on
demand
After 1 but
within
2 years
After 2 but
within
5 years After 5 years
Total
undiscounted
cash flow
Total
carrying
amount
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at 31 December 2024
Non-derivative financial
liabilities
Trade and bills payables /H11181,234,954 – – – 1,234,954 1,234,954
Other payables and
accruals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118148,472 – – – 148,472 148,472
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H111826,688 27,005 77,595 50,363 181,651 156,072
Bank borrowings /H1118/H1118/H1118/H1118/H11181,008,231 92,678 – – 1,100,909 1,083,600
2,418,345 119,683 77,595 50,363 2,665,986 2,623,098
Within
1 year or on
demand
After 1 but
within
2 years
After 2 but
within
5 years After 5 years
Total
undiscounted
cash flow
Total
carrying
amount
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at 30 June 2025
Non-derivative financial
liabilities
Trade and bills payables 1,594,909 – – – 1,594,909 1,594,909
Other payables and
accruals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118112,570 – – – 112,570 112,570
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H111827,592 27,433 78,239 36,692 169,956 147,765
Bank borrowings /H1118/H1118/H1118/H1118/H11181,721,779 78,621 – – 1,800,400 1,774,058
3,456,850 106,054 78,239 36,692 3,677,835 3,629,302
39.7 Fair value measurements
Financial assets and liabilities measured at fair value in the consolidated statements of financial position are
grouped into three levels of a fair value hierarchy. The three levels are defined based on the observability and
significance of inputs to the measurements, as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities.
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly or indirectly, and not using significant unobservable inputs.
Level 3: significant unobservable inputs for the asset or liability.
The level in the fair value hierarchy within which the financial asset or liability is categorised in its entirety
is based on the lowest level of input that is significant to the fair value measurement.
The financial assets measured at fair value in the consolidated statements of financial position on a recurring
basis are grouped into the fair value hierarchy as follows:
As at 31 December 2022
Level 1 Level 2 Level 3 Total
RMB’000 RMB’000 RMB’000 RMB’000
Financial assets at FVTPL
– Unlisted equity investments /H1118/H1118/H1118/H1118/H1118– – 4,560 4,560
APPENDIX I ACCOUNTANTS’ REPORT
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As at 31 December 2023
Level 1 Level 2 Level 3 Total
RMB’000 RMB’000 RMB’000 RMB’000
Financial assets at FVTPL
– Unlisted equity investments /H1118/H1118/H1118/H1118/H1118– – 14,560 14,560
As at 31 December 2024
Level 1 Level 2 Level 3 Total
RMB’000 RMB’000 RMB’000 RMB’000
Financial assets at FVTPL
– Unlisted equity investments /H1118/H1118/H1118/H1118/H1118– – 14,560 14,560
As at 30 June 2025
Level 1 Level 2 Level 3 Total
RMB’000 RMB’000 RMB’000 RMB’000
Financial assets at FVTPL
– Unlisted equity investments /H1118/H1118/H1118/H1118/H1118– – 14,560 14,560
The following table summarizes the quantitative information about the significant unobservable inputs used in
level 3 fair value measurements and the sensitivity analysis of fair value to the inputs:
Fair value
Valuation
technique
Significant
unobservable
input
Range of
inputs
(probability-
weighted
average)
Sensitivity
of fair
value to
the input
As at 31 December
As at
30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Financial assets at
FVTPL
– Unlisted equity
investments /H1118/H1118/H1118
4,560 14,560 14,560 14,560 Recent
transaction
price
N/A N/A N/A
40. CAPITAL MANAGEMENT
The Group’s capital management objectives are to ensure the Group’s ability to continue as a going concern
and to provide an adequate return to shareholders by pricing goods and services commensurately with the level of
risk.
In order to maintain a desirable ratio, the Group may adjust the amount of dividends paid to shareholders, issue
new shares, return capital to shareholders, raise new debt financing or sell assets to reduce debt.
The Group monitors its capital structure on the basis of the debt to asset ratio (i.e. total liabilities divided by
total assets). As at 31 December 2022, 2023, 2024 and 30 June 2025, the Group’s debt to asset ratio is 63.2%, 51.7%,
52.6% and 59.4% respectively.
APPENDIX I ACCOUNTANTS’ REPORT
– I-84 –


--- page 527 ---
41. CONTINGENT LIABILITIES
CIG US is involved in a patent infringement lawsuit in the Northern District of California concerning eight
patents related to optical module technologies. The court stayed the case in April 2025 after CIG US initiated inter
partes review (IPR) proceedings for five of the patents. By late August 2025, four of the petitions were denied and
one was granted, with oral arguments for the granted petition scheduled for June 2026. CIG USA is asking to review
two of the rejected petitions and plans to challenge by filing a writ of mandamus with the U.S. Court of Appeals. In
the opinion of the Directors, the court will resume litigation after all IPR outcomes are finalized, and no contingent
liability has been recognized.
As of 31 December 2022, 2023, 2024 and 30 June 2025, the Group did not have any other material contingent
liabilities, except for disclosed above.
42. EVENTS AFTER THE REPORTING DATE
On 18 August 2025, the Board of Directors resolved to distribute an interim dividend, representing not less
than 10% of net profit for six months ended 30 June 2025 (i.e. approximately RMB 12,114,000). The interim dividend
proposed after 30 June 2025 has not been recognised as a liability as at 30 June 2025.
The Group has evaluated the events after 30 June 2025 through the date of these Historical Financial
Information. The Group is not aware of any other significant events after 30 June 2025 that would require recognition
or disclosure in the Historical Financial Information except as disclosed above.
43. SUBSEQUENT FINANCIAL STATEMENTS
No audited financial statements have been prepared by the Company or any of the Companies now comprising
the Group in respect of any period subsequent to 30 June 2025 and up to the date of this report.
APPENDIX I ACCOUNTANTS’ REPORT
– I-85 –


--- page 528 ---
The following information set out in this Appendix does not form part of the Accountants’
Report from Grant Thornton Hong Kong Limited, Certified Public Accountants, the Company’ s
reporting accountants, as set out in Appendix I to this Prospectus, and is included herein for
illustrative purposes only. The unaudited pro forma financial information should be read in
conjunction with the section headed “Financial Information” in this Prospectus and the
Accountants’ Report set out in Appendix I to this Prospectus.
A. UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET
TANGIBLE ASSETS
The following unaudited pro forma statement of adjusted consolidated net tangible assets
of the Group has been prepared in accordance with paragraph 4.29 of the Listing Rules for the
purpose of illustrating the effect of the Global Offering as if it had taken place on 30 June 2025
and based on the audited consolidated net tangible assets of the Group attributable to the
owners of the Company as at 30 June 2025 as derived from the Accountants’ Report, the text
of which is set out in Appendix I to this Prospectus, and adjusted as described below.
The unaudited pro forma statement of adjusted consolidated net tangible assets has been
prepared for illustrative purposes only and, because of its hypothetical nature, it may not give
a true picture of the consolidated net tangible assets of the Group had the Global Offering been
completed as at 30 June 2025 or any future dates:
Audited
consolidated net
tangible assets of
the Group
attributable to
owners of the
Company as at
30 June 2025
Estimated net
proceeds from the
Global Offering
Unaudited pro
forma adjusted
consolidated net
tangible assets
of the Group
attributable to
the owners of
the Company as
at 30 June 2025
Unaudited pro forma adjusted
consolidated net tangible
assets per share
RMB’000 RMB’000 RMB’000 RMB HK$
(Note 1) (Note 2) (Note 3) (Note 4)
Based on the Offer Price of
HK$68.88 per H Share /H1118/H1118/H11181,749,601 4,092,381 5,841,982 17.44 19.10
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-1 –


--- page 529 ---
Notes:
(1) The adjusted consolidated net tangible assets of the Group attributable to the owners of the Company as at
30 June 2025 is extracted from the Accountants’ Report of the Company as set out in Appendix I to this
Prospectus, which is based on the audited consolidated net assets of the Group attributable to the owners of
the Company of approximately RMB2,396,262,000 with adjustments for the goodwill and intangible assets
attributable to the owners of the Company as at 30 June 2025 of RMB98,969,000 and RMB547,692,000,
respectively.
(2) The estimated net proceeds from the Global Offering are based on 67,010,500 H Shares and the indicative
Offer Price of HK$68.88 (equivalent to RMB62.89) per H Share after deduction of the estimated underwriting
fee and other estimated listing-related expenses incurred or expected to be incurred by the Group subsequent
to 30 June 2025, other than those expenses which had been recognised in profit or loss prior to 30 June 2025,
and takes no account of any Shares which may be allotted and issued by the Company pursuant to the exercise
of the Over-allotment Option, any Shares that may be issued by the Company pursuant to the exercise of
options or the vesting of restricted shares or other awards that have been or may be granted from time to time
under the Share Schemes or any Shares which may be issued or repurchased by the Company after the Latest
Practicable Date.
(3) The unaudited pro forma adjusted consolidated net tangible assets per Share is arrived at after the adjustments
referred to in the preceding paragraph and on the basis that 335,030,341 Shares (representing 268,041,841
Shares in issue as at 30 June 2025, excluding 22,000 Shares held for restricted shares incentive scheme as at
30 June 2025, adding 67,010,500 Offer Shares) were in issue, assuming that the Global Offering had been
completed on 30 June 2025 but does not take into account of any Shares which may be allotted and issued by
the Company pursuant to the exercise of the Over-allotment Option, any Shares that may be issued by the
Company pursuant to the exercise of options or the vesting of restricted shares or other awards that have been
or may be granted from time to time under the Share Schemes or any Shares which may be issued or
repurchased by the Company after the Latest Practicable Date.
(4) For the purpose of the unaudited pro forma statement of adjusted consolidated net tangible assets per Share,
the balances stated in Renminbi are converted into Hong Kong dollars at the rate of HK$1.00 to RMB0.9130.
No representation is made that Renminbi amounts have been, could have been or may be converted to Hong
Kong dollars, or vice versa, at that date.
(5) No adjustment has been made to the unaudited pro forma adjusted consolidated net tangible assets of the Group
attributable to the owners of the Company as at 30 June 2025 to reflect any trading results or other transactions
of the Group entered into subsequent to 30 June 2025. In particular, the above unaudited pro forma adjusted
net tangible assets have not been taken into account the interim dividend which has not less than 10% of net
profit for six months ended 30 June 2025 declared on 18 August 2025. Has the interim dividend of 10% of net
profit for six months ended 30 June 2025 declared on 30 June 2025, the unaudited pro forma adjusted net
tangible assets of the Group attributable to equity holders of the Company as at 30 June 2025 would have been
decreased by approximately RMB12,114,000 while the unaudited pro forma adjusted net tangible assets of the
Group attributable to equity holders of the Company per Share as at 30 June 2025 would have been decreased
by RMB0.04 or HK$0.04.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-2 –


--- page 530 ---
The following is the text of the report received from the reporting accountants, Grant
Thornton Hong Kong Limited, Certified Public Accountants, Hong Kong for the purpose of
incorporation in this Prospectus.
B. INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON
THE COMPILATION OF THE UNAUDITED PRO FORMA FINANCIAL
INFORMATION
To the Directors of CIG Shanghai Co., Ltd.
We have completed our assurance engagement to report on the compilation of unaudited
pro forma financial information of CIG Shanghai Co., Ltd. (the “Company”) and its
subsidiaries (together, the “Group”) by the directors for illustrative purposes only. The
unaudited pro forma financial information consists of the unaudited pro forma statement of
adjusted consolidated net tangible assets of the Group as at 30 June 2025 and related notes (the
“Unaudited Pro Forma Financial Information”) as set out on pages II-1 to II-2 of the
Company’s prospectus dated 20 October 2025 (the “Prospectus”), in connection with the
proposed initial public offering of the Company’s H shares (the “Global Offering”). The
applicable criteria on the basis of which the directors have compiled the Unaudited Pro Forma
Financial Information are described on pages II-1 to II-2.
The Unaudited Pro Forma Financial Information has been compiled by the directors to
illustrate the impact of the Global Offering on the Group’s financial position as at 30 June 2025
as if the Global Offering had taken place at 30 June 2025. As part of this process, information
about the Group’s financial position has been extracted by the Directors from the Group’s
financial information for the year ended 30 June 2025, on which an accountants’ report has
been published.
Directors’ Responsibilities for the Unaudited Pro Forma Financial Information
The directors are responsible for compiling the Unaudited Pro Forma Financial
Information in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities
on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and with reference to
Accounting Guideline 7 “Preparation of Pro Forma Financial Information for Inclusion in
Investment Circulars” (“AG 7”) issued by the Hong Kong Institute of Certified Public
Accountants (the “HKICPA”).
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-3 –


--- page 531 ---
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.
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” issued by the HKICPA, 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 Unaudited Pro Forma Financial Information and to report our opinion to
you. We do not accept any responsibility for any reports previously given by us on any
financial information used in the compilation of the Unaudited Pro Forma Financial
Information beyond that owed to those to whom those reports were addressed by us at the dates
of their issue.
We conducted our engagement in accordance with Hong Kong Standard on Assurance
Engagements 3420 “Assurance Engagements to Report on the Compilation of Pro Forma
Financial Information Included in a Prospectus” issued by the HKICPA. This standard requires
that the reporting accountants plan and perform procedures to obtain reasonable assurance
about whether the directors have compiled the Unaudited Pro Forma Financial Information in
accordance with paragraph 4.29 of the Listing Rules and with reference to AG 7 issued by the
HKICPA.
For purposes of this engagement, we are not responsible for updating or reissuing any
reports or opinions on any historical financial information used in compiling the Unaudited Pro
Forma Financial Information, nor have we, in the course of this engagement, performed an
audit or review of the financial information used in compiling the unaudited pro forma
financial information.
The purpose of Unaudited Pro Forma Financial Information included in the Prospectus is
solely to illustrate the impact of a significant event or transaction on unadjusted financial
information of the Group as if the event had occurred or the transaction had been undertaken
at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any
assurance that the actual outcome of the Global Offering as at 30 June 2025 would have been
as presented.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-4 –


--- page 532 ---
A reasonable assurance engagement to report on whether the Unaudited Pro Forma
Financial Information has been properly compiled on the basis of the applicable criteria
involves performing procedures to assess whether the applicable criteria used by the directors
in the compilation of the Unaudited Pro Forma Financial Information provide a reasonable
basis for presenting the significant effects directly attributable to the event or transaction, and
to obtain sufficient appropriate evidence about whether:
 The related unaudited pro forma adjustments give appropriate effect to those
criteria; and
 The Unaudited Pro Forma Financial Information reflects the proper application of
those adjustments to the unadjusted financial information.
The procedures selected depend on the reporting accountants’ judgment, having regard to
the reporting accountants’ understanding of the nature of the Group, the event or transaction
in respect of which the Unaudited Pro Forma Financial Information has been compiled, and
other relevant engagement circumstances.
The engagement also involves evaluating the overall presentation of the Unaudited Pro
Forma Financial Information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Opinion
In our opinion:
(a) the Unaudited Pro Forma Financial Information has been properly compiled by the
directors on the basis stated;
(b) such basis is consistent with the accounting policies of the Group; and
(c) the adjustments are appropriate for the purposes of the Unaudited Pro Forma
Financial Information as disclosed pursuant to paragraph 4.29(1) of the Listing
Rules.
Grant Thornton Hong Kong Limited
Certified Public Accountants
11th Floor, Lee Garden Two
28 Y un Ping Road
Causeway Bay
Hong Kong SAR
20 October 2025
Han Pui Y u
Practising Certificate No.: P07101
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-5 –


--- page 533 ---
TAXATION OF SECURITY HOLDERS
The taxation of income and capital gains of holders of H Shares is subject to the laws and
practices of the PRC and of jurisdictions in which holders of H Shares are residents or
otherwise subject to tax. The following summary of certain relevant taxation provisions is
based on current effective laws and practices, and no predictions are made about changes or
adjustments to relevant laws or policies, and no comments or suggestions will be made
accordingly. The discussion has no intention to cover all possible tax consequences resulting
from the investment in H Shares, nor does it take the specific circumstances of any particular
investor into account, some of which may be subject to special regulations. Accordingly, you
should consult your own tax adviser regarding the tax consequences of an investment in H
Shares. The discussion is based upon laws and relevant interpretations in effect as of the date
of this Prospectus, which is subject to change or adjustment and may have a retrospective
effect. No issues on PRC or Hong Kong taxation other than income tax, capital appreciation,
and profit tax, stamp duty, and estate duty were referred to the discussion. Prospective
investors are urged to consult their financial advisers regarding the PRC, Hong Kong, and other
tax consequences of owning and disposing of H Shares.
THE PRC TAXATION
Taxation on Dividends
Individual Investors
Pursuant to the IIT Law and the Implementation Regulations for the IIT Law , which was
most recently amended on December 18, 2018, and effective on January 1, 2019, dividends
distributed by PRC enterprises are subject to individual income tax levied at a flat rate of 20%.
At the same time, according to the Notice on Issues Relating to Differentiated Individual
Income Tax Policies for Dividends and Bonuses of Listed Companies (ߎࢹٰ
) issued by the MOF, the SA T and the CSRC on
September 7, 2015, and effective on September 8, 2015, where an individual acquires stocks
of a listed company from public offering of the company or from the stock transfer market and
holds the stocks for more than one year, the income from dividends is exempt from individual
income tax; where an individual acquires stocks of a listed company from public offering of
the company or from the stock transfer market and holds the stocks for one month or less, the
full amount of such income from dividends shall be included in taxable income; if the
individual holds the stocks for more than one month to one year, 50% of such income from
dividends shall be included in taxable income; the aforesaid income is subject to an individual
income tax at a flat rate of 20%.
For a foreign individual who is not a resident of the PRC, the receipt of dividends from
an enterprise in the PRC is normally subject to an individual income tax of 20% unless
specifically exempted by the tax authority of the State Council or reduced by relevant tax
treaties.
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-1 –


--- page 534 ---
The PRC and the government of Hong Kong entered into the Arrangement between the
Mainland of the PRC 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 (ʫ
τર) (the “ Arrangement ”)
on August 21, 2006. Pursuant to the Arrangement, the PRC Government may levy taxes on the
dividends paid by a PRC-resident enterprise to Hong Kong residents (including resident
individuals and resident entities) in an amount not exceeding 10% of the total dividends
payable by the PRC-resident enterprise unless a Hong Kong resident directly holds 25% or
more of the equity interest in a PRC-resident enterprise, then such tax shall not exceed 5% of
the total dividends payable by the PRC-resident enterprise. The Fifth Protocol of the
Arrangement between Chinese 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 (<τર>ୋʞᙄ
) (the “ Fifth Protocol ”), which became effective on December 6, 2019, adds a criterion
for the qualification of entitlement to enjoy treaty benefits.
Enterprise Investors
In accordance with the EIT Law, which was promulgated by the SCNPC on March 16,
2007, and was most recently amended with immediate effect on December 29, 2018, and the
Implementation Rules of the Enterprise Income Tax Law of the PRC (ʕശɛ͏΍ձ਷Άุ
ૢԷ) most recently amended on December 6, 2024, the rate of Enterprise
Income Tax (the “ EIT”) shall be 25%. A non-resident enterprise is generally subject to a 10%
EIT on PRC-sourced income (including dividends received from a PRC resident enterprise that
issues shares in Hong Kong), if it does not have an establishment or premise in the PRC or has
an establishment or premise in the PRC but its PRC-sourced income has no real connection
with such establishment or premise. The aforesaid income tax payable by non-resident
enterprises is deducted at source, where the payer of the income is required to withhold the
income tax from the amount to be paid to the non-resident enterprise. The Circular on Issues
Relating to the Withholding and Remittance of EIT by PRC Resident Enterprises on Dividends
Distributed to Overseas Non-resident Enterprise Shareholders of H Shares (͏Ά
ุΣྤ̮H), which was
issued and implemented by the SA T on November 6, 2008, further clarified that a PRC-resident
enterprise must withhold EIT at a rate of 10% on the dividends of 2008 and onwards that it
distributes to overseas non-resident enterprise shareholders of H Shares. In addition, the
Response to Questions on Levying EIT on Dividends Derived by Non-resident Enterprise from
Holding Stock such as B Shares (͏Άุ՟੻B੻೼ਪᕚ
ҭᔧ), which was issued by the SA T and effective on July 24, 2009, further provides that
any PRC-resident enterprise whose shares are listed on overseas stock exchanges must
withhold and remit EIT at a rate of 10% on dividends of 2008 and onwards that it distributes
to non-resident enterprises. Such tax rates may be further modified pursuant to the tax treaty
or agreement that China has entered into with a relevant country or area, where applicable.
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-2 –


--- page 535 ---
Pursuant to the Arrangement, the PRC Government may levy taxes on the dividends paid
by a PRC-resident enterprise to Hong Kong residents (including resident individuals and
resident entities) in an amount not exceeding 10% of the total dividends payable by the
PRC-resident enterprise unless a Hong Kong resident directly holds 25% or more of the equity
interest in a PRC-resident enterprise, then such tax shall not exceed 5% of the total dividends
payable by the PRC-resident enterprise. The Fifth Protocol provides that such provisions shall
not apply to arrangements or transactions made for one of the primary purposes of obtaining
such tax benefits. Although there may be other provisions under the Arrangement, the treaty
benefits under the criteria shall not be granted in the circumstance where relevant gains, after
taking into account all relevant facts and conditions, are reasonably deemed to be one of the
main purposes for the arrangement or transactions which will bring any direct or indirect
benefits under this Arrangement, except when the grant of benefits under such circumstance is
consistent with relevant objective and goal under the Arrangement. The application of the
dividend clause of tax agreements is subject to the requirements of PRC tax law and regulation,
such as the Notice of the SAT on the Issues Concerning the Application of the Dividend Clauses
of Tax Agreements () issued with immediate
effect on February 20, 2009.
Tax Treaties
Non-resident investors residing in jurisdictions which have entered into treaties or
adjustments for the avoidance of double taxation with the PRC might be entitled to a reduction
of the Chinese EIT 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 but not limited to Hong Kong Special Administrative
Region, Macau Special Administrative Region, Australia, Canada, France, Germany, Japan,
Malaysia, the Netherlands, Singapore, the United Kingdom and the United States. Non-PRC
resident enterprises entitled to preferential tax rates in accordance with the relevant taxation
treaties or arrangements are required to apply to the Chinese tax authorities for a refund of the
EIT in excess of the agreed tax rate, and the refund application is subject to approval by the
Chinese tax authorities.
Taxation on Share Transfer
Individual Investors
According to IIT Law and Implementation Regulations for the IIT Law, the gains realized
from the disposal of equity interests in PRC resident enterprises are subject to an individual
income tax rate of 20%. Pursuant to Circular on Continuing to Temporarily Exempt Individual
Income Tax on Income from the Transfer of Shares by Individuals (੻
) issued by the MOF and the SA T on March 30, 1998, the
income of individuals from the transfer of shares of listed enterprises continues to be exempted
from individual income tax since January 1, 1997. On December 31, 2009, the MOF, the SA T
and the CSRC jointly issued the Circular on Related Issues on Levying Individual Income Tax
over the Income Received by Individuals from the Transfer of Restricted Shares of Listed
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-3 –


--- page 536 ---
Companies (), which
states that, since January 1, 2010, income derived by individuals from transfer of shares of
listed companies issued to the public by the listed companies and transfer of shares of listed
companies obtained from the market at the Shanghai Stock Exchange and the Shenzhen Stock
Exchange shall continue to be exempted from individual income tax. On December 27, 2024,
the MOF, the SA T and the CSRC jointly issued the Announcement on the Further Improvement
of the Administration of Individual Income Tax on the Transfer of Restricted Shares of Listed
Companies by Individuals (੻೼Ϟᗫ
ʮѓ), which was effective on the date of issuance, and any inconsistency
with this announcement shall be in accordance with this announcement.
As of the Latest Practicable Date, no aforesaid provisions have expressly provided that
individual income tax shall be levied from non-PRC resident individuals on the transfer of
shares in PRC resident enterprises listed on overseas stock exchanges. To the knowledge of the
Company, in practice, the PRC tax authorities have not levied income tax from non-PRC
resident individuals on gains from the transfer of PRC resident enterprises listed overseas.
However, there is no assurance that the PRC tax authorities will not change these practices
which could result in levying income tax on non-PRC resident individuals on gains from the
sale of H shares.
Enterprise Investors
In accordance with the EIT Law and the Implementation Rules of the Enterprise Income
Tax Law of the PRC, a non-resident enterprise is generally subject to EIT at the rate of 10%
on PRC-sourced income, including gains derived from disposal of equity interests in a PRC
resident enterprise, if it does not have an establishment or premise in the PRC or has an
establishment or premise in the PRC but its PRC-sourced income has no real connection with
such establishment or premise. Such income tax payable for non-resident enterprises is
deducted at source, where the payer of the income is required to withhold the income tax from
the amount to be paid to the non-resident enterprise. Such tax may be reduced or exempted
pursuant to relevant tax treaties or agreements on the avoidance of double taxation.
Shanghai-Hong Kong Stock Connect Taxation Policy and Shenzhen-Hong Kong Stock
Connect
Taxation Policy
On October 31, 2014 and November 5, 2016, the MOF, SA T and CSRC jointly issued the
Circular on the Relevant Taxation Policies regarding the Pilot Inter-connected Mechanism for
Trading on the Shanghai Stock Market and the Hong Kong Stock Market (ୃ̹
) and the Circular on the Relevant Taxation
Policies regarding the Pilot Inter-connected Mechanism for Trading on the Shenzhen Stock
Market and the Hong Kong Stock Market (ʝᑌʝஷዚՓ༊ᓃϞᗫ೼
), pursuant to which, the income from transfer differences and dividend and
bonus income derived by PRC enterprise investors from investing in stocks listed on the Hong
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-4 –


--- page 537 ---
Kong Stock Exchange through Shanghai-Hong Kong Stock Connect or Shenzhen-Hong Kong
Stock Connect shall be included in their total income and subject to EIT in accordance with the
law. In particular, the dividend and bonus income derived by PRC resident enterprises which
hold H shares for at least 12 consecutive months shall be exempted from EIT according to law.
H-share companies do not withhold tax on dividends and bonus income of PRC enterprise
investors, and the tax payable shall be declared and paid by enterprises.
For dividends and bonuses received by PRC individual investors investing in H shares
listed on the Hong Kong Stock Exchange through Shanghai-Hong Kong Stock Connect and
Shenzhen-Hong Kong Stock Connect, H-share companies shall submit an application to China
Securities Depository and Clearing Corporation Limited (the “ CSDC ”), which shall provide
H-share companies with a register of PRC individual investors. H-share companies shall
withhold individual income tax at a rate of 20%. Individual investors who have paid
withholding tax outside the PRC may apply for tax credits at the competent tax authorities of
the CSDC with valid tax deduction certificates. Individual income tax is levied on dividend and
bonus income derived by PRC security investment funds from investing in stocks listed on the
Hong Kong Stock Exchange through Shanghai-Hong Kong Stock Connect and Shenzhen-Hong
Kong Stock Connect in accordance with the above provisions.
On August 21, 2023, the MOF, the SA T and the CSRC jointly issued the Announcement
on the Continuation of Implementation of Individual Income Tax Policies Relating to
Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect and Mutual
Recognition of Funds between Chinese Mainland and Hong Kong (လಥeଉಥ
ʮѓ), which
stipulates that for PRC individual investors, the transfer difference income derived from
investing in stocks listed on the Hong Kong Stock Exchange through Shanghai-Hong Kong
Stock Connect and Shenzhen-Hong Kong Stock Connect and the trading of Hong Kong fund
units through mutual recognition of funds will continue to be exempt from individual income
tax on a temporary basis until December 31, 2027.
Stamp Duty
Pursuant to the Stamp Duty Law of the PRC (), which was
promulgated by the SCNPC on June 10, 2021 and effective on July 1, 2022, PRC stamp duty
is applicable to the entities and individuals that conclude taxable vouchers or conduct securities
trading within the territory of the PRC, and the entities and individuals outside the territory of
the PRC that conclude taxable vouchers that are used inside China. Therefore, the 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 the PRC.
Estate Duty
As of the Latest Practicable Date, no estate duty has been levied in the PRC under the
PRC laws.
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-5 –


--- page 538 ---
PRINCIPAL TAXATION OF OUR COMPANY IN THE PRC
Enterprise Income Tax
According to the EIT Law, enterprises and other income-generating organizations
(hereinafter collectively referred to as “enterprises”) within the territory of the PRC are the
taxpayers of EIT and shall pay EIT in accordance with the provisions of the EIT Law. The EIT
rate is 25%.
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 MOF and the SA T are entitled to enjoy a
preferential enterprise income tax rate of 15%, under which the validity period of the high and
new technology enterprise qualification shall be three years from the date of issuance of the
certificate. An enterprise can re-apply for such recognition as a high and new technology
enterprise before or after the previous certificate expires.
A resident enterprise shall mean an enterprise lawfully incorporated in the PRC or an
enterprise lawfully incorporated pursuant to the laws of a foreign country (region) but where
actual management functions are conducted in the PRC. A non-resident enterprise shall mean
an enterprise lawfully incorporated pursuant to the laws of a foreign country (region) that has
an office or premises established in the PRC with no actual management functions performed
in the PRC, or an enterprise that has income derived from or accruing in the PRC although it
does not have an office or premises in the PRC.
The EIT shall be payable by a resident enterprise for income derived from or accruing in
or outside the PRC. The EIT shall be payable by a non-resident enterprise, for income derived
from or accruing in the PRC by its office or premises established in the PRC, and for income
derived from or accruing outside the PRC for which the established office or premises has a
de facto relationship. Where the non-resident enterprise has no office or premises established
in the PRC or the income derived or accrued has no de facto relationship with the office or
premises established, the EIT shall be payable by the non-resident enterprise for income
derived from or accruing in the PRC.
Value-added Tax
According to the V A T Regulations, which was recently amended with immediate effect on
November 19, 2017, and the Implementing Rules for the Provisional Regulations on
V alue-added Tax of the PRC (), which was
recently amended on October 28, 2011 and effective on November 1, 2011, all enterprises and
individuals that engage in the sale of goods, the provision of processing, repair and
replacement services, sales of service, intangible assets and real estate and the importation of
goods within the territory of the PRC shall pay value-added tax at the rate of 0%, 6%, 11% and
17% for the different goods they sells and different services it provides, except when specified
otherwise. On December 25, 2024, the SCNPC promulgated the V alue-Added Tax Law of the
People’ s Republic of China (), which will become effective on
January 1, 2026 and the above interim regulations will be abolished.
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-6 –


--- page 539 ---
According to the Notice of the MOF and the SA T on the Relevant Policies on the
Streamlining and Combination of V alue-added Tax Rates (ᔊԻ
), the Notice of the MOF and the SA T on the Adjusting V alue
added Tax Rates () and the Announcement
of the MOF, the SA T and the General Administration of Customs on Relevant Policies for
Deepening the V alue-Added Tax Reform (೼ҷ
ʮѓ), the V A T tax rates currently implemented is 13%, 9%, 6% and 0%, and
the V A T tax rate applicable to the small-scale taxpayers is 3%.
FOREIGN EXCHANGE
The lawful currency of the PRC is Renminbi, which is currently subject to foreign
exchange control and cannot be freely converted into foreign currency. The SAFE, with the
authorization of the PBOC, is empowered with the functions of administering all matters
relating to foreign exchange, including the enforcement of foreign exchange control
regulations.
The Regulations on Foreign Exchange Control of the PRC (ʕശɛ͏΍ձ਷̮ි၍ଣ
ૢԷ), which was promulgated on January 29, 1996 and was recently amended with
immediate effect on August 5, 2008, classifies all international payments and transfers into
current account items and capital account items. Current account items are subject to the
reasonable examination of the veracity of transaction documents and the consistency of the
transaction documents and the foreign exchange receipts and payments by financial institutions
engaging in the conversion and sale of foreign currencies and supervision and inspection by the
foreign exchange control authorities. For capital account items, overseas organizations and
overseas individuals making direct investments in China shall, upon approval by the relevant
authorities in charge, process registration formalities with the foreign exchange control
authorities. Foreign exchange income received overseas can be repatriated or deposited
overseas, and foreign exchange and foreign exchange settlement funds under the capital
account are required to be used only for purposes as approved by the competent authorities and
foreign exchange administrative authorities. In the event that international revenues and
expenditures occur or may occur a material misbalance, or the national economy encounters or
may encounter a severe crisis, the State may adopt necessary safeguard and control measures
on international revenues and expenditure.
According to the Announcement on Improving the Reform of the Renminbi Exchange Rate
Formation Mechanism (ʮѓ), which was
promulgated 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 RMB exchange rate was no longer pegged to the
U.S. dollar. The PBOC would publish the closing price of the exchange rate of the RMB 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 RMB
transactions on the following working day.
APPENDIX III TAXATION AND FOREIGN EXCHANGE
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According to the relevant laws and regulations in the PRC, PRC enterprises (including
foreign investment enterprises) which need foreign exchange for current item transactions may,
without the approval of the foreign exchange administrative authorities, effect payment
through foreign exchange accounts opened at the designated foreign exchange bank, on the
strength of valid transaction receipts and proof. Foreign investment enterprises which need
foreign exchange for the distribution of profits to their shareholders and PRC enterprises
which, in accordance with regulations, are required to pay dividends to their shareholders in
foreign exchange 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 Decision of the State Council on Matters including Canceling and
Adjusting a Batch of Administrative Approval Items (ᄲҭධ
) which was promulgated by the State Council on October 23, 2014, the
approval requirement by 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 is
cancelled.
Pursuant to the Notice on Issues concerning Foreign Exchange Control Pertaining to
Overseas Listing () which was
issued by the SAFE and became effective on December 26, 2014, a domestic company shall,
within 15 business days from the date of the completion of its overseas listing issuance, register
the overseas listing with the local branch office of SAFE 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. A domestic company (except for
bank financial institutions) shall present its certificate of overseas listing to open a special
account at a local bank for its initial public offering (or follow-on offering) and repurchase
business to handle the exchange, remittance and transfer of funds for the business concerned.
According to the Circular on Further Simplifying and Improving Policies for Foreign
Exchange Administration for Direct Investment (ٜ
), which was issued on February 13, 2015 and was recently
amended with immediate effect on December 30, 2019, the confirmation of foreign exchange
registration under domestic direct investment and the confirmation of foreign exchange
registration under overseas direct investment shall be directly examined and handled by banks.
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-8 –


--- page 541 ---
According to the Notice of the State Administration of Foreign Exchange on Policies for
Reforming and Regulating the Control over Foreign Exchange Settlement under the Capital
Account (), which was
issued on June 9, 2016 and was recently amended with immediate effect on December 4, 2023,
discretionary foreign exchange settlement applies to foreign exchange capital. The tentative
percentage of foreign exchange settlement for foreign currency earnings in the capital account
of domestic institutions is 100%, subject to adjustment of the SAFE in due time in accordance
with international revenue and expenditure situations.
On January 26, 2017, the SAFE issued the Notice of the State Administration of Foreign
Exchange on Further Promoting the Reform of Foreign Exchange Administration and
Improving the Examination of Authenticity and Compliance (ආɓӉપ
) to further expand the scope of settlement for
domestic foreign exchange loans with export background under goods trading, allow
repatriation of funds under domestic guaranteed foreign loans for domestic utilization, allow
settlement for domestic foreign exchange accounts of foreign institutions operating in the Free
Trade Pilot Zones, and adopt the model of full-coverage RMB and foreign currency overseas
lending management, where a domestic institution engages in overseas lending, the sum of its
outstanding overseas lending in RMB and outstanding overseas lending in foreign currencies
shall not exceed 30% of its owner’s equity in the audited financial statements of the preceding
year.
On October 23, 2019, the SAFE issued the Notice of the State Administration of Foreign
Exchange on Further Facilitating Cross-Board Trade and Investment (׵
), which was amended with immediate effect on
December 4, 2023. The notice canceled restrictions on the domestic equity investment by
non-investment foreign-funded enterprises with their capital funds. In addition, restrictions on
the use of funds for foreign exchange settlement of domestic accounts for the realization of
assets have been removed and restrictions on the use and foreign exchange settlement of
foreign investors’ security deposits have been relaxed. Eligible enterprises in the pilot area are
also allowed to use revenues under capital accounts, such as capital funds, foreign debts and
overseas listing revenues for domestic payments without providing materials to the bank in
advance for authenticity verification on an item-by-item basis, while the use of funds should
be true, in compliance with applicable rules and conforming to the current capital revenue
management regulations.
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-9 –


--- page 542 ---
HONG KONG TAXATION
Dividend Taxation
Under the current practice of the Inland Revenue Department of Hong Kong, no tax is
payable in Hong Kong in respect of dividends paid by us.
Capital Gains and Profit Tax
No tax is imposed in Hong Kong in respect of capital gains from the sale of H Shares
effected on the Stock Exchange. Capital gains from the sale of H Shares that are derived from
outside Hong Kong but received in Hong Kong by a member of a MNE Group (as defined
under the Inland Revenue Ordinance (Cap. 112) (“IRO”) carrying on a trade, profession or
business in Hong Kong, may be chargeable to Hong Kong profits tax if the member does not
carry on specified economic activities (as defined under the IRO) in Hong Kong. Tax
exemption and relief for foreign tax imposed on the gain may apply where specific conditions
are met.
Trading gains from the sale of the H Shares by persons carrying on a trade, profession or
business in Hong Kong, where such gains are derived from or arise in Hong Kong from such
trade, profession or business will be subject to Hong Kong profits tax, which is currently
imposed at the maximum rate of 16.5% on corporations and at the maximum rate of 15% on
unincorporated businesses. A concessionary tax rate at half of the applicable tax rate may apply
to the first HKD2 million of assessable profits of corporations or unincorporated businesses.
Certain categories of taxpayers (for example, financial institutions, insurance companies and
securities dealers) are likely to be regarded as deriving trading gains rather than capital gains
unless these taxpayers can prove that the investment securities are held for long-term
investment purposes.
Trading gains from sales of H Shares effected on the Stock Exchange will be considered
to be derived from or arise in Hong Kong. Liability for Hong Kong profits tax would thus arise
in respect of trading gains from sales of H Shares effected on the Stock Exchange realized by
persons carrying on a business of trading or dealing in securities in Hong Kong.
Hong Kong has also introduced the Inland Revenue (Amendment) (Minimum Tax for
Multinational Enterprise Groups) Ordinance 2025 to implement a domestic minimum top-up
tax. For all fiscal years commencing on or after 1 January 2025, income of a constituent entity
of an in-scope MNE group that is located in Hong Kong may also be subject to top-up tax.
APPENDIX III TAXATION AND FOREIGN EXCHANGE
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Stamp Duty
Hong Kong stamp duty, currently charged at the ad valorem rate of 0.10% on the higher
of the consideration for or the market value of the H Shares, will be payable by the purchaser
on every purchase and by the seller on every sale of the Hong Kong securities, including H
Shares (in other words, a total of 0.20% is currently payable on a typical sale and purchase
transaction involving H Shares). In addition, a fixed duty of HK$5.00 is currently payable on
any instrument of transfer of H Shares. Where one of the parties is a resident outside Hong
Kong and does not pay the ad valorem duty due by it, the duty not paid will be assessed on the
instrument of transfer (if any) and will be payable by the transferee. If no stamp duty is paid
on or before the due date, a penalty of up to ten times the duty payable may be imposed.
Estate Duty
Pursuant to the Revenue (Abolition of Estate Duty) Ordinance 2005, estate duty ceased
to be chargeable in Hong Kong in respect of the estates of persons dying on or after
February 11, 2006.
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-11 –


--- page 544 ---
This appendix summarizes certain aspects of the PRC laws and regulations which are
relevant to our Company’s operations and business. Laws and regulations relating to taxation
in the PRC are discussed separately in “Taxation and Foreign Exchange” in Appendix III to this
Prospectus. This appendix also contains a summary of laws and regulatory provisions of the
PRC Company Law. The principal objective of this summary is to provide potential investors
with an overview of the principal laws and regulatory provisions applicable to our Company.
This summary is not intended to include all the information which is important to the potential
investors. For a discussion of laws and regulations which are relevant to our Company’s
business, see “Regulatory Overview” for details.
THE PRC LEGAL SYSTEM
The PRC legal system is based on the PRC Constitution () (the
“Constitution ”), and is made up of written laws, administrative regulations, local regulations,
separate regulations, rules and regulations of departments of the State Council, rules and
regulations of local governments, autonomous regulations, separate regulations of autonomous
regions, special administrative region law and international treaties and other regulatory
documents signed by the PRC government. Court decisions do not constitute 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 (ʕശɛ͏΍ձ਷ͭ
) (the “ Legislation Law ”), which was amended by the NPC on 13 March 2023 and
became effective on 15 March 2023, the NPC and the SCNPC are empowered to exercise the
legislative power of the State. The NPC has the power to formulate and amend basic laws
governing criminal and civil matters, state organs and other matters. The SCNPC is empowered
to formulate and amend laws other than those required to be enacted by the NPC and to
supplement and amend any parts of laws enacted by the NPC during the adjournment of the
NPC, provided such supplements and amendments are not in conflict with the basic principles
of such laws.
The State Council is the highest organ of state administration and has the power to
formulate administrative regulations based on the Constitution and laws. The people’s
congresses of provinces, autonomous regions and municipalities and their respective standing
committees may formulate local regulations based on the specific circumstances and actual
needs of their respective administrative areas, provided that such local regulations do not
contravene any provision of the Constitution, laws or administrative regulations. The people’s
congresses of cities divided into districts and their standing committees may formulate local
regulations on matters such as urban and rural construction and management, environmental
protection and historical and cultural protection based on the specific circumstances and actual
needs of such cities, provided that such local regulations do not contravene any provision of
the Constitution, laws, administrative regulations and local regulations of such provinces or
autonomous regions. Where laws have other stipulations on matters of local regulations
formulated by cities divided into districts, such stipulations shall prevail. The local regulations
of cities divided into autonomous regions need to be approved before implementation.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS
– IV-1 –


--- page 545 ---
The standing committees of the people’s congresses of provinces or autonomous regions
shall examine the legality of local regulations submitted for approval, and such approval
should be granted within four months if they are not in conflict with the Constitution, laws,
administrative regulations and local regulations of their respective provinces or autonomous
regions. People’s congresses of national autonomous areas have the power to enact autonomous
regulations and separate regulations in the light of the political, economic and cultural
characteristics of the nationality (nationalities) in the areas concerned. The ministries,
commissions, PBOC, National Audit Office of the State Council and institutions with
administrative functions directly under the State Council may formulate rules and regulations
within the jurisdiction of their respective departments based on the laws and the administrative
regulations, decisions and rulings of the State Council.
The Constitution has supreme legal authority and no laws, administrative regulations,
local regulations, autonomous regulations or separate regulations or rules may contravene the
Constitution. The authority of laws is greater than that of administrative regulations, local
regulations and rules. The authority of administrative regulations is greater than that of local
regulations and rules. The authority of the rules enacted by the people’s governments of the
provinces and autonomous regions is greater than that of the rules enacted by the people’s
governments of the cities divided into districts within their respective administrative regions.
The NPC has the power to alter or annul any inappropriate laws enacted by the SCNPC,
and to annul any autonomous regulations and separate regulations which have been approved
by the SCNPC but which contravene the Constitution and the Legislation Law; the SCNPC has
the power to annul administrative regulations that contravene the Constitution and laws, to
annul local regulations that contravene the Constitution, laws and administrative regulations,
and to annul autonomous regulations and separate regulations which have been approved by the
standing committees of the people’s congresses of the relevant provinces, autonomous regions
or municipalities directly under the Central Government, but which contravene the
Constitution and the Legislation Law; the State Council has the power to alter or annul any
inappropriate ministerial rules and rules of local governments; the people’s congresses of
provinces, autonomous regions and municipalities directly under the Central Government have
the power to alter or annul any inappropriate local regulations enacted or approved by their
respective standing committees; the standing committees of the local people’s congresses have
the power to annul inappropriate rules enacted by the people’s governments at the
corresponding level; the people’s governments of provinces and autonomous regions have the
power to alter or annul any inappropriate rules enacted by the people’s governments at a lower
level.
According to the Constitution and the Legislation Law, the power to interpret laws is
vested in the SCNPC. According to the Decision of the SCNPC Regarding the Strengthening
of Interpretation of Laws (Ӕᙄ)
passed by the SCNPC and effective on 10 June 1981, the Supreme People’s Court shall give
interpretation on questions involving the specific application of laws and decrees in court
trials. The Supreme People’s Procuratorate shall interpret all issues involving the specific
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS
– IV-2 –


--- page 546 ---
application of laws and decrees in the procuratorial work. 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 competent authorities.
Where the scope of local regulations needs to be further defined or additional stipulations
need to be made, the standing committees of the people’s congresses of provinces, autonomous
regions and municipalities directly under the Central Government which have enacted these
regulations shall provide the interpretations or make the stipulations. Interpretation of
questions involving the specific application of local regulations shall be provided by the
competent departments of the people’s governments of provinces, autonomous regions and
municipalities.
PRC JUDICIAL SYSTEM
According to the Constitution and the Organic Law of the People’ s Courts of PRC (ʕ
) amended by the SCNPC on 26 October 2018 and becoming
effective on 1 January 2019, the PRC People’s Court is made up of the Supreme People’s
Court, the local people’s courts, and other special people’s courts. The local people’s courts are
divided into three levels, namely the basic people’s courts, the intermediate people’s courts and
the higher people’s courts. The basic 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 shall be
the highest judicial organ of the state. The Supreme People’s Court shall supervise the
administration of justice by the local people’s courts at all levels and by the special people’s
courts. The people’s courts at a higher level shall supervise the judicial work of the people’s
courts at lower levels.
According to the Constitution and the Organic Law of the People’ s procuratorates of PRC
() revised by SCNPC on 26 October 2018 and taking
effect on 1 January 2019, the People’s Procuratorate is the law supervision organ of the state.
The Supreme People’s Procuratorate shall be the highest procuratorial organ. The Supreme
People’s Procuratorate shall direct the work of the local people’s procuratorates at all levels
and of the special people’s procuratorates; the people’s procuratorates at higher levels shall
direct the work of those at lower levels.
The people’s courts employ a two-tier appellate system, and 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 court. 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
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS
– IV-3 –


--- page 547 ---
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 PRC Civil Procedure Law (ج2023ࠈࡌ)) (the
“PRC Civil Procedure Law ”), adopted by the SCNPC on 1 September 2023 and effective on
1 January 2024 sets forth the requirements for instituting a civil action, the jurisdiction of the
people’s courts, the procedures to be followed for conducting a civil action and the procedures
for enforcement of a civil judgment or order. All parties to a civil action conducted within the
PRC must comply with the PRC Civil Procedure Law. Civil cases are generally heard by the
courts where the defendants are located. The court of jurisdiction in a civil action may be
chosen by express agreement between the parties, provided that the court is located at a place
that has direct connection with the dispute, such as the plaintiff’s or the defendant’s place of
domicile, the place where the contract is performed or signed or the object of the action is
located. However, the choice of the court cannot be in conflict with the regulations of different
jurisdictions and exclusive jurisdictions in any case.
A foreign individual, a person without nationality, a foreign-invested enterprise or a
foreign organization must have the same litigation rights and obligations as a PRC citizen,
legal person or other organizations when initiating or defending any proceedings at a people’s
court. If a foreign court limits the litigation rights of PRC citizens and enterprises, the PRC
court may apply the same limitations to the citizens and enterprises of such foreign country.
A foreign individual, a person without nationality, a foreign-invested enterprise or a foreign
organization must engage a PRC lawyer if such person needs to engage a lawyer in initiating
or defending any proceedings at a people’s court. Under an international treaty or the principle
of reciprocity signed or acceded to by the PRC, the people’s court and foreign courts may
require each other to act on their behalf to serve documents, conduct investigations, collect
evidence and take other actions on behalf of each other. If the request by a foreign court would
result in the violation of the PRC’s sovereignty, security or public interest, the people’s court
shall decline the request.
All parties must comply with legally effective civil judgments and rulings. If any party
to a civil action refuses to comply with a judgment or order 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 enforcement within two years. Suspension or disruption of the time limit for applying
for such enforcement shall comply with the provisions of the applicable law concerning the
suspension or disruption of the time-barring of actions.
When a party applies to a people’s court for enforcing an effective judgment or ruling by
a people’s court against a party who is not located within the territory of the PRC or whose
property is not within the PRC, the party may apply to a foreign court with proper jurisdiction
for recognition and enforcement of the judgment or ruling. A foreign judgment or ruling may
also be recognized and enforced by the people’s court according to the PRC enforcement
procedures if the PRC has entered into, or acceded to, an international treaty with the relevant
foreign country, which provides for such recognition and enforcement, or if the judgment or
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS
– IV-4 –


--- page 548 ---
ruling satisfies the court’s examination according to the principle of reciprocity, unless among
other exceptions, the people’s court finds that the recognition or enforcement of such judgment
or ruling will result in a violation of the basic legal principles of the PRC, its sovereignty or
security, or for reasons of social and public interests.
THE PRC COMPANY LA W, TRIAL MEASURES AND GUIDELINES FOR ARTICLES
OF ASSOCIATION
A joint stock limited company established in the PRC seeking a listing on The Stock
Exchange of Hong Kong Limited is mainly subject to the following laws and regulations of the
PRC.
The PRC Company Law, was adopted by the Fifth Standing Committee Meeting of the
Eighth NPC on 29 December 1993 and came into effect on 1 July 1994, and was amended on
25 December 1999, 28 August 2004, 27 October 2005, 28 December 2013, 26 October 2018
and 29 December 2023. The latest revised PRC Company Law came into effect on 1 July 2024.
The Trial Measures and the Filing Rules promulgated by the CSRC on 17 February 2023
came into effect on 31 March 2023 and were applicable to the direct and indirect overseas share
subscription and listing of domestic companies.
According to the Trial Measures and its interpretative guidelines, where a domestic
company directly offers and list overseas, it shall formulate its articles of association in line
with the Guidelines for Articles of Association of Listed Companies (ˏ)
(the “ Guidelines for Articles of Association ”), in place of the Mandatory Provisions for
Articles of Association of Companies to be Listed Overseas (Ցྤ̮ɪ̹ʮ̡௝೻̀௪ૢ
ಛ) which ceased to apply from 31 March 2023. The Guidelines for Articles of Association
were promulgated by the CSRC on 16 December 1997 and last amended on 28 March 2025.
Set out below is a summary of the major provisions of the PRC Company Law, the Trial
Measures and the Guidelines for Articles of Association which are applicable to our Company.
General Provisions
“A joint stock limited company” means a corporate legal person incorporated under the
PRC Company Law, whose registered capital is divided into shares of equal par value. The
liability of its shareholders is limited to the extent of the shares held by them and the liability
of a company is limited to the full value of all the property owned by it.
A company must conduct its business in accordance with laws as well as public and
commercial ethics. A company may invest in other limited liability companies. The liabilities
of the company to such invested companies are limited to the amount invested. Unless
otherwise provided by laws, a company cannot be the capital contributor who has the joint
liabilities associated with the debts of the invested enterprises.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS
– IV-5 –


--- page 549 ---
Incorporation
A joint stock limited company may be incorporated by promotion or subscription. A joint
stock limited company may be incorporated by a minimum of one but not more than 200
promoters, and at least half of the promoters must have residence within the PRC.
The promoters shall convene an inaugural meeting of the company within 30 days after
the share capital has been paid-up and shall notify all subscribers the date of the meeting or
make an announcement in this regard 15 days before the meeting. The inaugural meeting may
be held only in the presence of promoters and subscribers holding more than 50% of the total
number of shares. Powers to be exercised at the inaugural meeting include but not limited to
the adoption of articles of association and the election of members of the Board of Directors
and the Supervisory Committee of a company. The aforesaid matters shall be resolved by more
than 50% of the votes to be cast by subscribers presented at the meeting.
Within 30 days after the conclusion of the inaugural meeting, the Board of Directors shall
authorize a representative to file an application for registration of establishment with the
company registration authority. A company is formally established and has the status of a legal
person after the business license has been issued by the relevant registration authority.
Registered Shares
Under the PRC Company Law, shareholders may make capital contributions in cash, or
with non-monetary property that may be valued in money and legally transferred, such as
contribution in kind or with an intellectual property right, land use rights, shareholding or
claims.
The Trial Measures provides that domestic enterprises that are listed overseas may raise
funds and distribute dividends in foreign currencies or Renminbi.
Under the PRC Company Law, a joint stock limited company is required to maintain a
register of shareholders, detailing the following information: (i) the name and domicile of each
shareholder; (ii) the class and number of shares subscribed for by each shareholder; (iii) the
serial number of shares if issued in paper form; and (iv) the date on which each shareholder
acquired the shares.
Allotment and Issue of Shares
All issue of shares of a joint stock limited company shall be based on the principles of
equality and fairness. The same class of shares must carry equal rights. Shares issued at the
same time and within the same class must be issued on the same conditions and at the same
price. It may issue shares at par value or at a premium, but it may not issue shares below the
par value.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS
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Domestic enterprises issuing and listing overseas shall file with the CSRC in accordance
with Trial Measures, submit filing reports, legal opinions and other relevant materials, and
truthfully, accurately and completely explain shareholder information and other information.
Where a domestic enterprise directly issues and is listed overseas, the issuer shall file with the
CSRC. If a domestic enterprise is indirectly listed overseas, the issuer shall designate a major
domestic operating entity as the domestic responsible person and file with the CSRC.
Increase in Share Capital
Under the PRC Company Law, in the case of a joint stock limited company issuing new
shares, resolutions shall be passed at the Shareholders’ Meeting in respect of the class and
number of new shares, the issue price of the new shares, the commencement and end dates for
the issuance of new shares and the class and number of the new shares proposed to be issued
to existing shareholders, if any. Additionally, if a company intends to make public offering of
shares, it is required to complete the registration with the securities regulatory authority of the
State Council and announce the prospectus.
Reduction of Share Capital
A company may reduce its registered capital in accordance with the following procedures
prescribed by the PRC Company Law:
(i) to prepare a balance sheet and a property list;
(ii) a company makes a resolution at Shareholders’ Meeting to reduce its registered
capital;
(iii) a company shall inform its creditors within 10 days and publish an announcement
in newspapers or the National Enterprise Credit Information Publicity System within
30 days after the approval of resolution of reducing registered capital;
(iv) the creditors shall have the right to require a company to repay its debts or provide
corresponding guarantees within 30 days after receiving the notice or within 45 days
after the announcement if the creditors have not received the notice;
(v) when a company reduces its registered capital, it shall register the change with a
company registration authority in accordance with the law.
When a company reduces its registered capital, it must reduce the amount of capital
contribution or shares in proportion to the capital contribution or shares held by the
shareholders, unless otherwise prescribed by any law, or agreed upon by all the shareholders
of a limited liability company, or as specified in the articles of association of a joint stock
limited company.
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Repurchase of Shares
Under the PRC Company Law, a company shall not purchase its own shares. Except for
the following circumstances:
(i) reducing the registered capital;
(ii) merging with other company that holds the shares of the company;
(iii) using the shares for employee stocks plan or equity incentives;
(iv) with respect to shareholders voting against any resolution adopted at the
Shareholders’ Meeting on the merger or division of the company, the right to
demand the company to acquire the shares held by them;
(v) using the shares for the conversion of convertible corporate bonds issued by the
company;
(vi) as required for maintenance of the corporate value and shareholders’ rights and
interests of a listed company.
The purchase of shares of a company for reasons specified in the case of (i) to (ii) above
shall be subject to the resolution of the meeting; the purchase of shares of a company for
reasons specified in the case of (iii), (v) and (vi) above shall be subject to the resolution of the
Board of Directors meeting attended by more than two-thirds of the directors in accordance
with the provisions of the articles of association or the authorization from the meeting.
Following the purchase of a company’s shares by a company in accordance with the above
provisions, such shares shall be canceled within 10 days from the date of buy-back in the case
of item (i) above; such shares shall be transferred or canceled within six months in the case of
items (ii) and (iv) above; the total numbers of share held accumulatively by the company shall
not exceed 10% of the total issued shares of a company, and shall be transferred or canceled
within three years in the case of items (iii), (v) and (vi) above.
Transfer of Shares
Shares held by a shareholder may be transferred according to the law. Under the PRC
Company Law, a shareholder should affect a transfer of his shares on an established securities
exchange according to the law or by any other means as required by the State Council.
Registered shares may be transferred by endorsement of shareholders or by other means
stipulated by laws or administrative regulations. After the transfer, a company shall record the
name and address of the transferee in the register of shareholders. No changes of registration
in the share register provided in the foregoing requirement shall be affected during a period of
20 days prior to the convening of shareholder’s meeting or 5 days prior to the record date for
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a company’s distribution of dividends. If any law, administrative regulation, or any provision
by the securities regulatory authority of the State Council specifies otherwise for the
modification of the register of shareholders of a listed company, such provisions should
prevail.
Under the PRC Company Law, shares issued by a company prior to the public offering
of shares shall not be transferred within one year from the date on which the shares of a
company are listed and traded on a securities exchange. The directors, supervisors and senior
management of the company should declare to the company the shares they hold and the
changes thereof. During the term of office as determined when they assume the posts, the
shares transferred each year should not exceed 25% of the total shares they hold of the
company. Shares of a company held by its directors, supervisors and senior management shall
not be transferred within one year from the date of a company’s listing on a securities
exchange, nor within six months after their resignation from their positions with a company.
If the shares are pledged within the time limit for restricted transfer as provided for by
laws and administrative regulations, the pledgee cannot exercise the pledge right within such
restricted period.
Shareholders
Under the PRC Company Law and Guidelines for Articles of Association the rights of a
shareholder of a company include:
(i) to receive dividends and other forms of interest distribution according to the number
of shares held;
(ii) to legally require, convene, preside over, participate in or authorize proxies of
Shareholders to attend the Shareholders’ Meeting and exercise corresponding voting
rights;
(iii) to supervise business operations of the company, provide suggestions or submit
queries;
(iv) to transfer, grant or pledge the Company’s shares held according to the provisions
of the laws, administrative regulations and the Articles of Association;
(v) to read and copy the Articles of Association, the register of Shareholders,
Shareholders’ Meeting minutes, resolutions of meetings of the Board of Directors,
resolutions of meetings of the Supervisory Committee and financial and accounting
reports;
(vi) shareholders who hold more than 3% of the company’s shares individually or
collectively for more than 180 consecutive days may inspect the company’s
accounting books and accounting vouchers as required by laws;
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(vii) to participate in the distribution of the remaining assets of the company according
to the proportion of shares held upon our termination or liquidation;
(viii) to require the company to acquire the shares from Shareholders voting against any
resolutions adopted at the Shareholders’ Meeting concerning the merger and division
of the Company;
(ix) other rights conferred by laws, administrative regulations, regulations of the
authorities, regulatory rules where the company’s shares are listed, or the Articles of
Association.
The obligations of a shareholder of a company include:
(i) to abide by laws, administrative regulations and the Articles of Association;
(ii) to provide Share capital according to the Shares subscribed for and Share
participation methods;
(iii) not to withdraw Shares unless prescribed otherwise in laws and administrative
regulations;
(iv) not to abuse Shareholders’ rights to infringe upon the interests of the Company or
other Shareholders; not to abuse the Company’s status as an independent legal entity
or the limited liability of Shareholders to damage the interests of the Company’s
creditors;
(v) to perform other duties prescribed in laws, administrative regulations, departmental
rules and the securities regulatory rules of the place where the Company’s shares are
listed.
Shareholders’ Meetings
Under the PRC Company Law, the Shareholders’ Meeting of a joint stock limited
company is made up of all shareholders. The Shareholders’ Meeting is the organ of authority
of a company, which exercises the following functions and powers:
(i) electing and replacing directors and supervisors and deciding on their
remunerations;
(ii) deliberating on and approving the reports of the Board of Directors;
(iii) deliberating on and approving the reports of the Supervisory Committee;
(iv) deliberating on and approving the plans for profit distribution and making up losses
of the company;
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(v) making resolutions on the increase or decrease of the registered capital of the
company;
(vi) making resolutions on the issuance of corporate bonds;
(vii) making resolutions on the merger, division, dissolution, liquidation or change of
corporate form of the company;
(viii) amending the articles of association; and
(ix) other functions and powers as prescribed in the articles of association.
Under the PRC Company Law, annual Shareholders’ Meetings are required to be held
once every year. An extraordinary Shareholders’ Meeting is required to be held within two
months after the occurrence of any of the following circumstances:
(i) the number of directors is less than the number stipulated in the PRC Company Law
or less than two-thirds of the number specified in the articles of association;
(ii) when the unrecovered losses of a company amount to one-third of the share capital;
(iii) shareholders individually or jointly holding 10% or more of the company’s shares
request;
(iv) when deemed necessary by the Board of Directors;
(v) the Supervisory Committee proposes to convene the meeting;
(vi) other circumstances as stipulated in the articles of association.
Shareholders’ Meeting shall be convened by the Board of Directors, and presided over by
the chairman of the Board of Directors. In the event that the chairman is incapable of
performing or 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 more than half of directors shall preside over the meeting.
If the Board of Directors is incapable of performing or is not performing its duties to
convene the Shareholders’ Meeting, the Supervisory Committee should convene and preside
over Shareholders’ Meeting in a timely manner. If the Supervisory Committee fails to convene
and preside over Shareholders’ 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’ Meeting.
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If the shareholders who separately or aggregately hold more than 10% of the shares of the
company request to convene an interim Shareholders’ Meeting, the Board of Directors and the
Supervisory Committee should, within 10 days after the receipt of such request, decide whether
to hold an interim Shareholders’ Meeting and reply to the shareholders in writing.
Notice of meeting shall state the time and venue of and matters to be considered at the
meeting and shall be given to all shareholders 20 days before the meeting. A notice of
extraordinary meeting shall be given to all shareholders 15 days prior to the meeting.
Shareholders who individually or jointly hold more than 1% of the company’s shares may
put forward interim proposals and submit them to the convener in writing 10 days before
Shareholders’ Meeting. The convener shall issue a supplementary notice of Shareholders’
Meeting within two days after receiving the proposal and announce the contents of the interim
proposal.
Under the PRC Company Law, a shareholder may entrust a proxy to attend a
Shareholders’ Meeting, and it should clarify the matters, powers and time limit of the proxy.
The proxy shall present a written power of attorney issued by the shareholder to a company and
shall exercise his voting rights within the scope of authorization. There is no specific provision
in the PRC Company Law regarding the number of shareholders constituting a quorum in a
Shareholders’ Meeting.
Under the PRC Company Law, shareholders present at a Shareholders’ Meeting have one
vote for each share they hold, except the shareholders of classified shares. However, shares
held by the company itself are not entitled to any voting rights.
The cumulative voting system may be adopted for the election of directors and
supervisors at the Shareholders’ Meeting in accordance with the provisions of the articles of
association or the resolutions of the Shareholders’ Meeting. Under the accumulative voting
system, each share shall have the same number of voting rights as the number of directors or
supervisors to be elected at the Shareholders’ Meeting, and shareholders may consolidate their
voting rights when casting a vote.
Under the PRC Company Law and the Guidelines for Articles of Association, the passing
of any resolution requires affirmative votes of shareholders representing more than half of the
voting rights represented by the shareholders who attend the Shareholders’ Meeting. Matters
relating to merger, division or dissolution of a company, increase or reduction of registered
capital, change of corporate form or amendments to the articles of association must be
approved by more than two-thirds of the voting rights held by the shareholders present at the
meeting.
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Directors
Under the PRC Company Law, a joint stock limited company should have a Board of
Directors, but a company with a small scale or a small number of shareholders can not have
a Board of Directors. A Board of Directors should consist of more than three members. The
term of office of a director shall be stipulated in the articles of association, but each term of
office shall not exceed three years. Directors may serve consecutive terms if re-elected.
Meetings of the Board of Directors shall be convened at least twice a year. All directors
and supervisors shall be noticed 10 days before the meeting for every meeting. The Board of
Directors exercises the following functions and powers:
(i) to convene Shareholders’ Meeting and report its work to the Shareholders’ Meeting;
(ii) to implement the resolutions of the Shareholders’ Meeting;
(iii) to decide on a company’s business plans and investment plans;
(iv) to formulate a company’s profit distribution plan and loss recovery plan;
(v) to formulate proposals for the increase or reduction of a company’s registered
capital and the issue of corporate bonds;
(vi) to formulate plans for merger, division, dissolution or change of corporate form of
a company;
(vii) to decide on the internal management structure of a company;
(viii) to decide on the appointment or dismissal of the manager of a company and their
remuneration; to decide on the appointment or dismissal of the deputy manager and
financial officer of a company based on the nomination of the manager and as well
as remuneration;
(ix) to formulate a company’s basic management system;
(x) other functions and powers specified in the articles of association or granted by the
Shareholders’ Meeting.
Board of Directors meetings shall be held only if more than half of the directors are
present. If a director is unable to attend a Board of Directors meeting, he may appoint another
director by a power of attorney specifying the scope of the authorization for another director
to attend the meeting on his behalf. If a resolution of the Board of Directors violates the laws,
administrative regulations or the articles of association, and as a result of which the company
suffers serious losses, the directors participating in the resolution shall be liable to compensate
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the company. However, if it can be proved that a director expressly objected to the resolution
when the resolution was voted on, and that such objection was recorded in the minutes of the
meeting, such director may be exempt from such liability.
Under the PRC Company Law, a person may not serve as a director of a company if he/she
is:
(i) a person without capacity or with restricted capacity;
(ii) a person who has been sentenced to any criminal penalty due to an offense of
corruption, bribery, encroachment of property, misappropriation of property, or
disrupting the order of the socialist market economy, or has been deprived of
political rights due to a crime, where a five-year period has not elapsed since the
date of completion of the sentence; if he/she is pronounced for suspension of
sentence, a two-year period has not elapsed since the expiration of the suspension
period;
(iii) a person who was a director, factory manager or manager of a company or enterprise
which has entered into insolvent liquidation and who was personally liable for the
insolvency of such company or enterprise, where less than three years have elapsed
since the date of the completion of the insolvency and liquidation of such company
or enterprise;
(iv) persons who were legal representatives of a company or enterprise which had its
business license revoked due to violation of the law and had been closed down by
order, and who were personally liable, where less than three years have elapsed
since the date of the revocation of the business license of the company or enterprise
or the order for closure; and
(v) being listed as one of “dishonest persons subject to enforcement” by the people’s
court due to his/her failure to pay off a relatively large amount of due debts.
The Board of Directors shall have one chairman, who shall be elected by more than half
of all the directors. The chairman shall exercise the following functions and powers (including
but not limited to):
(i) to preside over Shareholders’ Meetings and convene and preside over Board of
Directors meetings;
(ii) to examine the implementation of resolutions of the Board of Directors;
(iii) to exercise other powers conferred by the Board of Directors.
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Supervisors
Under the PRC Company Law, except as otherwise provided by law, a joint stock limited
company shall have a Supervisory Committee composed of not less than three members. The
Supervisory Committee 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 and the specific proportion shall be stipulated
in the articles of association.
A corporation may, in accordance with the company bylaws, have an audit committee
composed of directors under the board of directors to exercise the powers of a board of
supervisors set out in this Law, dispensing with a board of supervisors or supervisors.
Managers and Senior Management
Under the PRC Company Law, a company should have a manager who is appointed or
removed by the Board of Directors. The manager is responsible to the Board of Directors and
exercises his/her functions and powers according to the Articles of Association or the
authorization of the Board of Directors. The manager attends the meetings of the board of
directors as a non-voting member.
According to the PRC Company Law, senior management shall refer to the manager,
deputy manager(s), financial controller, secretary of the Board of Directors of listed company
and other personnel as stipulated in the articles of association of the company.
Duties of Directors, Supervisors and Senior Management
Directors, supervisors and senior management of the company are required under the PRC
Company Law to comply with the relevant laws, regulations and the articles of association, and
have fiduciary and diligent duties to the company. Directors, supervisors and senior
management are prohibited from abusing their powers to accept bribes or other unlawful
incomes and from misappropriating the company’s properties.
Directors, supervisors and senior management are prohibited from:
(i) embezzling the company’s property or misappropriating the company’s capital;
(ii) depositing the company’s capital into accounts under his own name or the name of
other individuals;
(iii) giving bribes or accepting any other illegal proceeds by taking advantage of their
power;
(iv) accepting and possessing commissions paid by a third party for transactions
conducted with the company;
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(v) unauthorized divulgence of confidential business information of the company; or
(vi) other acts in violation of their fiduciary duty to the company.
If any director, supervisor or senior management directly or indirectly concludes a
contract or conducts a transaction with the company, he/she should report the matters relating
to the conclusion of the contract or transaction to the Board of Directors or Shareholders’
Meeting, subject to the approval of the Board of Directors or shareholders according to the
articles of association.
The provisions of the preceding paragraph shall apply if any near relatives of the
directors, supervisors or senior management, or any of the enterprises directly or indirectly
controlled by the directors, supervisors or senior management or any of their near relatives, or
any related parties with any other related-party relationship with the directors, supervisors or
senior management, concludes a contract or conducts a transaction with the company.
Neither director, supervisor nor senior management may take advantage of his/her
position to seek any business opportunity that belongs to the company for himself/herself or
any other person except under any of the following circumstances:
(i) where he/she has reported to the Board of Directors or the Shareholders’ Meeting
and has been approved by a resolution of the Board of Directors or the Shareholders’
Meeting according to the Articles of Association; or
(ii) where the company cannot make use of the business opportunity as stipulated by
laws, administrative regulations or the Articles of Association.
Where any director, supervisor or senior management fails to report to the Board of
Directors or the Shareholders’ Meeting and obtain an approval by resolution of the Board of
Directors or the Shareholders’ Meeting according to the articles of association, he/she may not
engage in any business that is similar to that of the company where he/she holds office for
himself/herself or for any other person.
A director, supervisor or senior management who contravenes any law, regulation or the
company’s articles of association in the performance of his duties resulting in any loss to the
company shall be personally liable for the damages to the company.
Finance and Accounting
Under the PRC Company Law, a company shall establish its financial and accounting
systems according to laws, administrative regulations and the regulations of the financial
department of the State Council. At the end of each fiscal year, the company shall prepare a
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financial and accounting report which shall be audited by an accounting firm in accordance
with the law. The financial and accounting reports shall be prepared in accordance with the
laws, administrative regulations and the regulations of the financial department of the State
Council.
A joint stock limited company shall make its financial and accounting reports available
at the company for inspection by the shareholders 20 days before the convening of an annual
meeting of shareholders. A joint stock limited company issuing its shares in public must
publish its financial and accounting reports.
When distributing each year’s after-tax profits, the company shall set aside 10% of its
profits into its statutory reserve fund. The company can no longer withdraw statutory reserve
fund if it has accumulated to more than 50% of the registered capital.
If the statutory reserve fund of the company is insufficient to make up for the losses of
the previous years, the current year profits shall be used to make up for the losses before
making allocations to the statutory reserve in accordance with the preceding paragraph. After
the company has made an allocation to the statutory reserve fund from its after-tax profit, it
may also make an allocation to the discretionary reserve fund from its after-tax profit upon a
resolution of the meeting or the Shareholders’ Meeting.
A joint stock limited company may distribute profits in proportion to the number of shares
held by its shareholders, except for profit distributions that are not in proportion to the number
of shares held in accordance with the provisions of the Articles of Association of the joint stock
limited company.
The premium over the nominal value of the shares of a joint stock limited company from
the issue of shares, the amount of share proceeds from the issuance of no-par shares that have
not been credited to the registered capital and other incomes required by the financial
department of the State Council to be treated as the capital reserve fund shall be accounted for
as the capital reserve fund of the company.
The reserve fund of the company shall be used to make up losses of the company, expand
the production and operation of the company or increase the capital of the company. Where the
reserve fund of a company is used for making up losses, the discretionary reserve and statutory
reserve shall be firstly used. If losses still cannot be made up, the capital reserve can be used
according to the relevant provisions. When the statutory reserve fund is converted to increase
registered capital, the balance of the statutory reserve shall not be less than 25% of the
registered capital before such conversion.
The company shall not keep accounts other than those provided by law.
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Appointment and Dismissal of Accounting Firms
Pursuant to the PRC Company Law, the engagement or dismissal of an accounting firm
responsible for the company’s auditing shall be determined by a Shareholders’ Meeting, the
Board of Directors or the Supervisory Committee in accordance with the articles of association.
The accounting firm should be allowed to make representations when the meeting, the Board
of Directors or the Supervisory Committee conduct a vote on the dismissal of the accounting
firm.
The company should provide true and complete accounting evidence, accounting books,
financial and accounting reports and other accounting information to the engaged accounting
firm without any refusal or withholding or falsification of information.
The Guidelines for Articles of Association provides that the company guarantees to
provide true and complete accounting vouchers, accounting books, financial accounting reports
and other accounting materials to the employed accounting firm, and shall not refuse, conceal
or falsely report. And the audit fee of the accounting firm shall be decided by the meeting of
shareholders.
Profit Distribution
Where a company distributes profits to shareholders in violation of the provisions of the
PRC Company Law, the shareholders shall refund the profits distributed to the company, and
the shareholders, directors, supervisors, and senior management personnel who are responsible
for causing losses to the company shall bear compensation liability.
Dissolution and Liquidation
According to the PRC Company Law, a company shall be dissolved for the following
reasons:
(i) the term of business stipulated in the Articles of Association has expired or other
events of dissolution specified in the Articles of Association have occurred;
(ii) dissolution by a resolution of the shareholders’ meeting;
(iii) dissolution is necessary due to a merger or division of the company;
(iv) the business license is revoked, or the business license is ordered to be closed or
revoked in accordance with laws;
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(v) where the company encounters serious difficulties in its operation and management
and its continuance shall cause a significant loss in the interest of shareholders, and
where this cannot be resolved through other means, shareholders who hold more
than 10% of the total shareholders’ voting rights of the company may present a
petition to a people’s court for the dissolution of the company with the support of
the judgment.
If any of the situations as mentioned in the preceding paragraph arises, a company shall
publicize the situations through the National Enterprise Credit Information Publicity System
within ten days.
Where the company is dissolved in accordance with sub-paragraph (i), (ii) above and has
not yet distributed property to shareholders, it may carry on its existence by amending its
articles of association or upon a resolution of the Shareholders’ Meeting, which must be
approved by more than two-thirds of the voting rights held by the shareholders present at the
Shareholders’ Meeting. Where the company is dissolved pursuant to sub-paragraphs (i), (ii),
(iv) or (v) above, it shall be liquidated. The directors, who are the liquidation obligors of the
company, shall form a liquidation group to carry out liquidation within 15 days from the date
of occurrence of the cause of dissolution.
The liquidation group shall be composed of the directors, unless it is otherwise provided
for in the company’s Articles of Association or it is otherwise elected by the Shareholders’
Meeting. The liquidation obligors shall be liable for compensation if they fail to fulfill their
obligations of liquidation in a timely manner, and thus any loss is caused to the company or
the creditors.
The liquidation group fails to be formed within the time limit or fails to carry out the
liquidation after its formation, any interested party may request the people’s court to designate
relevant persons to form a liquidation group. The people’s court shall accept such request and
organize a liquidation group to carry out the liquidation in a timely manner.
The liquidation committee shall exercise the following functions and powers during the
liquidation period:
(i) to liquidate the company’s property and respectively prepare balance sheet and list
of property;
(ii) to notify creditors by notice or public announcement;
(iii) to deal with the outstanding business of the company involved in the liquidation;
(iv) to pay all outstanding taxes and taxes arising in the course of liquidation;
(v) to liquidate claims and debts;
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(vi) distributing the remaining property of the company after paying off debts;
(vii) to participate in civil litigations on behalf of the company.
The liquidation group shall notify the company’s creditors within ten days as of its
formation and shall make a public announcement in the newspaper or on the National
Enterprise Credit Information Publicity System within 60 days. The creditors shall file their
proofs of claim with the liquidation group within 30 days as of the receipt of the notice or
within 45 days as of the issuance of the public announcement in the case of failing to receive
such notice.
The remaining property of the company after the payment of liquidation expenses,
employees’ wages, social insurance expenses and statutory compensation, outstanding taxes
and the company’s debts, shall be distributed to shareholders in proportion to their
shareholdings.
During the liquidation period, the company shall continue to exist but shall not carry out
any business activities unrelated to the liquidation. The company’s assets shall not be
distributed to the shareholders before the liquidation in accordance with the preceding
paragraph.
If the liquidation committee, having thoroughly examined the company’s assets and
having prepared a balance sheet and an inventory of assets, discovers that the company’s assets
are insufficient to pay its debts in full, it shall file an application to a people’s court for
bankruptcy liquidation. After the people’s court accepts the application for bankruptcy, the
liquidation group shall hand over the liquidation matters to the bankruptcy administrator
designated by the people’s court.
Upon completion of the liquidation, the liquidation committee shall prepare a liquidation
report to be submitted to the Shareholders’ Meeting or the people’s court for confirmation, and
submit to the company registration authority to apply for cancellation of the company’s
registration.
The members of the liquidation group performing their duties of liquidation are obliged
to loyalty and diligence. Any member of the liquidation group who neglects to fulfill his/her
liquidation duties, thus causing any loss to the company shall be liable for compensation, and
any member of the liquidation group who causes any loss to any creditor due to his/her
intentional or gross negligence shall be liable for compensation.
Where, after three years since the business license of a company is revoked, or the
company is ordered to close down or is revoked, the company fails to apply for its
deregistration with the company registration authority, the said authority may announce the
company’s deregistration through the National Enterprise Credit Information Publicity System
for a period of no less than 60 days. If there is no objection after the announcement period
expires, the company registration authority may deregister the company.
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Overseas Listing
According to the Trial Measures, where an issuer makes an overseas initial public offering
or listing, it shall file with the CSRC within 3 working days after submitting the application
documents for overseas issuance and listing. If an issuer issues securities in the same overseas
market after overseas issuance and listing, it shall file with the CSRC within 3 working days
after the completion of the issuance. If an issuer issues and lists in other overseas markets after
overseas issuance and listing, it shall file with the CSRC within 3 working days after
submitting the application documents for overseas issuance and listing. Moreover, if the filing
materials are complete and meet the requirements, the CSRC shall complete the filing within
20 working days from the date of receiving the filing materials, and publicize the filing
information through the website. If the filing materials are incomplete or do not meet the
requirements, the CSRC shall inform the issuer of the materials to be supplemented within 5
working days after receiving the filing materials. The issuer shall supplement the materials
within 30 working days.
Loss of Share Certificates
A shareholder may, in accordance with the public notice procedures set out in the PRC
Civil Procedure Law, apply to a people’s court if his share certificate(s) in registered form is
either stolen, lost or destroyed, for a declaration that such certificate(s) will no longer be valid.
After the people’s court declared that such certificate(s) will no longer be valid, the shareholder
may apply to the company for the issue of a replacement certificate(s).
Suspension and Termination of Listing
The PRC Company Law has deleted provisions governing suspension and termination of
listing. The Securities Law has also deleted provisions regarding suspension of listing. Where
listed securities fall under the delisting circumstances stipulated by the stock exchange, the
stock exchange shall terminate its listing and trading in accordance with the business rules.
According to the Trial Measures, in case of active or compulsory termination of listing,
the issuer shall report the specific situation to the CSRC within 3 working days from the date
of occurrence and announcement of the relevant matters.
SECURITIES LA W AND REGULATIONS
In October 1992, the State Council established the Securities Committee and the CSRC.
The Securities Committee is responsible for coordinating the drafting of securities regulations,
formulating securities-related policies, planning the development of securities markets,
directing, coordinating and supervising all securities-related institutions in the PRC and
administering the CSRC. The CSRC is the regulatory arm of the Securities Committee and is
responsible for the drafting of regulatory provisions of securities markets, supervising
securities companies, regulating public offers of securities by Chinese companies in the PRC
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or overseas, regulating the trading of securities, compiling securities-related statistics and
undertaking research and analysis. In April 1998, the State Council consolidated the above two
departments and reformed the CSRC.
The Provisional Regulations for the Administration of Issuing and Trading of Shares
(၍ଣᅲБૢԷ) promulgated by the State Council and effective on 22
April 1993 provide the application and approval procedures for public offerings of shares,
trading in shares, the acquisition of listed companies, the deposit, settlement and transfer of
listed shares, the disclosure of information with respect to a listed company, investigation and
penalties and dispute arbitration.
The Regulations of the State Council Concerning the Domestic Listed Foreign Shares of
Joint Stock Limited Companies (), which
were promulgated by the State Council and came into effect on 25 December 1995, mainly
provide for the issue, subscription, trading and payment of dividends of domestic listed foreign
shares and disclosure of information of joint stock limited companies with domestic listed
foreign shares.
The Securities Law provides a series of provisions regulating, among other things, the
issue and trading of securities, takeovers by listed companies, securities exchanges, securities
companies and the duties and responsibilities of the State Council’s securities regulatory
authorities in the PRC, and comprehensively regulates activities in the PRC securities market.
The Securities Law provides that a domestic enterprise must comply with the relevant
provisions of the State Council in issuing securities directly or indirectly outside the PRC or
listing and trading its securities outside the PRC. Currently, the issue and trading of foreign
issued shares are mainly governed by the rules and regulations promulgated by the State
Council and the CSRC.
ARBITRATION AND ENFORCEMENT OF ARBITRAL A W ARDS
Under the Arbitration Law of the PRC (), or the Arbitration
Law, amended by the SCNPC on September 1 2017 and effective on January 1 2018, the
Arbitration Law is applicable to economic disputes involving foreign parties, and all parties
have entered into a written agreement to refer the matter to an arbitration committee constituted
in accordance with the Arbitration Law. An arbitration committee may, before the promulgation
by the PRC Arbitration Association of arbitration regulations, formulate interim arbitration
rules in accordance with relevant regulations under the Arbitration Law and the PRC Civil
Procedure Law. Where both parties have agreed to settle disputes by means of arbitration, the
people’s court will refuse to take legal action brought by a party in the people’s court.
Under the Arbitration Law, an arbitral award is final and binding on the parties. If a party
fails to comply with an award, the other party to the award may apply to the people’s court for
enforcement according to the PRC Civil Procedure Law. A people’s court may refuse to enforce
an arbitral award made by an arbitration commission if there is any procedural irregularity
(including irregularity in the composition of the arbitration committee or the making of an
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS
– IV-22 –


--- page 566 ---
award on matters beyond the scope of the arbitration agreement or the jurisdiction of the
arbitration commission). A party seeking to enforce an arbitral award of foreign arbitration
commission against a party who or whose property is not within the PRC shall apply to a
foreign court with jurisdiction over the case for recognition and enforcement. Similarly, an
arbitral award made by a foreign arbitration body may be recognized and enforced by the
people’s court in accordance with the principles of reciprocity or any international treaty
concluded or acceded to by the PRC.
According to the Arrangement of the Supreme People’ s Court on Mutual Enforcement of
Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region
(τર) promulgated by the
Supreme People’s Court on 24 January 2000 and effective on 1 February 2000, and the
Supplementary Arrangement of the Supreme People’ s Court on Mutual Enforcement of Arbitral
Awards between the Mainland and the Hong Kong Special Administrative Region (௰৷ɛ͏
໾̂τર) promulgated by the
Supreme People’s Court on 26 November 2020 and effective on 27 November 2020, awards
made by PRC arbitral authorities can be enforced in Hong Kong, and Hong Kong arbitration
awards are also enforceable in the PRC.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS
– IV-23 –


--- page 567 ---
This Appendix is mainly providing potential investors with an overview on the Articles
of Association of the Company. The following information is only a summary, not covering all
the information that may be material to potential investors.
INCREASE/DECREASE, REPURCHASE AND TRANSFER OF SHARES
Increase/Decrease of Shares
In light of the needs of the Company’s operation and development, and in accordance with
the provisions of laws and administrative regulations, the Company may, upon separate
resolutions adopted by the Shareholders’ Meeting, increase its capital by adopting the
following methods:
(i) offering of shares to non-specific investors;
(ii) offering of shares to specific investors;
(iii) allotting bonus shares to existing shareholders;
(iv) converting the capital reserve into share capital;
(v) other methods as prescribed by laws and administrative regulations, and approved
by the CSRC, the securities regulatory authority in the place where the Company’s
shares are listed, and the stock exchange.
According to the provisions of the Company’s Articles of Association, the Company may
reduce its registered capital. When reducing the registered capital, the Company shall follow
the procedures stipulated in the PRC Company Law, other relevant regulations, and the
Company’s Articles of Association.
Repurchase of Shares
The Company may acquire its own shares in accordance with the provisions of laws,
administrative regulations, departmental rules and regulations, and the Company’s Articles of
Association under the following circumstances:
(i) reducing the Company’s registered capital;
(ii) merging with other companies that hold shares of the Company;
(iii) using the shares for an employee shareholding plan or equity incentive;
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--- page 568 ---
(iv) where a shareholder, dissenting from the resolutions of the Company’s merger or
division passed by the Shareholders’ Meeting, requests the Company to acquire
his/her shares;
(v) using the shares to convert the convertible corporate bonds issued by the Company
into stocks;
(vi) when it is necessary for the Company to safeguard the Company’s value and the
rights and interests of its shareholders.
Except for the above-mentioned circumstances, the Company shall not acquire its own
shares.
Where the Company acquires its own shares due to the circumstances specified in item
(i) and item (ii) above, a resolution of the Shareholders’ Meeting shall be obtained. Where the
Company acquires its own shares due to the circumstances specified in item (iii), item (v) and
item (vi) above, it may, in accordance with the provisions of the Company’s Articles of
Association and on the premise of complying with the securities regulatory rules applicable to
the place where the Company’s shares are listed, pass a resolution at a meeting of the Board
of Directors attended by more than two-thirds of the directors.
As for A shares, after the Company acquires its own shares in accordance with the above
provisions, in the case of item (i), the acquired shares shall be cancelled within 10 days as of
the date of acquisition; in the case of item (ii) and item (iv), the acquired shares shall be
transferred or cancelled within 6 months; in the case of item (iii), item (v) and item (vi), the
total number of the Company’s own shares held by the Company shall not exceed 10% of the
total number of issued shares of the Company, and shall be transferred or cancelled within 3
years.
As for H shares, where laws, regulations and the securities regulatory authority in the
place where the Company’s shares are listed have otherwise prescribed relevant matters
concerning the share repurchase, such provisions shall prevail.
Transfer of Shares
The shares issued before the Company’s initial public offering of A shares shall not be
transferred within one year as of the date when the Company’s A shares are listed and traded
on a securities exchange. Where laws, administrative regulations or the securities regulatory
institution of the State Council have otherwise provided for the transfer of the shares held by
the Company’s shareholders or actual controllers, such provisions shall prevail.
Directors and senior management of the Company shall report to the Company the
number of the Company’s shares they hold and any changes thereto. During their term of
office, the number of shares they transfer each year shall not exceed 25% of the total number
of the Company’s shares they hold; and the shares of the Company they hold shall not be
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
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--- page 569 ---
transferred within one year as of the date when the Company’s shares are listed and traded.
Within six months after the above-mentioned personnel leave their positions, they shall not
transfer the shares of the Company they hold. Where the securities regulatory rules of the place
where the Company’s shares are listed have otherwise provided for the restrictions on the
transfer of the Company’s shares, such provisions shall prevail.
SHAREHOLDERS AND SHAREHOLDERS’ MEETINGS
Shareholders
The shareholders of the Company shall be entitled to the following rights:
(i) to receive dividends and other forms of profit distribution in accordance with the
number of shares held;
(ii) to legally request, convene, chair, attend or authorize a proxy to attend a general
meeting and speak at the meeting and legitimately exercise corresponding voting
rights, save for individual shareholders are required to waive their voting rights on
individual matters under the securities regulatory rules of the listing place or
applicable laws and regulations;
(iii) to supervise the Company’s operation and put forward suggestions or inquiries;
(iv) to transfer, donate or pledge the shares held in accordance with the provisions of
laws, administrative regulations and the Company’s Articles of Association;
(v) to inspect and replicate the Articles of Association, the register of members, minutes
of general meetings, resolutions of the Board meetings and financial accounting
reports. Shareholders who meet the relevant requirements may inspect the
Company’s accounting books and accounting vouchers;
(vi) when the Company is terminated or liquidated, to participate in the distribution of
the Company’s remaining property in accordance with the number of shares held;
(vii) shareholders who dissent from the resolutions of the Company’s merger or division
passed by the Shareholders’ Meeting may request the Company to acquire their
shares;
(viii) other rights as provided for by laws, administrative regulations, departmental rules
and regulations, the Company’s Articles of Association or the securities regulatory
rules of the place where the company’s shares are listed.
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--- page 570 ---
If the contents of the resolutions of the Company’s Shareholders’ Meeting or the Board
of Directors violate laws or administrative regulations, shareholders shall have the right to
request the people’s court at the Company’s place of registration to determine such resolutions
invalid. If the convening procedures or voting methods of the Shareholders’ Meeting or the
Board of Directors’ meeting violate laws, administrative regulations or the Company’s Articles
of Association, or if the contents of the resolutions violate the Company’s Articles of
Association, shareholders shall have the right to request the people’s court at the Company’s
place of registration to revoke such resolutions within 60 days as of the date of adoption of the
resolutions. However, this shall not apply where there are only minor flaws in the convening
procedures or voting methods of the Shareholders’ Meeting or the Board of Directors’ meeting
and such flaws have not had a substantial impact on the resolutions.
The Shareholders of the Company shall undertake the following obligations:
(i) to abide by laws, administrative regulations and the Company’s Articles of
Association;
(ii) to pay the share capital in accordance with the subscribed shares and the method of
shareholding;
(iii) except in the circumstances provided for by laws and regulations, not to withdraw
from the shares;
(iv) not to abuse the shareholder rights to damage the interests of the Company or other
shareholders; not to abuse the independent legal person status of the Company and
the limited liability of shareholders to damage the interests of the Company’s
creditors;
(v) other obligations that shall be borne as provided for by laws, administrative
regulations, the Company’s Articles of Association or the securities regulatory rules
of the place where the Company’s shares are listed.
Where a shareholder of the Company abuses the shareholder rights and causes losses to
the Company or other shareholders, he/she shall bear the liability for compensation in
accordance with the law. Where a shareholder of the Company abuses the independent legal
person status of the Company and the limited liability of shareholders to evade debts, which
seriously damages the interests of the Company’s creditors, he/she shall bear joint and several
liability for the Company’s debts.
The controlling Shareholder or actual controller of the Company shall not utilize its
related-party relationship against the interests of the Company, or else, shall compensate the
Company for any loss incurred.
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--- page 571 ---
General Provisions for Shareholders’ Meetings
The Shareholders’ Meeting is the power organ of the Company and shall exercise the
following authorities in accordance with the law:
(i) to elect and replace directors, and to decide on matters regarding their remuneration;
(ii) to consider and approve the report of the Board of Directors;
(iii) to consider and approve the Company’s profit distribution plan and the plan for
making up losses;
(iv) to pass resolutions on the increase or decrease of the Company’s registered capital;
(v) to pass resolutions on the issuance of corporate bonds;
(vi) to pass resolutions on the merger, division, dissolution, liquidation of the Company
or the change of the Company’s form;
(vii) to amend the Company’s Articles of Association;
(viii) to decide on the Company’s appointment or removal of accounting firms which
engage in auditing matters in relation to the Company;
(ix) to consider and approve the guarantee matters specified in the Company’s Articles
of Association;
(x) to consider and approve any related party/connected transaction (except for
transactions which the Company is given cash gift or provided with guarantees)
which the Company intends to enter with related/connected parties with an amount
of over RMB10 million and accounting for more than 5% of the absolute value of
the Company’s latest audited net assets;
(xi) to consider matters concerning the Company’s purchase and sale of major assets
within one year, where the value of such assets exceeds 30% of the Company’s latest
audited total assets;
(xii) to consider and approve matters concerning the change of the use of raised funds;
(xiii) to consider and approve the equity incentive plan and the employee shareholding
plan;
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--- page 572 ---
(xiv) to authorize the Board of Directors to decide to issue shares with an aggregate
amount of financing not exceeding RMB300 million and not exceeding 20% of the
net assets as at the end of the most recent year to specific parties, and such
authorization shall expire on the date of the next annual general meeting;
(xv) specifically for any annual general meeting, to authorize the Board to issue shares
with a total financing amount of not more than RMB0.3 billion and not more than
20% of the net assets at the end of the latest year, and such authorization shall
become invalid on the date when next general meeting is convened;
(xvi) to consider and approve other matters that should be decided by the Shareholders’
Meeting as stipulated by laws, administrative regulations, departmental rules and
regulations, the Company’s Articles of Association, or the securities regulatory rules
of the place where the Company’s shares are listed.
The Shareholders’ Meeting is divided into the annual Shareholders’ Meeting and the
extraordinary Shareholders’ Meeting. The annual Shareholders’ Meeting shall be held once
each fiscal year and shall be convened within six months after the end of the previous fiscal
year. In case any of the following circumstances occurs, the Company shall convene an
extraordinary Shareholders’ Meeting within two months as of the date when the relevant fact
occurs:
(i) when the number of directors is less than the statutory minimum number specified
in the PRC Company Law or two-thirds of that specified in the Company’s Articles
of Association;
(ii) when the Company’s uncovered losses reach one-third of the total share capital;
(iii) when shareholders who individually or jointly hold more than 10% of the total
number of the Company’s shares make a request;
(iv) when the Board of Directors deems it necessary;
(v) when a majority of all independent non-executive directors propose to convene the
meeting;
(vi) when the audit committee proposes to convene the meeting;
(vii) in other circumstances as provided for by laws, administrative regulations,
departmental rules and regulations, the Company’s Articles of Association or the
securities regulatory rules of the place where the Company’s shares are listed.
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
– V-6 –


--- page 573 ---
Convening of Shareholders’ Meetings
With the approval of a majority of all independent non-executive directors, independent
non-executive directors shall have the right to propose in writing to the Board of Directors to
convene an extraordinary Shareholders’ Meeting. Regarding the proposal of the independent
non-executive directors to convene an extraordinary Shareholders’ Meeting, the Board of
Directors shall, in accordance with the provisions of laws, administrative regulations and the
Company’s Articles of Association, submit a written feedback indicating whether it agrees or
disagrees to convene the extraordinary Shareholders’ Meeting within 10 days upon receipt of
the proposal. If the Board of Directors agrees to convene the extraordinary Shareholders’
Meeting, it shall issue a notice for convening the Shareholders’ Meeting within 5 days after
passing the resolution of the Board of Directors. If the Board of Directors disagrees to convene
the extraordinary Shareholders’ Meeting, it shall state the reasons and make an announcement.
The audit committee shall have the right to propose in writing to the Board of Directors
to convene an extraordinary Shareholders’ Meeting. The Board of Directors shall, in
accordance with the provisions of laws, administrative regulations and the Company’s Articles
of Association, submit a written feedback indicating whether it agrees or disagrees to convene
the extraordinary Shareholders’ Meeting within 10 days upon receipt of the proposal. If the
Board of Directors agrees to convene the extraordinary Shareholders’ Meeting, it shall issue a
notice for convening the Shareholders’ Meeting within 5 days after passing the resolution of
the Board of Directors. Any changes to the original proposal in the notice shall be subject to
the consent of the audit committee. If the Board of Directors disagrees to convene the
extraordinary Shareholders’ Meeting, or fails to provide feedback within 10 days upon receipt
of the proposal, it shall be deemed that the Board of Directors is unable to perform or fails to
perform its duty of convening the Shareholders’ Meeting, and the audit committee may
convene and preside over the Shareholders’ Meeting on its own.
Shareholders who individually or jointly hold more than 10% of the Company’s shares
shall have the right to request the Board of Directors to convene an extraordinary Shareholders’
Meeting and shall submit the request to the Board of Directors in writing. The Board of
Directors shall, in accordance with the provisions of laws, administrative regulations and the
Company’s Articles of Association, submit a written feedback indicating whether it agrees or
disagrees to convene the extraordinary Shareholders’ Meeting within 10 days upon receipt of
the request. If the Board of Directors agrees to convene the extraordinary Shareholders’
Meeting, it shall issue a notice for convening the Shareholders’ Meeting within 5 days after
passing the resolution of the Board of Directors. Any changes to the original request in the
notice shall be subject to the consent of the relevant shareholders. If the Board of Directors
disagrees to convene the extraordinary Shareholders’ Meeting, or fails to provide feedback
within 10 days upon receipt of the request, shareholders who individually or jointly hold more
than 10% of the Company’s shares shall have the right to propose to the audit committee to
convene an extraordinary Shareholders’ Meeting and shall submit the request to the audit
committee in writing. If the audit committee agrees to convene the extraordinary Shareholders’
Meeting, it shall issue a notice for convening the Shareholders’ Meeting within 5 days upon
receipt of the request. Any changes to the original proposal in the notice shall be subject to the
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
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--- page 574 ---
consent of the relevant shareholders. If the audit committee fails to issue a notice for the
Shareholders’ Meeting within the specified time limit, it shall be deemed that the audit
committee will not convene and preside over the Shareholders’ Meeting. Shareholders who
individually or jointly hold more than 10% of the Company’s shares for more than 90
consecutive days may convene and preside over the shareholders’ meeting on their own.
Notice of Shareholders’ Meeting
The annual Shareholders’ Meeting shall notify each shareholder in writing (including
through announcements) 21 days prior to the convening of the meeting, and the extraordinary
Shareholders’ Meeting shall notify each shareholder in writing (including through
announcements) 15 days prior to the convening of the meeting.
The written notice of the Shareholders’ Meeting shall include the following contents:
(i) the time, place and duration of the meeting;
(ii) the matters and proposals to be considered at the meeting;
(iii) it shall be clearly stated in writing that all shareholders have the right to attend the
Shareholders’ Meeting, and may entrust an agent in writing to attend the meeting
and participate in the voting. the shareholder’s agent does not have to be a
shareholder of the Company;
(iv) the record date for equity of shareholders entitled to attend the Shareholders’
Meeting;
(v) the name and telephone number of the permanent contact person for the meeting
affairs;
(vi) the voting time and voting procedures for online or other methods;
(vii) other requirements as provided for by laws, administrative regulations, departmental
rules and regulations, the securities regulatory rules of the place where the
Company’s shares are listed, and the Company’s Articles of Association.
The notice and supplementary notice of the Shareholders’ Meeting shall include the
contents specified in the securities regulatory rules of the place where the Company’s shares
are listed and this Articles of Association, and shall fully and completely disclose all the
specific contents of all the proposals. Where matters to be discussed require independent
non-executive directors to express their opinions, the opinions and reasons of the independent
non-executive directors shall be disclosed simultaneously when the notice or supplementary
notice of the Shareholders’ Meeting is issued.
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
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--- page 575 ---
The start time of the online or other forms of voting for the Shareholders’ Meeting shall
not be earlier than 3:00 p.m. of the day prior to the convening of the on-site Shareholders’
Meeting, and shall not be later than 9:30 a.m. of the day when the on-site Shareholders’
Meeting is convened. The end time of the voting shall not be earlier than 3:00 p.m. of the day
when the on-site Shareholders’ Meeting ends.
The interval between the equity record date and the meeting date shall not be more than
7 working days. Once the equity record date is confirmed, it shall not be changed.
After the notice of the Shareholders’ Meeting is issued, without justifiable reasons, the
Shareholders’ Meeting should not be postponed or cancelled, and the proposals listed in the
notice of the Shareholders’ Meeting should not be cancelled. In case of any postponement or
cancellation, the convener shall make an announcement and state the reasons at least 2 working
days before the originally scheduled convening date. Where the securities regulatory rules of
the place where the Company’s shares are listed have special provisions on the procedures for
postponing or cancelling the Shareholders’ Meeting, such provisions shall prevail, provided
that they do not violate the domestic regulatory requirements.
Proposals at Shareholders’ Meetings
When the Company convenes a Shareholders’ Meeting, the Board of Directors, the audit
committee, and shareholders who individually or jointly hold more than 1% of the Company’s
shares have the right to submit proposals to the Company.
Shareholders who individually or jointly hold more than 1% of the Company’s shares may
put forward an extraordinary proposal 10 days before the convening of the Shareholders’
Meeting and submit it in writing to the convener. The convener shall issue a supplementary
notice of the Shareholders’ Meeting within 2 days after receiving the proposal, and announce
the content of the extraordinary proposal. If, in accordance with the provisions of the securities
regulatory rules of the place where the Company’s shares are listed, the Shareholders’ Meeting
needs to be postponed due to the publication of the supplementary notice of the Shareholders’
Meeting, the convening of the Shareholders’ Meeting shall be postponed in accordance with the
provisions of the securities regulatory rules of the place where the Company’s shares are listed.
Except for the circumstances specified in the preceding paragraph, after issuing the notice
and announcement of the Shareholders’ Meeting, the convener shall not modify the proposals
already listed in the notice of the Shareholders’ Meeting or add new proposals.
Proxy for the Shareholders’ Meeting
Shareholders may attend the Shareholders’ Meeting in person, or entrust an agent to
attend and vote on their behalf. The agent need not be a shareholder of the Company.
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
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--- page 576 ---
If a natural person shareholder attends the meeting in person, he/she shall present his/her
identity card or other valid certificates or documents indicating his/her identity; if entrusting
an agent to attend the meeting, he/she shall present his/her valid identity document, the power
of attorney from the shareholder.
A corporate shareholder shall be represented by its legal representative or an agent
entrusted by the legal representative to attend the meeting and vote at the meeting. When the
legal representative attends the meeting, he/she shall present his/her identity card, the business
license of the corporate shareholder affixed with the official seal, a valid certificate proving
his/her qualification as the legal representative; when an agent is entrusted to attend the
meeting, the agent shall present his/her identity card, the written power of attorney lawfully
issued by the legal representative of the corporate shareholder, the business license of the
corporate shareholder affixed with the official seal (except when the shareholder is a
recognized clearing house (or its agent) as defined in the relevant ordinances promulgated from
time to time in Hong Kong).
A shareholder of an unincorporated partnership enterprise shall be represented by a
natural person executive partner or a delegated representative of a non-natural person executive
partner to attend the meeting, or by an agent entrusted by the aforesaid person to attend the
meeting and vote at the meeting. When a natural person executive partner or a delegated
representative of a non-natural person executive partner attends the meeting, he/she shall
present his/her identity card, a valid certificate proving his/her qualification as a natural person
executive partner or a delegated representative of a non-natural person executive partner; when
an agent is entrusted to attend the meeting, the agent shall present his/her identity card, the
written power of attorney lawfully issued by the natural person executive partner or the
delegated representative of the non-natural person executive partner of the shareholder entity
(except when the shareholder is a recognized clearing house (or its agent) as defined in the
relevant ordinances promulgated from time to time in Hong Kong).
Voting at the Shareholders’ Meeting
The resolutions of the Shareholders’ Meeting divided into ordinary resolutions and
special resolutions. An ordinary resolution at a Shareholders’ Meeting shall be passed by more
than half of the voting rights held by the shareholders present at the Shareholders’ Meeting
(including proxies). A special resolution at a Shareholders’ Meeting shall be passed by at least
two-thirds of the voting rights held by the shareholders present at the Shareholders’ Meeting
(including proxies).
Shareholders (including proxies) shall exercise voting rights based on the number of
shares with voting rights held by them, and each share shall be entitled to one vote.
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
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--- page 577 ---
If a shareholder purchases voting shares of the Company in violation of the provisions of
Paragraph 1 and Paragraph 2 of Article 63 of the Securities Law, the shares in excess of the
specified proportion shall not be entitled to exercise the voting rights within 36 months as of
the date of purchase, and shall not be counted into the total number of voting shares of the
shareholders attending the Shareholders’ Meeting. According to the applicable laws,
regulations and the Hong Kong Listing Rules, if any shareholder is required to abstain from
voting on a certain resolution matter, or any shareholder is restricted to only vote in favor of
(or against) a certain resolution matter, the number of votes cast by such shareholder or its
representative in violation of the relevant provisions or restrictions shall not be counted into
the total number of voting shares.
The following matters shall be adopted by the Shareholders’ Meeting through an ordinary
resolution:
(i) the work reports of the Board of Directors;
(ii) the profit distribution plan and the loss recovery plan prepared by the Board of
Directors;
(iii) the appointment and removal of members of the Board of Directors, as well as their
remuneration and payment methods;
(iv) other matters except those that shall be adopted by a special resolution as provided
for by laws, administrative regulations, the Company’s Articles of Association or the
securities regulatory rules of the place where the Company’s shares are listed.
The following matters shall be adopted by the Shareholders’ Meeting through a special
resolution:
(i) the increase or decrease of the Company’s registered capital;
(ii) issuance of corporate bonds;
(iii) the division, spin-off, merger, dissolution and liquidation of the Company;
(iv) the amendment of the Company’s Articles of Association;
(v) the equity incentive plan;
(vi) the Company’s purchase or sale of major assets or provision of guarantees within
one year, where the amount exceeds 30% of the Company’s latest audited total
assets;
(vii) repurchase of shares by the Company;
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--- page 578 ---
(viii) other matters that, as provided for by laws, administrative regulations, the
Company’s Articles of Association or the securities regulatory rules of the place
where the Company’s shares are listed, and as determined by the Shareholders’
Meeting through an ordinary resolution, will have a significant impact on the
Company and need to be adopted by a special resolution.
DIRECTORS AND BOARD OF DIRECTORS
Directors
Directors shall be elected or replaced by the Shareholders’ Meeting, and their positions
may be terminated by the Shareholders’ Meeting before the expiration of their term of office.
The term of office of a director is three years, and upon the expiration of the term, the director
may be re-elected for consecutive terms in accordance with the provisions of the securities
regulatory rules of the place where the Company’s shares are listed.
Directors may concurrently hold the position of general manager or other senior
management positions. However, the total number of directors who concurrently hold the
position of general manager or other senior management positions and directors who are
representatives of employees shall not exceed one-half of the total number of directors of the
Company. The Company’s Board of Directors does not arrange for employee representatives to
serve as directors.
The directors of the Company may include executive directors, non-executive directors
and independent non-executive directors. Non-executive directors refer to directors who do not
hold positions in the Company’s operation and management. Relevant matters such as the
eligibility requirements, nomination and election procedures, and authorities of independent
non-executive directors shall be implemented in accordance with the relevant provisions of
laws, the CSRC and the securities exchange where the Company’s shares are listed. Directors
shall possess the eligibility qualifications required by laws, administrative regulations, rules,
the Company’s Articles of Association and the securities regulatory rules of the place where the
Company’s shares are listed.
Directors shall abide by laws, administrative regulations and the Company’s Articles of
Association, and owe the following fiduciary duties to the Company:
(i) they shall not to expropriate the property of the Company and not to misappropriate
the capital of the Company;
(ii) they shall not open an account in their own name or the name of other individuals
to deposit the Company’s funds;
(iii) not to take advantage of his/her functions and powers to accept bribes or other
illegal income;
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--- page 579 ---
(iv) not to enter into a contract or conduct any transaction directly or indirectly with the
Company, unless such act has been reported to and approved by the Board or the
general meeting in accordance with the provisions of the Articles of Association;
(v) not to enter into a contract or conduct any transaction directly or indirectly with the
Company, unless such act has been reported to and approved by the Board or the
general meeting in accordance with the provisions of the Articles of Association;
(vi) without the consent of the Shareholders’ Meeting or the Board of Directors, they
shall not, by taking advantage of their positions, seek for themselves or others the
business opportunities that should belong to the Company. However, the following
circumstances are exceptions:
Report to the Board of Directors or the Shareholders’ Meeting, and pass the
resolution of the Board of Directors or the Shareholders’ Meeting in accordance with
the provisions of the Company’s Articles of Association;
According to the provisions of laws, administrative regulations or the Company’s
Articles of Association, the Company cannot take advantage of such business
opportunities.
(vii) they shall not accept commissions from transactions with the Company for their own
benefit;
(viii) they shall not disclose the Company’s secrets;
(ix) they shall not damage the Company’s interests by taking advantage of their affiliated
(connected) relationships;
(x) other fiduciary duties as provided for by laws, administrative regulations,
departmental rules and regulations, the Company’s Articles of Association and the
securities regulatory rules of the place where the Company’s shares are listed.
Any income obtained by directors in violation of the provisions of this article shall belong
to the Company; if losses are caused to the Company, they shall bear the liability for
compensation.
Directors shall abide by laws, administrative regulations and the Company’s Articles of
Association, and owe the following duties of diligence to the Company:
(i) they shall exercise the rights granted by the Company prudently, earnestly and
diligently to ensure that the Company’s business activities comply with the
requirements of national laws, administrative regulations and various national
economic policies, and that the business activities do not exceed the scope of
business specified in the business license;
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
– V-13 –


--- page 580 ---
(ii) they shall treat all shareholders fairly;
(iii) they shall promptly understand the Company’s business operation and management
situation;
(iv) they shall sign a written confirmation opinion on the Company’s periodic reports to
ensure that the information disclosed by the Company is true, accurate and
complete;
(v) they shall truthfully provide relevant information and materials to the audit
committee, and shall not obstruct the audit committee from exercising their powers;
(vi) other duties of diligence as provided for by laws, administrative regulations,
departmental rules and regulations, the Company’s Articles of Association and the
securities regulatory rules of the place where the Company’s shares are listed.
Chairman
The Board of Directors shall appoint a Chairman. The Chairman shall be assumed by a
Director of the Company and elected by the Board of Directors by more than one half of all
Directors.
Board of Directors
The Board of Directors shall consist of nine directors, of whom 4 are independent
Directors and 1 is an employee representative Director. The composition and number of the
Board shall comply with the requirements of the securities regulatory rules of the place where
the shares of the Company are listed.
The Board of Directors exercises the following powers:
(i) to be responsible for convening the Shareholders’ Meeting and reporting the work
to the Shareholders’ Meeting;
(ii) to implement the resolutions of the Shareholders’ Meeting;
(iii) to decide on the Company’s business plans and investment plans;
(iv) to formulate the Company’s profit distribution plan and loss recovery plan;
(v) to formulate the Company’s plan for increasing or decreasing the registered capital,
issuing bonds or other securities and going public;
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
– V-14 –


--- page 581 ---
(vi) to draw up plans for major acquisitions by the Company, acquisition of the
Company’s own shares, or merger, division, dissolution and change of the
Company’s form;
(vii) within the scope of authorization of the Shareholders’ Meeting, to decide on matters
such as the Company’s external investment, acquisition and sale of assets, asset
mortgage, external guarantee, entrusted wealth management, affiliated (connected)
transactions, external donations, etc.;
(viii) to decide on the establishment of the Company’s internal management institutions;
(ix) to appoint or dismiss the Company’s general manager and secretary of the Board of
Directors, and to decide on their remuneration, rewards and punishments; based on
the nomination of the general manager, to appoint or dismiss senior management
personnel such as the Company’s deputy general manager and chief financial officer,
and to decide on their remuneration, rewards and punishments;
(x) to formulate and revise the Company’s basic management systems;
(xi) to formulate a plan for amending the Company’s Articles of Association;
(xii) to manage the Company’s information disclosure matters;
(xiii) to propose to the Shareholders’ Meeting the engagement or replacement of the
accounting firm that audits the Company;
(xiv) to listen to the work reports of the Company’s general manager and relevant
personnel and inspect the work of the general manager;
(xv) to deliberate on the Company’s acquisition of its own shares in the situations
specified in Paragraph 1, Items (3), (5) and (6) of Article 25 of the Company’s
Articles of Association, and a resolution of the Board of Directors meeting attended
by more than two-thirds of the directors shall be required;
(xvi) other powers and functions as provided for by laws, administrative regulations, the
Company’s Articles of Association or the securities regulatory rules of the place
where the Company’s shares are listed, and those granted by the Company’s Articles
of Association.
Matters exceeding the scope of authorization by the shareholders’ meeting shall be
submitted to the shareholders’ meeting.
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
– V-15 –


--- page 582 ---
Subject to compliance with the provisions of the securities regulatory rules of the place
where the Company’s shares are listed, the Board of Directors shall determine the authorities
regarding external investment, acquisition and sale of assets, asset mortgage, external
guarantee matters, entrusted wealth management, affiliated (connected) transactions, and
external donations, and establish strict examination and decision-making procedures. For
major investment projects, relevant experts and professionals shall be organized to conduct
evaluations, and such projects shall be reported to the Shareholders’ Meeting for approval and
comply with the securities regulatory rules of the place where the Company’s shares are listed.
A meeting of the Board of Directors may be held only when more than half of the
directors are present. A resolution of the Board of Directors must be passed by more than half
of all the directors, except as otherwise provided by laws, regulations, the securities regulatory
rules of the place where the Company’s shares are listed and the Company’s Articles of
Association. In the voting on resolutions of the Board of Directors, each director shall have one
vote.
If a director has an affiliated (connected) relationship with an enterprise involved in the
matters to be resolved at a Board of Directors’ meeting, the director shall promptly report it in
writing to the Board of Directors. Such a director shall not exercise the right to vote on the
matter, nor shall he/she act as an agent for other directors to exercise the right to vote. The
Board of Directors’ meeting may be held only when more than half of the directors without
affiliated (connected) relationships are present, and the resolution passed shall be approved by
more than half of the directors without affiliated (connected) relationships who attend the
meeting. If the number of directors without affiliated (connected) relationships attending the
Board of Directors’ meeting is less than three, the matter shall be submitted to the
Shareholders’ Meeting for deliberation.
Special Committees under the Board
The Board of Directors has established four special committees, namely the Strategy and
ESG Committee, the Audit Committee, the Nomination Committee and the Remuneration and
Evaluation Committee. The special committees shall be responsible to the Board of Directors,
and perform their duties according to the Articles of Association and the authorization granted
by the Board of Directors.
Secretary to the Board
The Company shall appoint a secretary of the Board of Directors, who shall be
responsible for the preparation of the Shareholders’ Meetings and Board of Directors’ meetings
of the Company, the custody of documents, the management of the Company’s shareholder
information, and the handling of information disclosure matters, among others. The secretary
of the Board of Directors shall comply with the relevant provisions of laws, administrative
regulations, departmental rules and regulations, the securities regulatory rules of the place
where the Company’s shares are listed, and the Company’s Articles of Association.
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
– V-16 –


--- page 583 ---
GENERAL MANAGER AND OTHER SENIOR MANAGEMENT MEMBERS
The Company shall have one general manager, who shall be appointed or dismissed by the
Board of Directors. The Company shall have several deputy general managers, who shall be
nominated by the general manager and appointed by the Board of Directors. The deputy general
managers shall assist the general manager in his/her work. The general manager, deputy
general managers, chief financial officer and secretary of the Board of Directors of the
Company shall be the senior management personnel of the Company.
The general manager shall be responsible to the Board of Directors and exercise the
following powers:
(i) to preside over the Company’s production, operation and management work,
organize the implementation of the resolutions of the Board of Directors, and report
work to the Board of Directors;
(ii) to organize the implementation of the Company’s annual business plan and
investment plan;
(iii) to draw up a plan for the establishment of the Company’s internal management
institutions;
(iv) to draw up the Company’s basic management systems;
(v) to formulate the Company’s specific rules and regulations;
(vi) to propose to the Board of Directors the appointment or dismissal of the Company’s
deputy general managers and chief financial officer;
(vii) to decide on the appointment or dismissal of responsible management personnel
other than those whose appointment or dismissal shall be decided by the Board of
Directors;
(viii) other powers granted by the Company’s Articles of Association or the Board of
Directors.
Audit Committee
The Board of Directors shall establish an Audit Committee, which shall exercise the
functions and powers of the supervisory board as stipulated under the PRC Company Law.
The Audit Committee shall consist of three (3) members, all of whom shall be
non-executive directors or Independent Directors who do not hold any senior management
positions within the Company. Among them, two (2) shall be Independent Directors, and the
convener shall be an accounting professional selected from among the Independent Directors.
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
– V-17 –


--- page 584 ---
The Audit Committee shall be responsible for reviewing the Company’s financial
information and its disclosure, supervising and evaluating the internal and external audits and
internal controls. The following matters shall be submitted to the Board for consideration after
the approval by a majority of all members of the Audit Committee:
(i) disclosure of financial information in financial accounting reports and periodic
reports, and internal control evaluation reports;
(ii) appointment or dismissal of the accounting firm that undertake the auditing business
of a listed company;
(iii) appointment or dismissal of the chief financial officer of a listed company;
(iv) changes in accounting policies, accounting estimates or correction of material
accounting errors for reasons other than changes in accounting standards;
(v) other matters as provided by laws, administrative regulations, the CSRC, regulations
of the securities regulatory rules of the place where the Company’s shares are listed,
and the Articles of Association.
QUALIFICATIONS AND RESPONSIBILITIES OF DIRECTORS AND SENIOR
MANAGEMENT
None of the following persons shall serve as our Director or senior management:
(i) being without capacity for civil conduct or with limited capacity for civil conduct;
(ii) having been sentenced to criminal punishment for embezzlement, bribery,
misappropriation of property, misappropriation of funds, or disruption of the
socialist market economic order, and not having passed five years since the
expiration of the execution period; or having been deprived of political rights due
to a crime, and not having passed five years since the expiration of the execution
period. In the case of being declared on probation, not having passed two years since
the expiration of the probation period;
(iii) having served as a director, factory director or manager of a company or enterprise
undergoing bankruptcy liquidation and being personally responsible for the
bankruptcy of such company or enterprise, and not having passed three years since
the completion of the bankruptcy liquidation of such company or enterprise;
(iv) having served as the legal representative of a company or enterprise whose business
license has been revoked due to violations of laws or has been ordered to be closed
down, and being personally responsible for it, and not having passed three years
since the date of revocation of the business license of such company or enterprise;
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
– V-18 –


--- page 585 ---
(v) having a relatively large amount of personal debt that is due but not repaid and being
listed as a person subject to enforcement for dishonesty by the people’s court;
(vi) having been imposed a penalty of being prohibited from entering the securities
market by the CSRC or the Hong Kong Stock Exchange, and the penalty period not
having expired;
(vii) a person who has been publicly identified by the securities regulatory authority and
the stock exchange at the place where the Company’s shares are listed as unsuitable
to serve as a director or senior executive of a listed company, and whose term has
not expired;
(viii) other circumstances as provided for by laws, administrative regulations,
departmental rules and regulations, the securities regulatory rules of the place where
the Company’s shares are listed, or relevant regulatory authorities.
FINANCIAL AND ACCOUNTING SYSTEM
The Company shall formulate its financial and accounting systems in accordance with
laws, administrative regulations, the securities regulatory rules of the place where the
Company’s shares are listed, and the provisions of relevant state departments.
Regarding A-share periodic report disclosure, the Company shall submit and disclose its
annual report to the CSRC dispatched agencies and the Shanghai Stock Exchange within four
months after the end of each fiscal year, submit and disclose its semi-annual report to the local
offices of the CSRC dispatched agencies and the Shanghai Stock Exchange within two months
after the end of the first six months of each fiscal year, and submit and disclose its quarterly
reports to the local offices of the CSRC dispatched agencies and the Shanghai Stock Exchange
within one month after the end of the first three months and the first nine months of each fiscal
year. Regarding H-share periodic report disclosure, the periodic reports for the Company’s
H-shares include the annual report and the interim report. The company shall disclose a
preliminary announcement of its annual results within three months after the end of each fiscal
year, prepare and disclose the annual report within four months after the end of each fiscal year
and at least 21 days before the annual Shareholders’ Meeting, disclose a preliminary
announcement of its interim results within two months after the end of the first six months of
each fiscal year, and prepare and disclose the interim report within three months after the end
of the first six months of each fiscal year.
The above-mentioned financial and accounting reports, annual reports, annual results,
interim reports, and interim results shall be prepared and/or submitted to shareholders in
accordance with relevant laws, administrative regulations, departmental rules, and the
requirements of the securities regulatory authorities and stock exchanges of the place where the
Company’s shares are listed.
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
– V-19 –


--- page 586 ---
The Company shall not maintain any accounting books other than the statutory ones. The
Company’s assets shall not be deposited in accounts opened in the name of any individual.
When distributing the after-tax profits of the current year, the Company shall allocate
10% of the profits to the statutory reserve fund. If the cumulative amount of the Company’s
statutory reserve fund reaches 50% or more of the Company’s registered capital, it may cease
to make such allocations. If the Company’s statutory reserve fund is insufficient to cover the
losses of previous years, the current year’s profits shall be used to cover the losses before
making allocations to the statutory reserve fund as stipulated in the previous paragraph. After
allocating the statutory reserve fund from the after-tax profits, the Company may, upon
resolution of the Shareholders’ Meeting, allocate any discretionary reserve fund from the
after-tax profits. The remaining after-tax profits after covering losses and allocating the
statutory reserve fund shall be distributed in proportion to the shares held by the shareholders,
except as otherwise provided in the Company’s Articles of Association. If the Shareholders’
Meeting distributes profits to shareholders before covering the Company’s losses and
allocating the statutory reserve fund in violation of the previous paragraph, the shareholders
must return the profits distributed in violation of the regulations to the Company.
The Company’s shares held by the Company itself shall not participate in the profit
distribution.
The Company must appoint one or more receiving agents in Hong Kong for its H-share
shareholders. The receiving agents shall collect and hold the dividends and other amounts
payable by the Company in respect of the H-shares on behalf of the relevant H-share
shareholders until payment is made to such H-share shareholders. The receiving agents
appointed by the Company shall meet the requirements of laws, regulations, and the securities
regulatory rules of the place where the Company’s shares are listed.
The Company’s reserve funds shall be used to cover the Company’s losses, expand
production and operation, or be converted into an increase in the Company’s capital. When
using reserve funds to cover the Company’s losses, the discretionary reserve fund and the
statutory reserve fund shall be used first; if they are still insufficient, the capital reserve fund
may be used as prescribed. When the statutory reserve fund is converted into capital, the
remaining amount of such reserve fund shall be no less than 25% of the Company’s registered
capital before the conversion.
After the Shareholders’ Meeting of the Company passes a resolution on the profit
distribution plan, or after the Company’s Board of Directors formulates a specific plan based
on the conditions and upper limits for the next-year interim dividend approved by the annual
Shareholders’ Meeting, the Company’s Board of Directors must complete the distribution of
dividends (or shares) within two months after the Shareholders’ Meeting.
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
– V-20 –


--- page 587 ---
If, due to the requirements of laws, regulations, and the securities regulatory rules of the
place where the Company’s shares are listed, the specific plan cannot be implemented within
two months, the implementation date of the specific plan may be adjusted accordingly in
accordance with such regulations and the actual situation.
The Company shall implement an internal audit system, which clearly defines the
leadership system, responsibilities and authorities, personnel allocation, funding support,
application of audit results and accountability for internal audit. The Company’s internal audit
system shall be implemented after being approved by the Board of Directors. The person in
charge of the audit shall be responsible to and report work to the audit committee of the Board
of Directors.
The Company shall engage an accounting firm that complies with the provisions of the
Securities Law, the Hong Kong Listing Rules, and the securities regulatory rules of the place
where the company’s shares are listed to conduct business such as auditing of accounting
statements, verification of net assets, and other related consulting services. The term of
engagement is one year, commencing from the time when it is approved by the Company’s
annual Shareholders’ Meeting and ending at the conclusion of the next annual Shareholders’
Meeting, and it may be re-engaged.
The engagement and dismissal of the accounting firm by the Company shall be decided
by the Shareholders’ Meeting. The Board of Directors shall not appoint an accounting firm
before the Shareholders’ Meeting makes a decision.
The Company shall ensure that it provides the engaged accounting firm with true and
complete accounting vouchers, accounting books, financial accounting reports, and other
accounting materials, and shall not refuse to provide, conceal, or make false reports of such
materials.
The remuneration of the accounting firm or the method for determining the remuneration
shall be decided by the Shareholders’ Meeting.
When the Company dismisses or decides not to renew the engagement of an accounting
firm, it shall notify the accounting firm 10 days in advance. When the Company’s
Shareholders’ Meeting votes on the dismissal of the accounting firm, the accounting firm shall
be allowed to attend the Shareholders’ Meeting and present its opinions to the shareholders at
the meeting.
DISSOLUTION AND LIQUIDATION OF THE COMPANY
The Company shall be dissolved for the following reasons:
(i) the expiration of the business term stipulated in the Company’s Articles of
Association or the occurrence of other dissolution events specified in the Company’s
Articles of Association;
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
– V-21 –


--- page 588 ---
(ii) dissolution upon resolution of the Shareholders’ Meeting;
(iii) dissolution required due to the merger or division of the Company;
(iv) being legally revoked of its business license, ordered to be closed down or being
cancelled;
(v) where there are serious difficulties in the Company’s operation and management,
and the continued existence of the Company will cause significant losses to the
interests of the shareholders, and the issue cannot be resolved through other
channels, shareholders holding more than 10% of the total voting rights of all
shareholders of the Company may request the people’s court at the Company’s
registered location to dissolve the Company.
When the Company encounters the dissolution events specified in the preceding
paragraph, it shall publicize the reasons for dissolution through the National Enterprise Credit
Information Publicity System within ten days.
For dissolution due to the circumstances specified in items (i), (ii), (iv) and (v) above, a
liquidation team shall be established within 15 days to commence liquidation. The liquidation
team shall be composed of directors or other persons determined by the shareholders’ meeting.
Where a liquidation team fails to be established within the time limit to conduct liquidation,
creditors may apply to the people’s court to appoint relevant persons to form a liquidation team
to carry out the liquidation.
The liquidation team shall notify the creditors within 10 days as of the date of its
establishment, and make an announcement within 60 days in the Company’s designated
newspapers recognised by the CSRC and the stock exchanges where the Company’s shares are
listed or on the National Enterprise Credit Information Publicity System and the HKEX News
website (www.hkexnews.hk). Creditors shall, within 30 days as of the date of receipt of the
notice, or within 45 days as of the date of the announcement in case of not receiving the notice,
declare their claims to the liquidation team. When declaring their claims, creditors shall state
the relevant matters of their claims and provide supporting materials. The liquidation team
shall register the claims. During the period when creditors are declaring their claims, the
liquidation team shall not make any payment to the creditors. Where there are other provisions
in the securities regulatory rules of the place where the Company’s shares are listed, the
relevant provisions shall also be complied with simultaneously.
After the Company’s property is used to pay off the liquidation expenses, employees’
salaries, social insurance premiums and statutory compensations respectively, pay off the
outstanding taxes and settle the Company’s debts, the remaining property of the Company shall
be distributed among shareholders in proportion to the shares they hold. During the liquidation
period, the Company shall remain in existence, but shall not conduct any business activities
unrelated to the liquidation. The Company’s property shall not be distributed to shareholders
before it is settled in accordance with the provisions of the preceding paragraph.
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
– V-22 –


--- page 589 ---
After the liquidation team has cleared up the Company’s property, prepared the balance
sheet and the list of properties, if it deems that the Company’s property is insufficient to pay
off its debts, it shall, in accordance with the law, apply to the people’s court at the Company’s
registered location for declaring the Company bankrupt. After the Company is declared
bankrupt by the people’s court, the liquidation team shall transfer the liquidation matters to the
bankruptcy administrator appointed by the people’s court.
Where the Company is declared bankrupt in accordance with the law, the bankruptcy
liquidation shall be carried out in accordance with the relevant laws on enterprise bankruptcy.
AMENDMENT TO THE ARTICLES OF ASSOCIATION
The Company shall amend the Company’s Articles of Association in case of any of the
following circumstances:
(i) after the PRC Company Law or relevant laws, administrative regulations, or the
securities regulatory rules of the place where the Company’s shares are listed are
amended, the matters specified in the Company’s Articles of Association conflict
with the provisions of the amended laws, administrative regulations, or the
securities regulatory rules of the place where the Company’s shares are listed;
(ii) the Company’s situation has changed and is inconsistent with the matters recorded
in the Company’s Articles of Association;
(iii) the Shareholders’ Meeting decides to amend the Company’s Articles of Association.
Where the matters of amending the Company’s Articles of Association passed by the
resolution of the Shareholders’ Meeting involve the Company’s registration matters, the change
registration shall be handled in accordance with the law. If the matters of amending the
Company’s Articles of Association fall within the information that needs to be disclosed as
required by laws, administrative regulations, and the securities regulatory rules of the place
where the Company’s shares are listed, an announcement shall be made in accordance with the
relevant provisions.
APPENDIX V SUMMARY OF ARTICLES OF ASSOCIATION
– V-23 –


--- page 590 ---
FURTHER INFORMATION ABOUT OUR GROUP
Incorporation
Our Company, then known as Xinqiao Network Equipment (Shanghai) Co., Ltd.* ( อ⢿
ၣഖண௪(ɪऎ)ʮ̡), was incorporated on March 14, 2006 under the laws of the PRC,
which later changed its name to CIG Shanghai Company Limited* (ʮ̡).
Our Company was converted to a joint stock limited company in July 2012 and completed the
Listing of A Shares on the Shanghai Stock Exchange (stock code: 603083) in November 2017.
Our registered office is located at Room 501, Building 8. No. 2388 Chenhang Road,
Minhang District, Shanghai, the PRC. We were registered as a non-Hong Kong company in
Hong Kong under Part 16 of the Companies Ordinance on March 27, 2025, and our principal
place of business in Hong Kong is at Room 1901, 19/F, Lee Garden One, 33 Hysan Avenue,
Causeway Bay, Hong Kong, the PRC. Ms. So Lai Shan, one of our joint company secretaries,
has been appointed as the authorised representative of our Company for the acceptance of
service of process and notices on behalf of our Company in Hong Kong. The address for
service of process on our Company in Hong Kong is the same as our principal place of business
in Hong Kong as set out above.
As we are established in the PRC, our corporate structure and Articles of Association are
subject to the relevant laws and regulations of the PRC. A summary of the relevant provisions
of our Articles of Association is set out in “Summary of Articles of Association” in Appendix
V to this Prospectus. A summary of certain relevant aspects of the laws and regulations of the
PRC is set out in “Regulatory Overview”.
Changes in Share Capital of Our Company
Save as disclosed below and in “History, Development and Corporate Structure — Major
Shareholding Changes in Our Company”, there has been no other alteration in the share capital
of our Company during the two years immediately preceding the date of this Prospectus:
Pursuant to the 2022 restricted share incentive scheme adopted by the then Shareholders
on November 30, 2022 (the “ 2022 Restricted Share Incentive Scheme ”), our Company issued
5,991,260 A Shares to eligible grantees who were granted with restricted Shares. Pursuant to
the 2021 share option incentive scheme adopted by the then Shareholders on February 25, 2021
(the “ 2021 Share Option Incentive Scheme ”), our Company issued an aggregate of 6,650,115
A Shares to eligible grantees who exercised options. Upon completion of the above issuance
of A Shares in April 2023, the registered share capital of our Company increased to
RMB268,222,941 and comprised 268,222,941 A Shares.
In August 2023, our Company repurchased and canceled in aggregate 118,000 A Shares
under the 2021 restricted share incentive scheme adopted by the then Shareholders on
November 26, 2021 (the “ 2021 Restricted Share Incentive Scheme ”), which were granted to
eligible grantees but failed to satisfy the conditions for unlocking of restricted Shares. Upon
the repurchase and cancellation in August 2023, the registered share capital of our Company
amounted to RMB268,104,941 and comprised 268,104,941 A Shares.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-1 –


--- page 591 ---
In June 2024, our Company repurchased and canceled 63,100 A Shares under the 2022
Restricted Share Incentive Scheme, which were granted to eligible grantees but failed to satisfy
the conditions for unlocking of restricted Shares or the eligible grantees no longer served as
our employees. Upon the repurchase and cancellation in June 2024, the registered share capital
of our Company amounted to RMB268,041,841 and comprised 268,041,841 A Shares.
In July 2025, our Company repurchased and canceled 22,000 A Shares under the 2022
Restricted Share Incentive Scheme, which were granted to eligible grantees but the eligible
grantees no longer served as our employees. Upon the repurchase and cancellation in July
2025, the registered share capital of our Company amounted to RMB268,019,841 and
comprised 268,019,841 A Shares.
As of the Latest Practicable Date, the total share capital of our Company was
RMB268,019,841 comprising 268,019,841 A Shares of nominal value of RMB1.00 each.
Changes in Share Capital of Our Subsidiaries
A summary of the corporate information and the particulars of our subsidiaries is set out
in the Accountants’ Report in Appendix I. Except for the issued and paid up capital of
Cambridge Industries USA Inc. increased to USD42,000,010 in 2024 as disclosed in Notes 1
and 19 of the Accountants’ Report, there had been no alterations in share capital of our
subsidiaries within the two years preceding the date of this Prospectus.
Resolutions Passed by Our Shareholders’ General Meeting in Relation to the Global
Offering
Pursuant to the Shareholders’ general meeting held on April 28, 2025, the following
resolutions, among other things, were duly passed:
(a) the issuance by our Company of the H Shares of nominal value of RMB1.00 each
and such H Shares being listed on the Hong Kong Stock Exchange;
(b) the maximum number of H Shares to be issued before the exercise of the
Over-allotment Option shall be approximately 20% of the enlarged share capital of
our Company upon completion of the Global Offering and granting the Underwriters
the Over-allotment Option of no more than 15% of the above number of H Shares
to be issued;
(c) subject to completion of the Global Offering, the conditional adoption of the Articles
of Association which shall become effective on the Listing Date, and authorization
to the Board and its authorized person 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 the Board and its authorized person to handle matters relating to,
among other things, the Global Offering, the issue and listing of the H Shares.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-2 –


--- page 592 ---
FURTHER INFORMATION ABOUT OUR BUSINESS
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) the Hong Kong Underwriting Agreement;
(b) the cornerstone investment agreement dated October 16, 2025 entered into among
our Company, Baring Asset Management (Asia) Limited, Guotai Junan Capital
Limited and Guotai Junan Securities (Hong Kong) Limited, with respect to a
subscription of H Shares at the Offer Price in the aggregate amount of Hong Kong
dollar equivalent of US$20.00 million;
(c) the cornerstone investment agreement dated October 16, 2025 entered into among
our Company, Morgan Stanley & Co. International plc, Guotai Junan Capital
Limited and Guotai Junan Securities (Hong Kong) Limited, with respect to a
subscription of H Shares at the Offer Price in the aggregate amount of Hong Kong
dollar equivalent of US$20.00 million;
(d) the cornerstone investment agreement dated October 16, 2025 entered into among
our Company, HCEP Management Limited, Guotai Junan Capital Limited and
Guotai Junan Securities (Hong Kong) Limited, with respect to a subscription of H
Shares at the Offer Price in the aggregate amount of Hong Kong dollar equivalent
of US$20.00 million;
(e) the cornerstone investment agreement dated October 16, 2025 entered into among
our Company, Arc Avenue Asset Management Pte. Ltd., Guotai Junan Capital
Limited and Guotai Junan Securities (Hong Kong) Limited, with respect to a
subscription of H Shares at the Offer Price in the aggregate amount of Hong Kong
dollar equivalent of US$10.00 million;
(f) the cornerstone investment agreement dated October 16, 2025 entered into among
our Company, CloudAlpha Capital Management Limited, Guotai Junan Capital
Limited and Guotai Junan Securities (Hong Kong) Limited, with respect to a
subscription of H Shares at the Offer Price in the aggregate amount of Hong Kong
dollar equivalent of US$30.00 million;
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-3 –


--- page 593 ---
(g) the cornerstone investment agreement dated October 16, 2025 entered into among
our Company, Turing International Limited, Guotai Junan Capital Limited and
Guotai Junan Securities (Hong Kong) Limited, with respect to a subscription of H
Shares at the Offer Price in the aggregate amount of Hong Kong dollar equivalent
of US$30.00 million;
(h) the cornerstone investment agreement dated October 16, 2025 entered into among
our Company, Cithara Global Multi-Strategy SPC – Bosideng Industry Investment
Fund SP , Guotai Junan Capital Limited and Guotai Junan Securities (Hong Kong)
Limited, with respect to a subscription of H Shares at the Offer Price in the
aggregate amount of Hong Kong dollar equivalent of US$30.00 million;
(i) the cornerstone investment agreement dated October 16, 2025 entered into among
our Company, 3W Fund Management Limited, Guotai Junan Capital Limited and
Guotai Junan Securities (Hong Kong) Limited, with respect to a subscription of H
Shares at the Offer Price in the aggregate amount of Hong Kong dollar equivalent
of US$20.00 million;
(j) the cornerstone investment agreement dated October 16, 2025 entered into among
our Company, Schonfeld Strategic Advisors (Hong Kong) Limited, Guotai Junan
Capital Limited and Guotai Junan Securities (Hong Kong) Limited, with respect to
a subscription of H Shares at the Offer Price in the aggregate amount of Hong Kong
dollar equivalent of US$20.00 million;
(k) the cornerstone investment agreement dated October 16, 2025 entered into among
our Company, Infini Global Master Fund, Guotai Junan Capital Limited and Guotai
Junan Securities (Hong Kong) Limited, with respect to a subscription of H Shares
at the Offer Price in the aggregate amount of Hong Kong dollar equivalent of
US$10.00 million;
(l) the cornerstone investment agreement dated October 16, 2025 entered into among
our Company, Alpine Investment Management Limited, Guotai Junan Capital
Limited and Guotai Junan Securities (Hong Kong) Limited, with respect to a
subscription of H Shares at the Offer Price in the aggregate amount of Hong Kong
dollar equivalent of US$20.00 million;
(m) the cornerstone investment agreement dated October 16, 2025 entered into among
our Company, Dymon Asia Multi-Strategy Investment Master Fund, Guotai Junan
Capital Limited and Guotai Junan Securities (Hong Kong) Limited, with respect to
a subscription of H Shares at the Offer Price in the aggregate amount of Hong Kong
dollar equivalent of US$10.00 million;
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-4 –


--- page 594 ---
(n) the cornerstone investment agreement dated October 16, 2025 entered into among
our Company, Aqua Ocean Limited, Guotai Junan Capital Limited and Guotai Junan
Securities (Hong Kong) Limited, with respect to a subscription of H Shares at the
Offer Price in the aggregate amount of Hong Kong dollar equivalent of US$20.00
million;
(o) the cornerstone investment agreement dated October 16, 2025 entered into among
our Company, Martis Fund, L.P ., Guotai Junan Capital Limited and Guotai Junan
Securities (Hong Kong) Limited, with respect to a subscription of H Shares at the
Offer Price in the aggregate amount of Hong Kong dollar equivalent of US$10.00
million;
(p) the cornerstone investment agreement dated October 16, 2025 entered into among
our Company, Taikang Life Insurance Co., Ltd* (ப΂ʮ̡),
Guotai Junan Capital Limited, Guotai Junan Securities (Hong Kong) Limited and
DBS Asia Capital Limited, with respect to a subscription of H Shares at the Offer
Price in the aggregate amount of Hong Kong dollar equivalent of US$10.00 million;
(q) the cornerstone investment agreement dated October 16, 2025 entered into among
our Company, ICBC Wealth Management Co., Ltd.* (ப΂ʮ̡),
Guotai Junan Capital Limited and Guotai Junan Securities (Hong Kong) Limited,
with respect to a subscription of H Shares at the Offer Price in the aggregate amount
of Hong Kong dollar equivalent of US$5.00 million; and
(r) the cornerstone investment agreement dated October 16, 2025 entered into among
our Company, ICBC Wealth Management Co., Ltd.* (ப΂ʮ̡),
Invesco Great Wall Fund Management Co., Ltd.* (ʮ̡),
Guotai Junan Capital Limited and Guotai Junan Securities (Hong Kong) Limited,
with respect to a subscription of H Shares at the Offer Price in the aggregate amount
of Hong Kong dollar equivalent of US$5.00 million.
Intellectual Property Rights
As of the Latest Practicable Date, our Group has registered the following intellectual
property rights which were material to our Group’s business.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-5 –


--- page 595 ---
Trademarks
As of the Latest Practicable Date, we have registered the following trademarks which we
consider to be or may be material to our business:
No. Trademark
Registration
number Class Owner
Place of
registration Expiry date
1. /H1118/H1118/H1118
 305023791 9, 42 Our Company Hong Kong August 12, 2029
2. /H1118/H1118/H1118
 43017421 9 Our Company PRC August 20, 2031
3. /H1118/H1118/H1118
 34231470 9 Our Company PRC July 27, 2030
4. /H1118/H1118/H1118
 28401431 9, 16,
29, 39,
43
Our Company PRC April 6, 2029
5. /H1118/H1118/H1118
23591862 9 Our Company PRC April 20, 2029
Patents
As of the Latest Practicable Date, we have registered the following patents which we
consider to be or may be material to our business:
No. Patent Patent number Category Owner
Place of
registration
Application
date
1 /H1118/H1118/H1118Method, system and
electronic device for
power detection of
routing equipment ( ༩͟
eӻ୕
ʿཥɿண௪)
202311158055.0 Invention patent Our Company, CIG
Zhejiang
Telecommunication
Equipment Co., Ltd.*
(ண௪Ϟ
ʮ̡)
PRC September 8,
2023
2 /H1118/H1118/H1118Method, device and
computer-readable
medium for locating
interfering signals in
wireless products ( ೌᇞପ
З˙
ၑዚ̙ᛘʧ
ሯ)
202311557390.8 Invention patent Our Company, CIG
Zhejiang
Telecommunication
Equipment Co., Ltd.*
(ண௪Ϟ
ʮ̡)
PRC November 21,
2023
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-6 –


--- page 596 ---
No. Patent Patent number Category Owner
Place of
registration
Application
date
3 /H1118/H1118/H1118V oice test bridge device and
voice test system (಻
಻༊ӻ
୕)
202311058670.4 Invention patent Our Company, CIG
Zhejiang
Telecommunication
Equipment Co., Ltd.*
(ண௪Ϟ
ʮ̡)
PRC August 22,
2023
4 /H1118/H1118/H1118Control method, device and
product for anti-
interference detector
(છՓ˙
ۜ)
202311780167.X Invention patent Our Company, CIG
Zhejiang
Telecommunication
Equipment Co., Ltd.*
(ண௪Ϟ
ʮ̡)
PRC December 22,
2023
5 /H1118/H1118/H1118Snap-fit housing
(̔ϔόಠ᜗)
201810332948.5 Invention patent Our Company PRC April 13,
2018
6 /H1118/H1118/H1118A rapid full-temperature
optical module testing
method ( ɓ၇Ҟ஺Ό๝Έ
ج)
202210073178.3 Invention patent Our Company PRC January 21,
2022
7 /H1118/H1118/H1118An external socket
protection device
(ᚐༀໄ)
202111027257.2 Invention patent Our Company PRC September 2,
2021
8 /H1118/H1118/H1118Monitoring and control
system and method for
output power of RF
power amplifiers (᎖̌
္
ج)
201811517771.2 Invention patent Our Company PRC December 12,
2018
9 /H1118/H1118/H1118System, method, apparatus,
medium and device for
chip testing (˪಻༊ӻ
eༀໄeʧሯʿ
ண௪)
202110191397.7 Invention patent Our Company PRC February 19,
2021
10 /H1118/H1118A testing method and
circuit based on 400G
optical module (׵
400Gʿ
಻༊ཥ༩)
202110505103.3 Invention patent Our Company PRC May 10, 2021
11 /H1118/H1118A testing system and
method based on optical
module (Έᅼ෯
ج)
202110021894.2 Invention patent Our Company PRC January 8,
2021
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-7 –


--- page 597 ---
No. Patent Patent number Category Owner
Place of
registration
Application
date
12 /H1118/H1118A testing system, method,
computer-readable storage
medium and electronic
device based on
transmission devices ( ɓ
಻༊ӻ
ၑዚ̙ᛘπ
Ꮇʧሯʿཥɿண௪)
202110021902.3 Invention patent Our Company PRC January 8,
2021
13 /H1118/H1118Method and system for
testing data throughput of
WiFi6 wireless router
(WiFi6ᅰኽ
ʿӻ୕)
201910446384.2 Invention patent Our Company PRC May 27, 2019
14 /H1118/H1118Wireless device testing
system, method,
apparatus, medium, and
device ( ೌᇞண௪಻༊ӻ
eༀໄeʧሯʿ
ண௪)
202110195700.0 Invention patent Our Company PRC February 19,
2021
15 /H1118/H1118Dual-band PCB spiral
antenna ( ᕐ᎖PCBᑮૅ˂
ᇞ)
202010177596.8 Invention patent Our Company PRC March 13,
2020
16 /H1118/H1118Surge Counter (ᅰኜ) 202010043284.8 Invention patent Our Company PRC January 15,
2020
17 /H1118/H1118Smart loop maintenance
device (ண
௪)
202010805550.6 Invention patent Our Company PRC August 12,
2020
18 /H1118/H1118Control method and device
for vehicle speed
indicator light (ͪ
ʿༀໄ)
201811288965.X Invention patent Our Company PRC October 31,
2018
19 /H1118/H1118PCB coupler (PCB ᇩΥኜ) 201910290611.7 Invention patent Our Company PRC April 11,
2019
20 /H1118/H1118Method and system for
testing traffic and port
data of unmanaged
switches (ೌ၍ଣ̌ঐ
ඎʿ၌ɹᅰኽ
ʿӻ୕)
202010043277.8 Invention patent Our Company PRC January 15,
2020
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-8 –


--- page 598 ---
No. Patent Patent number Category Owner
Place of
registration
Application
date
21 /H1118/H1118Detection circuit and power
adapter for USB Type-C
device type (USB Type-C
Ꮸ಻ཥ༩ʿཥ
๕ቇৣኜ)
201910251856.9 Invention patent Our Company PRC March 29,
2019
22 /H1118/H1118POE device (POE ண௪) 201910295646.X Invention patent Our Company PRC April 12,
2019
23 /H1118/H1118Performance evaluation
method for total
omnidirectional
sensitivity (ܓ
ج)
201810332937.7 Invention patent Our Company PRC April 13,
2018
24 /H1118/H1118Calibration method and
system for BOSA
components (BOSA ଡ଼΁
ʿӻ୕)
201810771268.3 Invention patent Our Company PRC July 13, 2018
25 /H1118/H1118Anti-interference testing
method and system for
wireless communication
module (ٙ
ʿӻ୕)
201710018846.1 Invention patent Our Company PRC January 10,
2017
26 /H1118/H1118Optical path control device
and ONT testing system
(Έ༩છՓண௪ʿONT಻
༊ӻ୕)
201710312318.7 Invention patent Our Company PRC May 5, 2017
27 /H1118/H1118Mounting assembly for
communication terminal
equipment (ஷৃ୞၌
τༀଡ଼΁)
201510041983.8 Invention patent Our Company PRC January 27,
2015
28 /H1118/H1118Network cable simulator
(ၣᇞᅼᏝኜ)
201610792301.1 Invention patent Our Company PRC August 31,
2016
29 /H1118/H1118Ceiling mounting bracket
for communication
terminal, communication
terminal and
communication terminal
installation system ( ஷৃ
eஷ
ৃ୞၌ʿஷৃ୞၌τༀӻ
୕)
201610352943.X Invention patent Our Company PRC May 24, 2016
30 /H1118/H1118Coprocessor ( ՘ஈଣኜ) 201610143284.9 Invention patent Our Company PRC March 14,
2016
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-9 –


--- page 599 ---
No. Patent Patent number Category Owner
Place of
registration
Application
date
31 /H1118/H1118Wireless positioning device
(Зༀໄ)
201610143269.4 Invention patent Our Company PRC March 14,
2016
32 /H1118/H1118Method for establishing
communication between
GPON OLT and GPON
ONU (GPON OLT ၾ
GPON ONUڦ
ج)
201010252320.8 Invention patent Our Company PRC August 13,
2010
33 /H1118/H1118A general RF module and
system for testing Wi-Fi
performance and
networking (᎖ஷ
͜ᅼଡ଼ʿWIFIঐʿଡ଼ၣ
಻༊ӻ୕)
202411698348.2 Invention patent CIG Zhejiang
Telecommunication
Equipment Co., Ltd.*
(ண௪Ϟ
ʮ̡)
PRC November 26,
2024
34 /H1118/H1118A multi-port Ethernet power
supply device ( ɓ၇ε༩
˸˄ၣԶཥༀໄ)
202411441780.3 Invention patent CIG Zhejiang
Telecommunication
Equipment Co., Ltd.*
(ண௪Ϟ
ʮ̡)
PRC October 16,
2024
Copyrights
As of the Latest Practicable Date, we have registered the following copyrights which we
consider to be or may be material to our business:
No. Copyright name
Registration
number Registered owner
Place of
registration
1. /H1118/H1118CIG Smart Factory Big Data
Dashboard Software (Ҧ
ழ΁)
2024SR0346733 Our Company PRC
2. /H1118/H1118CIG Label Laser Software (߅
ழ΁)
2022SR0559760 Our Company PRC
3. /H1118/H1118CIG Web BigData Analysis System 2022SR0551792 Our Company PRC
4. /H1118/H1118CIG Trace SMT Software 2022SR0551793 Our Company PRC
5. /H1118/H1118CIG Electronic Shelf Material
Management System (Ҧ
၍ଣӻ୕)
2022SR0551757 Our Company PRC
6. /H1118/H1118CIG Optical Module TOSA UID
Visual Recognition Inspection
Software ( ᄏ዗Έᅼ෯TosaUID ൖ
ᙂᗆйᏨ಻ழ΁)
2021SR0184892 Our Company PRC
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-10 –


--- page 600 ---
No. Copyright name
Registration
number Registered owner
Place of
registration
7. /H1118/H1118CIG Optical Module UID Visual
Recognition Inspection Software
(ᄏ዗Έᅼ෯UIDൖᙂᗆйᏨ಻ழ
΁)
2020SR0089879 Our Company PRC
8. /H1118/H1118CIG Log Analysis Web System 2019SR1126914 Our Company PRC
9. /H1118/H1118CIG Real-Time Production
Capacity Rolling Display
Dashboard Software (ࣛ
ழ΁)
2019SR1061489 Our Company PRC
10. /H1118CIG WebMES System 2019SR1061140 Our Company PRC
Domain Names
As of the Latest Practicable Date, we have registered the following internet domain names
which we consider to be or may be material to our business:
No. Domain name Registered owner Expiry date
1. /H1118/H1118ci-g.com Our Company April 11, 2033
2. /H1118/H1118cambridgeig.com Our Company May 7, 2033
3. /H1118/H1118cigtech.com Our Company April 23, 2033
4. /H1118/H1118cigsys.com Our Company July 30, 2033
5. /H1118/H1118actiontec.com.cn Actiontec Electronics
(Shanghai) Company
Limited* ( ᒕ౽ฆཥɿ
(ɪऎ)ʮ̡)
March 16, 2028
Save as disclosed above, as of the Latest Practicable Date, there were no other intellectual
property rights which were material to our business.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-11 –


--- page 601 ---
FURTHER INFORMATION ABOUT OUR DIRECTORS AND SUBSTANTIAL
SHAREHOLDERS
Service Contracts
Each of our Directors has entered into a service contract or appointment letter with our
Company. The principal particulars of these service contracts and appointment letters comprise
(a) the term of the service; and (b) subject to termination in accordance with their respective
term.
Save as disclosed above, none of our Directors has or is proposed to have a service
contract with any member of our Group (other than contracts expiring or determinable by the
relevant employer within one year without the payment of compensation (other than statutory
compensation)).
Remuneration of Directors
Save as disclosed in “Directors and Senior Management — Remuneration” in this
Prospectus, none of the Directors received other remuneration from our Company for each of
the years ended December 31, 2022, 2023 and 2024 and the six months ended June 30, 2025.
Disclosure of Interests
(a) Interests of our Directors and chief executive
Save as disclosed below, immediately following completion of the Global Offering
(assuming that the Over-allotment Option is not exercised, the options granted under the 2024
Share Option Incentive Scheme are not exercised and that no changes are made to the issued
share capital of our Company between the Latest Practicable Date and Listing), so far as our
Directors are aware, none of our Directors or chief executive have any interests and/or short
positions in our Shares, underlying Shares or debentures of our Company or any of our
associated corporations (within the meaning of Part XV of the SFO) which will have to be
notified to our Company and the Hong Kong Stock Exchange pursuant to Divisions 7 and 8 of
Part XV of the SFO (including interests and short positions in which they are taken or deemed
to have under such provisions of the SFO), or which will be required, pursuant to section 352
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-12 –


--- page 602 ---
of the SFO, to be entered in the register referred to therein, or which will be required to be
notified to us and the Hong Kong Stock Exchange pursuant to the Model Code for Securities
Transactions by Directors of Listed Issuers contained in the Hong Kong Listing Rules:
Name of Director
or chief executive Position Nature of interest 1
Number
and class
of Shares
Shareholding
in the total
issued Shares
immediately
prior to the
Global Offering
Shareholding
in the total
issued Shares
immediately
after the
Global Offering
Mr. Gerald G Wong 2 /H1118/H1118Chairman, executive
Director and general
manager (chief
executive officer)
(i) Interest in
controlled
corporation
32,025,735
A Shares
11.95% 9.56%
(ii) Interest held
jointly with other
persons
5,850,476
A Shares
2.18% 1.75%
Mr. Zhao Haibo
3 /H1118/H1118/H1118/H1118Executive Director,
deputy general
manager, chief
technology officer
(i) Interest in
controlled
corporation
5,850,476
A Shares
2.18% 1.75%
(ii) Interest held
jointly with other
persons
32,025,735
A Shares
11.95% 9.56%
Mr. Zhao Hongwei
4 /H1118/H1118Executive Director,
chief operating
officer
Beneficial owner 94,100
A Shares
0.04% 0.03%
Mr. Zhang Jie
5 /H1118/H1118/H1118/H1118/H1118Executive Director,
manager of
broadband products
division
(i) Beneficial owner 147,000
A Shares
0.05% 0.04%
(ii) Interest of spouse 3,700
A Shares
0.00% 0.00%
Notes:
(1) All interests stated are long positions.
(2) As of the Latest Practicable Date, (i) Mr. Gerald G Wong was interested in 32,025,735 A Shares held
by CIG Cayman, a company wholly owned by Mr. Gerald G Wong; (ii) Mr. Gerald G Wong was deemed
to be interested in 5,850,476 A Shares held by Mr. Zhao Haibo (through Kangling Technology) pursuant
to the Concert Party Agreement.
(3) As of the Latest Practicable Date, (i) Mr. Zhao Haibo was interested in 5,850,476 A Shares held by
Kangling Technology, a limited partnership whose executive partner is Mr. Zhao Haibo; (ii) Mr. Zhao
Haibo was deemed to be interested in 32,025,735 A Shares held by Mr. Gerald G Wong (through CIG
Cayman) pursuant to the Concert Party Agreement.
(4) As of the Latest Practicable Date, Mr. Zhao Hongwei held 19,100 A Shares, and was interested in 75,000
outstanding options granted under the 2024 Share Option Incentive Scheme.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-13 –


--- page 603 ---
(5) As of the Latest Practicable Date, Mr. Zhang Jie held 72,000 A Shares, and was interested in 75,000
outstanding options granted under the 2024 Share Option Incentive Scheme; Mr. Zhang Jie’s spouse,
Ms. Wang Meihua (ശɾɻ), held 3,700 A Shares as of the Latest Practicable Date.
So far as our Directors are aware, none of our Directors or chief executive has any
interests and/or short positions in the shares or underlying shares of our associated
corporations.
(b) Interests of the Substantial Shareholders
Save as disclosed in “Substantial Shareholders”, “— Further Information about Our
Directors and Substantial Shareholders — Disclosure of Interests — (a) Interests of our
Directors and chief executive” in this section and below, immediately following completion of
the Global Offering (assuming that the Over-allotment Option is not exercised, the options
granted under the 2024 Share Option Incentive Scheme are not exercised and that no changes
are made to the issued share capital of our Company between the Latest Practicable Date and
Listing), our Directors are not aware of any person (other than a Director or chief executive
of our Company) who will have an interest or a short position in the Shares or underlying
Shares of our Company which would fall to be disclosed to our Company under the provisions
of Divisions 2 and 3 of Part XV of the SFO, or will be, directly or indirectly, interested in 10%
or more of the issued voting shares of any other member of our Group:
Our Subsidiaries Parties with 10% or more equity interest Shareholding
CIG Zhejiang Telecommunication
Equipment Co., Ltd.* ( एϪᄏ዗
ʮ̡)1/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Jiashan Zhongxin Industrial
Development Investment
Company Limited* ( ྗഛጤʕอ
ʮ̡)
33.33%
Note:
(1) As of the Latest Practicable Date, our Company and Jiashan Zhongxin Industrial Development
Investment Company Limited* (ʮ̡) held approximately 66.67% and
33.33% equity interest in CIG Zhejiang Telecommunication Equipment Co., Ltd.* (ண௪
ʮ̡), respectively. Jiashan Finance Bureau* (҅), through its wholly-owned subsidiary
Jiashan Shancheng Industrial Company Limited* (ʮ̡), held 100% equity interest
in Jiashan Zhongxin Industrial Development Investment Company Limited* (ҳ༟
ʮ̡).
Disclaimers
(a) Save as disclosed in the section headed “Further Information About our Directors and
Substantial Shareholders — Disclosure of Interests” in this Appendix VI, none of our
Directors or our chief executive has any interest or short position in our Shares,
underlying Shares or debentures of our Company or any of our associated corporations
(within the meaning of Part XV of the SFO) which will have to be notified to us and the
Hong Kong Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO, or
which will be required, pursuant to section 352 of the SFO, to be entered in the register
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-14 –


--- page 604 ---
referred to therein, or which will be required to be notified to us and the Hong Kong Stock
Exchange pursuant to Model Code for Securities Transactions by Directors of Listed
Issuers once the H Shares are listed on the Hong Kong Stock Exchange;
(b) Save as disclosed in the section headed “Further Information About our Directors and
Substantial Shareholders — Disclosure of Interests” in this Appendix VI, none of our
Directors is aware of any person (other than a Director or chief executive of our
Company) who will have an interest or a short position in the Shares or underlying Shares
of our Company which would fall to be disclosed to our Company under the provisions
of Divisions 2 and 3 of Part XV of the SFO, or will be, directly or indirectly, interested
in 10% or more of the issued voting shares of any other member of our Group;
(c) none of our Directors, their respective close associates (as defined under the Hong Kong
Listing Rules) or Shareholders who own more than 5% of the number of issued Shares of
our Company have any interests in the top five customers or suppliers of our Group; and
(d) Save in connection with the Underwriting Agreements, none of our Directors or any of the
parties listed in “Qualifications of Experts” in this section 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 Group; or (ii) materially
interested in any contract or arrangement subsisting at the date of this Prospectus which
is significant in relation to our business.
OUR SHARE INCENTIVE SCHEMES
2024 Share Option Incentive Scheme
We adopted the 2024 Share Option Incentive Scheme by the then Shareholders on August
26, 2024, which was still in effect as of the Latest Practicable Date. The terms of the 2024
Share Option Incentive Scheme are not subject to the provisions of Chapter 17 of the Hong
Kong Listing Rules as they do not involve any grant of options by our Company after the
Listing. The major terms are summarized as below:
Purpose
The purpose of the 2024 Share Option Incentive Scheme is to improve our corporate
governance structure, establish and improve our Company’s long-term incentive mechanism,
attract and retain the directors, senior management, core management and technical/business
personnel of our Group, fully mobilize their enthusiasm and creativity to enhance the cohesion
of our core team and core competitiveness, so as to realize our development strategies and
business objectives.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-15 –


--- page 605 ---
Administration
The 2024 Share Option Incentive Scheme is subject to the approval of the Shareholders’
general meeting, administration of the Board of our Company.
Participants
The participants of the 2024 Share Option Incentive Scheme include the directors, senior
management, core management and technical/business personnel of our Group. The scope of
participants excludes independent Directors and Shareholders or actual controller who
individually or collectively hold 5% or more of the Shares of our Company and their spouse,
parents and children.
Source and maximum number of Shares
The Shares underlying the 2024 Share Option Incentive Scheme shall be A Shares issued
by our Company to the eligible grantees. The maximum number of options that can be granted
under the 2024 Share Option Incentive Scheme is 15,601,000 A Shares. Each option granted
represents the right to purchase one A Share within the exercise period at the exercise price.
V alidity period
The validity period of the 2024 Share Option Incentive Scheme shall be from the date of
grant of the options up to the date when all options granted to the eligible grantees are
exercised or cancelled, provided that the validity period shall not exceed 36 months.
Date of grant
After the 2024 Share Option Incentive Scheme was approved by the Shareholders’ general
meeting, the Board shall determine and perform the grant to eligible grantees within 60 days
(if there are conditions for grant, it will be counted from the fulfillment of such conditions) and
complete the announcement, registration and other relevant procedures.
Grant conditions
The options under the 2024 Share Option Incentive Scheme will only be granted to
eligible grantees if the following conditions are simultaneously fulfilled:
(a) With respect to our Company, none of the following circumstances having occurred:
(1) an audit report with an adverse opinion or a disclaimer of opinion has been
issued by the reporting accountant with respect to our Company’s accountant’s
report for the most recent fiscal year; (2) an audit report with an adverse opinion or
a disclaimer of opinion has been issued by the reporting accountant with respect to
the internal control report contained in accountant’s report for the most recent fiscal
year; (3) our Company has not distributed dividends in accordance with the laws and
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-16 –


--- page 606 ---
regulations, our Articles of Association or our public commitment within the last 36
months after its listing; (4) applicable laws and regulations prohibit the
implementation of any share incentive scheme; or (5) any other circumstances
determined by the CSRC.
(b) With respect to an eligible grantee, none of the following circumstances having
occurred: (1) the grantee has been regarded as an inappropriate person by the stock
exchange within the last 12 months; (2) the grantee has been regarded as an
inappropriate person by the CSRC or its local office within the last 12 months; (3)
the grantee has been punished or prohibited from entering into the securities market
by the CSRC or its local office within the last 12 months; (4) the grantee is not
qualified to serve as a director or senior management according to the PRC
Company Law; (5) the grantee is prohibited from participating in any incentive plan
of listed companies according to applicable laws and regulations; or (6) any other
circumstances determined by the CSRC.
No grant consideration is paid/payable for the options granted under the 2024 Share
Option Incentive Scheme.
Exercise price
The eligible grantees shall pay the exercise price upon fulfilment of all the conditions of
the options to purchase the A Shares from our Company. The exercise price of each option shall
not be lower than the nominal value of each A Share and, in principle, shall not be lower than
the higher of (1) the average trading price of the A Shares on the trading date before the
announcement of the draft scheme; and (2) the average trading price of the A Shares during the
20 trading dates before the announcement of the draft scheme.
The number of options granted and/or the exercise price will be adjusted upon the
occurrence of certain events, including increase in the share capital by way of capitalization of
capital reserves, issue of bonus shares, subdivision of shares, share consolidation, placing and
dividend distribution.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-17 –


--- page 607 ---
Exercise
The options granted are subject to a waiting period before exercise. The waiting period
commences from the date of completion of registration of the options granted to the eligible
grantees, and the interval between the date of grant and the date of exercise of the options shall
not be less than twelve months. The exercise schedule of the options are as below:
Exercise period Exercise schedule
Exercise
proportion
First period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118The first trading date after the 12-month
anniversary from the date of grant, till
the last trading day up to the 24-month
anniversary of the date of grant
50%
Second period /H1118/H1118/H1118/H1118/H1118/H1118The first trading date after the 24-month
anniversary from the date of grant, till
the last trading day up to the 36-month
anniversary of the date of grant
50%
Options may be exercised upon fulfilling the conditions same as the grant conditions
stipulated above and with reference to the eligible grantees’ personal performance and our
Company’s performance targets in each of the two years ending December 31, 2025, which are
as below:
Exercise period Performance targets
First period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Revenue for the year of 2024 is not less than
RMB3,400 million, or, net profit for the year of
2024 is not less than RMB115 million
Second period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Revenue in aggregate for the two years of 2024 and
2025 is not less than RMB7,140 million, or, net
profit in aggregate for the two years of 2024 and
2025 is not less than RMB235 million
In the event that the grant conditions do not be fulfilled or our Company’s performance
does not meet the performance targets, the options which have been granted but not yet
exercised shall be canceled by our Company. Upon expiry of the exercise period, options
granted but not exercised will cease to be exercisable and shall be canceled by our Company.
Blackout period for our Directors and senior management
If the eligible grantees are our Directors and senior management, the Shares to be
transferred in each year during their tenure of office shall not exceed 25% of the total Shares
of our Company he or she holds; and no Share held by such Directors or senior management
can be transferred within six months after termination of his or her employment.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-18 –


--- page 608 ---
Dividend and voting rights
During the waiting period, the options granted to eligible grantees shall not be
transferred, pledged or settled for debt repayment. Upon exercise of the options, the eligible
grantees will be entitled to exercise the right of Shareholders, including but not limited to the
right to receive dividends and voting rights.
Outstanding options
On August 26, 2024, our Company granted 15,601,000 options to 780 eligible grantees
with the exercise price of RMB29.48 per A Share. No grant consideration was paid/payable for
the options granted to each of the eligible grantees. Due to termination of employment by one
eligible grantee, 15,593,000 options were actually registered on behalf of 779 eligible grantees
on September 10, 2024.
As of the Latest Practicable Date, (i) no further option under the 2024 Share Option
Incentive Scheme can be granted; (ii) due to termination of employment by 36 eligible
grantees, 15,138,300 options were held by 743 eligible grantees, representing approximately
5.65% of the total issued Shares of our Company as of the Latest Practicable Date, and all of
such options remained outstanding and have not been exercised. Assuming full exercise of all
outstanding options granted under the 2024 Share Option Incentive Scheme, the shareholding
of our Shareholders immediately following completion of the Global Offering (assuming that
the Over-allotment Option is not exercised) will be diluted by a maximum of approximately
4.32%. The maximum dilution effect on our earnings per Share would be approximately 4.32%.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-19 –


--- page 609 ---
The following table sets forth the of outstanding options granted to the eligible grantees
under the 2024 Share Option Incentive Scheme as of the Latest Practicable Date:
Name Position Address Grant date
Exercise
price 2
Number of
A Shares
underlying the
outstanding
options as of
the Latest
Practicable Date
Exercise period
for outstanding
options
Shareholding of
A Shares
underlying the
outstanding
options in the
total issued
Shares
immediately
after the Global
Offering 1
Connected persons:
Mr. Zhang Jie /H1118Executive
Director
Room 401, No. 2,
Lane 333,
Dongchuan Road,
Minhang District,
Shanghai, PRC
August 26,
2024
RMB29.48 75,000 50% during
September 10,
2025 to
September 9,
2026;
50% during
September 10,
2026 to
September 9,
2027
0.02%
Mr. Zhao
Hongwei /H1118/H1118
Executive
Director
Room 701, No. 9,
Lane 818,
Minsheng Road,
Pudong New Area,
Shanghai, PRC
75,000 0.02%
Mr. Wang
Zhiming
(΋
͛) /H1118/H1118/H1118/H1118/H1118
Chief executive
and director
of our
significant
subsidiaries
Room 601, No. 7,
Lane 241, Xinling
Road, Minhang
District, Shanghai,
PRC
65,000 0.02%
Mr. Zhang
Deyong
(΋
͛) /H1118/H1118/H1118/H1118/H1118
Director of our
significant
subsidiary
Room 301, No. 1,
Lane 1700,
Qishan Road,
Pudong New Area,
Shanghai
PRC
70,000 0.02%
Ms. Luan
Y anjie
(㐟Ѹᆎɾ
ɻ) /H1118/H1118/H1118/H1118/H1118
Supervisor of
our
significant
subsidiary
Room 510, No. 16,
Railway New
Village, Pushan
Road, Jing’an
District, Shanghai,
PRC
52,000 0.02%
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-20 –


--- page 610 ---
Name Position Address Grant date
Exercise
price 2
Number of
A Shares
underlying the
outstanding
options as of
the Latest
Practicable Date
Exercise period
for outstanding
options
Shareholding of
A Shares
underlying the
outstanding
options in the
total issued
Shares
immediately
after the Global
Offering 1
Mr. Cheng
Gucheng /H1118/H1118/H1118
Deputy general
manager,
financial
officer of
our Company
and director
of our
significant
subsidiaries
Room 501, No. 2,
Lane 68,
Huachang Road,
Hongkou District,
Shanghai, PRC
75,000 0.02%
Other eligible grantees (excluding our connected persons):
Mr. W ANG
SHIMING /H1118/H1118
Vice president 285 Wilton Ave,
Palo Alto,
CA94306, United
States
August 26,
2024
RMB29.48 75,000 50% during
September
10, 2025 to
September 9,
2026; 50%
during
September
10, 2026 to
September 9,
2027
0.02%
Mr. HUANG
JIAHENG /H1118/H1118
Director of
product
management
2759 Coit Dr, San
Jose CA95725,
United States
75,000 0.02%
Mr.
LEIBOVICH
ALEXANDER
VLADIMIR /H1118
Senior vice
president
203 Oakview Dr,
San Carlos,
CA94070, United
States
75,000 0.02%
Mr. XIN WEI
MICHAEL /H1118
Director of sale
and vice
president
502 Chantecler Dr.
Fremont, CA
94539, United
States
75,000 0.02%
Mr. Lv Liping
(ѐл̻΋
͛) /H1118/H1118/H1118/H1118/H1118
General
manager of
the
optoelectronics
division
Room 801, No. 4,
Lane 1001,
Minsheng Road,
Y angjing
Subdistrict,
Pudong New Area,
Shanghai, PRC
75,000 0.02%
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-21 –


--- page 611 ---
Name Position Address Grant date
Exercise
price 2
Number of
A Shares
underlying the
outstanding
options as of
the Latest
Practicable Date
Exercise period
for outstanding
options
Shareholding of
A Shares
underlying the
outstanding
options in the
total issued
Shares
immediately
after the Global
Offering 1
Mr. Han
Fengyong
(ᒵჾ͑΋
͛)/H1118/H1118/H1118/H1118/H1118/H1118
Deputy general
manager of
the
optoelectronics
market sales
department
Room 502, No. 48,
Lane 6888,
Jiasong Middle
Road, Zhaoxiang
Town, Qingpu
District, Shanghai,
PRC
75,000 0.02%
Mr. Fu Jili
(௩ᘱл΋
͛) /H1118/H1118/H1118/H1118/H1118
Vice president
of product
management
and general
manager of a
subsidiary
Room 404, No. 40,
Lane 649, Y an’an
West Road,
Changning
District, Shanghai,
PRC
75,000 0.02%
Mr. Lian
Zhihong
(΋
͛) /H1118/H1118/H1118/H1118/H1118
Senior vice
president of
international
business
development
Room 3002, Unit 1,
Building 18, Lane
88, Lishang Road,
Putuo District,
Shanghai, PRC
75,000 0.02%
Ms. Zhong Wei
(ᒤฆɾɻ) /H1118
Senior treasury
director
No. 200, Lane 568,
Puxing Highway,
Pujin Subdistrict,
Minhang District
Shanghai, PRC
73,000 0.02%
Mr. Luo Xuan
(ᖯ⥳΋͛) /H1118
Director of
international
product
management
division II
Room 404, No. 63,
Lane 555, Shitai
Road, Dachang
Town, Baoshan
District, Shanghai,
PRC
71,000 0.02%
Mr. Y ang Xudi
(เ඲ή΋
͛) /H1118/H1118/H1118/H1118/H1118
Senior director
of market
and
commerce
Room 502, No. 12,
Lane 1350, Fuxing
Middle Road
Hunan Road
Subdistrict, Xuhui
District Shanghai,
PRC
70,000 0.02%
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-22 –


--- page 612 ---
Name Position Address Grant date
Exercise
price 2
Number of
A Shares
underlying the
outstanding
options as of
the Latest
Practicable Date
Exercise period
for outstanding
options
Shareholding of
A Shares
underlying the
outstanding
options in the
total issued
Shares
immediately
after the Global
Offering 1
Mr. Yin Lei
(ʙཤ΋͛) /H1118/H1118
Director of
planning and
warehousing
center
Room 301, No. 3,
Lane 633, Pushen
Road, Pujin
Subdistrict,
Minhang District,
Shanghai, PRC
70,000 0.02%
Ms. Hu Rong /H1118Senior vice
president of
international
market
management
Room 12-801, 168
Jinan Lane,
Huaihai Middle
Road Subdistrict,
Huangpu District,
Shanghai, PRC
70,000 0.02%
Mr. Cui Lin
(੦ᎌ΋͛) /H1118
Deputy general
manager of
the business
division
Room 2303, No. 10,
Lane 269,
Changning Road,
Jing’an District,
Shanghai, PRC
70,000 0.02%
Ms. Zhang
Lingling
(ɾ
ɻ) /H1118/H1118/H1118/H1118/H1118
Director of
human
resources
Room 502, No. 1,
Lane 99,
Y anchang Road,
Daning Road
Subdistrict,
Jing’an District,
Shanghai, PRC
70,000 0.02%
Mr. Jiang
Wenjun
(΋
͛) /H1118/H1118/H1118/H1118/H1118
Senior
financial
manager
Room 102, No. 8,
Lane 1198,
Mingcheng Road,
Haiwan Town
Fengxian District
Shanghai, PRC
68,000 0.02%
Ms. Dong
Wenming
(ɾ
ɻ) /H1118/H1118/H1118/H1118/H1118
Senior sales
manager
Room 1005, No. 61
Shangzhong Road,
Changqiao
Subdistrict, Xuhui
District, Shanghai,
PRC
65,000 0.02%
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-23 –


--- page 613 ---
Name Position Address Grant date
Exercise
price 2
Number of
A Shares
underlying the
outstanding
options as of
the Latest
Practicable Date
Exercise period
for outstanding
options
Shareholding of
A Shares
underlying the
outstanding
options in the
total issued
Shares
immediately
after the Global
Offering 1
Mr. Wang
Haibin
(ˮऎⅳ΋
͛)/H1118/H1118/H1118/H1118/H1118/H1118
Director of the
information
technology
center
Room 802, No. 2,
Lane 645, Gudai
Road, Meilong
Subdistrict,
Minhang District,
Shanghai, PRC
65,000 0.02%
Ms. Y ANG
XIAO-LIN /H1118
Vice president Room 2304, No. 15,
Lane 538, Haifang
Road, Jiangning
Subdistrict,
Jing’an District,
Shanghai, PRC
65,000 0.02%
Mr. Liu Zhe
(΋͛) /H1118
Deputy general
manager of
the wireless
products
division
Room 403, No. 39,
Lane 1036,
Xinzhen Road,
Qibao Town,
Minhang District,
Shanghai, PRC
64,000 0.02%
Mr. Fang
Haibin
(˙ऎᏵ΋
͛) /H1118/H1118/H1118/H1118/H1118
Deputy general
manager of
software
R&D center
I
Room 46-301, Lane
288, Y uqiao Road,
Sanlin Town,
Pudong New Area,
Shanghai, PRC
64,000 0.02%
Mr. Wang
Dongwei
(ᙯ΋
͛) /H1118/H1118/H1118/H1118/H1118
Deputy general
manager of
the wireless
products
division
Room 1403, No. 1,
Lane 99, Baotun
Road,
Bansongyuan
Road Subdistrict,
Huangpu District
Shanghai, PRC
64,000 0.02%
Mr. Zhong
Y anghong
(΋
͛) /H1118/H1118/H1118/H1118/H1118
Strategic
consulting
advisor
Room 1702, No. 5,
Lane 251, Caoxi
Road, Caoxi
Subdistrict, Xuhui
District Shanghai,
PRC
64,000 0.02%
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-24 –


--- page 614 ---
Name Position Address Grant date
Exercise
price 2
Number of
A Shares
underlying the
outstanding
options as of
the Latest
Practicable Date
Exercise period
for outstanding
options
Shareholding of
A Shares
underlying the
outstanding
options in the
total issued
Shares
immediately
after the Global
Offering 1
Ms. Wang
Bingbing
(ˮΏΏɾ
ɻ)/H1118/H1118/H1118/H1118/H1118/H1118
Senior
financial
manager
Room 1804, No. 6,
Lane 411,
Gongchuan Road,
Huinan Town,
Pudong New Area,
Shanghai, PRC
61,000 0.02%
Mr. Lu Jun
(΋͛) /H1118
Director of
software
development
Room 903, No. 81,
Waterfall Bay
Road, Lane 958,
Xinsong Road,
Xinzhuang Town,
Minhang District,
Shanghai, PRC
60,000 0.02%
Mr. Xu
Zhengrong
(੣Ꮜ΋
͛) /H1118/H1118/H1118/H1118/H1118
Director of the
securities
department
Room 703, No. 16,
Lane 951, Fanglin
Road, Nanxiang
Town, Jiading
District, Shanghai,
PRC
58,000 0.02%
Mr. FAN
SHANHUAN /H1118
Director of
sales &
business
development
5061 Campion
Drive, San
Ramon, CA94582,
United States
56,000 0.02%
Mr. Y ang Song
(΋͛) /H1118
Director of
quality
management
center and
director of
JDM sales
department
Room 502, No. 3,
Lane 500,
Changhai Road,
Changhai Road
Subdistrict,
Y angpu District
Shanghai, PRC
53,000 0.02%
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-25 –


--- page 615 ---
Name Position Address Grant date
Exercise
price 2
Number of
A Shares
underlying the
outstanding
options as of
the Latest
Practicable Date
Exercise period
for outstanding
options
Shareholding of
A Shares
underlying the
outstanding
options in the
total issued
Shares
immediately
after the Global
Offering 1
Mr. Liu Caijun
(ᄎৌё΋
͛)/H1118/H1118/H1118/H1118/H1118/H1118
Director of the
automation
R&D center
Room 1603,
Building 16,
Zhongchengyuan,
Lane 99, Pulian
Road, Pujiang
Town, Minhang
District, Shanghai
53,000 0.02%
Mr. Liu Qiwei
(ᄎຩਃ΋
͛) /H1118/H1118/H1118/H1118/H1118
Director of
general
affairs and
deputy Plant
manager
Room 3203,
Building 23,
Puyue, Greenland
Central Park
Xinjian District,
Nanchang City,
Jiangxi Province,
PRC
53,000 0.02%
Mr. Qian Ying
(፺ኩ΋͛) /H1118
Systems and
pre-research
department
manager
Room 1402, No.
105, Lane 1717,
Longwu Road
Changqiao
Subdistrict, Xuhui
District Shanghai,
PRC
53,000 0.02%
Mr. Sun Yifan
(ɓω΋
͛) /H1118/H1118/H1118/H1118/H1118
Director of
production
quality
Room 302, No. 1,
Lane 359, Puxiu
Road, Pujin
Subdistrict,
Minhang District,
Shanghai, PRC
53,000 0.02%
Ms. Liu
Jiaorong
(ɾ
ɻ) /H1118/H1118/H1118/H1118/H1118
Director of
procurement
division I
Room 1202,
Building 3, Lane
577, Tangqi Road,
Dachang Town,
Baoshan District,
Shanghai, PRC
53,000 0.02%
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-26 –


--- page 616 ---
Name Position Address Grant date
Exercise
price 2
Number of
A Shares
underlying the
outstanding
options as of
the Latest
Practicable Date
Exercise period
for outstanding
options
Shareholding of
A Shares
underlying the
outstanding
options in the
total issued
Shares
immediately
after the Global
Offering 1
Ms. Li Jingyi
(ҽᘩᛄɾ
ɻ)/H1118/H1118/H1118/H1118/H1118/H1118
Senior human
resources
manager
Room 102, No. 19,
Lane 60,
Jianghang Road,
Pujiang Town,
Minhang District,
Shanghai, PRC
52,000 0.02%
548 eligible
grantees who
have been
granted
options to
subscribe for
1,000 to
25,000 A
Shares /H1118/H1118/H1118/H1118
Employees – August 26,
2024
RMB29.48 7,033,300 50% during
September
10, 2025 to
September
9,2026; 50%
during
September
10, 2026 to
September 9,
2027
2.10%
155 eligible
grantees who
have been
granted
options to
subscribe for
25,001 to
50,000 A
Shares /H1118/H1118/H1118/H1118
Employees – August 26,
2024
RMB29.48 5,475,000 50% during
September
10, 2025 to
September
9,2026; 50%
during
September
10, 2026 to
September 9,
2027
1.63%
Total /H1118/H1118/H1118/H1118/H1118/H1118 15,138,300 4.52%
Notes:
(1) The calculation is based on the assumption that the Over-allotment Option is not exercised, the options granted
under the 2024 Share Option Incentive Scheme are not exercised and that no other changes are made to the
issued share capital of the Company between the Latest Practicable Date and Listing.
(2) The number of A Shares underlying the outstanding options granted and/or the exercise price will be adjusted
upon the occurrence of certain events, including increase in the share capital by way of capitalization of capital
reserves, issue of bonus shares, subdivision of shares, share consolidation, placing and dividend distribution.
Such adjustment shall be subject to our Board’s review and approval.
Save as disclosed above, no options were granted to any Directors, senior management
and/or other connected persons of our Company under the 2024 Share Option Incentive
Scheme.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-27 –


--- page 617 ---
We have applied to the Hong Kong Stock Exchange and SFC, respectively for (i) a waiver
from strict compliance with the disclosure requirements under Rule 17.02(1)(b) of, and
paragraph 27 of Appendix D1A to, the Hong Kong Listing Rules, in relation to the options
granted under the 2024 Share Option Incentive Scheme; and (ii) a certificate of exemption
under Section 342A of the Companies (Winding Up and Miscellaneous Provisions) Ordinance
exempting our Company from strict compliance with the disclosure requirements under
paragraph 10(d) of Part I of the Third Schedule to the Companies (Winding Up and
Miscellaneous Provisions) Ordinance in relation to the options granted under the 2024 Share
Option Incentive Scheme. See “Waivers from Strict Compliance with Hong Kong Listing Rules
and Exemption from Strict Compliance with the Companies (Winding Up and Miscellaneous
Provisions) Ordinance — Waiver and Exemption in Relation to the 2024 Share Option
Incentive Scheme” for details.
OTHER INFORMATION
Estate Duty
Our Directors have been advised that no material liability for estate duty is likely to fall
on our Company or any of our subsidiaries under the laws of the PRC.
Litigation
As of the Latest Practicable Date, we were not engaged in any litigation, arbitration or
claim of material importance and no litigation, arbitration or claim of material importance was
known to our Directors to be pending or threatened by or against any member of our Group,
that would have a material and adverse effect on our Group’s results of operations or financial
conditions, taken as a whole.
Sole Sponsor
The Sole Sponsor has made an application on our behalf to the Listing Committee of the
Hong Kong Stock Exchange for the listing of, and permission to deal in, the H Shares to be
issued as mentioned in this Prospectus. All necessary arrangements have been made enabling
the H Shares to be admitted into CCASS.
The Sole Sponsor satisfies the independence criteria applicable to the sponsor set out in
Rule 3A.07 of the Listing Rules. Pursuant to the engagement letters entered into between our
Company and the Sole Sponsor, the fees of the Sole Sponsor payable by us to it in respect of
its service as the sponsor in connection with the Listing on the Hong Kong Stock Exchange is
HKD3 million.
Compliance Adviser
Our Company has appointed Guotai Junan Capital Limited as our Compliance Adviser in
compliance with Rules 3A.19 of the Hong Kong Listing Rules.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
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Qualifications of Experts
The qualifications of the experts (as defined under the Hong Kong Listing Rules and the
Companies (Winding Up and Miscellaneous Provisions) Ordinance) who have given their
opinion and/or advice in this Prospectus are as follows:
Name Qualification
Guotai Junan Capital Limited /H1118/H1118Licensed corporation to conduct Type 6 (advising
on corporate finance) regulated activity as
defined under the SFO
Grant Thornton Hong Kong
Limited /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Certified Public Accountants
Beijing DeHeng Law Offices /H1118/H1118PRC Legal Adviser
Frost & Sullivan (Beijing) Inc.,
Shanghai Branch Co. /H1118/H1118/H1118/H1118/H1118/H1118
Independent industry consultant
Thompson Hine LLP /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Legal adviser as to U.S. laws in relation to our
business operations in the U.S.
Hogan Lovells International
LLP /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
International Sanctions Legal Adviser
Commerce & Finance Law
Offices LLP /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Legal adviser as to U.S. tariff laws and regulations
Zhitong (Beijing) Registered
Tax Agents Co., Ltd.
Shanghai Branch /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Transfer Pricing Adviser
Each of the experts named above has given and has not withdrawn their respective written
consents to the issue of this Prospectus with the inclusion of their reports and/or letters (as the
case may be) and the references to their names included in the form and context in which they
are respective included.
As of the Latest Practicable Date, none of the experts named above had any shareholding
interest in our Company or any of our subsidiaries or the right (whether legally enforceable or
not) to subscribe for or to nominate persons to subscribe for securities in any member of our
Group.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
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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.
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).
No Material Adverse Change
Our Directors confirm that there has been no material adverse change in the financial or
trading position or prospects of our Group since June 30, 2025 (being the date to which the
latest consolidated financial statements of our Group were prepared).
Taxation of Holders of H Shares
The sale, purchase and transfer of H Shares are subject to Hong Kong stamp duty if such
sale, purchase and transfer are effected on the H Share register of members of our Company,
including in circumstances where such transactions are effected on the Hong Kong Stock
Exchange. The current rate of Hong Kong stamp duty for such sale, purchase and transfer on
each of the purchaser and the seller is 0.1% of the consideration or, if higher, the fair value of
the H Shares being sold or transferred.
Preliminary Expenses
Our Company has not incurred any material preliminary expenses in relation to the
incorporation of our Company.
Promoter
The promoters of our Company are CIG Cayman, Kangyiqiao, Kangling Technology, CIG
Holding, Kangguiqiao, Kangwuqiao and the 2012 Investors. See “History, Development and
Corporate Structure — Major Shareholding Changes in Our Company — Capital Injection and
Conversion into Joint Stock Limited Company in 2012” for details.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
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Save as disclosed in the sections headed “History, Development and Corporate Structure”
and “Financial Information — Dividend” in this Prospectus, within the two years immediately
preceding the date of this Prospectus, no cash, securities or other benefit has been paid, allotted
or given or is proposed to be paid, allotted or given to the promoters in connection with the
Global Offering and the related transactions described in this Prospectus.
Miscellaneous
Save as otherwise disclosed in this Prospectus:
(a) within the two years preceding the date of this Prospectus: (i) we have 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 commissions, discounts, brokerage fee
or other special terms have been granted in connection with the issue or sale of any
shares of our Company;
(b) no share or loan capital of our Company is under option or is agreed conditionally
or unconditionally to be put under option;
(c) we have not issued nor agreed to issue any founder shares, management shares or
deferred shares;
(d) there are no arrangements under which future dividends are waived or agreed to be
waived;
(e) there are no procedures for the exercise of any right of pre-emption or transferability
of subscription rights;
(f) there have been no interruptions in our business which may have or have had a
significant effect on our financial position in the last 12 months;
(g) there are no restrictions affecting the remittance of profits or repatriation of capital
by us into Hong Kong from outside Hong Kong;
(h) save for the A Shares of our Company that are listed on the Shanghai Stock
Exchange, and save for the H Shares to be issued, none of the equity and debt
securities of our Company, if any, is listed or dealt with in any other stock exchange
nor is any listing or permission to deal being or proposed to be sought; and
(i) our Company has no outstanding convertible debt securities or debentures.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
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DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES IN HONG KONG
The documents attached to the copy of this Prospectus delivered to the Registrar of
Companies in Hong Kong for registration were:
(a) the written consents referred to in “Statutory and General Information — Other
Information — Qualifications of Experts” in Appendix VI to this Prospectus; and
(b) a copy of each of the material contracts referred to in “Statutory and General
Information — Further Information about our Business — Summary of Material
Contracts” in Appendix VI to this Prospectus.
DOCUMENTS A V AILABLE ON DISPLAY
Electronic copies of the following documents will be available on display on the website
of the Hong Kong Stock Exchange at www.hkexnews.hk and our website at www.cigtech.com
during a period of 14 days from the date of this Prospectus:
(a) the Articles of Association;
(b) the Accountants’ Report prepared by Grant Thornton Hong Kong Limited, the text
of which is set forth in Appendix I to this Prospectus;
(c) the audited consolidated financial statements of our Company for the three years
ended December 31, 2022, 2023 and 2024 and the six months ended June 30, 2025;
(d) the report from Grant Thornton Hong Kong Limited on the unaudited pro forma
financial information of our Group, the text of which is set forth in Appendix II to
this Prospectus;
(e) the material contracts in “Statutory and General Information — Further Information
about our Business — Summary of Material Contracts” in Appendix VI to this
Prospectus;
(f) the written consents referred to in “Statutory and General Information — Other
Information — Qualifications of Experts” in Appendix VI to this Prospectus;
(g) the service contracts referred to in “Statutory and General Information — Further
Information about our Directors and Substantial Shareholders — Service Contracts”
in Appendix VI to this Prospectus;
(h) the legal opinions issued by Beijing DeHeng Law Offices, our PRC Legal Adviser,
in respect of, among other things, the general corporate matters and the property
interests of our Group under PRC law;
APPENDIX VII DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES AND A V AILABLE ON DISPLAY
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(i) the legal memorandum issued by Hogan Lovells, our International Sanctions Legal
Adviser;
(j) the legal opinion issued by Thompson Hine LLP , our legal adviser as to U.S. laws
in relation to our business operations in the U.S.;
(k) the legal opinion issued by Commerce & Finance Law Offices LLP , our legal adviser
as to U.S. tariff laws and regulations;
(l) the industry report issued by F&S, the summary of which is set forth in “Industry
Overview”;
(m) the transfer pricing report issued by Zhitong (Beijing) Registered Tax Agents Co.,
Ltd. Shanghai Branch;
(n) a copy of the following PRC laws, together with their unofficial English
translations: (1) the PRC Company law, (2) the Securities Law, and (3) the Trial
Measures for the Administration Related to the Overseas Securities Offering and
Listing by Domestic Companies; and
(o) the terms of the 2024 Share Option Incentive Scheme.
DOCUMENT A V AILABLE FOR INSPECTION
A copy of a full list of grantees under the 2024 Share Option Incentive Scheme will be
made available for public inspection at our Company’s principal place of business in Hong
Kong at Room 1901, 19/F, Lee Garden One, 33 Hysan Avenue, Causeway Bay, Hong Kong
during normal business hours up to and including the date which is 14 days from the date of
this Prospectus.
APPENDIX VII DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES AND A V AILABLE ON DISPLAY
– VII-2 –


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上海劍橋科技股份有限公司
CIG SHANGHAI CO., L TD.
