China Mengshu Ecological Group Company Limited 中國蒙樹生態集團有限公司 (Incorporated in the Cayman Islands with Limited Liability)

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Application Proof of

China Mengshu Ecological Group Company Limited 中國蒙樹生態集團有限公司 (Incorporated in the Cayman Islands with limited liability)

WARNING

The publication of this Application Proof is required by The Stock Exchange of Hong Kong Limited (the “Stock Exchange”)/the Securities and Futures Commission (the “Commission”) solely for the purpose of providing information to the public in Hong Kong.

This Application Proof is in draft form. The information contained in it is incomplete and is subject to change which can be material. By viewing this document, you acknowledge, accept and agree with China Mengshu Ecological Group Company Limited (the “Company”), its sponsor, advisers or member of the underwriting syndicate that:

(a) this document is only for the purpose of providing information about the Company to the public in Hong Kong and not for any other purposes. No investment decision should be based on the information contained in this document;

(b) the publication of this document or supplemental, revised or replacement pages on the Stock Exchange’s website does not give rise to any obligation of the Company, its sponsor, advisers or members of the underwriting syndicate to proceed with an offering in Hong Kong or any other jurisdiction. There is no assurance that the Company will proceed with the offering;

(c) the contents of this document or supplemental, revised or replacement pages may or may not be replicated in full or in part in the actual final listing document;

(d) the Application Proof is not the final listing document and may be updated or revised by the Company from time to time in accordance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited;

(e) this document does not constitute a prospectus, offering circular, notice, circular, brochure or advertisement offering to sell any securities to the public in any jurisdiction, nor is it an invitation to the public to make offers to subscribe for or purchase any securities, nor is it calculated to invite offers by the public to subscribe for or purchase any securities;

(f) this document must not be regarded as an inducement to subscribe for or purchase any securities, and no such inducement is intended;

(g) neither the Company nor any of its affiliates, advisers or underwriters is offering, or is soliciting offers to buy, any securities in any jurisdiction through the publication of this document;

(h) no application for the securities mentioned in this document should be made by any person nor would such application be accepted;

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(k) the application to which this document relates has not been approved for listing and the Stock Exchange and the Commission may accept, return or reject the application for the subject public offering and/or listing.

If an offer or an invitation is made to the public in Hong Kong in due course, prospective investors are reminded to make their investment decisions solely based on the Company’s prospectus registered with the Registrar of Companies in Hong Kong, copies of which will be distributed to the public during the offer period. THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. IMPORTANT

IMPORTANT: If you are in any doubt about any of the contents of this document, you should obtain independent professional advice.

China Mengshu Ecological Group Company Limited 中國蒙樹生態集團有限公司 (Incorporated in the Cayman Islands with limited liability) [REDACTED] Number of [REDACTED] under : [REDACTED] Shares (comprising the [REDACTED] [REDACTED] [REDACTED] and [REDACTED] [REDACTED], subject to the [REDACTED]) Number of [REDACTED] : [REDACTED] Shares (subject to adjustment) Number of [REDACTED] : [REDACTED] Shares (comprising [REDACTED] New Shares and [REDACTED] [REDACTED], subject to adjustment and the [REDACTED]) [REDACTED] : not more than HK$[REDACTED] per [REDACTED] (payable in full on application in Hong Kong dollars, subject to refund, plus brokerage of 1%, SFC transaction levy of 0.0027% and Stock Exchange trading fee of 0.005%) and expected to be not less than HK$[REDACTED] per [REDACTED] Nominal Value : HK$0.001 per Share Stock Code : [REDACTED]

Sole Sponsor

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Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsibility for the contents of this document, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document. A copy of this document, having attached thereto the documents specified in the paragraph headed “Documents Delivered to the Registrar of Companies and Available for Inspection and Display” in Appendix V to this document, has been registered by the Registrar of Companies in Hong Kong as required by section 342C of the Companies (Winding Up and Miscellaneous Provisions) Ordinance. The Securities and Futures Commission and the Registrar of Companies in Hong Kong take no responsibility for the contents of this document or any other document referred to above. The [REDACTED] have not been and will not be registered under the U.S. Securities Act or any state securities law in the United States and may not be [REDACTED], sold, pledged or transferred within the United States, or for the account or benefit of U.S. persons, except that [REDACTED] may be [REDACTED], sold or delivered outside the United States in offshore transactions in accordance with Regulation S. The [REDACTED] is expected to be fixed by agreement between the [REDACTED] (for itself and on behalf of the [REDACTED] and our Company (acting for itself and on behalf of the [REDACTED] on the [REDACTED]. The [REDACTED] is expected to be on or around [REDACTED], [REDACTED] and, in any event, not later than [REDACTED], [REDACTED]. The [REDACTED] will be not more than HK$[REDACTED] and is currently expected to be not less than HK$[REDACTED] unless otherwise announced. Applicants for [REDACTED] are required to pay, on application, the maximum [REDACTED] of HK$[REDACTED] for each Share together with a brokerage fee of 1 %, SFC transaction levy of 0.0027% and Stock Exchange trading fee of 0.005% subject to refund if the [REDACTED] as finally determined should be lower than HK$[REDACTED]. If, for any reason, the [REDACTED] is not agreed by [REDACTED], [REDACTED] between the [REDACTED] (for itself and on behalf of the [REDACTED]) and our Company (acting for itself and on behalf of the [REDACTED]), the [REDACTED] will not proceed and will lapse. Prior to making an investment decision, prospective investors should carefully consider all of the information set out in this document, including the risk factors set out in the section headed “Risk Factors” in this document. The [REDACTED] (for itself and on behalf of the [REDACTED]) may, with our consent, reduce the number of [REDACTED] in the [REDACTED] and/or the [REDACTED] below that stated in this document (which is HK$[REDACTED] to HK$[REDACTED] per Share) at any time on or prior to the morning of the last day for lodging applications under the [REDACTED]. In such a case, notices of the reduction in the number of [REDACTED] in the [REDACTED] and/or the [REDACTED] will be published in [South China Morning Post] (in English) and [Hong Kong Economic Times] (in Chinese) not later than the morning of the day which is the last day for lodging applications under the [REDACTED]. Further details are set out in the sections headed “Structure and Conditions of the [REDACTED]” and “How to Apply for [REDACTED]” in this document. The obligations of the [REDACTED] under the [REDACTED] to subscribe for, and to procure applicants for the subscription for, the [REDACTED], are subject to termination by the [REDACTED] (for itself and on behalf of the [REDACTED]) if certain grounds arise prior to 8:00 a.m. on the [REDACTED]. See “[REDACTED] — [REDACTED] Arrangements and Expenses — [REDACTED] — Grounds for Termination” for further details.

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IMPORTANT NOTICE TO INVESTORS

This document is issued by our Company solely in connection with the [REDACTED] and does not constitute an [REDACTED] to sell or a solicitation of an [REDACTED] to buy any security other than the [REDACTED] [REDACTED] by this document pursuant to the [REDACTED]. This document may not be used for the purpose of, and does not constitute, an [REDACTED] or invitation in any other jurisdiction or in any other circumstances. No action has been taken to permit a [REDACTED] of the [REDACTED] in any jurisdiction other than Hong Kong and no action has been taken to permit the distribution of this document in any jurisdiction other than Hong Kong. The distribution of this document and the [REDACTED] and sale of the [REDACTED] 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 authorisation by the relevant securities regulatory authorities or an exemption therefrom.

You should rely only on the information contained in this document to make your investment decision. We have not authorised anyone to provide you with information that is different from what is contained in this document. Any information or representation not made in this document must not be relied on by you as having been authorised by us, the [REDACTED], the [REDACTED], the Sole Sponsor, the [REDACTED], the [REDACTED], the [REDACTED], any of our or their respective affiliates or any of their respective directors, officers, employees or agents or any other person or party involved in the [REDACTED].

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EXPECTED TIMETABLE ...... iii

CONTENTS ...... vi

SUMMARY ...... 1

DEFINITIONS ...... 13

GLOSSARY OF TECHNICAL TERMS ...... 28

FORWARD-LOOKING STATEMENTS ...... 32

RISK FACTORS ...... 33

WAIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES ...... 50

INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED] ...... 53

DIRECTORS AND PARTIES INVOLVED IN THE [REDACTED] ...... 58

CORPORATE INFORMATION ...... 64

INDUSTRY OVERVIEW ...... 67

REGULATORY OVERVIEW...... 82

HISTORY, REORGANISATION AND GROUP STRUCTURE ...... 109

BUSINESS ...... 141

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DIRECTORS AND SENIOR MANAGEMENT ...... 251

RELATIONSHIP WITH CONTROLLING SHAREHOLDERS ...... 269

SUBSTANTIAL SHAREHOLDERS ...... 278

SHARE CAPITAL ...... 283

FINANCIAL INFORMATION ...... 287

FUTURE PLANS AND USE OF [REDACTED] ...... 352

[REDACTED]...... 359

STRUCTURE AND CONDITIONS OF THE [REDACTED] ...... 371

HOW TO APPLY FOR [REDACTED]...... 381

APPENDIX I — ACCOUNTANTS’ REPORT ...... I-1

APPENDIX II — UNAUDITED PRO FORMA FINANCIAL INFORMATION ...... II-1

APPENDIX III — SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANY LAW ...... III-1

APPENDIX IV — STATUTORY AND GENERAL INFORMATION ...... IV-1

APPENDIX V — DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES AND AVAILABLE FOR INSPECTION AND DISPLAY ...... V-1

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OUR MISSION Guided by the slogan “Clear waters and green mountains are as valuable as gold and silver mountains (綠水青山就是金山銀山)”, the PRC government aims to achieve carbon neutrality by 2060. To this end, our mission is to render full support to the PRC government’s carbon neutrality target and contribute to combat against global warming. BUSINESS OVERVIEW Our background Founded in 2008, we are a well-established service provider for a variety of ecological forest plantation, ecological restoration and urban and rural greening projects primarily in North China. Adhering to our business motto — “stay oriented towards tree (以樹為本)” , we strive to contribute to the improvement of the environment in China and during the three years ended 31 December 2020, we planted over 19 million units of seedling in our projects. We offer integrated services covering project design, construction, and maintenance as well as seedling supply to our project customers, most of which are public sector entities including bureaus of different local governments and state-invested enterprises. Headquartered in Inner Mongolia, we expanded our footprint across a number of provinces, including Hebei, Shanxi, Henan, Anhui, Shandong and Guizhou. According to the Frost & Sullivan Report, we ranked (i) fourth in the ecological forest plantation industry in the PRC, with a market share of 0.25% in terms of revenue in 2020; and (ii) second in the PRC in terms of area of plantation bases in the seedling cultivation industry in 2020. Our business segments Our major business segments are as follows: • Ecological forest plantation: to create forests with long-term ecological and environmental sustainability through planned afforestation and maintenance work. During the Track Record Period, we were contracted to undertake the following types of ecological forest plantation projects: (i) national reserve forest (國家儲備林); (ii) carbon sink forest (碳匯林); (iii) shelter belt forest (防護林); and (iv) commercial forest (經濟林); • Ecological restoration: to recover areas with degraded, damaged, or destroyed ecosystems through the application of various scientific means to revive the original chemical, biological, and physical characteristics of water or soil as well as the surrounding plant community. During the Track Record Period, we undertook projects in (i) desertified land restoration (荒漠化土地修復); (ii) river, lake, and wetland restoration (河湖濕地修復); and (iii) slope restoration (邊坡治理); and • Urban and rural greening: to improve the overall landscape of an area, normally as part of urbanisation, through green (trees and herb) planting, as well as earthworks construction, such as terrain modification, and ancillary facilities building. The following table sets out the revenue breakdown of our business segments during the Track Record Period:

FY2018 FY2019 FY2020 RMB’000 % RMB’000 % RMB’000 %

Ecological forest plantation 188,361 52.0 423,765 55.8 591,051 72.8 Ecological restoration 31,888 8.8 134,850 17.8 57,015 7.0 Urban and rural greening 135,174 37.4 186,942 24.7 128,387 15.8 Others (Note) 6,500 1.8 13,269 1.7 36,003 4.4

Total 361,923 100.0 758,826 100.0 812,456 100.0

Note: Others mainly include sales of seedlings to external customers and operation of hotel.

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Our plantation bases and biological assets We operated 15 plantation bases, occupying an aggregate area of approximately 45,000 mu (30.0 million sq.m.) as at the Latest Practicable Date. Among the 15 plantation bases we operate, seven were leased from Independent Third Parties, four were operated under collaboration arrangements with Independent Third Parties, and the remaining four were operated under the land contractual management right which we acquired. These plantation bases are strategically located in different locations in Inner Mongolia and Hebei, covering a service area of 1,600 km from east to west in North China, where services for ecological forest plantation and ecological restoration projects are in demand. Our biological assets primarily consist of (i) seedlings which are categorised into two major types, namely (a) Arbors, which can be divided into Evergreens and Deciduous; and (b) Flowering Shrubs; and (ii) sowing seedlings. As at 31 December 2020, our plantation bases carried approximately 14.4 million units of seedlings planted with fair value of RMB349.8 million in aggregate. We believe that having our own seedling stock allows us to accumulate extensive experience in seedling cultivation and plantation base operation, which in turn bolster customers’ confidence in our ability in achieving the target survival rate of planted seedling in our projects, thereby arising our chances in securing projects. Moreover, our Directors believe that seedling stock will continue to add value to our business as based on our Directors’ experience, the market price of seedlings tends to increase as they grow in height and crown width. See “Business — Biological assets” and “Financial information — Description of certain items of consolidated statements of financial position — Biological assets”. The following table sets out the quantity and fair value of our biological assets during the Track Record Period:

As at 31 December 2018 2019 2020 Percentage Percentage Percentage Quantity Fair value of total Quantity Fair value of total Quantity Fair value of total (Units (RMB fair value (Units (RMB fair value (Units (RMB fair value ‘000) ‘000) (%) ‘000) ‘000) (%) ‘000) ‘000) (%)

Evergreens 2.5m or 46 7,745 2.7% 206 38,568 11.4% 650 95,037 27.2% above Below 10,160 216,361 75.8% 10,130 255,879 76.0% 8,353 211,423 60.4% 2.5m

Subtotal 10,206 224,106 78.5% 10,336 294,447 87.4% 9,003 306,460 87.6%

Deciduous 3,921 54,737 19.2% 2,592 37,812 11.2% 2,557 40,328 11.5% Flowering Shrubs 3,265 3,284 1.2% 5,621 3,987 1.2% 2,769 2,821 0.8% Sowing seedlings 23,401 3,138 1.1% 94 600 0.2% 66 217 0.1%

Total 40,793 285,265 100.0% 18,643 336,846 100.0% 14,395 349,826 100.0%

Our project model We provide our services primarily on a project basis. Our projects can be categorised into (i) traditional model, under which we are engaged as the main contractor by the project owner to manage or execute the entire project (with general project duration of three years) covering the procurement, construction and maintenance stages or as a subcontractor to provide services in respect of a portion of the project works; and (ii) public-private-partnership (“PPP”) model, a model of long-term contractual agreement comprising the construction phase and the operation phase with overall project duration ranging from 12 to 30 years. Upon completion of the construction phase, our project company (which is jointly established by our Group and the public sector entity(ies) together with other private sector entity(ies) in some cases) is usually given the right to operate the project for a period of time, namely the operation phase. Projects under the PPP model generally involve a higher level of complexity with higher profit margin as compared to projects under the traditional model. For FY2020, revenue attributable to projects under traditional model and PPP model accounted for approximately 37.6% and 58.0% of our total revenue, respectively. See “Business — Our project models and project portfolio”.

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Pricing policy We determine the tender price or quotation on a project-by-project basis depending on: (i) the project model (i.e. PPP or traditional model); (ii) the duration and complexity of the project; (iii) the payment terms and payment schedule; (iv) the costs of raw materials and subcontracting fees; (v) the prevailing market conditions; and (vi) the location of project. Our research and development We seek to distinguish ourselves from our competitors with our research and development capabilities which enable us to increase survival rate of seedlings. We focus on (i) improving our plantation and ecological restoration techniques to overcome the climate condition and soil condition of project site such as humidity, temperature, soil thickness and soil composition that we may encounter in different project sites; and (ii) cultivating new species of seedlings with better growth yields and tolerance against harsh environment . We successfully obtained the rights in new varieties of plants (植物新品種權) for six of our seedling species and 97 patents as at the Latest Practicable Date. The following table sets out some of our key research and development achievements:

Key invention patents Description

A culture medium, solid mycorrhizal solution An integrated microbial fertiliser for and its manufacturing method (一種培養基 improving soil condition. This was applied 固體菌根製劑及其製備方法) in our Chifeng City Nanshan PPP Project (赤峰市南山景觀綠化提升工程PPP項目) which was commenced in 2019.

A method for improving ecological A technique to improve the vegetation slope environment in loess hilly and gully area protection ability. This was applied in our (一種改善黃土丘陵洵壑區生態環境的方法) Shengle Project (內蒙古盛樂國際生態示範區) which was commenced in 2013.

A method for fast breeding of poplar tree (一 A method for increasing the growth yields of 種快速繁育楊樹苗的方法) poplar tree. This was applied in our breeding of Mengshu No. 1* (蒙樹1號楊) and Mengshu No. 2* (蒙樹2號楊)

LANDSCAPE OF CHINA ECOLOGICAL AND ENVIRONMENTAL INDUSTRY Favourable PRC government policies Our business has benefited, and we believe our Group will continue to benefit from a number of favourable policies and initiatives of the PRC government for the ecological and environmental industry in recent years. In both the 13th and 14th Five-Year Plan for the National Economic and Social Development, the PRC government put forward various specific initiatives in relation to environmental protection, ecological restoration and carrying-out large scale greening of the country. More importantly, the PRC government aims to achieve carbon neutrality by 2060. According to the Frost and Sullivan Report, large scale afforestation plays a significant role in achieving carbon neutrality by reducing the level of carbon dioxide in the atmosphere. We believe against such policy backdrop there are tremendous business opportunities for us to grow our business. Details of key favourable PRC government policies are as follows:

Key government policies Issuing authorities Area of focus

Master Plan for Major National The National The national forest coverage rate Ecosystem Protection and Development and is expected to increase from Restoration Projects (2021-2035) Reform 23.0% in 2020 to 26.0% by (全國重要生態系統保護和修復重 Commission and 2035, with the to-be-created 大工程總體規劃(2021-2035年)) the Ministry of forest area of approximately Natural 297.6 million sq.m., equivalent Resources* (國家 to approximately 1.6 times the 發展與改革委會和 size of Guangdong. 自然資源部)

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Key government policies Issuing authorities Area of focus

Opinions of the Central Committee The Central Ecological restoration projects of the Communist Party of China Committee of the such as river, lake and wetland and the State Council on Communist Party restoration, slope restoration Comprehensively Strengthening of China and the and mined land restoration will Ecological Environment State Council* be supported by PRC Protection and Resolutely (中國共產黨中央 government, and be funded by Fighting the Tough Battle of 國務院) public finance. Pollution Prevention and Control (中共中央國務院關於全面加強生態環境保護堅決打好污染防治攻堅戰的意見)

Three-North Shelter Belt Forest The State Forestry It sets out the PRC government’s Program (三北防護林計劃) Administration* target to construct 35.1 million (國家林業局) hectare of shelter belt forests by around 2050. This will continue to drive the growth of the ecological forest plantation industry in the PRC persistently.

National Reserve Forest The State Forestry It sets out a target to construct Construction Plan (2018-2035) and Grassland 20 million hectare of national (國家儲備林建設規劃 Administration* reserve forests by 2035. (2018-2035年)) (國家林業和草原局)

Competitive landscape The ecological forest plantation industry, ecological restoration industry and urban and rural greening industry in the PRC are highly fragmented with low market concentration rate. With the exception of certain well-established players, most market players are focusing on their respective local markets, and cannot compete for large-scale public projects which normally have a certain number of requirements such as large-scale project experience, financial strength and the number of qualified professionals as stipulated in the tender documents. OUR COMPETITIVE STRENGTHS Our Directors believe that our Group possesses the following competitive strengths which have contributed to our success amid the competitive industry: (i) leveraging on our considerable experience and business success in Inner Mongolia, we are well-positioned to capture opportunities in the growing ecological and environmental protection industry in other provinces in the PRC; (ii) we have a well-established reputation in the ecological and environmental protection industry, which enabled us to capture new business opportunities; (iii) our integrated business model allows us to differentiate ourselves from our competitors; (iv) strong research and development capability and technical know-how as reflected by our proprietary patents; and (v) our founder and core management team have a proven track record of experience in the ecological and environmental protection industry and management experience in a listed company. See “Business — Our Competitive Strengths”. OUR STRATEGIES We intend to pursue the following business strategies which are correlated with the growth and development of the ecological and environmental industry in the PRC: (i) strengthen our market position through continued funding of current projects; (ii) deepen our research and development to enhance our project execution capabilities; (iii) establish strategic cooperation with public sector entities to further expand our business network; (iv) recruit and continue to develop talents to expand our workforce and enhance our competitiveness; and (v) upgrade our information technology system to further improve our operational efficiency and enhance project management capability. See “Business — Our Business Strategies”.

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OUR CUSTOMERS, SUPPLIERS AND SUBCONTRACTORS Customers During the Track Record Period, our major customers were mainly public sector entities including bureaus of different local governments and state-invested enterprises in the PRC. For FY2018, FY2019 and FY2020, approximately RMB66.7 million, RMB266.7 million and RMB216.4 million, representing approximately 18.4%, 35.1% and 26.6% of our total revenue was attributed to our largest customer in the respective year. For the same periods, approximately RMB204.5 million, RMB527.7 million and RMB549.0 million, representing approximately 56.5%, 69.5% and 67.6% of our revenue was attributed to our five largest customers in the respective year. See “Business — Our customers”. Suppliers Our suppliers mainly include (i) raw materials suppliers such as seedlings, and construction materials suppliers; and (ii) service providers who provide services including irrigation, soil management, application of fertilisers and disease and pest control for our plantation bases. For FY2018, FY2019 and FY2020, approximately RMB10.7 million, RMB14.8 million and RMB14.4 million, representing approximately 4.0%, 2.9% and 2.6% of our total cost of sales were attributed to purchases from our largest supplier in the respective year, while approximately RMB47.2 million, RMB42.0 million and RMB51.6 million, representing approximately 17.7%, 8.3% and 9.4% of our total cost of sales were attributed to purchases from our five largest suppliers in the respective year. See “Business - Our suppliers”. Subcontractors Our subcontractors mainly include (i) labour subcontractors; (ii) professional subcontractors; and (iii) machinery subcontractors. For FY2018, FY2019 and FY2020, subcontracting fees to our largest subcontractor amounted to approximately RMB14.4 million, RMB91.6 million and RMB50.7 million, representing approximately 5.4%, 18.1% and 9.3% of our total cost of sales. For the same periods, subcontracting fees to our five largest subcontractors amounted to approximately RMB55.5 million, RMB191.2 million and RMB120.0 million, respectively, representing approximately 20.8%, 37.8% and 22.0% of our total cost of sales, respectively. See “Business- Subcontracting”. RISK FACTORS Our business is subject to risks. A summary of major risk factors is set out below: (i) we may not be able to bill and receive the full amount of trade and bills receivables and contract assets; (ii) we may experience timing difference between our cash outflow and cash inflow when undertaking our traditional projects; (iii) we may not be able to obtain adequate debt financing for our PPP projects; (iv) undertaking PPP projects requires significant capital commitment over a long time span and we receive no cash income during the construction phase; and (v) our results of operations are subject to biological asset fair value adjustments which can be highly volatile and are subject to a number of assumptions. See “Risk factors”. SELECTED KEY FINANCIAL AND OPERATIONAL DATA The following tables set out, for the years indicated, selected financial and operating data from our consolidated financial information. See the Accountants’ Report in Appendix I to this document for further details on financial information. Summary of Consolidated Statements of Profit or Loss and other Comprehensive Income The following table sets out a summary of our consolidated statements of profit or loss and other comprehensive income for the years indicated:

FY2018 FY2019 FY2020 RMB’000 RMB’000 RMB’000

Revenue 361,923 758,826 812,456 Gross profit 94,648 252,224 265,666 (Loss)/profit before tax (40,401) (4,748) 132,534 (Loss)/profit for the year (48,372) (39,247) 93,708

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Our revenue increased by RMB396.9 million or 109.7% from RMB361.9 million in FY2018 to RMB758.8 million in FY2019 mainly due to (i) the commencement of construction works of two ecological forest planation projects and one ecological restoration project in PPP model, namely Chifeng City Nanshan PPP Project, Anqing PPP Project, and Yu County PPP Project in FY2019; and (ii) the increase in revenue derived from urban and rural greening projects mainly as a result of the increase in revenue generated from two projects, namely Hulun Bei’er PPP Project and Heze Project. Our revenue further increased by RMB53.7 million or 7.1% to RMB812.5 million in FY2020 primarily due to the increase in revenue derived from ecological forest plantation projects as a result of (i) the full year effect of construction of Xun County PPP Project; and (ii) the commencement of construction work of Chifeng agriculture and animal husbandry science and technology industrial park construction project (Xishan Breeding Base) and Liyang Project. Non-HKFRS Financial Measures To supplement our consolidated financial statements which are presented in accordance with HKFRSs, we also use a non-HKFRS measure, adjusted net (loss)/profit for the year, as an additional financial measure, to facilitate comparisons of our operating performance from period to period by eliminating potential impacts of certain profit and loss items which our management do not consider to be indicative of our operating performance. We believe that such measures provide useful information to investors and others in understanding and evaluating our consolidated results of operations in the same manner as they help our management. See “Financial Information — Non-HKFRS Measures” for details.

FY2018 FY2019 FY2020 RMB’000 RMB’000 RMB’000

Adjusted net (loss)/profit for the year (unaudited) (9,751) 134,354 96,816

The following table reconciles our adjusted net (loss)/profit for the years indicated:

FY2018 FY2019 FY2020 RMB’000 RMB’000 RMB’000

(Loss)/profit for the year (48,372) (39,247) 93,708

Add: Finance expenses contingent upon redemption of Fort Minor [REDACTED] (Note 1) 28,091 31,093 33,113 Foreign exchange loss/(gain) relating to Fort Minor [REDACTED] 10,530 8,408 (35,767) Fair value changes on financial liabilities measured at fair value through profit or loss (Note 2) — 133,650 — [REDACTED] expenses [REDACTED] [REDACTED] [REDACTED]

Adjusted net (loss)/profit for the year (unaudited) (9,751) 134,354 96,816

Notes:

1. Pursuant to the relevant shareholders’ agreement, Fort Minor had been granted certain special rights, including, among others, a liquidity protection. The liquidity protection allowed Fort Minor to require the Company to repurchase or redeem Fort Minor’s [REDACTED] at the price that would yield a pre-agreed return to Fort Minor on its investment amount. Thus, Fort Minor’s [REDACTED] was recognised as an interest-bearing liability by the Group with the associated interest recognised as our finance costs.

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All special rights including the liquidity protection granted to Fort Minor in relation to its [REDACTED] shall cease to be effective and be discontinued upon [REDACTED]. As a result, no cash repayment will be made by the Group to Fort Minor regarding the [REDACTED] and the liabilities in relation to the [REDACTED], including the accrued interests, will be reclassified to equity. We therefore consider these non-cash expense items relating to such liquidity protection are not indicative of our operating performance and are excluded from our net profit or loss for the year in above reconciliation. See “History, Reorganisation and Group Structure — [REDACTED] — Rights of the [REDACTED]” for details of rights of Fort Minor. 2. Fair value changes on financial liabilities measured at fair value through profit or loss represent the non-cash expense item in relation to the warrants issued to Fort Minor in December 2019 in substitution for the valuation adjustment payment payable by our Group to Fort Minor pursuant to the relevant shareholders’ agreement. We therefore consider these non-cash expense items are not indicative of our operating performance and are excluded from our net profit or loss for the year in above reconciliation. For details, see “History, Reorganisation and Group Structure — [REDACTED] — Investor Group [REDACTED] Overview — Fort Minor Warrant”. We recorded adjusted net profit of RMB134.4 million for FY2019 as compared to adjusted net loss of RMB9.8 million for FY2018, primarily due to the increase in revenue. Our adjusted net profit decreased by RMB37.6 million or 28.0% from RMB134.4 million for FY2019 to RMB96.8 million for FY2020, primarily due to (i) the increase in finance costs as a result of the increase in borrowings for the expansion of our business; (ii) the decrease in net change in fair value of biological assets because of realised fair value loss incurred during the year as a result of the losses arising from death of seedlings caused by the extreme weather in spring of 2020 in one of our plantation bases; and (iii) the increase in impairment loss of financial and contract assets as a result of the increase in amount of overdue contract assets. The slowing economic growth of the PRC which negatively impacted the finance of local governments, together with the measures promulgated by the MOF to tighten the regulation on the management of PPP projects, led the overall business environment to become very challenging to most market players in our industry in 2018. See “Regulatory overview — Laws and Regulations in Relation to Public-Private Partnership (PPP) Projects”. Our operating performance was not satisfactory in 2018 similar to our comparable industry participants and we recorded an adjusted loss for the year. Summary of Consolidated Statements of Financial Position The following table sets out a summary of our consolidated statements of financial position as at the dates indicated:

As at 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Non-current assets 621,481 1,297,290 1,558,152

Current assets 1,188,954 1,151,802 1,739,578 Current liabilities 629,376 956,774 1,352,528

Net current assets 559,578 195,028 387,050

Non-current liabilities 714,064 913,538 1,255,913

Net assets 466,995 578,780 689,289

Our Group recorded net assets of RMB467.0 million, RMB578.8 million and RMB689.3 million as at 31 December 2018, 2019 and 2020, respectively. The increase in our net assets was mainly attributable to the positive operating performance we achieved throughout the Track Record Period, as indicated by the non-HKFRS adjusted profit for FY2019 and FY2020.

−7− THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. SUMMARY

Summary of Consolidated Statements of Cash Flows The following table sets out a summary of our consolidated statements of cash flows for the periods indicated:

FY2018 FY2019 FY2020 RMB’000 RMB’000 RMB’000

Net cash flows used in operating activities (255,336) (174,910) (235,677) Net cash flows used in investing activities (17,334) (87,491) (98,736) Net cash flows from/(used in) financing activities (58,998) 198,857 559,395

During the Track Record Period, we recorded net cash flows used in operating activities, mainly attributable to the fact that the majority of our ongoing PPP projects were commenced during the Track Record Period and were still in the construction phase, during which we generally did not receive any payments or cash inflow while incurring significant project costs until completion of construction phase. The construction of such PPP projects is expected to be completed starting from 2021 thereby generating positive operating cash flows to our Group. For FY2019, our Group had net cash flows used in investing activities of RMB87.5 million, mainly due to the purchases of items of property, plant and equipment in FY2019.

Key financial ratios

The following table sets out a summary of our key financial ratios for the periods or as of the dates indicated:

FY2018 FY2019 FY2020

Gross profit margin (%) 26.2 33.2 32.7 Net profit margin (%) N/A N/A 11.5 Return on equity (%) N/A N/A 7.8 Return on total assets (%) N/A N/A 2.8 Interest coverage (times) 0.5 2.0 4.9

As at 31 December 2018 2019 2020

Current ratio (times) 1.9 1.2 1.3 Quick ratio (times) 1.9 1.2 1.3 Gearing ratio (%) 36.5 42.2 85.9 Net debt to equity ratio (%) 19.6 33.3 59.5

FY2018 FY2019 FY2020

For illustrative purpose: Non-HKFRS adjusted net profit margin (%) N/A 17.7 11.9 Non-HKFRS adjusted return on equity (%) N/A 12.2 8.1 Non-HKFRS adjusted return on total assets (%) N/A 5.5 2.9

See “Financial Information — Key financial Ratios”

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[REDACTED] EXPENSES [REDACTED] expenses in connection with the [REDACTED] consist primarily of [REDACTED] commissions and professional fees. We estimate that total expenses in relation to the [REDACTED] (assuming an [REDACTED] of HK$[REDACTED] per [REDACTED] (being the mid-point of the [REDACTED]) and no exercise of the [REDACTED]) will be RMB[REDACTED] million (equivalent to HK$[REDACTED] million), representing approximately [REDACTED]% of the gross [REDACTED] of the [REDACTED] (assuming an [REDACTED] of HK$[REDACTED] per [REDACTED], being the mid-point of the [REDACTED] and no exercise of the [REDACTED]). During the Track Record Period, we incurred [REDACTED] expenses of RMB[REDACTED] million of which RMB[REDACTED] million was charged to our administrative expenses and RMB[REDACTED] million was capitalised. We expect to incur additional [REDACTED] expenses of RMB[REDACTED] million. RMB[REDACTED] million is expected to be recognised as administrative expenses and RMB[11.1] million (together with the previously incurred [REDACTED] expenses recorded as prepayment) is expected to be recognised as a deduction in equity for the year ending 31 December 2021. The total [REDACTED] expenses above are the latest practicable estimate and for reference only. The actual amount may differ from this estimate. OUR CONTROLLING SHAREHOLDERS As of the Latest Practicable Date, Mr. Zhao, Mr. Li, Mr. Qiu, Mr. Ma Liming (馬黎明), Ms. Guo Jinchun (郭瑾春), Mr. Li Jianjun (栗建軍) and Ms. Tie Ying (鐵英), Mr. Wang Shiwei (王世偉), Mr. Zhang Zhiguang (張志光), Mr. Gao Yubao (高玉豹), Mr. Li Guangjun (李廣軍) and Ms. Li Binbin (李彬彬), Zhao’s BVI Company, Li’s BVI Company I, Li’s BVI Company II, Qiu’s BVI Company, Shenglin BVI Company and Mengsheng BVI Company constitute our Company Controlling Shareholders Group, and will together hold [REDACTED]% of our Company’s enlarged issued share capital immediately after completion of the [REDACTED] (without taking into account any Shares which may be allotted or issued upon exercise of the [REDACTED] or the options granted under the [REDACTED] Share Option Schemes or to be granted under the Post-[REDACTED] Share Option Scheme) and assuming that Fort Minor fully converts its [REDACTED] Investor Class Shares into Shares. Company Controlling Shareholders Group will remain as our Controlling Shareholders upon [REDACTED]. Fort Minor and Chili Roost are our [REDACTED]. As at the Latest Practicable Date, Fort Minor held 52,970,000 Shares and 65,000,000 Investor Class Shares and Chili Roost held 57,500,000 Shares. Assuming that Fort Minor fully converts its Investor Class Shares into Shares on the basis of one Investor Class Share for one Share and immediately after completion of the [REDACTED], Investor Group, through Fort Minor and Chili Roost, will hold in aggregate [REDACTED] Shares, representing [REDACTED]% of our Company’s enlarged issued share capital immediately after completion of the [REDACTED] (without taking into account any Shares which may be allotted or issued upon exercise of the [REDACTED] or the options granted under the [REDACTED] Share Option Schemes or to be granted Post-[REDACTED] Share Option Scheme). Therefore, Investor Group will be our Controlling Shareholder upon [REDACTED]. Investor Group is a passive investor of our Group, mainly because it did not and will not participate in our Group’s day to day management and operation, which is the responsibility of our executive Directors and senior management. For the background information of Investor Group, see “History, Reorganization and Group Structure — Investor Group [REDACTED] Investment Overview” in this document for further details. [REDACTED] Green Thrive Group On 8 December 2012, Green Thrive HK invested RMB30 million in Mengshu Group. As part of the Reorganisation and to mirror Green Thrive HK’s interests in Mengshu Group, Green Thrive BVI, being the sole shareholder of Green Thrive HK, subscribed for 20 million Shares, representing 8.703% of the then share capital of our Company. Green Thrive Group is an Independent Third Party. Assuming that Fort Minor fully converts its [REDACTED] Investor Class Shares into Shares, immediately after completion of the [REDACTED] (without taking into account any Shares which may be allotted or issued upon exercise of the [REDACTED] or the options granted under the [REDACTED] Share Option Schemes or to be granted under the Post-[REDACTED] Share Option Scheme), Green Thrive BVI will hold [REDACTED]% of our Company’s enlarged issued share capital.

−9− THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. SUMMARY

Investor Group The Investor Group, having invested approximately US$69 million in our Company, held (i) 52,970,000 Shares and 65,000,000 Investor Class Shares (with the initial conversion ratio of one Investor Class Share for one Share) through Fort Minor; and (ii) 57,500,000 Shares through Chili Roost as at the Latest Practicable Date. This represents approximately [REDACTED]% of our Company’s enlarged issued capital immediately after completion of the [REDACTED] (without taking into account any Shares which may be allotted or issued upon exercise of the [REDACTED] or the options granted under the [REDACTED] Share Option Schemes on to be granted Post-[REDACTED] Share Option Schemes) and assuming that Fort Minor fully converts its [REDACTED] Investor Class Share into Shares based on the initial conversion ratio of one Investor Class Share for One Share. The Investor Group will be our Controlling Shareholder upon [REDACTED]. See “Our History, Reorganization and Corporate Structure [REDACTED]” of this document for further details. LEGAL PROCEEDINGS AND COMPLIANCE Our Directors confirm that to their best knowledge and understanding, during the Track Record Period and up to the Latest Practicable Date, there were no material litigation, arbitration or administrative proceedings pending or threatened against us or any of our Directors. During the Track Record Period and up to the Latest Practicable Date, our Group experienced non-compliance incidents, namely (i) failure to obtain the forest seed production and operation license (林木種子生產經營許可證) or engage in seedling plantation and sales activities in accordance with the scope thereof; and (ii) use the land used for protected agriculture (設施農業用地) for non-agricultural purposes. As at the Latest Practicable Date, we had taken remedial actions to rectify our non-compliance incidents and have adopted internal control procedures to prevent future occurrence or reoccurrence of the non-compliance incidents. See “Business — Legal proceedings and Non-compliance” for further details. RECENT DEVELOPMENTS AND MATERIAL ADVERSE CHANGE Subsequent to the Track Record Period and up to the Latest Practicable Date, we signed contracts with our customers for one new ecological forest plantation project and two new urban and rural greening projects with total contract sum of approximately RMB188.7 million, and received notice of award for one ecological forest plantation project in Sichuan and one ecological restoration project in Inner Mongolia and are in the process of finalising the contract terms with the customers. Furthermore, we obtained (i) landscape architecture engineering — grade I (風景園林工程設計專項甲級) in June 2021 which allows us to undertake all types and scale of landscape engineering design projects; and (ii) qualification of construction entities under the geological disaster control projects — grade III (地質災害防治單位資質證書施工丙級) in May 2021 as part of our business strategies to expand our ecological restoration segment through undertaking mined land restoration projects. As at the Latest Practicable Date, we had 54 projects on hand with a total backlog of approximately RMB3.3 billion. Out of these projects, (i) 25 were ecological forest plantation projects with a total backlog of approximately RMB1,907.6 million; (ii) six were ecological restoration projects with a total backlog of approximately RMB655.4 million; and (iii) 23 were urban and rural greening projects with a total backlog of approximately RMB738.4 million. Our Directors confirm that, up to the date of this document, there has been no material adverse change in our financial or trading position or prospect of our Company or its subsidiaries since 31 December 2020, being the end of the reporting period in Appendix I to this document, and there has been no event since 31 December 2020 which would materially affect the information shown in Appendix I to this document. [REDACTED] Our [REDACTED] are expected to sell [REDACTED] [REDACTED] under the [REDACTED]. We estimate the net [REDACTED] to the [REDACTED] from the sale of [REDACTED] pursuant to the [REDACTED] to be approximately HK$[REDACTED] million (assuming an [REDACTED] of HK$[REDACTED] per Share, being the mid-point of the [REDACTED]). The [REDACTED] will repay the amount due to our Group of approximately HK$[REDACTED] million through the sale of the [REDACTED] upon [REDACTED]. See “History, Reorganisation and Group Structure — Acquisition of PRC Subsidiaries - (iv) Acquisition of 1% equity interest in Mengshu Group by He Yu Sheng” in this document for a detailed description of such shareholder indebtedness.

−10− THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. SUMMARY

USE OF [REDACTED] We estimate that the aggregate net [REDACTED] to us from the [REDACTED] (comprising [REDACTED] New Shares and [REDACTED] [REDACTED]) (after deducting [REDACTED] and estimated expenses payable by us and the [REDACTED] in connection with the [REDACTED]), assuming an [REDACTED] of HK$[REDACTED], being the mid-point of the [REDACTED], will be approximately HK$[REDACTED] million of which (i) approximately HK$[REDACTED] million will be received from the issue of [REDACTED]; and (ii) approximately HK$[REDACTED] million will be received from the [REDACTED] through the sale of the [REDACTED] (without taking into account any Shares which may be allotted or issued upon exercise of the [REDACTED] or the options granted under the [REDACTED] Share Option Schemes or to be granted under the Post-[REDACTED] Share Option Scheme). We currently intend to apply the net [REDACTED] from the [REDACTED] in the following manner: • Approximately HK$[REDACTED] million (equivalent to approximately RMB[REDACTED] million), or [REDACTED]% of the net [REDACTED] of the [REDACTED] will be used to fund our construction costs during the construction phase of our Yu County PPP project; • HK$[REDACTED] million (equivalent to approximately RMB[REDACTED] million), or [REDACTED]% of the net [REDACTED] of the [REDACTED] will be used for investment into Xun County PPP Project for initial registered capital of project company of Xun County PPP Project; • Approximately HK$[REDACTED] million (equivalent to approximately RMB[REDACTED] million) or [REDACTED]% of the net [REDACTED] of the [REDACTED] will be used to fund our two research and development projects for breeding of stress-resistant seedlings; • Approximately HK$[REDACTED] million (equivalent to approximately RMB[REDACTED] million) or [REDACTED]% of the net [REDACTED] of the [REDACTED] will be used for recruitment of project execution personnel, sales and marketing personnel and research and development personnel to expand our workforce to cope with new business opportunities and enhance our competitiveness; • Approximately HK$[REDACTED] million (equivalent to approximately RMB[REDACTED] million) or [REDACTED]% of the net [REDACTED] of the [REDACTED] will be used to repay our bank loans and improve our gearing ratio; • Approximately HK$[REDACTED] million (equivalent to approximately RMB[REDACTED] million), or [REDACTED]% of the net [REDACTED] of the [REDACTED] will be used to upgrade our information technology system; and • The remaining balance of approximately HK$[REDACTED] million (equivalent to approximately RMB[REDACTED] million), or [REDACTED]% of the net [REDACTED] will be used as working capital and other general corporate purposes. See “Future Plans and Use of [REDACTED]”.

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STATISTICS OF THE [REDACTED]

Based on the Based on the minimum indicative maximum indicative [REDACTED] of [REDACTED] of HK$[REDACTED] HK$[REDACTED] per per [REDACTED] [REDACTED]

Market capitalisation of our Shares(1) HK$[REDACTED] million HK$[REDACTED] million Unaudited pro forma adjusted consolidated net tangible assets of our Group per Share(2), (3) HK$[REDACTED] HK$[REDACTED]

Notes:

1. The calculation of market capitalisation of our Shares is based on [REDACTED] Shares in issue immediately after completion of the [REDACTED] without taking into account any new Shares which may be allotted and issued upon the exercise of the [REDACTED] or any options granted under the [REDACTED] Share Option Schemes or any options that may be granted under the Post-[REDACTED] Share Option Scheme or any Shares which may be issued or repurchased by our Company pursuant to our Company’s general mandates.

2. The unaudited pro forma adjusted consolidated net tangible assets of our Group per Share has been prepared based on [REDACTED] Shares in issue assuming that the [REDACTED] had been completed on 31 December 2020 and with reference to certain other estimations and adjustments. See “Unaudited Pro Forma Financial Information” in Appendix II to this document for our unaudited pro forma adjusted consolidated net tangible assets.

3. On 30 May 2021, Chili Roost, a company incorporated in the Cayman Islands with limited liability and wholly owned by Valley Orchards Limited, subscribed for [REDACTED] shares of the Company at par value of HK$0.001 per share. The subscription of new shares to Chili Roost would have increased the total number of share in issue from [REDACTED] Shares as mentioned in note (2) above to [REDACTED] Shares and would have increased the unaudited pro forma adjusted combined net tangible assets of the Group attributable to owners of the Company as at 31 December 2020 to RMB[REDACTED] or RMB[REDACTED], or would have decreased to RMB[REDACTED] (HK$[REDACTED]) per Share or RMB[REDACTED] (HK$[REDACTED]) per Share based on the [REDACTED] of HK$[REDACTED] per Share or HK$[REDACTED] per Share, respectively. DIVIDEND POLICY We have neither a pre-determined dividend payout ratio nor any dividend policy. The payment and amount of any future dividends will be at the sole discretion of our Board of Directors, and subject to the applicable laws and regulations, and will also depend on factors such as our results of operations, cash flow, capital requirements, general financial condition, future prospects and other factors that our Board of Directors deem relevant. Up to the Latest Practicable Date, we have not declared or paid any dividends on our Shares.

−12− THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DEFINITIONS

In this document, unless the context otherwise requires, the following expressions shall have the following meanings.

“Anqing City Mengshu Greenery Anqing City Mengshu Greenery Management Ltd.* (安慶市 Management” 蒙樹綠化管理有限責任公司), an enterprise established under the laws of the PRC on 13 December 2019 and an indirect non-wholly owned subsidiary of our Company, which is owned as to 78% by Mengshu Group, 1% by Beijing Mengshu Ecological, and 21% by two Independent Third Parties

“Articles” or “Articles of the second amended and restated articles of association of our Association” Company conditionally adopted on [REDACTED] and effective on the [REDACTED] Date, a summary of which is set out in Appendix III to this document, and as amended or supplemented from time to time.

“Beijing Mengshu Ecological” Beijing Mengshu Ecological Environmental Engineering Co., Ltd.* (北京蒙樹生態環境工程有限公司), an enterprise established under the laws of the PRC on 16 October 2002 and an indirect wholly-owned subsidiary of our Company

“Beijing Mengshu Investment Beijing Mengshu Investment Management Co., Ltd.* (北京蒙 Management” 樹投資管理有限公司), an enterprise established under the laws of the PRC on 28 January 2016 and an indirect wholly-owned subsidiary of our Company

“Beijing Mengshu Landscape Beijing Mengshu Landscape Design Co., Ltd.* (北京蒙樹景 Design” 觀設計有限公司), an enterprise established under the laws of the PRC on 17 August 2016 and an indirect non-wholly owned subsidiary of our Company, which is owned as to 75% by Mengshu Group and 25% by Mr. Fan Yu (樊宇), a director of our subsidiary.

“Board” or “Board of Directors” the board of directors of our Company

“business day” any day (other than a Saturday, Sunday or public holiday) on which banks in Hong Kong are generally open for normal banking business

“BVI” the British Virgin Islands

“Cayman Companies Act” or the Companies Act (as revised) of the Cayman Islands, as “Companies Act” amended or supplemented from time to time

[REDACTED] [REDACTED]

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[REDACTED] [REDACTED]

“Chifeng City Mengzhishu Chifeng City Mengzhishu Greenery Engineering Ltd.* (赤峰 Greenery Engineering” 市蒙之樹綠化工程有限責任公司), an enterprise established under the laws of the PRC on 31 July 2019 and an indirect non-wholly owned subsidiary of our Company, which is owned as to 97.9% by Mengshu Group, 1% by Beijing Mengshu Ecological, 1% by Guizhou Mengshu Ecology and 0.10% by an Independent Third Party

“Chifeng Mengshu Landscape” Chifeng Mengshu Landscape Co., Ltd.* (赤峰蒙樹景觀有限公司), an enterprise established under the laws of the PRC on 17 September 2018 and an indirect wholly-owned subsidiary of our Company

−14− THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DEFINITIONS

“Chili Roost” Chili Roost Limited, an exempted company incorporated in the Cayman Islands with limited liability on 4 December 2020, being wholly owned by Valley Orchards Limited (an Independent Third Party) and our [REDACTED]

“Companies Ordinance” the Companies Ordinance (Chapter 622 of the Laws of Hong Kong), as amended or supplemented from time to time

“Companies (Winding Up and the Companies (Winding Up and Miscellaneous Provisions) Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong), as Ordinance” amended or supplemented from time to time

“Company” or “our Company” China Mengshu Ecological Group Company Limited (中國蒙樹生態集團有限公司), an exempted company incorporated in the Cayman Islands with limited liability on 14 August 2017

“Company Controlling Mr. Zhao, Mr. Li, Mr. Qiu, Mr. Ma Liming (馬黎明), Ms. Guo Shareholders Group” Jinchun (郭瑾春), Mr. Li Jianjun (栗建軍), Ms. Tie Ying (鐵英), Mr. Wang Shiwei (王世偉), Mr. Zhang Zhiguang (張志光), Mr. Gao Yubao (高玉豹), Mr. Li Guangjun (李廣軍) and Ms. Li Binbin (李彬彬), Zhao’s BVI Company, Li’s BVI Company I, Li’s BVI Company II, Qiu’s BVI Company, Shenglin BVI Company and Mengsheng BVI Company

“Controlling Shareholders” has the meaning ascribed to it under the Listing Rules, and in the context of this document refers to the Company Controlling Shareholders Group and the Investor Group

“Corporate Governance Code” the Corporate Governance Code as set out in Appendix 14 of the Listing Rules

“COVID-19” coronavirus disease 2019, a disease caused by a novel virus designated as severe acute respiratory syndrome coronavirus

“Directors” or “our directors” the directors of our Company

“EIT Law” Enterprise Income Tax Law of the PRC* (中華人民共和國企業所得稅法), as amended or supplemented from time to time

“EITIR” the Enterprise Income Tax Implementation Regulations (中華人民共和國企業所得稅法實施條例)

“Extreme Conditions” extreme conditions caused by a super typhoon as announced by the government of Hong Kong

“Fort Minor” Fort Minor Limited, a company incorporated in the BVI with liability limited by shares on 18 August 2016, being wholly owned by Valley Orchards Limited (an Independent Third Party) and our [REDACTED]

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“Frost & Sullivan” Frost & Sullivan (Beijing) Inc., Shanghai Branch Co., an independent market research and consulting company

“Frost & Sullivan Report” an industry report prepared by Frost & Sullivan for the purpose of this document

“FY” or “financial year” financial year of our Company ended or ending 31 December

[REDACTED] [REDACTED]

“Green Thrive BVI” Green Thrive Investments Limited, a company incorporated in the BVI with liability limited by shares on 28 August 2012, being wholly owned by Superb Link Limited (an Independent Third Party) and our [REDACTED]

“Green Thrive Group” Green Thrive BVI, Green Thrive HK, Superb Link Limited (being a company incorporated in the BVI), Shining Capital Holdings II L.P. and Shining Capital Management Limited

“Green Thrive HK” Green Thrive Investments HK Limited, a company incorporated in Hong Kong with limited liability on 25 September 2012, a direct wholly-owned subsidiary of Green Thrive BVI and our [REDACTED]

“Group”, “we”, “our” or “us” our Company and its subsidiaries at the relevant time or, where the context otherwise 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

“Guizhou Mengshu Ecology” Mengshu Ecology (Guizhou) Co., Ltd.* (蒙樹生態（貴州）有限公司), an enterprise established under the laws of the PRC on 3 January 2018, an indirect non-wholly owned subsidiary of our Company, which is owned as to 90% by Mengshu Group and 10% by an Independent Third Party

“He Yu Sheng” Inner Mongolia He Yu Sheng Business Consulting Co., Ltd.* (內蒙古和瑜盛商務諮詢有限公司), an enterprise established under the laws of the PRC on 12 November 2018, and an indirect wholly-owned subsidiary of our Company

“Hesheng Ecological Dengkou” Hesheng Ecological Dengkou Co., Ltd.* (和盛生態磴口有限公司), an enterprise established under the laws of the PRC on 20 May 2015 and an indirect wholly-owned subsidiary of our Company

−16− THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DEFINITIONS

[REDACTED] [REDACTED]

“HK$” or “Hong Kong dollars” Hong Kong dollars and cents, the lawful currency of Hong Kong

[REDACTED] [REDACTED]

“Hohhot Chengchi I Industrial Hohhot Chengchi I Industrial Development Fund Investment Development Fund” Center (Limited Partnership)* (呼和浩特市城池一期產業發展基金投資中心（有限合夥）), a limited partnership established in the PRC on 6 July 2018, and an indirect non-wholly owned subsidiary of our Company, which is owned as to 59.99% by Shenzhen Kunxing No.3, and 40.01% by two Independent Third Parties

“Hong Kong” the Hong Kong Special Administrative Region of the PRC

[REDACTED] [REDACTED]

“Hou’s BVI Company” China Mengsong Ecological Company Limited (中國蒙松生態有限公司), a company incorporated in the BVI with liability limited by shares on 18 August 2017, which is wholly owned by Ms. Hou, an Independent Third Party

“Huirong Datong” Inner Mongolia Huirong Datong Commerce Co., Ltd.* (內蒙古匯融達通商貿有限公司), an enterprise established under the laws of the PRC on 12 July 2018, which is owned as to (i) 17.06% by Mr. Zhao, 26.74% by Mr. Li, 31.88% by Mr. Qiu, 10.87% by Shenglin, and 11.92% by Mengsheng, and (ii) 0.67% by Ms. Ma and 0.86% by Ms. Hou, who are Independent Third Parties

−17− THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DEFINITIONS

“Hulun Bei’er City Haisheng Hulun Bei’er City Haisheng Greenery Management Ltd.* (呼 Greenery Management” 倫貝爾市海盛綠化管理有限公司), an enterprise established under the laws of the PRC on 23 March 2018 and an indirect non-wholly owned subsidiary of our Company, which is owned as to 95% by Mengshu Group, and 5% by an Independent Third Party

“Hulun Bei’er City Shengxin City Hulun Bei’er City Shengxin City Engineering Co., Ltd.* (呼 Engineering” 倫貝爾市盛新市政工程有限公司), an enterprise established under the laws of the PRC on 14 December 2018 and an indirect non-wholly owned subsidiary of our Company, which is owned as to 98.01% by Beijing Mengshu Ecological, and 1.99% by two Independent Third Parties

“Independent Third Party(ies)” individual(s) or company(ies) not connected with (within the meaning of the Listing Rules) any director, chief executive or Substantial Shareholder of our Company or any of its subsidiaries or any of their respective associates

“Inner Mongolia” Inner Mongolia Autonomous Region of the PRC

“Inner Mongolia Hesheng Inner Mongolia Hesheng Ecological Technology Research Ecological Technology Institute Co., Ltd.* (內蒙古和盛生態科技研究院有限公司), Research Institute” an enterprise established under the laws of the PRC on 21 January 2014, an indirect wholly-owned subsidiary of our Company

“Inner Mongolia Hesheng Inner Mongolia Hesheng Mengshu Greenery Engineering Mengshu Greenery Co., Ltd.* (內蒙古和盛蒙樹綠化工程有限公司), an Engineering” enterprise established under the laws of the PRC on 24 March 2017, an indirect non-wholly owned subsidiary of our Company, which is owned as to 95% by Mengshu Group, and 5% by an Independent Third Party

“Inner Mongolia Heyuan Gusheng Inner Mongolia Heyuan Gusheng Agricultural Technology Agricultural Technology” Co., Ltd.* (內蒙古和源谷盛農業科技有限公司), an enterprise established under the laws of the PRC on 21 June 2013, an indirect wholly-owned subsidiary of our Company

“Inner Mongolia Mengshu Inner Mongolia Mengshu Ecological Environment Co., Ltd.* Ecological” (內蒙古蒙樹生態環境有限公司) (formerly known as Inner Mongolia Jutai Landscape Co., Ltd.* (內蒙古聚碳園林綠化有限公司), an enterprise established under the laws of the PRC on 12 December 2011, an indirect non-wholly owned subsidiary of our Company, which is owned as to 77.02% by Mengshu Group and 22.98% by Hohhot Chengchi I Industrial Development Fund

−18− THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DEFINITIONS

“Inner Mongolia Mengshu Inner Mongolia Mengshu Greenery Maintenance Service Co., Greenery Maintenance Service” Ltd.* (內蒙古蒙樹綠化養護服務有限公司), an enterprise established under the laws of the PRC on 23 February 2017, an indirect wholly-owned subsidiary of our Company

“Inner Mongolia Mengshu Inner Mongolia Mengshu Landscape Planning and Design Art Landscape Design” Co., Ltd.* (內蒙古蒙樹景觀規劃設計藝術有限公司), an enterprise established under the laws of the PRC on 13 April 2006, an indirect non-wholly owned subsidiary of our Company and a direct wholly-owned subsidiary of Beijing Mengshu Landscape Design

“Inner Mongolia Yuanyuan Zhihui Inner Mongolia Yuanyuan Zhihui Culture and Tourism Culture and Tourism” Development Ltd.* (內蒙古園緣智匯文化旅遊開發有限責任公司), an enterprise established under the laws of the PRC on 20 December 2019, an indirect wholly-owned subsidiary of our Company

[REDACTED] [REDACTED]

“Latest Practicable Date” 20 June 2021, being the latest practicable date for the purpose of ascertaining certain information contained in this document prior to its publication

“Li’s BVI Company I” China Mengduan Ecological Company Limited (中國蒙椴生態有限公司), a company incorporated in the BVI with liability limited by shares on 18 August 2017, which is wholly owned by Mr. Li and being our Controlling shareholder

“Li’s BVI Company II” China Mengli Ecological Company Limited (中國蒙櫟生態有限公司), a company incorporated in the BVI with liability limited by shares on 17 August 2017, which is wholly owned by Mr. Li and being our Controlling Shareholder

[REDACTED] [REDACTED]

−19− THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DEFINITIONS

[REDACTED] [REDACTED]

“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange, as amended or supplemented from time to time

“Memorandum” or “Memorandum the second amended and restated articles of association of our of Association” Company conditionally adopted on [REDACTED] and effective on the [REDACTED] Date, a summary of which is set out in Appendix III to this document, and as amended or supplemented from time to time

“Ma’s BVI Company” China Mengshan Ecological Company Limited (中國蒙杉生態有限公司), a company incorporated in the BVI with liability limited by shares on 21 August 2017, which is wholly owned by Ms. Ma, an Independent Third Party

“Mengsheng” Ningbo Mengsheng Investment Management Partnership (Limited Partnership)* (寧波蒙升投資管理合夥企業(有限合夥)), a limited partnership established under the laws of the PRC on 24 December 2015, which is owned as to 21.60% by Mr. Gao Yubao (高玉豹), 27.20% by Mr. Wang Shiwei (王世偉), 23.60% by Mr. Zhang Zhiguang (張志光), 20.80% by Mr. Li Guangjun (李廣軍) and 6.80% by Ms. Li Binbin (李彬彬), who are our Controlling Shareholders.

“Mengsheng BVI Company” China Mengsheng Ecological Company Limited (中國蒙升生態有限公司), a company incorporated in the BVI with liability limited by shares on 16 August 2017, which is owned as to 22% by Mr. Gao Yubao (高玉豹), 23% by Mr. Zhang Zhiguang (張志光), 21% by Mr. Li Guangjun (李廣軍), 7% by Ms. Li Binbin (李彬彬) and 27% by Mr. Wang Shiwei (王世偉) and being our Controlling Shareholder

“Mengshu BVI” China Hesheng Mengshu Ecological Company Limited (中國和盛蒙樹生態有限公司), a company incorporated in the BVI with liability limited by shares on 5 September 2017, a direct wholly-owned subsidiary of our Company

“Mengshu HK” Hesheng Mengshu Ecological (China) Company Limited (和盛蒙樹生態（中國）有限公司), a company incorporated in Hong Kong with limited liabilities on 19 September 2016, an indirect wholly-owned subsidiary of our Company

−20− THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DEFINITIONS

“Mengshu Group” Mengshu Ecological Construction Group Co., Ltd.* (蒙樹生態建設集團有限公司) (formerly known as Inner Mongolia Hesheng Ecological Forestry Co., Ltd.* (內蒙古和盛生態育林有限公司)), a company established under the laws of the PRC on 29 October 2008 and an indirect wholly-owned subsidiary of our Group, which is owned as to 83.99% by Mengshu HK and 16.01% by He Yu Sheng

“MOFCOM” the Ministry of Commerce of the PRC (中華人民共和國商務部) or its predecessor, the Ministry of Foreign Trade and Economic cooperation of the PRC (中華人民共和國對外貿易經濟合作部)

“Mr. Li” Mr. Li Feng (李峰), our Controlling Shareholder

“Mr. Liu” Mr. Liu Xiuzhang (劉秀章), an Independent Third Party

“Mr. Qiu” Mr. Qiu Lianjun (邱連軍), our Controlling Shareholder

“Mr. Zhao” Mr. Zhao Quansheng (趙泉勝) (formerly known as Zhao Quansheng 趙全生), chairman of the Board, an executive Director and our Controlling Shareholder

“Ms. Hou” Ms. Hou Bo (侯波), an Independent Third Party

“Ms. Ma” Ms. Ma Guilan (馬桂蘭), an Independent Third Party

“New Shares” the [REDACTED] new Shares being [REDACTED] for subscription by our Company at the [REDACTED] under the [REDACTED] and the [REDACTED]

[REDACTED] [REDACTED]

−21− THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DEFINITIONS

[REDACTED] [REDACTED]

“PRC” or “China” the People’s Republic of China, excluding for the purposes of this document only, Hong Kong, the Macau Special Administrative Region of the People’s Republic of China and Taiwan

[REDACTED] [REDACTED]

“[REDACTED] Share Option the [REDACTED] Share Option Scheme I adopted by the Scheme I” Company on 23 July 2019 and amended on 30 December 2019 and 30 May 2021, summary of the principal terms of which are set out in the section headed “Appendix IV — Statutory and General Information — D. [REDACTED] Share Option Schemes” in this document.

“[REDACTED] Share Option the [REDACTED] Share Option Scheme II adopted by the Scheme II” Company on 23 July 2019 and amended on 30 December 2019 and 30 May 2021, summary of the principal terms of which are set out in the section headed “Appendix IV — Statutory and General Information — D. [REDACTED] Share Option Schemes” in this document.

“[REDACTED] Share Option [REDACTED] Share Option Scheme I and [REDACTED] Schemes” Share Option Scheme II

[REDACTED] [REDACTED]

−22− THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DEFINITIONS

[REDACTED] [REDACTED]

“Post-[REDACTED] Share the Post-[REDACTED] Share Option Scheme conditionally Option Scheme” adopted under the written resolution of our Shareholders of our Company passed on [REDACTED], the summary of the principal terms of which are set out in the section headed “Appendix IV — Statutory and General Information — E. Post-[REDACTED] Share Option Scheme” in this document.

“PRC Legal Advisers” Commerce & Finance Law Offices, the legal advisers to our Company as to PRC law

[REDACTED] [REDACTED]

−23− THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DEFINITIONS

[REDACTED] [REDACTED]

“Qiu’s BVI Company” China Mengsang Ecological Company Limited (中國蒙桑生態有限公司), a company incorporated in the BVI with liability limited by shares on 21 August 2017, which is wholly owned by Mr. Qiu, and being our Controlling Shareholder

“Regulation S” Regulation S under the U.S. Securities Act

“Reorganisation” the reorganisation of the Group in preparation for the [REDACTED], details of which are set out in the section headed “History, Reorganisation and Group Structure — Reorganisation” in this document

“RMB” Renminbi, the lawful currency of the PRC

“SAFE” State Administration of Foreign Exchange of the PRC* (中華人民共和國國家外匯管理局)

[REDACTED] the [REDACTED] Shares being initially [REDACTED] for sale by the [REDACTED] at the [REDACTED] under the [REDACTED]

“SAT” State Administration of Taxation of the PRC* (中華人民共和國國家稅務總局)

[REDACTED] Zhao’s BVI Company, Li’s BVI Company I, Li’s BVI Company II, Qiu’s BVI Company, Shenglin BVI Company, Mengsheng BVI Company, Ma’s BVI Company and Hou’s BVI Company, our existing Shareholders who are expected to [REDACTED] to sell Shares in the [REDACTED], as detailed in the section headed “Statutory and General Information — F. Other information — 9. [REDACTED]” in Appendix IV of this document

“SFC” the Securities and Futures Commission of Hong Kong

“SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), as amended or supplemented from time to time

−24− THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DEFINITIONS

“SHA Existing Shareholders” Zhao’s BVI Company, Li’s BVI Company I, Li’s BVI Company II, Qiu’s BVI Company, Shenglin BVI Company, Mengsheng BVI Company, Hou’s BVI Company, Ma’s BVI Company, Ms. Hou, Ms. Ma and Green Thrive BVI

“Shareholder(s)” holder(s) of Shares

“Share(s)” ordinary share(s) with a nominal or par value of HK$0.001 each in the share capital of our Company

[REDACTED] [REDACTED]

“Shenglin” Ningbo Shenglin Investment Management Partnership (Limited Partnership)* (寧波盛林投資管理合夥企業（有限合夥）), a limited partnership established under the laws of the PRC on 6 August 2014, which is owned as to 20.53% by Mr. Li Jianjun (栗建軍), 19.56% by Ms. Tie Ying (鐵英), 26.05% by Ms. Guo Jinchun (郭瑾春) and 33.86% by Mr. Ma Liming (馬黎明), who are our Controlling Shareholders

“Shenglin BVI Company” China Shenglin Ecological Company Limited (中國盛林生態有限公司), a company incorporated in the BVI with liability limited by Shares on 17 August 2017, which is owned as to 21% by Mr. Li Jianjun (栗建軍), 19% by Ms. Tie Ying (鐵英), 26% by Ms. Guo Jinchun (郭瑾春) and 34% by Mr. Ma Liming (馬黎明) and being our Controlling Shareholder

“Shenzhen Kunxing No.3” Shenzhen Kunxing No.3 Partnership (Limited Partnership)* (深圳坤行三號投資合夥企業(有限合夥)), a limited partnership established under the laws of the PRC on 13 November 2018, and an indirect non-wholly owned subsidiary of our Company which is owned as to 94.95% by Mengshu Group, 0.005% by Beijing Mengshu Investment Management and 5.045% by an Independent Third Party

“Sole Sponsor” or [REDACTED] Shenwan Hongyuan Capital (H.K.) Limited, a licenced or [REDACTED] or corporation licenced to carry out type 1 (dealing in [REDACTED] or securities), type 4 (advising on securities) and type 6 [REDACTED] (advising on corporate finance) regulated activities under the SFO

[REDACTED] [REDACTED]

−25− THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DEFINITIONS

“Stock Exchange” or “Hong The Stock Exchange of Hong Kong Limited Kong Stock Exchange”

“Takeovers Code” the Hong Kong Code on Takeovers and Mergers issued by the SFC, as amended or supplemented from time to time

“Track Record Period” FY2018, FY2019 and FY2020

[REDACTED] [REDACTED]

“U.S.” or “United States” the United States of America, its territories and possessions, any state of the United States and the District of Columbia

“U.S. Securities Act” the United States Securities Act 1933, as amended or supplemented from time to time

“US$” United States Dollars, the lawful currency of the United States

“Valuer” Jones Lang LaSalle Corporate Appraisal and Advisory Limited

“Xun County Mengshu Forestry” Xun County Mengshu Forestry Co., Ltd.* (浚縣蒙樹林業有限公司), an enterprise established under the laws of the PRC on 26 July 2019, an indirect non-wholly owned subsidiary of our Company, which is owned as to 93% by Mengshu Group, 1% by Beijing Mengshu Ecological, 1% by Guizhou Mengshu Ecology and 5% by an Independent Third Party

“Yu County Mengshu Yu County Mengshu Landscaping Engineering Co., Ltd.* (盂 Landscaping Engineering” 縣蒙樹景觀工程有限公司), an enterprise established under the laws of the PRC on 13 June 2019 and an indirect non-wholly owned subsidiary of our Company, which is owned as to 89% by Mengshu Group, 1% by Guizhou Mengshu Ecology and 10% by an Independent Third Party

“Zhao’s BVI Company” China Mengyang Ecological Company Limited (中國蒙楊生態有限公司), a company incorporated in the BVI with liability limited by shares and 16 August 2017, which is wholly owned by Mr. Zhao and being our Controlling Shareholder

−26− THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DEFINITIONS

“Zhenning Autonomous County Zhenning Autonomous County Mengshu Landscaping Mengshu Landscaping Construction Co., Ltd.* (鎮寧自治縣蒙樹景觀建設有限公 Construction” 司), an enterprise established under the laws of the PRC on 6 December 2019 and an indirect non-wholly owned subsidiary of our Company, which is owned as to 88% by Mengshu Group, 1% by Beijing Mengshu Ecological, 1% by Guizhou Mengshu Ecology and 10% by an Independent Third Party

“Zhong Sheng Li De” Inner Mongolia Zhong Sheng Li De Environmental Engineering Co., Ltd.* (內蒙古中盛立德環境工程有限公司) (formerly known as 白楊景觀藝術有限責任公司), a company established under the laws of the PRC on 15 November 2002, which was owned as to 44% by Mengshu Group as at the Latest Practicable Date

“%” per cent

In this document, unless the context otherwise requires:

• the terms “associate”, “close associate”, “connected person”, “connected transaction”, “controlling shareholder’, “core connected person”, “subsidiary” and “substantial shareholder” shall have the meanings given to such terms in the Listing Rules, unless the context otherwise requires;

• all data in this document is as at the date of this document; and

• all references to any shareholdings in our Company assume no exercise of the [REDACTED] unless otherwise specified.

For ease of reference, the names of the PRC established companies, entities, laws and regulations have been included in this document in both Chinese and English. The name in Chinese is the official name of each such company, entity, law or regulation (as the case may be), while that in English is only an unofficial translation and are included for identification purpose only (as indicated by a “*” next to such name) In the event of any inconsistency, the Chinese name shall prevail.

−27− THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. GLOSSARY OF TECHNICAL TERMS

This glossary of technical terms contains explanations of certain terms used in this document as they relate to our Company and are used in this document in connection with our business or us. These terms and their given meanings may not correspond to standard industry definitions.

“Anqing PPP Project” The PPP Project for the Enhancement of Ecological Corridors and Forestry Landscape along the River in Yingjiang District, Anqing City, Anhui Province (安徽省安慶市迎江區沿江生態廊道及林業景觀提升PPP項目)

“Arbors” relatively tall trees with well-defined trunks extending from the roots to the canopy and are usually applied for functional purposes such as construction of quarantine belt, shelter belt and landscape greening. Depending on whether the leaves are deciduous in winter, Arbors can be divided into Evergreens and Deciduous

“CAGR” compound annual growth rate, a method of assessing the average growth of a value over time

“carbon sink” the process and mechanism of using plant photosynthesis to absorb carbon dioxide in the atmosphere into the vegetation and soil through various ways such as tree planting, forest management, and vegetation restoration, thereby reducing the concentration of greenhouse gases in the atmosphere. The main ecosystems that generate carbon sinks include forests, grasslands, wetlands, oceans, etc.

“carbon sink forest” forests that aim to cope with global warming via utilising the function of carbon sink of forests, and the amount of carbon fixed by the carbon sink forest is tradable in the market as carbon emission right

“Chifeng City Aohan Banner Chifeng City Aohan Banner District Greening PPP Project (赤 District PPP Project” 峰市敖漢旗城區及重點區域綠化PPP項目) located in Aohan Banner District, Chifeng City, Inner Mongolia

“Chifeng City Nanshan PPP Chifeng City Nanshan Landscape Enhancement PPP Project Project” (赤峰市南山景觀綠化提升工程PPP項目) located in Nanshan, Chifeng City, Inner Mongolia

“Chongli Winter Olympics The Landscape Enhancement Project for the Winter Olympics Project” Ecological Passageway in Chongli (崇禮冬奧賽事生態廊道景觀提升工程施工第13標段項目) located in Zhangjiakou, Hebei Province

−28− THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. GLOSSARY OF TECHNICAL TERMS

“commercial forests” forests with related supporting facilities for non-timber production and commercial activities. Non-timber products include fruits, nuts, oils, spices, industrial raw materials and medicinal materials. Commercial activities include forest eco-tourism, and forest-based planting and animal breeding

“Deciduous” Arbors that lose all of their leaves during winter or drought seasons

“ecological forest plantation projects that aim at creating forests with long-term ecological projects” and environmental sustainability through planned afforestation and maintenance work

“ecological forest plantation services provided for the purpose of ecological forestry services”

“ecological restoration projects” projects that seek to recover areas with degraded, damaged, or destroyed ecosystems through the application of various scientific means to revive the original chemical, biological, and physical characteristics of the water or soil as well as the surrounding plant community

“ecological restoration services” services provided for the purpose of ecological restoration

“Evergreens” Arbors that have green leaves throughout the year and are always green

“Flowering Shrubs” a type of shrub mainly for beautification purposes with various stems branching near the ground and do not have well-defined trunks

“GB/T 26424-2010” technical regulations for inventory for forest management planning and design issued by the General Administration of Quality Supervision, Inspection and Quarantine of the People’s Republic of China and the Standardization Administration of China on 14 January 2011 and adopted on 1 June 2011

“GB/T 24001-2016/ISO national standard of environmental management systems 14001:2015” issued by the General Administration of Quality Supervision, Inspection and Quarantine of the People Republic of China, China National Standardization Administration Committee on 13 October 2016 and adopted on 1 May 2017

“GDP” gross domestic product

“germplasm” resources such as seeds that are maintained for the purpose of plant breeding, preservation or other research uses

−29− THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. GLOSSARY OF TECHNICAL TERMS

“gully” a landform created by running water, eroding sharply into soil, typically on a hillside

“Heze Project” Landscaping and Greening Project for National Highways in Mudan District, Heze City, Shandong Province (菏澤市牡丹區國省道綠化工程項目)

“Hulun Bei’er PPP Project” Hulun Bei’er New District PPP Project (呼倫貝爾新區棚改配套基礎設施建設PPP項目)

“ISO” International Organisation for Standardisation, a non-government organisation based in Geneva, Switzerland, for assessing the quality systems of business organisations

“ISO 9001” a framework and systematic approach set by ISO to manage business processes to produce a product/service that conforms to customer expectations

“km” kilometer(s)

“Liyang Project” The Liyang Gucheng Forest Park (Phase 1) Project (浚縣黎陽故城森林公園（一期）總承包項目) located in Xun County, Henan Province

“mu” the traditional Chinese unit of area (畝), one mu is equivalent to approximately 666.67 sq.m.

“national reserve forest” forests that are suitable for the cultivation of timber or other natural resources in order to meet the needs of economic and social development

“PPP” Public-Private-Partnership, a business model in which there is a cooperative arrangement between two or more public and private sector entities in terms of project management financing and operation, typically of a long-term nature and the private sector entity(ies) have equity interest in the project company, if established

“Settlement Audit” a process of a project where our customer’s designated cost consultant or auditing agent determines and certifies the final contract sum for the purpose of settlement of the outstanding payment

“shelter belt forest” forests and artificial forests built with protection functions for water and soil maintenance, water source conservation, climate regulation, pollution reduction, and mitigation of natural disasters

−30− THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. GLOSSARY OF TECHNICAL TERMS

“Shengle Project” Inner Mongolia Shengle International Ecological Demonstration Zone (內蒙古盛樂國際生態示範區) in Inner Mongolia

“sq.km.” square kilometer(s)

“sq.m.” square meter(s)

“traditional model” a business model under which we are engaged as contractor or subcontractor of projects other than our PPP projects

“urban and rural greening projects that seek to improve the overall landscape of an area, projects” normally as part of urbanisation, through green (trees and herb) planting, as well as earthworks construction, such as terrain modification, and ancillary facilities building

“urban and rural greening services provided for urban and rural greening projects services”

“Xun County PPP Project” Xun County National Reserve Forest PPP Construction Project (浚縣國家儲備林PPP建設項目) located in Xun County, Henan Province

“Yu County PPP Project” The PPP Project for the Restoration of Swampy Area in Yu County (盂縣香河濱水空間環境綜合治理工程PPP項目) located in Yu County, Shanxi Province

−31− THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements that are, by their nature, subject to significant risks and uncertainties. The forward-looking statements are contained principally in the sections headed “Summary”, “Risk Factors”, “Industry Overview”, “Business”, “Financial Information” and “Future Plans and Use of [REDACTED]” in this document. These statements relate to events that involve known and unknown risks, uncertainties and other factors, including those listed under the section headed “Risk Factors” in this document, which may cause our actual results, performance or achievements to be materially different from performance or achievements expressed or implied by the forward-looking statements. These forward-looking statements include, without limitation, statements relating to:

• our operations and business prospects;

• our business strategies and plan to achieve these strategies;

• our tenancy agreements on hand;

• our future debt levels and capital needs;

• the regulatory environment of the ecological and environmental protection industry in general;

• our financial conditions and performance;

• the nature of, and potential for, future development of our business;

• future development in the ecological and environmental protection industry; and

• our dividend policy.

The words “aim”, “anticipate”, “believe”, “can”, “could”, “estimate”, “expect”, “intend”, “may”, “might”, “plan”, “project”, “seek”, “will”, “would” and the negative of these terms and other similar expressions, as they relate to us, are intended to identify a number of these forward-looking statements. These forward-looking statements reflect our current views with respect to future events and are not a guarantee of future performance. Actual results may differ materially from information contained in the forward-looking statements as a result of a number of uncertainties and factors, including but not limited to the risk factors described in the section headed “Risk Factors” in this document. One or more of these risks or uncertainties may materialise.

Subject to the requirements of applicable laws, rules and regulations, we do not have any obligation to update or otherwise revise the forward-looking statements in this document, whether as a result of new information, future events or otherwise. As a result of these and other risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this document might not occur in the way we expect, or at all. Accordingly, you should not place undue reliance on any forward-looking information. All forward-looking statements contained in this document are qualified by reference to the cautionary statements set out in this section as well as the risks and uncertainties discussed in the section headed “Risk Factors” in this document.

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You should carefully consider all of the information set out in this document, including the risks and uncertainties described below before making an investment in the [REDACTED]. You should pay particular attention to the fact that we are incorporated in the Cayman Islands and that substantially all of our Group’s operations are conducted in the PRC. Our business, financial condition and results of operations could be materially and adversely affected by any of these risks. The trading price of our Shares could decline due to any of these risks, and you may lose all or part of your investment.

RISKS RELATING TO OUR BUSINESS AND THE INDUSTRY IN WHICH WE OPERATE

We may not be able to bill and receive the full amount of trade and bills receivables and contract assets.

Our trade and bills receivables primarily consist of receivables from customers for construction that are completed and accepted by them. As at 31 December 2018, 2019 and 2020, our trade and bills receivables (including current and non-current trade and bills receivables) amounted to approximately RMB24.5 million, RMB38.8 million and RMB42.3million, respectively. As at 31 December 2018, 2019 and 2020, impairment of trade and bills receivables were RMB3.7 million, RMB3.1 million and RMB5.9 million, respectively. As at the Latest Practicable Date, RMB9.1 million or 21.5% of our trade and bills receivables outstanding as at 31 December 2020 were settled. As we are subject to the credit risks of our customers and our liquidity and cash position are dependent on the timely settlement of payments by our customers, we cannot assure you that our customers will pay us on time and that they will be able to fulfil their payment obligations.

On the other hand, our contract assets will be reclassified to trade receivables upon completion of construction and once being billed. Our Group recorded contract assets (including current and non-current contract assets) of approximately RMB738.5 million, RMB1,241.8 million, and RMB1,672.3 million as at 31 December 2018, 2019 and 2020, respectively. Contract assets may vary from period to period. Our contract assets represent the amount of works performed by us but have not reached the stage or milestone of which we are entitled to bill our customers for completed works. See “Financial Information — Contract assets”. There is no guarantee that the contract assets incurred will be settled by our customers in full or at all. Most of our customers are public sector entities which, as far as our Directors are aware, have strong financial standing. However, we may still experience delay in receiving payment from our customers due to their complex internal settlement procedures.

We cannot assure you that we will be able to collect all or any of the trade and bills receivables or contract assets from our customers on time. If any of our customers face unexpected situations, they may delay or even default in their payment obligation. As a result, we may not be able to receive the overdue trade and bills receivables or contract assets in full, or at all, and we need to make allowance for expected credit losses and may record impairment losses in the future. In addition, we may not be able to maintain sufficient cash flow to support our newly undertaken projects as a result of the delay in payment by our customers. Accordingly, it could materially and adversely affect our financial conditions and performance of our operations.

−33− THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS

We may experience timing difference between our cash outflow and cash inflow when undertaking our traditional projects.

Our operating cash flows and profitability are dependent on, among other factors, the timely settlement of payments made by our customers for our services. In particular, undertaking our traditional project requires a certain level of working capital funding over extended periods, which may affect our liquidity and decrease the capital resources otherwise available for other uses. There is also no guarantee that our payment term or trade payables turnover days with suppliers or subcontractors will not be shortened in the future. We may not be able to match our cash inflows from our operations with our cash outflow, which may result in a liquidity gap requiring us to resort to further bank borrowings to fund our project development and business operations. Liquidity shortfalls may also impair our ability to obtain sufficient additional financing on acceptable terms or at all. Any negative impact on our liquidity or any mismatch between our cash outflows and inflows could have a material adverse effect on our business, financial condition and results of operations. If we are unable to execute our traditional projects effectively, our business, financial conditions, results of operations and prospects may be materially and adversely affected.

We may not be able to obtain adequate debt financing for our PPP projects.

As our projects are generally capital intensive, it is necessary for us to have stable and reliable sources of funding for the continuation of our works and failure to do so may lead to our failure or delay in completing projects. In particular, during the constructions phase of PPP projects, we incur significant construction costs, which are funded by capital contribution from the public and private sector entities, and debt financing granted from financing institutions. As a result, our performance is affected by our access to capital, our ability to raise debt financing as well as the cost of financing. While we actively seek to finance our PPP projects and other capital expenditures through bank and other borrowings as supplemented by our internal resources, there is no guarantee that we can obtain debt financing in the future. Our ability to obtain external funding depends on many factors, including our financial condition, results of operations, cash flows and credit history, restrictive covenants under our existing debt instruments, general economic and capital market condition and the availability of credit from banks. We cannot assure you that external funding will be available in the future on acceptable terms or at all. Failure to obtain sufficient funding for our PPP projects may delay the implementation of our PPP projects, and expose us to delay in overall project schedule, which could affect our results of operations.

In addition, reliance on debt financing may increase our overall gearing ratio. Our gearing ratio increased from 36.5% as at 31 December 2018 to 42.2% as at 31 December 2019 and further 85.9% as at 31 December 2020. As at 31 December 2018, 2019 and 2020, our bank and other borrowings were RMB310.9 million, RMB283.7 million and RMB865.3 million, respectively. Our finance costs were RMB53.6 million, RMB57.1 million and RMB75.6 million for FY2018, FY2019 and FY2020, respectively. During the Track Record Period, our bank and other borrowings bore effective interest rates ranging from 4.15% to 8.52%. Any change in the interest rates of our bank and other borrowings or the amount of our bank and other borrowings will affect our interest payments and finance costs, which in turn could affect our cash flow, financial condition and results of operations.

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Undertaking PPP projects requires significant capital commitment over a long time span and we receive no cash income during the construction phase.

During the Track Record Period, our PPP projects accounted for approximately 15.2%, 69.3% and 58.0% of our total revenue. Our PPP projects usually require a long time span. A PPP project generally consists of construction phase and operation phase with the overall contract duration ranging from 12 years to 30 years. During the construction phase, our project company, which was jointly established by us and the public sector entity, receives no cash income and pays off the construction costs through the capital contribution from the public and private sector entities, and debt financing granted from financial institutions. Our project company will only receive cash inflow in the form of government payments from the relevant government entity and, in some cases, user payments from project users for some PPP projects during the operation phase. Such income model may increase our average turnover days of contract assets. Our average turnover days of contract assets increased from 476.3 days for FY2019 to 656.4 days for FY2020, mainly due to the increase in average contract assets of 47.2%, while our revenue only grew by 7.1%, as our PPP projects were still in the construction phase. This in turn could have a material adverse effect on our business, financial position and results of operations.

Our results of operations are subject to biological asset fair value adjustments which can be highly volatile and are subject to a number of assumptions.

Our biological assets were valued at approximately RMB285.5 million, RMB337.1 million and RMB349.8 million as at 31 December 2018, 2019 and 2020, respectively. We measure our biological assets at their fair value less costs to sell when they are sold or as at the balance sheet dates pursuant to HKAS 41 Agriculture. Gains or losses arising from net changes in fair value of a biological asset (including unrealised fair value gains or losses) are included in profit or loss for the period in which they arise.

Fair value changes do not impact our cash position, i.e. fair value gains do not generate any cash inflows and similarly, fair value losses do not result in any cash outflows. Nevertheless, our results of operations have been and will continue to be affected by biological asset fair value adjustments. Any increase or decrease in market prices of our biological assets may increase or reduce our gains or losses arising from net changes in fair value of a biological asset, which makes our profit more volatile. For FY2018, FY2019 and FY2020, we recorded net gain arising from change in fair value of biological assets of RMB6.8 million, RMB18.2 million and RMB5.6 million, respectively.

The fair value of our biological assets at the end of each reporting period was independently valued by the Valuer. Two valuation methods, namely market approach for Arbor and Flowering Shrubs and cost approach for sowing seedlings, were used for measuring the fair value of our biological assets. In applying these valuation methods, the Valuer had relied on assumptions and information inputs including (i) the classification of seedlings provided by our Group; (ii) the quantity of biological assets as of the valuation dates provided by our Group; and (iii) the market price quotes of biological assets obtained from several online seedlings trading platforms and enquiries with several market participants with business presence in proximate geographical locations. See “Financial Information — Biological Assets — Valuation of Biological Assets”.

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The fair value of the biological assets could be affected by, among others, the assumptions and information relied on by the Valuer, the physical attributes of our seedlings and the prevalent market conditions such as customers’ preference, market demand and price of seedlings in the industry from time to time. Therefore, the resulting fair value adjustments can be highly volatile. We expect that our results of operations will continue to be affected by these biological asset fair value adjustments.

The total amount of user payment specified in the respective PPP contracts may differ from the actual amount of user payment that we may receive during the operation phase.

We shall receive government payments from the relevant government entity and user payments from project users during the operation phase of two of our PPP projects, namely Anqing PPP Project and Xun County PPP Project. The total amount of user payment specified in the respective PPP contracts was however estimated by public sector entities with assistance from third party qualified engineering consultant and accepted by our Group based on our feasibility analysis and our Directors’ industry knowledge and experience. The actual amount of user payment that we may receive may differ from the estimated amount and any shortfall or surplus will be taken by our project company. We cannot assure you that we may be able to receive user payments at a level comparable to the estimated amount, or at all. In the event that the actual amount of user payment in the operation phase of the project is significantly smaller than expected, our business, financial conditions, results of operations and prospects could be materially and adversely affected.

Restrictions imposed by the terms of our debt instrument covenants may adversely affect our financial conditions and limit our ability to plan for or respond to changes in our business.

As at 31 December 2018, 2019 and 2020, our bank and other borrowings were RMB310.9 million, RMB283.7 million and RMB865.3 million, respectively. See “Financial Information — Indebtedness”.

We have various bank loan agreements which impose certain restrictive conditions on us, including both operational and financial covenants. Such covenants primarily include, among others, requirements for us to obtain the lending institutions’ prior consent for certain transactions such as transfer of material assets, merger and acquisition, and inform them upon the occurrence of certain issues such as liquidation and winding up. Breach of any of such covenants may result in an event of default and trigger our lenders’ exercise of their rights on an accelerated basis, or could result in cross-defaults on the terms of our other existing and outstanding indebtedness, which could increase our debt financing costs and affect our ability to refinance our indebtedness. We cannot assure you that we will be able to continue to fully comply with such restrictive conditions, or refinance any of our indebtedness on commercially acceptable terms or at all. The occurrence of any of the foregoing may materially and adversely affect our business, financial conditions and results of operations.

In addition, some of our loan agreements may also contain cross-default clauses, which could enable creditors under our loan agreements to declare an event of default should there be an event of default on our other loan agreements. Any event of default or cross-default could lead to an acceleration of our indebtedness or require us to compensate the lending banks for their losses. Consequently, our business, financial conditions, results of operations and prospects could be materially and adversely affected.

−36− THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS

We cannot assure you that we will be able to obtain the consent of the lending banks for any of the aforementioned restricted activities. If we engage in such activities without obtaining such consent, our business may be adversely affected. In addition, if we breach the restrictive covenants, make any misrepresentations or commit any other breach under our financing agreements, we may trigger an event of default, which in turn could lead to an acceleration of our indebtedness or require us to compensate the lending banks for their losses. As a result, our business, financial conditions, results of operations and prospects could be materially and adversely affected.

Fire, floods, seedlings diseases, other natural disasters or adverse climate change could cause significant damage to our project sites or plantation bases.

We undertake projects spanning across Inner Mongolia, Hebei, Shanxi, Henan, Anhui, Shandong and Guizhou. We also operate our plantation bases which were located in different locations in Inner Mongolia and Hebei. During the construction and maintenance phases of our projects or the operation of our plantation bases, there is no guarantee that the quality of our projects or our seedlings will not be materially and adversely affected by unfavourable weather conditions, in particular the continental climate in Inner Mongolia, or any natural disasters in the future. We may face events such as fire, floods, seedlings diseases, other natural disasters or adverse climate change which could negatively impact our operation and supply chain. During the Track Record Period, we encountered four fire accidents in four plantation bases, which caused immaterial damage to our seedlings resulting in fair value losses of approximately RMB0.1 million, RMB0.7 million and RMB0.2 million, respectively. See “Business — Biological assets — Operation of our plantation bases — Fire accidents”. Alternatively, extended periods of drought or reduced rainfall in the PRC could negatively affect the growth of seedlings thereby reducing or delaying our supply of seedlings. If any of these events occurs, we may have to suspend or cease our projects, or incur loss of biological assets in our plantation bases, which would have a material adverse effect on our business, financial condition and results of operations.

Our cost estimates for projects may not always be accurate and we may not be able to complete projects within our cost estimates.

Our projects are typically awarded by our customers through a competitive tender process. In determining the tender price, we conduct feasibility analysis and estimate the construction time and costs based on information specified in the tender invitation documents and our site visits. See “Business — Operational flow — Project feasibility analysis and decision making”. However, the actual time and costs incurred in our projects may be adversely affected by a series of factors which are beyond our control including: (i) unanticipated geographical conditions of the project sites; (ii) unfavourable weather conditions; (iii) unforeseen disputes with our customers, suppliers, subcontractors and other relevant parties; and (iv) variation orders from our customers altering the contract amount. In the event that there is a significant deviation from the works as scheduled due to the above factors or otherwise, there may be a substantial delay or increase in costs in connection with our projects. There is no guarantee that the actual time and costs incurred will be consistent with our initial estimates, which in turn potentially reduces our profitability or even exposes us to litigation or claims from our customers in case of delays.

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Due to the above uncertainties which are beyond our Group’s control, the profit margins and income of our projects may fluctuate from project to project and the historical revenue from our projects may not be indicative of our future revenue. As such, there is no assurance that we will always be able to accurately estimate our project time and costs, or determine a precise mark-up margin so that we are able to price our tender price competitively. This in turn may adversely affect our operation and financial results. On the flip side, if the mark-up margin is set too low, we may not be able to cover the additional costs contributory to the above-mentioned factors. In that case, our profitability will be materially and adversely affected.

Our Group recorded net cash used in operating activities for FY2018, FY2019 and FY2020.

We recorded net cash outflow from operating activities of approximately RMB255.3 million, RMB174.9 million and RMB235.7 million for FY2018, FY2019 and FY2020, respectively. See “Financial information — Liquidity and capital resources — Cash flow — Operating activities”. In the event that we are unable to generate sufficient cash flow from our operations or are otherwise unable to obtain sufficient funds to bridge the temporary cash flow mismatch, our liquidity and financial condition may be materially and adversely affected. There is no assurance that we will have sufficient cash from other sources to fund our operations. If we resort to other financing activities such as bank borrowings to generate additional cash, we will incur additional financing costs, and we cannot guarantee that we will be able to obtain the financing on terms acceptable to us, or at all.

We may not be able to recover the full amount of deferred tax assets.

As at 31 December 2018, 2019 and 2020, our deferred tax assets amounted to approximately RMB16.6 million, RMB22.5 million and RMB27.1 million, respectively. Our deferred tax assets are recognised for all deductible temporary differences and all unused tax losses to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the unused tax losses can be utilised. Our deferred tax assets may also pose risk to our Group as the recoverability is dependent on our Group’s ability to generate future taxable profit. We cannot assure you that the deferred tax assets can be recovered. In the case that the value of deferred tax assets has changed, our Group may have to write-down the deferred tax assets, which may significantly and adversely affect our expenditure, profit and loss and financial condition in that respective financial year.

Since we receive our projects through tendering, revenue derived from our projects is non-recurring in nature. There is no guarantee that our customers will continue to provide us with new business opportunities or that we can secure new contracts.

While our Group may benefit from supportive government policies and the market size of ecological and environmental protection industry is expected to grow at a CAGR of approximately 9.2% from 2020 to 2025 according to the Frost & Sullivan Report, there is no assurance that we can continue to secure new contracts as our services are offered on a project-by-project basis with no long term commitment with any of our customers. For each of the three years ended 31 December 2020, our tender success rates was approximately 44.4%, 73.3% and 64.3% respectively. Our tender success rate is affected by a range of factors including our pricing and tender strategy, our project execution capabilities and qualifications, competitors’ tender and pricing strategy, level of competition and our customers’ evaluation standards. There is no guarantee that we will be able to achieve a tender success

−38− THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS rate similar to those during the Track Record Period in the future. Depending on the market condition and competitive landscape, we may have to lower our pricing or adjust our tender strategy in order to maintain the competitiveness of our tenders. In the event that our Group fails to secure new projects from our existing or potential clients of contract sum, size or margins comparable to existing ones, our business and financial performance and results of operations will be materially and adversely affected.

We do not own the land on which we operate our plantation bases, and we may not be able to renew our lease, collaboration arrangements or land contractual management rights.

As at the Latest Practicable Date, we operated 15 plantation bases in the PRC, occupying an aggregate area of approximately 45,000 mu (30.0 million sq.m.). See “Business — Biological assets — Plantation bases”. We do not own the land on which we operate our planation bases. If we cannot renew the lease, collaboration arrangements or land contractual management rights in respect of our plantation bases after expiry, we will have to relocate our plantation bases to a new area, carry out all preparatory works, apply for all requisite licences and incur additional costs due to relocation, which will cause material disruption to our plantation process.

Our Group’s profit and profit margin attained during the Track Record Period may not be indicative of our future profit and profit margin.

For FY2018, FY2019 and FY2020, our gross profit amounted to approximately RMB94.6 million, RMB252.2 million and RMB265.7 million, respectively, whereas our gross profit margin was approximately 26.2%, 33.2% and 32.7%, respectively, for the corresponding periods. See “Financial Information — Review of historical results of operation”. The inherent risk of using such historical financial information to project or estimate our future financial performance, is that they only reflect our past performance under particular conditions. We may not be able to sustain our historical growth rate and profit margin for various reasons, including, intensification of competition within the ecological and environmental protection industry in the PRC, aggravation in labour shortage, and other unforeseen factors such as outbreak of diseases, adverse weather and geological conditions, any of which may delay the completion of our projects, reduce the number of projects awarded to us, and reduce the profit margin of our projects.

We are required to obtain various licences and permits to operate our business, the loss of or our failure to renew any or all of these licences and permits could materially and adversely affect our business.

In accordance with the applicable PRC laws and regulations, we are required to maintain various licences and permits in order to operate our business such as forest seed production and operation licence, design engineering certificate, qualification certificates for construction enterprises of commensurate grades and safety production permit. Any loss of or failure to renew our licences and permits could result in temporary or permanent suspension of our operations, which could disrupt our operations and adversely affect our business. See “Business — Permits, licences and approvals”.

There is no assurance that the PRC government will not change the laws or regulations or impose additional or more requirements, compliance with which may cause us to incur extra costs and expenses, which we may not be able to pass on to our customers by increasing the prices of our

−39− THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS services or seedling products, which might result in a material adverse effect on our performance. Further, we cannot guarantee that we will always be able to comply with all future laws or regulations or be able to renew our licences or permits, failure of which may subject us to penalties and liabilities or even suspension of our operations and business, and may thereby result in a material adverse effect on our business, financial condition and performances.

Our backlog is subject to unforeseen adjustments and cancellations and therefore is not indicative of our future results of operations.

Our estimation of our backlog is based on the assumption that the contract is performed in accordance with its terms and our works are conducted in accordance with the design drawings agreed by the project owners. Backlog is not a measure defined by generally accepted accounting principles and is not indicative of our future results of operations. As at the Latest Practicable Date, the total backlog of our projects was approximately RMB3.3 billion. See “Business — Our project models and project portfolio — Movement of our backlog”.

Given that our backlog is calculated based on the assumption that our contracted works in progress will be performed in full in accordance with the contract terms, any alteration or termination of any one or more major contracts or their design drawings may have a substantial and immediate adverse impact on our backlog. Further, we cannot guarantee that the estimated figures of backlog will be realised in full, or in a timely manner, or at all, or that our recognised backlog amount will be realised as profits as expected. As a result, we caution you not to place reliance on our backlog information presented in this document as an indicator of our future earnings and results of operations.

We are dependent on the stable supply of raw materials and services from our suppliers for our business operation.

During the Track Record Period, our suppliers supplied to us raw materials which primarily include seedlings, and construction materials such as steels, stones and sands. We also engaged third party service providers to conduct manual works for our plantation bases (including irrigation, soil management, application of fertilisers and disease and pest control). For FY2018, FY2019 and FY2020, purchase from our five largest suppliers accounted for approximately 17.7%, 8.3% and 9.4%, respectively, of our cost of sales and purchases from our largest supplier accounted for approximately 4.0%, 2.9% and 2.6% of our cost of sales, respectively, during the same period. If any of our key suppliers is unable to continue providing the raw materials or services we need, at prices and on terms and conditions we consider acceptable, we may need to procure such raw materials and services from other suppliers. We cannot assure you that we will be able to locate replacements or find new qualified suppliers in a timely manner or at all. Failure to find suitable replacements could jeopardise or cause delay in the delivery of our services, which could materially and adversely affect our business, financial condition, results of operations and prospects.

In addition, our business may be affected by the availability, cost and quality of the raw materials used in our projects, which are dependent on factors beyond our control, including economic conditions, competition, availability of qualified suppliers and production levels in the PRC. For FY2018, FY2019 and FY2020, our cost of materials consumed amounted to approximately RMB120.2 million, RMB142.0 million and RMB183.4 million, respectively, accounting for approximately

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45.0%, 28.0% and 33.5% of our cost of sales during the same period. If for any reason our primary suppliers of raw materials cease to provide or provide us with raw materials that do not meet our requirements or at prices that are not competitive or are on unacceptable terms, we may not be able to identify alternate suppliers on commercially reasonable terms timely or at all. Our ability to meet our project requirements may be impaired, and our construction schedules and operations may be disrupted, which could adversely impact our business, financial condition and results of operations.

We rely on a stable supply of subcontractors to complete certain parts of our projects and the work performance of the subcontractors may be beyond our control.

We engage third party subcontractors in our projects from time to time to provide extra workforce or for professional specialty services. Our subcontractors include (i) labour subcontractors; (ii) professional subcontractors; and (iii) machinery subcontractors. Our subcontracting costs accounted for approximately 48.0%, 67.1% and 58.1% of the total cost of sales for FY2018, FY2019 and FY2020, respectively.

Our subcontractors may not be readily available when we need to outsource certain of our works under the relevant projects. Our ability to complete our projects on time may be impaired if we are unable to engage suitable or sufficient subcontractors. Further, we cannot guarantee the service quality provided by our subcontractors and we cannot assure you that our monitoring of the works and performance of our subcontractors will be sufficient to control the quality of their works. If our subcontractors fail to meet our quality requirement or provide the services as required under a contract, or in the event that we have disputes with, or lose the services of, any of our existing subcontractors, we may not be able to find suitable alternative subcontractors on a timely basis to complete our work. Costs associated with rectifying any problems caused by our subcontractors may have a material adverse effect on our business, financial conditions and results of operations.

We may be subject to claims in relation to defects attributable to projects undertaken by us, which may result in claims from our customers against us.

We may remain responsible for rectifying any defects or imperfections in relation to works done by us. Should there be a need to undergo rectifications, they are normally typical maintenance works or minor repair works. In the event that substantial rectifications beyond the usual scope are required, we may be required to incur significant time and costs, or even be subject to claims from our customers against us.

We may be subject to fines and penalties as a result of our non-compliance incidents during the Track Record Period.

During the Track Record Period and up to the Latest Practicable Date, our Group had non-compliance incidents, namely (i) failure to obtain the forest seed production and operation license (林木種子生產經營許可證) or engage in seedling plantation and sales activities in accordance with the scope thereof; and (ii) use the land used for protected agriculture (設施農業用地) for non-agricultural purposes. See “Business — Legal proceedings and Non-compliance”.

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There is no assurance that we will not be subject to fines or penalties imposed by the relevant PRC government authorities as a result of these non-compliance incidents, or any order to rectify such non-compliance incidents. In addition, we may incur additional costs to comply with the relevant laws and regulations imposed by the relevant PRC government authorities. Any such development may harm our corporate image and may have an adverse effect on our financial condition and results of operations.

Our research and development efforts may be unsuccessful.

We expect to continue to expend time and resources on research and technological developments in the future. Our research and development efforts may not result in improved technologies or expertise or we may fail to implement these improved technologies or expertise in a timely or cost-efficient manner, which could have a material adverse effect on our business, financial condition and results of operations.

Our business and results of operations may be severely affected due to the outbreak of diseases or epidemic.

An occurrence of diseases or epidemic may cause material disruptions to our business operations. During the outbreak of diseases or epidemic, our customers may delay the commencement date of our projects or temporarily close down the project sites, or we may encounter interruption in the supply of raw materials from our suppliers or experience difficulties in engaging subcontractors and may be required to suspend our business operations temporarily. As a result, we may experience a delay in the overall progress of our projects. For instance, COVID-19 was detected toward the end of 2019 and quickly spread across the world in early 2020. In response to the COVID-19 pandemic, government around the world have imposed travel restrictions and lockdown to contain its spread. Since mid-2020, the outbreak in China has been brought under control, as compared to other countries in the world. See “ Business — Outbreak of COVID-19”. However, there is no assurance that the current containment measures by the PRC government will continue to be effective and if this is the case, it is possible for the PRC government authorities to impose additional restrictions to further contain the spread of COVID-19, which may adversely affect our project execution.

Further, outbreak of diseases or other epidemic or a general apprehension of such outbreaks may lead to the decrease in the number of projects available in the market and awarded to us, which would in turn adversely affect our operational and financial results.

We rely on key management personnel.

Our success depends on the continued services of our senior executives and other key employees. In particular, we rely on the expertise, experience and leadership of our executive Directors and our senior management, who play a vital role in our operation. See “Directors and Senior Management”. If one or more of our senior executives or other key employees are unable or unwilling to continue in their present positions, we may not be able to replace them promptly, or at all, which may severely disrupt our business and affect our results of operations and future prospects.

−42− THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS

If we are unable to retain our existing staff or attract new joiners with similar industry expertise, we may not be able to maintain our operational efficiency and capacity, which in turn may materially disrupt our business operations and adversely affect our results of operations.

Our insurance coverage may not be sufficient to cover the risks related to our operations and losses.

We maintain different types of insurance policies against fire, flooding, wind disaster, blizzard and seedling pest. However, we do not maintain insurance policies for our projects. Our insurance policies may not be adequate to cover all of the risks relating to our business. In addition, as a result of market conditions, premiums and deductibles for our existing insurance policies may increase substantially and, in some instances, our existing insurance may become unavailable or available only for reduced amounts of coverage. Any losses or liabilities which are not covered by our current insurance policies may have a material adverse effect on our business, financial condition, results of operations and prospects.

Our business operations may be adversely affected by the changes of policies and regulations of the PRC government in the ecological and environmental protection industry.

During the Track Record Period, public sector projects accounted for 88.0%, 96.4% and 95.4% of our project revenue recognised. According to the Frost & Sullivan Report, supportive government policies is one of the drivers for the ecological and environmental protection industry. Favourable policies include (i) Master Plan for Major National Ecosystem Protection and Restoration Projects (2021-2035) (全國重要生態系統保護和修復重大工程總體規劃(2021-2035)) jointly issued by the National Development and Reform Commission and the Ministry of Natural Resources* (國家發展與改革委員會和自然資源部); and (ii) the 13th and 14th Five-Year Plan for Forestry Development (“十三五”及“十四五規劃”). The market size is expected to reach approximately RMB4,617.1 billion in 2025, representing the CAGR at approximately 9.2% from 2020 to 2025.

However, we cannot preclude the possibility that the PRC government may change its priority in terms of investing in different economic sectors in the future, resulting in less capital investment in the ecological and environmental protection industry, slowing down the industry growth in general. If such change of government policies, laws and regulation materialise, our financial position and business performance may be materially and adversely affected.

RISKS RELATING TO CONDUCTING BUSINESS IN THE PRC

Our business operations may be materially and adversely affected by any change in the political, economic and social policies and conditions of the PRC.

Our business and results of operations are subject to the political, economic and social policies and conditions of the PRC, as our business activities are conducted in the PRC. Our ability to conduct and expand our business operations in the PRC depends on a number of factors that are beyond our control, including macro-economic and other market conditions and credit availability from financial institutions. Any change in the political, economic and social policies and conditions of the PRC may bring uncertainty to our business operations and may materially and adversely affect our prospects and results of operations. While the PRC government has undergone various economic reforms in the

−43− THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS last few decades, many of such reforms are of an experimental nature and are expected to be refined, adjusted and modified from time to time based on economic and social conditions. In addition, the scope, application and interpretation of the laws and regulations relating to such reforms may not be entirely clear. Such refinement, adjustment or modification may impact our business operations in ways that we cannot predict and any uncertainty in the scope, application and interpretation of the relevant laws and regulations may materially and adversely affect our results of operations and financial condition.

The PRC’s legal system embodies uncertainties that could materially and adversely affect our business and results of operations

All of our operations are conducted in the PRC. Our operations are therefore generally affected by and subject to the PRC legal system, laws and regulations. However, the PRC’s legal system is still evolving. The enforcement of laws or contracts based on existing laws may be uncertain, and it may be difficult to obtain swift and equitable enforcement, or to obtain enforcement of a judgment by a court of another jurisdiction. The PRC legal system is based on written statutes and their interpretation, and prior court decisions may merely be persuasive to the courts but have limited weight as precedents. The relative inexperience of the PRC’s judiciary creates additional uncertainty as to the outcome of any litigation. In addition, interpretation of statutes and regulations may be subject to government policies reflecting domestic political changes.

Rules and regulations in the PRC on investment and loans by offshore holding companies to PRC subsidiaries may delay or prevent us from using the [REDACTED] from the [REDACTED] to make additional capital contributions or loans to our PRC subsidiaries, which could harm our liquidity and our ability to expand our business.

We, as an offshore holding company, may make additional capital contributions or loans to our PRC subsidiaries, including from the [REDACTED] of the [REDACTED]. Any loan to our PRC subsidiaries is subject to PRC laws and regulations. For example, loans from us to our wholly-owned PRC subsidiaries, is required to be registered with the SAFE or its local branches. We may also decide to finance our wholly-owned PRC subsidiaries by means of capital contributions. According to the relevant PRC regulations on foreign-invested enterprises in China, capital contributions by us to our PRC subsidiaries are subject to the requirement of submitting necessary information to MOFCOM or its local branches through the enterprise registration system.

There is no assurance that, in relation to all future loans or capital contributions by us to our PRC subsidiaries, we will be able to complete all required government registrations or recording in a timely manner or at all. If we fail to complete such registrations or recording, our ability to use the [REDACTED] of the [REDACTED] may be affected, which may in turn materially and adversely affect our liquidity and our ability to fund and expand our business.

Pursuant to the SAFE Circular on Reforming the Management Approach Regarding the Foreign Exchange Capital Settlement of Foreign-invested Enterprises (國家外匯管理局關於改革外商投資企業外匯資本金結匯管理方式的通知) (the “Circular 19”), which became effective on 1 June 2015, and the SAFE Circular on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts《國家外匯管理局關於改革和規範資本項目結匯管理政策的通知》 ( ) (the “Circular 16”) promulgated by the SAFE on 9 June 2016, foreign-invested enterprises shall be

−44− THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS allowed to settle foreign exchange capital on a discretionary basis. While Circular 19 and Circular 16 unlock the restrictions on foreign exchange capital settlement, it is uncertain how the PRC authorities will interpret, apply and enforce Circular 19 and Circular 16 and whether Circular 19 and Circular 16 will be effective in unlocking the restrictions on foreign exchange capital settlement. The PRC government’s control over currency conversion may affect the value of our Shares and limit our ability to utilise our cash effectively.

The PRC government’s control over currency conversion may affect the value of our Shares and limit our ability to utilise our cash effectively.

The PRC government has imposed controls on the conversion between RMB and foreign currencies and, in certain cases, the remittance of foreign currencies into and out of the PRC. Pursuant to the existing PRC foreign exchange regulations, payments of current account items, such as dividend distributions and interest payments, can be made in foreign currencies without prior approval from the SAFE, but subject to certain procedural requirements. However, approval from or registration with the SAFE is required where RMB is to be converted into other foreign currencies and remitted out of the PRC to pay capital expenses such as the repayment of loans denominated in foreign currencies.

We cannot assure you that the PRC regulatory authorities will not impose restrictions on foreign exchange transactions for current account items in the future. Any shortage in the availability of foreign currency may restrict the ability of our PRC subsidiaries to remit sufficient foreign currency to pay dividend or make other payments to their holding companies or our Company, or otherwise satisfy their obligations that are required to be settled in foreign currency. If the foreign exchange control system prevents us from obtaining sufficient foreign currency to satisfy our currency demands, we may not be able to pay dividend in foreign currencies to our Shareholders. In addition, since some of our future cash flow derived from our operations will be denominated in RMB, any existing and future restriction on currency exchange may limit our ability to purchase or obtain goods and services in countries outside of the PRC, or otherwise limit or impair our business activities that are conducted in foreign currencies.

It may be difficult to effect service of process in relation to disputes brought in courts outside the PRC on, or to enforce judgments obtained from non-PRC courts against, us in the PRC.

There is no assurance that you will be able to effect service of process in connection with disputes brought in courts outside the PRC on, or to enforce judgments obtained from non-PRC courts against, us in the PRC. Furthermore, the PRC does not have treaties providing for the reciprocal recognition and enforcement of judgments awarded by courts with most western countries. It may therefore be difficult or even impossible to enforce against us any judgment obtained from non-PRC courts.

Dividend payable by us to our non-PRC Shareholders or gain realised on the transfer of our Shares may be subject to PRC income tax under PRC tax laws.

Pursuant to the EIT Law and the EITIR, subject to any applicable tax treaty or arrangement between the PRC and your jurisdiction of residence that provides a different income tax arrangement, the payment of dividend by a PRC resident enterprise to investors that are non-PRC resident enterprises (including enterprises that do not have an establishment or place of business in the PRC

−45− THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS and enterprises that have an establishment or place of business but their income is not effectively connected with the establishment or place of business) or any gain realised on the transfer of shares by such investors is generally subject to PRC income tax at a rate of 10.0%, to the extent such dividend has its source in the PRC or such gain is regarded as income derived from sources within the PRC. Under the PRC Individual Income Tax Law (中華人民共和國個人所得稅法) and its implementation rules (中華人民共和國個人所得稅法實施條例), dividend from sources within the PRC paid to foreign individual investors who are not PRC residents and gains from PRC sources realised by such investors on the transfer of shares are generally subject to a PRC income tax at a rate of 20.0%, subject to any reduction or exemption set out in applicable tax treaties and PRC laws.

It is uncertain whether we will be considered as a PRC resident enterprise. If we are regarded as a PRC resident enterprise, dividend payable by us with respect to our Shares, or any gain realised from the transfer of our Shares, may be treated as income derived from sources within the PRC and may be subject to PRC income tax, subject to the interpretation, application and enforcement of the PRC tax laws by the relevant tax authorities. If we are required under the PRC tax laws to withhold PRC income tax on dividend payable to our non-resident Shareholders, or if you are required to pay PRC income tax on the transfer of your Shares, the value of your investment in our Shares may be materially and adversely affected.

Dividend payable by our PRC subsidiaries to our Hong Kong subsidiaries may not qualify for the reduced PRC withholding tax rate.

Pursuant to the EIT Law and the EITIR, the payment of dividend by a PRC resident enterprise to investors that are non-resident enterprises is subject to PRC withholding tax at a rate of 10.0%. Under the Agreement between the Mainland China and Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion with Respect to Taxes on Income (內地和香港特別行政區關於對所得避免雙重徵稅和防止偷漏稅的安排), the withholding tax rate will be reduced to 5.0% if the PRC enterprise distributing dividend is owned as to 25.0% or more by a Hong Kong resident enterprise. However, according to the Notice of the SAT on the Issues Concerning the Application of the Dividend Clauses of Tax Agreements (國家稅務總局關於執行稅收協定股息條款有關問題的通知) issued by the SAT on 20 February 2009, if the main purpose of a transaction or an arrangement is to obtain preferential tax treatment, the PRC tax authorities will have the discretion to adjust the preferential tax rate for which an offshore entity would otherwise be eligible. There is no assurance that we will enjoy the 5.0% reduced withholding tax rate in relation to dividend payable by our PRC subsidiaries to our Hong Kong subsidiaries.

RISKS RELATING TO THE [REDACTED]

There is no existing public market for our Shares and their liquidity and market price may fluctuate.

Prior to the [REDACTED], there has not been a public market for our Shares. We have applied for the [REDACTED] of and [REDACTED] in our Shares on the Stock Exchange. However, even if approved, we cannot assure you that an active and liquid public trading market for our Shares will develop following the [REDACTED], or, if it does develop, it will be sustained. The financial market in Hong Kong and other countries have in the past experienced significant price and volume fluctuations. Volatility in the price of our Shares may be caused by various factors, some of which are

−46− THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS outside our control and may be unrelated or disproportionate to our operating results. We cannot assure you that the liquidity and market price of our Shares will not fluctuate. The [REDACTED] and the [REDACTED] for our Shares were the results of negotiations among us (acting for itself and on behalf of the [REDACTED] and the [REDACTED] (for itself and on behalf of the [REDACTED]) and may not be indicative of prices that will prevail in the trading market after the [REDACTED]. Our Shareholders may therefore not be able to sell their Shares at or above the [REDACTED].

Investors of our Shareholders may experience an immediate dilution in the book value of their Shares subscribed or purchased in the [REDACTED] and may experience further dilution if we issue additional Shares in the future.

Based on the [REDACTED], the [REDACTED] is expected to be higher than the net tangible book value per Share prior to the [REDACTED]. Therefore, you will experience an immediate dilution in pro forma net tangible book value per Share. In addition, we may issue additional Shares or equity-related securities in the future or to raise additional funds, finance acquisitions or for other purposes. If we issue additional Shares or equity-related securities in the future, the percentage ownership of our existing Shareholders may be diluted. In addition, such new securities may have preferred rights, options or pre-emptive rights that make them more valuable than or senior to the Shares.

Our Controlling Shareholders, may exert substantial influence over our operation and may not act in the best interests of our public Shareholders.

Immediately following the [REDACTED], our Controlling Shareholders in aggregate will own [REDACTED]% of our issued share capital, without taking into account of the Shares which may be issued upon the exercise of the [REDACTED] or the options granted under the [REDACTED] Share Option Schemes or to be granted under the Post-[REDACTED] Share Option Scheme. Therefore, they will be able to exercise significant influence over all matters requiring Shareholders’ approval, including the appointment of Directors and the approval of significant corporate transactions. They will also have veto power with respect to any shareholder action or approval requiring a majority vote except where they are required by relevant rules to abstain from voting. Such concentration of ownership also may have the effect of delaying, preventing or deterring transactions or matters that would otherwise benefit our other Shareholders. The interests of our Controlling Shareholder may not always align with our Company or your best interests. If the interests of our Controlling Shareholders conflict with the interests of our Company or our other Shareholders, or if our Controlling Shareholders cause our business to pursue strategic objectives that conflict with the interests of our Company or other Shareholders, our Company or other Shareholders, including you, may be disadvantaged as a result.

Future sales or issuances or perceived sales or issuances of our Shares could have a material adverse effect on the prevailing market price of our Shares and our ability to raise additional capital.

Based on our [REDACTED] structure as outlined in “Structure and Conditions of the [REDACTED]” in this document, there will be [REDACTED] Shares outstanding immediately following the [REDACTED], assuming no exercise of the [REDACTED] and not taking into account

−47− THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS options which were granted under the [REDACTED] Share Option Schemes or to be granted under the Post-[REDACTED] Share Option Scheme. Our Controlling Shareholders are subject to a lock-uppursuant to Rule 10.07 of the Listing Rules for a period of six months after the [REDACTED] Date. In addition, the shareholders’ agreement dated 5 December 2017 imposes transfer restrictions on SHA Existing Shareholders, some of which are our Controlling Shareholders, after the completion of the [REDACTED]. See “History, Reorganisation and Group Structure — [REDACTED] — Investor Group [REDACTED] Investment Overview” for further details. However, after the expiry of this lock-up period, subject to certain conditions including the transfer restrictions as disclosed above, our Controlling Shareholders are free to dispose of their Shares at their own discretion and the sale or disposal of any substantial amounts of our Shares in the public market or the perception that such sales could occur, could have a material and adverse effect on the market price of our Shares. This may also consequently affect our future ability to raise capital through [REDACTED] of our Shares.

You should read the entire document and we strongly caution you not to place any reliance on any information contained in the press articles, other media and/or research analyst reports regarding us, our business, our industry and the [REDACTED].

There may be subsequent to the date of this document but prior to the completion of the [REDACTED], press, media, and/or research analyst coverage regarding us, our business, our industry and the [REDACTED]. You should rely solely upon the information contained in this document in making your investment decisions regarding our Shares and we do not accept any responsibility for the accuracy or completeness of the information contained in such press articles, other media and/or research analyst reports nor the fairness or the appropriateness of any forecasts, views or opinions expressed by the press, other media and/or research analyst regarding the Shares, the [REDACTED], our business, our industry or us. We make no representation as to the appropriateness, accuracy, completeness or reliability of any such information, forecasts, views or opinions expressed or any such publications. To the extent that such statements, forecasts, views or opinions are inconsistent or conflict with the information contained in this document, we disclaim them. Accordingly, prospective investors are cautioned to make their investment decisions on the basis of information contained in this document only and should not rely on any other information.

You may experience difficulties in protecting your interests because we are a Cayman Islands company and the laws of the Cayman Islands for minority shareholders protection may be different from those under the laws of Hong Kong and other jurisdictions.

Our corporate affairs are governed by, among other things, the Articles of Association, the Companies Act and the common law of the Cayman Islands. The rights of Shareholders to take action against our Directors, actions by minority shareholders and the fiduciary responsibilities of our Directors to us under the laws of the Cayman Islands are to a large extent governed by the Articles of Association, the Companies Act and the common law of the Cayman Islands. The laws of the Cayman Islands relating to the protection of the interests of minority shareholders differ in some respects from those in Hong Kong and other jurisdictions. Such differences mean that the remedies available to our minority Shareholders may be different from those they would have under the laws of Hong Kong or other jurisdictions. See “Appendix III — Summary of the Constitution of our Company and the Cayman Islands Company Law”.

−48− THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS

We cannot guarantee the accuracy of certain facts and statistics contained in this document.

Certain facts and statistics in this document have been derived from various official government and other publications generally believed to be reliable. We believe that the sources of such 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 in any material respect or that any fact has been omitted that would render such information false or misleading in any material respect. Such information has not been independently verified by us, the [REDACTED], or any of the Sole Sponsor, the [REDACTED], [REDACTED], [REDACTED], the [REDACTED] or any of our or their respective directors, officers or representatives or any other person involved in the [REDACTED] and no representation is given as to its accuracy. Due to possibly flawed or ineffective collection methods or discrepancies between published information and market practices, the facts and statistics in this document may be inaccurate or may not be comparable to facts and statistics produced with respect to other economies. Further, we cannot assure you that they are stated or compiled on the same basis or with the same degree of accuracy (as the case may be) in other jurisdictions. As a result, you should not unduly rely upon such facts and statistics contained in this document.

Forward-looking statements contained in this document are subject to risks and uncertainties.

This document contains certain statements that are “forward-looking” and uses forward looking terminology such as “anticipate”, “estimate”, “believe”, “expect”, “may”, “plan”, “consider”, “should”, “would”, and “will”. These statements include, among other things, the discussion of our growth strategy and the expectations of our future operations, liquidity and capital resources. Purchasers of our [REDACTED] are cautioned that reliance on any forward-looking statement 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 those identified in the risk factors discussed above. In light of these and other uncertainties, the inclusion of forward-looking statements in this document should not be regarded as representations or warranties by us that our Company’s plans and objectives will be achieved and these forward-looking statements should be considered in light of various important factors, including those set out in this section. We do not intend to update these forward-looking statements in addition to our on-going disclosure obligations pursuant to the Listing Rules or other requirements of the Stock Exchange. Investors should not place undue reliance on such forward-looking information.

−49− THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. WAIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES

In preparation for the [REDACTED], our Company has sought the following waivers from strict compliance with the relevant provisions of the Listing Rules.

MANAGEMENT PRESENCE IN HONG KONG

Pursuant to Rule 8.12 of the Listing Rules, we must have sufficient management presence in Hong Kong, which normally means that at least two of our executive Directors must be ordinarily resident in Hong Kong. Our Group’s principal business and operations are located, managed and conducted in the PRC through its operating subsidiaries established in the PRC. None of our executive Directors is a Hong Kong permanent resident or is ordinarily based in Hong Kong. The executive Directors will continue to be based in the PRC after the [REDACTED] to manage the Group’s business. As a result, our Company does not, and will not, in the foreseeable future, have a sufficient management presence in Hong Kong as required under Rule 8.12 of the Listing Rules. Further, it would be impractical and commercially unnecessary for our Company to appoint additional executive Directors who is ordinarily resident in Hong Kong or to relocate its existing PRC based executive Directors to Hong Kong.

Accordingly, we [have] applied to the Stock Exchange for, and the Stock Exchange [has granted], a waiver from strict compliance with the requirements under Rule 8.12 of the Listing Rules, subject to the condition that the following measures and arrangements are made for maintaining regular and effective communication with the Stock Exchange:

(i) we have appointed two authorised representatives pursuant to Rule 3.05 of the Listing Rules, who will act as our Company’s principal channel of communication with the Stock Exchange. The two authorised representatives of our Company are Ms. Tie Ying, our executive Director and Mr. Chen Kun, our company secretary, who is an ordinary resident in Hong Kong. Each of our authorised representatives will be available to meet with the Stock Exchange within a reasonable period of time upon the request of the Stock Exchange and will be readily contactable by telephone, facsimile and/or email. Each of our authorised representatives is authorised to communicate on behalf of our Company with the Stock Exchange;

(ii) each of our authorised representatives has means to contact all members of the Board (including the non-executive Directors and the independent non-executive Directors) promptly at all times as and when the Stock Exchange wishes to contact our Directors for any matters. To enhance the communication between the Stock Exchange, our authorised representatives and our Directors, we have implemented a policy to ensure that (a) each Director will provide his/her respective office phone number, mobile phone number and email address to our authorised representatives and (b) each Director and authorised representative will provide, if available, his/her respective office phone number, mobile phone number and email address to the Stock Exchange. In the event that a Director expects to travel or is out of the office, he/she will provide the phone number of the place of his/her accommodation or other means of communication to our authorised representatives;

−50− THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. WAIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES

(iii) our Directors, who are not ordinarily resident in Hong Kong, have confirmed that they possess or can apply for valid travel documents to visit Hong Kong and are able to come to Hong Kong, when required, to meet with the Stock Exchange upon reasonable notice;

(iv) we have, in compliance with Rule 3A.19 of the Listing Rules, appointed Shenwan Hongyuan Capital (H.K.) Limited as our compliance adviser who will, among other things, in addition to the two authorised representatives of our Company, act as a channel of communication between the Stock Exchange and our Company for the period commencing on the [REDACTED] Date and ending on the date on which our Company complies with Rule 13.46 of the Listing Rules in respect of its financial results for the first full financial year commencing after the [REDACTED] Date. Shenwan Hongyuan Capital (H.K.) Limited will have full access at all times to the two authorised representatives of our Company and our Directors; and

(v) we will also retain legal advisers to advise on on-going compliance requirements and other issues arising under the Listing Rules and other applicable laws and regulations in Hong Kong after [REDACTED].

APPOINTMENT OF JOINT COMPANY SECRETARIES

Pursuant to Rules 3.28 and 8.17 of the Listing Rules, we must appoint a company secretary who, by virtue of his/her academic or professional qualifications or relevant experience, is, in the opinion of the Stock Exchange, capable of discharging the functions of the company secretary. Note 1 to Rule 3.28 of the Listing Rules further provides that the Stock Exchange considers the following academic or professional qualifications to be acceptable:

(a) a member of The Hong Kong Institute of Chartered Secretaries;

(b) a solicitor or barrister (as defined in the Legal Practitioners Ordinance); and

Note 2 to Rule 3.28 of the Listing Rules provides that, in assessing “relevant experience”, the Stock Exchange will consider the individual’s:

(i) length of employment with the issuer and other issuers and the roles he/she played;

(ii) familiarity with the Listing Rules and other relevant law and regulations including the SFO, Companies Ordinance, the Companies (Winding Up and Miscellaneous Provisions) Ordinance and the Takeovers Code;

(iii) relevant training taken and/or to be taken in addition to the minimum requirements under Rule 3.29 of the Listing Rules; and

(iv) professional qualifications in other jurisdictions.

−51− THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. WAIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES

Our Company has appointed Ms. Bai Xueying as one of our joint company secretaries on 9 November 2020, responsible for corporate governance matters such as meeting of our Board and Shareholders, participating in formulating our institutional process system and promoting and supervising the effectiveness of implementation of our internal control system. She has extensive experience in board and corporate management matters but presently does not possess any of the qualifications under Rules 3.28 and 8.17 of the Listing Rules. Thus, Ms. Bai Xueying may not be able to fulfil the requirements of the Listing Rules. Therefore, we have appointed Mr. Chen Kun, a solicitor of the High Court of Hong Kong, who fully meets the requirements under Rules 3.28 and 8.17 of the Listing Rules, to act as the other joint company secretary. Mr. Chen Kun will provide assistance to Ms. Bai Xueying for an initial period of three years from the [REDACTED] Date to enable Ms. Bai Xueying to acquire the “relevant experience” under Note 2 to Rule 3.28 of the Listing Rules so as to fully comply with the requirements set out under Rules 3.28 and 8.17 of the Listing Rules.

Both the compliance adviser and the Hong Kong legal advisers of our Company will assist Ms. Bai Xueying in relation to Hong Kong corporate governance practices and regulatory compliance, ongoing compliance obligations under the Listing Rules and the applicable laws and regulations as and when required. In addition, Ms. Bai Xueying will endeavour to attend relevant trainings and familiarise herself with the Listing Rules and duties required of a company secretary of an issuer [REDACTED] on the Stock Exchange.

We [have] applied to the Stock Exchange for, and the Stock Exchange [has granted] us, a waiver from strict compliance with the requirements of Rules 3.28 and 8.17 of the Listing Rules. The waiver is valid for an initial period of three years from the [REDACTED] Date, and is granted on the condition that we engage Mr. Chen Kun, who possesses all the requisite qualifications under Rule 3.28 of the Listing Rules, to assist Ms. Bai Xueying in discharging her duties as a joint company secretary and in gaining the “relevant experience” as required under Note 2 to Rule 3.28 of the Listing Rules.

Before the expiration of the initial three-year period, the qualifications of Ms. Bai Xueying will be re-evaluated to determine whether the requirements as stipulated in Rules 3.28 and 8.17 of the Listing Rules can be satisfied and whether the need for on-going assistance will continue. It is expected that Ms. Bai Xueying will be able to fulfil all the requirements stipulated at the end of the initial three-year period.

−52− THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED]

[REDACTED]

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DIRECTORS

Name Residential address Nationality

Executive Directors

Mr. Zhao Quansheng (趙泉勝) No. 102, Unit 2, No. 3 Building Chinese District D Qiaohua Century Village University East Road Saihan District Hohhot Inner Mongolia PRC

Mr. Ma Liming (馬黎明) 6#-1-1 Chinese Lingnan Zhujing Shengle Economic Park Hohhot Inner Mongolia PRC

Ms. Tie Ying (鐵英) No. 1202, Unit 3 Chinese No.1 Upper Building Dianli Jia Yuan Saihan District Hohhot Inner Mongolia PRC

Ms. Guo Jinchun (郭瑾春) No. 402, Unit 3, No. 2 Building Chinese Fifth District Juhai City Saihan District Hohhot Inner Mongolia PRC

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Name Residential address Nationality

Non-executive Directors

Ms. Cui Hanzhang (崔含章) Flat 6J, Block 2 Chinese Chao Yang Park 6 South Road Chao Yang District Beijing PRC

Mr. Cheng Chi Leung Albert Flat 4A, Block A British (鄭之亮) Pearl Gardens 7 Conduit Road Hong Kong

Independent non-executive Directors

Mr. Sun Baoping (孫保平) Unit 502, Unit 1, No.11 Building Chinese Beijing Forestry University Haidian District Beijing PRC

Ms. Ge Xiaoping (葛曉萍) Room 2501, No.15 Chinese Hai Xia International Community Phase II Siming District Xiamen PRC

Ms. Hao Chunhong (郝春虹) B1-1101, Tahiti Villa District Chinese No. 6, Genghis Khan Street Huimin District Hohhot Inner Mongolia PRC

See “Directors and Senior Management” in this document for further information of our Directors.

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PARTIES INVOLVED IN THE [REDACTED]

Sole Sponsor Shenwan Hongyuan Capital (H.K.) Limited (A licensed corporation carrying on type 1 (dealing in securities), type 4 (advising on securities) and type 6 (advising on corporate finance) regulated activities as defined under the SFO) Level 17 28 Hennessy Road Hong Kong

[REDACTED] [REDACTED]

Auditor and Reporting Accountant Ernst & Young 27/F, One Taikoo Place 979 King’s Road Quarry Bay Hong Kong

Legal Advisers to our Company as to Hong Kong law Jia Yuan Law Office 17/F No. 238 Des Voeux Road Central Sheung Wan Hong Kong

as to PRC law Commerce & Finance Law Offices 6/F, NCI Tower A12, Jianguomenwai Avenue Chaoyang District Beijing PRC

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As to Cayman Islands law Appleby Suites 4201-03&12 42/F One Island East Taikoo Place 18 Westlands Road Quarry Bay Hong Kong

Legal Advisers to the Sole Sponsor as to Hong Kong law and the [REDACTED] Deacons 5th Floor Alexandra House 18 Chater Road Central Hong Kong

as to PRC law AllBright Law Offices Room 02-07 33/F and Room 01-02 35/F Guangzhou International Finance Center No.5 Zhujiang West Road Tianhe District Guangzhou PRC

Industry Consultant Frost & Sullivan (Beijing) Inc., Shanghai Branch Co. 1014-1018 Tower B 500 Yunjin Road Shanghai PRC

Independent Valuer Jones Lang LaSalle Corporate Appraisal and Advisory Limited Level 7 One Taikoo Place 979 King’s Road Quarry Bay Hong Kong

Compliance Adviser Shenwan Hongyuan Capital (H.K.) Limited (A licensed corporation carrying on type 1 (dealing in securities), type 4 (advising on securities) and type 6 (advising on corporate finance) regulated activities as defined under the SFO) Level 17 28 Hennessy Road Hong Kong

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[REDACTED] [REDACTED]

[REDACTED] China Mengyang Ecological Company Limited Jayla Place Wickhams Cay 1 Road Town Tortola British Virgin Islands

China Mengduan Ecological Company Limited Jayla Place Wickhams Cay 1 Road Town Tortola British Virgin Islands

China Mengli Ecological Company Limited Jayla Place Wickhams Cay 1 Road Town Tortola British Virgin Islands

China Mengsang Ecological Company Limited Jayla Place Wickhams Cay 1 Road Town Tortola British Virgin Islands

China Shenglin Ecological Company Limited Jayla Place Wickhams Cay 1 Road Town Tortola British Virgin Islands

China Mengsheng Ecological Company Limited Jayla Place Wickhams Cay 1 Road Town Tortola British Virgin Islands

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China Mengshan Ecological Company Limited Jayla Place Wickhams Cay 1 Road Town Tortola British Virgin Islands

China Mengsong Ecological Company Limited Jayla Place Wickhams Cay 1 Road Town Tortola British Virgin Islands

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Registered office Windward 3 Regatta Office Park P.O. Box 1350 Grand Cayman KY1-1108 Cayman Islands

Principal place of business in Unit 2413A, 24/F Hong Kong Lippo Centre Tower One 89 Queensway Admiralty Hong Kong

Principal place of business in The Fifth Farm the PRC Shengle Economic Park Helinger County Hohhot Inner Mongolia PRC

Company’s website https://www.mengshu.cn/ (information contained in this website does not form part of this document)

Joint Company Secretaries Ms. Bai Xueying (白雪瑩女士) The Fifth Farm Shengle Economic Park Helinger County Hohhot City Inner Mongolia PRC

Mr. Chen Kun (陳坤先生) Solicitor Unit 2413A, 24/F Lippo Centre Tower One 89 Queensway Admiralty Hong Kong

Authorised representatives (for the Ms. Tie Ying (鐵英女士) purpose of the Listing Rules) No. 1202, Unit 3, No. 1 Upper Building Dianli Jia Yuan Saihan District Hohhot Inner Mongolia PRC

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Mr. Chen Kun (陳坤先生) Solicitor Unit 2413A, 24/F Lippo Centre Tower One 89 Queensway Admiralty Hong Kong

Audit committee Ms. Ge Xiaoping (葛曉萍) (Chairman) Mr. Sun Baoping (孫保平) Ms. Hao Chunhong (郝春虹)

Remuneration committee Mr. Sun Baoping (孫保平) (Chairman) Ms. Ge Xiaoping (葛曉萍) Ms. Cui Hanzhang (崔含章)

Nomination committee Mr. Zhao Quansheng (趙泉勝) (Chairman) Ms. Ge Xiaoping (葛曉萍) Ms. Hao Chunhong (郝春虹)

Principal bankers Agriculture Development Bank of China 1st Floor, South Building, Yuetan Mansion, 2 Jia Yuetan North Street, Xicheng District, Beijing PRC

Bank of Inner Mongolia Co., Ltd, Operation Department 33 Tengfei South Road, Saihan District, Hohhot PRC

China CITIC Bank Corporation Limited, Hohhot Branch No. 68 Xinhua Street, Huimin District, Hohhot PRC

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Inner Mongolia Hohhot Jingu Rural Commercial Bank Limited Company, Zhao Wu Da Branch Office Building Century Six Road Jinqiao Development Zone Saihan District Hohhot PRC

China Construction Bank Corporation, Anqing East Branch 126 Huazhong West Road Yingjiang District Anqing PRC

[REDACTED] [REDACTED]

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This and other sections of this document contain information and statistics relating to our industry and related industry sectors, some of which have been derived from official government sources and from the report independently prepared by Frost & Sullivan. We believe that these sources are appropriate sources for such information and statistics and have taken reasonable care in extracting and reproducing such information and statistics. We have no reason to believe that such information or statistics are materially false or misleading or that any fact has been omitted that would render such information or statistics materially false or misleading. Such information and statistics have not been independently verified by us, the Sole Sponsor, the [REDACTED], the [REDACTED], the [REDACTED] or any other party involved in the [REDACTED] and no representation is given as to their accuracy. Accordingly, you should not place undue reliance on such information or statistics.

SOURCE OF INFORMATION

We have commissioned Frost & Sullivan to conduct market research and prepare a report on ecological forest plantation industry, ecological restoration industry and urban and rural greening industry (collectively ecological and environmental protection industry) with the [REDACTED] (the Frost & Sullivan Report). Frost & Sullivan is an independent global consulting firm founded in 1961 in New York that offers industry research and market strategies. We were charged RMB500,000 by Frost & Sullivan in connection with its preparation of the report, which our Directors believe that such fee reflects market rates for reports of this type. Our payment of such fee is not contingent upon the results of its research and analysis.

In preparing the Frost & Sullivan Report, Frost & Sullivan conducted detailed primary research which involved in-depth telephone and face-to-face interviews with industry participants. Frost & Sullivan also conducted secondary research which involved reviewing annual reports, industry publications and data based on its own research database. Frost & Sullivan obtained the figures for various market size estimates from historical data analysis plotted against macroeconomic data, and considered related industry drivers. Its forecasting methodology integrates several forecasting techniques with its internal analytics of critical market elements investigated in connection with its market research work. These elements primarily include identification of market drivers and restraints and integration of expert opinions. Frost & Sullivan has assumed: (i) the macro economy of the PRC is likely to return to steady growth after the outbreak of COVID-19; and (ii) the social, economic and political environment in the PRC is likely to remain stable in the forecast period. Our Directors have confirmed that after taking reasonable care, there is no adverse change in the market information since the date of the Frost & Sullivan Report which may qualify, contradict or have an impact on the information in this section.

OVERVIEW OF ECOLOGICAL FOREST PLANTATION INDUSTRY

Definition and Classification of Ecological Forest Plantation

Ecological forest plantation projects generally refer to the creation of forests with long-term ecological and environmental sustainability through planned afforestation and maintenance works.

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Based on forest type, ecological forest plantation projects can be divided into the followings:

National Reserve Forests: Forests that are suitable for the cultivation of timber or other natural resources in order to meet the needs of economic and social development.

Carbon Sink Forests: The carbon sink forests refer to a special type of commercial forests, which aim to cope with global warming via utilising the function of carbon sink, and the amount of fixed carbon is tradable in the market as carbon emission rights.

Shelter Belt Forests: Forests and artificial forests that built with protection functions for water and soil maintenance, water source conservation, climate regulation, pollution reduction, and mitigation of natural disasters.

Commercial Forests: Commercial forests refer to the forests with related supporting facilities for non-timber products production and commercial activities. The non-timber products include fruits, nuts, oil, spices, industrial raw materials and medicinal materials, etc. The commercial activities include forest eco-tourism, and forest-based planting and animal breeding, etc.

Value Chain Analysis

Upstream Midstream Downstream

Technology and Labor Provider Fire, Forest Diseases and Pest Control Company

Tree Seedling Supplier Ecological Forest Subcontractors and Plantation Company / Other Services Client Project Investigation and Forestry Bureau Providers Consulting Company Planning and Design Company

Source: Frost & Sullivan

Upstream sector includes companies such as technology and labour providers and seedling suppliers. Ecological forest plantation companies are positioned in the midstream sector and regarded as the main contractors, whose main activity is afforestation.

Additionally, all levels of Forestry Bureaus and their affiliated ecological forest plantation companies are also the major participants in the midstream sector. They are mainly involved in the construction projects of shelter belt forests and national reserve forests. In particular, they are responsible for forest protection in their localities and are required to plant trees annually based on the allocated afforestation assignments from their superior authorities. Some manufacturing companies whose major raw materials include timber or other forest products may also participate in the ecological forest plantation industry via constructing their own forests.

The clients of the ecological forest plantation industry mainly include governments, government-affiliated institutions, companies purchasing carbon emission right, and manufacturing companies whose major raw materials include timber or other forest products, etc.

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Market Size Analysis

Market Size of Ecological Forest Plantation Industry in the PRC, by Project Type, 2016-2025E

CAGR 2016-2020 2020-2025E National Reserve Forests 23.4% 14.2% Shelter Belt Forests 14.5% 6.1% Commercial Forests 8.8% 9.3% Total 15.1% 9.0% RMB Billion 400 National Reserve Forests 366.9 348.1 350 Shelter Belt Forests 330.7 308.1 300 Commercial Forests 286.2 116.8 99.2 106.3 238.5 88.0 250 214.5 76.8 187.6 194.9 60.1 200 58.0 136.0 29.0 40.6 176.5 150 158.7 165.9 171.8 25.9 151.9 100 111.5 112.5 111.2 131.2 76.4 50 65.6 70.0 73.6 33.7 47.1 41.8 45.3 47.2 57.5 61.4 0 2016 2017 2018 2019 2020 2021E 2022E 2023E 2024E 2025E

Notes: Considering the business nature of carbon sink forests is for commercial trading, and the market size of carbon sink forests is relatively small comparing to other types of forests, the market size of carbon sink forests is included in the market size of commercial forests. For illustrative purpose, the market size of carbon sink forests is illustrated separately in the paragraph “Market Size of Carbon Sink Forests” below.

Source: Frost & Sullivan

The rapid economic growth of the PRC for the past decades had environmental consequences including the deterioration of its ecological environment and mass carbon emissions. According to the World Bank and National Forestry and Grassland Administration, as of 2020, the PRC’s forest area per person is approximately 25% of the global average, and according to the World Resources Institute, as of 2020, the PRC is the world’s biggest emitter of carbon dioxide. In response, the PRC government has put great emphasis on afforestation and reduction of carbon emissions, and President Xi Jinping has stated that “Clear waters and green mountains are as valuable as gold and silver mountains” (綠水青山就是金山銀山). Guided by this slogan, the PRC government has formulated a number of policies and initiatives to protect the natural environment throughout the years. The National Development and Reform Commission and the Ministry of Natural Resources has unveiled a plan that includes major projects to protect and restore key ecosystems from 2021 to 2035 (全國重要生態系統保護和修復重大工程總體規劃(2021-2035年)) that determined to increase the national forest coverage rate from 23.0% in 2020 to 26.0% by 2035, with the to-be-created forest area of approximately 297.6 million sq.m., approximately equivalent to 1.6 times the size of Guangdong. Besides, according to the commitment made by President Xi Jinping in the United Nations General Assembly (UNGA) on 22 September 2020, the PRC aims to achieve carbon neutrality by 2060, which will promote the construction of carbon sink forests as well as all kinds of forests. These all have created a supporting and positive environment for the further development of the ecological forest plantation industry. Driven by the government policy, the market size of ecological forest plantation in the PRC went through noticeable growth from 2016 to 2020 at a CAGR of 15.1%. Among all forest types, shelter belt forests accounted for the largest market share, as the PRC government emphasizes soil erosion control and sand storm prevention. The market size of national reserve forests increased rapidly at a CAGR of 23.4% from 2016 to 2020. As 2021 is the beginning year of 14th Five Year Plan, governments are expected to invest in ecological forest plantation to meet the target national forest coverage rate of 24.1% set by the 14th Five Year Plan. Looking forward, the market size of

−69− THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. INDUSTRY OVERVIEW ecological forest plantation is expected to continuously benefit from the supportive environment, the huge demand for shelter belt forests and a series of government policies as detailed in the paragraph headed “Supportive government policies for ecological forest plantation industry” in this section and grow at a CAGR of 9.0%, to reach RMB366.9 billion in 2025.

Market Size of Carbon Sink Forests in the PRC, 2016-2025E

CAGR 2016-2020 2020-2025E Carbon Sink Forests 28.2% 23.0% RMB Billion 8 7.6 7 6.5 6 5.4 5 4.4 3.9 4 3 2.7 1.9 2 1.5 1.0 1.1 1 0 2016 2017 2018 2019 2020 2021E 2022E 2023E 2024E 2025E

Source: Frost & Sullivan

Due to the supportive government policies for combating global warming, the market size of carbon sink forests experienced significant growth from 2016 to 2020 at a CAGR of 28.2%. In the future, as the government’s policies for resolving global warming are gradually enhanced, it is predicted that the market size is expected to reach RMB7.6 billion in 2025, representing a CAGR of 23.0%.

Market Drivers Analysis

Supportive government policies for ecological forest plantation industry: The PRC government has put forward specific initiatives in the “Outline of the Thirteenth Five-Year Plan for the National Economic and Social Development” (中華人民共和國國民經濟和社會發展第十三個五年規劃綱要), including improvement of ecosystem functions, ecological restoration, the provision of ecological goods and biodiversity protection, all of which are favourable to the ecological forest plantation industry. Additionally, the PRC government has launched “Proposals for Formulating the 14th Five-Year Plan (2021-2025) for National Economic and Social Development and the Long-Range Objectives Through the Year 2035”(中共中央關於制定國民經濟和社會發展第十四個五年規劃和二〇三五年遠景目標的建議)in October 2020 which included some special initiatives such as promoting green development and the harmonious coexistence of human and nature, continuing to improve environmental quality and carry out pollution prevention and control actions, carrying out large-scale greening action plan of the country, etc. This indicates the PRC government’s continuous emphasis on environment protection and greening.

On the other hand, the scale of national reserve forests and commercial forests has been expanded in the past few years. The National Reserve Forest Construction Plan (國家儲備林建設規劃） was introduced in 2015 by National Forestry and Grassland Administration with an aim to build 20 million hectare national reserve forests by 2035. It is expected that the PRC government will provide comprehensive supports to such projects. In addition, along with the poverty alleviation policy (脫貧政策) in the PRC, commercial forests will play a significant role in boosting the income of commercial forests operators via adding more economic values, such as forest eco-tourism, and forest-based planting and animal breeding. After the Decision of the Central Committee of the Communist Party of China and the State Council on Winning the Battle Against Poverty (中共中央

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國務院關於打贏脫貧攻堅戰的決定) in 2015, was issued by the CPC Central Committee and State Council, governments in the PRC are seeking effective way to increase the income of low-income residents. As the construction of commercial forests can generate stable income to the low-income residents, it is expected that this will be supported by local governments throughout the country.

Huge demand for shelter belt forests: As the PRC has suffered from desertification and climate change, the demand for shelter belt forests grow steadily as they can prevent and control water and soil erosion and adapt to climate change. Construction of shelter belt forests has been implemented by the PRC government for decades. For example, as the world’s largest shelter belt forests construction project with the longest continuous construction time, the Three-North Shelter Belt Forest Program (三北防護林工程), has been implemented since 1978 and has lasted for more than 40 years which set out the PRC government’s target to complete the construction of 35.1 million hectare of shelter belt forests by around 2050, and such national level shelter belt forests program will drive the growth of the ecological forest plantation industry in the PRC persistently. In recent years, the PRC government has continuously introduced bills to promote the construction of shelter belt forests including the Opinions of the State Forestry Administration on Deepening the Construction and Reform of the Three-North Shelter Belt Forest System (國家林業局關於深化三北防護林體系建設改革的意見) which states that more tree species with both ecological and economic value will be planted to conserve water and soil in Loess Plateau, and shelter belt forests for farmland will be built in the North and Northeast regions, etc..

Future Trends Analysis

Increasing carbon sink forests: With the continuous introduction of supportive policies for increasing carbon sink forests launched by the PRC government to achieve carbon neutrality target, the market size of carbon sink forests will increase continuously along with the expansion of the carbon emission trading market. In addition, carbon sink forests projects will benefit from more diversified sources of financing from social capital as well as accelerated funding approval. Furthermore, local governments in remote regions such as Yunnan, Guangxi and Guizhou have been promoting the construction and maintenance of carbon sink forests to generate income to their local residents. According to the statement of President Xi in the United Nations General Assembly on 22 September 2020, the PRC aims to achieve carbon neutrality, i.e. achieving net zero carbon dioxide emissions by 2060. One of the important means to achieve carbon neutrality is afforestation. Thus, it is expected that a large number of carbon sink forests projects will be launched in the next several decades.

Continuous diversified development of the ecological forest plantation industry: The market sizes of industries such as furniture-making, paper-making, forest eco-tourism, forest-based planting and animal breeding, etc., are expected to expand, which increase their respective demand for different kinds of forests or forest products. Additionally, as the domestic supply of timber cannot meet the demands in the PRC and the PRC government is committed to ensuring the effective supply of forest products, it is expected that more national reserve forests will be built in the future to augment the domestic timber supply. The continuous diversified development of the ecological forest plantation industry will boost the return on investment of the industry, and thus more investors, talents and private capitals will be attracted to the ecological forest plantation industry in the future.

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OVERVIEW OF ECOLOGICAL RESTORATION INDUSTRY

Definition and Classification of Ecological Restoration

Ecological restoration aims to recover areas with degraded, damaged, or destroyed ecosystems through the application of various scientific means to revive the original chemical biological and physical characteristics of water, soil as well as the surrounding plant community. Ecological restoration does not mean the complete restoration of the ecosystem to its original state, but improve and restore the ecosystem functions through continuous measures.

Classified by restoration objectives, ecological restoration can be mainly categorised as follows:

Desertified land restoration (荒漠化土地修復): It refers to the application of measures such as rehabilitation and reforestation to restore desertified lands. The typical scope of work generally includes (i) the stabilisation of gullies and repair of degraded land by vegetative or structural measures (i.e. gully treatment (溝壑治理)); (ii) the improvement of soil conditions of sandy land to reduce desertification (i.e. desertification treatment (沙化治理)); (iii) the reduction of water loss and soil erosion, and afforestation in rocky mountain areas (i.e. loess hills and rocky mountain treatment (黃土丘陵及土石山治理)); (iv) the reduction of soil salinity through water conservancy measures (i.e. soil salinisation treatment (土地鹽鹼治理));

River, lake and wetland restoration (河湖濕地修復): It refers to the improvement of water quality of river, lake and wetland, the maintenance of water and soil condition as well as the improvement of the natural habitat of an area. The typical scope of work generally includes the improvement of water quality of areas mentioned above through vegetative or structural measures such as the restoration of plants, rebuilding of buffer zones, waterfront greening works as well as the construction of ecological revetment for waterfront areas;

Slope restoration (邊坡治理): It refers to the application of measures to restore, protect and reinforce damaged or degraded slopes caused by artificial disturbance or natural soil erosion. The typical scope of work generally includes the stabilisation of slopes and recovers degraded ecology by the combination of vegetative measures and engineering works.

Other Type of Restoration: Other type of restoration includes mined land restoration (礦山修復), disease and pest control projects, comprehensive restoration projects, etc.

Value Chain Analysis

Source: Frost & Sullivan

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One notable feature of this industry is that ecological restoration companies, especially those large players, are eager to expand their business to upstream sector and provide integrated services. Technical know-how is vital as an ecological restoration project requires the use of physical, chemical, biological measures as well as engineering technology. The clients of ecological restoration industry mainly include governments, government-affiliated institutions, large companies, etc.

Market Size Analysis

Market Size of Ecological Restoration Industry in the PRC, by Project Type, 2016-2025E

CAGR 2016-2020 2020-2025E Desertification Restoration 2.8% 8.6% River, Lake And Wetland Restoration 16.3% 17.1% Slope Restoration 12.6% 16.1% Others 12.0% 15.9% RMB Billion Total 11.7% 15.2% 130 125.0 120 Desertified Land Restoration 113.1 18.9 110 103.9 River, Lake and Wetland Restoration 18.9 100 93.1 Slope Restoration 17.1 90 16.1 80 Others 77.3 69.1 65.1 70 14.8 62.2 61.6 57.6 60 11.5 52.8 11.2 12.5 50 47.8 46.9 39.6 37.8 40 11.1 35.0 11.2 30.7 29.6 30 20.7 24.7 27.8 20 16.2 20.5 22.8 15.4 16.6 10 11.0 14.0 13.2 8.2 9.6 11.2 11.9 13.2 0 4.0 5.0 6.3 7.2 6.3 8.1 2016 2017 20182019 2020 2021E 2022E 2023E 2024E 2025E

Source: Frost & Sullivan

Driven by the supportive government policies, the ecological restoration market size in the PRC experienced rapid growth from 2016 to 2020, at a CAGR of 11.7%. The enormous demand for ecological restoration projects will further drive the growth of ecological restoration industry in the PRC. Among all the segments of ecological restoration industry, the river, lake and wetland restoration accounted for the largest market size, as the PRC government aims to reduce the water pollutions and enhance the overall water quality. With the threats of desertification and soil pollutions, the segments of desertified land restoration and slope restoration also enjoyed remarkable growth in the past few years. Due to the outbreak of COVID-19, the project schedule of ecological restoration projects and the market size in 2020 are negatively impacted in general. Looking forward, the major segments of ecological restoration will keep growing steadily, and the market size of ecological restoration industry is expected to reach RMB125.0 billion in 2025, representing a CAGR of 15.2%. According to the Fourteenth Five Year Plan, more ecological restoration projects will be launched with the supports from governments especially in the area of Yangtze River, Yellow River, abandoned mines, coastline, etc.

Market Drivers Analysis

Supportive government policies for ecological restoration industry: The PRC government has formulated numerous action plans and opinions to promote the ecological restoration industry. In February 2019, ecological restoration industry was added into the “2019 Guiding Catalogue for Green Industries” (綠色產業指導目錄) by seven government authorities, including National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Natural Resources, Ministry of Ecology and Environment, Ministry of Housing and Urban-Rural Development, the People’s Bank of China, and National Energy Administration, which indicates more social resources and relevant services will be introduced to the ecological restoration industry in an orderly manner by PRC government. In June 2018, the “Opinions of the Central Committee of the

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Communist Party of China and the State Council on Comprehensively Strengthening Ecological Environment Protection and Resolutely Fighting the Tough Battle of Pollution Prevention and Control” (中共中央國務院關於全面加強生態環境保護堅決打好污染防治攻堅戰的意見) addresses the importance of accelerating ecological restoration. Ecological restoration projects such as river, lake and wetland restoration, slope restoration and mine restoration will be supported by PRC government, and be funded by public finance. According to the Ministry of Finance, RMB31.7 billion and RMB4 billion will be allocated for water and soil related restoration projects respectively in 2020. In June 2020, the National Development and Reform Commission issued the “Master Plan for Major National Ecosystem Protection and Restoration Projects (2021-2035)” (全國重要生態系統保護和修復重大工程總體規劃(2021-2035年)), which indicate that the government will further promote the development of ecological restoration industry.

Enormous demands for ecological restoration projects: The rapid economic growth and industrial development in the past decades in the PRC have led to notable environmental issues relating to water and soil, which indicates a significant demand for ecological restoration. According to the China Ecological Environment Bulletin 2020 (2020中國生態環境狀況公報) published by Ministry of Ecology and Environment, 16.6% of surface water in the PRC is in Class IV, V and inferior V indicating they cannot be used for drinking or farming purpose. Furthermore, according to the World Bank, the renewable internal freshwater resource per capita in the PRC is only approximately 34.8% of the world average in 2019, indicating the PRC is a water-scarce country, thus there will be persistent demand for river, lake and wetland restoration. According to the National Survey on Soil Pollution Status jointly conducted by Ministry of Ecology and Environment and Ministry of Natural Resource in 2019, 19.4% of the arable land in the PRC has been contaminated. According to the National Forestry and Grassland Administration, the total area of desertified land in the PRC is over 2.6 million square kilometers, accounting for approximately 27.2% of the total land area, thus the demand for land desertification restoration projects will exist for a long time in the PRC. Together with the food safety issue that has arisen in the past years, the demand for soil related restoration work is expected to increase significantly.

Future Trends Analysis

Higher concentration level of the industry: Due to a variety of the contamination conditions and complexity of geological conditions in the PRC, solutions that incorporated multiple technologies should be in growing demand, but such solutions can only be provided by large enterprises with strong research and development capacity and technologies accumulation. In the future, large enterprises will capture more market share by integrated services and technical know-how, thus increasing the concentration level of the industry. Additionally, as a series of more rigorous environmental protection law are being coming into effect, large enterprises that can offer comprehensive restoration solutions will gain further advantages.

Increasing investment from social capital through PPP model: Over the years, the PRC government required that the polluters should be responsible for restoration. However, due to the lack of effective tracing and review mechanism, most of ecological restoration projects are eventually financed by the PRC government. In recent years, the PRC government has gradually encouraged government-social capital cooperation by providing investment subsidies, operating subsidies, etc to attract social capital. Additionally, the application of PPP model provides social capital with a feasible

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Increasing demand for mined land restoration: According to the Ministry of Natural Resources, more than 54 million mu of land was damaged by mining activities in the PRC by the end of 2018, which threaten the local ecological equilibrium. Under such circumstances, the government will attach more importance to the mined land restoration. The PRC government has released a series of incentive policies including the Opinions On Exploring and Utilising Marketization Methods to Promote Mine Restoration (關於探索利用市場化方式推進礦山生態修復的意見) in 2019, which promotes social capital to invest in mined land restoration. Furthermore, the Inner Mongolia Autonomous Region government issued the Implementation Plan for Mine Environmental Governance in the Inner Mongolia Autonomous Region （內蒙古自治區礦山環境治理實施方案) in August 2020 to further strengthen the environmental governance of the mines in the region and accelerate the transformation and development of the mining industry. And the Green Mine Construction Plan in Inner Mongolia Autonomous Region (內蒙古自治區綠色礦山建設方案) was published in November 2020 which required by the end of 2023, the ecological environment of the mines in the region should be effectively protected, and the level of land reclamation in the mining area should be improved. These will increase the demand for mine restoration.

OVERVIEW OF URBAN AND RURAL GREENING INDUSTRY

Definition and Classification of Urban and Rural Greening Industry

A urban and rural greening project generally aims at improving the overall landscape of an area, normally as part of urbanisation, through green (trees and herb) planting as well as earthworks construction, terrain modification, and ancillary facilities building.

Urban and rural greening project can be divided into municipal landscaping, real estate landscaping and other types of landscaping.

Value Chain Analysis

Source: Frost & Sullivan

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As the upstream and midstream sectors are highly complementary with each other, landscaping companies in the midstream sector are eager to expand their business to upstream to provide integrated services. Landscape designer in the upstream sector mainly includes design institutes or individual designers. Landscaping companies are responsible for the construction of landscaping projects and the subsequent maintenance services (usually for a term of two years) such as replanting, fertilisation, irrigation, deinsectisation, etc. Apart from direct labour, it is common for landscaping companies to engage subcontractors and labor service providers to carry out certain works. Clients mainly include governments, government-affiliated institutions and non-governmental parties such as real estate developers.

Market Size Analysis

Market Size of Urban and Rural Greening Market in the PRC, by Project Type, 2016-2025E

CAGR 2016-2020 2020-2025E Municipal landscaping 0.6% 2.4% Real estate landscaping 7.9% 6.5% Others 4.6% 4.1% Total 5.5% 5.2% RMB Billion 866.0 900 828.6 Municipal Landscaping Real Estate Landscaping Others 791.3 800 753.8 716.4 196.8 193.9 700 663.5 670.7 191.1 615.8 188.1 574.3 185.2 600 542.4 184.5 174.9 500 179.9 171.0 176.6 400 563.7 595.7 499.7 531.7 300 435.7 467.7 378.8 417.7 200 321.1 344.8 100 63.5 66.0 68.5 71.0 73.5 0 50.3 52.9 57.1 61.3 60.1 2016 2017 2018 2019 2020 2021E 2022E 2023E 2024E 2025E

Source: Frost & Sullivan

Driven by the stable economic growth and supportive governmental policies, the urban and rural greening market size in the PRC experienced stable growth from 2016 to 2020 at a CAGR of 5.5%. The market size of municipal landscaping increased from RMB171.0 billion in 2016 to RMB174.9 billion in 2020, representing a CAGR of 0.6%. Revenue generated from real estate landscaping reached approximately RMB435.7 billion in 2020, at a CAGR of 7.9% since 2016, the growth of which was in line with the progress of the national urban construction plan and real estate investment in the PRC. As for the market size of other types of landscaping, it grew at a 4.7% from 2016 to 2020. Due to the outbreak of COVID-19, the project schedule of municipal landscaping projects and the market size in 2020 are negatively impacted. Looking forward, all the major segments of the urban and rural greening market, are expected to continue to grow. The market size of urban and rural greening market in the PRC is expected to grow at a CAGR of 5.2% from 2020 to 2025, reaching RMB866.0 billion in 2025.

Market Drivers Analysis

Supportive government policies: The development of urban and rural greening market in the PRC is driven by the government policies such as Urban Greening Ordinance (《城市綠化條例》), Guidelines of the Ministry of Housing and Urban-Rural Development on Promoting the Development of Urban Greening (《住房城鄉建設部關於促進城市園林綠化事業健康發展的指導意見》), etc. The

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Continuous urbanization process: The continuous urbanization process has greatly stimulated demand for better quality urban housing and living environment. In 2020, the urban population in the PRC has exceeded 860 million, with an urbanization rate (the proportion of the urban population in the total population) of 61.6%, compared with 82.5% in the United States and 92.5% in Japan. There is significant growth potential for urbanization in the PRC, and the demand from urban residents for landscaping will continue to grow. The “beautiful countryside” (美麗鄉村) and “characteristic towns” (特色小鎮) policies proposed by the PRC government also have driving effect on the development of urban and rural greening.

Future Trends Analysis

Higher concentration level of the industry: In recent years, an increasing number of urban and rural greening companies have been expanding their business vertically along the value chain, which includes seedling cultivation, design, construction and maintenance. In the future, it is expected that large companies tend to leverage on their established market position to acquire other smaller-scale companies, thus increasing the concentration level of the industry.

Growing investment in research and development: Urban and rural greening companies in the PRC are allocating additional effort and resources, and increasing cooperation with research institutes to develop advanced landscaping technologies. In particular, urban and rural greening companies place more emphasis on upgrading core technologies in municipal works in relation to urban rain flood management in view of the evolving concept of sponge city, a concept to enhance adaptability of city towards the change of environment. In addition, urban and rural greening companies are also dedicated in selecting and cultivating of plant as well as developing technologies that can improve living environment. Some market participants are also recognized as high-tech enterprises with patented technologies and products.

COMPETITIVE LANDSCAPE ANALYSIS

The ecological forest plantation industry, ecological restoration industry and urban and rural greening industry in the PRC are highly fragmented and competitive with low market concentration rate as most market players are relatively small companies focusing on local markets. With the exception of certain well-established players, most market players are relatively small players focusing on local markets, and cannot compete for large-scale public projects which normally have a certain number of requirements such as large-scale project experience, financial strength and the number of qualified professionals as stipulated in the tender documents.

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Entry barriers

The entry barriers in the urban and rural greening industry, ecological restoration industry, and ecological forest plantation industry are similar as following:

Long growth period of seedlings: Seedlings supply is the upstream of the urban and rural greening industry, ecological restoration industry, and ecological forest plantation industry as the seedlings are the necessary raw material of all greening and ecological related projects in these industries. It generally takes years or even more than ten years for some seedling species to grow before launching in the market. For example, it generally takes approximately eight to ten years to outplant spruce, one of the most common evergreen seedlings. Such long growth period of seedlings constitutes entry barriers for new market entrants.

Capital intensive: The business of these industries is capital intensive in nature and the scale of projects undertaken by the contractors is highly dependent on their financial capacity and capital reserve. The requirement of intensive capital injection in ecological and environmental protection industry in the PRC is clearly indicated in the Guidance Opinion on Increasing Input of State-owned Capital into Industries for Public Welfare (關於國有資本加大對公益性行業投入的指導意見) (the “Guidance Opinion”) dated 16 November 2017 issued by the Ministry of Finance, in which environmental protection is one of the industries requiring increased input from state-owned capital. In particular, sufficient capital reserve is generally a pre-requisite for contractors undertaking public projects in the PRC which generally have a longer project period and credit term of up to two or three years. A strong financial condition is also required for maintaining professionals, procurement for business operation and research and development.

Track record and industry reputation: Companies with strong track record and industry reputation are generally preferred by clients, and established market participants have maintained long-term relationships with major clients. Track record is also important and a key requisite item in the tendering of large scale projects, which may exclude the new entrants.

Technical know-how and staffing: In-depth technical knowledge in the area of geology, construction, aesthetics and botany is considered a pre-requisite for new entrants in these industries in the PRC. Furthermore, in light of the different regional features in respect of geographical conditions, climate and historic culture in the PRC, established companies typically maintain adequate techniques and strong local network with access to labor and resources for undertaking local projects.

Extensive industry network and geographical coverage: Established companies demonstrate extended scale of operation by undertaking projects across different regions in the PRC. The established wide networks with subsidiaries all over the PRC can help these enterprises to obtain and manage the projects in different regions. The cross-regional operation enables the established companies to efficiently offer technical support and after-sales services to their clients, which further strengthen the relationship with clients. It is hard for new entrants to develop cross regional business networks at the very beginning.

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Competitive advantages of our Group

Our Directors believe that our competitive strengths have contributed to our success in the industry. Some of our competitive strengths include (i) well positioned to capture opportunities in the growing ecological and environmental protection industry in other provinces in the PRC; (ii) well-established reputation in the ecological and environmental protection industry; (iii) integrated business model which differentiate from competitors; (v) strong research and development capability and technical know-how as reflected by proprietary patents; and (vi) founder and core management team have a proven track record of experience in the ecological and environmental protection industry and management experience in a [REDACTED] company. Please see “Business — Our Competitive Strengths” for further details.

The following table sets out the ranking of our Group in the ecological forest plantation industry in 2020:

Estimated Market share revenue in the in the ecological ecological forest forest plantation plantation Ranking Name industry, 2020 industry, 2020 Description (RMB Million)

1 Company A 1,339.9 0.56% Founded in 1996, it is an ecological forest plantation company with nationwide business coverage. It also engages in timber business. 2 Company B 1,040.1 0.44% Founded in 1954, it is an ecological forest plantation company with business mainly located in Leizhou Peninsula. 3 Company C 899.7 0.38% Founded in 2014, it is an ecological forest plantation company with business located in Shaanxi Province. 4 Our Group 591.1 0.25% Founded in 2008, it is a service provider for ecological forest plantation, ecological restoration and urban and rural greening projects established in Inner Mongolia.

5 Company D 410.6 0.17% Founded in 1953, it is an ecological forest plantation company in Guangxi Zhuang Autonomous Region. It is the largest state-owned forestry company in Guangxi Zhuang Autonomous Region. Top 5 total 4,271.5 1.79%

Total 238,512.8 100.00%

Source: Frost & Sullivan

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Additionally, our Group owns the second largest plantation bases in the PRC in terms of total area with an aggregate area of approximately 45,000 mu (30.0 million sq.m.) in the PRC.

PRICE OF SEEDLINGS

The prices of seedlings mainly depend on the species and specifications such as heights, and the market price of seedlings generally increases as they grow in height and crown width. Affected by climatic conditions and market demand, although the price of a certain type of seedling may fluctuate to a certain extent, the overall average price of seedlings has been rising steadily in the past few years. From 2016 to 2020, the average price of seedlings grows at a CAGR of 4.1%.

LABOUR COST

Labour has taken up approximately 15% to 25% in the cost structure of ecological forest plantation, ecological restoration, and urban and rural greening projects in recent years. With the continuous increase of per capita disposable income in the PRC, the average salary in these industries has been raising from 2016 to 2020 at a CAGR of about 7.5%. The rise in the average salary also represents the competitiveness of the industry in the labour market and it also keeps the industry attractive as for talents.

Price Index of Labor and Seedling in the PRC, 2016-2020

CAGR 2016-2020 Labor 7.5% 2016=100 Seedling 4.1% 160.0 140.0 120.0 100.0 80.0 60.0 40.0 20.0 0.0 2016 2017 2018 2019 2020 Labor 100.0 106.7 116.2 125.7 133.4 Seedling 100.0 104.5 108.9 113.3 117.5

Source: National Bureau of Statistics, China Forestry Yearbook, Frost & Sullivan

TRADE AND BILLS RECEIVABLES AND CONTRACT ASSETS TURNOVER DAYS ANALYSIS

Generally, the project duration of ecological forest plantation projects, ecological restoration projects and urban and rural greening projects is approximately one year to three years and 10 to 30 years for traditional model and PPP model, respectively. The business model of these projects usually requires contractors to complete part or all the project before receiving progress payment from project owners during or even after the long project period, thus a significant amount of trade and bills receivables and contract assets will arise. Furthermore, as the owners of these projects are generally governments, the governments normally need a longer time to settle payment mainly due to its internal approval process. Nevertheless, they have higher credibility than private entities.

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Frost & Sullivan have selected 20 large-scale enterprises listed on the Hong Kong Stock Exchange, Shanghai Stock Exchange and Shenzhen Stock Exchange who undertake ecological forest plantation projects, ecological restoration projects and urban and rural greening projects of governments as well as projects in PPP model. All the selected companies generate revenue mainly from undertaking construction projects in ecological and environment protection industry. Among the 20 selected listed companies, there are only one companies with a trade and bills receivables and contract assets turnover days of less than one year, and seven companies with turnover days in the period of one to two years. The average trade and bills receivables and contract assets turnover days of the 20 companies was 928.6 days in 2020.

COVID-19 PANDEMIC

According to the Frost & Sullivan Report, the outbreak of COVID-19 in the PRC in late 2019 has partly delayed the project schedule of urban and rural greening, ecological restoration and ecological forest plantation projects in the first quarter of 2020 which negatively impacted the market size in 2020. Due to the negative impact of the epidemic on the macro economy the PRC government has adopted fiscal stimulus measures to stimulate the economy. Under such circumstance, the overall economy gradually recovers in the PRC, which is evidenced by the national GDP growth rate improving from -6.8% in first quarter of 2020 to 2.3% in the full year of 2020. Looking forward, the PRC government will introduce more policies to increase the investment in various industries including ecological construction to stabilize employment and promote economic development in line with the loosening of monetary policies globally, so as to sustain economic growth. Therefore, in the long term, COVID-19 will not have a material negative impact on the urban and rural greening industry, ecological restoration industry and ecological forest plantation industry, but instead may enhance the investment in the ecological and environmental protection around the country due to the increasing societal consciousness for health, greenery and well-being.

SEVERE FLOODING IN THE SUMMER OF 2020

According to the Office of State Flood Control and Drought Relief Headquarters, more than 27 provincial level administrative areas and more than 30 million citizens have been affected by severe flooding in the summer of 2020. The flooding had a negative impact on the seedling cultivation industry, as many plantation bases were destroyed by the flooding, and the logistics for the seedlings were interrupted. With the help of all levels of governments and troops, the flooding was soon under control, and the production and living of the affected areas have back to normal. The severe flooding in 2020 has raised the importance of conservation of water and soil and thus the PRC government plans to launch more soil and water conservation projects including building shelter belt forests, and water related ecological restoration projects, etc. Therefore, in the long term, the flooding in 2020 will not have a material negative impact on the urban and rural greening industry, ecological restoration industry and ecological forest plantation industry, but may instead boost the governmental investment in soil and water conservation projects.

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LAWS AND REGULATIONS IN RELATION TO QUALIFICATIONS OF CONSTRUCTION

According to the Construction Law of the PRC《中華人民共和國建築法》 ( ) (the “Construction Law”) promulgated by the Standing Committee of the National People’s Congress (the “SCNPC”) on 1 November 1997 and with effect from 1 March 1998, last amended on and with effect from 23 April 2019, enterprises engaged in construction, engineering survey, engineering design and supervision shall apply for the qualifications of different grades according to their registered capital, professional and technical personnel, technical equipment and achievements. They can separately obtain qualification certificates of commensurate grades for construction, survey, design, supervision after passing commensurate qualification examinations, and undertake construction, survey, design, and supervision activities within the scope set out in its qualifications.

Qualifications of Construction Enterprises

According to the Administrative Provisions on the Qualification of Construction Enterprises《建築業企業資質管理規定》 ( ) promulgated by the Ministry of Housing and Urban-Rural Development of the PRC (the “MOHURD”) on and with effect from 6 October 1995, last amended on and with effect from 22 December 2018, and the Notice of the MOHURD on Issuance of Qualification Standards in Construction Enterprises《住房和城鄉建設部關於印發〈建築業企業資質 ( 標準〉的通知》(建市[2014]159號)) (the “Qualification Standards in Construction Enterprises”) promulgated by the MOHURD on 6 November 2014 and with effect from 1 January 2015, the qualifications of construction enterprises are classified into three categories, namely, main contractor qualification, professional contractor qualification and construction labor qualification. Both main contractor qualification and professional contractor qualification are divided into various subcategories of qualifications according to the nature and technical characteristics of the relevant construction projects, and each of the subcategories is further divided into various classes in accordance with the stipulated conditions. As at the Latest Practicable Date, we have already obtained qualifications including the Main Contractor in General Construction Works — Grade III, the Main Contractor in Municipal and Public Construction Works — Grade II & Grade III, the Main Contractor in Water Conservancy and Hydropower Project — Grade II, the Professional Contractor in Ancient Architecture Engineering — Grade II & Grade III, the Professional Contractor in City and Road Lighting Engineering — Grade II, the Professional Contractor in Environment Protection Engineering — Grade III, the Professional Contractor in River and Lake Improvement Projects — Grade III and the Construction Labor Qualification.

Qualification of Main Contractor

Qualifications of Main Contractor in General Construction Works

Pursuant to the Qualification Standards in Construction Enterprises and the Notice of the MOHURD on Simplification of Partial Index of the Qualification Standards in Construction Enterprises (《住房和城鄉建設部關於簡化建築業企業資質標準部分指標的通知》) (the “Notice of Simplifying Qualification Standards”) promulgated on 14 October 2016 and with effect from 1 November 2016, qualifications of main contractor in general construction works are divided into Special-Grade, Grade I, Grade II and Grade III.

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The scope of general construction work permitted under the Main Contractor in General Construction Works — Grade III includes:

• industrial and civil construction projects below 50 meters in height;

• structural construction projects below 70 meters in height;

• single industrial and civil construction projects with a construction area of less than 12,000 square meters; and

• construction projects with a single span less than 27 meters.

Qualifications of Main Contractor in Municipal and Public Construction Works

Pursuant to the Qualification Standards in Construction Enterprises and the Notice of Simplifying Qualification Standards, qualifications of main contractor in municipal and public construction works are divided into Special-Grade, Grade I, Grade II and Grade III.

The scope of municipal and public construction work permitted under the Main Contractor in Municipal and Public Construction Works — Grade II includes:

• all types of urban road engineering; urban bridge engineering with a single span less than 45 meters;

• water supply work with the limit of 150,000 tons per day; sewage disposal work with the limit of 100,000 tons per day; pump station for water supply with the limit of 250,000 tons per day, pump station for sewage disposal and rainfall with the limit of 150,000 tons per day; all types of water supply and drainage pipelines and reclaimed water pipelines engineering;

• gas pipelines and pressure regulating stations below medium-pressure; thermal projects with a heating area less than 1,500,000 square meters and all types of thermal pipeline engineering;

• all types of urban domestic waste disposal engineering;

• tunnel engineering with sections less than 25 square meters and underground transportation engineering;

• all types of city square and ground parking lot covered by rigid material; and

• comprehensive municipal project with an individual contract sum less than RMB40 million.

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The scope of municipal and public construction work permitted under the Main Contractor in Municipal and Public Construction Works — Grade III includes:

• urban road engineering (excluding expressway); urban bridge engineering with a single span less than 25 meters;

• water supply work with the limit of 80,000 tons per day; sewage disposal work with the limit of 60,000 tons per day; pump station for water supply with the limit of 100,000 tons per day, pump station for sewage disposal and for rainfall with the limit of 100,000 tons per day; water supply pipelines engineering less than 1 meter in diameter; sewage and reclaimed water pipelines engineering less than 1.5 meters in diameter;

• medium-pressure and low-pressure gas pipelines and pressure regulating stations below 2 kg/cm2; thermal projects with a heating area less than 500,000 square meters, and thermal pipelines engineering less than 0.2 meters in diameter;

• urban domestic waste disposal engineering with an individual contract sum less than RMB25 million;

• underground transportation engineering with an individual contract sum less than RMB20 million (excluding rail transit engineering);

• city square and ground parking lot covered by rigid material less than 5,000 square meters; and

• comprehensive municipal project with an individual contract sum less than RMB25 million.

Qualifications of Main Contractor in Water Conservancy and Hydropower Project

According to the Qualification Standards in Construction Enterprises and the Notice of Simplifying Qualification Standards, qualifications of main contractor in water conservancy and hydropower project are divided into Special-Grade, Grade I, Grade II and Grade III. The scope of construction of water conservancy and hydropower project permitted under the Main Contractor in Water Conservancy and Hydropower Project — Grade II includes, the construction of water conservancy and hydropower projects below the medium-sized project scale and the construction of hydraulic buildings below the building level 3, but the following project scales are subject to the following specific limits: dam height shall be under 70 meters, the total installed capacity of the hydropower station shall be less than 150MW, the hydraulic tunnel shall be less than 8 meters (or other types with the same cross-sectional area) and the length shall be less than 1,000 meters, and the dike level shall be less than level 2.

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Qualification of Professional Contractor

Qualifications of Professional Contractor in the Ancient Architecture Engineering

According to the Qualification Standards in Construction Enterprises and the Notice of Simplifying Qualification Standards, qualifications of professional contractor in the ancient architecture engineering are divided into Grade I, Grade II and Grade III.

The scope of construction work permitted under the Professional Contractor in the Ancient Architecture Engineering — Grade II includes:

• single archaise building construction with a construction area less than 800 square meters; and

• renovation construction of historical building project in national important protection units of cultural relic with area less than 200 square meters.

The scope of construction work permitted under the Professional Contractor in the Ancient Architecture Engineering — Grade III includes:

• single archaise building construction with a construction area less than 400 square meters; and

• renovation construction of historical building project in provincial important protection units of cultural relic with area less than 100 square meters.

Qualifications of Professional Contractor in City and Road Lighting Engineering

According to the Qualification Standards in Construction Enterprises and the Notice of Simplifying Qualification Standards, qualifications of professional contractor in city and road lighting engineering are divided into Grade I, Grade II and Grade III. The scope of construction work permitted under the Professional Contractor in City and Road Lighting Engineering — Grade II contains the construction of urban road lighting projects with an individual contract sum not exceeding RMB12 million.

Qualifications of Professional Contractor in Environmental Protection Engineering

According to the Qualification Standards in Construction Enterprises and the Notice of Simplified Qualification Standards, qualifications of professional contractor in environmental protection engineering are divided into Grade I, Grade II and Grade III. The scope of construction work permitted under the Professional Contractor in Environmental Protection Engineering — Grade III contains the construction of pollution restoration projects, domestic waste treatment and disposal projects with medium-scale and other small-sized environmental protection projects.

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Qualifications of Professional Contractor in River and Lake Improvement Projects

According to the Qualification Standards in Construction Enterprises and the Notice of Simplified Qualification Standards, qualifications of professional contractor in river and lake improvement projects are divided into Grade I, Grade II and Grade III. The scope of construction work permitted under the Professional Contractor in River and Lake Improvement Projects Grade III contains the construction of river and lake dredging projects and reclamation projects of Grade III levee engineering or below.

Qualifications of Urban and Rural Greening Construction Enterprises

According to the Regulations of Urban Greening《城市綠化條例》 ( ), promulgated by the State Council on 22 June 1992 and with effect from 1 August 1992, last amended on and with effect from 1 March 2017, enterprises engaged in engineering designs and constructions of urban greening projects shall obtain relevant qualification certificates. The design scheme of urban greening projects shall be undertaken enterprises with corresponding qualification certificates and approved by corresponding local landscape authorities. The construction project owners shall construct urban greening projects in accordance with the approved design scheme. Any necessary change to the design scheme shall be reviewed and approved by the original approval authorities.

Pursuant to the Decision of the State Council on Amending and Repealing some Administrative Regulations《國務院關於修改和廢止部分行政法規的決定》 ( ) promulgated by the State Council and with effect from 1 March 2017, article 16 of the Regulation of Urban Greening《城市綠化條例》 ( ) was deleted which stipulated that the construction of urban greening projects shall be entrusted to construction enterprises with corresponding qualification certificates. Pursuant to the Notice of the General Office of the MOHURD on Effectively Implementing the Work of Cancelling the Administrative Licensing for Qualifications of Urban Greening Construction Enterprises《住房和城 ( 鄉建設部辦公廳關於做好取消城市園林綠化企業資質核准行政許可事項相關工作的通知》(建辦城 [2017]27號)) promulgated by the MOHURD on 13 April 2017 and with effect from the same day, all levels of competent authorities of housing and urban-rural construction (greening) no longer accept the application for qualifications of urban greening construction enterprise and no longer, in any way, require the qualification of urban greening construction enterprise or the qualification of the main contractor in municipal and public construction works as the preconditions for contracting the construction of urban greening projects. Thus, the administrative licensing requirement for the qualifications of urban greening construction enterprises engaged in the construction of urban greening projects has been removed since 13 April 2017.

Professional Qualifications of Employees

Qualification requirements on registered constructor

According to the Administrative Provisions on Registered Constructors《註冊建造師管理規 ( 定》) promulgated by the Ministry of Construction (the “MOC”, predecessor of the MOHURD) on 28 December 2006 and with effect from 1 March 2007, partially amended by the MOHURD on 13 September 2016 and with effect from 20 October 2016, registered constructors refer to professional

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Qualification requirements on certified cost engineer

According to the Administrative Measures for Certified Cost Engineers《註冊造價工程師管理 ( 辦法》) promulgated by the MOC on 25 December 2006 and with effect from 1 March 2007, last amended by the MOHURD on and with effect from 19 February 2020, certified cost engineers refer to professionals who have obtained the professional qualification certificate of cost engineer after passing the professional qualification examination for cost engineers in civil engineering or installation engineering, or after passing the qualification recognition and mutual recognition of qualifications, and engaged in project cost activities after registration. The certificated cost engineers are divided into Grade I and Grade II.

Qualification requirements on registered architect

According to the Regulations on Registered Architects《註冊建築師條例》 ( ) promulgated by the State Council on 23 September 1995 and with effect from the same day, last amended on and with effect from 23 April 2019, registered architects refer to professionals who have lawfully acquired the certificates of a registered architect and are engaged in the architectural design of buildings or other related businesses. The registered architects are divided into Grade I and Grade II.

Qualification requirements on registered engineer

According to the Administrative Provisions on Registered Survey and Design Engineers《勘察 ( 設計註冊工程師管理規定》) promulgated by the MOC on 4 February 2005 and with effect from 1 April 2006, partially amended by the MOHURD on 13 September 2016 and with effect from 20 October 2016, registered engineers refer to the professional technicians who have obtained a registered engineer qualification certificate after passing the qualifying examination, have acquired a registered engineer practicing certificate and a practicing seal after registration, and are engaged in the construction survey, design and other relevant businesses. Registered engineers are classified into different categories on the basis of different specialties. Except that registered structural engineers are divided into Grade I and Grade II, registered engineers of other specialties are not divided into different grades.

Title system of professional engineer

According to Guiding Opinions on Deepening the Reform of the Professional Title System for Engineering and Technical Personnel《關於深化工程技術人才職稱制度改革的指導意見》 ( (人社部發 [2019]16號)) jointly promulgated by the Ministry of Human Resources and Social Security and the Ministry of Industry and Information Technology (the “MIIT”) on and with effect from 1 February 2019, the engineering and technical personnel can be divided into professorate senior engineer, senior engineer, intermediate engineer, associate engineer and technician by professional titles.

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LAWS AND REGULATIONS IN RELATION TO QUALIFICATIONS OF ENGINEERING DESIGN

Qualification of Construction Engineering Design

According to the Regulations on the Administration of Survey and Design of Construction Projects《建設工程勘察設計管理條例》 ( ) promulgated by the State Council on 25 September 2000 and with effect from the same day, last amended on and with effect from 7 October 2017, construction engineering design enterprises shall engage in business activities within the scope permitted by their respective qualifications as approved by the competent regulatory authorities. Professionals engaged in the construction engineering design projects shall obtain the certificate of executive registration and be employed by one construction engineering design enterprise to participate in the construction engineering design projects.

According to the Provisions on the Administration of Qualifications of Construction Survey and Design《建設工程勘察設計資質管理規定》 ( ) promulgated by the MOC on 26 June 2007 and with effect from 1 September 2007, last amended by the MOHURD on and with effect from 22 December 2018, and the Notice on the Issuance of Qualification Standards for Engineering Design (關於印發《工程設計資質標準》的通知) promulgated by MOC on and with effect from 29 March 2007, last amended by the MOHURD on and with effect from 10 March 2017 (the “Qualification Standards for Engineering Design”), qualifications for construction engineering design enterprises are divided into four categories, namely general engineering design qualification, industrial engineering design qualification, professional engineering design qualification and specific engineering design qualification. Among the four categories, specific engineering design qualification is divided into various subcategories of qualifications according to nature and technical characteristics of the relevant engineering design projects, and each subcategories of qualifications is further divided into various classes in accordance with the stipulated conditions. Pursuant to the Qualification Standards for Engineering Design, specific engineering design qualification for landscape architecture engineering are divided into Grade I and Grade II. As at the Latest Practicable Date, we have already obtained the Landscape Architecture Engineering Grade I.

Qualification of Landscape Engineering Design

Landscape Architecture Engineering — Grade I

The scope of project permitted under the Landscape Architecture Engineering Grade I includes all types and scales of landscape engineering design projects.

LAWS AND REGULATIONS IN RELATION TO THE QUALIFICATION OF CONSTRUCTION ENTITIES UNDER THE GEOLOGICAL DISASTER CONTROL PROJECTS

Qualification of Construction Entities under the Geological Disaster Control Projects

According to the Regulation on the Prevention and Control of Geological Disasters《地質災害 ( 防治條例》) promulgated by the State Council on 24 November 2003 and with effect from 1 March 2004, only after passing the qualification examination of the land and resources department of the people’s government at or above the provincial level, and obtaining the corresponding qualification

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According to the Administrative Measures for the Qualification of Surveying Entities, Designing Entities and Construction Entities under the Geological Disaster Control Projects《地質災害治理工 ( 程勘查設計施工單位資質管理辦法》) promulgated by the Ministry of Land and Resources (predecessor of the Ministry of Natural Resources) on 20 May 2005 and with effect from 1 July 2005, last amended on and with effect from 24 July 2019, the eligibilities of construction entities engaged in geological disaster control projects are divided into Grade I, Grade II and Grade III. As at the Latest Practicable Date, we have already obtained the Qualification Certificate of Construction Entities under the Geological Disaster Control Projects — Grade III.

Qualification of Construction Entities under the Geological Disaster Control Projects - Grade III

Geological disaster control projects may be divided into three types, namely large, medium, and small. A Grade III eligible construction entity of geological disaster control project may undertake the construction of small geological disaster control projects.

A geological disaster control project that meets any of the following conditions shall be a large geological disaster control project:

• the total amount of investments of the control project is no less than RMB20 million, or for a separately initiated geological disaster survey project, the amount of project expenses is no less than RMB0.5 million;

• the number of people protected by the control project is no less than 500; or

• the value of the properties protected by the control project is no less than RMB50 million.

A geological disaster control project that meets any of the following conditions shall be a medium geological disaster control project:

• the total amount of investments of the control project is no less than RMB5 million but no more than RMB20 million, or for a separately initiated geological disaster survey project, the amount of project expenses is no less than RMB0.3 million but no more than RMB0.5 million;

• the number of people protected by the control project is no less than 100 but no more than 500; or

• the value of the properties protected by the control project is no less than RMB5 million but no more than RMB50 million.

A geological disaster control project which is other than the aforementioned two project types shall be a small geological disaster control project.

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LAWS AND REGULATIONS IN RELATION TO QUALITY CONTROL AND WORK SAFETY OF CONSTRUCTION PROJECTS

Quality Control of Construction Projects

Pursuant to the Regulations on the Administration of Quality Control of Construction Projects《建設工程質量管理條例》 ( ) promulgated by the State Council on and with effect from 30 January 2000, last amended on and with effect from 23 April 2019, construction project owners and enterprises that undertake survey, design, construction or project supervision are responsible for the project quality control. All construction activities must be conducted in strict compliance with basic construction procedures and by adhering to the principle of “surveying first, then designing and finally constructing”. The main contractor shall be responsible for the quality of the construction project contracted by it. Where a main contractor subcontracts the construction project in question to another contractor in accordance with the law, the subcontractor shall, under the subcontract, be responsible to the main contractor for the quality of the project subcontracted by it. The main contractor and the subcontractor shall be jointly and severally responsible for the quality of the aforesaid project.

Work Safety in Relation to Construction Projects

In addition to the Construction Law, the administration of work safety in relation to construction project is mainly set out in a variety of laws and regulations including, among others,

• the Work Safety Law of the PRC《中華人民共和國安全生產法》 ( ) promulgated by the SCNPC on 29 June 2002 and with effect from 1 November 2002, last amended on 31 August 2014 and with effect from 1 December 2014;

• the Regulations on the Administration of Construction Safety《建設工程安全生產管理條 ( 例》) promulgated by the State Council on 24 November 2003 and with effect from 1 February 2004;

• the Regulations on Work Safety Permits《安全生產許可證條例》 ( ) promulgated by the State Council on and with effect from 13 January 2004, last amended on and with effect from 29 July 2014; and

• the Regulations on Administration of Construction Enterprises’ Work Safety Permit《建築 ( 施工企業安全生產許可證管理規定》) promulgated by the MOC on and with immediate effect from 5 July 2004, last amended on by the MOHURD and with effect from 22 January 2015.

Under the foregoing laws and regulations, construction enterprises shall establish a work safety management organisation or provide personnel dedicated for work safety management. The PRC Government implements the work safety permit system for construction enterprises. Without obtaining a work safety permit, a construction enterprise shall not engage in construction activities.

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Construction project owners and enterprises that undertake survey, design, construction, project supervision or other work safety-related activities, must comply with the provisions of the work safety laws and regulations, ensure the work safety of the construction project and assume responsibilities for work safety in accordance with laws and regulations.

LAWS AND REGULATIONS IN RELATION TO TENDER AND BIDDING

Construction Projects Subject to Bidding

According to the Tender and Bidding Law of the PRC《中華人民共和國招標投標法》 ( ) (the “Tender and Bidding Law”) promulgated by the SCNPC on 30 August 1999 and with effect from 1 January 2000, last amended on 27 December 2017 and with effect from 28 December 2017, and the Implementation Regulations for the Law of the PRC on Tenders and Bids《中華人民共和國招標投 ( 標法實施條例》) (the “Tender and Bidding Implementation Regulations”) promulgated by the State Council on 20 December 2011 and with effect from 1 February 2012, last amended on and with effect from 2 March 2019, invitation for tendering is required for the following project construction items undertaken within the PRC, including survey, design, construction, supervision and management of the project, as well as the purchase of important equipment and materials for the construction project:

• large scale infrastructure or public utility projects and other projects relating to the social public interest or public security;

• projects wholly or partly utilising the investment of the state-owned fund or financed by the PRC Government; and

• projects utilising loans or aid funds provided by international organisations or foreign governments.

The specific scope and standards on the scale of the construction projects subject to tender by law shall be drafted by the development reform department, together with other relevant departments under the State Council, and shall be released and implemented after approval by the State Council.

The Rules on Projects Subject to Bidding《必須招標的工程項目規定》 ( ) (the “Must Bidding Rules”) promulgated by National Development and Reform Commission (the “NDRC”) on 27 March 2018 and with effect from 1 June 2018, further stipulates the scope of survey, design, construction and consultancy of projects that requires bidding:

• Projects in which investment is made with all or part of state-owned funds or state financing include:

- projects that use more than RMB2 million of budgetary funds, and such funds account for more than 10% of the investment amount; or

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- projects that use the funds of a state-owned enterprise or public institution, and such funds account for controlling or dominant portion;

• Projects that use loans or aid funds from international organisations or foreign governments include:

- projects using loans and aid funds from international organisations such as the World Bank and Asian Development Bank; and

- projects using loans and aid funds from foreign governments and their agencies;

• For other projects involving large-scale infrastructure and public utilities concerning social public interests and public safety that are not mentioned above.

For projects listed above, the survey, design, construction, supervision and procurement of important equipment and materials relating to the construction thereof that satisfy any of the following criteria are subject to bidding:

• the estimated price of an individual contract on construction is more than RMB4 million;

• the estimated price of an individual contract on the procurement of important equipment, materials is more than RMB2 million; or

• the estimated price of an individual contract on the procurement of survey, design, supervision or other service is more than RMB1 million.

The survey, design, construction and supervision that can be merged for a project as well as the purchase of important equipment, materials relating to the construction of the same project are subject to bidding if the estimated contract sum meets the criteria specified in the Must Bidding Rules.

Tender Agencies and Pool of Bidding Evaluation Experts

According to the Tender and Bidding Law and the Tender and Bidding Implementation Regulations, a tenderer shall have the right to choose, on its own, a tender agency and entrust it with the handling of the tender matters. A tender agency shall handle the tender matters within the scope entrusted to it by the tenderer and shall abide by the provisions of the Tender and Bidding Law regarding tenders.

According to the Tender and Bidding Law and the Tender and Bidding Implementation Regulations, uniform classification standards and management measures will be applied to the experts in the evaluation of bids. Provincial governments and the relevant authorities of the State Council shall establish a comprehensive pool of bidding evaluation experts. The bidding evaluation committee established by the tenderer in accordance with law shall be responsible for the evaluation of the bids. The bidding evaluation committee of a project for which a tender is required by law shall be composed of the representatives of the tenderer and experts in the relevant technological, economic, and other fields. Experts shall be determined by random selection from the list of experts of relevant fields in the pool of bidding evaluation experts.

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LAWS AND REGULATIONS IN RELATION TO PUBLIC-PRIVATE PARTNERSHIP (PPP) PROJECTS

According to the Guiding Opinions of National Development and Reform Commission on Carrying out Public-Private Partnerships《國家發展改革委關於開展政府和社會資本合作的指導意 ( 見》(發改投資[2014]2724號) promulgated by the NDRC on and with effect from 2 December 2014, the public-private partnership (the “PPP”) model refers to the benefit sharing, risk sharing and long-term cooperative relationship established with private capital by the government through franchise, purchase of service or equity cooperation, in order to increase the capacity in supply of public products and enhance the supply efficiency. The PPP model is mainly applicable to the public services and infrastructure projects that are provided by the government and suitable for market-based operation.

According to the Circular of the Ministry of Finance on Issues Concerning the Promotion and Application of the Public- Private-Partnership Model《財政部關於推廣運用政府和社會資本合作模 ( 式有關問題的通知》(財金[2014]76號)) promulgated by the Ministry of Finance of the PRC (the “MOF”) on and with effect from 23 September 2014, the Circular of the MOF on Issues Concerning the Implementation of the Demonstration Project Cooperated between Governments and Social Capitals《財政部關於政府和社會資本合作示範項目實施有關問題的通知》 ( (財金[2014]112 號)) promulgated by the MOF on and with effect from 30 November 2014 and the Circular of the MOF on Regulating the Management of Co-operative Contracts between Governments and Social Capitals (《財政部關於規範政府和社會資本合作合同管理工作的通知》(財金[2014]156號)) promulgated by the MOF on and with effect from 30 December 2014, government authorities have set up a series of guidelines on the cooperation between governments and social capitals under the PPP model, including project management and co-operative contract management.

The Notice of the General Office of the State Council on Forwarding the Guiding Opinions of the MOF, the DNRC, and the People’s Bank on the Promotion of Public-Private-Partnership Models in the Public Service Sector《國務院辦公廳轉發財政部、發展改革委、人民銀行關於在公共服務領 ( 域推廣政府和社會資本合作模式指導意見的通知》(國辦發[2015]42號)), promulgated by the General Office of the State Council on 19 May 2015, proposes that the promotion of the Public-Private-Partnership model in the public service sector is an important reform measure to transform government functions, stimulate market vitality, and create new economic growth points.

According to the Guiding Opinions of the MOF on Increasing State-owned Capital Investment in Public Welfare Industries (《財政部關於國有資本加大對公益性行業投入的指導意見》(財建 [2017]743號)) promulgated by the MOF on and with effect from 16 November 2017, the government requires to increase the investment of state-owned capital in public welfare industries in various forms. Central enterprises are encouraged to increase investment in energy conservation and environmental protection, scientific research, and other public welfare industries specified in the documents of Central Committee of the Communist Party of China and the State Council. Local governments can encourage local state-owned enterprises to increase investment in public welfare industries such as urban management infrastructure based on actual development. Specific forms include arranging fiscal funds, allocating government assets, state-owned capital investment and operating company for allocating capital, government investment funds, and government and social capital cooperation (PPP), etc.

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Meanwhile, in order to strictly regulate the management of PPP projects, the MOF promulgated the Notice on Regulating the Management of the Project Database of the Public-Private-Partnership (PPP) Integrated Information Platform《關於規範政府和社會資本合作 ( (PPP)綜合信息平台項目庫管理的通知》(財辦金[2017]92號)) on 10 November 2017. According to the notice, financial departments at all governmental levels should strictly enforce the standards and management requirements for the project management database, and projects which cannot fulfill the above standards and requirements, or have incomplete information shall be removed out of the database. Projects under one of the following conditions are not allowed to be stored in the database: (1) PPP model is not suitable for the project; (2) preliminary preparations of the project are not up to the standard; (3) a pay-for-use mechanism is not established for the project. Projects that fall under the aforementioned items (1) and (2) or under one of the following conditions should be removed out of the database: (i) the two rounds of discussion about the feasibility of the PPP project are not carried out in accordance with the regulations; (ii) it is not appropriate to adopt the PPP model; (iii) it does not meet the compliance requirements; (iv) it constitutes guarantee or borrowing in violation of laws and regulations; (v) it does not disclose information as required. All provincial finance departments should complete the clean-up of the project management database in their area before 31 March 2018.

On 24 April 2018, the MOF promulgated the Circular of the MOF on Further Strengthening the Normative Management of Demonstrative Public-Private-Partnership (PPP) Projects《財政部關於進 ( 一步加強政府和社會資本合作(PPP)示範項目規範管理的通知》(財金[2018]54號)), and clarified that local finance departments at various governmental levels shall take appropriate measures to handle the 173 identified projects that are found problematic, including being removed out of the list of problematic projects; or withdrawing from the project library of the National PPP Integrated Information Platform (the “project library”); or making rectifications within the time limit and determining whether to be removed out of the list of problematic projects or withdraw from the project library based on the results of the rectification.

After the clearance and rectification of PPP projects during 2017 to 2018, the Implementation Opinions of the MOF on Promoting the Development of Public-Private-Partnership Standards《財政 ( 部關於推進政府和社會資本合作規範發展的實施意見》(財金[2019]10號)) was promulgated by the MOF on 7 March 2019, which clarified that the promotion of using the PPP model in the field of public services, introducing social forces to participate in the supply of public services and improving the quality and efficiency of supply is a major decision made by the Central Committee of the Communist Party of China and the State Council. Financial departments at all levels should further raise awareness, follow the principles of compliant operation, strict supervision, openness and transparency, honest performance of contracts”, and steadily promote the development of PPP standards. According to the above implementation opinions, financial departments at all governmental levels should work with relevant departments to take multiple measures to strengthen compliant management, to enhance classification guidance, and to increase policy support for key areas and key projects. On 10 February 2020, the China Public Private Partnerships Center issued the Notice on Accelerating the Strengthening of the Storage and Reserve Management of Public-Private-Partnership (PPP) Projects《關於加快加強政府和社會資本合作 ( (PPP)項目入庫和儲備管理工作的通知》(財政企函[2020]1號)), further requiring the acceleration of the progress of project data management, and promoting PPP projects as a means to safeguard investment.

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LAWS AND REGULATIONS IN RELATION TO SEEDLINGS PLANTING AND SALES

Forest Seed Production and Operation License (林木種子生產經營許可證)

According to the Seed Law of the People’s Republic of China《中華人民共和國種子法》 ( ) (the “Seed Law”), which was promulgated by the SCNPC on 8 July 2000 and with effect from 1 December 2000, last amended on 4 November 2015 and with effect from 1 January 2016, and the Measures for the Management of Forest Seed Production and Operation License《林木種子生產經營許可證管理辦 ( 法》) which was promulgated by the National Forestry Administration (predecessor of the National Forestry and Grassland Administration) on 19 April 2016 and with effect from 1 June 2016, enterprises engaged in the management of forest seeds and the main forest seed production shall apply for and obtain the Forest Seed Production and Operation License from the competent agriculture and forestry departments at or above the county level, and engage in the production and business operation activities within the scope of the Forest Seed Production and Operation License.

Seedling Certificate and Seedling Quarantine Certificate (苗木標簽及苗木質量檢驗證書)

According to the Seed Law, seeds to be sold shall meet the national or industrial standards and attach with seedling certificates and introductions. The contents of seedling certificates and instructions shall be consistent with the seedlings to be sold. Enterprises and individuals that engage in the production and operation of seedlings shall be responsible for the authenticity of contents of seedling certificates and the seedling quality. Seedling certificates shall indicate types of seedlings, names of varieties, numbers of variety examination and approval or registration, suitable planting areas and seasons, the name of producers and operators, registration places, quality index, number of the Phytosanitary Certificate, number of the Forest Seed Production and Operation License, information code and other matters stipulated by the competent agriculture and forestry departments under the State Council.

According to the Opinions of the National Forestry Administration on Strengthening the Administration of the Quality of Tree Seeds and Seedlings《國家林業局關於加強林木種苗質量管理 ( 的意見》(林場發[2014]81號)), which was promulgated by the National Forestry Administration on 4 June 2014, seedling producers and operators shall conduct self-examination or entrust others to exam the seedlings they produce and operate, issue Seedling Quarantine Certificate, and be responsible for the quality.

The Phytosanitary Certificate (植物檢疫證書)

The Phytosanitary Regulation《植物檢疫條例》 ( ), promulgated by the State Council on and with effect from 3 January 1983, last amended on and with effect from 7 October 2017 provides that all seeds, seedlings, and other propagation materials, regardless of whether they are included in the list of plants and plant products subjected to quarantine, or where they are shipped to, they must be quarantined before being dispatched. When transferring the aforementioned plants and plant products between provinces, autonomous regions, and municipalities directly under the Central Government, the importing unit must obtain the prior consent of the phytosanitary agency of the province, autonomous region, or municipality where it is located, and submit phytosanitary requirements to the exporting unit. The exporting unit must comply with the phytosanitary requirements and apply for

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License for Water Drawing (取水許可證)

According to the Water Law of the PRC《中華人民共和國水法》 ( ) promulgated by the SCNPC on 21 January 1988 and with effect from 1 July 1988, last amended on and with effect from 2 July 2016, the Regulation on the Administration of the License for Water Drawing and the Levy of Water Resource Fees《取水許可和水資源費徵收管理條例》 ( ) promulgated by the State Council on 21 February 2006 and with effect from 15 April 2006, last amended on and with effect from 1 March 2017, and the Administrative Measures for the License for Water Drawing《取水許可管理辦法》 ( ) promulgated by the Ministry of Water Resources on 9 April 2008 and with effect from the same day, last amended on and with effect from 22 December 2017, the drawing of water directly from natural resources (i.e. rivers, lakes or underground water) shall comply with the license system of water drawing and, except for the circumstances prescribed in laws and regulations, shall apply for a license certificate for water drawing and pay for the water resource fees.

As at the Latest Practicable Date, we have already obtained the Forest Seed Production and Operation License, License for Water Drawing, and paid the water resource fees in accordance with the above provisions, and all tree seeds and seedlings we sold are accompanied by seedling quarantine certificate, seedling certificate and phytosanitary certificate.

LAWS AND REGULATIONS IN RELATION TO ENVIRONMENTAL PROTECTION

Environmental Protection Law of the PRC《中華人民共和國環境保護法》 ( ) (the “Environmental Protection Law”)

According to the Environmental Protection Law promulgated by the SCNPC on and with effect from 26 December 1989, last amended on 24 April 2014 and with effect from 1 January 2015, enterprises, institutions and other producers and operators discharging pollutants shall adopt measures to prevent and control environmental pollution and damage incurred during production, construction or other activities. Pollution prevention facilities in construction projects shall be designed, built and put into operation together with the main part of the project. Should enterprises, public institutions and other manufacturers and business operators violate the laws and regulations to discharge pollutants, which causes or might cause severe pollution, the competent department for environmental protection and other departments responsible for the supervision and administration of environmental protection under the people’s governments above the county level may seal up and sequester their facilities and equipment discharging pollutants.

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Law of the PRC on Environmental Impact Assessment《中華人民共和國環境影響評價法》 ( ) (the “Environmental Impact Assessment Law”)

Environmental Impact Assessment Law《中華人民共和國環境影響評價法》 ( ) was promulgated by the SCNPC on 28 October 2002 and with effect from 1 September 2003, last amended on and with effect from 29 December 2018. China implements classified management on environmental impact assessment of construction projects in accordance with the impact degree on environment of the construction projects. The construction project owners must organise the preparation of environmental impact reports and environmental impact statements or fill in the environmental impact registration form.

According to the Regulation on the Administration of Environmental Protection for Construction Project《建設項目環境保護管理條例》 ( ) promulgated by the State Council on and with effect from 29 November 1998, last amended on 16 July 2017 and with effect from 1 October 2017, construction project owners shall, depending on the level of the environmental impacts, submit environmental impact reports and the required environmental impact forms to the competent authority. For a construction project for which an environmental impact report or statement is prepared, its ancillary environmental protection facilities may go into production or be delivered for use only after they pass the acceptance check. For a construction project for which an environmental impact registration form shall be filled in, the construction project owners shall submit the environmental impact registration form to the competent administrative department of environmental protection at the county level of the locality of the construction project for record-filing.

LAWS AND REGULATIONS IN RELATION TO FOREIGN INVESTMENT

The Company Law of the PRC《中華人民共和國公司法》 ( ) (the “Company Law”)

The Company Law was promulgated by the SCNPC on 29 December 1993 and with effect from 1 July 1994, last amended on and with effect from 26 October 2018. Companies with limited liability and joint stock limited companies established in the PRC are governed by the Company Law. Except as otherwise provided in the foreign investment laws, foreign-invested enterprises are also subject to the Company Law.

The Foreign Investment Law of the PRC《中華人民共和國外商投資法》 ( ) (the “Foreign Investment Law”)

The Foreign Investment Law was approved at the Second Session of the Thirteenth National People’s Congress (the “NPC”) of the PRC on 15 March 2019 and with effect from 1 January 2020. The Law of the PRC on Sino-Foreign Equity Joint Ventures《中華人民共和國中外合資經營企業 ( 法》), the Law of the PRC on Foreign-invested Enterprises《中華人民共和國外資企業法》 ( ) and the Law of the PRC on Sino-Foreign Cooperative Joint Ventures《中華人民共和國中外合作經營企業 ( 法》) were repealed simultaneously.

The Foreign Investment Law stipulates that it shall implement the management systems of pre-establishment national treatment and “negative list” for foreign investment. The negative list shall

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The Foreign Investment Law further stipulates that a foreign investor may, in accordance with the law, freely transfer inward and outward its contributions, profits, capital gains, income from asset disposal, royalties of intellectual property rights, compensation or indemnity lawfully obtained, income from liquidation and so on within the territory of China in RMB or a foreign currency. In addition, the State shall protect the intellectual property rights of foreign investors and foreign-invested enterprises, and protect the legitimate rights and interests of holders of intellectual property rights and relevant right holders. In formulating normative documents concerning foreign investment, the people’s government at all levels and their relevant departments shall comply with laws and regulations. Where relevant laws and regulations are not available, the people’s government at all levels and their relevant departments shall not impair the legitimate rights and interests of or impose any additional obligation on a foreign-invested enterprise, set any condition for market access and withdrawal, or intervene any normal production and operation activity of a foreign-invested enterprise.

Merger and Acquisition Provisions

According to the Provisions on the Merger and Acquisition of Domestic Enterprises by Foreign Investors《關於外國投資者並購境內企業的規定》 ( ) jointly promulgated by the Ministry of Commerce (the “MOFCOM”) , the State-owned Assets Supervision and Administration Commission of the State Council, the China Securities Regulatory Commission, the State Administration of Taxation (the “SAT”), the State Administration for Industry and Commerce (the “SAIC”) and the State Administration of Foreign Exchange (the “SAFE”) on 8 August 2006 and with effect from 8 September 2006, last amended by the MOFCOM on and with effect from 22 June 2009, the mergers and acquisitions of domestic companies by foreign investors include foreign investors’ acquisition of equity in the domestic non-foreign-invested enterprise or subscribe for increased capital to convert the domestic non-foreign-invested enterprise into a foreign-invested enterprise; or foreign investors’ establishment of a foreign-invested enterprise to acquire the assets of the domestic non-foreign-invested enterprise by agreement and operates these assets; or foreign investors’ purchase of the assets from the domestic non-foreign-invested enterprise and invests such assets to establish foreign-invested enterprises for operation of such assets. In the event of merger and acquisition by a company, enterprise, or natural person in the PRC, in the name of a company that it has legitimately established or controls outside the PRC, of a domestic company affiliated thereto, the merger and acquisition shall be submitted to the MOFCOM for approval.

LAWS AND REGULATIONS IN RELATION TO INTELLECTUAL PROPERTY

Regulations on Copyright

The Copyright Law of the PRC《中華人民共和國著作權法》 ( ) (the “Copyright Law”) promulgated by the SCNPC on 7 September 1990 and with effect from 1 June 1991, last amended on 11 November 2020 and with effect from 1 June 2021, provides that Chinese citizens, legal persons, or unincorporated organisations shall, whether published or not, enjoy copyright in their works, which

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The Regulations for the Protection of Computer Software《計算機軟件保護條例》 ( ) was promulgated by the State Council on 4 June 1991 and with effect from 1 October 1991, last amended on 30 January 2013 and with effect from 1 March 2013. The current Regulations for the Protection of Computer Software is aimed at protecting the rights of the owners of software copyrights and adjusting interest relations in the process of software development, dissemination and use of software. The Computer Software Copyright Registration Measures《計算機軟件著作權登記辦法》 ( ) promulgated by the PRC Copyright Office on and with effect from 6 April 1992, last amended on and with effect from 20 February 2002, further provides the relevant matters about the registrations of software copyright, exclusive licensing contracts and transfer contracts for software copyrights.

Regulations on Patent

According to the Patent Law of the PRC《中華人民共和國專利法》 ( ) (the “Patent Law”) promulgated by the SCNPC on 12 March 1984 and with effect from 1 April 1985, last amended on 17 October 2020 and with effect from 1 June 2021, and the Implementation Rules of the Patent Law of the People’s Republic of China《中華人民共和國專利法實施細則》 ( ) promulgated by the Patent Office of the PRC (predecessor of the China National Intellectual Property Administration) on 19 January 1985 and with effect from 1 April 1985, last amended by the State Council on 9 January 2010 and with effect from 1 February 2010, the State provides patent protection for three types of patents, namely “invention”, “utility model” and “design”. Invention patents are valid for twenty years, while design patents and utility model patents are valid for fifteen years and ten years, respectively, from the date of application. However, according to the Interim Measures for the Processing of Relevant Examination Services Concerning the Implementation of the Revised Patent Law《關於施行修改後 ( 專利法的相關審查業務處理暫行辦法》 (國家知識產權局公告第423號)) promulgated by the China National Intellectual Property Administration on 24 May 2021 and with effect from 1 June 2021, design patents of which the date of application was on or before 31 May 2021 are valid for ten years 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, the patent will be granted to the person who files the application first. To be patentable, an invention or utility model must meet three criteria: novelty, inventiveness and practicability. A third party must obtain consent or a proper license from the patent owner to use the patent. Otherwise, the use constitutes an infringement of the patent rights.

Regulations on Trademark

Registered trademarks are protected by the Trademark Law of the PRC《中華人民共和國商標 ( 法》) (the “Trademark Law”), which was promulgated by SCNPC on 23 August 1982 and with effect from 1 March 1983, last amended on 23 April 2019 and with effect from 1 November 2019, as well as the Implementing Regulations of the Trademark Law of the PRC《中華人民共和國商標法實施條 (

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例》) promulgated by the State Council on 3 August 2002 and with effect from 15 September 2002, last amended on 29 April 2014 and with effect from 1 May 2014. Pursuant to the Trademark Law, registered trademarks include commodity trademarks, service trademarks, collective marks and certification marks.

The Trademark Office of National Intellectual Property Administration handles trademark registrations and grants a validity term of ten years to registered trademarks. Where a registered trademark needs to be used after the expiration of its validity term, the registration renewal application shall be filed within twelve months prior to the expiration of the term. A trademark registrant may license its registered trademark to another party by entering into a trademark license contract. Trademark license contracts must be filed with the Trademark Office to be recorded. The licensor shall supervise the quality of the commodities on which the trademark is used, and the licensee shall guarantee the quality of such commodities.

Regulations on Domain Name

According to the Administrative Measures for Internet Domain Names《互聯網域名管理辦法》 ( ) promulgated by the MIIT on 24 August 2017 and with effect from 1 November 2017, which replaced the PRC Administrative Measures for Internet Domain Names《中國互聯網絡域名管理辦法》 ( ) promulgated by the Ministry of Information Industry (predecessor of the MIIT) on 5 November 2004 and with effect from 20 December 2004, “domain name” shall refer to the character mark of hierarchical structure, which identifies and locates a computer on the internet and corresponds to the Internet protocol (IP) address of such computer. The principle of “first come, first serve” applies to domain name registration service. After completing the domain name registration, the applicant will become the holder of the registered domain name.

Protection for New Plant Varieties

According to the Seed Law, the State implements the protecting system for new plant varieties. The plant varieties that listed in the national list of protected plant varieties and are improved from the artificial selection and breeding or discovered wild plants, possess the novelty, specificity, consistency and stability, and are appropriately named shall be granted the right of new plant variety by the competent agriculture and forestry departments under the State Council, and the competent departments will protect the legitimate rights and interests of holders of rights of new plant varieties. Entities or individuals completing the breeding have the exclusive rights of their authorised varieties. No entity or individual shall, without the consent of the holder of right of new plant variety, produce, cultivate or sell the propagative materials of the said authorised variety, or produce the propagative materials of another variety by repeatedly using the propagative materials of the authorised varieties for commercial purposes.

LAWS AND REGULATIONS IN RELATION TO TAXATION

Regulations on Enterprise Income Tax

According to the Enterprise Income Tax Law of the PRC《中華人民共和國企業所得稅法》 ( ) (the “EIT Law”) promulgated by the NPC on 16 March 2007 and with effect from 1 January 2008, last amended by the SCNPC on and with effect from 29 December 2018, and the EIT Law and the

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Implementing Regulations of the Enterprise Income Tax Law of the PRC《中華人民共和國企業所得 ( 稅法實施條例》) (the “EIT Implementation Regulations”), which was promulgated by the State Council on 6 December 2007 with effect from 1 January 2008, and last amended on and with effect from 23 April 2019, the income tax rate for both domestic and foreign-invested enterprises is 25% commencing from 1 January 2008 with certain exceptions. For example, the income of enterprises engaged in cultivating and planting trees and seedlings shall be exempted from enterprise income tax; high-tech Enterprises to which the state need to give key support are given the reduced enterprise income tax rate of 15%.

According to the EIT Law and the Administrative Measures for the Accreditation of High-tech Enterprises《高新技術企業認定管理辦法》 ( ) and the Administrative Guides for the Accreditation of High-tech Enterprise《高新技術企業認定管理工作指引》 ( ) which were jointly promulgated by the Ministry of Science and Technology, the MOF and the SAT on 29 January 2016 and 22 June 2016 respectively, and both with effect from 1 January 2016, enterprises are entitled to enjoy the preferential enterprise income tax rate of 15% from the year in which they are accredited as high-tech enterprises. The validity period of the high-tech enterprise qualification shall be three years from the date of issuance of the certificate of high-tech enterprise. The enterprise can re-apply for such recognition upon expiry of the certificate of high-tech enterprise.

According to the Circular on Issues Concerning Tax Policies for In-depth Implementation of Western Development Strategies《關於深入實施西部大開發戰略有關稅收政策問題的通知》 ( (財稅[2011]58號)), which was jointly promulgated by the SAT, the MOF and the General Administration of Customs on 27 July 2011 with effect from 1 January 2011, and the Circular on Issues Concerning the Duration of Tax Policies for In-depth Implementation of Western Development Strategies《關於延續西部大開發企業所得稅政策的公告》 ( (財政部、稅務總局、國家發展改革委公告2020年第23號)), which was jointly promulgated by the MOF, the SAT and the NDRC on 23 April 2020, and with effect from 1 January 2021, provides that enterprises whose locations are in western region and whose principal business are the industrial projects prescribed in the Catalogue of Encouraged Industries in the Western Region《西部地區鼓勵類產業目錄》 ( (國家發展和改革委員會令第40號)), the income of which accounts for more than 60% of the total income of such enterprises, are entitled to enjoy the preferential enterprise income tax rate of 15% from 1 January 2011 to 31 December 2030. Projects related to shelter forest, natural forest and other natural resource protection, forest management, low-quality and low-efficiency forest transformation, national reserve forest construction, characteristic economic forest construction, carbon sequestration forest construction, tree and grass planting and forest grass seedling are listed on The Catalogue of Encouraged Industries in the Western Region.

Regulations on Value-Added Tax (the “VAT”)

According to the PRC Interim VAT Regulations《中華人民共和國增值稅暫行條例》 ( ) promulgated by the State Council on 13 December 1993 and with effect from 1 January 1994, last amended on and with effect from 19 November 2017, entities and individuals that sell goods or labor services of processing, repair or replacement, sell services, intangible assets, or immovables, or import goods within the territory of China are taxpayers of VAT and shall pay VAT according to the law. Unless otherwise stipulated, the VAT rate is 17% for taxpayers selling goods, labor services, or tangible movable property leasing services or importing goods; 11% for taxpayers selling transportation, postal, basic telecommunications, construction, or immovable leasing services, selling

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Pursuant to the Circular on Comprehensively Promoting the Pilot Programme of the Collection of VAT in Lieu of Business Tax《關於全面推開營業稅改征增值稅試點的通知》 ( (財稅[2016]36號)) and its annexes jointly promulgated by the MOF and the SAT on 23 March 2016 and with effect from 1 May 2016, last amended on 20 March 2019 and with effect from 1 April 2019, entities and individuals that sell services, intangible assets, or immovables in China shall pay VAT instead of business tax since 1 May 2016.

According to the Circular of the MOF and the SAT on Adjusting VAT Rates《財政部、稅務總 ( 局關於調整增值稅稅率的通知》(財稅[2018]32號)) jointly promulgated by the MOF and the SAT on 4 April 2018 and with effect from 1 May 2018, the tax rates for the taxable sales or goods import activity, which were subject to the tax rates of 17% and 11% respectively, were adjusted to 16% and 10% respectively.

According to the Announcement on Relevant Policies for Deepening VAT Reform《關於深化增 ( 值稅改革有關政策的公告》(財政部、稅務總局、海關總署公告2019年第39號)) jointly promulgated by the MOF, the SAT and the General Administration of Customs on 20 March 2019 and with effect from 1 April 2019, the tax rate of 16% and 10% originally applicable to the VAT taxable sales or import of goods by a general VAT taxpayer shall be adjusted to 13% and 9%, respectively.

According to the Announcement on Clarifying the VAT Exemption Policy for Small-scale Value-added Taxpayer《關於明確增值稅小規模納稅人免征增值稅政策的公告》 ( (財政部、稅務總局公告2021年第11號)) jointly promulgated by the MOF and the SAT on 31 March 2021 and with effect from the same day, and the Announcement of the Tax Collection and Administration Issues related to the Exemption of VAT for Small-scale Taxpayers《國家稅務總局關於小規模納稅人免征增值稅征管 ( 問題的公告》(國家稅務總局公告2021年第5號)) promulgated by the SAT on 31 March 2021 and with effect from 1 April 2021, small-scale VAT taxpayer whose taxable sales do not exceed a total monthly amount of RMB0.15 million (or a quarterly amount of RMB0.45 million if the applicable taxable period is quarterly) shall be exempted from VAT from 1 April 2021 to 31 December 2022.

Stamp Duty

According to the Provisional Regulation on Stamp Duty of the PRC《中華人民共和國印花稅 ( 暫行條例》) promulgated by the State Council on 6 August 1988 with effect from 1 October 1988, last amended on 8 January 2011 with effect from the same day, and the Implementation Rules of the Provisional Regulations on Stamp Duty of the PRC《中華人民共和國印花稅暫行條例施行細則》 ( ) promulgated by the MOF on 29 September 1988 with effect from 1 October 1988, last amended on 5 November 2004, entities and individuals who execute or receive taxable instruments within the territory of the PRC are subject to stamp duty. Taxable instruments include purchases and sales contracts, the undertaking of processing contracts, contracts for undertaking construction projects, property leasing contracts, commodity transport contracts, warehousing and safekeeping contracts, loan contracts, property insurance contracts, technology contracts and other documents of contractual

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Urban Maintenance and Construction Tax

According to the Interim Regulations on Urban Maintenance and Construction Tax of the PRC (《中華人民共和國城市維護建設稅暫行條例》) promulgated by the State Council on 8 February 1985 with effect from 1 January 1985, last amended and with effect from 8 January 2011, any organisation or individual liable to consumption tax, VAT and business tax shall be a payer of urban maintenance and construction tax and pay urban maintenance and construction tax. The rates of urban maintenance and construction tax for a taxpayer in a city is 7%, for a taxpayer in a county town or town is 5%, and for a taxpayer living in a place other than a city, county-level town or town is 1%.

According to the Circular on Forwarding the Notice of the State Council on Harmonising the Urban Maintenance and Construction Tax and Educational Surcharges for Chinese and Foreign-funded Enterprises and Individuals《關於統一內外資企業和個人城市維護建設稅和教育費附加制度的通 ( 知》(國發[2010]35號)) (the “Notice No. 35”) promulgated by the State Council on 18 October 2010 with effect from 1 December 2010, foreign-invested enterprises, foreign enterprises and foreign individuals shall be subject to the Interim Regulations on Urban Maintenance and Construction Tax of the PRC promulgated by the State Council in 1985 and the laws, regulations and policies by the State Council and competent finance and taxation authorities under the State Council since 1985 on urban maintenance as at 1 December 2010.

According to the Law on Urban Maintenance and Construction Tax《中華人民共和國城市維護 ( 建設稅法》), which was promulgated by the SCNPC on 11 August 2020 and will come into effect from 1 September 2021, the taxpayers of urban maintenance and construction tax are amended to entities and individuals whoever pay VAT or consumption tax within the territory of China, and urban maintenance and construction tax shall not be levied on the amount of VAT or consumption tax paid for imported goods or for labor services, services and intangible assets sold by overseas entities or individuals. In the meantime, the Interim Regulations on Urban Maintenance and Construction Tax promulgated by the State Council since 1985 shall be repealed simultaneously when the said law comes into effect.

Education Surcharge

According to the Interim Provisions on the Collection of Education Surcharge《徵收教育費附 ( 加的暫行規定》) promulgated by the State Council on 28 April 1986 with effect from 1 July 1986, last amended and with effect from 8 January 2011, any organisation or individual liable to consumption tax, VAT and business tax shall pay an education surcharge at a tax rate of 3%, unless such obliged taxpayer is instead required to pay a rural area education surcharge as stipulated under the Notice of the State Council on Raising Funds for Schools in Rural Areas《國務院關於籌措農村學校辦學經費 ( 的通知》(國發[1984]174號)) promulgated by the State Council on 13 December 1984 and with effect from the same day.

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According to the Notice No. 35, foreign-invested enterprises, foreign enterprises and foreign individuals shall be subject to the Interim Provisions on the Collection of Education Surcharge promulgated by the State Council in 1986 and the laws, regulations and policies by the State Council and competent finance and taxation authorities under the State Council since 1986 on Education Surcharge as at 1 December 2010.

Withholding Income Tax and Tax Treaties

The EIT Implementation Regulations provide that since 1 January 2008, an income tax rate of 10% will normally be applicable to dividends declared to non-PRC resident enterprise investors that do not have an establishment or place of business in the PRC, or that have such establishment or place of business but the relevant income is not effectively connected with the establishment or place of business, to the extent such dividends are derived from sources within the PRC. The income tax on the dividends may be reduced according to a tax treaty between China and the jurisdictions in which our non-PRC shareholders reside.

According to the Agreement between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Incomes《內地和香港特別行政區關於對所得避免雙重徵稅和防止偷漏稅 ( 的安排》) (the “Double Tax Avoidance Arrangement”) and other applicable PRC laws, if a Hong Kong resident enterprise is determined by the competent PRC tax authority having satisfied the relevant conditions and requirements under such Double Tax Avoidance Arrangement and other applicable laws, the withholding tax rate on the dividends the Hong Kong resident enterprise receives from a PRC resident enterprise may be reduced to 5%. However, according to the Circular of the SAT on Certain Issues with Respect to the Enforcement of Dividend Provisions in Tax Treaties《國家稅 ( 務總局關於執行稅收協定股息條款有關問題的通知》(國稅函[2009]81號)) promulgated by the SAT on and with effect from 20 February 2009, if the relevant PRC tax authorities determine, in their discretion, that a company benefits from such reduced income tax rate due to a structure or arrangement that is primarily tax-driven, such PRC tax authorities may adjust the preferential tax treatment. According to the Announcement of the SAT on Issues concerning the “Beneficial Owner” in Tax Treaties《國家稅務總局關於稅收協定中 ( “受益所有人”有關問題的公告》(國家稅務總局公告2018年第9號)) promulgated by the SAT on 3 February 2018 and with effect from 1 April 2018, agents and designated payees are not “beneficial owners”, and thus are not entitled to the above-mentioned reduced income tax rate of 5% under the Double Tax Avoidance Arrangement.

LAWS AND REGULATIONS IN RELATION TO FOREIGN EXCHANGE

The Administrative Regulations of the PRC on Foreign Exchange《中華人民共和國外匯管理條 ( 例》) (the “Foreign Exchange Administrative Regulations”) promulgated by the State Council on 29 January 1996 and with effect from 1 April 1996, last amended on and with effect from 5 August 2008, constitute an important legal basis for the PRC governmental authorities to supervise and regulate foreign exchange. The People’s Bank of China further promulgated the Administrative Regulations regarding Foreign Exchange Settlement, Sales and Payment《結匯、售匯及付匯管理規定》 ( ) (the “Settlement Regulations”) which regulates the settlement, sale and payment of foreign exchange on 20 June 1996 and with effect from 1 July 1996.

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According to the Foreign Exchange Administrative Regulations and the Settlement Regulations, RMB is generally freely convertible to foreign currencies for current account transactions (such as trade and service-related foreign exchange transactions and dividend payments), but not for capital account transactions (such as capital transfer, direct investment, securities investment, derivative products or loans), except where a prior approval from the SAFE and/or its competent local counterparts is obtained or registration with the SAFE and/or its competent local counterparts has been done.

Foreign-invested enterprises in the PRC may, without any approval from the SAFE and/or its competent local counterparts, purchase foreign exchange for dividend distribution, trade or services by providing certain documentary evidence (such as resolutions of the board of directors and certificates of tax payments etc.).

The Circular of the SAFE on Further Improving and Adjusting the Direct Investment Foreign Exchange Administration Policies《國家外匯管理局關於進一步改進和調整直接投資外匯管理政策 ( 的通知》(匯發[2012]59號)) (the “Circular No.59”) promulgated by the SAFE on 19 November 2012 with effect from 17 December 2012, partially amended on and with effect from 30 December 2019, substantially amends and simplifies the previous foreign exchange procedures. The major developments under the Circular No.59 are that the opening of various special purpose foreign exchange accounts (such as up-front fee foreign exchange account, foreign exchange capital account, asset realisation account, and margin account) no longer requires the approval of the SAFE. Furthermore, the limitation on opening of foreign exchange capital account and asset realisation account in different places, the limitation on the number of accounts opened for foreign exchange capital, and the capital inflow quota for a single foreign exchange capital account, are all cancelled by the Circular No.59. Reinvestment of RMB [REDACTED] by foreign investors in the PRC no longer requires the SAFE’s approval.

The Circular of the SAFE on Printing and Distributing the Administrative Provisions on Foreign Exchange in Domestic Direct Investment by Foreign Investors and Relevant Supporting Documents《關於印發 ( 〈外國投資者境內直接投資外匯管理規定〉及配套文件的通知》(匯發[2013]21 號)) promulgated by the SAFE on 10 May 2013 with effect from 13 May 2013, partially amended on and with effect from 30 December 2019, specifies that the administration by the SAFE or its competent local branches over foreign investors’ direct investment in the PRC shall be conducted in a registration manner. Institutions and individuals shall register with the SAFE and/or its competent local branches for their direct investment in the PRC. Banks shall process foreign exchange business relating to the direct investment in the PRC according to the registration information provided by the SAFE and/or its competent local branches. According to the Circular of the SAFE on Further Simplifying and Improving the Direct Investment-related Foreign Exchange Administration Policies (《國家外匯管理局關於進一步簡化和改進直接投資外匯管理政策的通知》(匯發[2015]13號)) (the “Circular No.13”) promulgated by the SAFE on 13 February 2015 and with effect from 1 June 2015, partially amended on and with effect from 30 December 2019, the foreign exchange registration under domestic direct investment and the foreign exchange registration under overseas direct investment (hereinafter collectively referred to as “direct investment-related foreign exchange registration”) will be directly reviewed and handled by banks, and the SAFE and its branches shall perform indirect regulation over the direct investment-related foreign exchange registration via banks.

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The SAFE promulgated the Circular of the SAFE on Reforming the Management Approach regarding the Settlement of Foreign Exchange Capital of Foreign-invested Enterprises《國家外匯管 ( 理局關於改革外商投資企業外匯資本金結匯管理方式的通知》(匯發[2015]19號)) (the “Circular No.19”) on 30 March 2015, which took effect on 1 June 2015 and partially amended on and with effect from 30 December 2019. The SAFE promulgated the Circular of the SAFE on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts《國家外 ( 匯管理局關於改革和規範資本項目結匯管理政策的通知》(匯發[2016]16號)) (the “Circular No.16”) on and with effect from 9 June 2016, which shall prevail in the event of any discrepancy between Circular No.19 and Circular No.16. According to the Circular No.19 and Circular No.16, the SAFE unified the policies on discretionary settlement of foreign exchange receipts under capital accounts of domestic institutions. Discretionary settlement of foreign exchange receipts under capital accounts refers to the case in which the foreign exchange receipts under capital accounts (including foreign exchange capital, foreign debts, and repatriated funds raised through overseas [REDACTED]) subject to discretionary settlement as expressly prescribed in the relevant policies may be settled with banks according to the actual need of domestic institutions for business operations. The proportion of discretionary settlement of the foreign exchange capital is settle up to 100%. Furthermore, the use of foreign exchange incomes of capital accounts by foreign-invested enterprises shall follow the principles of authenticity and self-use within the business scope of enterprises. The foreign exchange incomes of capital accounts and capital in RMB obtained by the foreign-invested enterprises from foreign exchange settlement shall not be used for the following purposes:

• directly or indirectly used for the payment beyond the business scope of the enterprises or the payment prohibited by relevant laws and regulations;

• directly or indirectly used for investment in securities or financial schemes other than bank guaranteed products unless otherwise provided by relevant laws and regulations;

• used for granting loans to non-connected enterprises unless otherwise permitted by its business scope; and

• used for the construction or purchase of real estate that is not for self-use (except for the real estate enterprises).

The Circular on Further Optimising the Cross-border RMB Policy to Support the Stabilisation of Foreign Trade and Foreign Investment《關於進一步優化跨境人民幣政策支持穩外貿穩外資的通 ( 知》(銀發[2020]330號)) jointly promulgated by the People’s Bank of China, the NDRC, the MOFCOM, the State-owned Assets Supervision and Administration Commission of the State Council, the China Banking and Insurance Regulatory Commission, and the SAFE on 31 December 2020 and with effect from 4 February 2021, further lifts the restriction on the RMB income use of part capital accounts. RMB income from capital accounts of domestic institutions (including foreign direct investment capital, cross-border financing and repatriation of funds raised from overseas [REDACTED]) shall be operated within the business scope approved by relevant state departments and shall be in line with specified circumstances:

• shall not be directly or indirectly used for the payment beyond the business scope of the enterprises or the payment prohibited by national laws and regulations;

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• shall not be directly or indirectly used for investment in securities unless otherwise expressly stipulated;

• shall not be used for granting loans to non-connected enterprises unless otherwise expressly permitted by its business scope; and

• shall not be used for the construction or purchase of real estate that is not for self-use (except for the real estate enterprises).

The SAFE Circular No.37

The Circular of the SAFE on Issues concerning Foreign Exchange Administration over the Overseas Investment and Financing and Round-trip Investment by Domestic Residents via Special Purpose Vehicles《關於境內居民通過特殊目的公司境外投融資及返程投資外匯管理有關問題的通 ( 知》(匯發[2014]37號)) (the “Circular No.37”) promulgated by the SAFE on and with effect from 4 July 2014 replaced the former circular commonly known as the “SAFE Circular No.75” promulgated by SAFE on 21 October 2005 and with effect from 1 November 2005. The Circular No.37 requires domestic residents to register with local counterparts of the SAFE in connection with their direct establishment or indirect control of an offshore entity, for the purpose of overseas investment and financing, with such domestic residents’ legally owned assets or equity interests in domestic enterprises or offshore assets or interests, referred to in Circular No.37 as a “special purpose vehicle”. The Circular No.37 further requires amendment to the registration in the event of any significant changes with respect to the special purpose vehicle, such as increase or decrease of capital contributed by PRC individuals, share transfer or exchange, merger, division or other material event. In the event that a PRC shareholder holding interests in a special purpose vehicle fails to fulfill the required SAFE registration, the PRC subsidiaries of that special purpose vehicle may be prohibited from making profit distributions to the offshore parent and from carrying out subsequent cross-border foreign exchange activities, and the special purpose vehicle may be restricted in its ability to contribute additional capital into its PRC subsidiary. Furthermore, failure to comply with the various SAFE registration requirements described above could result in liability under PRC law for evasion of foreign exchange controls.

According to the SAFE Circular No.13, the foreign exchange registration under overseas direct investment, including the initial and alteration registration in accordance with the Circular No.37, will be no longer reviewed and handled by the SAFE and its competent local counterparts, and these authorities are subordinate to the local banks.

LAWS AND REGULATIONS IN RELATION TO LABOR AND SOCIAL INSURANCE

According to the Labor Law of the PRC《中華人民共和國勞動法》 ( ) promulgated by the SCNPC on 5 July 1994 and with effect from 1 January 1995, last amended on and with effect from 29 December 2018, and the Labor Contract Law of the PRC《中華人民共和國勞動合同法》 ( ) promulgated by the SCNPC on 29 June 2007 and with effect from 1 January 2008, last amended on 28 December 2012 and with effect from 1 July 2013, and the Implementing Regulations of the Labor Contract Law of the PRC《中華人民共和國勞動合同法實施條例》 ( ) promulgated by State Council on and with effect from 18 September 2008, labor contracts in written form shall be executed to establish labor relationships between employers and employees. Wages cannot be lower than local minimum

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According to the applicable PRC laws, including the Social Insurance Law of the PRC《中華 ( 人民共和國社會保險法》) promulgated by the SCNPC on 28 October 2010 and with effect from 1 July 2011, last amended on and with effect from 29 December 2018, the Interim Measures on the Collection and Payment of Social Security Funds《社會保險費征繳暫行條例》 ( ) promulgated by the State Council on and with effect from 22 January 1999, last amended on and with effect from 24 March 2019, the Interim Measures concerning the Maternity Insurance for Enterprise Employees《企 ( 業職工生育保險試行辦法》) promulgated by the Ministry of Labor (predecessor of the Ministry of Human Resources and Social Security) on 14 December 1994 and with effect from 1 January 1995, the Regulations on Occupational Injury Insurance《工傷保險條例》 ( ) promulgated by the State Council on 27 April 2003 and with effect from 1 January 2004, last amended on 20 December 2010 and with effect from 1 January 2011, and the Regulations on the Administration of Housing Provident Funds《住房公積金管理條例》 ( ) promulgated by the State Council on and with effect from 3 April 1999, last amended on and with effect from 24 March 2019, employers are required to contribute, on behalf of their employees, to a number of social security funds, including funds for basic pension insurance, unemployment insurance, basic medical insurance, occupational injury insurance, maternity insurance and to housing provident funds. These payments are made to local administrative authorities and any employer who fails to contribute may be fined and ordered to make good the deficit within a stipulated time limit.

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HISTORY AND DEVELOPMENT OF OUR GROUP

Overview

Our history can be traced back to October 2008, when Mr. Li, one of our Controlling Shareholders, together with his friends and his former colleagues in Inner Mongolia Mengniu Dairy (Group) Co., Ltd. (內蒙古蒙牛乳業(集團)股份有限公司) （“Mengniu”） (the “Initial Members”), established Mengshu Group. Mr Li and his former colleagues believed that by taking advantage of their management experience obtained when working for Mengniu, they could, through Mengshu Group, participate in local afforestation to create a better environment for Inner Mongolia. Several of the Initial Members invested in Mengshu Group through Inner Mongolia Xinniu Livestock Farming Industry Investment Management Co., Ltd.* (內蒙古馨牛畜牧業投資管理有限公司)(“Xinniu Muye”) while the others invested directly in their own capacity. The initial registered capital of Mengshu Group was RMB22 million, which was funded by Mr. Li and the Initial Members with their respective personal financial resources. Mengshu Group commenced its business of seedling plantation with an initial plantation base of approximately 500 mu.

In 2011, those Initial Members who invested through Xinniu Muye decided to focus on individual business or personal life. In the same year, Mr. Zhao, who was also a former colleague of Mr. Li, was introduced to Mengshu Group for his expertise in corporate management. Having considered (i) the market prospect, (ii) the success of other market players, and (iii) the land resources for plantation bases secured by Mengshu Group in Inner Mongolia, Mr. Zhao was confident that Mengshu Group would have a promising future in the ecological and environmental protection industry. Thus, Mr. Zhao decided to join Mengshu Group in February 2011. As a result, in May 2011, Xinniu Muye transferred its equity interests in Mengshu Group to Mr. Li, several of the Initial Members who decided to stay, and newly joined shareholders including Mr. Zhao. Eventually, save for Mr. Li, the rest of the Initial Members left our Group in March 2012. See “History and Development of our Group — Corporate development — Mengshu Group” in this section.

In December 2012, Green Thrive HK being our first [REDACTED], invested RMB[REDACTED] million in our Group and in September 2017, we received investment [REDACTED] of approximately US$[REDACTED] million from another [REDACTED], Fort Minor. See the paragraph headed “[REDACTED]” in this section for further details.

Under the leadership of Mr. Zhao, coupled with the unremitting efforts of our Directors, senior management and staff, our Group gradually expanded its businesses from seedling plantation to integrated service covering project design, construction, and maintenance as well as seedling supply to our project customers. Headquartered in Inner Mongolia, we expanded our footprint across a number of provinces, including Hebei, Shanxi, Henan, Anhui, Shandong and Guizhou. See “Business”.

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Key Business Development Milestones

The following table sets out the key business development milestones of our Group:

Year Milestone Event

2008 We established Mengshu Group in October in Helinger, Inner Mongolia and commenced our business of seedling plantation.

2011 We expanded our plantation base from initially approximately 500 mu to approximately 4,600 mu.

2012 We, as the implementation party, undertook the construction of the Shengle Project in December, which is the first carbon sink forest project constructed by us.

2013 The Shengle Project met the Clean Development Mechanism (“CDM”) registration requirements under Kyoto Protocol of the United Nations Framework Convention on Climate Change (“UNFCCC”), and the project was successfully registered as the forestation and reforestation project under the CDM Executive Board of the UNFCCC in January, which enables us to trade in the carbon sink market upon its completion.

2014 We established Inner Mongolia Hesheng Ecological Technology Research Institute in January, to research and develop new species of seedlings and our plantation and ecological restoration techniques, which provides the technological support for our sustainable development.

We were awarded “Inner Mongolia Hesheng National Forest Tree Seedling Base* (內蒙古和盛國家林木種苗基地)” by State Forestry Administration* (國家林業和草原局) in September.

2015 We undertook the research and development project of “Special Technology Project in Inner Mongolia Autonomous Region* (內蒙古自治區重大科技專項)” in January, being the “Model and Aggregation of Key Technology in respect of Building Ecological Safeguards in Northern PRC* (北方生態屏障建設關鍵技術集成與示範)”, under which we applied more than 20 patents, published 20 academic articles, cultivated two new seedling species and released one publication.

2016 We cooperated with Beijing Forestry University (北京林業大學) and established a collaborative seedling innovative centre of Hesheng—Beilin Forest Tree Seedling Coordination and Innovation Centre* (和盛—北林林木育種協同創新中心) in March, through which we improved our plantation technology and successfully cultivated the new seedling species of Wuxuyang series* (無絮楊系列).

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Year Milestone Event

We established Beijing Mengshu Landscape Design in August, and since then, we have offered integrated services covering project design, construction, and maintenance as well as seedling supply to our project customers.

We, as the implementation party, undertook the construction of the winter olympics carbon sink forest project located in Zhangjiakou, Hebei Province in September, our first project out of Inner Mongolia.

2018 We were awarded 2017 Autonomous Region Chairman Quality Award* (2017年自治區主席質量獎) by Quality Supervision Bureau of Inner Mongolia Autonomous Region* (內蒙古質監局) in October. The award is the highest quality honor award established by the People’s Government of Inner Mongolia and over the years, the winners of this award are the leading corporations in the region, such as Mengniu, Yili Group* (伊利集團) and Inner Mongolia M-Grass Ecology and Environment (Group) Co., Ltd.* (內蒙古蒙草生態環境(集團)股份有限公司).

2019 Our business further expanded into several provinces of the PRC, including Shanxi, Henan, Anhui and Shandong, through which we continue to promote our expansion strategy.

Our new species of plants, Mengshu No. 2* 蒙樹2號楊 with the characteristics of no popular flakes, was awarded 2019 Inner Mongolia third prize of Science and Technology Progress Award* (2019年度自治區科學技術進步三等獎)bythe People’s Government of Inner Mongolia in December.

2020 We were awarded as Top 50 National Urban Landscaping and Greening Enterprise* (全國城市園林綠化企業50強) and National Excellence Operation Efficiency Enterprise* (中國傑出經營效率園林企業) by China Flower & Gardening News* (中國花卉報) in July.

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Corporate development

Summary

As at the Latest Practicable Date, our Group had 24 subsidiaries and two partnerships, among which three are investment holding companies, six are project companies, 14 are subsidiaries with business operation, one is a subsidiary established for the purpose of a project which has not yet been commenced and two are partnerships with business operation. The following table sets out details of our subsidiaries and partnerships as at the Latest Practicable Date:

Shareholder(s) as at the Latest Practicable Date Principal (approximate Date of Business shareholding No. Company Name establishment Activities percentage)

1. Beijing Mengshu 16 October 2002 Ecological and Mengshu Group Ecological environmental (100%)(1) protection construction

2. Inner Mongolia Mengshu 13 April 2006 Landscaping Beijing Mengshu Landscape Design design Landscape Design (100%)(2)

3. Mengshu Group 29 October 2008 Seedling Mengshu HK plantation and (83.99%) sales He Yu Sheng (16.01%)

4. Inner Mongolia Mengshu 12 December Ecological and Mengshu Group Ecological 2011 environmental (77.02%)(8) protection and construction

5. Inner Mongolia Heyuan 21 June 2013 Agricultural Mengshu Group Gusheng Agricultural technology (100%) Technology development

6. Inner Mongolia Hesheng 21 January 2014 Research and Mengshu Group Ecological Technology development (100%) Research Institute

7. Hesheng Ecological 20 May 2015 Seedling Mengshu Group Dengkou plantation and (100%) sales

8. Beijing Mengshu 28 January 2016 Investment Mengshu Group Investment Management management (100%)(3)

9. Beijing Mengshu 17 August 2016 Landscaping Mengshu Group Landscape Design design (75%)(8)

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Shareholder(s) as at the Latest Practicable Date Principal (approximate Date of Business shareholding No. Company Name establishment Activities percentage)

10. Mengshu HK 19 September Investment Mengshu BVI 2016 holding (100%)

11. Inner Mongolia Mengshu 23 February 2017 Greenery Mengshu Group Greenery Maintenance maintenance (100%) Service

12. Mengshu BVI 5 September 2017 Investment The Company holding (100%)

13. Guizhou Mengshu Ecology 3 January 2018 Ecological and Mengshu Group environmental (90%)(4)(8) protection construction

14. Hulun Bei’er City 23 March 2018 Greenery Mengshu Group Haisheng Greenery maintenance (95%)(8) Management

15. Hohhot Chengchi I 6 July 2018 Investment Shenzhen Kunxing Industrial Development management No.3 (59.99%)(5) Fund

16. Chifeng Mengshu 17 September Seedling Mengshu Group Landscape 2018 plantation and (100%) sales

17. He Yu Sheng 12 November Investment Mengshu HK 2018 holding (100%)

18. Shenzhen Kunxing No.3 13 November Investment and Mengshu Group 2018 business (94.95%)(6)(8) management consultancy

19. Zhenning Autonomous 6 December 2019 Ecological and Mengshu Group County Mengshu environmental (88%)(8) Landscaping protection Construction(9) construction

20. Inner Mongolia Yuanyuan 20 December Hospitality Beijing Mengshu Zhihui Culture and 2019 management and Investment Tourism culture and Management tourism (100%) development

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Shareholder(s) as at the Latest Practicable Date Principal (approximate Date of Business shareholding No. Company Name establishment Activities Project(7) percentage)

PPP Project company

21. Inner Mongolia 24 March 2017 Project company Chifeng City Mengshu Group Hesheng Mengshu Aohan Banner (95%)(8) Greenery District PPP Engineering Project (赤峰市敖漢旗城區及重點區域綠化 PPP項目)

22. Hulun Bei’er City 14 December Project company Hulun Bei’er Beijing Mengshu Shengxin City 2018 PPP Project (呼 Ecological Engineering 倫貝爾新區棚改 (98.01%)(8) 配套基礎設施建設PPP項目)

23. Yu County 13 June 2019 Project company Yu County PPP Mengshu Group Mengshu Project (盂縣香 (89%)(8) Landscaping 河濱水空間環境 Engineering 綜合治理工程PPP項目)

24. Xun County 26 July 2019 Project company Xun County PPP Mengshu Group Mengshu Forestry Project (浚縣國 (93%)(8) 家儲備林PPP建設項目)

25. Chifeng City 31 July 2019 Project company Chifeng City Mengshu Group Mengzhishu Nanshan PPP (97.90%)(8) Greenery Project (赤峰市 Engineering 南山景觀綠化提升工程PPP項目)

26. Anqing City 13 December Project company Anqing PPP Mengshu Group Mengshu Greenery 2019 Project (安徽省 (78%)(8) Management 安慶市迎江區沿江生態廊道及林業景觀提升PPP 項目)

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Notes:

(1) Mengshu Group acquired the entire equity interests in Beijing Mengshu Ecological from three Independent Third Parties in November 2016. See “Major Historical Acquisitions and Disposals” in this section for details.

(2) Beijing Mengshu Landscape Design acquired the entire equity interests in Inner Mongolia Mengshu Landscape Design from two Independent Third Parties in August 2017. See “Major Historical Acquisitions and Disposals” in this section for details.

(3) Mengshu Group acquired the entire equity interests in Beijing Mengshu Investment Management from two Independent Third Parties in March 2017. See “Major Historical Acquisitions and Disposals” in this section for details.

(4) Mengshu Group acquired 90% of the equity interests in Guizhou Mengshu Ecology from two Independent Third Parties in June 2018. See “Major Historical Acquisitions and Disposals” in this section for details.

(5) Shenzhen Kunxing No.3 subscribed for 59.99% partnership interests in Hohhot Chengchi I Industry Development Fund in March 2019.

(6) We acquired the entire partnership interests in Shenzhen Kunxing No. 3 from two Independent Third Parties in March 2019. In August 2019, an Independent Third Party subscribed for certain amount in respect of the increased capital contribution of Shenzhen Kunxing No. 3 and as a result, the partnership interests held by Mengshu Group and Beijing Mengshu Investment Management were diluted to 94.95%.

(7) Project refers to the respective PPP project undertaken by such entity during the Track Record Period and up to the Latest Practicable Date.

(8) See “Corporate Structure — Corporate Structure after Reorganisation and [REDACTED] and immediately prior to [REDACTED]” in this section for details in respect of the remaining equity interests or partnership interests in respective subsidiaries or partnerships.

(9) The company was established for the purpose of a project, which has not yet been commenced as at the Latest Practicable Date.

Mengshu Group

We set out below a summary of the changes in the equity interests in Mengshu Group, our principal subsidiary.

Establishment of Mengshu Group

Mengshu Group was established under the laws of the PRC as a limited liability company on 29 October 2008, with an initial registered capital of RMB22 million. Upon its establishment, Mengshu Group was owned as to approximately 7.35% by Mr. Li, 81.82% by Xinniu Muye, and the remaining 10.83% was owned by five individuals, who are Mr. Li’s former colleagues and friends. Xinniu Muye in turn was owned by eight individuals, of whom, two are the spouses of Mr. Liu and Ms. Ma, respectively and the rest are Mr. Li’s former colleagues and friends.

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The Introduction of Mr. Zhao and Exit of Xinniu Muye

In December 2008, the registered capital of Mengshu Group was increased from RMB22 million to RMB22.50 million and in May 2011, the registered capital of Mengshu Group was further increased from RMB22.50 million to RMB37.50 million, of which approximately RMB0.55 million was contributed by Mr. Li, RMB0.67 million was contributed by Mr. Zhao and RMB0.88 million was contributed by Ms. Guo Jinchun (郭瑾春)(“Ms. Guo”), all of whom are our Controlling Shareholders, and the rest was contributed by ten Independent Third Parties. At the same time, Xinniu Muye transferred (i) certain percentages of the equity interests in Mengshu Group to Mr. Li, Mr. Zhao and Ms. Guo for considerations of RMB6.60 million, RMB4.01 million and RMB2.26 million, respectively, which were determined based on the then registered capital of Mengshu Group, and (ii) 13.69% of the equity interests in Mengshu Group to three Independent Third Parties. In October 2011, the registered capital of Mengshu Group was increased from RMB37.50 million to RMB45.00 million, of which approximately RMB1.83 million was contributed by Mr. Li, RMB0.94 million was contributed by Mr. Zhao, RMB0.63 million was contributed by Ms. Guo and the rest was contributed by 11 Independent Third Parties. Upon completion of the capital increase and transfer of equity interests, Mengshu Group was owned as to 24.38% by Mr. Li, 12.48% by Mr. Zhao, 8.36% by Ms. Guo and 54.78% by 11 Independent Third Parties.

The Introduction of Ms. Ma, Mr. Liu and Mr. Qiu and the Entrustment Arrangement

In March 2012, Mr. Guo and 11 Independent Third Parties transferred 63.14% of the equity interests in Mengshu Group to Mr. Li, Mr. Zhao, Ms. Ma and Mr. Liu for considerations of approximately RMB4.33 million, RMB6.28 million, RMB12.3 million and RMB5.50 million, respectively, which were determined based on the then registered capital of Mengshu Group. At the same time, the registered capital of Mengshu Group was increased from RMB45 million to RMB65 million, and of the increased amount, RMB7.25 million was contributed by Mr. Liu for a consideration of RMB19.03 million and RMB12.75 million was contributed by Mr. Qiu, one of our Controlling Shareholders, for a consideration of RMB33.47 million. The considerations were determined based on the then independent valuation of Mengshu Group and after arm’s length negotiation among the parties. In respect of the equity interests in Mengshu Group held by Mr. Liu, Mr. Liu held the same as trustee for Mr. Li. The entrustment arrangement was made to render each of Mr. Li, Mr. Liu and Mr. Zhao prima facie similar level of shareholding in our Group in order to provide Mr. Zhao a strong position to deal with our business partners. Prior to the completion of the Reorganisation, the entrustment arrangement had been terminated. See “Reorganisation — Changes in the equity interests in Mengshu Group during the Reorganisation — (ii) Revocation of entrustment by Mr. Li” in this section for further details. Upon completion of transfer of equity interests and capital increase, Mengshu Group was owned as to 23.54% by Mr. Li, 19.615% by Mr. Liu (on trust for Mr. Li), 18.31% by Mr. Zhao, 19.615% by Mr. Qiu, and 18.92% by Ms. Ma.

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The Introduction of Ms. Hou, Green Thrive HK, Shenglin and Mengsheng

In June 2012, the registered capital of Mengshu Group was increased from RMB65 million to RMB75 million, the increased amount of which was contributed by Ms. Hou, for a consideration of RMB30 million, which was determined based on the then independent valuation of Mengshu Group and after arm’s length negotiation among the parties. Upon completion of the capital increase, Mengshu Group was owned as to 20.40% by Mr. Li, 17% by Mr. Liu (on trust for Mr. Li), 15.87% by Mr. Zhao, 17% by Mr. Qiu, 16.40% by Ms. Ma and 13.33% by Ms. Hou.

In December 2012, Green Thrive HK, acquired 11.765% of the equity interests in Mengshu Group through subscription of the increased registered capital. Upon completion of the subscription, the registered capital of Mengshu Group increased from RMB75 million to RMB85 million and Mengshu Group was owned as to 18%, 15%, 14%, 15%, 14.47%, 11.765% and 11.765% by Mr. Li, Mr. Liu (on trust for Mr. Li), Mr. Zhao, Mr. Qiu, Ms. Ma, Ms. Hou and Green Thrive HK. See “[REDACTED] — Green Thrive Group [REDACTED] Overview” in this section for further details.

In February 2014, an initial acting-in-concert arrangement was formed among Mr. Li, Mr. Zhao, Mr. Liu and Mr. Qiu (together as the “Initial Acting-in-Concert Parties”) through entering into an acting-in-concert agreement. See “Relationship With Controlling Shareholders — Overview — Company Controlling Shareholders Group — Acting-in-concert arrangement” in this document for further details.

In December 2015, Shenglin subscribed for RMB11.4 million in respect of increased registered capital in Mengshu Group for a consideration of RMB35.34 million. On the same day, Mr. Zhao subscribed for RMB6 million in respect of the increased registered capital in Mengshu Group for a consideration of RMB18.6 million. Both considerations were determined based on the then independent valuation of Mengshu Group and after arm’s length negotiation among the parties. Upon completion of the subscription, the registered capital of Mengshu Group was increased from RMB85 million to RMB102.4 million and Mengshu Group was owned as to 14.941%, 12.451%, 17.480%, 12.451%, 12.012%, 9.766%, 9.766% and 11.133% by Mr. Li, Mr. Liu (on trust for Mr. Li), Mr. Zhao, Mr. Qiu, Ms. Ma. Ms. Hou, Green Thrive HK and Shenglin.

In January 2016, Mengsheng subscribed for RMB12.5 million in respect of the increased registered capital in Mengshu Group for the consideration of RMB70 million, which was determined based on the then independent valuation of Mengshu Group and after arm’s length negotiation among the parties. Upon completion of the subscription, the registered capital of Mengshu Group was increased from RMB102.4 million to RMB114.9 million and Mengshu Group was owned as to 13.316%, 11.097%, 15.579%, 11.097%, 10.705%, 8.703%, 8.703%, 9.922% and 10.879% by Mr. Li, Mr. Liu (on trust for Mr. Li), Mr. Zhao, Mr. Qiu, Ms. Ma. Ms. Hou, Green Thrive HK, Shenglin and Mengsheng.

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In February 2016, the Initial Acting-in-Concert Parties entered into a new acting-in-concert agreement with Shenglin and Mengsheng to form our current acting-in-concert arrangement. See “Relationship With Controlling Shareholders — Overview — Company Controlling Shareholders Group — Acting-in-concert arrangement”.

REORGANISATION

The following chart sets out the shareholding structure of our Group immediately prior to the Reorganisation.

Green Thrive HK Offshore 8.70% Mr. Gao Yubao Mr. Zhang Zhiguang Mr. Li Guangjun Ms. Li Binbin Mr. Wang Shiwei Mr. Li Jianjun Ms. Tie Ying Mr. Ma Liming Ms. Guo (高玉豹) (張志光) (李廣軍) (李彬彬) (王世偉) (栗建軍) (鐵英) (馬黎明) 21.60% 23.60% 20.80% 6.80% 27.20% 20.53% 19.56% 26.05% 33.86%

Onshore Mr. Zhao Mr. Li Mr. Liu Mr. Qiu Mengsheng Shenglin Ms. Hou Ms. Ma

15.578% 13.316% 11.097% 11.097% 10.879% 9.922% 8.703% 10.705%

Mengshu Group

100% 95% 100%100% 100% 75% 100% 100% 100% Hesheng Ecological Dengkou Inner Mongolia Hesheng Mengshu Greenery Engineering Beijing Mengshu Ecological Inner Mongolia Mengshu Ecological Beijing Mengshu Landscape Design Inner Mongolia Mengshu Greenery Maintenance Service Beijing Mengshu Investment Management Inner Mongolia Heyuan Gusheng Agricultural Technology Inner Mongolia Hesheng Ecological Technology Research Institute (1) (2)

Notes:

(1) The remaining 25% of the equity interest in Beijing Mengshu Landscape Design was held by Mr. Fan Yu (樊宇), a director of our subsidiary.

(2) The remaining 5% of the equity interest in Inner Mongolia Hesheng Mengshu Greenery Engineering was held by an Independent Third Party.

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In preparation of our [REDACTED], we carried out a series of restructuring steps for the purpose of preparing our corporate structure for the [REDACTED]. The principal steps involved in the Reorganisation are summarised below.

Incorporation of Offshore Investment Holding Companies, our Company and Offshore Subsidiaries

(i) Incorporation of Offshore Investment Holding Companies

Zhao’s BVI Company

On 16 August 2017, Zhao’s BVI Company was incorporated in the BVI with liability limited by shares and is authorised to issue a maximum of 50,000 shares of US$1.00 par value each. On the same day, one ordinary share was allotted and issued at par value to Mr. Zhao. As a result, Mr. Zhao was interested in the only issued share of Zhao’s BVI Company.

Li’s BVI Company I

On 18 August 2017, Li’s BVI Company I was incorporated in the BVI with liability limited by shares and is authorised to issue a maximum of 50,000 shares of US$1.00 par value each. On the same day, one ordinary share was allotted and issued at par value to Mr. Li. As a result, Mr. Li was interested in the only issued share of Li’s BVI Company I.

Li’s BVI Company II

On 17 August 2017, Li’s BVI Company II was incorporated in the BVI with liability limited by shares and is authorised to issue a maximum of 50,000 shares of US$1.00 par value each. On the same day, one ordinary share was allotted and issued at par value to Mr. Liu. Li’s BVI Company II was incorporated pursuant to Mr. Li’s instruction and as a result, Mr. Liu held the only issued share of Li’s BVI Company II on trust for Mr. Li. Subsequently, on 29 December 2017, Mr. Liu transferred the one ordinary share to Mr. Li for cash of US$1.00 and as a result, Mr. Li became the sole shareholder of Li’s BVI Company II.

Qiu’s BVI Company

On 21 August 2017, Qiu’s BVI Company was incorporated in the BVI with liability limited by shares and is authorised to issue a maximum of 50,000 shares of US$1.00 par value each. On the same day, one ordinary share was allotted and issued at par value to Mr. Qiu. As a result, Mr. Qiu was interested in the only issued share of Qiu’s BVI Company.

Ma’s BVI Company

On 21 August 2017, Ma’s BVI Company was incorporated in the BVI with liability limited by shares and is authorised to issue a maximum of 50,000 shares of US$1.00 par value each. On the same day, one ordinary share was allotted and issued at par value to Ms. Ma. As a result, Ms. Ma was interested in the only issued share of Ma’s BVI Company.

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Hou’s BVI Company

On 18 August 2017, Hou’s BVI Company was incorporated in the BVI with liability limited by shares and is authorised to issue a maximum of 50,000 shares of US$1.00 par value each. On the same day, one ordinary share was allotted and issued at par value to Ms. Hou. As a result, Ms. Hou was interested in the only issued share of Hou’s BVI Company.

Shenglin BVI Company

On 17 August 2017, Shenglin BVI Company was incorporated in the BVI with liability limited by shares and is authorised to issue a maximum of 50,000 shares of US$1.00 par value each. On the same day, one ordinary share was allotted and issued at par value to Mr. Li Jianjun. On 26 September 2017, Shenglin BVI Company further allotted and issued 20, 19, 26 and 34 ordinary shares at par value to Mr. Li Jianjun, Ms. Tie Ying, Ms. Guo and Mr. Ma Liming, respectively. As a result, Mr. Li Jianjun, Ms. Tie Ying, Ms. Guo and Mr. Ma Liming was interested in the 21%, 19%, 26% and 34% of the issued shares of Shenglin BVI Company. Mr. Li Jianjun, Ms. Tie Ying, Ms. Guo and Mr. Ma Liming are the partners of Shenglin, which was a shareholder of Mengshu Group immediately prior to the Reorganisation.

Mengsheng BVI Company

On 16 August 2017, Mengsheng BVI Company was incorporated in the BVI with liability limited by shares and is authorised to issue a maximum of 50,000 shares of US$1.00 par value each. On the same day, one ordinary share was allotted and issued at par value to Mr. Gao Yubao. On 26 September 2017, Mengsheng BVI Company further allotted and issued 21, 23, 21, seven and 27 shares at par value to Mr. Gao Yubao, Mr. Zhang Zhiguang, Mr. Li Guangjun, Ms. Li Binbin and Mr. Wang Shiwei, respectively. As a result, Mr. Gao Yubao, Mr. Zhang Zhiguang, Mr. Li Guangjun, Ms. Li Binbin and Mr. Wang Shiwei was interested in the 22%, 23%, 21%, 7% and 27% of the issued shares of Mengsheng BVI Company. Mr. Gao Yubao, Mr. Zhang Zhiguang, Mr. Li Guangjun, Ms. Li Binbin and Mr. Wang Shiwei are the partners of Mengsheng, which was a shareholder of Mengshu Group immediately prior to the Reorganisation.

(ii) Incorporation of our Company

On 14 August 2017, our Company was incorporated in the Cayman Islands as an exempted company with limited liability. The initial authorised share capital of our Company was HK$380,000 divided into 380,000,000 ordinary shares of par value of HK$0.001 each. On the same day, one Share was allotted and issued at par value to our initial subscriber and was subsequently transferred to Mr. Zhao. As a result, Mr. Zhao was interested in the entire issued share capital of the Company.

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(iii) Incorporation of Mengshu BVI

On 5 September 2017, Mengshu BVI was incorporated in the BVI with liability limited by shares and is authorised to issue a maximum of 50,000 shares of US$1.00 par value each. On the same day, one ordinary share was allotted and issued at par value to our Company. Upon incorporation and up to the Latest Practicable Date, Mengshu BVI was a direct wholly-owned subsidiary of our Company.

(iv) Incorporation of Mengshu HK

On 19 September 2016, Mengshu HK was incorporated in Hong Kong with limited liability with a share capital of HK$100 divided into 100 ordinary shares, which were allotted and issued to Mr. Zhao. On 6 October 2017, Mr. Zhao transferred 100 ordinary shares in Mengshu HK to Mengshu BVI for a consideration of HK$1.00. As at the Latest Practicable Date, Mengshu HK was a direct wholly-owned subsidiary of Mengshu BVI and an indirect wholly-owned subsidiary of our Company.

(v) Share Swap and Allotment and Issue of Shares by our Company

On 3 November 2017, Mr. Zhao transferred one Share of our Company to Zhao’s BVI Company, as consideration for which, Zhao’s BVI Company allotted and issued one share to Mr. Zhao.

On the same day, our Company allotted and issued at par value 35,799,999, 30,600,000, 25,500,000, 25,500,000, 22,800,000, 25,000,000, 24,600,000 and 20,000,000 Shares to Zhao’s BVI Company, Li’s BVI Company I, Li’s BVI Company II, Qiu’s BVI Company, Shenglin BVI Company, Mengsheng BVI Company, Ma’s BVI Company and Hou’s BVI Company, respectively and the subscription prices were fully settled on 11 January 2018. Upon completion of the allotment, our Company was owned as to 17.06%, 14.59%, 12.15%, 12.15%, 10.87%, 11.92%, 11.73% and 9.53% by Zhao’s BVI Company, Li’s BVI Company I, Li’s BVI Company II, Qiu’s BVI Company, Shenglin BVI Company, Mengsheng BVI Company, Ma’s BVI Company and Hou’s BVI Company, respectively.

(vi) Subscription of Shares by Green Thrive BVI and Introduction of Fort Minor as a [REDACTED]

Immediately prior to the Reorganisation, Green Thrive HK, as a [REDACTED], held 8.703% equity interests in Mengshu Group. As part of the Reorganisation and to mirror Green Thrive HK’s interests in Mengshu Group, Green Thrive BVI, being the sole shareholder of Green Thrive HK, subscribed for 20,000,000 Shares, representing 8.703% of the then share capital of our Company on 10 November 2017. See “[REDACTED] — Details of the Green Thrive Group [REDACTED]” in this section for further details. Upon completion of the subscription, the Group is owned to 15.578% by Zhao’s BVI Company, 13.316% by Li’s BVI Company I, 11.097% by Li’s BVI Company II, 11.097% by Qiu’s BVI Company, 9.922% by Shenglin BVI Company, 10.879% by Mengsheng BVI Company, 10.705% by Ma’s BVI Company, 8.703% by Hou’s BVI Company and 8.703% by Green Thrive BVI.

On 9 September 2017, Fort Minor, an independent Third Party, was introduced as a [REDACTED]. See “[REDACTED] — Details of the Investor Group [REDACTED] Overview” in this section for further details.

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Changes in the equity interests in Mengshu Group during the Reorganisation

(i) Disposal by Ms. Hou and Ms. Ma

Due to personal financial reasons, Ms. Hou and Ms. Ma agreed to sell their respective 7.92% and 10.095% of the equity interests in Mengshu Group to Mr. Qiu for considerations of RMB46.6 million and RMB59.4 million respectively, which were determined with reference to the then independent valuation of Mengshu Group. In order to facilitate the Reorganisation, instead of directly transfer the equity interests in Mengshu Group to Mr. Qiu, it was agreed by the parties thereof that Ms. Hou and Ms. Ma would subsequently transfer their respective equity interests in Mengshu Group to Mengshu HK and He Yu Sheng directly during the Reorganisation process.

To reflect the aforesaid transfer in equity interest in Mengshu Group at offshore structure, on 23 May 2018, Hou’s BVI Company and Ma’s BVI Company transferred their respective 18,199,520 and 23,199,360 Shares to Qiu’s BVI Company for considerations of HK$18,199.52 and HK$23,199.36, respectively. The considerations were fully paid by Qiu’s BVI Company on 23 May 2018 in cash. Upon completion of the transfer, Hou’s BVI Company, Ma’s BVI Company and Qiu’s BVI Company held 1,800,480, 1,400,640 and 66,898,880 Shares, respectively (representing 0.78%, 0.61% and 29.11% in the shareholding of our Company, respectively).

(ii) Revocation of entrustment by Mr. Li

As disclosed in the paragraph headed “History and Development of our Group — Corporate Development — Mengshu Group — The Introduction of Ms. Ma, Mr. Liu and Mr. Qiu and The Entrustment Arrangement” above in this section, since March 2012, Mr. Liu had held certain percentage of the equity interests in Mengshu Group on trust for Mr. Li. For Reorganisation purpose, Mr. Li had decided to revoke such entrustment arrangement. In this connection, Mr. Liu transferred 100% equity interests in Li’s BVI Company II to Mr. Li on 29 December 2017 and transferred back the 11.097% equity interests in Mengshu Group to Mr. Li for nil consideration. The transaction was completed on 31 May 2018. Upon completion of the transfers, Mr. Liu was no longer a shareholder of Mengshu Group and Mr. Li held 24.413% of the equity interests in Mengshu Group.

As advised by our PRC Legal Advisers, the entrustment arrangement between Mr. Li and Mr. Liu and its revocation are legally valid under the relevant PRC laws and regulations.

Acquisition of PRC Subsidiaries

(i) Acquisition of an aggregate 84.835% of the equity interests in Mengshu Group by Mengshu HK

On 26 June 2018, as part of the Reorganisation, each of the then shareholders of Mengshu Group respectively entered into an equity interest agreement with Mengshu HK, pursuant to which Mengshu HK agreed to acquire in aggregate 84.835% of the equity interests in Mengshu Group (the “June 2018 Equity Transfer Agreement”).

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Details of the equity transfers are as follows:

Percentage of equity interests Date on full Date of in Mengshu payment of completion of Transferor Group Consideration consideration registration

Green Thrive HK 8.703% US$7,733,390.69 19 September 2018 3 July 2018 Mr. Zhao 12.991% RMB76,437,634 6 July 2018 3 July 2018 Mr. Li 20.357% RMB119,780,762 6 July 2018 3 July 2018 Mr. Qiu 9.253% RMB54,445,801 6 July 2018 3 July 2018 Shenglin 8.274% RMB48,680,952 13 November 2018 3 July 2018 Mengsheng 9.072% RMB53,378,236 13 November 2018 3 July 2018 Ms. Hounote 7.258% RMB42,702,589 13 November 2018 3 July 2018 Ms. Manote 8.927% RMB52,524,185 20 September 2018 3 July 2018

Note: As disclosed in the paragraph headed “Reorganisation — Changes in the equity interests in Mengshu Group during the Reorganisation — (i) Disposal by Ms. Hou and Ms. Ma” in this section, Ms. Hou and Ms. Ma transferred their respective 7.258% and 8.927% equity interests in Mengshu Group to Mengshu HK under the instruction of Mr. Qiu.

Upon completion of the above equity interests transfers, Mengshu Group was owned as to 84.835% by Mengshu HK and 15.165% in aggregate by Mr. Zhao, Mr. Li, Mr. Qiu, Ms. Hou, Ms. Ma, Shenglin and Mengsheng.

(ii) Establishment of He Yu Sheng as a wholly foreign-owned enterprise and acquisition of 15.165% equity interests in Mengshu Group

On 12 November 2018, Mengshu HK established He Yu Sheng under the laws of the PRC as a wholly-foreign-owned enterprise with limited liability in the PRC with a registered capital of RMB1 million, which was paid up by Mengshu HK in cash. Upon establishment and up to the Latest Practicable Date, He Yu Sheng was a wholly-owned subsidiary of Mengshu HK.

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On 23 November 2018, each of the then shareholders of Mengshu Group (except Mengshu HK) respectively entered into an equity interests transfer agreement with He Yu Sheng, the details of which are as follows:-

Percentage of equity interests Date of full Date of in Mengshu payment of completion of Transferor Group Consideration consideration registration

Mr. Zhao 2.59% RMB15,221,470 12 December 2018 3 December 2018 Mr. Li 4.06% RMB23,862,435 11 December 2018 3 December 2018 Mr. Qiu 1.84% RMB10,847,631 11 December 2018 3 December 2018 Shenglin 1.65% RMB9,698,919 11 December 2018 3 December 2018 Mengsheng 1.81% RMB10,632,510 11 December 2018 3 December 2018 Ms. Hounote 1.44% RMB8,504,831 11 December 2018 3 December 2018 Ms. Manote 1.78% RMB10,462,765 11 December 2018 3 December 2018

Note: As disclosed in the paragraph headed “Reorganisation — Changes in the equity interests in Mengshu Group during the Reorganisation — (i) Disposal by Ms. Hou and Ms. Ma” in this section, Ms. Hou and Ms. Ma transferred the respective 0.662% and 1.168% in their approximately 1.44% and 1.78% equity interests in Mengshu Group to He Yu Sheng under the instruction of Mr. Qiu.

Upon completion of the above transfers, Mengshu Group was owned as to 84.835% by Mengshu HK and 15.165% by He Yu Sheng. As a result, Mengshu Group became an indirect wholly-owned subsidiary of the Company.

(iii) Increase of registered capital of Mengshu Group and subscription of 1% of equity interests in Mengshu Group by Huirong Datong

On 13 August 2019, Mengshu HK, He Yu Sheng, Huirong Datong and Mengshu Group entered into a capital increase agreement, pursuant to which Huirong Datong agreed to subscribe for 1% of the equity interests in Mengshu Group for a total subscription price of RMB537,180,720. The subscription price was settled by setting off the loan of RMB475,624,586 which was lent to Mengshu Group in July 2018 and the remaining RMB61,556,134 was settled pursuant to the arrangement as disclosed in the subparagraph (iv) below. Of the subscription price, RMB2,321,212 was used to increase the registered capital of Mengshu Group and the remaining of RMB534,859,508 became capital reserve. The transaction was completed on 11 September 2019. Upon completion of the increase of capital, Mengshu Group was owned as to 83.99% by Mengshu HK, 15.01% by He Yu Sheng and 1% by Huirong Datong, respectively.

(iv) Acquisition of 1% equity interest in Mengshu Group by He Yu Sheng

On 23 November 2020, each of the Company Controlling Shareholders Group, Ms. Ma, Ms. Hou, Shenglin, Mengsheng, Ma’s BVI Company, Hou’s BVI Company, Huirong Datong, Mengshu HK, He Yu Sheng, Mengshu Group and our Company entered into an agreement (the “November 2020

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Agreement”), pursuant to which, Huirong Datong transferred 1% of the equity interest in Mengshu Group to He Yu Sheng at a nominal consideration of RMB1. Upon completion of the transfer, Mengshu Group was owned as to 83.99% by Mengshu HK and 16.01% by He Yu Sheng. Besides, parties to the November 2020 Agreement agreed to exempt the remaining amount of RMB61,556,134 owed by Huirong Datong to Mengshu Group as disclosed in the subparagraph (iii) above, in return, Mr. Zhao, Mr. Li, Mr. Qiu, Ms. Hou, Ms. Ma and each individual partners of Shenglin and Mengsheng will settle in HK$72,613,757 equivalent to RMB61,556,134 at the HK$:RMB middle exchange rate announced by SAFE on 23 November 2020 through selling the Shares held by his or her respective BVI holding companies upon [REDACTED]. In this regard, the amount owed to our Group (being RMB61,556,134) by the then shareholders of Mengshu Group (i.e being Mr. Zhao, Mr. Li, Mr. Qiu, Ms. Hou, Ms. Ma, Shenglin and Mengsheng) during the Reorganisation will be fully settled.

The purpose of the transactions described in subparagraphs (iii) and (iv) above is to allow all considerations received by each of the then shareholders of Mengshu Group during the Reorganisation to stay within our Group so that none of them would be financially benefited from the Reorganisation.

Our PRC Legal Advisers have confirmed that, all the share or equity interest transfers and changes in registered capital in respect of our PRC subsidiaries as described above and the onshore Reorganisation have been conducted in compliance with the applicable PRC laws and regulations and have been legally completed and duly registered with the local registration authorities of the PRC.

[REDACTED]

Green Thrive Group [REDACTED] Overview

Green Thrive HK entered into an agreement on subscription of capital increase (認購增資協議) with Mr. Li, Mr. Zhao, Mr. Qiu, Mr. Liu, Ms. Ma and Ms. Hou, the then shareholders of Mengshu Group on 8 December 2012 (the “Green Thrive HK [REDACTED] Subscription Agreement”), pursuant to which Green Thrive HK agreed to subscribe for RMB10 million increased registered capital of Mengshu Group at a subscription price of RMB30 million, determined with reference to the then independent valuation of Mengshu Group.

On 8 December 2012, Green Thrive HK entered into the sino-foreign joint venture agreement (中外合資經營合同) with Mr. Li, Mr. Zhao, Mr. Qiu, Mr. Liu, Ms. Ma and Ms. Hou (the “Joint Venture Agreement”, together with the Green Thrive HK [REDACTED] Subscription Agreement, the “2012 Green Thrive Investment Agreements”), pursuant to which Green Thrive HK obtained certain special rights. Pursuant to the undertaking executed by Green Thrive HK in favour of Mengshu Group on 2 November 2020, Green Thrive HK undertakes that, since 26 June 2018, the day on which the June 2018 Equity Transfer Agreement was signed, (i) it no longer enjoyed the rights or was under the obligations as contemplated under 2012 Green Thrive Investment Agreements; and (ii) it would not make any claims against Mengshu Group or any parties to the 2012 Green Thrive Investment Agreements pursuant to its terms and conditions.

Upon completion of the aforesaid subscription, Mengshu Group became a sino-foreign joint venture with a registered capital of RMB85 million and was owned as to 18% by Mr. Li, 14% by Mr. Zhao, 14.47% by Ms. Ma, 15% by Mr. Liu, 15% by Mr. Qiu, 11.765% by Ms. Hou and 11.765% by Green Thrive HK, respectively.

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Details of the Green Thrive Group [REDACTED]

The following table sets out summary of the Green Thrive HK [REDACTED] Subscription Agreement and other details in relation to the Green Thrive Group [REDACTED]:

Name of the [REDACTED]: Green Thrive HK, Green Thrive BVI and Superb Link Limited

Date: 8 December 2012

Subscription price: RMB30 million

Basis of determination of the The consideration was determined with reference to the then subscription price: independent valuation of Mengshu Group.

Date of settlement of the 12 April 2013 subscription price:

Date of completion of 26 June 2013 registration:

Cost per Share: RMB[REDACTED] (equivalent to approximately HK$[REDACTED])

Discount to the [REDACTED]% [REDACTED](1):

Use of [REDACTED]: The [REDACTED] of RMB30 million were used for the purpose of our business expansion, research and development, and general working capital, which had been fully utilised as at the Latest Practicable Date.

Reasons and benefits for Green Our Directors are of the view that (i) we can benefit from the Thrive Group [REDACTED]: [REDACTED]’s commitment to our Company as its investment demonstrates its confidence in the operations of our Group and serves as an endorsement of our Company’s performance, strength and prospects; (ii) Green Thrive Group, with its established network and experience in capital market in Hong Kong, may assist with our Group’s future financing and fund raising if needed; and (iii) the [REDACTED] serves as a source of additional working capital to our Group and provides immediate funding available for our Group’s business operation and expansion.

Interest in Mengshu Group Approximately 11.765% upon completion of the transaction under the Green Thrive HK [REDACTED] Subscription Agreement:

− 126 − THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HISTORY, REORGANISATION AND GROUP STRUCTURE

Interest in our Company [REDACTED]% immediately prior to the [REDACTED]:

Interest in our Company upon [REDACTED]% completion of the [REDACTED]:

Lock-up period: Nil

The 2012 Green Thrive Investment Agreements and the Shareholders’ Agreement did not impose any lock-up obligations over the Shares held by Green Thrive BVI, except where requested by the Stock Exchange, if applicable.

Public float: Given that (i) the shareholding of Green Thrive BVI in our Company upon completion of the [REDACTED] is less than [REDACTED]%; (ii) Green Thrive BVI is solely a passive investor in our Group; and (iii) Green Thrive BVI is an Independent Third Party, the Shares held by Green Thrive BVI will be counted as part of the public float of our Company upon completion of the [REDACTED].

Note:

(1) Assuming the [REDACTED] is HK$[REDACTED] per Share, being the mid-point of the indicative [REDACTED] and exchange rate of RMB1.00 to HK$1.2064.

Immediately prior to the Reorganisation, Green Thrive HK held 8.703% equity interests in Mengshu Group. As part of the Reorganisation and to mirror Green Thrive HK’s interests in Mengshu Group, Green Thrive BVI, being the sole shareholder of Green Thrive HK, subscribed for 20,000,000 Shares, representing 8.703% of the then share capital of our Company at a subscription price of US$7,733,390.69, determined with reference to the then valuation of 8.703% equity interests in Mengshu Group held by Green Thrive HK on 10 November 2017 (the “Green Thrive BVI [REDACTED] Subscription”). The subscription price was offset by the consideration for transfer of 8.703% equity interests in Mengshu Group from Green Thrive HK (as transferor) to Mengshu HK (as transferee) and was fully settled on 19 September 2018. Since there was no actual payment in the Green Thrive BVI [REDACTED] Subscription, Green Thrive’s [REDACTED] was limited to the RMB30 million paid under the Green Thrive HK [REDACTED] in 2013.

Green Thrive BVI entered into a Shareholders’ Agreement with Fort Minor, the other [REDACTED] and certain shareholders of our Company on 5 December 2017. See “[REDACTED] — Investor Group [REDACTED] Overview — Shareholders’ Agreement” in this section for details.

− 127 − THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HISTORY, REORGANISATION AND GROUP STRUCTURE

Information of Green Thrive Group

Green Thrive HK is a company incorporated under the laws of Hong Kong with limited liability and is wholly owned by Green Thrive BVI. After completion of the Reorganisation, Green Thrive HK no longer held any shares in our Group. Green Thrive BVI is wholly owned by Superb Link Limited, a company incorporated in the BVI with liability limited by shares, which is in turn controlled by Shining Capital Holdings II L.P., a limited partnership established in the Cayman Islands. Shining Capital Management Limited (尚心投資管理有限公司), a company incorporated in the Cayman Islands, is the general partner of Shining Capital Holdings II L.P., and is an investment management firm based in Hong Kong.

To the best of our Directors’ knowledge, information and belief and having made all reasonable enquires, Green Thrive Group and their respective ultimate beneficial owners do not have any relationship (including without limitation, family, employment, trust, financing or otherwise) with our Group, our Shareholders, our Directors, our senior management and their respective associates.

Investor Group [REDACTED] Overview

Fort Minor [REDACTED] Subscription Agreement

Fort Minor, entered into a subscription agreement with our Company, Mr. Zhao, Mr. Li, Mr. Liu, Mr. Qiu, Mengsheng and Shenglin on 9 September 2017 (the “Fort Minor [REDACTED] Subscription Agreement”), pursuant to which Fort Minor subscribed for 65,000,000 Investor Class Shares at a total consideration of approximately US$69 million. The conversion ratio shall initially be one Share for one Investor Class Share.

Shareholders’ Agreement

On 5 December 2017, Mr. Zhao, Mr. Li, Mr. Liu, Mr. Qiu, Ms. Hou, Ms. Ma, Shenglin, Mengsheng, Fort Minor, Green Thrive BVI, our Company, and other then shareholders of our Company (being Zhao’s BVI Company, Li’s BVI Company I, Li’s BVI Company II, Qiu’s BVI Company, Ma’s BVI Company, Hou’s BVI Company, Shenglin BVI Company and Mengsheng BVI Company) entered into a shareholders’ agreement (the “Shareholders’ Agreement”), pursuant to which, among others, (i) our Company shall make a valuation adjustment payment in cash (the “Valuation Adjustment Payment”) to Fort Minor if our Company’s 2019 net profit (the “2019 Net Profit”) is less than an agreed amount, (ii) each of Green Thrive BVI and Fort Minor has the right to nominate one investor director, and (iii) each of Green Thrive BVI and Fort Minor had been granted certain special rights.

In addition, the Shareholders’ Agreement imposes transfer restrictions on the SHA Existing Shareholders (other than Green Thrive BVI) after completion of the [REDACTED], pursuant to which no SHA Existing Shareholder (other than Green Thrive BVI) shall transfer a number of Shares in the aggregate exceeding the lesser of (i) 35% of the total number of Shares held by such SHA Existing Shareholder on the date of the Shareholders’ Agreement and (ii) the number of Shares held by such SHA Existing Shareholder upon [REDACTED] multiplied by a fraction, the numerator of which is the number of Shares transferred by Fort Minor following completion of the [REDACTED] and the denominator of which is the number of Shares held by Fort Minor upon completion of the [REDACTED].

− 128 − THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HISTORY, REORGANISATION AND GROUP STRUCTURE

Fort Minor Warrant

On 30 December 2019, our Company and Fort Minor executed a deed of undertaking (the “Company Undertaking”), pursuant to which, instead of paying the Valuation Adjustment Payment, our Company agreed to issue, and Fort Minor agreed to subscribe for, [REDACTED] warrants (the “Warrants”) upon and subject to the terms and conditions set out in the Warrant Instrument at nil consideration.

Warrant Instrument

On 30 December 2019, our Company executed the warrant instrument relating to the creation of Warrants to subscribe for new Shares in the capital of our Company by way of a deed poll (the “Warrant Instrument”), pursuant to which, among others,

(i) our Company created and granted to the holder of Warrants (the “Warrantholder”, i.e. Fort Minor) the Warrants; and

(ii) Fort Minor shall have the right at any time during the period commencing on 30 December 2019 (being the date of issuance of the Warrants) and expiring on 29 December 2024 (being the day falling sixty (60) months after the date of issuance of the Warrants (and if that day is not a business day, then the business day immediately preceding such day) (both dates inclusive) (the “Subscription Period”)) to subscribe for one fully-paid Share in respect of each Warrant at HK$0.001 per Share (which is equivalent to the par value of the Share) to be issued on the exercise of the Warrants subject to any adjustments based on change in the Company’s share capital or in any rights or interests attaching to the Shares (the “Subscription Rights”).

Investor’s Undertaking

On 30 December 2019, Fort Minor executed a deed in favour of certain then shareholders of our Company (the “Investor’s Undertaking”), pursuant to which Fort Minor undertook to the relevant shareholders that if Fort Minor still holds all or part of the Warrants and/or any unsold warrant shares (i.e. being the Shares to be allotted and issued by the Company to the Warrantholder upon exercise of the Warrant) (the “Warrant Shares”) after having received net [REDACTED] amounting to a certain amount (which is 2.0x multiple of money of Fort Minor’s investment) from selling Shares held by Fort Minor, Fort Minor shall sell all the outstanding Warrants and/or Warrant Shares at an aggregate consideration of US$1 to the relevant shareholders in proportion to the number of Shares held by each of them bears to the aggregate number of shares held by all of them at the time of the disposal. If any of the shareholders does not fully purchase the number of Warrants and/or Warrant Shares that it is entitled to purchase, then each other shareholder shall have the right to purchase all or a portion of the Warrants and/or Warrant Shares not so purchased by such shareholder.

Exercise of Subscription Rights

On 4 December 2020, Fort Minor exercised its Subscription Rights in full under the Warrant Instrument, pursuant to which Fort Minor subscribed for, and our Company allotted and issued to Fort Minor, 52,970,000 Shares at an aggregate price of HK$52,970.

− 129 − THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HISTORY, REORGANISATION AND GROUP STRUCTURE

Subscription of New Shares by Chili Roost

On 30 May 2021, Chili Roost subscribed for, and our Company allotted and issued to Chili Roost, 57,500,000 Shares at a price of HK$0.001 per Share. Our Directors and Shareholders are of the view that it is in our Group’s best interest to issue new Shares at nominal consideration to Chili Roost because a larger stake in our Group held by the Investor Group will accelerate our [REDACTED] process and can serve as an endorsement of our Group, which is conducive to establishing our Company as a preferred investment target in the ecological and environmental protection industry amongst international institutional investors after the [REDACTED].

Details of the Investor Group [REDACTED]

(i) Details in relation to Fort Minor [REDACTED] Subscription Agreement, Warrant and Subscription of New Shares by Chili Roost

Fort Minor [REDACTED] Subscription Agreement

• Name of the [REDACTED]: Fort Minor and Valley Orchards Limited

• Date of the Fort Minor 9 September 2017 [REDACTED] Subscription Agreement:

• Subscription price under the Approximately US$69 million Fort Minor [REDACTED] Subscription Agreement:

• Number of the shares 65 million Investor Class Shares subscribed for under the Fort Minor [REDACTED] Subscription Agreement:

• Basis of determination of The consideration was determined based on the then net the subscription price under assets value, potential profitability and future prospect of the Fort Minor Mengshu Group after arm’s length negotiation among the [REDACTED] Subscription parties. Agreement:

• Date of completion of the 5 December 2017 transaction under the Fort Minor [REDACTED] Subscription Agreement:

• Date of settlement of the 5 December 2017 subscription price under the Fort Minor [REDACTED] Subscription Agreement:

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Warrant

• Name of the [REDACTED]: Fort Minor and Valley Orchards Limited

• Date of the Warrant 30 December 2019 Instrument:

• Consideration for the Nil Warrants:

• Number of Warrants 52,970,000 Warrants subscribed for under the Warrant Instrument:

• Basis of determination of HK$0.001 per Share (which is equivalent to the par value of the subscription price for the Share) the Warrant Shares:

• Total subscription price for HK$52,970 the Warrant Shares:

• Date of completion of the 30 December 2019 transactions under the Warrant Instrument:

• Date of settlement of the 21 December 2020 total subscription price for the Warrant Shares:

Subscription of New Shares by Chili Roost

• Name of the [REDACTED]: Chili Roost and Valley Orchards Limited

• Date of subscription of new 30 May 2021 Shares:

• Consideration for the Nil subscription of new Shares:

• Number of new Shares 57,500,000 Shares subscribed for:

• Basis of determination of HK$0.001 per Share (which is equivalent to the par value of the subscription price for the Share) the new Shares:

− 131 − THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HISTORY, REORGANISATION AND GROUP STRUCTURE

• Total subscription price for HK$57,500 the new Shares

• Date of settlement of the 15 June 2021 total subscription price for the new Shares:

(ii) Other Details in relation to the Investor Group [REDACTED]

Cost per Share:(2) HK$[REDACTED]

Premium to the [REDACTED]% [REDACTED](1)(2):

Use of [REDACTED]: The [REDACTED] were used (a) as working capital for projects; (b) for development of plantation bases; and (c) for the development of the Company, which had been fully utilised as at the Latest Practicable Date.

Reasons and benefits for Fort Our Directors are of the view that (i) we can benefit from the Minor [REDACTED]: [REDACTED]’s commitment to our Company as its investment demonstrates its confidence in the operations of our Group and serves as an endorsement of our Company’s performance, strength and prospects; (ii) the Investor Group, with its established experience in capital market in Hong Kong, may assist with our Group’s future financing and fund raising if needed; and (iii) the [REDACTED] serves as a source of additional working capital to our Group and provides immediate funding available for our Group’s business operation and expansion.

Interest in our Company Approximately [REDACTED]% immediately prior to the [REDACTED]:(2)

Interest in our Company upon [REDACTED] % completion of the [REDACTED]:

Lock-up period: As agreed in the Shareholders’ Agreement, for a period of six months from completion of the [REDACTED], Fort Minor will not transfer any Shares subscribed by them prior to the [REDACTED].

− 132 − THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HISTORY, REORGANISATION AND GROUP STRUCTURE

Public float: Since Fort Minor and Chili Roost are substantial Shareholders of our Company upon completion of the [REDACTED], the Shares held by the Investor Group will not be counted as part of the public float of our Company upon completion of the [REDACTED].

Notes:

(1) Assuming the [REDACTED] is HK$[REDACTED] per Share, being the mid-point of the indicative [REDACTED] and exchange rate of US$1.00 to HK$7.76.

(2) Assuming Fort Minor converts its [REDACTED] Investor Class Shares into Shares on the basis of one Investor Class Shares for One Share.

Information on Investor Group

Fort Minor is a company incorporated in the BVI with liability limited by shares and is wholly owned by Valley Orchards Limited, a company incorporated in the BVI with liability limited by shares. Chili Roost is a company incorporated in the Cayman Islands with liability limited by shares and is wholly owned by Valley Orchards Limited.

Save as disclosed in the section headed “Substantial Shareholders” in this document, to the best of our Directors’ knowledge, information and belief and having made all reasonable enquires, Investor Group and their respective ultimate beneficial owners do not have any relationship (including without limitation, family, employment, trust, financing or otherwise) with our Group, our Shareholders, our Directors, our senior management and their respective associates.

Rights of the [REDACTED]

Pursuant to the Shareholders’ Agreement, the [REDACTED] had been granted certain special rights, including, among others, right of first refusal, tag-along right, divestment right, right to elect director and participate in the Board, preemptive right, anti-dilution protection and capital increase right and liquidity protection.

All special rights shall cease to be effective and be discontinued upon the [REDACTED].

Sole Sponsor’s confirmation

Given that (i) the [REDACTED] will take place no earlier than 120 clear days after the completion of the [REDACTED]; and (ii) no special right which has been granted to the [REDACTED] will survive after the [REDACTED], the Sole Sponsor is of the view that the [REDACTED] are in compliance with the Interim Guidance (HKEX-GL29-12) issued by the Hong Kong Stock Exchange in January 2012 and updated in March 2017, the Guidance Letter HKEX-GL43-12 issued by the Hong Kong Stock Exchange in October 2012 and updated in July 2013 and March 2017 and the Guidance Letter HKEx-GL-44-12 issued by the Hong Kong Stock Exchange in October 2012 and updated in March 2017.

− 133 − THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HISTORY, REORGANISATION AND GROUP STRUCTURE

CORPORATE STRUCTURE

Corporate Structure after the Reorganisation and [REDACTED] and immediately prior to the [REDACTED]

The following chart sets out the shareholding structure of our Group after the Reorganisation and the [REDACTED] and immediately prior to the [REDACTED]:

Mr. Gao Yubao Mr. Zhang Zhiguang Mr. Li Guangjun Ms. Li Binbin Mr. Wang Shiwei Mr. Li Jianjun Ms. Tie Ying Ms. Guo Mr. Ma Liming

22% 23% 21% 7% 27% 21% 19% 26% 34%

Superb Link Mr. Zhao Mr. Li Mr. Li Mr. Qiu Ms. Hou Ms. Ma Limited(17) 100% 100% 100% 100% 100% 100% 100% Zhao's BVI Li's BVI Li's BVI Qiu's BVI Mengsheng BVI Shenglin BVI Hou's BVI Ma's BVI Green (16) (16) Company Company I Company II Company Company Company Company Company Thrive BVI Fort Minor Chili Roost

8.83% 7.55% 6.29% 16.51% 6.17% 5.63% 0.44% 0.35% 4.93% 29.11% 14.19%

The Company 100% Mengshu BVI 100% Mengshu HK Offshore

100% Onshore He Yu Sheng 83.99% 16.01% Mengshu Group

100% 100% 100% 77.02% 90% 100% 75% 95% 95% 89% 93% 97.90% 88% 78% 100% 100% 100% 94.95%

Shenzhen Kunxing No.3

Inner Mongolia Heyuan Gusheng Agricultural Technology

Beijing Mengshu Investment Management

Inner Mongolia Mengshu Greenery Maintenance Service

Anqing City Mengshu Greenery Management

Zhenning Autonomous County Mengshu Landscaping Construction

Chifeng City Mengzhishu Greenery Engineering

Xun County Mengshu Forestry

Inner Mongolia Hesheng Ecological Technology Research Institute Yu County Mengshu Landscaping Engineering

Hulun Bei’er City Haisheng Greenery Management

Inner Mongolia Hesheng Mengshu Greenery Engineering

Beijing Mengshu Landscape Design

Guizhou Mengshu Ecology

Inner Mongolia Mengshu Ecological

Beijing Mengshu Ecological

Chifeng Mengshu Landscape

Hesheng Ecological Dengkou

(13)

(3)

(9)

(4)

(2)

(12)

(8)

(10)

(6)

(5)

(11)

98.01% 22.98% 100% 100% 59.99%

Inner Mongolia Yuanyuan Zhihui Culture and Tourism

Hohhot Chengchi I Industrial Development Fund

Inner Mongolia Mengshu Landscape Design

Hulun Bei’er City Shengxin City Engineering

(7)

(14)

Note:

(1) Fort Minor holds [REDACTED] Shares in the Company immediately prior to the [REDACTED] based on the assumption that the [REDACTED] Investor Class Shares are fully converted into Shares on the basis of one Investor Class Share for one Share.

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(2) The remaining 22.98% of the equity interests in Inner Mongolia Mengshu Ecological was held by Hohhot Chengchi I Industrial Development Fund.

(3) The remaining 10% of the equity interests in Guizhou Mengshu Ecology was held by an Independent Third Party.

(4) The remaining 25% of the equity interests in Beijing Mengshu Landscape Design was held by Mr. Fan Yu (樊宇), a director of our subsidiary.

(5) The remaining 5% of the equity interests in Inner Mongolia Hesheng Mengshu Greenery Engineering was held by an Independent Third Party.

(6) The remaining 5% of the equity interests in Hulun Bei’er City Haisheng Greenery Management was held by an Independent Third Party.

(7) The remaining approximately 1% and 0.99% of the equity interests in Hulun Bei’er City Shengxin City Engineering were held by two Independent Third Parties.

(8) The remaining 10% and 1% of the equity interests in Yu County Mengshu Landscaping Engineering were held by an Independent Third Party and Guizhou Mengshu Ecology, respectively.

(9) The remaining 5%, 1% and 1% of the equity interests in Xun County Mengshu Forestry were held by an Independent Third Party, Guizhou Mengshu Ecology and Beijing Mengshu Ecological, respectively.

(10) The remaining 1%, 1% and 0.10% of the equity interests in Chifeng City Mengzhishu Greenery Engineering were held by Beijing Mengshu Ecological, Guizhou Mengshu Ecology and an Independent Third Party, respectively.

(11) The remaining 10%, 1% and 1% of the equity interests in Zhenning Autonomous County Mengshu Landscaping Construction were held by an Independent Third Party, Beijing Mengshu Ecological and Guizhou Mengshu Ecology, respectively.

(12) The remaining 20%, 1% and 1% of the equity interests in Anqing City Mengshu Greenery Management were held by two Independent Third Parties and Beijing Mengshu Ecological, respectively.

(13) The remaining 0.005% and 5.045% of the partnership interests in Shenzhen Kunxing No.3 were held by Beijing Mengshu Investment Management and an Independent Third Party.

(14) The remaining approximately 0.02% and 39.99% of the partnership interests in Hohhot Chengchi I Industrial Development Fund were held by two Independent Third Parties.

(15) Those companies highlighted in grey color background are PPP project companies.

(16) Each of Fort Minor and Chili Roost is wholly owned by Valley Orchards Limited, which is controlled by DCP Capital Partners, L.P..

(17) Superb Link Limited is controlled by Shining Capital Holdings II L.P..

− 135 − THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HISTORY, REORGANISATION AND GROUP STRUCTURE

Corporate Structure after the [REDACTED]

The following chart sets out the shareholding structure of our Group immediately after the [REDACTED] (without taking into account any Shares which may be allotted or issued upon exercise of the [REDACTED] or the options granted under the [REDACTED] Share Option Schemes or to be granted under Post-[REDACTED] Share Option Scheme):

Mr. Zhang Mr. Li Mr. Wang Mr. Gao Yubao Zhiguang Guangjun Ms. Li Binbin Shiwei Mr. Li Jianjun Ms. Tie Ying Ms. Guo Mr. Ma Liming 22% 23% 21% 7% 27% 21%19% 26% 34%

Superb Link Mr. Zhao Mr. Li Mr. Li Mr. Qiu Ms. Hou Ms. Ma Limited(17) 100% 100% 100% 100% 100% 100% 100% Zhao's BVI Li's BVI Li's BVI Qiu's BVI Mengsheng Shenglin BVI Hou’s BVI Ma’s BVI Green Thrive Chili Public Fort Minor(16) Company Company I Company II Company BVI Company Company Company Company BVI Roost(16) Shareholders [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]%

The Company 100% Mengshu BVI 100% Mengshu HK

Offshore Onshore 100%

83.99% He Yu Sheng

16.01% Mengshu Group

100% 100% 100% 77.02% 90% 100% 75% 95% 95% 89% 93% 97.90% 88% 78% 100% 100% 100% 94.95%

Shenzhen Kunxing No.3

Inner Mongolia Heyuan Gusheng Agricultural Technology

Beijing Mengshu Investment Management

Inner Mongolia Mengshu Greenery Maintenance Service

Anqing City Mengshu Greenery Management

Zhenning Autonomous County Mengshu Landscaping Construction

Chifeng City Mengzhishu Greenery Engineering

Xun County Mengshu Forestry

Inner Mongolia Hesheng Ecological Technology Research Institute Yu County Mengshu Landscaping Engineering

Hulun Bei’er City Haisheng Greenery Management

Inner Mongolia Hesheng Mengshu Greenery Engineering

Beijing Mengshu Landscape Design

Guizhou Mengshu Ecology

Inner Mongolia Mengshu Ecological

Beijing Mengshu Ecological

Chifeng Mengshu Landscape

Hesheng Ecological Dengkou

(13)

(3)

(9)

(4)

(2)

(12)

(8)

(10)

(6)

(5)

(11)

98.01% 22.98% 100% 100% 59.99%

Hohhot Chengchi I Industrial Development Fund

Inner Mongolia Yuanyuan Zhihui Culture and Tourism

Inner Mongolia Mengshu Landscape Design

Hulun Bei’er City Shengxin City Engineering

(7)

(14)

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Note:

(1) Upon [REDACTED], Fort Minor fully converts its [REDACTED] Investor Class Shares into Shares on the basis of one Investor Class Share for one Share, and it will hold in aggregate [REDACTED] Shares.