China Yu Tian Holdings Limited 中國宇天控股有限公司 (Incorporated in the Cayman Islands with Limited Liability) Stock Code: 8230

China Yu Tian Holdings Limited 中國宇天控股有限公司 (Incorporated in the Cayman Islands with limited liability) Stock Code: 8230

LISTING BY WAY OF PLACING

Sole Sponsor

Sole Global Coordinator, Sole Bookrunner and Sole Lead Manager IMPORTANT

If you are in any doubt about any content of this Prospectus, you should obtain independent professional advice.

China Yu Tian Holdings Limited 中國宇天控股有限公司 (Incorporated in the Cayman Islands with limited liability)

LISTING ON THE GROWTH ENTERPRISE MARKET OF THE STOCK EXCHANGE OF HONG KONG LIMITED BY WAY OF PLACING

Number of Placing Shares : 210,000,000 Shares (Subject to the Over-allotment Option) Placing Price : Not more than HK$0.54 per Placing Share and expected to be not less than HK$0.50 per Placing Share plus brokerage of 1%, the SFC transaction levy of 0.0027% and the Stock Exchange trading fee of 0.005% (payable in full on application and subject to refund) Nominal Value : HK$0.01 per Share Stock Code : 8230

Sole Sponsor

Sole Global Coordinator, Sole Bookrunner and Sole Lead Manager

Co-Lead Managers

BLACK MARBLE

Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsibility for the contents of this Prospectus, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from, or in reliance upon, the whole or any part of the contents of this Prospectus. A copy of this Prospectus, having attached thereto the documents specified in “Appendix VI – Documents Delivered to the Registrar of Companies and Available for Inspection,” has been registered by the Registrar of Companies in Hong Kong as required by Section 342C of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong). The Securities and Futures Commission of Hong Kong and the Registrar of Companies in Hong Kong take no responsibility as to the contents of this Prospectus or any other documents referred to above. The Placing Price is expected to be determined by agreement between the Sole Global Coordinator (for itself and on behalf of the Underwriters) and the Company on the Price Determination Date, which is expected to be on or around Thursday, 24 December 2015 (Hong Kong time) or such later date may be agreed by the Sole Global Coordinator (for itself and on behalf of the Underwriters) and the Company. If, for any reason, the Sole Global Coordinator (for itself and on behalf of the Underwriters) and the Company are unable to agree on the Placing Price on or before Thursday, 24 December 2015 (Hong Kong time) or such later date may be agreed by the Sole Global Coordinator (for itself and on behalf of the Underwriters) and the Company, the Placing will not proceed and will lapse. The Placing Price will be not more than HK$0.54 and is currently expected to be not less than HK$0.50, unless otherwise announced. The Sole Global Coordinator (for itself and on behalf of the Underwriters) may, with the Company’s consent, reduce the indicative Placing Price range stated in this Prospectus at any time prior to the Price Determination Date. In such a case, notice of such reduction will be published on the Company’s website at www.hkgg.hk and the website of the Stock Exchange at www.hkexnews.hk as soon as practicable but in any event not later than the Price Determination Date. Further details are set out in “Structure and Conditions of the Placing” of this Prospectus. Prior to making an investment decision, prospective investors should consider carefully all the information set out in this Prospectus, including the risk factors set out in “Risk Factors” of this Prospectus. Prospective investors of the Placing Shares should note that the obligations of the Underwriters under the Underwriting Agreement are subject to termination by the Sole Global Coordinator (for itself and on behalf of the Underwriters) upon the occurrence of any of the events set forth under “Underwriting – The Underwriting Agreement – Grounds for Termination” in this Prospectus at any time prior to 8:00 a.m. (Hong Kong time) on the Listing Date. Further details of these termination provisions are set out in “Underwriting” of this Prospectus. It is important that you refer to that section for further details. Should the Sole Global Coordinator (for itself and on behalf of the Underwriters) terminate the Underwriting Agreement, the Placing will not proceed and will lapse.

21 December 2015 CHARACTERISTICS OF GEM

GEM has been positioned as a market designed to accommodate companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investor should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors.

Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board and no assurance is given that there will be a liquid market in the securities traded on GEM.

The principal means of information dissemination on GEM is publication on the Internet website operated by the Stock Exchange. Listed companies are not generally required to issue paid announcements in gazetted newspaper. Accordingly, prospective investors should note that they need to have access to the website of the Stock Exchange at www.hkexnews.hk in order to obtain up-to-date information on GEM listed issuers.

–i– EXPECTED TIMETABLE

2015(1) (5)

Price Determination Date(2) ...... Thursday, 24 December

Announcement of the determination of the Placing Price and indication of the level of interest in the Placing to be published on the GEM website and the Company’s website at www.hkgg.hk on or before...... Monday, 28 December

Allotment of the Placing Shares to placees (or their designated person(s)) on or before ...... Monday, 28 December

Deposit of share certificates for the Placing Shares into CCASS on or before(3) (4) ...... Monday, 28 December

Dealings in Shares on GEM expected to commence at 9:00 a.m. on...... Tuesday, 29 December

Notes:

(1) All times and dates refer to Hong Kong times and dates, except as otherwise stated.

(2) The Price Determination Date, being the date on which the Placing Price is to be determined, is expected to be on or around Thursday, 24 December 2015 or such later date as may be agreed between the Sole Global Coordinator (for itself and on behalf of the Underwriters) and the Company but in any event not later than Thursday, 24 December 2015. If the Sole Global Coordinator (for itself and on behalf of the Underwriters) and the Company are unable to reach any agreement on the Placing Price by that date or such later date as may be agreed between the Sole Global Coordinator (for itself and on behalf of the Underwriters) and the Company, the Placing will not proceed and will lapse.

(3) The share certificates are expected to be issued in the name of HKSCC Nominees Limited or in the name of the placee(s) or their agent(s) as designated by the Underwriters and/or the placing agents. The share certificates for the Placing Shares to be distributed via CCASS are expected to be deposited in CCASS on or before Monday, 28 December 2015 for credit to the relevant CCASS Participants’ or CCASS Investor Participants’ stock accounts designated by the Underwriters, the placees or their respective agents (as the case may be). No temporary documents or evidence of title will be issued by the Company.

(4) All share certificates will only become valid certificates of title when the Placing has become unconditional in all respects and the Underwriting Agreement has not been terminated in accordance with its terms prior to 8:00 a.m. (Hong Kong time) on the Listing Date. If the Underwriting Agreement does not become unconditional or is terminated in accordance with the terms and conditions, the Placing will not proceed and we will make an announcement as soon as possible. No dealings in the Placing Shares should take place prior to the Listing Date. Investors who trade the Shares prior to such date shall do so entirely at their own risk.

(5) A separate announcement will be issued if there is any change to the expected timetable.

For details of the structure of the Placing, including the conditions thereof, please refer to “Structure and Conditions of the Placing” in this Prospectus.

–ii– CONTENTS

IMPORTANT NOTICE TO INVESTORS

This Prospectus is issued by the Company solely in connection with the Placing and does not constitute an offer to sell or a solicitation of an offer to subscribe for or buy any security other than the Placing Shares offered by this Prospectus pursuant to the Placing. This Prospectus may not be used for the purpose of, and does not constitute, an offer to sell or a solicitation of an offer in any other jurisdiction or in any other circumstances.

No action has been taken to permit a placing of the Placing Shares or the distribution of this Prospectus in any jurisdiction other than Hong Kong.

You should rely only on the information contained in this Prospectus to make your investment decision. The Company, the Sole Sponsor, the Sole Global Coordinator and the Underwriters have not authorized anyone to provide you with information that is different from what is contained in this Prospectus. Any information or representation not made in this Prospectus must not be relied on by you as having been authorized by the Company, the Sole Sponsor, the Sole Global Coordinator, the Underwriters, any of their respective directors, advisers, officers, employees, agents or representatives or any other person involved in the Placing.

Page

CHARACTERISTICS OF GEM ...... i

EXPECTED TIMETABLE...... ii

CONTENTS ...... iii

SUMMARY AND HIGHLIGHTS ...... 1

DEFINITIONS ...... 18

GLOSSARY ...... 28

FORWARD-LOOKING STATEMENTS ...... 31

RISK FACTORS ...... 33

WAIVER FROM STRICT COMPLIANCE WITH THE GEM LISTING RULES ...... 60

INFORMATION ABOUT THIS PROSPECTUS AND THE PLACING ...... 62

DIRECTORS AND PARTIES INVOLVED IN THE PLACING ...... 67

– iii – CONTENTS

Page

CORPORATE INFORMATION ...... 70

INDUSTRY OVERVIEW...... 73

REGULATORY OVERVIEW ...... 91

HISTORY, DEVELOPMENT AND REORGANIZATION ...... 99

BUSINESS ...... 111

RELATIONSHIP WITH CONTROLLING SHAREHOLDERS ...... 166

DIRECTORS AND SENIOR MANAGEMENT...... 174

SHARE CAPITAL ...... 185

SUBSTANTIAL SHAREHOLDERS ...... 188

FINANCIAL INFORMATION...... 190

FUTURE PLANS AND USE OF PROCEEDS...... 243

UNDERWRITING ...... 249

STRUCTURE AND CONDITIONS OF THE PLACING ...... 257

APPENDICES

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

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

APPENDIX III PROPERTY VALUATION REPORT...... III-1

APPENDIX IV SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW ...... IV-1

APPENDIX V STATUTORY AND GENERAL INFORMATION ...... V-1

APPENDIX VI DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES AND AVAILABLE FOR INSPECTION ...... VI-1

–iv– SUMMARY AND HIGHLIGHTS

This summary aims to give you an overview of the information contained in this Prospectus. As this is a summary, it does not contain all of the information which may be important to you. You should read this Prospectus in its entirety before you decide to invest in the Placing Shares.

There are risks associated with any investment. Some of the particular risks in investing in the Placing Shares are summarized in “Risk Factors” in this Prospectus. You should read that section carefully before you decide to invest in the Placing Shares.

OVERVIEW

We are engaged in the manufacture and sale of industrial coated products as well as design and assembly of coated glass production equipment. According to HCR, we were ranked tenth among China’s manufacturers of Low-E glass, which is the primary product category of coated architectural glass, in terms of designed annual production capacity for the year ended 31 December 2014. We were also one of only seven manufacturers in China with the ability to design, assemble, build and sell complete sets of coated glass production lines as of 31 December 2014. Our proprietary coating technologies can be utilized for a wide variety of industrial products, including coated architectural glass and CTP module components. Our business model of offering a wide array of industrial coated products and coated glass production equipment is made possible by our broad range of capabilities. Our extensive industrial coating expertise and understanding of customers’ needs allow us not only to continuously refine our production process and coating techniques to develop high-quality coated glass products, but also enable us to upgrade our coated glass manufacturing equipment. Leveraging our extensive experience and know-how in industrial coating, we commenced commercial production of CTP module components for use in electronic devices in March 2014 and recorded our first sale of CTP module components in May 2014. Currently, Low-E glass is the primary coated architectural glass product in China due to its energy-efficiency. According to HCR, we had a market share in China of 2.7% for Low-E glass in terms of sales volume in 2014.

Our Products

During the Track Record Period, we focused on the production and sale of coated architectural glass products, coated glass production equipment, and CTP module components. Our CTP module components are the components of capacitive touch panel, or CTP, which is a component of a touch-screen display module that senses a touch on the surface of the display module by measuring a change in electrical capacitance of its surface. Our CTP module components are applied in various electronic devices, including mobile phones tablets, personal computers and industrial electronic devices. We commenced commercial production of CTP module components and offered such products in 2014, and thus experienced a change in the percentage contribution of our product mix to our revenue. For the six months ended 30 June 2015, the revenue from the sale of CTP module components was RMB31.9 million, representing 40.1% of our total revenue during the same period. The revenue from the sale of

–1– SUMMARY AND HIGHLIGHTS coated architectural glass products declined from RMB66.5 million for the six months ended 30 June 2014 to RMB47.7 million for the six months ended 30 June 2015. The table below sets forth a breakdown of our revenue by segment for the periods indicated:

Year ended 31 December Six months ended 30 June 2013 2014 2014 2015 RMB’000 % RMB’000 % RMB’000 % RMB’000 % (Unaudited)

Coated architectural glass ...... 133,424 79.3 134,861 68.8 66,467 92.1 47,748 59.9 Coated glass production equipment ...... 34,746 20.7 38,143 19.4 – – – – CTP module components ...... – – 23,180 11.8 5,683 7.9 31,927 40.1

Total revenue ...... 168,170 100.0 196,184 100.0 72,150 100.0 79,675 100.0

The following table sets forth a breakdown of our gross profit and gross profit margin by segment for the periods indicated:

Year ended 31 December Six months ended 30 June 2013 2014 2014 2015 Gross Gross Gross Gross Gross profit Gross profit profit Gross profit profit margin profit margin Gross profit margin profit margin RMB’000 % RMB’000 % RMB’000 % RMB’000 % (Unaudited)

Coated architectural glass ...... 33,210 24.9 42,773 31.7 17,682 26.6 12,856 26.9 Coated glass production equipment . . 12,595 36.2 13,194 34.6 – – – – CTP module components ...... – – 6,105 26.3 996 17.5 9,663 30.3 Total gross profit/gross profit margin ...... 45,805 27.2 62,072 31.6 18,678 25.9 22,519 28.3

We procure float glass from third-party suppliers and process it into coated architectural glass and CTP module components. Our coated architectural glass products consist of three product categories, namely, unprocessed coated architectural glass comprising Low-E glass and solar control glass, tempered glass products and insulating Low-E glass units. As we do not manufacture float glass in our coated glass production line, our Low-E glass products are classified in the industry as offline Low-E glass. For the years ended 31 December 2013 and 2014 and the six months ended 30 June 2014 and 2015, our sales of Low-E glass accounted for approximately 74%, 88%, 92% and 70% of our sales of coated architectural glass, respectively. For the years ended 31 December 2013 and 2014 and the six months ended 30 June 2014 and 2015, the average selling price of our coated architectural glass was RMB30.2 per m2,

–2– SUMMARY AND HIGHLIGHTS

RMB32.5 per m2, RMB32.1 per m2 and RMB25.3 per m2, respectively. The average selling price of our coated architectural glass was lower than the average market price of similar products during the Track Record Period because, while having relatively low bargaining power as a new market player and maintaining our gross profit margin, we priced our products lower than the average market price in order to achieve market acceptance and brand recognition, as well as to compete more effectively. We produce or purchase and sell individual equipment and/or consumable materials for coated glass production on a per unit basis, or assemble together production equipment for sale as a complete production line. We sold one complete glass production line in each of the years ended 31 December 2013 and 2014, the selling price of which was RMB35.8 million and RMB35.0 million, respectively. We did not record sale of coated glass production equipment for the six months ended 30 June 2015. Our CTP module components include G+G CTP module components and OGS CTP module components, which we began to produce in March 2014 and December 2014, respectively. For the year ended 31 December 2014 and the six months ended 30 June 2015, the average selling price of our CTP module components was RMB23.3 per unit and RMB46.1 per unit, respectively. The increase in the average selling price was mainly due to the increase in the sales of OGS CTP module components. For further details, see “Financial Information – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Period to Period Comparison of Results of Operations – Six months ended 30 June 2015 compared with six months ended 30 June 2014 – Turnover – CTP module components” on page 202 of this Prospectus. The table below sets forth data relating to our Low-E glass production line and CTP module components production line for the periods indicated:

Year ended Six months ended 31 December 30 June 2013 2014 2014 2015 ’000 m2/units, except for percentage

Low-E glass production line Designed annual/semiannual production capacity(1)...... 7,200 7,200 3,600 3,600 Production volume(2) ...... 5,031 4,840 2,408 2,190 Utilization rate(3) ...... 69.9% 67.2% 66.9% 60.8%

CTP module components production line(4) Designed annual/semiannual production capacity(5)...... – 3,500 1,750 1,750 Production volume ...... – 1,346 492 837 Utilization rate(6) ...... – 46.1%(7) 28.1% 47.8%

–3– SUMMARY AND HIGHLIGHTS

Notes: (1) Designed annual production capacity was calculated based on 365 working days per year with 24 working hours per day. Designed semiannual production capacity was calculated by dividing the designed annual production capacity by two. (2) Such production volume represents the total production volume of unprocessed coated architectural glass, namely Low-E glass and solar control glass, as the Low-E glass production line can also be used to produce solar control glass. The production of solar control glass on Low-E glass production line will not materially affect the designed annual production capacity of the Low-E glass production line. (3) Utilization rate is calculated by dividing production volume for the year/period by designed annual/semiannual production capacity. (4) We commenced the assembly of our CTP module components production line in 2013 and commenced commercial production in March 2014. (5) Designed annual production capacity was calculated based on 350 working days per year with 16 working hours per day. Designed semiannual production capacity was calculated by dividing the designed annual production capacity by two. (6) Utilization rate is calculated by dividing production volume for the year/period by designed annual/semiannual production capacity. (7) Since we commenced commercial production of CTP module components in March 2014, we use the production capacity for ten months, which is 2,916,667 units, to calculate the utilization rate.

Customers, Sales and Marketing

For the years ended 31 December 2013 and 2014 and the six months ended 30 June 2015, we had approximately 230, 250 and 100 customers, respectively. The decrease in number of customers was mainly due to (i) the half-year operation up to 30 June 2015; and (ii) the decrease in number of customers in coated architectural glass segment corresponding to the decrease in the sale of coated architectural glass products during the six months ended 30 June 2015. During the Track Record Period, we sold our coated architectural glass products to customers located in China, including customers from Jiangsu, Shandong, Anhui, Fujian and Guangdong Provinces. During the Track Record Period, we sold coated glass production equipment to domestic PRC customers as well as to one customer from Indonesia. We sold CTP module components to customers in China and Hong Kong during the Track Record Period.

We have maintained business relationships ranging from one to three years with our five largest customers during the Track Record Period. For the years ended 31 December 2013 and 2014 and the six months ended 30 June 2014 and 2015, sales to our five largest customers accounted for 61.7%, 60.2%, 59.4% and 57.8%, respectively, of our total revenue, and sales to our largest customer accounted for 18.2%, 23.3%, 16.8% and 19.4%, respectively, of our total revenue.

We sell our coated architectural glass products, coated glass production equipment, and CTP module components directly to our customers through our sales and marketing department and do not engage distributors or agents. Our sales personnel maintain direct contact with our customers and conduct on-site visits as well as participate in exhibitions.

–4– SUMMARY AND HIGHLIGHTS

Suppliers

The principal raw materials and components used in our production include: (i) float glass and target materials used to produce coated architectural glass; (ii) steel and electronic equipment used in the production of coated glass production equipment and assembly of complete sets of coated glass production lines; and (iii) ultra-thin glass sheets, a type of float glass, and electronic parts and components used to produce CTP module components.

During the Track Record Period, our suppliers mainly included raw material suppliers, components suppliers and equipment suppliers, all of which were located in China. We have developed stable relationships with our key suppliers, with whom we have maintained business relationships ranging from one to three years. For the years ended 31 December 2013 and 2014 and the six months ended 30 June 2014 and 2015, purchases from our five largest suppliers in the amounts of RMB42.4 million, RMB75.6 million, RMB35.7 million and RMB38.8 million, respectively, accounted for 34.7%, 56.4%, 66.7% and 67.8%, respectively, of our cost of sales, and purchases from our largest supplier in the amounts of RMB17.8 million, RMB22.3 million, RMB11.1 million and RMB12.8 million, respectively, accounted for 14.5%, 16.6%, 20.7% and 22.4%, respectively, of our cost of sales.

Existing Production Facilities and Expansion Plan

In order to enhance our overall operating scale, we plan to build a new factory building at our current plant site in 2016, which will bring the total gross floor area of our factory space from 44,324.9 m2 to 88,324.9 m2. We also plan to add a new production line for on-cell CTP module components which will bring our total number of production lines from two to three. As of the Latest Practicable Date, we were in the process of developing and assembling such production line to expand into the new on-cell CTP market. We intend to fund our expansion plan using cash flow from operations, bank loans and the proceeds from the Placing.

–5– SUMMARY AND HIGHLIGHTS

The details of our expansion plan are set out below:

Estimated capital expenditure Total Expected time to Capital expenditure to be estimated complete construction/ incurred incurred capital commence commercial Project 2014 2015 2016 expenditure production RMB’000 Construction of a new factory building ...... – – 33,880 33,880 July 2016 Assembly of production line for on-cell CTP module components with planned designed annual production capacity of 3.5 million units . 43,967 8,069(1) 13,500 65,536 January 2017 Total estimated capital expenditure ...... 43,967 8,069(1) 47,380 99,416

Note: (1) All had been incurred as of 31 August 2015 and no additional capital expenditure is expected to be incurred in 2015.

Our Track Record

We recorded growth during the Track Record Period. Our revenue increased from RMB168.2 million in 2013 to RMB196.2 million in 2014 mainly due to the introduction and sale of our CTP module components and an increase in revenue from the sale of coated glass production equipment. Our revenue increased from RMB72.2 million for the six months ended 30 June 2014 to RMB79.7 million for the six months ended 30 June 2015 primarily because of an increase in revenue from the sale of our CTP module components. Our gross profit increased from RMB45.8 million in 2013 to RMB62.1 million in 2014. Our gross profit increased from RMB18.7 million for the six months ended 30 June 2014 to RMB22.5 million for the six months ended 30 June 2015. Our profit for the year was RMB24.0 million and RMB33.2 million for the years ended 31 December 2013 and 2014, respectively. Our profit for the period was RMB3.5 million and RMB4.3 million for the six months ended 30 June 2014 and 2015, respectively.

–6– SUMMARY AND HIGHLIGHTS

OUR COMPETITIVE STRENGTHS

We believe that the following principal strengths have contributed to our historical success: (i) we are able to offer a wide array of industrial coated products and coated glass production equipment; (ii) our strong research and development capabilities enable us to develop high-quality products; (iii) we continue to achieve operational efficiency and maintain high utilization rates; (iv) we are well positioned to benefit from favorable PRC government policies and market developments; and (v) we have a visionary and experienced management team.

OUR BUSINESS STRATEGIES

Our principal objective is to leverage our extensive experience and know-how in both the production of coated glass and the design, assembly and manufacture of coated glass production equipment, as well as to increase our profit in order to enhance our market position in China. We believe that the following strategies will enable us to leverage our strengths to capture future growth opportunities and enhance our competitiveness: (i) expand our scale of operations and strengthen our market leadership position; (ii) further enhance our research and development capabilities; (iii) penetrate the CTP market and extend the CTP production chain by optimizing our product mix; and (iv) expand our sales and marketing coverage by establishing a new branch and broadening our customer base.

SUMMARY KEY FINANCIAL INFORMATION

The summary historical data of financial information set forth below have been derived from the Accountants’ Report attached as Appendix I to this Prospectus and should be read in conjunction with our financial information included in “Appendix I – Accountants’ Report,” including the accompanying notes and the information set forth in “Financial Information” on page 190 of this Prospectus. Our financial information was prepared in accordance with HKFRS.

–7– SUMMARY AND HIGHLIGHTS

Summary Consolidated Statements of Profit or Loss and Other Comprehensive Income

Year ended 31 December Six months ended 30 June 2013 2014 2014 2015 RMB’000 % RMB’000 % RMB’000 % RMB’000 % (Unaudited)

Turnover ...... 168,170 100.0 196,184 100.0 72,150 100.0 79,675 100.0 Cost of sales ...... (122,365) (72.8) (134,112) (68.4) (53,472) (74.1) (57,156) (71.7)

Gross profit ...... 45,805 27.2 62,072 31.6 18,678 25.9 22,519 28.3 Other revenue ...... 335 0.2 4,967 2.5 140 0.2 484 0.6 Distribution costs ...... (878) (0.5) (1,651) (0.8) (618) (0.9) (730) (0.9) Administrative expenses ...... (14,516) (8.6) (21,619) (11.0) (11,401) (15.8) (13,167) (16.5)

Profit from operations ...... 30,746 18.3 43,769 22.3 6,799 9.4 9,106 11.5 Finance costs ...... (2,577) (1.5) (4,335) (2.2) (2,214) (3.1) (3,482) (4.4)

Profit before taxation ...... 28,169 16.8 39,434 20.1 4,585 6.3 5,624 7.1 Income tax ...... (4,201) (2.5) (6,201) (3.2) (1,048) (1.5) (1,338) (1.7)

Profit for the year/period ...... 23,968 14.3 33,233 16.9 3,537 4.8 4,286 5.4

Other comprehensive income for the year/period Exchange differences on translation of financial statements of overseas companies ...... – – (24) 0.0 (25) 0.0 – –

Total comprehensive income for the year/period ...... 23,968 14.3 33,209 16.9 3,512 4.8 4,286 5.4

For more information, see “Financial Information – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Description of Components of Results of Operations” on page 196 of this Prospectus.

–8– SUMMARY AND HIGHLIGHTS

Summary Consolidated Statements of Financial Position

As of As of 31 December 30 June 2013 2014 2015 RMB’000 RMB’000 RMB’000

Non-current assets ...... 145,942 185,620 182,853 Current assets ...... 104,972 138,426 142,075 Current liabilities...... (113,496) (142,285) (139,139) Net current (liabilities)/assets ...... (8,524) (3,859) 2,936 Net assets ...... 135,988 177,612 181,898

For more information, see “Financial Information – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Net Current Liabilities” and “Financial Information – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Selected Items of the Consolidated Statements of Financial Position” on page 212 and page 213 of this Prospectus.

Summary Consolidated Cash Flow Statements

Year ended Six months ended 31 December 30 June 2013 2014 2014 2015 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited) Cash and cash equivalents at beginning of year/period...... 2,120 5,797 5,797 1,893 Net cash generated from/(used in) operating activities ...... 33,822 26,765 6,661 (16,024) Net cash used in investing activities...... (74,768) (64,859) (35,841) (4,831) Net cash generated from financing activities ..... 44,623 34,190 26,901 24,698 Net increase/(decrease) in cash and cash equivalents...... 3,677 (3,904) (2,279) 3,843

Cash and cash equivalents at end of year/period . . . 5,797 1,893 3,518 5,736

–9– SUMMARY AND HIGHLIGHTS

We had negative net operating cash flow of RMB16.0 million for the six months ended 30 June 2015 primarily due to: (i) a decrease in trade and other payables of RMB20.7 million mainly due to our subsequent settlement of some trade and other payables as of 31 December 2014; and (ii) an increase in inventories of RMB5.2 million mainly due to an increase in work-in-progress related to the building and assembly of a complete coated glass production line for a customer. For more information about our cash flows, see “Financial Information – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Cash flows” on page 209 of this Prospectus.

Key Financial Ratios

As of or for the year As of or for the six ended 31 December months ended 30 June 2013 2014 2015 %% %

Gross profit margin(1) ...... 27.2 31.6 28.3 Net profit margin(2) ...... 14.3 16.9 5.4 Gearing ratio(3) ...... 23.2 31.5 43.2 Current ratio(4) ...... 92.5 97.3 102.1

Notes: (1) Gross profit margin is calculated based on gross profit of the relevant period divided by revenue of the respective period and multiplied by 100%. (2) Net profit margin is calculated based on net profit of the relevant period divided by revenue of the respective period and multiplied by 100%. (3) Gearing ratio is calculated based on total loans and borrowings divided by total equity as of the relevant period end and multiplied by 100%. (4) Current ratio is calculated based on total current assets divided by total current liabilities as of the relevant period end and multiplied by 100%.

For more information, see “Financial Information – Major Financial Ratios” on page 232 of this Prospectus.

NET CURRENT LIABILITIES/ASSETS

We had net current liabilities of RMB8.5 million and RMB3.9 million as of 31 December 2013 and 2014, respectively. Our net current liabilities positions as of 31 December 2013 and 2014 were mainly due to our rapid business expansion during the Track Record Period. We had loans and borrowings of RMB31.5 million and RMB56.0 million as of 31 December 2013 and 2014, respectively, to finance our operations and business expansion during the Track Record Period. We had net current assets of RMB2.9 million as of 30 June 2015, as compared to net current liabilities of RMB3.9 million as of 31 December 2014, primarily attributable to a decrease in trade and other payables of RMB23.0 million mainly because: (i) we settled some trade and other payables as of 31 December 2014; and (ii) we did not incur significant capital expenditures for the six months ended 30 June 2015.

–10– SUMMARY AND HIGHLIGHTS

As we are in the process of assembling a new CTP module components production line and plan to build a new factory building, we estimate the total investment to be approximately RMB99 million, of which RMB52.0 million had been invested as of 31 August 2015, and the remaining of which is expected to be financed by the proceeds from the Placing, loans and borrowings and cash flow from operations.

Our Directors believe that the expansion plan would not create excessive financial burdens to our Group and would not have a material adverse impact on our business operations or liquidity position.

CONTROLLING SHAREHOLDERS

Immediately after completion of the Placing and Capitalization Issue (without taking into account any Shares that may be issued pursuant to the exercise of the Over-allotment Option or any options that may be granted under the Share Option Scheme), Sky Prosper will effectively hold 55.56% of the total issued share capital of the Company. Sky Prosper is held as to 80% by Ms. Wang and 20% by Fu Hong (which is held as to 100% by Ms. Wang). Sky Prosper and Ms. Wang will continue to control more than 30% of the issued share capital and will remain as Controlling Shareholders after the Placing and Capitalization Issue. For further details, please refer to “Relationship with Controlling Shareholders” on page 166 of this Prospectus.

PRE-IPO INVESTMENT

Pursuant to the share subscription agreement dated 25 February 2014 (the “Share Subscription Agreement”), 250,000 Shares were issued and allotted to China Fund at the consideration of RMB37,500,000. Accordingly, the Company was owned as to 75% by Sky Prosper and 25% by China Fund after completion of the subscription of 250,000 Shares by China Fund. Pursuant to the Share Subscription Agreement, China Fund has the right to require Sky Prosper to purchase all the 250,000 Shares held by China Fund (the “Put Option”) for the amount of consideration paid by China Fund plus an interest at the annual rate of 10% if the Listing does not take place within one year after the date of the Share Subscription Agreement. Based on a confirmation dated 29 June 2015, China Fund confirmed that it waived the Put Option and will not require Sky Prosper to purchase the 250,000 shares held by it and pay any relevant interest. China Fund will hold 18.52% of the Company upon the completion of the Placing and Capitalization Issue (without taking into account any Shares that may be issued pursuant to the exercise of the Over-allotment Option or any options that may be granted under the Share Option Scheme). Li & Partners, our legal adviser as to the laws of Hong Kong, is of the view that such confirmation does not constitute a new contract under the laws of Hong Kong. Save for the Put Option, China Fund does not have any other special rights under the Share Subscription Agreement. The Put Options will cease to have effect upon the Listing. For further details of the Pre-IPO investment of China Fund, please refer to “History, Development and Reorganization – Pre-IPO Investment” on page 104 of this Prospectus.

–11– SUMMARY AND HIGHLIGHTS

RECENT DEVELOPMENT AND FLUCTUATIONS IN THE FINANCIAL PERFORMANCE FOR THE TEN MONTHS ENDED 31 OCTOBER 2015

Our revenue and gross profit for the ten months ended 31 October 2015 increased when compared to the ten months ended 31 October 2014. Such increase in revenue was mainly due to an increase in revenue from the sale of our CTP module components attributable to the increased orders of the same, despite a significant decrease in revenue from the sale of the coated architectural glass. The sales quantity of CTP module components significantly increased from 0.9 million units for the ten months ended 31 October 2014 to approximately 2.3 million units for the ten months ended 31 October 2015. The sales volume of the coated architectural glass slightly increased from 3.8 million m2 for the ten months ended 31 October 2014 to 4.3 million m2 for the same period in 2015. The average selling price of our coated architectural glass products for the ten months ended 31 October 2015 decreased by approximately 25.6% when compared to that for the ten months ended 31 October 2014. Notwithstanding such considerable decline in revenue from the sale of coated architectural glass for the ten months ended 31 October 2015 as compared to the same period in 2014, our Directors still have a positive outlook on our business as the addition of CTP module components to our product portfolio since March 2014 has enabled us to capture opportunities opened up by new products along with the development of the relevant market. Our gross profit for the ten months ended 31 October 2015 increased when compared to that for the ten months ended 31 October 2014, and our gross profit margin for the ten months ended 31 October 2015 decreased by approximately 3% when compared to that for the ten months ended 31 October 2014 mainly due to a substantial decrease in average selling price of coated architectural glass products. Our net current assets amounted to RMB15.6 million as of 31 October 2015, as compared to RMB2.9 million as of 30 June 2015, mainly because we recorded net profit attributable to our stable overall business growth, which led to an increase in inventories of: (i) work-in-progress related to the continuous building and assembly of a complete coated glass production line for a customer, which is expected to be delivered in the first quarter of 2016; and (ii) raw material held for the production of coated architectural glass products and CTP module components, while no significant capital expenditure was incurred.

The average selling price of our coated architectural glass for the four months ended 31 October 2015 remained at a similar level to that for the six months ended 30 June 2015. The monthly sales volume of our coated architectural glass was approximately 0.4 million m2 and 0.5 million m2 for the six months ended 30 June 2015 and four months ended 31 October 2015, respectively. The average selling price and monthly sales volume of our coated architectural glass fluctuate from time to time according to market conditions and our negotiations with customers.

–12– SUMMARY AND HIGHLIGHTS

Despite that our business is expected to grow in the future, our Directors consider that our financial performance for the year ending 31 December 2015 will be materially and adversely affected by: (i) a decrease in gross profit margin mainly because the slowdown of the PRC macro economy has caused downstream demand for our product to decrease and competition in our industry to intensify in 2015; (ii) the listing expenses to a material extent as disclosed on page 241 of this Prospectus; (iii) an increase in finance costs due to an increase in bank loans to finance our plan to enter into the on-cell CTP market and for general working capital purposes; and (iv) a decrease in revenue from the sales of coated glass production equipment due to the delay in delivery of a complete coated glass production line to a customer in the first quarter of 2016, which should be originally delivered in December 2015.

Our Directors confirmed that, up to the date of this Prospectus, save as disclosed above and as disclosed in “Business – Compliance, Legal Proceedings and Internal Control – Legal Proceedings” on page 163 of this Prospectus, there has been no material adverse change in our financial or trading position, indebtedness, mortgage, contingent liabilities, guarantees or prospects since 30 June 2015, being the date of our latest audited financial statements.

NON-COMPLIANCE MATTERS

Except for the non-compliance incidents disclosed below, we are advised by our PRC Legal Advisers that, during the Track Record Period and up to the Latest Practicable Date, we had complied with relevant PRC laws and regulations in all material respects.

• We commenced the sale of architectural tempered glass products and insulating glass units prior to obtaining the CCC certificates, which are mandatory;

• We did not contribute to the social insurance for all of our eligible employees and did not make full social insurance contributions based on such eligible employees’ actual income before June 2015; and

• We did not set up housing provident fund accounts and contribute to the housing provident fund for all of our eligible employees before June 2015.

For further information regarding the above non-compliance incidents, please see “Business – Compliance, Legal Proceedings and Internal Control – Compliance” on page 159 of this Prospectus.

–13– SUMMARY AND HIGHLIGHTS

PLACING STATISTICS

The statistics in the following table are based on the assumptions that: (i) the Placing is completed and 210,000,000 Shares are issued and sold in the Placing; (ii) the Over-allotment Option is not exercised; and (iii) 810,000,000 Shares are issued and outstanding upon completion of the Placing.

Based on an Based on an Placing Price of Placing Price of HK$0.50 HK$0.54 per Share per Share

HK$405.0 HK$437.4 Market capitalization of our Shares...... million million Unaudited pro forma adjusted consolidated net tangible assets to our equity Shareholders per Share(1) ...... HK$0.40 HK$0.41

Note:

(1) The unaudited pro forma adjusted consolidated net tangible assets to our equity Shareholders per Share is calculated after making the adjustments referred to in “Appendix II – Unaudited Pro Forma Financial Information.”

–14– SUMMARY AND HIGHLIGHTS

USE OF PROCEEDS

The net proceeds from the Placing, after deducting underwriting fees and commission and other estimated expenses in connection with the Placing, are estimated to amount to approximately HK$93.2 million (assuming a Placing Price of HK$0.52 per Share, being the mid-point of the indicative Placing Price range and assuming the Over-allotment Option is not exercised). We presently intend to apply such net proceeds of the Placing as follows:

For the For the six For the six six For the six Upon Listing months months months months to ending ending ending ending Approximate 31 December 30 June 31 December 30 June 31 December %ofnet 2015 2016 2016 2017 2017 Total proceeds HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Expand our scale of operations and penetrate CTP market . 2,536 57,530 2,535 – – 62,601 67 Enhance our research and development capability. – 5,447 4,374 254 253 10,328 11 Expand our sales and marketing coverage . . 152 2,967 1,065 2,155 1,268 7,607 8 Others ...... – – 634 – 3,169 3,803 4

Total...... 2,688 65,944 8,608 2,409 4,690 84,339 90

The remaining HK$8.9 million will be used as our working capital and other general corporate purpose. For more details, see “Future Plans and Use of Proceeds” on page 243 of this Prospectus.

DIVIDEND POLICY

We have not declared or paid any dividends since our incorporation. Declaration of dividends is subject to the discretion of our Directors, depending on our results of operations, working capital, financial position, future prospects, and capital requirements, as well as any other factors which our Directors may consider relevant. In addition, any declaration and payment as well as the amount of dividend will be subject to the constitutional documents of the Company and the Cayman Islands company law. Any future declarations and payments of dividends may or may not reflect the historical declarations. Future dividend payments will also depend upon the availability of dividends received from our PRC operating subsidiary. Under applicable PRC laws, our subsidiary in the PRC may only distribute after-tax profits after it has made (i) allocations or allowances for recovery of accumulated losses, (ii) allocations to the statutory reserves and (iii) possible allocation to the discretionary reserves.

–15– SUMMARY AND HIGHLIGHTS

Currently, we do not have any dividend policy or intention to declare or pay any dividends in the near future. We do not have any predetermined dividend payout ratio. Going forward, we will evaluate our future dividend policy in light of our financial position, the prevailing economic environment and other factors which our Directors deem relevant.

LISTING EXPENSES

The total amount of listing expenses that will be borne by us in connection with the Placing, including underwriting commission, is estimated to be HK$26.2 million (based on the mid-point of our indicative price range for the Placing), of which HK$8.8 million is expected to be accounted for as a deduction from equity in accordance with the relevant accounting standards. The remaining fees and expenses of HK$17.4 million were or are expected to be charged to our consolidated statements of profit or loss, of which HK$8.2 million and HK$4.6 million was charged up to 31 December 2014 and during the six months ended 30 June 2015, respectively, and HK$4.6 million is expected to be charged upon Listing. The professional fees and/or other expenses related to the preparation of Listing subsequent to 30 June 2015 are the current estimate for reference only and the actual amount to be recognized is subject to adjustment based on audit and the then changes in variables and assumptions. Our financial performance for the year ending 31 December 2015 is expected to be adversely affected by the listing expenses to be charged to our consolidated statements of profit or loss in 2015 to a material extent.

RISK FACTORS

Our operations involve certain risks, some of which are beyond our control. These risks can be broadly categorized into: (i) risks relating to our business and industry; (ii) risks relating to doing business in China; and (iii) risks relating to the Placing. Some of the risks generally associated with our business and industry include the following:

• We have a limited operating history which makes it difficult to evaluate our business and growth prospects.

• We have a limited track record of manufacturing and selling CTP module components, and as such, our plan to further expand into the CTP market may not be successful.

• We had negative net operating cash flow for the six months ended 30 June 2015, and we may have difficulty meeting our payment obligations if we continue to record net operating cash outflows in the future.

• We may not be able to keep up with changes in market needs or technological development in the industry in which we conduct business in a timely manner, and our efforts in new product development may not be successful.

–16– SUMMARY AND HIGHLIGHTS

• We had net current liabilities as of 31 December 2013 and 2014.

• If we fail to maintain our product quality, our business, brand and reputation could be materially and adversely affected.

• Demand for our coated architectural glass products is highly dependent on the PRC real estate market, which could be materially and adversely affected by the PRC macro economy and other conditions.

• A decline in demand for, or a decrease in the average selling prices of, our products would materially and adversely affect our business and results of operations.

These risks are not the only significant risks that may affect the value of our Shares. You should carefully consider all of the information set forth in this Prospectus and, in particular, should evaluate the specific risks set forth in “Risk Factors” on page 33 of this Prospectus in deciding whether to invest in our Shares.

–17– DEFINITIONS

Unless the context otherwise requires, the following expressions have the following meanings in this Prospectus.

“Accountants’ Report” our accountants’ report set out in Appendix I to this Prospectus

“Articles of Association” or the amended and restated articles of association of the “Articles” Company adopted on 15 December 2015 with effect from the Listing Date and as amended from time to time

“associate(s)” has the meaning ascribed to it under the GEM Listing Rules

“Board” or “Board of Directors” the board of Directors

“Business Day” has the meaning ascribed to it under the GEM Listing Rules

“BVI” the British Virgin Islands

“CAGR” compound annual growth rate

“Capitalization Issue” the issue of new Shares to be made upon the capitalization of certain sums standing to the credit of the share premium account of the Company referred to “Appendix V – Statutory and General Information – Information about the Company – 3. Resolutions in Writing of the Shareholders Passed on 15 December 2015” to this Prospectus

“CCASS” the Central Clearing and Settlement System established and operated by HKSCC

“CCASS Clearing Participant” a person admitted to participate in CCASS as a direct clearing participant or general clearing participant

“CCASS Custodian Participant” a person admitted to participate in CCASS as a custodian participant

“CCASS Investor Participant” a person admitted to participate in CCASS as an investor participant who may be an individual or joint individuals or a corporation

–18– DEFINITIONS

“CCASS Participant” a CCASS Clearing Participant, a CCASS Custodian Participant or a CCASS Investor Participant

“China Fund” China Fund Limited (中國基金有限公司), an exempted company incorporated in the Cayman Islands with limited liability on 13 March 2008. China Fund is owned as to 100% by Luckever and a pre-IPO investor of the Company. China Fund is a connected person of the Company. For details of the investment, please refer to “History, Development and Reorganization – Pre-IPO Investment” in this Prospectus

“close associate(s)” has the meaning ascribed thereto under the GEM Listing Rules

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

“Companies Ordinance” the Companies Ordinance (Chapter 622 of the Laws of Hong Kong) which came into effect on 3 March 2014 as amended, supplemented and/or otherwise modified from time to time

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

“Company” China Yu Tian Holdings Limited (中國宇天控股有限公司), an exempted company incorporated in the Cayman Islands with limited liability on 13 November 2013

“connected person(s)” has the meaning ascribed to it under the GEM Listing Rules

“Controlling Shareholder(s)” has the meaning ascribed to it under the GEM Listing Rules and, in the context of this Prospectus, means the controlling shareholders of the Company, namely Ms. Wang and Sky Prosper

“Co-Lead Managers” (in Black Marble Securities Limited, Fortune (HK) alphabetical order) Securities Limited and Gransing Securities Co., Limited

–19– DEFINITIONS

“Deed of Indemnity” the deed of indemnity dated 15 December 2015 and executed by the Controlling Shareholders as indemnifiers in favor of the Company (for itself and as trustee for subsidiaries stated therein) in present of, among others, certain indemnities regarding taxation and non- compliance matters, the particulars of which are set forth in “Appendix V – Statutory and General Information – Other Information – 14. Estate Duty, Tax and Other Indemnity” to this Prospectus

“Deed of Non-Competition” the deed of non-competition dated 15 December 2015 and executed by the Controlling Shareholders as covenantors in favor of the Company, the particulars of which are set forth in “Relationship with Controlling Shareholders – Deed of Non-Competition” in this Prospectus

“Director(s)” the director(s) of the Company

“EIT” the PRC enterprise income tax

“EIT Law” the Enterprise Income Tax Law promulgated by the National People’s Congress on 16 March 2007 which became effective on 1 January 2008

“First Factory Building” our first factory building located at our plant

“Fu Hong” Fu Hong Global Limited (富鴻環球有限公司), a limited liability company incorporated on 26 November 2013 in accordance with the laws of the BVI and is owned as to 100% by Ms. Wang

“GEM” the Growth Enterprise Market of the Stock Exchange

“GEM Listing Rules” the Rules Governing the Listing of Securities on GEM

“GEM website” the Internet website at www.hkgem.com operated by the Stock Exchange for the purposes of GEM

–20– DEFINITIONS

“Group,” “our Group,” “we” or the Company and its subsidiaries at the relevant time or, “us” where the context otherwise requires, in respect of the period before the Company becoming the holding company of its present subsidiaries, such subsidiaries and the business operated by them or their predecessors (as the case may be)

“HCR” HCR Co., Ltd. (北京慧辰資道資訊股份有限公司), a market research firm commissioned by us, an Independent Third Party

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

“HKFRS” Hong Kong Financial Reporting Standards (including Hong Kong Accounting Standards and Interpretations) issued by the Hong Kong Institute of Certified Public Accountants

“HKSCC” Hong Kong Securities Clearing Company Limited

“HK Yutian” Hong Kong Yu Tian Group Limited (香港宇天集團有限公司), a company incorporated in Hong Kong with limited liability on 28 October 2013, which is an indirect wholly-owned subsidiary of the Company

“HK$” or “Hong Kong dollar(s)” Hong Kong dollar(s), the lawful currency of Hong Kong

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

“Hongze” Hongze County, Huai’an, Jiangsu

“Huai’an” Huai’an City, Jiangsu

“Independent Third Party(ies)” an individual(s) or company(ies) who/which is/are not our connected persons (within the meaning of the GEM Listing Rules)

–21– DEFINITIONS

“Issuing Mandate” the general unconditional mandate granted to the Directors by the Shareholders in relation to the issue of new Shares, further information of which is set out in “Appendix V – Statutory and General Information – Information about the Company – 3. Resolutions in Writing of the Shareholders Passed on 15 December 2015” to this Prospectus

“Jiangsu” Jiangsu Province, a province located in the eastern coast of China

“Jiangsu Yutian” Jiangsu Yutian Gangbo New Material Co., Ltd. (江蘇宇天港玻新材料有限公司), a limited liability company established on 23 March 2011, converted into a wholly foreign-owned enterprise on 27 January 2014 in accordance with the laws of the PRC. Jiangsu Yutian is an indirect wholly-owned subsidiary of the Company

“Kaifa Global” Kaifa Global Limited (凱發環球有限公司), a company incorporated in the BVI with limited liability on 25 September 2013, which is a wholly-owned subsidiary of the Company

“Latest Practicable Date” 14 December 2015, being the latest practicable date prior to the printing of this Prospectus for ascertaining certain information contained in this Prospectus

“Listing” the listing of the Shares on GEM

“Listing Date” the date on which dealings in the Shares first commence on GEM, which is expected to be on or around Tuesday, 29 December 2015

“Luckever” Luckever Holdings Limited, a company incorporated in the BVI with limited liability on 16 November 2004, which is owned as to 60.87% by Mr. Liu Xuezhong and 39.13% by Ms. Li Yuelan, who is the spouse of Mr. Liu Xuezhong. Luckever is a connected person of the Company

“m2” square meters

–22– DEFINITIONS

“Main Board” the stock market operated by the Stock Exchange prior to the establishment of GEM (excluding options market) and which stock market continues to be operated by the Stock Exchange in parallel with GEM and which, for the avoidance of doubt, excludes GEM

“Main Board Listing Rules” the Rules Governing the Listing of Securities of the Stock Exchange

“Memorandum” or the amended and restated memorandum of association of “Memorandum of Association” the Company adopted on 15 December 2015 with effect from the Listing Date and as amended from time to time

“MOFCOM” the Ministry of Commerce of the PRC (中華人民共和國商務部)

“Mr. Wang” Mr. Wang Jindong (王進東), the executive Director and chief executive officer of the Company, and the spouse of Ms. Wang

“Ms. Wang” Ms. Wang Xuemei (王雪梅), the chairlady, executive Director and Controlling Shareholder of the Company, and the spouse of Mr. Wang

“M&A Rules” the Provisions on the Merger and Acquisition of Domestic Enterprises by Foreign Investors (關於外國投資者併購境內企業的規定)

“Nanjing Investment” Nanjing Ruixin Venture Investment Center (limited partnership)* (南京睿欣創業投資中心(有限合夥)), an Independent Third Party

“Nanjing Shunji” Nanjing Shunji Automation Technology Company Limited* (南京順吉自動化科技有限公司) (formerly known as 南京宇天玻璃有限公司 Nanjing Yutian Glass Company Limited*), a limited liability company established on 12 February 2003 in the PRC. Nanjing Shunji has been excluded from our Group and is owned as to 60% by Mr. Wang and 40% by Ms. Wang, respectively

–23– DEFINITIONS

“Nanjing Yaopi” 南京耀皮網絡科技有限公司 (Nanjing Yaopi Network Technology Company Limited*) (formerly known as 南京耀皮玻璃有限公司 (Nanjing Yaopi Glass Company Limited*)), a limited liability company established on 15 December 2004 in the PRC. Nanjing Yaopi was previously owned by the Controlling Shareholders and their close associates and is now owned as to 100% by an Independent Third Party

“Over-allotment Option” the option granted by the Company to the Sole Global Coordinator under the Underwriting Agreement pursuant to which the Sole Global Coordinator may require the Company to allot and issue up to an aggregate of 31,500,000 additional Placing Shares, representing 15% of the initial number of Placing Shares under the Placing to cover any over-allocation in the Placing and/or to satisfy the obligation of the Sole Global Coordinator to return securities borrowed under the Stock Borrowing Agreement, the particulars of which are set out in “Structure and Conditions of the Placing – Over- allotment Option” in this Prospectus

“PBOC” the People’s Bank of China

“Placing” the conditional placing of the Placing Shares by the Underwriters on behalf of the Company for cash at the Placing Price, as further described in “Structure and Conditions of the Placing” in this Prospectus

“Placing Price” the final price per Placing Shares (excluding brokerage, SFC transaction levy and Stock Exchange trading fee payable thereon) which will be not more than HK$0.54 per Placing Share and is expected to be not less than HK$0.50 per Placing Share at which the Placing Shares are to be offered for subscription pursuant to the Placing, to be determined as further described in “Structure and Conditions of the Placing” in this Prospectus

“Placing Share(s)” the 210,000,000 new Share(s) being offered by the Company for subscription at the Placing Price under the Placing, subject to the Over-allotment Option set forth in “Structure and Conditions of the Placing” in this Prospectus

–24– DEFINITIONS

“PRC” or “China” the People’s Republic of China, which for the purpose of this Prospectus only, exclude Hong Kong, the Macau Special Administrative Region of the People’s Republic of China and Taiwan

“PRC Legal Advisers” Jingtian & Gongcheng, the legal advisers to the Company as to PRC law

“Price Determination Agreement” the agreement to be entered into between the Company and the Sole Global Coordinator (for itself and on behalf of the Underwriters) on the Price Determination Date to fix and record the Placing Price

“Price Determination Date” the date, expected to be on or around Thursday, 24 December 2015, on which the Placing Price is expected to be fixed for the purposes of the Placing

“Prospectus” prospectus issued in connection with the Placing

“RMB” Renminbi, the lawful currency of the PRC

“Reorganization” our corporate reorganization in preparation for the Listing, the particulars of which are set out in “History, Development and Reorganization – Reorganization” in this Prospectus

“Repurchase Mandate” the general unconditional mandate to repurchase Shares granted to the Directors by the Shareholder, further information of which is set out in “Appendix V – Statutory and General Information – Information about the Company – 3. Resolutions in Writing of the Shareholders Passed on 15 December 2015” to this Prospectus

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

“SAIC” State Administration for Industry and Commerce (中華人民共和國工商行政管理總局)

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

“Second Factory Building” our second factory building located at our plant

–25– DEFINITIONS

“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, supplemented or otherwise modified from time to time

“Share(s)” ordinary share(s) with a nominal value of HK$0.01 each in the capital of the Company

“Shareholder(s)” holder(s) of Share(s)

“Share Option Scheme” the share option scheme conditionally adopted by the Company on 15 December 2015, the principal terms of which are set out in “Appendix V – Statutory and General Information – Other information – 13. Share Option Scheme” to this Prospectus

“Sky Prosper” Sky Prosper Global Limited (天茂環球有限公司), a company incorporated in the BVI with limited liability on 24 September 2013, which is owned as to 80% by Ms. Wang and 20% by Fu Hong (which is owned as to 100% by Ms. Wang). Sky Prosper is a Controlling Shareholder, holding 55.56% of the total issued share capital of the Company upon Listing (assuming the Over-allotment Option is not exercised)

“Sole Bookrunner” Guotai Junan Securities (Hong Kong) Limited, the sole bookrunner of the Placing

“Sole Global Coordinator” Guotai Junan Securities (Hong Kong) Limited, the sole global coordinator of the Placing

“Sole Lead Manager” Guotai Junan Securities (Hong Kong) Limited, the sole lead manager of the Placing

“Sole Sponsor” Guotai Junan Capital Limited, the sole sponsor of the Placing

“subsidiary(ies)” has the meaning ascribed to it in section 2 of the Companies Ordinance

“substantial shareholder(s)” has the meaning ascribed to it under the GEM Listing Rules

–26– DEFINITIONS

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

“Track Record Period” the period comprising the two financial years ended 31 December 2014 and the six months ended 30 June 2015

“Underwriters” the underwriters of the Placing named in “Underwriting – Underwriters” in this Prospectus

“Underwriting Agreement” the underwriting agreement dated 18 December 2015 and entered into between, among others, the Company, the Controlling Shareholders, the executive Directors, the Sole Sponsor, the Sole Global Coordinator and the Underwriters relating to the Placing, particulars of which are summarized in “Underwriting” in this Prospectus

“United States” the United States of America, its territories, its possessions and all areas subject to its jurisdiction

“US$” or “U.S. dollar(s)” United States dollar(s), the lawful currency of the United States of America

“Yutian International” HK Glass Group Yutian International Holding Limited (香港玻璃集團宇天國際控股有限公司) (currently known as HK Jishun Group Company Limited (香港吉順集團有限公司)), a company incorporated in Hong Kong with limited liability on 8 July 2009. Yutian International is owned as to 60% by Mr. Wang and 40% by Ms. Wang and has no business operation

“%” percent

* For identification purpose only

–27– GLOSSARY

This glossary contains explanations of certain technical terms and abbreviations in connection with our business used in this Prospectus. The terms and their assigned meanings herein may not, however, correspond to their respective standard meanings or usages in the industry, as the terms may be.

“6S management system” a visual management system relating to five Japanese terms (seiri (整理), seiton (整頓), seiso (清掃), seiketsu (清潔), and shitsuke (素養)) plus security (安全), which helps improve the efficiency of workplaces

“argon” an non-reactive gas which is common for industrial use. It is used by us in production of argon gas filled insulating Low-E glass units

“CCC” China Compulsory Certificates, a certificate for products listed under a unified product catalog under compulsory certification, which are required to pass the relevant qualification tests before being delivered to or collected by customers

“clean room” production environment of CTP module components where the level of contamination such as dust and other airborne particles are controlled at a prescribed level

“CNC” computer numeric control, an automation methodology that uses computer as an integral controller to operate a group of machine tools with precisely programed commands

“coated glass” glass coated with a layer of film composed of metallic compound to enhance its functionality

“CTP” capacitive touch panel, a touch sensing component of a touch-screen display module that senses a touch on the surface of the display by measuring a change in electrical capacitance of at its surface

“emissivity” the value given to a material based on the ratio of the energy radiated from its surface compared to that radiated from a black body at the same temperature and wavelength, on a scale from zero to one (lower is better)

–28– GLOSSARY

“ERP system” enterprise resources planning system, an inventory management system we plan to purchase to monitor the consumption of raw materials, works-in-progress and finished goods

“float glass” float glass without any enhanced functionality which is used as a raw material in our production

“FPC” flexible printed circuit, a patterned arrangement of printed circuitry and components that utilizes flexible base material with or without cover lay

“G+G” glass plus glass, a kind of CTP structure. A G+G CTP consists of two components, namely glass substrate and cover glass

“infra-red radiation” radiation of wavelength between 0.76 to 3 micrometers

“insulating Low-E glass unit” comprises one Low-E glass pane and one float glass pane (both of which can be tempered or non-tempered) mounted and sealed together with an aluminum spacer and air-tight space in between filled with air or argon gas

“in-cell” a kind of structure of touch screen display module that fully integrates the touch sensor into the actual display panel

“ISO” International Organization for Standardisation

“ITO” Indium tin oxide, a type of coating material used in the production of our CTP module components

“Low-E glass” glass coated with low-emissivity coating, which emits lower level of far infra-red radiation than ordinary glass

“mm” millimeter(s)

“MSVD” magnetron sputtering vapor deposition, a type of sputtering deposition technology used to deposit a thin film composed of various metal oxide compound onto float glass to produce coated glass

–29– GLOSSARY

“OGS” one glass solution, a CTP structure using one ultra-thin glass sheet that is both the glass substrate for ITO coating and cover glass

“on-cell” a kind of structure of touch screen display module that attaches the touch sensor directly onto the actual display panel

“solar control glass” glass coated with coating that reflects solar energy, which includes both visible light and infra-red radiation, but does not control far infra-red radiation

“target material” a slab of coating material used in MSVD film coating process

“temper(ed)” a process using controlled thermal or chemical treatments to increase the strength of glass compared with ordinary glass

“tempered glass” a kind of safety glass which breaks into small particles instead of sharp pieces when shattered, which reduces the risk of severe injuries compared to ordinary glass

“touch screen display module” a display unit that allows user control by touching the screen and comprises a touch sensing module, such as a CTP, and a display module

“Twelfth Five-Year Guideline the Twelfth Five-Year Guideline of Forestry Development (2011-2015)” (建材工業 “十二五”發展規劃) issued by the PRC Ministry of Industry and Information Technology (中華人民共和國工業和信息化部)

“ultra-thin glass sheet” glass of 0.4mm to 1.1mm in thickness, which is a type of float glass and used by us as raw material to produce CTP module components

“utilization rate” the rate at which the designed annual production capacity of the production facility is being met or used

“weight case” a unit for glass used in the glass industry, which is defined as the weight of 10 m2 of glass of thicknesses of 2mm. For example, 1 weight case of glass is equal to 4 m2 of glass of thicknesses of 5mm or 3.33 m2 of glass of thicknesses of 6mm

–30– FORWARD-LOOKING STATEMENTS

We have included in this Prospectus forward-looking statements. Statements that are not historical facts, including statements about our intentions, beliefs, expectations or predictions for the future, are forward-looking statements. These forward-looking statements include, without limitation, statements relating to:

• any changes in the regulatory and operating conditions in the industry and the market in which we operate;

• our ability to control our credit risks and other risks inherent in our business;

• our business and operating strategies and our ability to implement such strategies;

• future developments, trends, conditions and the competitive environment in the industry and the market in which we operate or into which we intend to expand;

• our expansion plan;

• financial market developments;

• our financial condition and performance;

• our future debt levels and capital needs;

• changes in economic conditions in the cities in which we operate, including a downturn in the property markets and general economy in China;

• our strategies, plans, objectives and goals;

• our production capabilities;

• our ability to reduce costs;

• our dividend policy;

• our capital expenditure plans;

• our business prospects;

• changes or volatility in interest rates, foreign exchange rates, equity prices or other rates or prices, including those pertaining to the PRC and the industry and the market in which we operate;

–31– FORWARD-LOOKING STATEMENTS

• the actions and developments of our competitors;

• certain statements in “Financial Information” with respect to trends in prices, volumes, operations, margins, overall market trends, risk management and exchange rates; and

• other statements in this Prospectus that are not historical facts.

In some cases, we use the words “aim,” “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “going forward,” “intend,” “ought to,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “will,” “would” and similar expressions to identify forward-looking statements. In particular, we use these forward-looking statements in “Summary and Highlights,” “Risk Factors,” “Business” and “Financial Information” and other sections of this Prospectus in relation to future events, our future financial, business or other performance and development, the future development of our industry and the future development of the general economy of our key markets.

These forward-looking statements are based on current plans and estimates, and speak only as of the date they were made. We undertake no obligation to update or revise any forward-looking statements in light of new information, future events or otherwise. Forward- looking statements involve inherent risks and uncertainties and are subject to assumptions, some of which are beyond our control. We caution you that a number of important factors could cause actual outcomes to differ, or to differ materially, from those expressed in any forward-looking statements.

Our Directors confirm that the forward-looking statements are made after reasonable care and due consideration. By their nature, however, forward-looking statements require us to make assumptions that are subject to inherent risks and uncertainties. As such, the forward- looking events and circumstances discussed in this Prospectus might not occur in the way we expect, or at all. Accordingly, you should not place undue reliance on any forward-looking information. All forward-looking statements contained in this Prospectus are qualified by reference to this cautionary statement.

–32– RISK FACTORS

You should carefully consider each of the risks described below and all of the other information contained in this Prospectus before deciding to invest in the Placing Shares. If any of the following risks occur, our business, financial condition and results of operations could be materially and adversely affected. In that case, the trading price of our Shares could decline, and you may lose all or part of your investment.

RISKS RELATING TO OUR BUSINESS AND INDUSTRY

We have a limited operating history which makes it difficult to evaluate our business and growth prospects.

We were established in 2011 and our revenue increased from RMB168.2 million in 2013 to RMB196.2 million in 2014. Due to our limited operating history, there may not be adequate basis for evaluating our future results of operations and business prospects. There can be no assurance that the rate of our future growth will continue at the same or comparable level as the growth we have experienced in the past. There is also no assurance that our business of CTP module components production and sale will be successful in the future. As our financial performance in the past may not be indicative of our results in the future, potential investors may have difficulties evaluating the future performance and prospects of our business.

We have a limited track record of manufacturing and selling CTP module components, and as such, our plan to further expand into the CTP market may not be successful.

We commenced commercial production of CTP module components for use in electronic devices in March 2014 and recorded our first sale of CTP module components in May 2014. To a considerable degree, our growth in revenue during the Track Record Period was attributable to our production and sale of CTP module components. However, we only have a limited operating history for the production and sale of CTP module components. Certain challenges are associated with companies that have relatively short operating histories on a business segment, including the ability to, among other things, effectively manage a rapidly growing business segment and respond effectively to the changes of market conditions.

In addition, one of our business plans is to expand our CTP module components production and sale. Our Directors intend to add an additional CTP module components production line and conduct CTP module components related research and development activities using cash flow from operating activities, bank loans and proceeds from the Placing. Although we have commenced the production and sale of our CTP module components, due to our limited track record, our expansion plan relating to the production and sale of CTP module components may not be successful and there may be inherent risks and uncertainties. Hence, there can be no assurance that we will be as successful in developing our CTP module components business as we have been in developing our other businesses. If we face significant and unexpected difficulty in managing and operating our CTP module components business, our results of operations could be adversely affected.

–33– RISK FACTORS

We had negative net operating cash flow for the six months ended 30 June 2015, and we may have difficulty meeting our payment obligations if we continue to record net operating cash outflows in the future.

We had negative net operating cash flow of RMB16.0 million for the six months ended 30 June 2015, and we may experience cash flow mismatch in our business. Our net operating cash outflows were primarily due to a decrease in trade and other payables, an increase in inventories and an increase in restricted deposit. See “Financial Information – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Cash flows – Net cash generated from/(used in) operating activities” for details. We may continue to experience negative net operating cash flows in the future. Our operating cash flows may be affected by the credit terms that we grant to our customers, some of which may be as long as nine months. Moreover, our operating cash flows may be adversely affected by a number of factors beyond our control, including but not limited to, market composition and the macroeconomic environment. Our future liquidity, the payment of trade payables, prepayments, deposits and other receivables, and repayment of any debt obligations, as they become due, will primarily depend on our ability to maintain adequate cash inflows from operating activities. If we are unable to maintain adequate cash inflows from operating activities, we may default on our payment obligations, which may materially and adversely affect our business, financial condition, results of operations and prospects.

We may not be able to obtain adequate financing for our business in the future.

We depended on cash generated from our operations as well as external financing to operate and expand our business during Track Record Period. Apart from the net proceeds from the Placing, our future funding requirements will depend, to a large extent, on our working capital requirements, our business performance, market conditions and other factors, some of which are beyond the control and anticipation of our management. We will also need substantial capital expenditures to enhance our overall operating scale and support our expansion plan. As of 31 October 2015, we had unutilized banking facilities of RMB0.3 million, which are unrestricted. Our ability to raise additional capital will depend on our business performance, market conditions and overall economic climate. We are unable to assure you that we will be able to obtain banking facilities and other external financing or resources on commercially acceptable terms or in a timely manner or at all in the future. If we are unable to obtain necessary financing or if we fail to obtain such financing on favorable terms due to factors beyond our control, we may be forced to curtail our expansion plans and our results of operations and financial condition may be materially and adversely affected.

We may not be able to keep up with changes in market needs or technological development in the industry in which we conduct business in a timely manner, and our efforts in new product development may not be successful.

Our competitiveness in the glass industry is largely dependent on our ability to improve the quality of our existing products and develop new products and techniques. For example, in anticipation of a growing demand in the market for CTP, we diversified our business to include CTP module components manufacturing and began commercial production of CTP module

–34– RISK FACTORS components in March 2014. In May 2014, we recorded the first sale of CTP module components. As we have a limited history of operating our CTP module components business, we can give no assurance that such products will be well-accepted by the market.

Moreover, the development of new products involves significant time, manpower and expenses. If we fail to accurately assess market needs and technological developments or fail to achieve widespread market acceptance, we may not be able to recover the research and development, production and marketing expenses as well as administrative costs incurred in developing such new products. For example, the traditional G+G CTP is not thin enough to fulfill the demand of mobile phone industry, which prefers lighter and thinner design, while it still has a relatively stable market share relating to other industrial electronic devices industries. If our G+G CTP module components fail to achieve widespread market acceptance in other industrial electronic devices industries, our results of operations may be adversely affected. In addition, changing our products in response to market demand may require the adoption of new technologies and production facilities, which may render our existing technologies and production facilities obsolete. The modification of the existing production facilities may also involve significant time and expenses. For example, it may not be possible to modify our existing CTP module components production line, which is for the production of both G+G CTP module components and OGS CTP module components, for the production of on-cell CTP module components with minimal costs.

Further, other competitors in the market may improve, develop and launch products which are superior to our products in terms of costs, production lead times and product quality which would render our products non-competitive and obsolete. If we lag behind our competitors in improving existing products and/or launching new products in a timely manner, we may not be able to retain our existing customers, compete effectively for new business or maintain our position in the market, and our results of operations, profitability and prospects could be adversely affected as a result.

We had net current liabilities as of 31 December 2013 and 2014.

We had a net current liabilities position of RMB8.5 million and RMB3.9 million as of 31 December 2013 and 2014, respectively. Our gearing ratio was 23.2% and 31.5% as of 31 December 2013 and 2014, respectively. Please see “Financial Information – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Net Current Liabilities” and “Financial Information – Major Financial Ratios – Gearing Ratio” for details.

The net current liabilities position exposed us to liquidity risk. Our future liquidity and ability to make additional capital investments necessary for our operations and business expansion will depend primarily on our ability to maintain sufficient cash generated from operating activities and to obtain external financing. There can be no assurance that we will be able to renew existing banking facilities and/or obtain new sources of debt financing. The lender may withdraw facilities, request for early repayment of outstanding loans or increase the amount of collaterals for secured borrowings. Further, the lender may require us to agree on less favorable terms that could limit the flexibility in conducting our future business activities.

–35– RISK FACTORS

We can give no assurance that the net current liabilities position can be improved in the future. In the event that we continue to have net current liabilities in the future, our working capital for business operations may be constrained. We intend to apply approximately 10% of the net proceeds of the Placing as our working capital. However, this amount of funding may not be sufficient for our future operations and we may still need to obtain additional external financing. If we do not generate sufficient positive operating cash flow or obtain additional borrowings to meet our working capital needs, our business, financial condition and results of operations may be materially and adversely affected.

If we fail to maintain our product quality, our business, brand and reputation could be materially and adversely affected.

Our results of operations depend, in part, on our ability to maintain our product quality. If we experience deterioration in manufacturing performance or in the quality of any of our products, it could result in delay in delivery or cancellation of orders, and as a result, our brand and reputation could be harmed and sales could be disrupted. Further, as the coated glass production equipment produced and assembled by us contain a variety of components produced by third parties, we may not be able to detect all the defects in the components supplied by third parties. If we fail to maintain our product quality or monitor the quality of supplies from third parties, our product quality cannot be guaranteed and our products may fail to compete with other products in the market.

As of the Latest Practicable Date, we received a number of quality certifications as described in “Business – Quality Control.” Should there be any changes in the certification requirements and standards in the future or should we fail to maintain our product quality, we may experience difficulties in keeping up with such certification requirements. If we fail to continue to be accredited with the certifications, our business and results of operations could be materially and adversely affected and our reputation and image could also be adversely impaired.

Demand for our coated architectural glass products is highly dependent on the PRC real estate market, which could be materially and adversely affected by the PRC macro economy and other conditions.

Our principal products, namely, coated architectural glass products, are mainly used in commercial and residential buildings. Such principal products contributed 79.3%, 68.8%, 92.1% and 59.9% of our total revenue for the years ended 31 December 2013 and 2014 and the six months ended 30 June 2014 and 2015, respectively. As many of our customers are engaged in the businesses of glass curtain wall installation, windows and doors installation and processed glass manufacturing, which are highly correlated with the real estate market, our success heavily depends on the performance of the PRC real estate market.

The PRC real estate market experienced fluctuations in recent years in response to PRC government policies and trends in the PRC and world economy. In particular, the PRC real estate market is affected by the recent slowdown in the PRC economic growth. There have been increasing concerns over the sustainability of the real estate market growth in China. Any

–36– RISK FACTORS global or PRC economic slowdown or financial turmoil in the future may cause uncertainty in the PRC real estate market, which may in turn contribute to a lower demand for our products. As a result, our results of operations and prospects could be materially and adversely affected. For example, orders of our coated architectural glass products decreased from 2.4 million m2 for the six months ended 30 June 2014 to 2.2 million m2 for the six months ended 30 June 2015 due to the slowdown of the PRC macro economy which had caused downstream demands to decrease and competition in the industry to intensify in 2015. Our Directors expect that the slowdown of the PRC macro economy may adversely affect our financial performance for the year ending 31 December 2015. Moreover, we can give no assurance that our business of manufacture and sale of coated architectural glass products will not continue to be adversely affected in the future.

A decline in demand for, or a decrease in the average selling prices of, our products would materially and adversely affect our business and results of operations.

We generated all of our revenue from the sale of our products, namely coated architectural glass, coated glass production equipment and CTP module components, during the Track Record Period. Due to our reliance on the real estate market and electronic devices market, a decline in demand for coated architectural glass or CTP module components could reduce our sales, and a substantial decrease in the average selling prices of our products could result in decreased profits. We experienced fluctuations in the average selling price of our products during the Track Record Period. For the years ended 31 December 2013 and 2014 and the six months ended 30 June 2014 and 2015, the average selling price of our coated architectural glass was RMB30.2 per m2, RMB32.5 per m2, RMB32.1 per m2 and RMB25.3 per m2, respectively. The average selling price of our coated architectural glass was lower than the average market price of similar products during the Track Record Period because, while having relatively low bargaining power as a new market player and maintaining our gross profit margin, we priced our products lower than the average market price in order to achieve market acceptance and brand recognition, as well as to compete more effectively. We sold one complete glass production line in each of the years ended 31 December 2013 and 2014, the selling price of which was RMB35.8 million and RMB35.0 million, respectively. We did not record sale of coated glass production equipment for the six months ended 30 June 2015. We commenced commercial production of CTP module components in March 2014. For the year ended 31 December 2014 and the six months ended 30 June 2015, the average selling price of our CTP module components was RMB23.3 per unit and RMB46.1 per unit, respectively. We cannot assure you that the average selling prices of our products will not decease in the future. We expect to continue to derive our revenue from the sale of coated architectural glass, coated glass production equipment and CTP module components for the foreseeable future, and as such, a sustained market demand for coated architectural glass and CTP module components is critical to our continued success. Failure to grow or maintain our revenue generated from the sale of our products would have a material and adverse effect on our business, financial condition and results of operations.

We rely on a limited number of customers.

During the Track Record Period, we derived a substantial portion of our revenue from a small number of customers. For the years ended 31 December 2013 and 2014 and the six months ended 30 June 2015, sales to our five largest customers accounted for 61.7%, 60.2%

–37– RISK FACTORS and 57.8% of our total revenue, respectively, and sales to our largest customer accounted for 18.2%, 23.3% and 19.4% of our total revenue, respectively. We do not enter into long-term sales contracts with our customers. There can be no assurance that our customers will continue to place orders with us, or that their future orders will be at a comparable level as in prior years. If any of our major customers ceases to place orders with us or reduces its order size, our business, financial condition and results of operations could be adversely affected.

As of 31 December 2013 and 2014 and 30 June 2015, our trade and other receivables from the five largest customers amounted to RMB27.2 million, RMB49.3 million and RMB36.3 million, respectively, representing 37.1%, 47.4% and 35.5% of our total trade and other receivables, respectively. If any of the customers fails to settle the amount due to us promptly or at all, our financial condition and results of operations could be materially and adversely affected.

We manufacture all of our products at our plant in Huai’an and store inventories at our plant and warehouse in Tianjin City, and may experience unexpected disruption of our production and operations.

As of the Latest Practicable Date, all of our products were manufactured at our plant in Huai’an and all of our inventories were stored in our storage facilities, which were located at our plant in Huai’an and warehouse in Tianjin City. Our plant or warehouse may be damaged or destructed, or our production process may be disrupted due to fire or natural disasters such as severe weather conditions, floods, droughts, earthquakes or other natural or man-made disasters, which may be out of our control. We cannot assure you that we will be able to adequately control the impact of these events. These events could adversely impair our ability to continue our production and operations and result in failure to deliver our products to customers on time. In such an event, the customers could make claims against us and our reputation may be tarnished. As a result, our business and results of operations may be adversely affected. In August 2015, there were a series of explosions that occurred at a container storage station at the port of Tianjin City. While our warehouse in Tianjin City was not affected by this incident, there can be no assurance that we can predict any natural or man-made disaster in the future or our operations will not be adversely affected by such disaster.

We may experience shortages of, or price increases in, raw materials and components.

Our continued success depends on our ability to obtain adequate supplies of raw materials and components on commercially acceptable terms and in a timely manner to support our operations and expansion plans. Our raw materials and components include float glass, target materials and steel. There can be no assurance that shortages or disruptions of supply of raw materials and components will not occur in the future and that, if such shortage or disruption occurs, we will be able to obtain an alternative supply of raw materials and components of similar quantity or quality to meet our production needs. If we are unable to obtain sufficient raw materials and components on a timely basis, our business operations and growth plans may be interrupted, and we may experience production and shipping delays, which could adversely affect our customer relationships and reduce our sales.

–38– RISK FACTORS

For the years ended 31 December 2013 and 2014 and the six months ended 30 June 2014 and 2015, our raw material costs in the amounts of RMB107.8 million, RMB111.7 million, RMB43.3 million and RMB47.9 million, respectively, represented 88.1%, 83.2%, 81.0% and 83.9% of our total cost of sales, respectively. The prices of our raw materials and components may fluctuate. If we experience significant increases in raw materials and components prices, our total cost of sales would increase and we may not be able to pass these additional costs on to our customers, in which case our profit margin may decrease and we may not be able to maintain or improve our current profit margin and profitability.

Our financial performance for the year ending 31 December 2015 is expected to be adversely affected by the listing expenses.

The estimated listing expenses paid and payable by us for the year ending 31 December 2015 are approximately HK$9.2 million. The amount of listing expenses is a current estimate for reference only and the actual amount to be recognized is subject to adjustment based on audit and the then changes in variables and assumptions. Investors should note that the financial performance of our Group for the year ending 31 December 2015 would be adversely affected by the estimated listing expenses mentioned above, and may or may not be comparable to the financial performance of our Group in the past or the future.

The implementation of our expansion plan may lead to higher depreciation expenses, which may adversely affect our profit margin.

In order to expand our overall operating scale, we plan to build a new factory building in 2016 and add a new production line for on-cell CTP module components, for which we expect to purchase additional equipment. The implementation of our expansion plan may lead to higher depreciation expenses compared with those during the Track Record Period. The additional amount of annual depreciation expenses for the new CTP module components production line is estimated to be RMB6.5 million and the depreciation period will commence upon the commencement of operation of the new production facilities, which may have a negative impact on our profit margin.

We may fail to compete effectively in our industry and may face potential competition from the customers of our complete sets of coated glass production lines.

According to HCR, we had a market share in China of 2.7% for Low-E glass in terms of sales volume in 2014. Some of our competitors have operated in glass industry for many years and achieved substantial market share. Competition in the glass industry is characterized by product quality, technical innovation and production capacity and efficiency. A number of our competitors are larger and have greater manufacturing, financial, research and development, and marketing resources than we do. Some of these competitors also offer product lines that we do not carry. During the Track Record Period, given our relatively short operating history in the industry, in order to achieve market acceptance and brand recognition, compete more effectively with enhanced bargaining power in the market and further broaden our customer base, we priced our coated architectural glass lower than the average market price. We may not be able to enhance our bargaining power in a short period of time, so as to compete effectively

–39– RISK FACTORS with increased selling price of our products. Failure to compete effectively in the market may adversely affect our business and prospects. Partly because of the intensive market competition, orders of our coated architectural glass decreased during the Track Record Period. There is no guarantee that we will compete effectively in the future and receive more orders of our coated architectural glass.

In addition, we design, assemble, build and sell complete sets of coated glass production lines. The customers who purchase complete sets of coated glass production lines from us could produce coated architectural glass products by themselves, including Low-E glass. Therefore, we may also face potential competition from the customers of our complete sets of coated glass production lines.

We may have difficulties managing our future growth.

We recorded growth during the Track Record Period and expect to continue to grow our operations. Our ability to manage our growth effectively will require us to: (i) improve our operational, financial and management systems; (ii) develop the skills of our management team; (iii) hire additional qualified personnel; (iv) train, motivate, manage and retain our employees; (v) maintain adequate facilities and equipment; and (vi) continue to expand our research and development, sales and marketing, and technological capabilities. However, we cannot assure you that our systems, procedures, personnel and expertise will be adequate to support our future growth. If we fail to sustain our profitability or manage our growth effectively, our business, financial condition and results of operations could be materially and adversely affected.

In addition, as we continue to develop and expand our business and operating scale, we expect our financing and operating costs to increase. Moreover, our long-term success is also dependent on our ability to secure existing and new customers and obtain sufficient capital. If we fail to manage any or all of these critical factors as well as our increased costs, our ability to develop our overall business and operating scale could be undermined.

Our industry is capital intensive and we may not be able to obtain the capital resources required to continue to upgrade our facilities.

Our production activities are capital intensive. We require additional capital resources to pursue our business strategy of growing our business and to remain competitive by responding on a timely basis to technological changes or market demand. In particular, we require significant capital to build, maintain, operate and improve our plant and to bring our processing facilities to the planned levels of production. We expect to meet our funding needs using proceeds from the Placing, cash flow from operating activities, bank borrowings and other external financing sources. Our ability to obtain additional financing will depend on a number of factors, including China’s economic condition, prevailing conditions in capital markets, regulatory requirements. Our costs of financing may also be affected by changes in interest rates. There can be no assurance that we will generate sufficient cash flows for our intended expansion plan. If we are unable to obtain sufficient funding on acceptable terms, we may not be able to successfully implement our business strategy, and our prospects could be materially and adversely affected.

–40– RISK FACTORS

Our business may be affected by seasonality.

During the Track Record Period, we recorded relatively lower revenue in the first quarter of each year. We believe that it is mainly because the sale of our products and our production activities are generally slower in the first quarter of each calendar year as a result of the Chinese New Year holidays, when many of our customers are in recess and the productivity of our production facilities are substantially lower than in other periods. Therefore, comparisons of our results of operations for the first quarter of each calendar year with other periods within the same calendar year or with periods in different calendar years are not necessarily meaningful and should not be relied upon as indicative of our performance for any future period. Seasonal fluctuations in our revenue require us to monitor and control our working capital carefully so as to provide our business with adequate cash for operations. Failure to manage seasonality in our business may cause our financial condition and results of operations to be adversely affected.

Our success depends on our ability to retain our senior management team and to attract and retain other qualified personnel.

Our success depends heavily on the continuous services and performance of our senior management team. In particular, we rely on the leadership and experience of Mr. Wang, our chief executive officer. Mr. Wang plays an important role in the development of our businesses and we rely, to a large extent, on him to oversee our overall strategic plans and business development. In addition to Mr. Wang, Mr. Zhao Haibo and Mr. Yang Xudong, who have approximately ten years of experience in the coated glass industry, have been overseeing our procurement and sales and marketing activities since our incorporation in 2011. Our future success will depend on the continuous involvement, efforts, performance and ability of our senior management team as a whole.

There is no assurance that we can maintain the service of our key personnel, or that we can continue to develop the experience and skills of our key personnel. The loss of service of Mr. Wang and/or other key employees without any suitable replacement in a timely and commercially viable manner may result in the loss of strategic leadership and disruption or delay to business operations or expansion, which may materially and adversely affect our business, financial condition and results of operations.

We may be involved in litigation or legal proceedings, which may adversely affect our financial condition, divert our management’s attention and harm our reputation.

We may at times be involved in litigation or legal proceedings during the ordinary course of our business operations, related to, among other things, product or other types of liabilities, and labor or contractual disputes. We may also be involved in litigation or legal proceedings as co-defendant. For the outstanding lawsuits that we were involved in as of the Latest Practicable Date, see “Business – Compliance, Legal proceedings and Internal Control – Legal Proceedings.” If we become involved in any litigation or other legal proceedings in the future, the outcome of such proceedings could be uncertain and could result in settlements or results

–41– RISK FACTORS which may materially and adversely affect our business, financial condition and results of operations. For example, in a lawsuit disclosed in “Business – Compliance, Legal proceedings and Internal Control – Legal Proceedings,” the plaintiff, Nanjing Yaopi and Jiangsu Yutian sought mediation that Nanjing Yaopi agreed to pay the sum of approximately RMB5.3 million for full and final settlement of the proceeding by installments before 2 February 2016 and both Nanjing Yaopi and Jiangsu Yutian would be discharged from all further liability in respect of the said proceeding upon full payment. In addition, our Controlling Shareholders have given indemnity in favor or us. However, if Nanjing Yaopi and the Controlling Shareholders fail to meet their obligations, we may be forced to make the payment, which may adversely affect our financial condition and results of operations.

In addition, any litigation or legal proceedings could involve substantial legal expenses, require a significant amount of time and resources, and divert the attention of our management from our operations. Further, we might suffer negative publicity resulting from such claims. If any negative publicity or reputational harm is not effectively remedied or reversed, our existing or potential suppliers and customers may develop negative views on us, which may negatively affect our ability to maintain solid relationships with our suppliers and customers, engage new customers and expand into new markets.

We may not be able to protect our intellectual property rights.

We have proprietary intellectual property rights and know-how with respect to certain of our products and stages of our production processes. We rely on trademarks and patents to protect our intellectual property rights. As of the Latest Practicable Date, we owned two trademarks, four invention patents and 14 utility model patents in China and had applied to register ten invention patents with the State Intellectual Property Office of the PRC. However, our protective measures may not be sufficient to prevent the misappropriation or unauthorized disclosure of our intellectual property or know-how. There can be no assurance that we will be successful in bringing intellectual property enforcement actions against parties who we believe have infringed upon our intellectual property rights. In addition, intellectual property laws in China are still evolving and may not afford the same level of protection as the laws of other jurisdictions. If we are unable to adequately protect our intellectual property to prevent misuse or misappropriation by any of our competitors, the value of our brand and other intangible assets may be diminished and our business may be materially and adversely affected.

In addition, seeking patent protection can be expensive and time consuming. There can be no assurance that patents will be granted from pending or future applications or that, if patents are granted, they will provide meaningful protection or other commercial advantage to us.

–42– RISK FACTORS

Any claims by third parties alleging possible infringement of their intellectual property rights would have an adverse effect on our business and reputation.

We may receive communications from third parties asserting patent rights over our products and production processes and, in such circumstances, we enter into discussions with such parties as to their respective positions and the terms of any possible licenses in respect of such patent rights. There can be no assurance that infringement claims will not be brought by third parties against us from time to time. Irrespective of the validity or successful assertion of these claims, such disputes may result in significant costs and divert the attention and efforts of our management and technical personnel. Moreover, if we are unable to successfully dispute such claims, we may ultimately be prevented from using the technology or producing and selling the products found to be infringing. The occurrence of any of these events could harm our reputation and have a material and adverse effect on our business, financial condition, results of operations and future prospects.

We may fail in developing new markets and be exposed to various risks associated with conducting business overseas.

We currently sell our coated architectural glass products in China, our coated glass production equipment both domestically and overseas, and our CTP module components in China and Hong Kong. Our revenue from international sales, which mainly related to the sales of coated glass production equipment and consumable materials to one customer in Indonesia and sales of CTP module components to one customer in Hong Kong, was RMB4.1 million, RMB9.6 million and RMB15.5 million for the years ended 31 December 2013 and 2014 and the six months ended 30 June 2015, respectively, accounting for 2.5%, 4.9% and 19.4% of our total revenue, respectively, during the same periods. We did not record revenue from international sales for the six months ended 30 June 2014. We intend to further increase our international sales by expanding into other countries in Asia, such as India. In expanding our business internationally, we have entered and intend to continue to enter markets in which we have limited or no experience and in which our brand may not be recognized. We may fail to anticipate competitive conditions, regulatory environment and international, regional and local political environment in new markets that are different from those in our existing markets.

Our overseas operations will expose us to various risks associated with conducting business in foreign countries and territories that include, among others:

• risks of business interruption and property loss due to political risks, including civil unrest, acts of terrorism, acts of war, regional and global political or military tensions and strained or altered foreign relations;

• economic, financial and market instability and credit risks;

• unfamiliarity with foreign business environments and market conditions;

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• compliance with foreign laws, regulatory requirements and local industry standards;

• exposure to litigation or third-party claims outside China;

• abrupt changes in foreign government regulations, policies or preferential treatment;

• foreign currency controls and fluctuations;

• cultural and language difficulties;

• tax increases or adverse tax policies;

• trade restrictions;

• discrimination, protectionism or unfavorable policies against companies from China for national security purposes;

• economic sanctions;

• difficulties with staffing and managing overseas operations after localization, including applying with various labor regulatory requirements of different jurisdictions;

• potential disputes with foreign partners or customers; and

• lack of a well-developed or independent legal system in certain foreign countries in which we conduct our business, which may create difficulties in the enforcement of legal rights.

Any of the above factors could lead to, among others, business disruptions and loss of sales, which could have a material and adverse effect on our business operations and overall growth strategies.

Our insurance coverage may not sufficiently cover the risks related to our business and operations.

We maintained insurance policies as disclosed in “Business – Insurance.” However, there may be circumstances under which certain types of losses, damages and liabilities are not covered by our insurance policies or that our Directors believe are not commercially reasonable to insure, such as business interruption or product liability claims. We do not maintain any product liability insurance for our products. Should there be any product liability claim against us, we may incur significant costs and expenses to defend against such claims and/or making payments for damages. We may also be fined or sanctioned, which could adversely affect our reputation, business and prospects.

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Our operations are subject to hazards and risks associated with our operations which may cause significant harm to persons or damages to properties and production processes. We cannot assure you that our insurance policies are sufficient to cover all the risks associated with our business and operations. Losses incurred for liabilities not sufficiently covered by our insurance policies may have a material and adverse effect on our business, financial condition and results of operations.

Labor shortages or an increase in labor costs could hinder our growth and adversely affect our business.

Direct labor costs accounted for 4.9% 7.6%, 8.6% and 6.8% of our cost of sales for the years ended 31 December 2013 and 2014 and the six months ended 30 June 2014 and 2015, respectively. We cannot assure you that we will not experience any labor shortages or that labor costs in China, particularly in Jiangsu, will not increase in the future. If we experience any labor shortages, we may not be able to maintain our production volumes. Moreover, increases in our labor costs could result in increases in our production costs that may not be passed on to our customers. Accordingly, if we experience labor shortages or increased labor costs, our financial condition and results of operations could be adversely affected.

We may not be able to continue to benefit from preferential tax treatment and government grants.

Under EIT Law, preferential tax treatment is given to companies in certain encouraged sectors and to entities classified as a “High and New Technology Enterprise” (高新技術企業). We have been classified as a “High and New Technology Enterprise” since 2013 and as a result, we enjoyed a preferential income tax rate of 15% for a period of three years from 2013 to 2015. In order to maintain such qualification and the preferential tax rate, we plan to apply for the extension of this preferential tax treatment before expiration.

During the Track Record Period, we also received government grants from the PRC government in relation to, among others, technical upgrade, government policies for encouraging investment, government policies for promoting the development of energy- efficient and environment-friendly industries, and transformation and upgrading of our industry. Such government grants are non-recurring in nature. For the years ended 31 December 2013 and 2014 and the six months ended 30 June 2014 and 2015, we recorded government grants of RMB0.3 million, RMB4.6 million, RMB0.1 million and RMB0.3 million, respectively, representing 1.1%, 11.7%, 3.0% and 4.6% of our profit before taxation, respectively.

There is no guarantee that we will continue to benefit from our current preferential tax treatment and government grants. If we fail to continue to qualify for our current preferential tax treatment, we may be subject to increased tax obligations, which may in turn have a material and adverse effect on our financial condition and results of operations. Further, if the relevant government authorities decide to terminate or reduce the amount of government grants provided to us, our financial condition and results of operations may also be materially and adversely affected.

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Our property valuation is based on certain assumptions which, by their nature, are subjective and uncertain and may materially differ from actual results.

Valuations of our property interests as of 31 October 2015 prepared by DTZ Debenham Tie Leung Limited, an independent property valuer, are set out in property valuation report in Appendix III to this Prospectus. The valuations are based on certain assumptions which, by their nature, are subjective and uncertain and may differ from actual results. Accordingly, these valuations are not a prediction of the actual value expected to be achieved by us. Unanticipated results of, or changes in, general or local economic conditions or other relevant factors could affect such valuations.

We may fail to comply with, or incur additional costs in complying with, present or future environmental, health and safety laws and regulations.

As substantially all of our operations are in China, we are subject to various periodic inspections, examinations, inquiries and audits by the relevant PRC regulatory authorities in accordance with the applicable PRC environmental, health and safety laws and regulations, as part of maintaining or renewing the various licenses, certificates and permits required for conducting business. As the PRC environmental, health and safety laws and regulations continue to evolve, we cannot guarantee that we will continue to be in compliance with all applicable laws and we may incur additional costs in complying with such laws and regulations. Failure to comply with any of these laws and regulations could hinder our production activities and operations, which could lead to the untimely delivery of goods, delayed receipt of revenue, loss of income, and the suspension or termination of our sales contracts, cause us to incur significant costs or fines, or result in the suspension or termination of our operations. Any costs incurred or limitations imposed on our operations as a result of our non-compliance with environmental, health and safety laws and regulations may have a material and adverse effect on our business, financial condition and results of operations.

We may experience failures in our information systems.

We rely, to a large extent, on our information systems for daily operations, especially our financial management software, Yonyou T3 system (用友T3). Our information systems allow us to record financial data, analyze our past financial performance and monitor our financial condition. Our operating efficiency has been enhanced by such information systems. We cannot assure you that any damage or interruption caused by power outages, computer viruses, hardware and software failures, telecommunications failures, fires, natural disasters and other similar events relating to our information systems will not happen in the future. Additionally, restoring any damaged information systems may cause us to incur significant costs and require additional workforce. If any serious damage or significant interruption occurs, we may experience errors in the systems and our operations may be disrupted.

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Our risk management and internal control systems may not be adequate or effective, and our business may be adversely affected by non-compliance incidents.

We have established risk management and internal control systems consisting of the relevant organizational framework policies, procedures and risk management methods that we believe are appropriate for our business operations. However, we may not be successful in implementing our risk management and internal control systems. During the Track Record Period, we had certain non-compliance incidents, including selling architectural tempered glass products and insulating glass units prior to obtaining the CCC certificates and failure in fully complying with the laws relating to social insurance and housing provident fund. We may be required to pay fines or cease production and operation for such non-compliance incidents, in which case our business may be adversely affected. For details, see “Business – Compliance, Legal Proceedings and Internal Control – Compliance.”

While we seek to continue to enhance our risk management and internal control systems from time to time, we cannot assure you that our risk management and internal control systems are adequate or effective notwithstanding our efforts, and any failure to address any potential risks and internal control deficiencies may give rise to future non-compliance incidents and could materially and adversely affect our business and results of operations.

In preparation for the Listing, we have implemented measures to enhance our internal control policies and procedures. As some of our risk management and internal control policies and procedures are relatively new, we will require additional time to fully evaluate the effectiveness of, and ensure compliance with, these policies and procedures. Since our risk management and internal control systems depend on their implementation by our employees, we cannot assure you that all of our employees will adhere to such policies and procedures, and the implementation of such policies and procedures may involve human errors or mistakes. Moreover, our growth and expansion may affect our ability to implement stringent risk management and internal control policies and procedures as our business evolves. If we fail to timely adopt, implement and modify, as applicable, our risk management and internal control policies and procedures, our business, financial condition and results of operations could be materially and adversely affected.

RISKS RELATING TO DOING BUSINESS IN CHINA

We are vulnerable to adverse changes in economic, political and social conditions and government policies in China.

Substantially all of our operations and assets are located in China. Accordingly, our financial condition, results of operations and prospects are subject, to a significant degree, to the economic, political and social conditions and government policies in China. The PRC economy differs from the economies of most developed countries in a number of respects, including the extent of government involvement, level of development, growth rate, and control of foreign exchange. Before its adoption of reform and open-door policies beginning in 1978, China was primarily a planned economy. Since that time, the PRC economy has been reformed from a planned economy to a market economy with socialist characteristics.

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For approximately three decades, the PRC government has implemented economic reform measures to utilize market forces in the development of the PRC economy. Many of the reform measures are unprecedented or experimental and are expected to be modified from time to time. Other political, economic and social factors may also lead to further readjustment or introduction of other reform measures. This reform process and any changes in laws and regulations or the interpretation or implementation thereof in China may have a material impact on our operations or may adversely affect our financial condition and results of operations.

While the PRC economy has grown significantly in the past 30 years, this growth has been geographically uneven among various sectors of the economy and during different periods. We cannot assure you that the PRC economy will continue to grow, or that if there is growth, such growth will be steady and uniform. Any economic slowdown may have a negative effect on our business. For example, the PRC government has in the past periodically implemented a number of measures intended to slow down certain segments of the economy which the government believed to be overheating. We cannot assure you that the various macroeconomic measures and monetary policies adopted by the PRC government to guide economic growth and the allocation of resources will be effective in improving the growth rate of the PRC economy. In addition, such measures, even if they benefit the overall PRC economy in the long term, may materially and adversely affect us if they reduce demand for our products.

The PRC legal system is evolving and has inherent uncertainties that could limit the legal protection available to you.

The legal system in China has inherent uncertainties that could limit the legal protection available to our Shareholders. As substantially all of our business and operations are conducted in China, we are principally governed by the PRC laws, rules and regulations. The PRC legal system is based on the civil law system. Unlike the common law system, the civil law system is established on the written statutes and their interpretation by the Supreme People’s Court (最高人民法院), while prior legal decisions and judgments have limited significance for guidance. The PRC government has been developing a commercial law system, and has made significant progress in promulgating laws and regulations relating to economic affairs and matters, such as corporate organization and governance, foreign investments, commerce, taxation and trade.

However, many of these laws and regulations are relatively new, and because of the limited volume of published decisions, their implementation and interpretation involve uncertainties and may not be as consistent and predictable as in other jurisdictions. In addition, the PRC legal system is based in part on government policies and administrative rules that may have a retroactive effect. As a result, we may not be aware of any violation of these policies and rules until sometime after such violation has occurred. Furthermore, the legal protection available to us under these laws, rules and regulations may be limited. Any litigation or regulatory enforcement action in China may be protracted and may result in substantial costs and diversion of resources and management attention.

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The PRC government’s control over foreign currency conversion may limit our foreign exchange transactions, including dividend payments on our Shares.

Currently, Renminbi still cannot be freely converted into any foreign currency, and conversion and remittance of foreign currencies are subject to PRC foreign exchange regulations. There can be no assurance that, under a certain exchange rate, we will have sufficient foreign currencies to meet our foreign exchange requirements. Under the current PRC foreign exchange control system, foreign exchange transactions under the current account conducted by us, including the payment of dividends following the completion of the Placing, do not require prior approval from the SAFE, but we are required to present documentary evidence of such transactions and conduct such transactions at designated foreign exchange banks within China that have the requisite licenses to carry out foreign exchange business. Foreign exchange transactions under the capital account conducted by us, however, must be approved in advance by the SAFE.

Under existing foreign exchange regulations, following the completion of the Placing, we will be able to pay dividends in foreign currencies without prior approval from the SAFE by complying with certain procedural requirements. However, there can be no assurance that these foreign exchange policies regarding payment of dividends in foreign currencies will continue in the future. In addition, any insufficiency of foreign currencies may restrict our ability to obtain sufficient foreign currencies for dividend payments to our Shareholders or to satisfy any other foreign exchange requirements.

Fluctuations in exchange rates may have a material adverse impact on your investment.

The exchange rate of the Renminbi against the U.S. dollar and other foreign currencies fluctuates and is affected by, among other things, the policies of the PRC government and changes in the PRC’s and international political and economic conditions. Since 1994, the conversion of Renminbi into foreign currencies, including U.S. dollars, has been based on rates set by the PBOC, which are set daily based on the previous business day’s interbank foreign exchange market rates and current exchange rates on the world financial markets. From 1994 to 20 July 2005, the official exchange rate for the conversion of Renminbi to U.S. dollars was generally stable. On 21 July 2005, the PRC government introduced a managed floating exchange rate system to allow the value of Renminbi to fluctuate within a regulated band based on market supply and demand and by reference to a basket of currencies. On the same day, the value of Renminbi appreciated by approximately 2% against the U.S. dollar. The PRC government has since made, and in the future may make, further adjustments to the exchange rate system.

There remains significant international pressure on the PRC government to adopt a more flexible currency policy, which, together with domestic policy considerations, could result in a further and more significant appreciation of Renminbi against the U.S. dollar, the Hong Kong dollar or other foreign currencies. If the appreciation of Renminbi continues, and as we need to convert the proceeds from the Placing and future financing into Renminbi for our operations, appreciation of Renminbi against the relevant foreign currencies would reduce the Renminbi amount we would receive from the conversion. On the other hand, because the dividends on our Shares, if any, will be paid in Hong Kong dollars, any devaluation of Renminbi against the Hong Kong dollar could reduce the amount of any cash dividends on our Shares in Hong Kong dollar terms.

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We may be deemed a PRC resident enterprise under the EIT Law and be subject to PRC taxation on our global income.

Pursuant to the EIT Law, which came into effect on 1 January 2008, an enterprise established outside China whose “de facto management body” is located in China is considered a “PRC resident enterprise” and will generally be subject to the uniform enterprise income tax rate, or EIT rate, of 25% on its global income. Under the implementation rules of the EIT Law, “de facto management body” is defined as the organization body that effectively exercises management and control over such aspects as the business operations, personnel, accounting and properties of the enterprise.

On April 22, 2009, the SAT released the Notice Regarding the Determination of Chinese-Controlled Offshore Incorporated Enterprises as PRC Tax Resident Enterprises on the Basis of De Facto Management Bodies (關於境外註冊中資控股企業依據實際管理機構標準認定為居民企業有關問題的通知) (the “Circular 82”), as amended on 29 January 2014, which sets out the standards and procedures for determining whether the “de facto management body” of an enterprise registered outside of the PRC and controlled by PRC enterprises or PRC enterprise groups is located within the PRC. Under Circular 82, a foreign enterprise controlled by a PRC enterprise or PRC enterprise group is considered a PRC resident enterprise if all of the following apply: (i) the senior management and core management departments in charge of daily operations are located mainly within the PRC; (ii) financial and human resources decisions are subject to determination or approval by persons or bodies in the PRC; (iii) major assets, accounting books, company seals and minutes and files of board and shareholders’ meetings are located or kept within the PRC; and (iv) at least half of the enterprise’s directors with voting rights or senior management reside within the PRC. Further to Circular 82, the SAT issued Chinese-Controlled Offshore Incorporated Resident Enterprises Income Tax Regulation (境外註冊中資控股居民企業所得稅管理辦法(試行)) (the “Bulletin 45”), which took effect on 1 September 2011, to provide more guidance on the implementation of Circular 82 and clarify the reporting and filing obligations of such “Chinese-controlled offshore incorporated resident enterprises.” Bulletin 45 provides procedures and administrative details for the determination of resident status and administration of post-determination matters. Although Circular 82 and Bulletin 45 explicitly provide that the above standards apply to enterprises which are registered outside the PRC and controlled by PRC enterprises or PRC enterprise groups, Circular 82 may reflect SAT’s criteria for determining the tax residence of foreign enterprises in general. If we were treated as a PRC resident enterprise, the EIT rate of 25% on our global taxable income could materially and adversely affect our ability to satisfy any cash requirements we may have.

You may be subject to PRC income tax on dividends from us or on any gain realized on the transfer of our Shares under the PRC law.

Under the EIT Law and its implementation rules, subject to any applicable tax treaty or similar arrangement between the PRC and your jurisdiction of residence that provides for a different income tax arrangement, PRC withholding tax at the rate of 10% is normally applicable to dividends from PRC sources payable to investors that are non-PRC resident enterprises, which do not have an establishment or place of business in the PRC, or which have

–50– RISK FACTORS such establishment or place of business if the relevant income is not effectively connected with the establishment or place of business. Any gain realized on the transfer of shares by such investors is subject to 10% PRC income tax if such gain is regarded as income derived from sources within the PRC unless a treaty or similar arrangement otherwise provides. Under the PRC Individual Income Tax Law (中華人民共和國個人所得稅法) and its implementation rules, dividends from sources within the PRC paid to foreign individual investors who are not PRC residents are generally subject to a PRC withholding tax at a rate of 20% and gains from PRC sources realized by such investors on the transfer of shares are generally subject to 20% PRC income tax, in each case, subject to any reduction or exemption set forth in applicable tax treaties and PRC laws.

Although substantially all of our business operations are in China, it is unclear whether dividends we pay with respect to our Shares, or the gain realized from the transfer of our Shares, would be treated as income derived from sources within the PRC and as a result be subject to PRC income tax if we are considered a PRC resident enterprise. If PRC income tax is imposed on gains realized from the transfer of our Shares or on dividends paid to our non-resident investors, the value of your investment in our Shares may be materially and adversely affected. Furthermore, our Shareholders whose jurisdictions of residence have tax treaties or arrangements with China may not qualify for benefits under such tax treaties or arrangements.

Regulations relating to offshore investment activities by PRC residents may subject us to fines or sanctions imposed by the PRC government, including restrictions on our PRC subsidiary’s abilities to pay dividends or make distributions to us and our ability to increase our investment in our PRC subsidiary.

The SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Administration for PRC Residents to Engage in Offshore Investment and Financing and Round Trip Investment 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) (the “Circular 37”) and its implementation guidelines in July 2014, which abolished and superseded the SAFE’s Circular on Relevant Issues Concerning Foreign Exchange Administration for PRC Residents to Engage in Financing and Round Trip Investment via Overseas Special Purpose Vehicles (關於境內居民通過境外特殊目的公司融資及返程投資外匯管理有關問題的通知) (the “Circular 75”) and its related implementation rules and guidelines. Pursuant to the Circular 37 and its implementation guidelines, PRC residents, including PRC institutions and individuals, must register with local branches of SAFE in connection with their direct or indirect offshore investments in an overseas special purpose vehicle, or SPV, directly established or indirectly controlled by PRC residents for the purposes of offshore investment and financing with their legally owned assets or interests in domestic enterprises, or their legally owned offshore assets or interests. Such PRC residents are also required to amend their registrations with SAFE when there is a significant change to the registered SPV, such as changes of its PRC resident individual shareholder, name, operation period or other basic information or the PRC individual resident’s increase or decrease in its capital contribution in the SPV, or any share transfer or exchange, merger, division of the SPV. In accordance with Circular of the State Administration of Foreign Exchange on Further

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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), the foreign exchange registration aforesaid is directly reviewed and handled by banks since 1 June 2015, and the SAFE and its branches shall perform indirect regulation over such foreign exchange registration via banks. Under this regulation, failure to comply with the registration procedures set forth in the Circular 37 may result in restrictions being imposed on the foreign exchange activities of our PRC subsidiary, including the payment of dividends and other distributions to its offshore parent or affiliate, the capital inflow from the offshore entities and its settlement of foreign exchange capital, and may also subject the relevant onshore company or PRC residents to penalties under PRC foreign exchange administration regulations.

We are committed to complying with and to ensuring that our Shareholders who are subject to the regulations will comply with the relevant rules. Our PRC Legal Advisers advise us that, based on the interview with Jiangsu branch of the SAFE on 10 June 2015, since the Controlling Shareholder, Ms. Wang, is not a PRC domestic resident, Circular 37 is not applicable to Ms. Wang. In addition, Mr. Liu Xuezhong and Ms. Li Yuelan have completed the foreign exchange registration with Jiangsu branch of the SAFE on 8 July 2014. Any future failure by any of our Shareholders who is a PRC resident, or controlled by a PRC resident, to comply with relevant requirements under this regulation could subject us to penalties or sanctions imposed by the PRC government. Furthermore, since Circular 37 was recently promulgated and it is unclear how this regulation, and any future regulation concerning offshore or cross-border transactions, will be interpreted, amended and implemented by the relevant government authorities, we cannot predict how these regulations will affect our business operations or future strategy.

PRC laws and regulations establish more complex procedures for some acquisitions of PRC companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China.

A number of PRC laws and regulations, including the M&A Rules, the Anti-monopoly Law (反壟斷法), and the Rules of Ministry of Commerce on Implementation of Security Review System of Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (商務部實施外國投資者併購境內企業安全審查制度的規定) promulgated by the MOFCOM in August 2011 (the “Security Review Rules”), have established procedures and requirements that are expected to make merger and acquisition activities in China which fall within the review radar by foreign investors more time consuming and complex. These include requirements in some instances that the MOFCOM be notified in advance of any change of control transaction in which a foreign investor takes control of a PRC domestic enterprise, or that the approval from the MOFCOM be obtained in circumstances where overseas companies established or controlled by PRC enterprises or residents acquire affiliated domestic companies. PRC laws and regulations also require certain merger and acquisition transactions to be subject to merger control review or security review.

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The Security Review Rules were formulated to implement the Notice of the General Office of the State Council on Establishing the Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (國務院辦公廳關於建立外國投資者併購境內企業安全審查制度的通知), which was promulgated in 2011. Under these rules, a security review is required for mergers and acquisitions by foreign investors having “national defense and security” concerns and mergers and acquisitions by which foreign investors may acquire the “de facto control” of domestic enterprises have “national security” concerns. In addition, when deciding whether a specific merger or acquisition of a domestic enterprise by foreign investors is subject to the security review, the MOFCOM will look into the substance and actual impact of the transaction.

The Security Review Rules further prohibits foreign investors from bypassing the security review requirement by structuring transactions through proxies, trusts, indirect investments, leases, loans, control through contractual arrangements or offshore transactions. It is unclear whether our business would be deemed to be in an industry that raises “national defense and security” or “national security” concerns. However, as there is a lack of clear statutory interpretation on the implementation of the same, there can be no assurance that the MOFCOM will not apply these national security review-related rules to the acquisition of equity interest in our PRC subsidiary. If we are found to be in violation of the Security Review Rules and other PRC laws and regulations with respect to the merger and acquisition activities in China, or fail to obtain any of the required approvals, the relevant regulatory authorities would have broad discretion in dealing with such violation, including levying fines, confiscating our income, revoking our PRC subsidiary’s business and operating licenses, requiring us to restructure or unwind the relevant ownership structure or operations. Any of these actions could cause significant disruption to our business operations and may materially and adversely affect our business, financial condition and results of operations. Further, if the business of any target company that we plan to acquire falls into the ambit of security review, we may not be able to successfully acquire such company either by equity or asset acquisition, capital contribution or through any contractual arrangement. We may grow our business in part by acquiring other companies operating in our industry. Complying with the requirements of the relevant regulations to complete such transactions could be time consuming, and any required approval processes, including approval from the MOFCOM, may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share.

It may be difficult to effect service of legal process and enforce judgments obtained from non-PRC courts against the Company or our Directors or executive officers residing in China.

The Company is incorporated in the Cayman Islands. Substantially all of our assets are located in China and all of our Directors and executive officers reside in China. Therefore, it may not be possible to effect service of process within Hong Kong or elsewhere outside China upon us or our Directors or executive officers. Moreover, China has not entered into treaties for the reciprocal recognition and enforcement of court judgments with the United Kingdom, Japan and many other countries. As a result, recognition and enforcement in China of a court judgment obtained in other jurisdictions may be difficult or impossible.

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In addition, on 14 July 2006, China and Hong Kong signed the “Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland and of the Hong Kong Special Administrative Region Pursuant to Choice of Court Agreements between Parties Concerned.” Pursuant to such arrangement, a party with a final court judgment rendered by a Hong Kong court requiring payment of money in a civil and commercial case according to a choice of court agreement in writing may apply for recognition and enforcement of the judgment in China. Similarly, a party with a final judgment rendered by a PRC court requiring payment of money in a civil and commercial case pursuant to a choice of court agreement in writing may apply for recognition and enforcement of such judgment in Hong Kong. A choice of court agreement in writing is defined as any agreement in writing entered into between parties after the effective date of the arrangement in which a Hong Kong court or a PRC court is expressly designated as the court having sole jurisdiction for the dispute. Therefore, it may not be possible to enforce a judgment rendered by a Hong Kong court in China if the parties in the dispute do not agree to enter into a choice of court agreement in writing. As a result, it may be difficult or impossible for investors to enforce a Hong Kong court judgment against our assets or our Directors or executive officers in China.

Inflation in China could negatively affect our profitability and growth.

Economic growth in China has, in the past, been accompanied by periods of high inflation, and the PRC government has implemented various policies from time to time to control inflation, designed to restrict the availability of credit or regulate growth. While inflation has eased recently in China, possible high inflation in the future may cause the PRC government to once again impose controls on credit and/or price of commodities, or to take other actions, which could inhibit economic activities in China. Any action on the part of the PRC government that seeks to control credit and/or price of commodities may adversely affect our business operations.

The national and regional economies in China and our business may be adversely affected by natural disasters, acts of God and the occurrence of epidemics.

Our business is subject to general economic and social conditions in China. Natural disasters, epidemics, acts of war or terrorism or other factors beyond our control may adversely affect the economy, infrastructure and livelihood of the people in the region where we conduct our business. Some of the regions in China may be under the threat of floods, earthquakes, sandstorms, snowstorms, fires or droughts, power shortages or failures, or are susceptible to potential wars, terrorist attacks or epidemics, such as Ebola, severe acute respiratory syndrome, or SARS, strains of avian influenza, the human swine influenza A (H1N1), the human swine influenza A (H5N1) and the human swine influenza A (H7N9). Serious natural disasters may result in a tremendous loss of lives, injuries and the destruction of assets, as well as disrupt our business and operations. Severe communicable disease outbreaks could result in a widespread health crisis that could materially and adversely affect economic systems and financial markets. Acts of war or terrorism may also injure our employees, cause loss of lives, disrupt our operations and adversely affect our markets. Any of these factors and other factors beyond

–54– RISK FACTORS our control could have an adverse effect on the overall business sentiment and environment, cause uncertainties in the region where we conduct business, cause our business to suffer in ways that we cannot predict and materially and adversely impact our business, financial condition and results of operations.

RISKS RELATING TO THE PLACING

There has been no prior market for our Shares, and their liquidity and market price following the Placing may be volatile.

Prior to the Placing, there has been no public market for our Shares. The initial placing price range for our Shares was the result of negotiations between us and the Sole Global Coordinator on behalf of the Underwriters, and the Placing Price may differ significantly from the market price of our Shares following the Placing. In addition, there can be no guarantee that: (i) an active or liquid trading market for our Shares will develop; or (ii) if such a trading market does develop, it will be sustained following the completion of the Placing; or (iii) the market price of our Shares will not decline below the Placing Price. The trading volume and price of our Shares may be subject to significant volatility in response to, among others, the following factors:

• variations in our results of operations, revenue, earnings and cash flow;

• announcements of new technologies;

• strategic alliances or acquisitions;

• industrial or environmental accidents, litigation or loss of key personnel suffered by us;

• fluctuations in the market prices of our products;

• announcements made by us or our competitors;

• changes in investors’ perception of us and the investment environment generally;

• changes in pricing made by us or our competitors;

• the liquidity of the market for our Shares; and

• general economic and other factors.

–55– RISK FACTORS

In addition, the trading market for our Shares will be influenced by research reports that industry or securities analysts publish about us or our business. If one or more analysts who cover us downgrade our Shares or publish negative opinions about us, the market price of our Shares would likely decline regardless of the accuracy of the information. If one or more of these analysts cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which, in turn, could cause the market price or trading volume of our Shares to decline.

Furthermore, GEM and other securities markets have from time to time experienced significant price and volume fluctuations that are not related to the operating performance of any particular company. These fluctuations may also materially and adversely affect the trading volume and market price of our Shares.

Future sales, or market perception of sales, of a substantial number of our Shares in the public market could cause the market prices of our Shares to fall.

The market price of our Shares could decline as a result of future sales of a substantial number of our Shares or other securities relating to our Shares in the public market, or the issuance of new Shares or other securities relating to our Shares, or the perception that such sales or issuance may occur. Moreover, future sales, or perceived sales, of substantial amounts of our Shares or other securities relating to our Shares, including as part of any future offerings, could materially and adversely affect the prevailing market price of our Shares and our ability to raise future capital at a favorable time and price.

Our Controlling Shareholders have substantial influence over the Company and their interests may not be aligned with the interests of Shareholders who subscribe for Shares in the Placing.

Immediately after the Placing, our Controlling Shareholders will control the exercise of 55.56% voting rights in the general meeting of the Company. The interests of our Controlling Shareholders may differ from the interests of our other Shareholders. Our Controlling Shareholders could have significant influence in determining the outcome of any corporate transaction or other matters submitted to our Shareholders for approval, including mergers, consolidations and sale of all or substantially all of our assets, election of Directors and other significant corporate actions. This concentration of ownership, as a result, may discourage, delay or prevent a change in control of the Company, which could deprive our Shareholders of an opportunity to receive a premium for their Shares in a sale of the Company or may reduce the market price of our Shares. In addition, to the extent the interests of our Controlling Shareholders conflict with the interests of other Shareholders, the interests of other Shareholders may be disadvantaged or harmed.

–56– RISK FACTORS

We have significant discretion as to how we will use the net proceeds of the Placing, and you may not necessarily agree with how we use them.

Our management may spend the net proceeds from the Placing in ways you may not agree with or that do not yield a favorable return. We plan to use the net proceeds from the Placing to expand our scale of operations, enhance our research and development capabilities, penetrate CTP market and expand our sales and marketing coverage. For details of our intended use of proceeds, see “Future Plans and Use of Proceeds.” However, our management will have discretion as to the actual application of our net proceeds. You are entrusting your funds to our management, upon whose judgment you must depend, for the specific uses we will make of the net proceeds from this Placing.

Potential investors will experience immediate and substantial dilution as a result of the Placing and could face dilution as a result of future equity financings.

Potential investors will pay a price per Share that substantially exceeds the per Share value of our tangible assets after subtracting our total liabilities and will therefore experience immediate dilution when potential investors purchase our Shares in the Placing. As a result, if we were to distribute our net tangible assets to our Shareholders immediately following the Placing, potential investors would receive less than the amount they paid for their Shares.

We will comply with Rule 17.29 of the GEM Listing Rules, which specifies that no further Shares or securities convertible into equity securities of the Company (subject to certain exceptions) may be issued or form the subject of any agreement to be issued within six months from the Listing Date. We may raise additional funds to finance the future expansion of our existing operations or future acquisitions by way of issuance of new equity or equity-linked securities of the Company other than on a pro-rata basis to existing Shareholders after six months from the Listing Date, in which case the percentage shareholding of the then Shareholders may be diluted or reduced or such new securities may confer rights and privileges that have priority over those conferred by the issued Shares.

We have adopted the Share Option Scheme, under which options may be granted after the Listing of our Shares on the Stock Exchange. Any exercise of options to be granted under the Share Option Scheme in the future and issuance of Shares thereunder would also result in the reduction in the percentage ownership of our Shareholders. There may also be a dilution in the earnings per Share and net asset value per Share as a result of the increase in the number of Shares outstanding after the issuance of such additional Shares.

There is no guarantee that the Company will declare dividends in the future.

A declaration of dividends is proposed by our Board of Directors and the amount of any dividends will depend on various factors, including, without limitation, our results of operations, financial condition, future prospects and other factors which our Board of Directors may determine are important. Please see “Financial Information – Dividend Policy” for more information about our dividend policy. We cannot guarantee when, if and in what form dividends will be paid in the future.

–57– RISK FACTORS

Investors may experience difficulties in enforcing their shareholders’ rights because our Company is incorporated in the Cayman Islands, and the protection to minority Shareholders under the Cayman Islands law may be different from that under the laws of Hong Kong or other jurisdictions.

Our Company is incorporated in the Cayman Islands and its affairs are governed by the Articles, the Companies Law and common law applicable in the Cayman Islands. The laws of the Cayman Islands may differ from those of Hong Kong or other jurisdictions where investors may be located. As a result, minority Shareholders may not enjoy the same rights as pursuant to the laws of Hong Kong or such other jurisdictions. A summary of the Cayman Islands company law on protection of minorities is set out in the paragraph headed “3. Cayman Islands Company Law” in Appendix IV to this Prospectus.

We cannot guarantee the accuracy of facts, forecasts and other statistics with respect to China, the PRC economy and our relevant industries contained in this Prospectus.

Certain facts, forecasts and other statistics in this Prospectus relating to China, the PRC economy and our relevant industries, such as the glass industry, have been derived from information provided or published by PRC and other government agencies, industry associations, independent research institutions or other third-party sources and we can guarantee neither the quality nor the reliability of such source materials. They have not been prepared or independently verified by us, the Sole Sponsor and the Underwriters or any of its or their respective affiliates or advisers and, therefore, we make no representation as to the accuracy of such facts, forecasts and statistics, which may not be consistent with other information compiled within or outside China. Due to possibly flawed or ineffective collection methods or discrepancies between published information and market practice, the statistics herein may be inaccurate or may not be comparable to statistics produced for other economies and should not be relied upon. Furthermore, there can be no assurance that they are stated or compiled on the same basis, or with the same degree of accuracy, as similar statistics presented elsewhere. In all cases, investors should give consideration as to how much weight or importance they should attach to or place on such facts, forecasts or statistics.

–58– RISK FACTORS

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

This Prospectus contains certain forward-looking statements and information relating to us that are based on the beliefs of our management as well as assumptions made by and information currently available to our management. When used in this Prospectus, the words “aim,” “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “ought to,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “will,” “would” and similar expressions, as they relate to the Company or our management, are intended to identify forward-looking statements. Such statements reflect the current views of our management with respect to future events, operations, liquidity and capital resources, some of which may not materialize or may change. These statements are subject to certain risks, uncertainties and assumptions, including the other risk factors as described in this Prospectus. Subject to the requirements of the GEM Listing Rules, we do not intend publicly to update or otherwise revise the forward-looking statements in this Prospectus, whether as a result of new information, future events or otherwise. Investors should not place undue reliance on such forward-looking statements and information.

–59– WAIVER FROM STRICT COMPLIANCE WITH THE GEM LISTING RULES

APPOINTMENT OF JOINT COMPANY SECRETARIES

Pursuant to Rule 11.07(2) of the GEM Listing Rules, we must appoint a company secretary who satisfies Rule 5.14 of the GEM Listing Rules. According to Rule 5.14 of the GEM Listing Rules, we must appoint as our company secretary an individual who, by virtue of his academic or professional qualifications or relevant experience, is, in the opinion of the Stock Exchange, capable of discharging the functions of company secretary.

Note 1 to Rule 5.14 of the GEM Listing Rules sets out the academic and professional qualifications considered to be acceptable by the Stock Exchange:

(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 5.14 of the GEM Listing Rules sets out the factors that the Stock Exchange considers when assessing an individual’s “relevant experience”:

(a) length of employment with the issuer and other issuers and the roles he played;

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

(c) relevant training taken and/or to be taken in addition to the minimum requirement under Rule 5.15 of the GEM Listing Rules; and

(d) professional qualifications in other jurisdictions.

We have appointed Mr. Xu Yibin as one of our joint company secretaries. He joined our Group on 1 August 2013 and has approximately 7 years of experience in investment management. For details of Mr. Xu Yibin, please refer to the section headed “Directors and Senior Management – Senior Management” in this Prospectus. Mr. Xu Yibin, however, does not possess the specified qualifications required by Rule 5.14 of the GEM Listing Rules. Given the important role of the company secretary in the corporate governance of a listed issuer, particularly in assisting the listed issuer as well as its directors in complying with the GEM Listing Rules and other relevant laws and regulations, we have made the following arrangements:

• Mr. Xu Yibin will endeavor to attend relevant training courses to enable him to acquire a good understanding of the relevant Hong Kong laws and regulations, including briefing on the latest changes to the applicable Hong Kong laws and

–60– WAIVER FROM STRICT COMPLIANCE WITH THE GEM LISTING RULES

regulations as well as the GEM Listing Rules organized by our Company’s Hong Kong legal advisers on an invitation basis and seminars organized by the Stock Exchange from time to time, in addition to the minimum requirement under Rule 5.15 of the GEM Listing Rules;

• we have appointed Mr. Tso Ping Cheong, Brian, who meets the requirements under Note 1 to Rule 5.14 of the GEM Listing Rules, as a joint company secretary to work closely with and to provide assistance to Mr. Xu Yibin in the discharge of his duties as a company secretary for an initial period of three years commencing from the Listing Date so as to enable Mr. Xu Yibin to acquire the relevant experience (as required under Note 2 to Rule 5.14 of the GEM Listing Rules) to discharge the duties and responsibilities as company secretary; and

• upon expiry of the three-year period, the qualifications and experience of Mr. Xu Yibin will be re-evaluated. Mr. Xu Yibin is expected to demonstrate to the Stock Exchange’s satisfaction that he, having had the benefit of Mr. Tso Ping Cheong, Brian’s assistance for three years, would then have acquired the “relevant experience” within the meaning of Note 2 to Rule 5.14 of the GEM Listing Rules. If such requirements cannot be satisfied, we will employ a suitable candidate who will be able to comply with the requirements under Rule 5.14 of the GEM Listing Rules as secretary of our Company.

We have applied to the Stock Exchange for, and the Stock Exchange has granted us, a waiver from strict compliance with the requirements of Rule 5.14 and 11.07(2) of the GEM Listing Rules. Upon expiry of the initial three-year period, the qualifications of Mr. Xu Yibin will be re-evaluated to determine whether the requirements as stipulated in Note 2 to Rule 5.14 of the GEM Listing Rules can be satisfied. In the event that Mr. Xu Yibin has obtained relevant experience under Note 2 to Rule 5.14 of the GEM Listing Rules at the end of the said initial three-year period, the above joint company secretaries arrangement would no longer be necessary.

–61– INFORMATION ABOUT THIS PROSPECTUS AND THE PLACING

DIRECTORS’ RESPONSIBILITY FOR THE CONTENTS OF THIS PROSPECTUS

This Prospectus, for which our Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Companies Ordinance, Companies (Winding Up and Miscellaneous Provisions) Ordinance, the Securities and Futures (Stock Market Listing) Rules (subsidiary legislation V of Chapter 571 of the Laws of Hong Kong) and the GEM Listing Rules for the purpose of giving information with regard to us. Our Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief, the information contained in this Prospectus is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this Prospectus misleading.

UNDERWRITING OF THE PLACING SHARES

This Prospectus is published solely in connection with the Placing and the Listing of the Placing Shares on GEM, which is solely sponsored by the Sole Sponsor and managed by the Sole Global Coordinator. The Placing Shares are fully underwritten by the Underwriters under the terms of the Underwriting Agreement and are subject to the Placing Price being fixed pursuant to the Price Determination Agreement. For further information about the Underwriters and the underwriting arrangements, please see “Underwriting” in this Prospectus.

INFORMATION ON THE PLACING

The Placing Shares are offered for subscription solely on the basis of the information contained and representations made in this Prospectus. No person is authorized in connection with the Placing to give any information, or to make any representation, not contained in this Prospectus, and any information or representation not contained in this Prospectus must not be relied upon as having been authorized by us, the Sole Sponsor, the Sole Global Coordinator, the Sole Bookrunner, the Sole Lead Manager, the Co-Lead Managers, the Underwriters, any of their respective directors, officers, agents, employees or any other persons or parties involved in the Placing. For further details of the structure of the Placing, including its conditions, see “Structure and Conditions of the Placing” in this Prospectus.

DETERMINATION OF THE PLACING PRICE

The Placing Shares are being offered at the Placing Price which will be determined by the Sole Global Coordinator (for itself and on behalf of the Underwriters) and us on or around 24 December 2015, and in any event no later than 24 December 2015. The Placing Price is expected to be not more than HK$0.54 per Placing Share and not less than HK$0.50 per Placing Share.

If the Sole Global Coordinator (for itself and on behalf of the Underwriters) and us are unable to reach an agreement on the Placing Price on or before 24 December 2015, or such later date or time as may be agreed between the Sole Global Coordinator (for itself and on behalf of the Underwriters) and us, the Placing will not become unconditional and will lapse.

–62– INFORMATION ABOUT THIS PROSPECTUS AND THE PLACING

RESTRICTIONS ON OFFER AND SALE OF THE PLACING SHARES

Each person acquiring the Placing Shares under the Placing will be required to, or be deemed by his acquisition of Placing Shares to, confirm that he is aware of the restrictions on offers of the Placing Shares described in this Prospectus.

No action has been taken to permit the offering of the Placing Shares in any jurisdiction other than in Hong Kong, or the distribution of this Prospectus in any jurisdiction other than Hong Kong. Accordingly, this Prospectus may not be used for the purpose of, and does not constitute, an offer or invitation in any jurisdiction or in any circumstances in which such an offer or invitation is not authorized or to any person to whom it is unlawful to make such an offer or invitation.

The distribution of this Prospectus and the offering and sale of the Placing Shares in other jurisdictions are subject to restrictions and may not be made except as permitted under the applicable securities laws of such jurisdictions pursuant to registration with or authorization by the relevant securities regulatory authorities or an exemption therefrom.

No invitation may be made directly or indirectly by or on behalf of the Company to the public in the Cayman Islands to subscribe for or acquire any of the Placing Shares. The Placing is made solely on the basis of the information contained and the representations made in this Prospectus. No person is authorized in connection with the Placing to give any information, or to make any representation, not contained in this Prospectus, and any information or representation not contained herein must not be relied upon as having been authorized by the Company, the Sole Sponsor, the Sole Global Coordinator, the Sole Bookrunner, the Sole Lead Manager, the Co-Lead Managers, the Underwriters, and any of their respective directors or affiliates of any of them or any other person and party involved in the Placing. The contents as shown in the website of the Company of www.hkgg.hk do not form part of this Prospectus.

Prospective investors for the Placing Shares should consult their financial advisers and take legal advice as appropriate, to inform themselves of, and to observe, all applicable laws and regulations of any relevant jurisdiction.

APPLICATION FOR LISTING ON GEM

The Company applied for the listing on the GEM board as it fulfilled the requirements under GEM board listing rules instead of the Main Board Listing Rules, after considering (i) the subsidy and grant from various local government authorities received by the Company which may not be recurring and does not fall within the ordinary and usual course of its business and the relevant income; (ii) the gain from the sale of products that were not CCC certified may not be taken into account for the profit test under the Main Board Listing Rules; and (iii) the Company’s unresolved lawsuit regarding a contract dispute may have an adverse effect for the profit test under Main Board Listing Rules.

–63– INFORMATION ABOUT THIS PROSPECTUS AND THE PLACING

The Company has applied to the Stock Exchange for the granting of the listing of, and permission to deal in, the Shares in issue and to be issued pursuant to the Placing and upon the exercise of the options which may be granted under the Share Option Scheme or the Over-allotment Option). No part of the share or loan capital of the Company is listed on or dealt in on any other stock exchange and no such listing or permission to list is being or proposed to be sought in the near future.

Pursuant to Rule 11.23(7) of the GEM Listing Rules, at the time of Listing and at all times thereafter, the Company must maintain the “minimum prescribed percentage” of 25% of the issued share capital of the Company in the hands of the public. A total of 210,000,000 Placing Shares for subscription, which represent 25.9% of the Company’s enlarged issued share capital will be in the hands of the public immediately following the completion of the Placing and upon Listing (assuming the options that may be granted under the Share Option Scheme or the Over-allotment Option are not exercised).

Under section 44B(1) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance, if the permission for our Shares offered under this Prospectus to be listed on GEM has been refused before the expiration of three weeks from the date of the closing of the Placing or such longer period not exceeding six weeks as may, within the said three weeks, be notified to the Company for permission by or on behalf of the Stock Exchange, then any allotment made on an application in pursuance of this Prospectus shall, whenever made, be void.

HONG KONG REGISTER OF MEMBERS AND STAMP DUTY

All the Placing Shares will be registered on the Company’s branch register of members to be maintained in Hong Kong by the Company’s branch share registrar and transfer office, Tricor Investor Services Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong. The Company’s principal register of members will be maintained in the Cayman Islands by the Company’s principal share registrar and transfer office in the Cayman Islands. Only Shares registered on the Company’s branch register of members maintained in Hong Kong may be traded on GEM, unless the Stock Exchange otherwise agrees.

Dealings in the Shares registered on the Company’s branch register of members maintained in Hong Kong will be subject to the Hong Kong stamp duty. Dealings in the Shares registered on the principal register of members of the Company maintained in the Cayman Islands will not be subject to the Cayman Islands stamp duty except where the Company holds interests in land in the Cayman Islands.

Unless determined otherwise by the Company, dividends in respect of Shares will be paid to the Shareholders by ordinary post, at the Shareholders’ risk, to the registered address of each Shareholder or if joint Shareholders, to the first-named therein in accordance with the Articles.

–64– INFORMATION ABOUT THIS PROSPECTUS AND THE PLACING

SHARES WILL BE ELIGIBLE FOR ADMISSION INTO CCASS

Subject to the granting of listing of, and permission to deal in, our Shares on GEM and the Company’s compliance with the stock admission requirements of HKSCC, our Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the Listing Date or any other date HKSCC chooses. Settlement of transactions between participants of the Hong Kong Stock Exchange is required to take place in CCASS on the second Business Day after any trading day.

All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

All necessary arrangements have been made for our Shares to be admitted into CCASS. If investors are unsure about the details of CCASS settlement arrangement and how such arrangements will affect their rights and interests, they should seek the advice of their stock broker or other professional advisors.

PROFESSIONAL TAX ADVICE RECOMMENDED

Potential investors in the Placing are recommended to consult their professional advisers if they are in any doubt as to the taxation implications of subscribing for, purchasing, holding and dealing in our Shares. None of the Company, the Sole Sponsor, the Sole Global Coordinator, the Sole Bookrunner and the Sole Lead Manager, the Co-Lead Managers, the Underwriters, any of their respective directors or any other person or party involved in the Placing accepts responsibility for any tax effects on, or liabilities of, any person resulting from the subscription for, purchasing, holding, disposing of, or dealing in our Shares or the exercise of any rights attaching to our Shares.

STRUCTURE OF THE PLACING

Details of the structure of the Placing, including its conditions, are set out in “Structure and Conditions of the Placing” in this Prospectus.

LANGUAGE

If there is any inconsistency between the English version of this Prospectus and the Chinese translation of this Prospectus, the English version of this Prospectus should prevail. If there is any inconsistency between the Chinese names of the PRC nationals, entities, departments, facilities, certificates, titles, laws, regulations and the like mentioned in this Prospectus and their English translations, the Chinese names shall prevail.

–65– INFORMATION ABOUT THIS PROSPECTUS AND THE PLACING

ROUNDING

In this Prospectus, where information is presented in hundreds, thousands, ten thousands, millions, hundred millions or billions, certain amounts of less than one hundred, one thousand, ten thousand, one million, a hundred million or a billion, as the case may be, have been rounded to the nearest hundred, thousand, ten thousand, million, hundred million or billion, respectively. Unless otherwise stated, all the numerical figures are rounded to one decimal place. Any discrepancies in any table or chart between totals and sums of amounts listed therein are due to rounding.

EXCHANGE RATE CONVERSION

Unless the context requires otherwise, translation of US$, HK$ and RMB is made in this Prospectus, for illustration purpose only, at the rates of US$1.00 to HK$7.7513 and HK$1.00 to RMB0.7888, respectively. No representation is made that any amount in HK$, US$ or RMB could have been or could be converted at the above rates or at any other rates or at all.

DEALING

Dealings in our Shares on GEM are expected to commence at 9:00 a.m. (Hong Kong time) on Tuesday, 29 December 2015. Shares will be traded in board lots of 5,000 Shares each. The stock code for our Shares is 8230. We will not issue temporary documents of title.

–66– DIRECTORS AND PARTIES INVOLVED IN THE PLACING

DIRECTORS

Name Residential Address Nationality

Executive Directors

Wang Jindong 王進東 No. 16, Run Shou Road, PRC Bin Jiang Development Zone, Jiangning District, Nanjing City, Jiangsu Province, the PRC

Wang Xuemei 王雪梅 No. 16, Run Shou Road, Guinea-Bissau Bin Jiang Development Zone, Jiangning District, Nanjing City, Jiangsu Province, the PRC

Tang Xiguang 唐夕廣 Room 401 PRC No. 21, Chunguangli Qinhuai District, Nanjing City, Jiangsu Province, the PRC

Zhao Haibo 趙海波 No. 26, Group 5, Xin Yu Village, PRC He De Town, She Yang County, Jiangsu Province, the PRC

Independent Non-Executive Directors

Cheng Bo 程波 Room 502, Block 3, 7th Building, PRC No. 800, Fang Jia Ying, Xia Guan District, Nanjing City, Jiangsu Province, the PRC

Huang Zhiwei 黃志偉 Room 401, No. 32, 259 Alley, PRC Mu Dan Road, Pudong District, Shanghai City, the PRC

Wang Zhonghua 王中華 Room 501, 26th Building, PRC Zhongding Shanzhuang, No. 299 Zhongshanmen Dajie, Xuanwu District, Nanjing City, Jiangsu Province, the PRC

For further information, please refer to “Directors and Senior Management” in this Prospectus.

–67– DIRECTORS AND PARTIES INVOLVED IN THE PLACING

PARTIES INVOLVED IN THE PLACING

Sole Sponsor Guotai Junan Capital Limited 27th Floor, Low Block Grand Millennium Plaza 181 Queen’s Road Central Hong Kong

Sole Global Coordinator, Guotai Junan Securities (Hong Kong) Limited Sole Bookrunner and 27th Floor, Low Block Sole Lead Manager Grand Millennium Plaza 181 Queen’s Road Central Hong Kong

Co-Lead Managers Black Marble Securities Limited (in alphabetical order) Unit 03-05, 32/F Sino Plaza 255-257 Gloucester Road Causeway Bay, Hong Kong

Fortune (HK) Securities Limited 35/F Office Tower, Convention Plaza, No.1 Harbour Road, WanChai, Hong Kong

Gransing Securities Co., Limited 805-806 Far East Consortium Building, 121 Des Voeux Road Central, Hong Kong

Legal advisers to the Company As to Hong Kong law: Li & Partners 22nd Floor World-Wide House Central Hong Kong

As to PRC law: Jingtian & Gongcheng Suite 1202-1204 K. Wah Centre, 1010 Huaihai Road (M) Xuhui District, Shanghai 200031, the PRC

As to Cayman Islands law: Appleby 2206-19 Jardine House 1 Connaught Place Central, Hong Kong

–68– DIRECTORS AND PARTIES INVOLVED IN THE PLACING

Legal advisers to the Sole Sponsor and As to Hong Kong law: the Underwriters Troutman Sanders 34th Floor, Two Exchange Square 8 Connaught Place Central, Hong Kong

As to PRC law: Commerce & Finance Law Offices 6th Floor, NCI Tower A12 Jianguomenwai Avenue Beijing, the PRC

Auditor and reporting accountant KPMG Certified Public Accountants 8th Floor, Prince’s Building 10 Chater Road Central, Hong Kong

Property valuer DTZ Debenham Tie Leung Limited 16/F, Jardine House 1 Connaught Place Central, Hong Kong

Compliance adviser Guotai Junan Capital Limited 27th Floor, Low Block Grand Millennium Plaza 181 Queen’s Road Central Hong Kong

–69– CORPORATE INFORMATION

Principal place of business in Hong Kong 9/F, Wah Yuen Building 149 Queen’s Road Central Hong Kong

Head office, headquarters and principal East side of Provincial Highway 328 place of business in the PRC North side of Yejin Avenue Hongze County, Huai’an City Jiangsu Province, PRC

Registered office Floor 4, Willow House, Cricket Square, PO Box 2804, Grand Cayman KY1-1112, Cayman Islands

Company’s website www.hkgg.hk (information on this website does not form part of this Prospectus)

Joint company secretaries Mr. Tso Ping Cheong, Brian (曹炳昌) FCPA, FCCA, FCIS, FCS Flat 6, 28/F Block D, Lei Yi House Lei On Court 11 Lei Yue Mun Road Kwun Tong, Kowloon Hong Kong

Mr. Xu Yibin (許倚濱) No. 63 Beijing East Road Xuan Wu District Nanjing City PRC

–70– CORPORATE INFORMATION

Authorized representatives Mr. Wang Jindong (王進東) No. 16, Runshou Road Binjiang Development Zone Jiangning District Nanjing City, Jiangsu Province PRC

Mr. Tso Ping Cheong, Brian (曹炳昌) Flat 6, 28/F Block D, Lei Yi House Lei On Court 11 Lei Yue Mun Road Kwun Tong, Kowloon Hong Kong

Compliance officer Ms. Wang Xuemei (王雪梅) No. 16, Runshou Road Binjiang Development Zone Jiangning District Nanjing City, Jiangsu Province PRC

Audit committee Mr. Cheng Bo (程波) (Chairman) Mr. Wang Zhonghua (王中華) Mr. Huang Zhiwei (黃志偉)

Remuneration committee Mr. Huang Zhiwei (黃志偉) (Chairman) Mr. Wang Zhonghua (王中華) Mr. Cheng Bo (程波)

Nomination committee Mr. Wang Zhonghua (王中華) (Chairman) Mr. Cheng Bo (程波) Mr. Huang Zhiwei (黃志偉)

Compliance adviser Guotai Junan Capital Limited

Cayman Islands principal share Appleby Trust (Cayman) Ltd. registrar and transfer office Clifton House 75 Fort Street PO Box 1350 Grand Cayman KY1-1108 Cayman Islands

–71– CORPORATE INFORMATION

Hong Kong branch share registrar and Tricor Investor Services Limited transfer office Level 22 Hopewell Centre 183 Queen’s Road East Hong Kong

Principal bankers Jiangsu Hongze Rural Commercial Bank Development Zone Sub-Branch* (江蘇洪澤農村商業銀行開發區支行) North side Development Zone Management Committee Fifth Street, Hongze County East Huai’an City Jiangsu Province PRC

Shanghai Pudong Development Bank Co., Ltd. Huai’an Branch* (上海浦東發展銀行股份有限公司淮安分行) 83 Huaihai West Road Huai’an City Jiangsu Province PRC

Postal Savings Bank of China Co., Ltd. Huai’an Branch* (中國郵政儲蓄銀行股份有限公司淮安分行) 130 Huaihai South Road Huai’an City Jiangsu Province PRC

–72– INDUSTRY OVERVIEW

The information in this section has been derived from an independent report prepared by HCR. The industry report prepared by HCR is based on information from its database, publicly available sources, industry reports, data obtained from interviews and other sources. 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 or that any fact has been omitted that would render such information false or misleading. The information has not been independently verified by us, the Sole Sponsor, the Sole Global Coordinator, the Sole Bookrunner and the Sole Lead Manager, the Co-Lead Managers, the Underwriters, any of their respective directors, officers, affiliates, advisors or representatives, or any other party involved in the Placing. We, the Sole Sponsor, the Sole Global Coordinator, the Sole Bookrunner and the Sole Lead Manager, the Co-Lead Managers, the Underwriters, any of their respective directors, officers, affiliates, advisors or representatives, and any other party involved in the Placing make no representation as to the completeness, accuracy or fairness of such information and accordingly such information should not be unduly relied upon.

CHINA’S ECONOMIC GROWTH AND URBANIZATION

Since China’s reform and opening up, China has experienced rapid economic development. From 2008 to 2014, the nominal GDP grew at a CAGR of 12.3% and the total fixed asset investment grew at a CAGR of 19.9% in China. Along with the economic growth, China’s urbanization process keeps accelerating. In China, the urban residents comprised more than a half of the total population in 2011 and the proportion of urban residents in the total population had reached 54.8% in 2014. This proportion is expected to reach approximately 60% in 2020. In the meantime, the income level of urban and rural residents in China also experienced continuous growth. The per capita disposal income increased from approximately RMB15,781 in 2008 to approximately RMB28,844 in 2014, representing a CAGR of 10.6%.

The PRC economy is anticipated to maintain a steady and sound development momentum in the future, which will, among others, drive the development of the architecture industry, the electronic devices industry and industrial control products industry, and provide a sound macroeconomic environment for the development of coated architectural glass industry, the coated glass production equipment industry, as well as the CTP industry.

–73– INDUSTRY OVERVIEW

CHINA’S COATED ARCHITECTURAL GLASS INDUSTRY

Overview

Coated architectural glass mainly includes Low-E glass, solar control glass, self-cleaning glass (自潔淨玻璃) and conductive glass (導電玻璃). Low-E glass is dominant in China’s coated architectural grass industry, accounting for approximately 72% of the market share. Low-E glass is further divided into offline Low-E glass and online Low-E glass according to the type of manufacturing process. The offline Low-E glass is produced by the offline vacuum magnetron sputtering coating technology (離線的磁控真空濺射鍍膜技術), which is conducted in several vacuum chambers off the float glass production line. The online Low-E glass is produced by the float online chemical vapor deposition coating technology (浮法在線的化學氣相沉積鍍膜技術), which is conducted on the float glass production line. The two types of Low-E glass are different in terms of radiation, oxidability and other attributes. Offline Low-E glass is the mainstream product in the market.

Low-E glass can be processed into tempered Low-E glass, insulating Low-E glass units and other glass products, for applications in various kinds of architectures.

Before 2005, solar control glass was the mainstream product in the market. However, its market share started to decline as Low-E glass was introduced and became increasingly popular. HCR estimates that the sales volume of solar control glass will remain at current level or slightly decline in the future, and the sales value of solar control glass will also decline accordingly while the selling price of solar control glass will remain stable.

According to HCR, the utilization rate of approximately 77% for the Low-E glass industry is close to saturation, which is relatively low compared to those for some other industries because: (i) Low-E glass manufacturers generally arrange production tailored to customer orders, pursuant to which they need to adjust the coated film structure frequently; (ii) performance test, which may be time consuming, is needed before batch production; and (iii) the utilization rate is calculated based on the designed area of Low-E glass defined in designed annual production capacity while the actual area of Low-E glass produced is specified by customers, which may be lower than the designed area defined in designed annual production capacity.

Since 2011, the PRC government has further intensified its regulation on real estate industry, including implementing stricter purchase limitation on real property and setting up financing barriers for purchasers of real property. Due to such macroeconomic policies, the development of China’s real estate market slowed down to a limited extent, which directly contributed to a lower demand for various glass products and decreased purchase orders for glass products from 2011. Accordingly, the Low-E glass industry was also affected with a slowing down growth rate. The sales volume of Low-E glass in China decreased from approximately 130 million m2 in 2011 to approximately 120 million m2 in 2012. In 2013, real estate market gained a slight recovery. In addition, Low-E glass, with a declined selling price, attracted customers from solar control glass market. In 2014, stimulated by the regulation

–74– INDUSTRY OVERVIEW relaxation on real estate industry and the newly released mandatory energy conservation standards for buildings, the sales volume of Low-E glass reached approximately 180 million m2, increasing by 15.4% compared to that in 2013. The sales volume of Low-E glass is expected to reach approximately 319 million m2 in 2019, representing a CAGR of 12.1% from 2014 to 2019. The chart below illustrates the historical data and estimated future trend of sales volume and growth rate of Low-E glass industry in China:

10,000 m2 35,000 120.00% 31,900 100.0% 30,000 28,900 100.00% 26,220 25,000 23,800 80.00% 62.5% 20,800 20,000 60.00% 18,000 15,600 15,000 40.00% 13,000 30.0% 12,000 14.3% 15.6% 14.4% 10,000 10.2% 10.2% 10.4% 20.00% 6,500 15.4% 5,000 3,500 4,000 0.00% -7.7% 0 -20.00%

2008 2009 2010 2011 2012 2013 2014 2015(E) 2016(E) 2017(E) 2018(E) 2019(E) Sales volume Growth rate

Sources: China Architectural Glass and Industrial Glass Association and HCR

Note: This sales volume includes the total sales volume of unprocessed Low-E glass, and excludes the further processed glass products.

The sales value of Low-E glass in 2012 was RMB5.6 billion, decreasing by 21.1% compared to that in 2011 mainly due to: (i) the recession of real estate market; and (ii) intensified competition from more Low-E glass manufacturers entering into the market, consequently suppressing the price. The sales value of Low-E glass in 2014 was RMB7.4 billion, increasing by 10.0% compared to that in 2013. In 2014, investment in domestic real estate market reached approximately RMB9.5 trillion, increasing by 10.5% compared to that in 2013. The growth of investment in residential, office and commercial buildings slowed down during the period from 2013 to 2014. The floor area under construction in 2014 was 7.3 billion m2, increasing by 9.2% from 2013. It is estimated that the sales value of Low-E glass in 2019 will reach RMB10.8 billion, with a CAGR of 8.0% compared to 2014. HCR estimates that the Low-E glass market will maintain rapid development in the future, primarily because: (i) the demand for Low-E glass increases rapidly, stimulated by the architectural energy-efficient policies; and (ii) the real estate market will continue to develop, which is driven by China’s macroeconomic growth. However, the growth rate of the Low-E glass market will slow down comparatively as the development of the real estate market slows down due to government policies relating to the control on national macroeconomic development and regulation on the real estate market.

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The Overall Trend of China’s Coated Architectural Glass Industry

Due to the increasingly strict requirements of architectural energy-efficiency in various national policies and standards, it is hard for solar control glass to fulfill the newly-raised standard, whereas Low-E glass will be the focus of glass processing development. Therefore, the solar control glass market is recessing and mainly concentrated in third-and fourth-tier cities. In addition, the development of new energy-efficient and environmental protection technologies will promote the technical upgrade in the overall industry and development of new type of Low-E glass.

Entry Barriers

Barriers to enter the coated architectural glass industry mainly include:

• Capital Barriers. Low-E glass production requires investment in expensive equipment. A complete production line imported from overseas costs at least approximately RMB100 million. Although domestically-made production lines are cheaper than the imported production lines, assembling a complete production line still needs approximately RMB30 million to RMB50 million. Significant investment is needed to enhance the research and development capabilities. In addition, procurement of raw materials also engages a certain amount of capital.

• Technical Barriers. Low-E glass production technologies relate to a wide range of subjects. To remain competitive, Low-E glass manufacturers need to be equipped with advanced technologies, and employ both innovative research and development personnel and professional technicians. At the same time, advanced research, development and testing equipment is also needed.

• Channel Barriers. The industry has a relatively strong regional nature. Sales radius of most enterprises is within 500 kilometers. Although several large enterprises had established production bases in many areas of the country, they are unable to cover the whole country due to the limit of the sales radius. It is difficult to establish a sales channel that covers the entire country, and most enterprises have their own turfs in which they are competitive. Within the territories, most enterprises cooperate with their long-term downstream customers in order to build up mutual trust, strengthen cooperation and promote their brand. It is difficult for new entrants to penetrate such territories.

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Competitive Landscape

Main market players

Enterprises that produce online Low-E glass are concentrated, and enterprises that produce offline Low-E glass are relatively fragmented. Jiangsu Yutian had a market share of 2.7% in terms of sales volume in 2014. According to HCR, one of the competitive advantages of main market players in Low-E glass industry is high production capacity, and it is the industry norm for Low-E glass enterprises to present the industry ranking in terms of designed annual production capacity. Jiangsu Yutian was ranked tenth among China’s Low-E glass enterprises in terms of designed annual production capacity in 2014. The chart below provides a ranking of China’s Low-E glass enterprises in terms of designed annual production capacity in 2014:

Ranking Enterprises Designed annual production capacity (million m2)

1 Competitor 1 63.5 2 Competitor 2 53.0 3 Competitor 3 50.0 4 Competitor 4 45.0 5 Competitor 5 39.0 6 Competitor 6 35.0 7 Competitor 7 16.0 8 Competitor 8 14.7 9 Competitor 9 10.0 10 Jiangsu Yutian New Material Co., Ltd. 7.2

Source: HCR

Note: The ranking is based on the designed annual production capacity of both offline and online Low-E glass.

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Price trend of raw material and coated architectural glass

The principal raw material for Low-E glass is float glass. From 2011 to 2012, the average selling price for float glass declined from RMB71.5 per weight case to RMB62.5 per weight case. The average selling price increased to RMB65.3 per weight case in 2013 and decreased to RMB55.3 per weight case in 2014. The price for float glass fluctuated within a stable range considering the trend from 2008 to 2014. HCR estimates that: (i) the demand for float glass will increase slightly due to the influence of national policies; and (ii) the supply of float glass will increase correspondingly. The selling price of float glass is expected to remain at a similar level and will not fluctuate significantly in the long run. The chart below illustrates the historical data of the monthly average selling price for float glass in China:

RMB (per weight case) 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0

May June July March April January August February October September NovemberDecember 2013 2014 2015

Source: HCR

The average selling price for Low-E glass gradually decreased from approximately RMB55 per m2 in 2011 to approximately RMB47 per m2 in 2012, to approximately RMB43 per m2 in 2013 and further to approximately RMB41 per m2 in 2014. With the increasing production volume, the selling price of Low-E glass is expected to decline in the future. The demand for Low-E glass will remain high in the future. The selling price of Low-E glass is primarily subject to the price changes of float glass and therefore will remain stable at approximately RMB40 m2 with a slight decline trend. The average selling price for solar control glass decreased from approximately RMB40 per m2 in 2011 to approximately RMB27 per m2 in 2014 and is expected to remain relatively stable with a slight decline trend. The average selling price for further processed Low-E glass, including tempered Low-E glass and insulating Low-E glass units, decreased from approximately RMB185 per m2 in 2012 to approximately RMB175 per m2 in 2014 and is expected to decline slightly in the future.

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Opportunities

The opportunities for Low-E glass industry are: (i) national policies and regulations that promote the development of Low-E glass; (ii) the increasing demand for office buildings and high-rise buildings which is driven by China’s urbanization; and (iii) besides the public constructions, an increasing number of civil buildings utilizing Low-E glass.

Challenges

The challenges for and threats to Low-E glass industry mainly include: (i) the Low-E glass industry is heavily affected by downstream industries, which are likely to be adversely affected by the governmental regulation and control in domestic real estate market; (ii) many enterprises suffer from spare capacity in recent years due to blind expansion of production capacity; (iii) due to sales radius, the Low-E glass industry shows regional characteristics, and remains at a low level of concentration with the co-existence of small and large companies; and (iv) renowned international companies have entered into China’s market, which intensifies the competition.

Regulatory Environment

The PRC government has introduced policies and regulations regarding Low-E glass after its production technology was first introduced into China in 1990s, including Circular Economy Promotion Project for 2015 (《2015年循環經濟推進計畫》) promulgated on 20 April 2015, 2014-2015 Energy Conservation and Emissions Reduction and Low-Carbon Development Plan (《2014-2015年節能減排低碳發展行動方案》) promulgated in 2014, Green Building Action Plan (《綠色建築行動方案》) promulgated on 1 January 2013, Implementation Advices on Accelerating Green Building Development in China (《關於加快推動我國綠色建築發展的實施意見》) promulgated on 27 April 2012 and Twelfth Five-Year Guideline promulgated on 29 November 2011. The shared objective of implementing aforementioned policies is to promote energy-efficient green architectures, which will promote and benefit the Low-E glass industry.

CHINA’S COATED GLASS PRODUCTION EQUIPMENT INDUSTRY

Overview

The development of coated glass production equipment industry is in line with the development of the coated architectural glass industry. Since complete Low-E glass production lines are large-scale customized equipment and their annual demand fluctuates, it is more meaningful to make an analysis based on parc (保有量). Parc refers to the quantity of certain objects at certain place at a certain time and is commonly used in manufacturing industry. From 2013 to 2014, the parc of Low-E glass production lines increased from 170 to 182. HCR estimates that the parc of Low-E glass production lines in 2019 will reach 241. In general, the demand for Low-E glass production lines grows in sync with the demand for Low-E glass.

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The chart below illustrates the historical data and estimated future trend of parc and newly-increased quantity of Low-E glass production lines in China:

Lines 300

250 241 227 214 202 200 192 182 170 162 150 150

100 75 75 61 50 50

11 14 12 8 12 10 10 12 13 14 0 2008 2009 2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E Parc Newly increased quantity

Sources: China Architectural Glass and Industrial Glass Association

Note: The data above includes both online and offline Low-E glass production equipment.

Trend of PRC Coated Glass Production Equipment Industry

Due to the substantial technical difficulties, dependence on the import of certain equipment, substantial capital investment and abundant capacity in the overall Low-E glass industry, the investment activities of glass processing companies in building new Low-E glass production lines are adversely affected. Therefore, HCR estimated that the increase in the number of Low-E glass production lines will not be significant in the future, and only well-established Low-E glass manufacturers will invest in the Low-E glass production lines. In addition, such manufacturers are expected to invest in Low-E glass production lines with relatively large production capacity.

Entry Barriers

The technical entry barrier of offline Low-E glass production lines is high, which requires a significant investment in research and development. Meanwhile, the technical entry barrier of online Low-E glass production lines is extremely high, which requires a high level of environment cleanness, and as a result, substantially all of the online Low-E glass production lines are imported from overseas.

Competitive Landscape

As online Low-E glass production lines account for less than 10% of total Low-E glass production lines and there are no manufacturers with the ability to build complete online Low-E glass production lines as of 31 December 2014 in China, only the competitive landscape

–80– INDUSTRY OVERVIEW of offline Low-E glass production lines will be analyzed below. The industry shows a high level of market concentration. The top five companies accounted for over 50% of the market shares in terms of parc in 2014. Jiangsu Yutian sold one complete Low-E glass production line in 2014, accounting for approximately 14% of the market share in terms of sales volume in 2014. As of 31 December 2014, there are only seven manufacturers in China with the ability to design, assemble, build and sell complete offline Low-E glass production lines, four of which recorded sales of the complete Low-E glass production lines in 2014, including Jiangsu Yutian.

Since complete Low-E glass production lines comprise large-scale customized equipment, the selling prices of such production lines differ based on their production capacity and key equipment tailored to customer orders. The market prices of a single complete domestically-made Low-E glass production line range from approximately RMB30 million to RMB50 million, and the market prices of imported production lines range from approximately RMB140 million to RMB318 million.

The principal raw material for coated glass production equipment is steel. The selling price of steel has been experiencing a decline since 2011 due to overcapacity. According to China Iron and Steel Industry Association (中國鋼鐵工業協會), the composite steel price index decreased by 30.3% from 131.0 points in 2011 to 91.3 points in 2014, which was historical low. The chart below illustrates the historical data of the monthly average composite steel price index in China:

Points 140

120

100

May June July March April January August February October September NovemberDecember 2013 2014 2015

Source: China Iron and Steel Industry Association

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HCR estimates that the selling price of steel will remain at a low level with slight fluctuation. However, since the selling prices of coated glass production equipment considerably varies based on its production capacity and key equipment tailored to customer orders, the selling prices are not materially affected by the selling price of steel.

CHINA’S CTP INDUSTRY

Overview

Currently, the mainstream technical standards in China’s CTP industry primarily consist of G+G, cover glass film/film (the “GFF”), OGS, on-cell and in-cell. Since the traditional G+G CTP is not thin enough to fulfill the demand of mobile phone industry which prefers lighter and thinner design, the sales of G+G CTP only constitute a fraction of market share relating to mobile phone industry. However, due to its good hardness, high transmittance, relatively mature technology and low cost, G+G CTP still has a relatively stable market share relating to other industrial electronic devices industries. The GFF CTP has seized a majority of the market share in medium and low-end mobile phone market due to its relatively mature technology and low cost. With light and thin design, OGS CTP is primarily applied to middle-end mobile phones, tablets, personal computers and other intelligent electronic devices. Due to its low yield rate and high unit prices, OGS CTP is still in its ascent stage. Due to their relatively demanding nature in terms of technologies, the market share of on-cell CTP and in-cell CTP will remain at a relatively low level in the short run. In the long term, the emerging OGS CTP, in-cell CTP and on-cell CTP will constitute the mainstream development trend. The on-cell CTP and in-cell CTP manufacturers are primarily display screen manufacturers in Japan, South Korea and other foreign countries who monopolize the techniques, while in China, most of the CTP manufacturers are traditional touch screen manufacturers. Therefore, OGS CTP was taken as the primary development direction for domestic CTP manufacturers.

As the demand for electronic devices, including mobile phones and tablets, is expected to rise rapidly, demand for CTP modules is also expected to sustain a positive growth in the following years. In addition, the emergence of certain newly-developed electronic devices equipped with touch screens, such as intelligent wearable devices, will drive the development of CTP industry as well.

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The chart below illustrates the historical data and estimated future trend of shipment of CTP modules in China:

million units 1,800

1,562 1,500 1,302 1,200 1,085

904 900 753 628 600 515 417 317 300 225 151 121 0 2008 2009 2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E Shipment

According to HCR, the utilization rate of approximately 70% for the CTP industry is close to saturation, which is relatively low compared to those for some other industries because: (i) the yield rate of CTP modules with emerging technologies remain at a relatively low level, which limits the utilization rate; (ii) performance test, which may be time consuming, is needed before batch production; and (iii) the utilization rate is calculated based on the designed area of CTP defined in designed annual production capacity while the actual area of CTP produced is specified by customers, which may be lower than the designed area defined in designed annual production capacity.

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The chart below illustrates the historical data and estimated future trend of sales volume of OGS CTP modules in China:

10,000 units 16,000 15,400 14,200 14,000 13,000 12,400 11,800 12,000 11,300 11,000

10,000 8,100 8,000

6,000

4,000

2,000

0 2012 2013 2014 2015(E) 2016(E) 2017(E) 2018(E) 2019(E)

Sales volume

Source: HCR

OGS CTP, as a new and advanced solution for the intelligent electronic devices employing touch panel modules, is still in its technologically ascent stage. In 2013, OGS CTP experienced rapid expansion in production capacity as it had just gone though the research and development stage and was entering into technologically ascent stage. However, owing to its relatively low yield rate and high unit prices, market demands for OGS CTP was relatively low as compared to the expanded production capacity in the past, which results in overcapacity of OGS CTP modules in 2013. Following the upgraded OGS technologies and improved yield rate, the cost and average selling price of OGS CTP modules are expected to gradually fall, which will attract more customers. In addition, the technological advancement of OGS CTP will also enhance its competitiveness and market acceptance, especially in large-size electronic devices owing to its low electrical resistivity and high resolution ratio. Based on the foregoing, HCR expected that the overcapacity of OGS CTP will be corrected in 2015, and there would be a sizable market space for OGS CTP modules used in various intelligent electronic devices for the foreseeable years to come.

On-cell CTP, as a new and advanced solution primarily for the high-end mobile phones, has considerably high and demanding technical barriers and capital requirements. On-cell CTP is in the research and development stage. In 2014, an increasing number of mobile phone manufacturers in China adopt on-cell CTP on their products due to the good performance of on-cell CTP. On-cell CTP is produced by attaching the touch sensor directly onto the LCD cell without the need for an additional sheet of glass, thus reducing the overall thickness and weight of electronic devices. It also improves light transmission, thereby enhancing outdoor readability due to a reduction of air gaps in the panel. Considering the technical nature and good market feedback, HCR estimated that the demand for on-cell CTP modules will continue to increase.

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In addition, with the continuous development of mobile internet technology and the continuous penetration of internet applications in recent years, smart devices represented by smart phones and tablets have gradually become important carriers of mobile internet. Currently, the on-cell CTP modules market is primarily driven by the growth of the global high-end smart phone market. On-cell CTP modules are also gaining popularity and seeing increased demand as components for tablets, given their better performance in terms of weight and resolution, as well as larger-size display compared to that of low-end notebook computers and small-size display smart phones. The growth of mobile internet usage serves as one of the main drivers for increasing sales of tablets globally. As the latest and the most convenient input modules, the on-cell CTP modules have therefore seen growing applications and HCR estimates that the on-cell CTP modules will anticipate a growth rate of approximately 15% per annum from 2015 to 2019.

The chart below illustrates the historical data and estimated future trend of shipment of on-cell CTP modules in China:

10,000 units

12,000 10,541 9,166 9,000 7,970 6,931 6,027 6,000 5,022 3,776 3,000

0 2013 2014 2015E 2016E 2017E 2018E 2019E

Shipment

Trend of China’s CTP Industry

With increasingly stringent technical requirements and fierce competition in CTP industry, CTP manufacturers will face serious challenges in terms of technologies and financial strength. From the perspective of business scale, vertical integration will dominate the future development in the industry. In the future, the degree of concentration in CTP industry will gradually increase and the number of small-to medium-scale enterprises is expected to decrease due to the competition in the market.

In addition, along with the advancement of in-cell CTP and on-cell CTP techniques, it is expected that the production process of CTP will be incorporated in the LCD production, and LCD manufacturers may dominate the CTP industry in the future, which will promote the enhancement of CTP performance.

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Moreover, the CTP industry is primarily driven by a robust development of electronic devices industry. The electronic devices, including mobile phones, tablets, Ultrabook (超極本) and all-in-one computers (一體機), have undergone technological development and rapid growth. For example, the global shipment for tablets increased significantly from approximately 60 million sets in 2011 to approximately 240 million sets in 2014. HCR estimated that the global shipment for tablets will increase to approximately 700 million sets in 2019. As a result, the CTP industry is expected to further develop.

Entry Barriers

The barriers to enter into the OGS CTP industry mainly include:

• Capital Barriers. The OGS CTP industry is rather demanding in respect of capital. Preliminary investment in equipment and plants entails substantial capital support. A complete production line includes coating equipment, cutting equipment, CNC shaping equipment, printing equipment and FPC binding machine. A set of OGS CTP production facilities for scalable production costs approximately RMB400 million to RMB500 million, with a monthly operating cost of approximately RMB10 million to RMB30 million, which small-scale enterprises cannot afford. In addition, to maintain a high level of development, continuous expenditure is required to enhance research and development capacities and to cultivate talents.

• Technical Barriers. The techniques utilized in OGS CTP modules production are fairly complicated, which include more than 30 procedures. Therefore, it can be difficult to maintain a high yield rate. In China, the current average yield rate of OGS CTP modules is around 70% to 80%. Only enterprises with a stable high yield rate at around 80% to 85% can achieve high profitability, and it can be difficult for the new market players to reach such level. In addition, there are stringent requirements in technicians’ experience for OGS CTP modules production. The universities in China do not offer CTP-related courses, which results in a shortage of talents in CTP industry.

• Marketing Channel Barriers. The OGS CTP industry has a high degree of market concentration in China. Only a few of sizable manufacturers are capable of large-scale production and have received bulk orders. With long-term development, solid capital base, advanced technologies and consistently reliable quality, such large enterprises have accumulated abundant and stable customer resources and formed complete marketing channels. It is difficult for small-to medium-scale enterprises to establish a relatively stable and complete marketing channel within a limited period of time.

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Competitive Landscape

Main market players

For OGS CTP, Competitor A has been dominant in China’s OGS CTP market, followed by Competitor B, Competitor C and Competitor D. Each of the four enterprises sold more than 10 million units of OGS CTP modules in 2014. In 2014, the total sales of top four OGS CTP modules manufacturers in China accounted for approximately 65% of the market share, showing a high degree of market concentration, and the market for remaining manufacturers is relatively fragmented. Jiangsu Yutian had a market share of less than 1.0% in terms of sales volume in 2014 mainly because it commenced the small-scale commercial production of CTP module components in March 2014. The chart below provides a ranking of China’s top four OGS CTP modules enterprises in terms of sales volume in 2014:

Ranking Enterprises Sales volume (million units)

1 Competitor A 23.0 2 Competitor B 19.0 3 Competitor C 16.0 4 Competitor D 13.0

Source: HCR

For on-cell CTP, the CTP modules enterprises in Japan and South Korea are major players in the industry, the sales of which represented over half of China’s on-cell CTP market share in 2014. Currently, Competitor E and Competitor F in South Korea remain as the industry leaders. There are nine major domestic PRC players, who, however, still fall behind the two industry leaders in South Korea in terms of production capacity. In addition, there are four major players in Taiwan. The following chart sets forth the China’s market share of the on-cell CTP modules enterprises in 2014:

40%

Domestic enterprises Foreign enterprises

60%

Source: HCR

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For in-cell CTP, three CTP modules enterprises in Japan and South Korea have been dominant in China’s in-cell CTP market, indicating a high degree of market concentration. Most domestic PRC enterprises are still in wait-and-see stage and thus have a small market share. The following chart sets forth the China’s market share of the in-cell CTP modules enterprises in 2014:

20%

Domestic enterprises Foreign enterprises

80%

Sources: HCR

Price trend of raw material and CTP

Since 2012 when mass production of OGS CTP modules was realized, the price of OGS CTP modules has kept decreasing, mainly due to substantially increased passing rate, reduced cost and fierce market competition. In 2014, the price of five-inch OGS CTP modules was approximately US$7 to US$8 per unit, decreasing by approximately 30% compared to that in 2013. In the future, with more transparent production costs, intensified competition and improved yield rate, the price of OGS CTP modules will continue to decline. HCR estimated that the price for OGS CTP modules will keep declining at a rate of 15% during the period from 2015 to 2017.

The principal raw material for CTP modules is ultra-thin glass sheet. From 2010 to 2011, the domestic demand for ultra-thin glass sheet increased acutely and its prices declined by approximately 35% to 45%. For example, the price for 400mm by 500mm Asahi ultra-thin glass sheet dropped to the range of approximately RMB16 to RMB20 per sheet in 2011. From 2012 to 2013, the price for ultra-thin glass sheet continued to decline slightly and the price for 400mm by 500mm Asahi ultra-thin glass sheet reached approximately RMB15 per sheet in 2014. It is expected that with the continuous increasing transparency in market price and sales channels, the price of ultra-thin glass sheet will remain in a reasonable range without material fluctuations.

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Opportunities and challenges

From 2004 to 2011, digital mobile communication products have been listed as prioritized high-tech industry in the Guide on Key Fields of High-Tech Industrialization as Current Priority (《當前優先發展的高科技產業化重點領域指南》) jointly issued by the PRC Development and Reform Commission, Ministry of Technology and MOFCOM. The OGS CTP industry will benefit from the rapid growth in China’s portable electronic devices industry. The emerging new CTP technologies will pose the greatest threat to the development of OGS CTP industry and the introduction of any kind of technology may change the landscape of the market completely.

Regulatory Environment

During the China’s twelfth five-year plan (“十二五”規劃) period, PRC government has introduced several plans in order to support portable internet intelligent terminals (移動互聯網智能終端) industry. Such plans would drive the development of mobile phones, tablets, Ultrabook and all-in-one computers, most of which have touch screen features, and consequently benefit the CTP industry. In addition, as one of the key raw materials for high-tech industries, ultra-thin glass sheet is promoted to develop with priorities. The promulgation of governmental supportive plans will promote China’s ultra-thin glass sheet industry and mitigate the foreign companies’ monopoly, thus benefiting the downstream industries, including CTP industry.

SOURCE OF INFORMATION

We appointed an Independent Third Party, HCR, to conduct a customized and detailed analysis of industries in which we conduct business from 2010 to 2019, in order to evaluate the existing market scale and future market potential, and provide an objective and fair overview of these industries in its report. The report was prepared independently by HCR without our influence. We agreed to pay HCR RMB434,080 for its research services, which we believe reflects the prevailing market rate. Such payment was not contingent upon the Listing or on the result of the report. Our Directors believe that there has been no perceivable negative oscillation in the market since the releasing date of the report.

HCR is a market research firm whose predecessor is HuiCong Research. HCR has research platforms in multiple industries and has accumulated substantial experience in industries including electric and power, construction material, chemical engineering, healthcare and pharmaceutical, electronic and consumer goods. HCR has a team of professional analysts specialized in industry research for IPO projects and has conducted multiple IPO projects involving China, Hong Kong, Taiwan and overseas market.

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To ensure the credibility, accuracy and reliability of the data in the report, which includes a description and evaluation of the existing market scale and future market potential of the PRC coated architectural glass industry, coated glass production equipment industry, CTP modules industry and related upstream and downstream industries, the market specialists of HCR made reference to macro-statistics, historical data and first-hand information acquired by primary research. Assisted by HCR’s internal database, the research method utilized integrates desk research and primary research and it also combines quantitative and qualitative analysis. Primary research involves interviewing, enterprise and user research as well as comparative studies.

Macro-statistics and historical data were collected primarily from China National Bureau of Statistics, industry associations, newspaper and other publications, all sources of which had been verified. Except for public records, most statistics was collected from interviews conducted by HCR and the interviewees are representative of all participants in the target industries, which include, among others, experts from industry associations, manufacturers and downstream customers. Predictions were conducted by multiple linear regression models, with the metadata being historical sales volume and macro-statistics. Predictions are premised on the assumption that macroeconomic objectives, set by national China’s twelfth five-year plan and the newly released 2020 planning vision and strategy, will be achieved.

Based on the above, our Directors and the Sole Sponsor are satisfied that the disclosures of future projection and industry data included in this section are not misleading. Our Directors further confirmed that, as of the Latest Practicable Date, after taking reasonable care, there had been no adverse change in the market information since the date of the report which may qualify, contradict or have an impact on the information in this section.

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PRC LAWS AND REGULATIONS RELATING TO FOREIGN INVESTMENT

Catalogue for the Guidance of Foreign Investment Industries

Investment in the PRC conducted by foreign investors and foreign-owned enterprises shall comply with the Catalogue for the Guidance of Foreign Investment Industries (《外商投資產業指導目錄》) (the “Catalogue”), which was amended and promulgated by the MOFCOM and the National Development and Reform Commission (the “NDRC”) on 10 March 2015. The Catalogue became effective on 10 April 2015 and contains specific provisions guiding market access of foreign capital, stipulates in detail the areas of entry pertaining to the categories of encouraged industries, restricted industries and prohibited industries. Any industry not listed in the Catalogue is a permitted industry unless specifically prohibited or restricted by other PRC laws and regulations. The design and manufacture of coated architectural glass falls within the encouraged industries in accordance with the Catalogue.

Law of PRC on Wholly Foreign-owned Enterprises

The establishment, operation and management of corporate entities in China are governed by the Company Law of the PRC (《中華人民共和國公司法》) (the “Company Law”) which was adopted by the Standing Committee of the National People’s Congress (全國人民代表大會常務委員會) on 29 December 1993 and with effect from 1 July 1994. It was last amended on 28 December 2013 and became effective on 1 March 2014. Under the Company Law, companies are generally classified into two categories, namely, limited liability companies and joint stock limited companies. The Company Law also applies to foreign-invested limited liability companies. According to the Company Law, where other PRC laws on foreign investment have other stipulations, such stipulations shall prevail.

The Law of the PRC on Wholly Foreign-owned Enterprises (《中華人民共和國外資企業法》), which was promulgated on 12 April 1986 and amended on 31 October 2000, and the Implementing Regulations of the PRC Law on Foreign-owned Enterprises (《中華人民共和國外資企業法實施細則》) which was issued by the State Council of the PRC and became effective on 12 December 1990 and last amended on 19 February 2014, are the fundamental legal principles for the Chinese government to supervise wholly foreign-owned enterprises (the “WFOE”). The above laws and regulations govern the establishment, modification (registered capital, shareholders, corporate form, merger and split), dissolution and termination of the WFOE.

PRC LAWS AND REGULATIONS RELATING TO THE INDUSTRY

According to the Regulations of the PRC on Certification and Accreditation (《中華人民共和國認證認可條例》) issued by the State Council on 3 September 2003 and implemented on 1 November 2003, with regard to products subject to compulsory certification, the certification and accreditation regulatory department of the State Council must issue unified product catalogues, unified set of mandatory technical requirements and standards, conformity assessment procedures, and unified logos.

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According to Article 2 of the Regulations regarding the Management of Compulsory Product Certification (《強制性產品認證管理規定》) issued by the General Administration of Quality Supervision, Inspection and Quarantine of the PRC (國家質量監督檢驗檢疫總局,or “AQSIQ”) on 3 July 2009 and implemented on 1 September 2009, the relevant products as prescribed by the PRC government must be certified and displayed with certification marks before leaving the factory, being sold, imported or used for any operational activities. According to Article 4 and Article 10 of the Regulations regarding the Management of Compulsory Product Certification, with regard to products which are subject to compulsory certification, the PRC government must promulgate and update the List of Regulated Products which Require Compulsory Product Certification (實施強制性產品認證的產品目錄, the “List”). The manufacturer, seller, and importer of the products covered by the List must entrust a certification body designated by the State Certification and Accreditation Administration (中國國家認證認可監督管理委員會) to carry out certification regarding product manufacturing, selling, importing, thus to obtain the Compulsory Product Certification (強制性產品認證證書).

According to the List promulgated and updated by AQSIQ and the Regulations on Architectural Safety Glass (《建築安全玻璃管理規定》), safety glass products are products which require Compulsory Product Certification. The Safety Glass Products sold in China must obtain the Compulsory Product Certification.

PRC LAWS AND REGULATIONS RELATING TO ENVIRONMENTAL PROTECTION

The major environmental regulations applicable include, among others, the Environmental Protection Law of the PRC (《中華人民共和國環境保護法》), the PRC Law on the Prevention and Control of Environmental Noise Pollution (《中華人民共和國環境噪聲污染防治法》), the PRC Law on the Prevention and Control of Air Pollution (《中華人民共和國大氣污染防治法》), the PRC Law on the Prevention and Control of Water Pollution (《中華人民共和國水污染防治法》), the PRC Law on the Prevention and Control of Environmental Pollution by Solid Wastes (《中華人民共和國固體廢物污染環境防治法》), the PRC Law on Evaluation of Environmental Effects (《中華人民共和國環境影響評價法》) and the Regulations on the Administration of Construction Project Environmental Protection (《建設項目環境保護管理條例》). There are national and local standards applicable to emissions control, discharge of water to the surface and subsurface, and the generation, handling, storage, transportation, treatment and disposal of waste materials.

Pursuant to Environmental Protection Law of the PRC (《中華人民共和國環境保護法》), which was promulgated on 26 December 1989 and was last amended on 24 April 2014 and became effective on 1 January 2015, the PRC government formulated the legal framework for environmental protection in China, the competent department of environmental protection under the State Council shall supervise and manage environmental protection work throughout the country in a unified manner. For enterprises and institutions and other producers and operators that further reduce the discharge of pollutants based on the legal requirements for discharge of pollutants, the PRC government shall encourage and support them by using favorable policies and measures in respect of finance, tax, price and government procurement in accordance with the law. The pollution prevention and control facilities in construction

–92– REGULATORY OVERVIEW projects shall be designed, built and commissioned together with the principal part of the project. The pollution prevention and control facilities shall meet the requirements specified in the approved documents regarding the environmental impact assessment and shall not be dismantled or left idle without authorization. The enterprises and institutions and other producers and operators that implement the pollution discharge license management shall discharge pollutants according to the requirements of the pollution discharge license; those that fail to obtain the pollution discharge license shall not discharge pollutants. For any construction project, in absence of the environmental impact assessment in accordance with the law, the construction of the project shall not be commenced.

Pursuant to the Environmental Impact Appraisal Law of the PRC (《中華人民共和國環境影響評價法》) with effect from 1 September 2003, the PRC government has set up a system to appraise the environmental impact from construction projects, and classify and administer the environmental impact appraisals in accordance with the degree of the environmental impact. If the construction project may result in a material impact on the environment, an environmental impact report of appraising thoroughly the environmental impact which may happen is required; if the construction project may result in a slight impact on the environment, an environmental impact record of analyzing or appraising the specific environmental impact which may happen is required; and if the construction project may result in very little impact on the environment, an environmental impact appraisal is not required but filing an environmental impact form is needed. Construction units shall prepare environmental impacts documents and such environmental impacts documents shall be approved by the relevant PRC environmental protection authority before construction commences.

Pursuant to the Law of the PRC on the Prevention and Control of Environmental Pollution by Solid Wastes (《中華人民共和國固體廢物污染環境防治法》) with effect from 1 April 1996 and last amended on 29 June 2013, environment impacts appraisal shall be conducted for construction of projects discharging solid wastes, store, use and disposal of solid wastes and comply with regulations regarding environmental protection of construction project. The prevention facilities for solid wastes shall be designed, constructed and put into operation together with the main part of the project. The construction project can only be put into operation after the environmental protection authority has examined and approved the solid wastes pollution prevention facilities.

Pursuant to the Law of the PRC on the Prevention and Control of Atmospheric Pollution (《中華人民共和國大氣污染防治法》) with effect from 1 June 1988 and amended on 29 August 1995 and 29 April 2000, respectively, new construction projects, expansion projects or reconstruction projects which discharge atmospheric pollutants shall comply with regulations regarding environmental protection of construction projects. The environmental impacts statement of the construction projects shall include an assessment of the project impact on the ecosystem and be submitted to the environmental protection authority for approval. The construction project can only be put into operation after the environmental protection authority has examined and approved the atmospheric pollution prevention facilities.

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Pursuant to the Law of the PRC on Prevention and Control of Environmental Noise Pollution (《中華人民共和國環境噪聲污染防治法》) with effect from 1 March 1997, a construction project which is likely to produce environmental noise pollution shall prepare an environmental impact statement which includes measures to prevent and control such pollution, and submit it to the relevant environmental protection authority for approval. The construction project can only be put into operation after the environmental protection authority has examined and approved the noise pollution prevention facilities.

Pursuant to the Law of the PRC on Prevention and Control of Water Pollution (《中華人民共和國水污染防治法》) with effect from 1 November 1984 and amended on 15 May 1996 and 28 February 2008, respectively, new construction projects, expansion projects or reconstruction projects and other above-water facilities that directly or indirectly discharge pollutants to water shall be carried out the appraisal regarding their effects on environment according to law. Water pollution prevention facilities shall be designed, built and put into operation together with the main part of the project. The construction project can only be put into operation after the environmental protection authority has examined and approved the water pollution prevention facilities.

PRC LAWS AND REGULATIONS RELATING TO PRODUCT QUALITY AND CONSUMERS PROTECTION

Product Quality Law of the PRC

The principal legal provisions governing product liability are set out in the Product Quality Law of the PRC (《中華人民共和國產品質量法》) (the “Product Quality Law”), which was last amended on and became effective from 8 July 2000. The Product Quality Law is applicable to all activities of production and sale of any product within the territory of the PRC, and the producers and sellers shall be liable for product quality in accordance with the Product Quality Law. According to the Product Quality Law, consumers or other victims who suffer personal injury or property losses due to product defects may demand compensation from the producer as well as the seller. Where the responsibility for product defects lies with the producer, the seller shall, after settling compensation, have the right to recover such compensation from the producer, and vice versa. Violations of the Product Quality Law may result in the imposition of fines. In addition, the seller or the producer may be ordered to suspend operation and its business license may be revoked. Criminal liability may be incurred in serious cases.

Consumer Protection Law of the PRC

The principal legal provisions for the protection of consumer interests are set out in the Consumer Protection Law of the PRC (《中華人民共和國消費者權益保護法》) (the “Consumer Protection Law”), which was last amended on 25 October 2013 and became effect on 15 March 2014. According to the Consumer Protection Law, the rights and interests of the consumers who buy or use commodities for the purposes of daily consumption or those who receive services are protected and all manufacturers and distributors involved must ensure that

–94– REGULATORY OVERVIEW the products and services will not cause damage to persons and properties. Violations of the Consumer Protection Law may result in the imposition of fines. In addition, the operator may be ordered to suspend operations and its business license may be revoked. Criminal liability may be incurred in serious cases.

PRC LAWS AND REGULATIONS RELATING TO INTELLECTUAL PROPERTY RIGHTS

Trademark Law of the PRC

Pursuant to the Trademark Law of the PRC (《中華人民共和國商標法》) (the “Trademark Law”), which was promulgated on 23 August 1982 with effect from 1 March 1983 and was last amended on 30 August 2013 and became effective on 1 May 2014, the right to exclusive use of a registered trademark shall be limited to trademarks which have been approved for registration and to goods for which the use of trademark has been approved. The period of validity of a registered trademark shall be ten years, counted from the day the registration is approved. According to the Trademark Law, the use of a trademark that is identical with or similar to a registered trademark in connection with the same or similar goods without the authorization of the owner of the registered trademark constitutes an infringement of the exclusive right to use a registered trademark. The infringer shall, in accordance with the regulations, undertake measures such as to cease the infringement, to take remedial actions, and to pay the damages.

Patent Law of the PRC

Pursuant to the Patent Law of the PRC (《中華人民共和國專利法》) (the “Patent Law”), which was revised on 27 December 2008 and with effect from 1 October 2009, after the grant of the patent right for an invention or utility model, except where otherwise provided for in the Patent Law, no entity or individual may, without the authorization of the patent owner, exploit the patent, that is, to make, use, offer to sell, sell or import the patented product, or use the patented process, or use, offer to sell, sell or import any product which is a direct result of the use of the patented process, for production or business purposes. After a patent right is granted for a design, no entity or individual shall, without the permission of the patent owner, exploit the patent, that is, for production or business purposes, to manufacture, offer to sell, sell, or import any product containing the patented design. Where the infringement of a patent is identified, the infringer shall, in accordance with the regulations, undertake measures such as to cease the infringement, take remedial actions, and pay the damages.

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PRC LAWS AND REGULATIONS RELATING TO PRODUCTION SAFETY AND LABOR

Production Safety Law of the PRC

Pursuant to the Production Safety Law of the PRC (《中華人民共和國安全生產法》) (the “Production Safety Law”) promulgated by the Standing Committee of the National People’s Congress on 29 June 2002, amended on 27 August 2009 and 31 August 2014 and effective on 1 December 2014, enterprises and institutions shall be equipped with the conditions for safe production as provided in the Production Safety Law and other relevant laws, administrative regulations, national standards and industrial standards. Any entity that is not equipped with such conditions is not allowed to engage in production and business operation activities. Enterprises and institutions shall educate their employees regarding production safety. In addition, enterprises and institutions shall provide personal protective equipment that meet national standards or industrial standards to the employees, and supervise and educate them to use such equipment.

Labor Law of the PRC

Pursuant to the Labor Law of the PRC (《中華人民共和國勞動法》) promulgated by the Standing Committee of the National People’s Congress on 5 July 1994 and effective on 1 January 1995, and the Labor Contract Law of the PRC (《中華人民共和國勞動合同法》) effective on 1 January 2008 and amended on 28 December 2012 with effect from 1 July 2013, enterprises and institutions shall ensure safety and hygiene of the workplace, strictly comply with applicable rules and standards on workplace safety and hygiene in China, and educate employees on such rules and standards. Furthermore, employers and employees shall enter into written employment contracts to establish their employment relationship. Employers are required to inform the employees about their job duties, working conditions, occupational hazards, remuneration and other matters with which employees may be concerned. Employers shall pay remuneration to employees on time and in full in accordance with the commitments set forth in the employment contracts and the relevant PRC laws and regulations.

Social Insurance and Housing Provident Fund

Pursuant to the Social Insurance Law of the PRC (《中華人民共和國社會保險法》) promulgated by the Standing Committee of the National People’s Congress on 28 October 2010, effective on 1 July 2011, and the Regulations on the Administrative Regulations on the Housing Provident Fund (《住房公積金管理條例》) promulgated by the State Council on and became effective on 24 March 2002, employers in the PRC shall provide their employees with welfare schemes covering basic pension insurance, basic medical insurance, unemployment insurance, maternity insurance, occupational injury insurance and housing provident fund.

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PRC LAWS AND REGULATIONS RELATING TO TAXATION AND FOREIGN EXCHANGE

Law of the PRC on Enterprise Income Tax

According to the EIT Law, which was promulgated on 16 March 2007 and became effective on 1 January 2008, the income tax rate for both domestic and foreign-invested enterprises is 25%, and the tax exemptions, reductions and preferential treatment which had been enjoyed by foreign-invested enterprises before 1 January 2008 were abolished unless otherwise specified. Pursuant to the EIT Law, enterprises established outside the PRC whose “de facto management bodies” are located in the PRC are considered “PRC resident enterprises” and subject to the uniform 25% enterprise income tax rate for their global income. The rate of enterprise income tax on high and new technological enterprises needing special support of the PRC government shall be reduced to 15%.

The Administrative Measures for Certification of New and High Technology Enterprises

Pursuant to the Administrative Measures for Certification of New and High Technology Enterprises (《高新技術企業認定管理辦法》) with effective from 1 January 2008, the high and new technology enterprises, which are recognized in accordance with these Measures, may apply for the tax preferential policy in accordance with the EIT Law and the Implementation Measures of the EIT Law thereof, the Law of PRC Concerning the Administration of Tax Collection (《中華人民共和國稅收徵收管理法》) and Implementation Rules of the Law of the PRC Concerning the Administration of Tax Collection (《中華人民共和國稅收徵收管理法實施細則》). The validity period of new and high technology enterprises shall be effective for three years from the date of issuance of the certificate of new and high technology enterprise is issued. Such an enterprise shall apply for reexamination three months before the expiration of the qualification; where an enterprise fails to apply for reexamination or where an enterprise fails in the reexamination, its qualification as high and new technology enterprise shall be null and void automatically at the expiration of its valid period.

Interim Regulations of the PRC on Value-added Tax

Pursuant to the Interim Regulations of the PRC on Value-added Tax (《中華人民共和國增值稅暫行條例》), which was promulgated on 13 December 1993 and amended on 10 November 2008 and its implementation rules, entities or individuals in the PRC engaged in the sale of goods, provision of processing, repairs and replacement services and importation of goods are required to pay a value-added tax, on the value added during the course of the sale of goods or provision of services. Unless otherwise specified, the applicable value-added tax rate for the sale or importation of goods and provision of processing, repair and replacing services is 17%.

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Administrative Regulations of the PRC on Foreign Exchange

The principal regulation governing foreign currency exchange in the PRC is 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 Regulations”) which was last amended on 5 August 2008 and with effect from 5 August 2008. Under these rules, Renminbi is generally freely convertible for payments of current account items, such as trade and service-related foreign exchange transactions and dividend payments, but not freely convertible for capital account items, such as capital transfer, direct investment, investment in securities, derivative products or loans unless the prior approval by the competent authorities for the administration of foreign exchange is obtained. Under the Foreign Exchange Regulations, foreign-invested enterprises in the PRC may purchase foreign exchange without the approval of the SAFE for paying dividends by providing certain evidencing documents (including board resolutions, tax certificates), or for trade and services-related foreign exchange transactions by providing commercial documents evidencing such transactions.

Pursuant to Circular of the State Administration of Foreign Exchange on Further Simplifying and Improving the Direct Investment-related Foreign Exchange Administration Policies (《關於進一步簡化和改進直接投資外匯管理政策的通知》) (the “Circular 13”), which was promulgated on 13 February 2015 and became effective on 1 June 2015, the foreign exchange registration under domestic direct investments and the foreign exchange registration under overseas direct investments will be directly reviewed and handled by banks in accordance with the Circular 13, and the SAFE and its branches shall perform indirect regulation over the foreign exchange registration via banks.

PRC MERGER & ACQUISITION REGULATIONS

The M&A Rules, which was promulgated by the MOFCOM, the State-owned Assets Supervision and Administration Commission of the State Council, the SAT, the SAIC, China Securities Regulatory Commission (the “CSRC”) and the SAFE on 8 August 2006, and subsequently amended by the MOFCOM on 22 June 2009, a special purpose vehicle formed for purposes of overseas listing and controlled directly or indirectly by PRC domestic companies or individuals is required to obtain the approval of the CSRC prior to the listing and trading of such special purpose vehicle’s securities on an overseas stock exchange.

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BUSINESS HISTORY

The following is a summary of our Group’s key business development milestones:

Key milestones

March 2011 Jiangsu Yutian was established as a limited liability company in the PRC

June 2011 Signing the agreement for the sale of first set of Low-E equipment

January 2012 Commencement of production of Low-E glass

January 2013 We were awarded 2012 Annual Authentication for the Huai’an Science and Technology Innovation Model Enterprises in Production, Academic and Research Integration (2012年度淮安市產學研科技創新示範企業認定) by Huai’an Municipal Science and Technology Bureau (淮安市科學技術局)

February 2013 We were awarded Advanced Group Award for Industrial and Economic Development (工業經濟發展進位先進集體) by Hongze County Committee of the Communist Party of China, Hongze County People’s Government (中共洪澤縣委員會, 洪澤縣人民政府)

April 2013 We were awarded Huai’an “Wuyi” Labor Award (淮安市五一勞動獎狀) by Huai’an Municipal People’s Government (淮安市人民政府)

February 2014 We were awarded 2013 Outstanding Enterprise (2013年度優秀企業) by Hongze County Committee of the Communist Party of China, Hongze County People’s Government (中共洪澤縣委員會, 洪澤縣人民政府)

March 2014 Commencement of production of CTP module components

April 2014 We were awarded “Wuyi” Labor Award (五一勞動獎狀) by Hongze County People’s Government (洪澤縣人民政府

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For further information in relation to the business, please refer to the section headed “Business” in this Prospectus.

CORPORATE DEVELOPMENT

The history of our Group started in March 2011 when the founder, namely Ms. Wang, established Jiangsu Yutian in the PRC as a limited liability company with a registered capital of RMB100 million. At the time of its establishment, Jiangsu Yutian was beneficially owned by Ms. Wang. Ms. Wang financed the contribution to Jiangsu Yutian by her family resources.

Mr. Wang (the spouse of Ms. Wang) held certain equity interest in Jiangsu Yutian for and on behalf of Ms. Wang. For further details, please refer to the paragraph headed “– The Subsidiaries in the BVI, Hong Kong and the PRC – PRC – Jiangsu Yutian” in this section.

For the background and relevant experience of Ms. Wang and Mr. Wang, please refer to the section headed “Directors and Senior Management – Directors” in this Prospectus.

The following describes the corporate history of the Company and its subsidiaries.

The Company

The Company was incorporated in the Cayman Islands on 13 November 2013 as a limited liability company with an authorized share capital of HK$380,000 divided into 38,000,000 Shares of HK$0.01 each and is the holding company of the subsidiaries. On the same date, Offshore Incorporations (Cayman) Limited transferred one Share to Sky Prosper which is beneficially owned by Ms. Wang at the consideration of HK$0.01.

As of the Latest Practicable Date, all allotted and issued Shares of the Company were held as to 75% by Sky Prosper and 25% by China Fund. For details of the Pre-IPO Investment by China Fund, please refer to the paragraph headed “– Pre-IPO Investment” in this section.

As a result of the Reorganization, the Company directly holds all the interests in Kaifa Global and indirectly holds all the interests in HK Yutian and Jiangsu Yutian. Jiangsu Yutian is principally engaged in the manufacture and sale of industrial coated products as well as design and assembly of coated glass production equipment. Please refer to the paragraph headed “– Reorganization” below in this section for further details about the Reorganization.

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The Subsidiaries in the BVI, Hong Kong and the PRC

BVI

Kaifa Global

Kaifa Global was incorporated in the BVI on 25 September 2013 as a limited liability company with an authorized share capital of US$50,000 divided into 50,000 shares of US$1 each. On 15 October 2013, 50,000 shares of Kaifa Global were issued to Ms. Wang at the consideration of US$1 per share. On 15 November 2013, Ms. Wang transferred 50,000 shares of Kaifa Global to the Company at the consideration of US$1 per share. As of the Latest Practicable Date, Kaifa Global was owned as to 100% by the Company. It serves as an intermediary holding company.

Hong Kong

HK Yutian

HK Yutian was incorporated in Hong Kong on 28 October 2013 as a limited liability company. At the time of its incorporation, 10,000 shares of HK Yutian were issued to Kaifa Global at the consideration of HK$1 per share. As of the Latest Practicable Date, HK Yutian was owned as to 100% by Kaifa Global. It serves as an intermediary holding company.

PRC

Jiangsu Yutian

Jiangsu Yutian was established in the PRC on 23 March 2011 as a limited liability company with an initial registered capital of RMB100 million which was subsequently increased to RMB106.15 million. At the time of its establishment, Jiangsu Yutian was owned as to 60% by Mr. Wang (on trust for Ms. Wang) and 40% by Ms. Wang, respectively. Jiangsu Yutian commenced its business in March 2011.

Pursuant to a trust agreement (《股權代持協議》) dated 22 March 2011, Mr. Wang held the 60% interest in Jiangsu Yutian for and on behalf of Ms. Wang. The trust arrangement was due to the family arrangement between Mr. Wang and Ms. Wang and having Mr. Wang as a registered shareholder of Jiangsu Yutian can also give him a higher status, which might help him better manage Jiangsu Yutian together with Ms. Wang. Pursuant to a termination agreement of the trust agreement (《股權代持協議》之終止協議) dated 1 April 2014, the trust arrangement between Mr. Wang and Ms. Wang was terminated. As confirmed by the Company’s PRC Legal Advisers, Jingtian & Gongcheng, such trust arrangement did not violate any laws or regulations in the PRC.

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Pursuant to two equity transfer agreements both dated 27 December 2012, Mr. Wang (at the instruction of Ms. Wang) and Ms. Wang transferred their respective 9% and 6% equity interests in Jiangsu Yutian to Nanjing Investment, an Independent Third Party, at the consideration of RMB9 million and RMB6 million, respectively, which was determined with reference to the registered capital of Jiangsu Yutian at the time of transfer and the consideration was fully settled on 25 January 2013. Immediately before the Reorganization, Jiangsu Yutian was owned as to 51% by Mr. Wang (on trust for Ms. Wang), 34% by Ms. Wang and 15% by Nanjing Investment, respectively.

Jiangsu Yutian is principally engaged in the manufacture and sale of industrial coated products as well as design and assembly of coated glass production equipment.

As a result of the Reorganization, the Company currently wholly owns the abovementioned subsidiaries. Please refer to the paragraph headed “– Reorganization” below in this section for further details about the Reorganization.

REORGANIZATION

Set out below is the shareholding and corporate structure of our Group immediately prior to the implementation of the Reorganization:

Nanjing (1) Ms. Wang Mr. Wang Investment

51% 34% 15%

Jiangsu Yutian

Note:

(1) Mr. Wang held 51% equity interest in Jiangsu Yutian on trust for Ms. Wang.

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In order to prepare for the Listing, the Company underwent the Reorganization which involved the following steps:

(1) Incorporation of BVI Holding Companies

On 26 November 2013, Fu Hong was incorporated in the BVI with an authorized share capital of US$50,000 divided into 50,000 shares of US$1 each. On 27 December 2013, 50,000 shares of Fu Hong were allotted and issued to Ms. Wang at the consideration of US$1 per share. As of the Latest Practicable Date, Fu Hong was owned as to 100% by Ms. Wang.

On 24 September 2013, Sky Prosper was incorporated in the BVI with an authorized share capital of US$50,000 divided into 50,000 shares of US$1 each. On 15 October 2013, 50,000 shares of Sky Prosper were allotted and issued to Ms. Wang at the consideration of US$1 per share. On 30 December 2013, Ms. Wang transferred 10,000 shares in Sky Prosper to Fu Hong for a consideration of US$1 per share. As of the Latest Practicable Date, Sky Prosper was owned as to 80% by Ms. Wang and 20% by Fu Hong.

(2) Incorporation of the Company

On 13 November 2013, the Company was incorporated in the Cayman Islands with an authorized share capital of HK$380,000 divided into 38,000,000 Shares of HK$0.01 each. On the same date, Offshore Incorporations (Cayman) Limited transferred one Share to Sky Prosper at the consideration of HK$0.01.

(3) Incorporation of Intermediate Holding Companies

On 25 September 2013, Kaifa Global was incorporated in the BVI. On 15 October 2013, 50,000 shares of Kaifa Global were issued to Ms. Wang at the consideration of US$1 per share. On 15 November 2013, Ms. Wang transferred 50,000 shares of Kaifa Global to the Company at the consideration of US$1 per share. As of the Latest Practicable Date, Kaifa Global was owned as to 100% by the Company.

On 28 October 2013, HK Yutian was incorporated in Hong Kong. At the time of its incorporation, 10,000 shares of HK Yutian were issued to Kaifa Global at the consideration of HK$1 per share. As of the Latest Practicable Date, HK Yutian was owned as to 100% by Kaifa Global.

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(4) Acquisition of Jiangsu Yutian

Pursuant to an equity transfer agreement dated 1 November 2013, Mr. Wang (at the instruction of Ms. Wang), Ms. Wang and Nanjing Investment transferred their respective 51%, 34% and 15% equity interests in Jiangsu Yutian to HK Yutian at a total consideration of RMB100 million, which was determined with reference to the appraised net asset value of the relevant interest in Jiangsu Yutian as of 30 September 2013 of approximately RMB109.19 million in a valuation report issued by an independent valuer, Huai’an Xinrui Asset Appraisal Co., Ltd.* (淮安新瑞資產評估事務所). The consideration was fully settled on 14 March 2014. The equity transfer was properly and legally completed when it was registered with competent government authority in the PRC on 27 January 2014. As of the Latest Practicable Date, Jiangsu Yutian was owned as to 100% by HK Yutian.

PRE-IPO INVESTMENT

Pursuant to the share subscription agreement dated 25 February 2014 (“Share Subscription Agreement”), 250,000 Shares were issued and allotted to China Fund at the consideration of RMB37,500,000 which was determined with reference to the appraised net asset value of the relevant interest in Jiangsu Yutian as of 30 September 2013 of approximately RMB109.19 million in a valuation report issued by an independent valuer, Huai’an Xinrui Asset Appraisal Co., Ltd.* (淮安新瑞資產評估事務所). Accordingly, the Company was owned as to 75% by Sky Prosper and 25% by China Fund after completion of the subscription of 250,000 Shares by China Fund pursuant to the Share Subscription Agreement.

Terms and details of the Share Subscription Agreement

The following table sets forth a summary of the China Fund’s investment made in the Company:

Shares (after Discount taking into over mid- Amount of account the Payment point of Date of consideration Capitalization date of Cost per Placing Price Use of Strategic Investor investment paid Issue) consideration share paid Range Proceeds benefits

China Fund 25 February RMB37,500,000 150,000,000 26 February RMB0.25 39.1% The proceeds Given that 2014 2014 and 13 (equivalent to from the China Fund March 2014 HK$0.317) subscription is a financial of Shares investor, the were fully pre-IPO used for investment do settling part not provide of the any strategic consideration benefits to for acquiring our Group. 100% interest in Jiangsu Yutian

– 104 – HISTORY, DEVELOPMENT AND REORGANIZATION

Pursuant to the Share Subscription Agreement, China Fund has the right to require Sky Prosper to purchase all the 250,000 Shares held by China Fund (the “Put Option”) for the amount of consideration paid by China Fund plus an interest at the annual rate of 10% if the Listing does not take place within one year after the date of the Share Subscription Agreement (provided that China Fund shall not exercise the Put Option in any other event). Based on a confirmation dated 29 June 2015, China Fund confirmed that it waived the Put Option and will not require Sky Prosper to purchase the 250,000 Shares held by it and pay any relevant interest. Li & Partners, our legal adviser as to the laws of Hong Kong, is of the view that such confirmation does not constitute a new contract under the laws of Hong Kong. Save for the Put Option, China Fund does not have any other special rights under the Share Subscription Agreement. The Put Options will cease to have effect upon the Listing.

There is no agreement or arrangement between China Fund and our Company, or the Controlling Shareholders, or our Directors or their respective associates, to compensate any loss in investment in our Company by China Fund.

Background of the pre-IPO investor

China Fund is an exempted company incorporated in the Cayman Islands with limited liability on 13 March 2008.

China Fund is a wholly owned subsidiary of Luckever, an investment vehicle, both controlled by Mr. Liu Xuezhong. Luckever is owned as to 60.87% by Mr. Liu Xuezhong and 39.13% by Ms. Li Yuelan (spouse of Mr. Liu Xuezhong).

Mr. Liu Xuezhong was a private investor who had made investments in various companies as financial investor, including China High Speed Transmission Equipment Group Co., Ltd (Stock Exchange stock code: 658) and Greens Holdings Ltd (Stock Exchange stock code: 1318). Mr. Liu Xuezhong is a personal friend of Mr. Wang and they came to know each other through a common friend. Mr. Liu Xuezhong invested in our Company through Luckever and China Fund as he is interested in and optimistic about the business prospect of the products and technologies of our Group. China Fund’s investment was financed out of its internal resources and Mr. Liu Xuezhong’s savings.

Save for the interest in the Company as far as the Directors are aware, Mr. Liu Xuezhong and Ms. Li Yuelan do not have any past or present relationships (other than being Shareholders) with other Shareholders and were not involved in any business that competes with the Company’s business as of the Latest Practicable Date.

Save as disclosed in this Prospectus, Luckever and China Fund, Mr. Liu Xuezhong and Ms. Li Yuelan, had no other relationship with our Group and/or any other connected persons of our Company during the Track Record Period and up to the Latest Practicable Date.

– 105 – HISTORY, DEVELOPMENT AND REORGANIZATION

Since China Fund is a substantial shareholder and therefore a connected person of the Company, the Shares held by China Fund will not be regarded as part of the Company’s public float upon the Listing. The Shares held by China Fund will not be subject to any lock-up after the Listing.

The Sole Sponsor has confirmed that it considers that the subscription of 250,000 Shares by China Fund is in compliance with the “Interim Guidance on Pre-IPO Investments” issued by the Listing Committee on 13 October 2010 since the consideration under the Share Subscription Agreement was settled on 26 February 2014 and 13 March 2014, which was more than 28 clear days before the date of the first submission of the listing application form to the Listing Division of the Stock Exchange in relation to the Listing. The Sole Sponsor has also confirmed that the subscription of 250,000 Shares by China Fund is in compliance with Guidance Letters HKEx-GL29-12 and HKEx-GL43-12 whereas the Guidance Letter HKEx- GL44-12 is not applicable to such subscription.

EXCLUDED BUSINESS

Pursuant to the Reorganization, Nanjing Yaopi and Nanjing Shunji were not included into our Group. Set out below are the details of Nanjing Yaopi and Nanjing Shunji.

Nanjing Yaopi

Nanjing Yaopi was established in the PRC on 15 December 2004 and has a registered capital of RMB2.5 million. Nanjing Yaopi was owned as to 60% by Mr. Wang and 40% by Ms. Wang. Pursuant to the shareholders’ resolutions dated 22 January 2014, Mr. Wang and Ms. Wang transferred all their equity interest in Nanjing Yaopi to an Independent Third Party, at the total consideration of RMB2.5 million which was determined with reference to the registered capital of Nanjing Yaopi at the time of the transfer.

During the Track Record Period and before the completion of the equity transfer in around 22 January 2014, Nanjing Yaopi was engaged in trading of various types of glasses and raw materials. Nanjing Yaopi was not included into our Group because Nanjing Yaopi’s business scope is not in line with our Group’s business focus, which is the manufacture and sale of industrial coated products as well as design and assembly of coated glass production equipment. Our Group is not engaged in the trading business. To the best knowledge of the Directors, Nanjing Yaopi no longer carries on business of glass trading.

According to the unaudited management accounts of Nanjing Yaopi for the year ended 31 December 2013, its revenue, net loss, total equity and gross profit margin were approximately RMB6,289,000, RMB(508,000), RMB1,026,000 and 0.2%, respectively. Ms. Wang and Mr. Wang ceased their management in Nanjing Yaopi after they transferred all their equity interest in Nanjing Yaopi to an Independent Third Party in around 22 January 2014.

– 106 – HISTORY, DEVELOPMENT AND REORGANIZATION

Nanjing Shunji

Nanjing Shunji was established in the PRC on 12 February 2003 and has a registered capital of RMB5.5 million. Nanjing Shunji is owned as to 60% by Mr. Wang and 40% by Ms. Wang, respectively.

From 12 February 2003 to 24 December 2013, Nanjing Shunji had been mainly engaged in manufacturing of decorative glass products, which belonged to the traditional glass industry with low entry barrier and keen competition. Nanjing Shunji was not included into our Group because Nanjing Shunji’s business scope of manufacturing decorative glass products (mainly mirrors) is not in line with our Group’s business focus. For further details, please refer to the section headed “Relationship with Controlling Shareholders – Retained Business of Our Controlling Shareholders”.

Nanjing Shunji no longer carried on business of manufacturing of decorative glass products because it was not profitable. Based on the amended articles of association of Nanjing Shunji dated 24 December 2013, it is engaged in the sales of robots, automated machineries hardware and electrical appliances as well as production research and manufacturing equipment of solar film cells.

According to the unaudited management accounts of Nanjing Shunji for the year ended 31 December 2013 and 2014, its revenue, net loss, total equity and gross profit margin are set out in the table below:

For the year For the year ended ended 31 December 31 December 2013 2014 (Approximately) (Approximately) RMB RMB

Revenue...... 41,623,000 10,753,000 Net loss ...... (18,000) (1,072,000) Total equity ...... 5,625,000 4,553,000 Gross profit margin ...... 2% 3%

– 107 – HISTORY, DEVELOPMENT AND REORGANIZATION

CORPORATE STRUCTURE

The following chart sets forth our Group’s shareholding structure immediately after completion of the Reorganization and prior to the Placing and Capitalization Issue (without taking into account any Shares that may be issued pursuant to the exercise of the Over-allotment Option or any options that may be granted under the Share Option Scheme):

Mr. Liu Ms. Li Ms. Wang Xuezhong Yuelan 100% 60.87% 39.13%

Fu Hong Luckever (BVI) (BVI)

80% 20% 100%

Sky Prosper China Fund (BVI) (Cayman)

75% 25%

The Company (Cayman) 100%

Kaifa Global (BVI) 100%

HK Yutian (Hong Kong) Offshore

100% Onshore Jiangsu Yutian (PRC)

– 108 – HISTORY, DEVELOPMENT AND REORGANIZATION

The following chart sets forth our Group’s shareholding structure immediately following completion of the Placing and Capitalization Issue (without taking into account any Shares that may be issued pursuant to the exercise of the Over-allotment Option or any options that may be granted under the Share Option Scheme):

Mr. Liu Ms. Li Ms. Wang Xuezhong Yuelan 100% 60.87% 39.13%

Fu Hong Luckever (BVI) (BVI)

80% 20% 100%

Sky Prosper China Fund Public (BVI) (Cayman)

55.56% 18.52% 25.92%

The Company (Cayman) 100%

Kaifa Global (BVI) 100%

HK Yutian (Hong Kong) Offshore

100% Onshore Jiangsu Yutian (PRC)

PRC GOVERNMENTAL APPROVALS

Our PRC Legal Advisers have confirmed that based on the materials and documents provided by the Company and retrieved from the competent authorities, and the interview and confirmations of the competent authorities, all share transfers and increases in registered capital in respect of Jiangsu Yutian as described in this section have obtained all relevant approvals and permits in all material respects and the procedures involved are in accordance with PRC laws and regulations in all material respects.

– 109 – HISTORY, DEVELOPMENT AND REORGANIZATION

M&A Rules

According to the M&A Rules jointly issued by the MOFCOM, the State-Owned Assets Supervision and Administration Commission of the State Council (國務院國有資產監督管理委員會), the SAT (國家稅務總局), the CSRC, the SAIC and the SAFE on 8 August 2006 and effective as of 8 September 2006 and subsequently amended on 22 June 2009, where a domestic company, enterprise or natural person intends to merge or acquire his/her related domestic company in the name of an offshore company which he/she lawfully established or controls, the acquisition shall be subject to the examination and approval of the MOFCOM; and in case the parties concerned makes an overseas company holding the equities of a company with special purpose, which refers to an overseas company directly or indirectly controlled by a domestic company or a natural person for the purpose of making the equities of its actual owned domestic company to be listed abroad as a subject to be listed abroad, this overseas company shall satisfy corresponding requirements for the company with special purpose as prescribed in the M&A Rules, and the listing transaction abroad of the company with special purpose shall be approved by the CSRC.

As advised by our Group’s PRC Legal Advisers, it is not necessary for our Group to obtain approval from the CSRC and the MOFCOM for the Listing and trading of the Shares on the Stock Exchange as the Controlling Shareholder, Ms. Wang, held a Guinea-Bissau passport prior to the onshore Reorganization and has canceled her residential registration in the PRC and she is not considered a PRC domestic natural person for the purposes of the M&A Rules.

SAFE Regulations

Pursuant to Circular of the State Administration of Foreign Exchange on Issues Concerning the Administration of Foreign Exchange in Offshore Financing and Return Investments by Domestic Residents through Special Purpose Vehicles (《國家外匯管理局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》) (the “Circular 37”), which was promulgated by the SAFE and became effective from 4 July 2014, where the PRC individual residents conduct investment to the offshore Special Purpose Vehicles (the “SPVs”) with their legitimate inshore and offshore assets or equities, they must register with local SAFE branches with respect to their investments. The Circular 37 also requires the PRC individual residents to file changes to their registration where their offshore SPVs undergo material events such as the change of basic information including PRC individual residence shareholder, name and operation period, as well as capital increase or decrease, share transfer or exchange, merger or division.

Jiangsu Branch of the SAFE advised that during the interview on 10 June 2015, since the Controlling Shareholder, Ms. Wang, is a not a PRC domestic resident, the Circular 37 is not applicable to Ms. Wang for her investment in the Group.

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OVERVIEW

Among the various types of coated architectural glass that we produce, our specialty is the production of Low-E glass. The markets and technologies for Low-E glass have seen significant developments in recent years driven by favorable PRC government policies that promote energy efficiency and emissions reduction through the use of advanced, energy- efficient materials in real estate development and construction. As a result of these supportive policies, the sales volume of Low-E glass in China increased at a CAGR of 35.1% from approximately 40 million m2 in 2009 to approximately 180 million m2 in 2014, and is expected to increase at a CAGR of 12.1% from approximately 180 million m2 in 2014 to approximately 319 million m2 in 2019, according to HCR. Our coated glass production equipment, which are used to produce Low-E glass, are therefore also expected to be in high demand. Moreover, due to the rapid increase in market demand for electronics equipped with touch screens, including tablets and smart phones, HCR estimates that global shipments for CTP modules, which are a critical component of touch screen devices, will increase from 1.7 billion units in 2014 to 2.7 billion units in 2019, representing a CAGR of 9.3%.

With our strong research and development capabilities and advanced industrial coating techniques, we are able to produce high-quality coated architectural glass. A majority of the key quality indicators of our coated architectural glass, including with respect to emissivity, visible light transmittance and ultraviolet transmittance, exceed industry average levels. As of the Latest Practicable Date, we owned four invention patents and 14 utility model patents in China. Applying advanced industrial coating techniques developed in-house during the production of our coated architectural glass products, we were able to develop the capacity and techniques to assemble high-precision coated CTP glass and electronic circuits to produce CTP module components, which we tailor to the specifications of manufacturers for electronic devices.

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As of the Latest Practicable Date, we had one operational production plant in Hongze Economic Development Zone, Huai’an, Jiangsu, which housed one Low-E glass production line with a total designed annual production capacity of 7.2 million m2 and one CTP module components production line with a total designed annual production capacity of 3.5 million units. In order to enhance our overall operating scale, we plan to build a new factory building to expand the floor space at our current plant site in 2016 and add a new production line for on-cell CTP module components, which will bring our total number of production lines from two to three. As of the Latest Practicable Date, we were in the process of developing and assembling such production line, which we expect will become fully operational in January 2017, in order to expand into the new on-cell CTP market.

Primarily due to our patented technologies relating to the production efficiency of coated glass products, we are able to achieve high utilization rates of our Low-E glass production line. Our ability to develop, assemble and build complete sets of coated glass production lines in-house provides us with the advantage of being able to continuously refine and optimize our production process and technologies to enhance our production efficiency and cost structure.

We recorded growth during the Track Record Period. Our total revenue increased by 16.7% from RMB168.2 million in 2013 to RMB196.2 million in 2014. Our total revenue increased by 10.4% from RMB72.2 million for the six months ended 30 June 2014 to RMB79.7 million for the six months ended 30 June 2015. Our profit for the year increased by 38.7% from RMB24.0 million in 2013 to RMB33.2 million in 2014. Our profit for the period increased by 21.2% from RMB3.5 million for the six months ended 30 June 2014 to RMB4.3 million for the six months ended 30 June 2015.

OUR COMPETITIVE STRENGTHS

We believe that the following principal strengths have contributed to our historical success:

We are able to offer a wide array of industrial coated products and coated glass production equipment.

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Our thorough understanding of and extensive experience in coating technologies have enabled us to provide our customers with not only coated glass products but also equipment to manufacture coated glass. Our expertise in coated glass processing and production enables us to design, assemble, and build high-quality coated glass production equipment that meets our customer’s requirements. Moreover, our ability to design, assemble, and build complete sets of production lines for coated glass enables us to continuously refine our production processes and coating techniques for high-quality coated glass. We believe that our business model has enabled us to optimize our production and cost efficiencies, and maximize our value to our customers.

Our strong research and development capabilities enable us to develop high-quality products.

We invest in research and development, which we view as critical to our continued success. We devote the majority of our research and development efforts to the introduction of proprietary and innovative products and technologies, as well as to the upgrade of our existing products and technologies. As a result, we are able to respond to rapidly developing technologies, evolving market demands and changing consumer preferences. For the years ended 31 December 2013 and 2014 and the six months ended 30 June 2014 and 2015, our research and development costs were RMB7.1 million, RMB9.1 million, RMB4.1 million and RMB3.7 million, respectively, accounting for 4.2%, 4.6%, 5.7% and 4.6% of our total revenue for the same periods, respectively.

With our experience, strong research and development capabilities and advanced industrial coating techniques, we are able to produce high-quality coated architectural glass. A majority of the key quality indicators of our coated architectural glass, including with respect to emissivity, visible light transmittance and ultraviolet transmittance, exceed industry average levels. For example, the emissivity of our Low-E glass is as low as 0.11 while the industry average is 0.13. We also assemble high-precision coated CTP glass and electronic circuits to produce CTP modules, which we tailor to the specifications of manufacturers for electronic devices. We develop advanced coating techniques in-house for both the coated architectural glass and CTP module components production processes. For example, we developed an exhaust system of vacuum production line, which enables us to improve our production efficiency of coated architectural glass and CTP module components. We also developed superhard temperable low-emissivity glass products and the manufacturing process for such products (超硬可鋼化低輻射玻璃及其製造工藝), which allows Low-E glass to be tempered off the Low-E glass production line. As of the Latest Practicable Date, we owned four invention patents and 14 utility model patents in China. We believe that our technologies and know-how will enable us to continue to offer high-quality customized products and keep pace with market developments.

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We continue to achieve operational efficiency and maintain high utilization rates.

We believe our profitability and competitiveness are in part driven by our operational efficiency and high utilization rates. As of 30 June 2015, we had one Low-E glass production line and one CTP module components production line. Primarily due to our patented technologies relating to the production efficiency of coated glass products, we are able to achieve high utilization rates of our Low-E glass production line. We are able to consistently maintain high utilization rates due to our extensive knowledge of coated glass production equipment.

According to HCR, we were one of only seven manufacturers in China with the ability to design, assemble, build and sell complete sets of coated glass production lines as of 31 December 2014. Our ability to design, assemble and build complete sets of coated glass production lines in-house provides us with the advantage of being able to continuously refine and optimize our production process and technologies to enhance our production efficiency and cost structure. Moreover, we have implemented strict quality controls over each stage of our production process, which is highly automated to reduce the rate of human error as well as the cost of production. We have implemented the 6S management system since 1 January 2013. We believe that our proprietary and efficient production processes, technological know-how and stringent process management have enabled us to maximize our operational efficiency and lower our overall costs.

We are well positioned to benefit from favorable PRC government policies and market developments.

We specialize in the production of Low-E glass as well as the design, assembly and manufacture of complete sets of coated glass production lines. In recent years, there have been significant developments in the markets and technologies for Low-E glass, which is a type of energy-efficient coated glass used in real estate development and construction. These developments have been driven by favorable PRC government policies, such as the Twelfth Five-Year Guideline (2011-2015), which specifically identifies Low-E glass as an energy- saving material to promote energy efficiency and emissions reduction, and Circular Economy Promotion Project for 2015 (2015年循環經濟推進計畫), which extends the application of energy efficiency standards to include a wider range of building types in addition to public works and other public welfare facilities. According to HCR, the sales volume of Low-E glass increased at a CAGR of 35.1% from approximately 40 million m2 in 2009 to approximately 180 million m2 in 2014, and is expected to grow at a CAGR of 12.1% from approximately 180 million m2 in 2014 to approximately 319 million m2 in 2019. As a result of the anticipated growth in demand for Low-E glass, our coated glass production equipment, which are used to produce Low-E glass, are therefore also expected to be in high demand.

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In addition, as a manufacturer of coated architectural glass possessing patents and proprietary technologies, we qualify as a “High and New Technology Enterprise” and are entitled to a preferential income tax rate of 15%. Moreover, we also received government grants from the PRC government in relation to, among others, technical upgrade, government policies for encouraging investment, government policies for promoting the development of energy-efficient and environment-friendly industries, and transformation and upgrading of our industry during the Track Record Period. We believe that we will continue to enjoy significant benefits with respect to preferential tax treatment and government grants.

Moreover, leveraging our extensive experience and know-how in industrial coating, we commenced commercial production of CTP module components for use in electronic devices in March 2014 and recorded our first sale of CTP module components in May 2014. Due to the rapid increase in market demand for electronics equipped with touch screens, including tablets and smart phones, HCR estimates that global shipments for CTP modules, which are a critical component of touch screen devices, will increase from 1.7 billion units in 2014 to 2.7 billion units in 2019, representing a CAGR of 9.3%. We believe that our business will benefit from this projected growth in market demand.

We have a visionary and experienced management team.

Our senior management team comprises professionals that possess extensive technical and industry experience, which has enabled us to achieve continued business growth and success. Our chief executive officer, Mr. Wang, has over 15 years of experience in the coated glass industry. Mr. Wang is also the inventor of all of our proprietary technologies, which are either patented or pending patent registration. In addition, Mr. Zhao Haibo, head of our procurement department, and Mr. Yang Xudong, head of our sales and marketing department, each has approximately ten years of experience in the coated glass industry. Moreover, members of our senior management team have extensive experience in the areas of production, sales and business management. Leveraging their foresight and in-depth industry knowledge, our management team is able to formulate sound business strategies, assess and manage risks, anticipate changes in consumer preferences, and capture significant market opportunities.

Under the direction of our management, we have developed a set of corporate governance practices and standards that take into account key elements of best practices and standards for corporate governance as well as strong business and operational knowledge in China. We believe that our management team possesses the vision and in-depth industry knowledge required to anticipate and take advantage of market opportunities and to effectively prioritize and execute sound business strategies to maximize shareholder value.

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OUR BUSINESS STRATEGIES

Expand our scale of operations and strengthen our market leadership position

We focus on expanding our market share in China’s coated architectural glass market and CTP market to strengthen our market position. We believe that the successful development of our business is to a large extent dependent on our ability to continue expanding our operating scale in line with the expected increase in demand for Low-E glass as well as CTP module components.

As of the Latest Practicable Date, we had one operational production plant in Hongze Economic Development Zone, Huai’an, Jiangsu, which housed one Low-E glass production line with a total designed annual production capacity of 7.2 million m2 and one CTP module components production line with a total designed annual production capacity of 3.5 million units. In order to enhance our overall operating scale, we plan to build a new factory building at our current plant site to expand the total gross floor area of our factory buildings from 44,324.9 m2 to 88,324.9 m2, as well as to add a new production line for on-cell CTP module components, which will bring our total number of production lines from two to three. As of the Latest Practicable Date, we were in the process of developing and assembling such production line to expand into the new on-cell CTP market.

We plan to finance our expansion plan using cash flow from operating activities, bank loans and proceeds from the Placing. We intend to complete construction of the new factory building by July 2016, which will house our new production line. We believe the new production line will provide us with the expanded capacity that we will need to achieve significant economies of scale and meet the demands of our anticipated future growth, thereby strengthening our market position in China.

Further enhance our research and development capabilities

We believe that the continued enhancement of our research and development capabilities is essential to our future success. In order to continue to diversify our product portfolio, we plan to further develop low-temperature coating (低溫鍍膜) technology to manufacture new types of CTP module components, such as on-cell CTP and in-cell CTP module components. We believe this will enable us to further develop our market share for CTP module components and diversify our customer base. Using cash flow from operating activities, bank loans and proceeds from the Placing, we plan to continue to upgrade our research and development facilities by constructing a CTP research laboratory and purchasing new laboratory equipment and materials.

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In addition, we continue to work closely with customers on a regular basis in order to gain a better understanding of their product needs. We believe this close exchange of communication and information also enables us to keep abreast of developing trends and changing consumer preferences, which will enable us to continue tweaking and refining our processing techniques. Moreover, we plan to recruit additional engineers and technicians to support the various endeavors of our in-house research and development department. By further enhancing our research and development capabilities, we expect to further grow our business.

Penetrate the CTP market and extend the CTP production chain by optimizing our product mix

We seek to broaden and enhance our product portfolio by developing and improving our CTP module components portfolio. As part of our strategy of further penetrating the CTP market, we plan to develop on-cell CTP and in-cell CTP module components, as well as to expand our overall CTP module components production capacity. We plan to add one CTP module components production line, which we expect will become fully operational in January 2017. As of the Latest Practicable Date, we were in the process of developing and assembling such production line for on-cell CTP module components production.

We believe that our ability to offer on-cell CTP and in-cell CTP module components as well as our expanded overall CTP module components production capacity will contribute significantly to our revenue in the future, particularly in light of the rapidly emerging market for CTP used for electronic devices, such as smart phones and tablet computers. According to HCR, the demand for CTP will increase significantly in the future and the production value of CTP is expected to increase from US$30.0 billion in 2014 to US$36.5 billion in 2019, representing a CAGR of 4.0%. As the coating techniques used in the production of coated architectural glass, G+G CTP and OGS CTP module components are the same techniques used in the production of on-cell CTP and in-cell CTP module components, we believe that we are able to leverage our existing experience and know-how to develop high-quality on-cell CTP and in-cell CTP module components to penetrate this fast-growing market.

In addition, we plan to produce cover glass and develop display screen technologies, which will enable us to extend the CTP production chain and produce entire CTP modules as well as entire touch-screen display modules. We will leverage our knowledge in developing on-cell CTP module components when developing display screen technologies. We believe that our expansion into the CTP market and extension of the CTP production chain as well as the diversification of our product portfolio will enable us to increase our sources of revenue and broaden our customer base.

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Expand our sales and marketing coverage by establishing a new branch and broadening our customer base

We plan to grow our business by further developing our existing markets and entering selected new markets with sizable market opportunities and high-growth potential. We plan to continue to develop our market share for China’s coated architectural glass and CTP modules by establishing a branch in Shenzhen City, Guangdong Province by the end of 2016. We believe the opening of our branch in Shenzhen City, the largest CTP trade center in China, will enable us to quickly and efficiently communicate with, and respond to, potential customers for our CTP module components. We expect to add a total of eight employees to our Shenzhen City branch.

In addition, while maintaining and strengthening our relationship with current customers, we plan to broaden our customer base by targeting terminal manufacturers for electronic devices as our potential customers. Along with our expanded CTP module components production capacity and development of on-cell CTP and in-cell CTP module components, we plan to establish relationships with large-scale terminal manufacturers for electronic devices through conducting in-person visits and participating in exhibitions and enter into long-term sales agreements with them. We believe that our ability to meet such customers’ requirements and demands will enable us to diversify our customer base and further grow our business. In addition, we plan to broaden our customer base by expanding into other countries in Asia, such as India, which we believe is an important market for CTP module components, through participating in various exhibitions. Moreover, while continuing to focus on the production and sale of Low-E glass production equipment, we plan to market our CTP production equipment, which we expect will increase our revenue and profit margin as well as further diversify our customer base.

OUR PRODUCTS

During the Track Record Period, we focused on the production and sale of coated architectural glass products, coated glass production equipment, and CTP module components. The table below sets forth a breakdown of our revenue by segment for the periods indicated:

Year ended 31 December Six months ended 30 June 2013 2014 2014 2015 RMB’000 % RMB’000 % RMB’000 % RMB’000 % (Unaudited)

Coated architectural glass. 133,424 79.3 134,861 68.8 66,467 92.1 47,748 59.9 Coated glass production equipment...... 34,746 20.7 38,143 19.4 – – – – CTP module components . – – 23,180 11.8 5,683 7.9 31,927 40.1

Total revenue...... 168,170 100.0 196,184 100.0 72,150 100.0 79,675 100.0

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Coated Architectural Glass

Our coated architectural glass products consist of three product categories, namely, unprocessed coated architectural glass, tempered glass products and insulating Low-E glass units.

We provide two types of unprocessed coated architectural glass, namely, Low-E glass and solar control glass. For the years ended 31 December 2013 and 2014 and the six months ended 30 June 2014 and 2015, our sales of Low-E glass accounted for approximately 74%, 88%, 92% and 70% of our sales of coated architectural glass, respectively. Low-E glass and solar control glass are both energy-efficient coated glass used in real estate development and construction. Low-E glass is designed to have metallic compound coating which dramatically reduces heat transfer and reflects interior generated heat back into the room. Our Low-E glass has an emissivity in respect of long-wave infra-red energy of approximately 0.11. We only produce and sell offline Low-E glass, which is coated off the float glass production line. We provide our customers with Low-E glass of visible light transparency ranging from 40% to 80%. We offer clear Low-E glass as well as Low-E glass in various colors, including silvery blue, silvery gray, blue and green. During the Track Record Period, we also produced and sold a small amount of solar control glass. Solar control glass can reduce the level of solar energy, light and heat that passes through it.

In addition, we process our unprocessed coated architectural glass into tempered glass. Tempered glass, a type of safety glass, breaks into small particles instead of sharp pieces when shattered, which reduces the risk of severe injuries compared to ordinary glass. Tempered glass is produced by heating glass to its softening point and rapidly cooling the surface uniformly with air to adjust its surface tension and increase its strength. We manufacture tempered coated architectural glass by applying tempering treatment to our unprocessed coated architectural glass.

Moreover, we process our Low-E glass into insulating Low-E glass units. An insulating Low-E glass unit comprises one float glass pane and one Low-E glass pane. These glass panes are placed in parallel with each other and held apart at the appropriate distance by an aluminum spacer, which contains desiccant that absorbs humidity from within the air space. We may fill the space between the two glass panes of an insulating Low-E glass unit with air or argon gas to enhance its heat insulating properties.

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The photographs below show certain coated architectural glass products that we offer:

Our coated architectural glass products are mainly processed into transparent glazing material for use in the building enclosure, including windows in external walls, or used as internal partitions or architectural features.

For the years ended 31 December 2013 and 2014 and the six months ended 30 June 2014 and 2015, we sold a total of 5.2 million m2, 4.9 million m2, 2.4 million m2 and 2.2 million m2 of coated architectural glass products, respectively, the sales of which accounted for 79.3%, 68.8%, 92.1% and 59.9% of our total revenue for the same periods, respectively.

Coated Glass Production Equipment

We recorded our first sale of coated glass production equipment in 2012. We produce or purchase and sell individual equipment and/or consumable materials for coated glass production on a per unit basis, or assemble together production equipment for sale as a complete production line. Consumable materials include target materials (靶材) and components. A single complete coated glass production line generally comprises a fully- automated glass loading machine (全自動上片台), a cleaning transition device (清洗過渡台), six transfer chambers (轉換室), four coating chambers (鍍膜室), a fully-automated glass unloading machine (全自動下片台), a control center (控制中心), a testing center (檢測中心) and electric motors (電機). We design, assemble and build complete sets of coated glass production lines that are of standardized basic configuration with modifications tailored to customer orders, taking into account specifications such as the designed annual production capacity of the equipment and production speed. These coated glass production equipment manufactured by us have a theoretical useful life of approximately ten years, which are similar

– 120 – BUSINESS to that of our own production line for coated architectural glass. For the complete sets of coated glass production lines, it generally takes nine to twelve months for such production line to be assembled and accepted by our customers after the sale contracts are entered. For the individual equipment and consumable materials for coated glass production, it generally takes approximately three months for such equipment and materials to be delivered after the sale contracts are entered.

The photograph below shows a standard complete coated glass production line that we offer:

For the years ended 31 December 2013 and 2014, sales of our coated glass production equipment accounted for 20.7% and 19.4% of our total revenue for the same periods, respectively. We sold one complete Low-E glass production line in each of the years ended 31 December 2013 and 2014 to Customer A and Jieyang City Hongguang Coated Glass Co., Ltd.* (揭陽市宏光鍍膜玻璃有限公司), respectively. Customer A mainly focuses on sales to customers engaged in architectural glass products trading in Hebei Province, while Jieyang City Hongguang Coated Glass Co., Ltd.* (揭陽市宏光鍍膜玻璃有限公司) mainly focuses on sales to customers engaged in architectural glass products trading in Guangdong Province. For further background information, please refer to “– Customers.” We also recorded sales of individual equipment and consumable materials for coated glass production to a customer in Indonesia in 2013 and 2014. To the best knowledge of our Directors, the Indonesia customer mainly focuses on sales to customers engaged in architectural glass products trading in Indonesia. We did not record any sale of coated glass production equipment for the six months ended 30 June 2014 and 2015.

Because we also build complete coated glass production lines for sale, those of our customers who purchase complete sets of coated glass production lines from us could utilize such equipment to produce coated architectural glass, including Low-E glass and thus potentially become our competitors. However, our Directors believe that the competition between such customers and us is limited because: (i) demand for Low-E glass continues to be largely driven by favorable PRC government policies and the market is very fragmented; (ii) our ability to design, assemble and build complete sets of coated glass production lines and know-how enable us to continuously refine our production processes and coating techniques, offer high-quality coated glass and keep pace with market developments; and (iii) the coated architectural glass industry has a relatively strong regional nature and there was no material overlap between the targeted markets of such customers and ours during the Track Record

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Period. Our Directors confirm that we did not and will not sell complete sets of coated glass production lines to any customers based in Jiangsu during the Track Record Period and in the future to reduce potential competition.

CTP Module Components

Capacitive touch panel, or CTP, is a component of a touch-screen display module that senses a touch on the surface of the display module by measuring a change in electrical capacitance of its surface. As of the Latest Practicable Date, we produced conventional CTP module components, including G+G CTP module components and OGS CTP module components. The product life cycle of a CTP module depends on the life cycle of the final products, such as tablets and smart phones.

We commenced production of G+G CTP module components in March 2014. A G+G CTP module comprises two ultra-thin glass sheets, one of which is produced by us using Indium Tin Oxide, or ITO, to form a glass substrate for electrically conductive coating. Our G+G CTP module components consist of the glass substrate, ITO coating CTP glass and FPC for connecting the CTP glass to other components inside the electronic device. The other ultra-thin glass sheet is attached to the glass substrate as a cover glass by our customers after they purchase our G+G CTP module components.

We commenced production of OGS CTP module components in December 2014. OGS CTP modules are produced using one ultra-thin glass sheet that is both the cover glass and the glass substrate for electrically conductive coating. Our CTP module components are used in the production of touch-screen display module components in electronic devices. Our CTP module components are generally customized according to individual customer orders, taking into account specifications such as the dimensions and functionalities.

We also produce other CTP module components, including cover glass and ITO coating CTP glass.

The photographs below show certain CTP module components that we offer:

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We recorded our first sale of CTP module components in May 2014. For the year ended 31 December 2014 and the six months ended 30 June 2014 and 2015, our revenue generated from the sale of CTP module components was RMB23.2 million, RMB5.7 million and RMB31.9 million, representing 11.8%, 7.9% and 40.1% of our total revenue for the same periods, respectively. The table below sets forth a breakdown of our revenue from CTP module components by type for the periods indicated:

Year ended 31 December Six months ended 30 June 2014 2014 2015 RMB’000 % RMB’000 % RMB’000 %

CTP module components G+G ...... 16,649 71.8 1,384 24.4 17,549 55.0 OGS ...... 619 2.7 – – 7,370 23.0 Others(1) ...... 5,912 25.5 4,299 75.6 7,008 22.0 Total revenue from CTP module components ..... 23,180 100.0 5,683 100.0 31,927 100.0

Note:

(1) Others include cover glass and ITO coating CTP glass.

The table below sets forth a breakdown of our gross profit margin of CTP module components by type for the periods indicated:

Year ended 31 December Six months ended 30 June 2014 2014 2015 %%%

CTP module components G+G...... 29.0 23.9 30.1 OGS...... 40.9 – 42.9 Others(1)...... 17.4 15.5 17.5 Total gross profit margin of CTP module components . . 26.3 17.5 30.3

Note:

(1) Others include cover glass and ITO coating CTP glass.

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In addition, the various types of CTP module components that we produce and sell have different risk profiles due to their own nature or competitive landscape. The details of their risk profiles and applications are set out below:

CTP module components Risk profiles Applications

G+G • hard to be applied in low-end mobile phones middle- and high-end and various industrial mobile phones electronic devices because it is not light or thin enough • relative low gross profit margin compared to OGS CTP module components

OGS • stringent technical mid-range mobile phones, requirements tablets, personal computers • low yield rate and and other intelligent high cost electronic devices • OGS CTP technology still in the ascent stage

Others(1) • low-end technology various electronic devices • lower gross profit equipped with touch panels margin compared to other types of CTP module components

Note:

(1) Others include cover glass and ITO coating CTP glass.

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Product under Development

We are in the process of developing and assembling a new production line for on-cell CTP module components production. Our on-cell CTP will be produced by attaching the touch sensor directly onto the LCD cell without the need for an additional sheet of glass, thus reducing the overall thickness and weight of electronic devices. On-cell CTP also improves light transmission, thereby enhancing outdoor readability due to a reduction of air gaps in the panel. We expect to complete the construction of the on-cell CTP module components production line by September 2016, commence trial production on such production line by November 2016 and commence commercial production of on-cell CTP module components in January 2017.

SEASONALITY

As most of our customers were located in provinces and regions with relatively mild seasonal weather changes during the Track Record Period, our business was not subject to major seasonality fluctuations. However, we expect that our revenue will be lower in the first half of the year than the second half of the year, primarily because business activity levels in January and February in general is expected to be lower due to the Chinese New Year holidays.

PRODUCTION PROCESSES

In general, our production department is responsible for the production of our coated architectural glass and CTP module components. Our research and development department is responsible for the entire design, assembly and manufacture of our complete sets of coated glass production lines. Our quality control department conducts inspections during the production processes.

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Production Process of Coated Architectural Glass

The following diagram illustrates our production process for coated architectural glass products:

Float glass

Clean and dry

Environment transfer chambers

Film coating MSVD film coating chambers

Environment transfer chambers

Inspection

Unprocessed coated architectural glass

Cut, polish, clean and dry

Tempering Print “CCC” mark

Temper

Inspection

Tempered coated architectural glassNote

Float glass/tempered Low-E glass/tempered float glass Low-E glass

Cut, polish, clean and dry Insulating Low-E Fill desiccant and seal aluminum spacer glass unit production Fill argon gas (optional)

Inspection

Insulating Low-E glass unit Package

Inventory/sale

Note: For the production of tempered coated architectural glass of thicknesses above 8mm, float glass undergoes tempering before the film coating process.

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• Clean and dry – to produce coated architectural glass, float glass is first cleaned and dried.

• Environment transfer chambers – the float glass is placed into transfer chambers that transfer the coating environment from atmospheric environment to the vacuum environment necessary for film coating.

• MSVD film coating chambers – the float glass is then coated with film by MSVD film coating equipment in the film coating chamber. When producing Low-E glass, we utilize the silver sputtering target for silvering of glass. This step is the bottleneck of our production process of unprocessed coated architectural glass, which generally takes approximately 20 minutes.

• Environment transfer chambers – the work-in-progress is transferred from vacuum film coating environment back to atmospheric environment through the transfer chambers.

• Inspection – the coated architectural glass produced undergoes inspections before it is either moved into inventory for sale as coated architectural glass products or further processed into tempered coated architectural glass or insulating Low-E glass units.

The above five steps generally take approximately 25 minutes.

• Cut, polish, clean and dry – production process of tempered coated architectural glass of thickness of 8mm or below begins with cutting the coated architectural glass to be tempered to the size specified by the customer and edge polishing. The trimmed coated architectural glass is then cleaned and dried. For the production of coated architectural glass of thicknesses above 8mm, float glass undergoes tempering process before the coating process, which means it is first tempered to produce tempered float glass, before it is placed into the Low-E glass production line to be coated into tempered coated architectural glass.

• Temper – the trimmed coated architectural glass will be tempered in a tempering furnace.

• Inspection – inspections are performed on the tempered coated architectural glass produced before it is packaged for sale or before the tempered Low-E glass is used in insulating Low-E glass unit production.

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The above three steps generally take approximately five minutes.

• Cut, polish, clean and dry – we first cut, polish, clean and dry the float glass pane and the Low-E glass pane, each of which can be tempered or non-tempered.

• Fill desiccant and seal aluminum spacer – desiccant is then filled into an aluminum spacer. Interior sealant is then applied to the aluminum spacer and the two glass panes are attached to the spacer. Exterior sealant is then applied to seal the peripheral of the insulating Low-E glass unit.

• Fill argon gas (optional) – if argon gas filled insulating Low-E glass unit is to be produced, argon gas is then filled into the space between the two glass panes. If air filled insulating Low-E glass unit is to be produced, this step can be skipped.

• Inspection – finished insulating Low-E glass unit is then inspected before it is packaged for sale.

The above four steps generally take approximately five minutes.

Production and Assembly Process of Coated Glass Production Equipment

The following diagram illustrates the production and assembly process of a complete coated glass production line:

Production of engineering designs

Procurement/production of equipment and components

Production of chambers

Installation of equipment into chambers and individual testing of chambers

Shipping to customer

On-site assembly of complete coated glass production line

Trial production

Complete coated glass production line

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• Production of engineering designs – we manufacture the complete sets of coated glass production lines that are of standardized basic configuration with modifications tailored to customer orders. Our customers provide us with specifications which we use to design, assemble and build complete sets of coated glass production lines.

• Procurement/production of equipment and components – we produce some of the equipment and components in the complete coated glass production line and procure some of the equipment from equipment suppliers as agreed between the customer and us.

• Production of chambers – individual chambers are then produced.

• Installation of equipment into chambers and individual testing of chambers – the equipment will be installed onto the chambers. The chambers are then individually tested.

• Shipping to customer – tested chambers are then shipped to the customer.

• On-site assembly of coated glass production line – we send staff to the customer’s site to assemble and install the complete coated glass production line.

• Trial production – the finished complete coated glass production line undergoes trial production before it is accepted by the customer.

We produce and assemble the complete coated glass production line according to the timetable stipulated in the sales contracts, and it generally takes four to six months to complete the production and assembly of a complete production line.

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Production Process of CTP Module Components:

The following diagram illustrates our production process for CTP module components:

G+G CTP modules production process OGS CTP modules production process

Ultra thin glass sheet Ultra thin glass sheet

Strengthen

Coat, expose and etch ITO layer Coat, expose and etch ITO layer

Print protective coating Print protective coating

Cut Cut

Shape by CNC system

Press FPC Press FPC

Glue

Functionality test and inspection Functionality test and inspection

G+G CTP modules OGS CTP modules

Package Package

Sale Sale

We produce customized CTP module components according to our customer orders.

G+G CTP module components

Production of G+G CTP module components consists of the following six steps:

• Coat, expose and etch ITO layer – ultra-thin glass sheet is first coated with a layer of ITO and the ITO layer is patterned by etching. This step is the bottleneck of our production process of G+G CTP module components, which generally takes approximately two minutes.

• Print protective coating – a layer of protective coating is printed on top of the ITO layer.

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• Cut – the ultra-thin glass sheet is cut into required size according to customer orders.

• Press FPC – FPC is then pressed to attach to the CTP glass.

• Glue – related layers are combined with glue.

• Functionality test and inspection – we then perform functionality tests and inspections to ensure that our products meet requisite standards.

The production of a standard unit of G+G CTP module components generally takes approximately three hours.

OGS CTP module components

• Strengthen – the production of OGS CTP module components begins with strengthening of the ultra-thin glass sheet using chemical materials, such as nitrate of potash.

• Coat, expose and etch ITO layer – the first ITO layer will then be coated and etched to form pattern and is followed by the coating and etching of the first metal layer. This step is the bottleneck of our production process of OGS CTP module components, which generally takes approximately two minutes.

• Print protective coating – protective coating is then printed.

• Cut – the ultra-thin glass sheet is cut into required size according to customer orders.

• Shape by CNC system – CNC shaping is then used to shape the CTP glass.

• Press FPC – FPC is then pressed to attach to the CTP glass.

• Functionality test and inspection – we then perform functionality tests and inspections to ensure that our products meet requisite standards.

The production of a standard unit of OGS CTP module components generally takes approximately two and a half hours.

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PRODUCTION FACILITIES

Existing Production Facilities

We have one plant located in Hongze Economic Development Zone, Huai’an, Jiangsu that houses all of our factory buildings and production facilities. As of 30 June 2015, our plant consisted of two factory buildings that occupied a total gross floor area of 44,324.9 m2. Our production facilities for the production of coated architectural glass and CTP module components are located at First Factory Building, which occupies approximately 10,000 m2. Our production facilities for the production of certain components of coated glass production equipment are located at Second Factory Building, which occupies approximately 15,000 m2.

Production facilities for coated architectural glass

As of 30 June 2015, we had one Low-E glass production line, capable of producing both Low-E glass and solar control glass. Besides the Low-E glass production line, we also had additional production facilities for further processing of Low-E glass, comprising one production facility for tempered glass products production and two production facilities for insulating Low-E glass units production, as of 30 June 2015. We purchased all of our equipment from domestic PRC suppliers who procured the equipment from domestic PRC or overseas manufacturers. Our Low-E glass production line has an average age of approximately three and a half years and has a theoretical useful life of ten years. Our tempering furnace, the major equipment of our production facilities for tempered glass products, has an average age of approximately three years and has a theoretical useful life of ten years. Our insulating equipment, the major equipment of our production facilities for insulating Low-E glass units, has an average age of approximately three years and a theoretical useful life of ten years.

We purchased the Low-E glass production line from Nanjing Shunji in 2011 with a purchase price of RMB29.2 million. A single Low-E glass production line comprises six environment transfer chambers, four MSVD film coating chambers and various glass cleaning and drying equipment. All the chambers and equipment are connected together with an automated transport system and are controlled by a digital control center. The environment transfer chambers are equipped with vacuum pumps and the film coating chambers are equipped with MSVD film coating equipment.

Inspection of the Low-E glass production line does not require suspension of operation. This production line is halted only on an as-needed basis to replace consumable materials, such as target materials, chemical consumables and worn-out components, as well as to repair or replace out-of-order equipment. We conduct thorough checks on the production line and equipment to ensure their normal function. We conduct annual maintenance and inspection of all of our equipment. Our production department is responsible for monitoring the normal function of the production line and equipment from time to time and implementing our annual maintenance plans.

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For the years ended 31 December 2013 and 2014 and the six months ended 30 June 2014 and 2015, our sales of Low-E glass accounted for approximately 74%, 88%, 92% and 70% of our sales of coated architectural glass, respectively. The table below sets forth data relating to our Low-E glass production line for the periods indicated:

Year ended 31 December Six months ended 30 June 2013 2014 2014 2015 ’000 m2, except for percentage

Low-E glass production line Designed annual/semiannual production capacity(1) . . . 7,200 7,200 3,600 3,600 Production volume(2) ..... 5,031 4,840 2,408 2,190 Utilization rate(3) ...... 69.9% 67.2% 66.9% 60.8%

Notes:

(1) Designed annual production capacity was calculated based on 365 working days per year with 24 working hours per day. Designed semiannual production capacity was calculated by dividing the designed annual production capacity by two.

(2) Such production volume represents the total production volume of unprocessed coated architectural glass, namely Low-E glass and solar control glass, as the Low-E glass production line can also be used to produce solar control glass. The production of solar control glass on Low-E glass production line will not materially affect the designed annual production capacity of the Low-E glass production line.

(3) Utilization rate is calculated by dividing production volume for the year/period by designed annual/semiannual production capacity.

The utilization rate of our Low-E glass production line decreased slightly from 69.9% for the year ended 31 December 2013 to 67.2% for the year ended 31 December 2014, which is in line with the slight decrease in our orders of unprocessed coated architectural glass during the same period. The utilization rate of our Low-E glass production line decreased from 66.9% for the six months ended 30 June 2014 to 60.8% for the six months ended 30 June 2015 mainly attributable to the decreased orders of our coated architectural glass, which was primarily because the slowdown of the PRC macro economy has caused downstream demand for our product to decrease and competition in our industry to intensify in 2015.

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Production facilities for coated glass production equipment

Our production facilities for the production of certain components of coated glass production equipment are located at Second Factory Building, which occupies approximately 15,000 m2. Production facilities for coated glass production equipment include various cutting, shaping, milling and welding equipment, each of which undergoes maintenance on an as-needed basis. Our lathe and welding equipment, the major equipment of our production facilities for coated glass production equipment, has an average age of approximately three years and a theoretical useful life of ten years.

Production facilities for CTP module components

Our production facilities for CTP module components are located in a clean room at First Factory Building, which occupies approximately 3,000 m2. Entrances and exits to the clean room are protected by airlocks and air showers. As of 30 June 2015, we had one CTP module components production line for the production of both G+G CTP module components and OGS CTP module components. Our CTP module components production line has an average age of approximately one and a half years and has a theoretical useful life of ten years. We designed and assembled the CTP module components production line in-house utilizing equipment sourced from domestic PRC suppliers who procured the equipment from domestic PRC or overseas manufacturers.

The table below sets forth data relating to our CTP module components production line for the period indicated:

Year ended Six months ended 31 December 30 June 2014(1) 2014 2015 ’000 units, except for percentage

CTP module components Designed annual/semiannual production capacity(2) ...... 3,500 1,750 1,750 Production volume ...... 1,346 492 837 Utilization rate(3) ...... 46.1%(4) 28.1% 47.8%

Notes:

(1) We commenced the assembly of our CTP module components production line in 2013 and commenced commercial production in March 2014.

(2) Designed annual production capacity was calculated based on 350 working days per year with 16 working hours per day. Designed semiannual production capacity was calculated by dividing the designed annual production capacity by two.

(3) Utilization rate is calculated by dividing production volume for the year/period by designed annual/semiannual production capacity.

(4) Since we commenced commercial production of CTP module components in March 2014, we use the production capacity for ten months, which is 2,916,667 units, to calculate the utilization rate.

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The utilization rate of our CTP module components production line was 46.1% for the year ended 31 December 2014. The utilization rate of our CTP module components production line increased from 28.1% for the six months ended 30 June 2014 to 47.8% for the six months ended 30 June 2015, which is in line with the increased orders of our CTP module components during the same period. The utilization rate of our CTP module components production line during the Track Record Period was lower than the saturation rate for the CTP industry, which is approximately 70%, because our utilization rate is affected by the number of customer orders we received. As a new market player, we recently commenced the marketing of our CTP module components and have been gradually gaining recognition in CTP market.

For the eight months ended 31 August 2015, we sold 1.6 million units of our CTP module components, enabling us to achieve a utilization rate of 68.0% for the same period.

We completed the assembly of our CTP module components production line in 2014 and commenced our CTP module components production in the same year. The CTP module components production line includes coating and etching equipment for ITO layer, cutting equipment, CNC shaping and cleaning and drying machines. All the machines and equipment are connected together with an automated transport system and controlled by a digital control center.

Inspection of the CTP module components production line does not require suspension of operation. The CTP module components production line is halted on an as-needed basis to replace chemical consumables and worn-out components. We conduct thorough checks on the production line and equipment, which undergo annual maintenance, to ensure their normal function. Our production department is responsible for monitoring the normal function of the production line and equipment from time to time and implementing our annual maintenance plans.

Expansion Plan

In order to enhance our overall operating scale, we plan to build a new factory building at our current plant site in 2016, which will bring the total gross floor area of our factory space from 44,324.9 m2 to 88,324.9 m2. We also plan to optimize our CTP module components production process, and add a new production line for on-cell CTP module components, which will bring our total number of production lines from two to three. The total capital expenditure for the on-cell CTP module components production facilities is expected to be approximately RMB99 million.

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Our Directors believe that there is increasing demand for our CTP module components products. According to HCR, the technology life cycle can be divided into four distinct stages, namely, the research and development stage, the ascent stage, the maturity stage and the decline stage. G+G CTP technology, OGS CTP technology and on-cell CTP technology is at the maturity stage, the ascent stage and the research and development stage, respectively. For more information on the CTP market, please see “Industry Overview – China’s CTP industry.” We believe that there is a need to expand our production capacity of CTP module components to capture the market opportunities.

Development of existing G+G CTP and OGS CTP

In respect of our existing G+G and OGS CTP module components production line, we plan to optimize the production process through our research and development activities and improve the utilization rate. In addition, we aim to further diversify our product portfolio of CTP module components into on-cell CTP module components through adding a new production line. We expect customer orders that were received and confirmed after the Track Record Period to support our expansion plan through various sources, including, among others: (i) sales orders for G+G CTP module components of RMB16.1 million; (ii) sales orders for OGS CTP module components of RMB34.6 million; and (iii) sales orders for other CTP module components, such as ITO coating CTP glass, of RMB8.5 million. The deliveries pursuant to such sales orders have been or will be made in the second half of 2015. In addition, we have entered into two letters of intent with our existing customers for the purchase of our on-cell CTP module components of RMB70.0 million.

Risk factor of our expansion plan

Our expansion plan may result in a number of risks, including but not limit to, higher depreciation expenses and significant and unexpected difficulty in managing and operating new products’ production and sale businesses. For example, we estimate the additional amount of annual depreciation expenses for the new CTP module components production line to be RMB6.5 million and the depreciation period will commence upon the commencement of operation of the new production facilities. For more details, please see “Risk Factors – The implementation of our expansion plan may lead to higher depreciation expenses, which may adversely affect our profit margin.” and “Risk Factors – We have a limited track record of manufacturing and selling CTP module components, and as such, our plan to further expand into the CTP market may not be successful.” However, according to HCR, the production and sale of on-cell CTP module components are similar to those of G+G and OGS CTP module components in which we have experience. As a result, we believe that we will be able to rationalize our management and resources and do not expect our expansion plan to have any significant impact on our risk profiles and liquidity. Moreover, while we expect our direct labor cost to increase due to the increase in the number of our employees in relation to our expansion plan, we do not expect our expansion plan to have any significant impact on our administrative and other operating expenses.

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Profitability of new on-cell CTP module components production line

We also believe that, through the expansion plan, we will expand our production capacity and product offerings of CTP module components. As our overall profit margin of CTP module components increased from 17.5% for the six months ended 30 June 2014 to 30.3% for the six months ended 30 June 2015 due to adjustment of product mix, we expect our overall profit margin of CTP module components to continue to increase mainly because: (i) on-cell CTP module components have higher profit margin than our existing CTP module components products due to their high-end market position; (ii) we will continue to improve our technologies and accumulate operational experience; and (iii) HCR estimates the shipment of on-cell CTP modules in China will grow at a rate of approximately 15% from 2017 to 2019. Our expansion plan is based on our estimation on (i) annual revenue; (ii) gross profit margin; (iii) expected utilization rate of such production line; and (iv) operating costs of the on-cell CTP module components.

We are actively exploring the market of the on-cell CTP module components by meeting with our existing customers of CTP module components and researching the needs of the on-cell CTP modules market. We entered into two letters of intent with our existing customers for the purchase of our on-cell CTP module components of RMB70 million. The letters of intent do not represent a legally binding commitment or obligation to purchase our on-cell CTP module components in 2017 by these two customers. However, taking into account that these two existing customers have engaged in the processing and sales of on-cell CTP modules related products shortly after the launch of on-cell technology to the CTP market in 2013, according to HCR, and have consolidated their sales network, and based on the purchase order forecasts provided by these customers in relation to their needs, our Directors expect purchase orders of approximately 3.5 million units of on-cell CTP module components will be placed by these customers in the second half of 2017 pursuant to the letters of intent. We also estimate the gross profit margin of the on-cell CTP module components produced on this production line based on: (i) our historical gross profit margins of CTP module components, especially the G+G CTP module components and OGS CTP module components, for the year ended 31 December 2014 and the six months ended 30 June 2015; and (ii) the higher profit margin of the on-cell CTP module components (as a type of high-end CTP module components) than that of G+G CTP module components and OGS CTP module components, according to HCR.

As of the Latest Practicable Date, we were in the process of developing and assembling the production line for on-cell CTP module components production to expand into the new on-cell CTP market, and the total capital expenditure for the on-cell CTP module components production facilities is expected to be approximately RMB99 million. We intend to complete construction of the new factory building, and apply for requisite completion acceptances and make relevant filings by July 2016. The new factory building will house our new CTP module components production line.

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The total estimated capital expenditure for the new factory building and production line is approximately RMB99 million, and as of 31 August 2015, we had incurred capital expenditure of RMB52.0 million. We plan to fund the construction of the new factory building and production line using cash flow from operations, bank loans and the proceeds from the Placing. The details of our expansion plan are set out below:

Note:

(1) All had been incurred as of 31 August 2015 and no additional capital expenditure is expected to be incurred in 2015.

CUSTOMERS

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The following table shows our revenue contribution by geographical location for the periods indicated:

Year ended 31 December Six months ended 30 June 2013 2014 2014 2015 RMB’000 % RMB’000 % RMB’000 % RMB’000 %

Sales of coated architectural glass products: China ...... 133,424 79.3 134,861 68.8 66,467 92.1 47,748 59.9 Overseas...... – – – – – – – – Sales of coated glass production equipment: China ...... 30,598 18.2 34,584 17.6 – – – – Overseas(1) ...... 4,148 2.5 3,559 1.8 – – – – Sales of CTP module components: China ...... – – 17,134 8.7 5,683 7.9 16,434 20.7 Overseas(2) ...... – – 6,046 3.1 – – 15,493 19.4 Total revenue...... 168,170 100.0 196,184 100.0 72,150 100.0 79,675 100.0

Notes:

(1) For the years ended 31 December 2013 and 2014, we sold coated glass production equipment and consumable materials to one overseas customer located in Indonesia.

(2) For the year ended 31 December 2014 and the six months ended 30 June 2015, we sold CTP module components to one customer located in Hong Kong.

The main customers for our coated architectural glass products are glass processing companies, companies engaged in the production of glass windows and glass doors and decoration companies as well as trading companies. During the Track Record Period, we sold our coated glass production equipment to a float glass manufacturer, a glass processing company, and a Low-E glass manufacturer. The main customers for our CTP module components are engaged in the business of producing and processing CTPs for applications in electronic devices.

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The table below sets forth the details of our five largest customers for the year ended 31 December 2013:

Percentage of Year of Revenue from the our total commencement customer for the revenue for the Company Company Products sold to of business year ended year ended 31 Customers background domicile the customer Payment/credit terms relationship 31 December 2013 December 2013 RMB’000

Customer A A private Shahe City, A complete • Prepayment of 30% of the 2013 30,598 18.2% manufacturing Hebei Province coated glass contract price upon the signing company engaged in production line of the agreement the manufacturing, processing and sales • Six-month credit period for of various glass and each installment of the other construction remaining balance (except for materials retention)

• Retention of 10% of contract price

Hongze Sifang Industry and A private trading Hongze, Coated Three-month credit period for each 2012 23,666 14.1% Trade Co., Ltd.* company engaged in Huai’an, architectural delivery (洪澤四方工貿有限公司) sales of glass Jiangsu glass products products, chemicals and metal accessories

Huai’an Hongtong Plastic A private trading and Hongze, Coated Three-month credit period for each 2012 20,812 12.4% Products manufacturing Huai’an, architectural delivery Co., Ltd.* company engaged in Jiangsu glass products (淮安鴻彤塑料製品有限公司) sales of insulating glass and plastic products

Jieyang City Hongguang A private Jieyang City, Coated Three-month credit period for each 2013 17,742 10.6% Coated Glass Co., Ltd.* manufacturing Guangdong architectural delivery (揭陽市宏光鍍膜玻璃有限公 company engaged in Province glass products 司) the manufacturing, processing and sales of coated glass products and further processed glass products

Huai’an Jintai New Energy A private Hongze, Coated Three-month credit period for each 2013 10,869 6.5% Co., Ltd.* manufacturing and Huai’an, architectural delivery (淮安金泰新能源有限公司, trading company Jiangsu glass products previously known as Huai’an engaged in the Yutian New Energy Co., manufacturing and Ltd.* sales of beveled 淮安宇天新能源有限公司) glass, coated glass and insulating glass

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The table below sets forth the details of our five largest customers for the year ended 31 December 2014:

Jieyang City Hongguang A private Jieyang City, Coated For coated architectural glass: 2013 45,675 23.3% Coated Glass Co., Ltd.* manufacturing Guangdong architectural Three-month credit period for each (揭陽市宏光鍍膜玻璃有限公 company engaged in Province glass products delivery 司) the manufacturing, and a complete processing and sales coated glass For the complete coated glass of coated glass production line production line: products and further • Prepayment of 30% of the processed glass contract price upon the signing products of the agreement

• Three-month credit period for each installment of the remaining balance (except for retention)

• Retention of 10% of contract price

Huai’an Jintai New Energy A private Hongze, Coated Three-month credit period for each 2013 26,115 13.3% Co., Ltd.* manufacturing and Huai’an, architectural delivery (淮安金泰新能源 trading company Jiangsu glass products 有限公司, engaged in the previously known as Huai’an manufacturing and Yutian New Energy Co., sales of beveled Ltd.* glass, coated glass 淮安宇天新能源 and insulating glass 有限公司)

Nanjing Fortune-Lit Digital A private Nanjing City, Coated Three-month credit period for each 2012 18,848 9.6% Technology Industry Co., manufacturing Jiangsu architectural delivery Ltd.* company engaged in glass products (南京富特萊數碼科技實業有 the sales and 限公司) manufacturing of glass further processing solution and equipments

Hongze Sifang Industry and A private trading Hongze, Coated Three-month credit period for each 2012 16,546 8.4% Trade Co., Ltd.* company engaged in Huai’an, architectural delivery (洪澤四方工貿有限公司) sales of glass Jiangsu glass products products, chemicals and metal accessories

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Shenzhen City Keqibao A private Shenzhen City, CTP module Nine-month credit period for each 2014 10,879 5.5% Technology Co., Ltd.* manufacturing Guangdong components delivery (深圳市科旗寶科技有限公司) company engaged in Province the manufacturing and sales of mobile handsets, tablets and other electronic devices

The table below sets forth the details of our five largest customers for the six months ended 30 June 2015:

Percentage of our total Year of Revenue from the revenue for the commencement customer for the six months Company Company Products sold to of business six months ended ended Customers background domicile the customer Payment/credit terms relationship 30 June 2015 30 June 2015 RMB’000

New Technology Electronic A private Hong Kong CTP module Full payment in advance or six-month 2014 15,493 19.4% (HK) Company Limited manufacturing and components credit period for each delivery (新科技電子(香港)有限公司) trading company engaged in the manufacturing and sales of mobile phones components

Huai’an Jintai New Energy A private Hongze, Coated Three-month credit period for each 2013 9,031 11.3% Co., Ltd.* manufacturing and Huai’an, architectural delivery (淮安金泰新能源 trading company Jiangsu glass products 有限公司, engaged in the previously known as Huai’an manufacturing and Yutian New Energy Co., sales of beveled Ltd.* glass, coated glass 淮安宇天新能源 and insulating glass 有限公司)

Hongze Sifang Industry and A private trading Hongze, Coated Three-month credit period for each 2012 7,987 10.0% Trade Co., Ltd.* company engaged in Huai’an, architectural delivery (洪澤四方工貿有限公司) sales of glass Jiangsu glass products products, chemicals and metal accessories

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Shenzhen City A private Shenzhen City, CTP module Six-month credit period for each 2015 7,873 9.9% Chuangshenglong manufacturing Guangdong components delivery Technology company engaged in Province Co., Ltd.* the manufacturing (深圳市創盛隆科技 and sales of 有限公司) electronic and communication products

Jieyang City Hongguang A private Jieyang City, Coated Three-month credit period for each 2013 5,701 7.2% Coated Glass Co., Ltd.* manufacturing Guangdong architectural delivery (揭陽市宏光鍍膜玻璃 company engaged in Province glass products 有限公司) the manufacturing, processing and sales of coated glass products and further processed glass products

The decrease in sales to certain of our five largest customers from 2013 to 2014 was principally because: (i) Customer A, our largest customer for the year ended 31 December 2013, only purchased a complete coated glass production line from us in 2013, which is non-recurring; and (ii) some of the customers reduced the purchase from us based on their own business decisions as the glass industry is relatively fragmented and competitive. Changes of the volume of customer orders during the Track Record Period were caused by the customers’ ordinary business decisions and not related to any complaints or quality disputes in connection with our products.

For the year ended 31 December 2013, Customer A, our largest customer, who purchased a complete coated glass production line, was also our largest supplier who supplied us with float glass. For the year ended 31 December 2013, the amount of float glass we purchased from this customer accounted for 14.5% of our cost of sales and the complete coated glass production line sold to it accounted for 18.2% of our revenue. Our gross profit from the sale to this customer was RMB11.0 million for the year ended 31 December 2013. We have maintained a business relationship with this customer since 2012. In 2013, this customer entered into an agreement with us for the purchase of a complete coated glass production line as part of such customer’s plans to expand into Low-E glass production. This customer was our largest customer for the year ended 31 December 2013. Our Directors confirmed that the sale of the complete coated glass production line and the procurement of float glass from this customer were negotiated on an arm’s length basis. Other than this customer, none of the other five largest customers during the Track Record Period supplied goods to us.

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To the knowledge of our Directors, none of our Directors, their close associates or our Shareholders who hold more than 5% of our issued share capital had any interest in our five largest customers during the Track Record Period. Our Directors confirmed that, save as disclosed in the Prospectus, our customers are independent from us.

SALES AND MARKETING

Sales of Our Coated Architectural Glass

Overview

We sell our coated architectural glass products directly to our customers through our sales and marketing department and do not engage distributors or agents. Our sales personnel maintain direct contact with our customers and conduct on-site visits as well as participate in exhibitions. We typically enter into framework sales agreements with our customers. In addition, we also enter into individual sales agreements with our customers on a case-by-case basis. For the customers that we have entered into framework sales agreements with, the customers place purchase orders for each of their purchases from us.

Generally, each sales agreement sets forth details such as quality standards, the total amount or consideration of products to be supplied and delivery method. For the framework sales agreements, the sales prices are typically subject to individual negotiations when our customers place purchase orders. For the individual sales agreements, the sales prices are typically set forth in the agreements. Our customers generally request the coated architectural glass products to be available for collection by batches and specify the proposed collection date and quantity of coated architectural glass products to be collected in the sales agreements or purchase orders. We are required to provide products that meet the qualifications stipulated in our sales agreements or purchase orders and our customers have the right to examine the products prior to collecting our coated architectural glass products.

Pricing

We determine the prices of our coated architectural glass products by taking into consideration prevailing market conditions, market demand and market prices of similar products. In pricing our products, we also consider our raw material costs, production and processing costs, volume purchased by the customers and expected gross profit margin. Our sales and marketing department determines the price of our coated architectural glass. Sales agreements involving a discount to the determined price have to be approved by the head of our sales and marketing department.

For the years ended 31 December 2013 and 2014 and the six months ended 30 June 2014 and 2015, the average selling price of our coated architectural glass was RMB30.2 per m2, RMB32.5 per m2, RMB32.1 per m2 and RMB25.3 per m2, respectively. When we sold our coated architectural glass products in 2013, given our relatively short operating history in the industry, we priced our coated architectural glass products lower than the then average market

– 144 – BUSINESS price in order to achieve market acceptance and brand recognition, and to build up our bargaining power in the market and customer base. As such, we established our market position, which enhanced our bargaining power in 2014. In 2014, our management determined to increase the average selling price of our coated architectural glass products. After the upward adjustment, the average selling price of our coated architectural glass products was still lower than, notwithstanding the decrease of, the average market price of similar products in order to further enhance our bargaining power in the market. In 2015, the slowdown of the PRC macro economy has caused downstream demand for our product to decrease and competition in our industry to intensify and as a result, the average selling price of our coated architectural glass decreased. For the price trend of coated architectural glass products, please see “Industry Overview – China’s Coated Architectural Glass Industry – Competitive Landscape – Price trend of raw material and coated architectural glass” in this Prospectus.

Credit policy

We normally grant a credit period of three months to our customers. We may grant our customers of coated architectural glass a credit period of up to six months or separately negotiate repayment schedule based on the credit assessment on a case-by-case basis. We determine the length of the credit period granted based on the customers’ business scale, the length of their business relationship with us, their financial situation and their credit history. Our customers generally settle payment by telegraphic transfers (電匯) and letter of credit (承兌匯票). See “Financial Information – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Selected Items of the Consolidated Statements of Financial Position – Trade and other receivables.”

Delivery

In general, customers who purchase our coated architectural glass products collect the products from our plant. We occasionally deliver our coated architectural glass products to customers pursuant to the terms of the relevant sales agreements. When we are responsible for delivery, we deliver by our own trucks and bear risk of transportation. The transportation cost is factored into the contract price.

After-sale services, warranty and return policy

For customers that purchase our coated architectural glass, we generally grant a warranty period of one year during which we replace defective products with new products of the same specifications.

During the Track Record Period, there were no exchanges or refunds of our products resulting from quality issues and accordingly, we did not make any warranty provisions.

Sales of Our Coated Glass Production Equipment

Overview

We sell our coated glass production equipment directly to our customers through our sales and marketing department. Our sales personnel maintain direct contact with our customers and conduct on-site visits as well as participate in exhibitions. We enter into sales agreements with

– 145 – BUSINESS our customers for purchase of complete sets of coated glass production lines or individual equipment and consumable materials for coated glass production. Generally, the agreement sets forth details such as the specifications and quality standards of the coated glass production equipment, the volume and price of the coated glass production equipment to be supplied, payment terms and delivery method.

Pricing

We determine the price of our coated glass production equipment based on the production costs such as price of procured equipment and components, production costs of equipment and components produced by us and labor cost, combined with an expected gross profit margin based on prevailing market conditions. Our sales and marketing department determines the price of our coated glass production equipment while consulting our research and development department. During the Track Record Period, we sold two complete sets of production lines at prices of RMB35.0 million and RMB35.8 million, respectively.

Payment terms and credit policy

The payment structure for each sale of coated glass production equipment is determined on a case-by-case basis and agreed with individual customers. We generally require: (i) up to 40% of the contract price as prepayment upon the signing of the agreements; (ii) approximately 30% to 60% of the contract price by installments when all components of the production equipment arrive at place of delivery, or when the on-site assembly and trial run are completed; and (iii) approximately 10% to 30% of the contract price as warranty, which is generally for a period of one year beginning one month after the customer has commenced operation of such coated glass production equipment. Normally, we grant our customers a credit period of three to six months for each installment mentioned above. See “Financial Information – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Selected Items of the Consolidated Statements of Financial Position – Trade and other receivables.”

Delivery

During the Track Record Period for domestic customers, we either delivered the coated glass production equipment to our customer’s designated location or prepare the coated glass production equipment at our plant for the customer’s collection. For overseas customer, we delivered the coated glass production equipment to China Customs for the customer’s collection.

After-sale services, warranty and return policy

For our coated glass production equipment, we provide on-site assembly and trial run services before the coated glass production equipment are accepted by the customer. We also provide one-year warranty after the sale is completed. In general, upon acceptance of the coated glass production equipment, a customer is permitted to retain approximately 10% to 30% of the contract price, depending on the term of the contract, as a one-year product warranty beginning one month after such customer has commenced operation of such

– 146 – BUSINESS production equipment. During the one-year warranty period, we agree to provide free on-site maintenance services to the customers and guarantee to send our maintenance staff within 72 hours of notice of any quality issues. According to the sales agreements, after expiration of warranty period, we provide maintenance services to our customers at a charge on a project-by-project basis.

For the years ended 2013 and 2014, there were no expenses incurred in relation to provision of the maintenance services and as a result, we did not make any warranty provisions.

Sales of Our CTP Module Components

Overview

We sell our CTP module components directly to our customers through our sales and marketing department and do not engage distributors or agents. Our sales personnel maintain direct contact with our customers and conduct on-site visits. We do not enter into sales agreements with a term of more than one year with our customers. Instead, we enter into individual sales agreements with our customers on a case-by-case basis.

Generally, each sales agreement sets forth details such as product specifications, quality standards and the total amount to be supplied. We are required to provide products that meet the qualifications stipulated in our sales agreements and our customers have the right to examine the products prior to acceptance of our CTP module components.

Pricing

We take raw material costs, production costs and customer orders into consideration when determining the price of our CTP module components. Our sales and marketing department determines the price of our CTP module components. Sales agreements involving a discount to the determined price have to be approved by the head of our sales and marketing department.

We commenced commercial production of CTP module components in March 2014 and recorded our first sale of CTP module components in May 2014. For the year ended 31 December 2014 and the six months ended 30 June 2015, the selling prices of our various CTP module components ranged from RMB8 per unit to RMB350 per unit, depending on the complexity and functionality. For the price trend of CTP modules, please see “Industry Overview – China’s CTP Industry – Competitive Landscape – Price trend of raw material and CTP” in this Prospectus.

Credit policy

Generally, we grant our customers a credit period of up to six months after products are accepted by our customers. We may grant our customers of CTP module components a credit period up to nine months on a case-by-case basis. According to HCR, it is an industry norm to grant customers of CTP module components a credit period of six to nine months. We determine the length of the credit period granted based on the customers’ business scale, their financial situation and credit history, and our strategic need to promote sales of our products in the relevant market. Our customers generally settle payment by telegraphic transfers. See “Financial Information – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Selected Items of the Consolidated Statements of Financial Position – Trade and other receivables.”

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Delivery

For CTP module components, we generally arrange delivery to our customers and bear the cost and risk of transportation. We engage an independent third-party logistics company to deliver our CTP module components to the shipment destination designated by our customers. We choose the logistics company based on its experience, service quality and price.

After-sale services, warranty and return policy

According to the sales agreements, we generally allow our customers to exchange or return defective CTP module components if they report such defects to us within 30 days of receiving shipment. We generally will bear the damages caused by our defective CTP module components, if any.

During the Track Record Period, there were no exchanges or refunds of our products resulting from quality issues and accordingly, we did not make any warranty provisions.

Marketing

Our sales and marketing department, comprising 19 employees as of 30 June 2015, is responsible for developing new customer relationships, negotiating and entering into sales agreements and purchase orders and maintaining customer relationships. Our marketing activities include conducting in-person visits of existing and potential customers and participating in exhibitions.

Our sales and marketing personnel visit our existing customers from time to time to maintain business relationships, collect customer feedback on our products, and keep abreast of customers’ needs and the latest development of their business. Paying visits to existing and potential customers enable us to explore new business opportunities and understand market conditions such as our customers’ expected pricing strategies for different glass products. We also participated in China Glass Exhibition (中國玻璃展) in 2013 and 2014 to showcase our coated architectural glass products and coated glass production equipment.

RAW MATERIALS AND COMPONENTS, EQUIPMENT AND SUPPLIERS

Raw Materials and Components

The principal raw materials and components used in our production include:

• float glass and target materials used to produce coated architectural glass;

• steel and electronic equipment used in the production of coated glass production equipment and assembly of complete sets of coated glass production lines; and

• ultra-thin glass sheets, a type of float glass, and electronic parts and components used to produce CTP module components.

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For the years ended 31 December 2013 and 2014 and the six months ended 30 June 2014 and 2015, the amounts of our purchases of float glass, including ultra-thin glass sheets, were RMB65.8 million, RMB105.7 million, RMB42.1 million and RMB43.5 million, respectively, which accounted for 75.2%, 71.1%, 67.0% and 76.0%, respectively, of our total purchases of RMB87.5 million, RMB148.6 million, RMB62.8 million and RMB57.2 million, respectively.

Our raw materials and components are generally widely and readily available in the open market from a number of suppliers. During the Track Record Period, we sourced all of our raw materials and components from domestic PRC suppliers. We maintain long-term business relationships with our key suppliers to secure a stable supply of our raw materials.

Our procurement department is responsible for the purchase of raw materials and components and our finance department is responsible for maintaining an inventory to satisfy our production needs. The production needs are estimated according to our sales forecast and the sales orders received from our customers which must be fulfilled during the relevant period. Our policy is to maintain inventory of float glass of approximately 55 days.

We purchased the raw materials and components from a number of suppliers and did not enter into any supply agreement with a term longer than one year with them during the Track Record Period. Prices of our principal raw materials and components did not experience material fluctuation during the Track Record Period. We manage our exposure to the risk of price fluctuations by making frequent but small-batch orders of raw materials. We do not engage in any hedging transaction to protect us from price fluctuations in raw materials and components, and there is no guarantee that we will be able to pass on the increased costs to our customers if prices of our principal raw materials and components increase in the future.

For the sensitivity analysis of the impact in relation to changes in our cost of raw materials and components and the breakeven analysis, please see “Financial Information – Sensitivity Analysis.”

Equipment

The equipment that we use at our plant mainly includes cleaning machines (清洗機), coating equipment (鍍膜設備), tempering furnace (鋼化爐) and cutting machines (切割機) for the production of coated architectural glass products, electric welding machines (電焊機), lathe (機床) and cutting machines (切割機) for our production of coated glass production equipment, and coating equipment (鍍膜設備)