We are one of the top 20 building decoration service providers in the PRC in 2015, according to the Frost & Sullivan Report, with our headquarters located in Shenzhen, Guangdong Province. With almost 20 years of operating history, we have gained substantial experience and established a solid reputation in the building decoration industry in the PRC. We possess a broad range of the highest level of qualifications and licences in the building decoration industry and have been awarded “Top100 Enterprises in the PRC Building Decoration Industry* (中國建築裝飾行業百強企業)” for 11 consecutive years during the period from 2004 to 2014. According to the Frost & Sullivan Report,there were approximately 24,000 players in the building decoration industry in the PRC as of 31 December 2015, and we were ranked 18th with a market share of 0.07% in the building decoration industry and 6th with a market share of 0.09% in the medical building decoration industry in terms of sales revenue in the PRC in 2015. The medical building decoration sector accounted for 6.1% of the entire China public building decoration market in terms of revenue in 2015.
We provide our customers with professional and comprehensive building decoration services that mainly cover four areas: (i) building decoration works; (ii) electrical and mechanical installation works; (iii) curtain wall engineering works; and (iv) fire safety engineering works. We also offer customised and professional interior design and curtain wall design services. During the Track Record Period, we acted as a subcontractor and were engaged in approximately 867 projects (each with a contract value of more than RMB1 million) in the PRC, the total contract value thereof amounted to approximately RMB7,380.9 million and among which approximately 169 and 23 projects were each with a contract value of more than RMB10 million and RMB50 million, respectively. In 2014, our building decoration project for The University of Hong Kong-Shenzhen Hospital (previously known as Shenzhen Binhai Hospital (深圳濱海醫院)) was awarded “China Construction Engineering Lu Ban Prize* (中國建設工程魯班獎)” by the Ministry of Construction (建設部) and China Construction Industry Association (中國建築業協會), which is an award for construction work with the highest quality at a national level in the PRC. In recognition of our quality services, we were also awarded “National Construction Engineering Decoration Prize* (全國建築工程裝飾獎)” by CBD Association for construction excellence in respect of seven projects undertaken by us during the Track Record Period.
We have established an extensive service network by setting up branch offices and representative offices in 18 provinces, autonomous regions and municipalities in the PRC. As of the Latest Practicable Date, we had 18 branch offices in major cities and regions across the PRC such as Beijing, Chongqing, Guangzhou, Wuhan, Chengdu, Xining, Yinchuan, Wuxi and Huizhou, and five representative offices in Tianjin, Nanjing, Zhengzhou, Urumqi and Dunhuang. Our widely distributed service network covers Southern China, Eastern China, South-western China, North-western China, Northern China, Central China and North-eastern China. We place great emphasis on research and development. Since 2013, our Company has been awarded the status as “High and New Technology Enterprise* (高新技術企業)” by relevant PRC governmental authorities and has been enjoying a preferential EIT of 15%. While our certificate of“High and New Technology Enterprise* (高新技術企業)” expired in October 2016, our Directors believe that we will again be qualified as a “High and New Technology Enterprise* (高新技術企業)” and be granted the preferential EIT treatment upon re-examination of our status as “High and New Technology Enterprise* (高新技術企業)” which is expected to be completed by the relevant authorities in December 2016,given that (i) wehave completed the necessary filings for re-examination of our status as “High and New Technology Enterprise* (高新技術企業)” with the relevant authorities in August 2016; (ii) there has been no major change to the laws and regulations relating to the certification since the last certification; and (iii) our corporate status and research and development credentials have been enhanced since the last certification, Please refer to the section headed “Financial Information – Critical Accounting Policies and Estimates – (d) Income taxes and deferred taxation” for the basis of our Directors’ views. According to the Frost & Sullivan Report, as of 31 December 2015, we stood out from approximately 24,000 players in the building decoration industry in the PRC, to be awarded as one of the 20“High and New Technology Enterprises* (高新技術企業)”. Please refer to the section headed “Business – Research and Development” and “Business – Awards and Accreditations” for further details of our research and development capabilities and achievements. OUR COMPETITIVE STRENGTHS
We believe we have the following competitive edges: (i) we are one of the top 20 building decoration service providers in the PRC; (ii) we possess a broad range of the highest level of qualifications and licences and provide our customers with integrated building decoration services; (iii) we have an extensive service network in the PRC; (iv) we have strong research and development capabilities; and (v) we have a dedicated management team with extensive industry experience and a team of experienced project managers. Please refer to the section headed “Business – Competitive Strengths” for further details of our competitive strengths. OUR BUSINESS STRATEGIES
We intend to strengthen our market position in the building decoration industry in the PRC by implementing the following strategies: (i) further expansion of our service network in the PRC and continuation to expand our existing business; (ii) establishment of an internal online platform for central procurement of raw materials; (iii) strengthening our research and development capabilities and establishing a research and development laboratory; (iv) strengthening our internal design capabilities; and (v) enhancement of the efficiency of our internal IT system. Please refer to the section headed “Business – Business Strategies” for further details of our business strategies. OUR BUSINESS MODEL
We derive our revenue mainly from four areas of services: (i) building decoration works; (ii) electrical and mechanical installation works; (iii) curtain wall engineering works; and (iv) fire safety engineering works. We undertake building decoration and design works for a wide range of building and property types in the PRC, including commercial buildings, office buildings, industrial buildings, residential buildings, public buildings and infrastructure, and hotels.
