HIP21100046e Project Triumph 2nd ReAP

You should carefully consider each of the risks described below and all of the other

information contained in this Document before deciding to invest in the [REDACTED].On the occurrence of any of the following risks, our business, financial condition and

results of operations could be materially and adversely affected. In that case, the

[REDACTED] price of our Shares could decline, and you may lose all or part of your

investment.

Our operation involves certain risks, many of which are beyond our control. We havecategorized these risks and uncertainties into: (i) risks relating to our business and industry; (ii)risks relating to conducting business in China; (iii) risks relating to the Shares and the[REDACTED]; and (iv) risks relating to this Document.

RISKS RELATING TO OUR BUSINESS AND INDUSTRY

Our business is concentrated in Nanjing, Jiangsu Province and is therefore susceptible toany adverse economic or market development in the region. There is also no assurance thatwe will be able to replicate our business model to other regions of the PRC.

Our business is based in Nanjing, Jiangsu Province and we expect to continue to derivea majority of our revenue from this market. During the Track Record Period, substantially allof our revenue was generated from Nanjing. Historically, our business development and resultsof operations were benefited from the rapid economic growth in Nanjing and its surroundingareas, which witnessed rapid urbanization and increasing government spending in publicsector, thereby creating surging demand for landscaping and municipal construction services.As such, any material adverse change in the economic and political conditions in the areaincluding: (i) change in landscaping and municipal construction, such as the emergence ofcompetitors with stronger brand recognition and more financial resources than us; (ii) a suddendownturn in the local economy or slowdown in landscaping and municipal constructionactivities or significant contraction of spending in public sector; (iii) change in localgovernment policies, rules or regulations such as tightening measures on local governmentspending on new landscaping and municipal construction projects; or (iv) natural disasters,epidemics, other acts of god or breakdown in the transportation system, which may disrupt ourraw material supplies and delivery as well as project completion, may lead to a significantdecrease in the demand for our services or significantly increase our cost of operations, and ourbusiness, results of operations, expansion plan and prospects would be materially andadversely affected.

To diversify our revenue source, in addition to further expansion in Nanjing, we plan toexpand to other cities with significant growth potential in the Yangtze River Delta Regionwhere we have little or no operating experience. These new regions may have differentcompetitive landscape, business and regulatory environments, market conditions andcustomers’ preferences. Potential customers in these regions may not be familiar with us andwe may need to build up our reputation in such markets through making greater investmentsin participation into the local projects than local competitors, setting up branch offices,

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

attending the industry events of landscaping and municipal construction industry, andcollecting valuable industry information to increase our visibility. As a result, we cannot assureyou that we will be able to replicate our success to other regions of the PRC.

Our contracts are mainly awarded through open tendering and we do not have long-term

commitments with our major customers. Failure to obtain new contracts from tendering

could materially affect our financial performance.

Our relationships with our customers are mainly contract-based. Our customers are under

no obligation to continue to award contracts to us in the future and there is no guarantee that

we will be able to secure new contracts in the future. As such, our major customers do not have

long-term commitments with us, and the number and scale of contracts and the amount of

revenue that we are able to derive therefrom can vary significantly from period-to-period. We

cannot assure you that we will be able to maintain or improve business relationships with our

existing customers and any of them may terminate their respective business relationships with

us at any time. Any material difficulty in securing projects from our customers, termination or

significant reduction in the number or contract value of the projects secured from them could

cause our revenue and profits to decrease significantly. If any of the foregoing events occurs,

our financial condition and results of operations may be materially and adversely affected.

In the tendering process, we have to prepare and submit a tender bid and sign contract for

new projects only if our bid is successful. For details of our tender success rates, please refer

to the section headed “Business – Our Business Operations – Success rate of tender” in this

Document. Our tender success rate is affected by a range of factors, such as our pricing and

tender strategy, customers’ tender evaluation standards, our competitor’s pricing, and the level

of competition. As such, we cannot assure you that every bid submitted by us in the tenders

will be successful, and there is no guarantee that we will be able to achieve a tender success

rate in the future that is similar to those during the Track Record Period. In the event that we

are unable to secure new contracts of similar or larger values or similar number of contracts

on a continual basis, our business and results of operations may be materially and adversely

affected.

Any occurrence of force majeure events, natural disasters or outbreaks of contagious

diseases in the PRC may have a material adverse effect on our business performance and

results of operations.

Our business could be adversely affected by natural disasters or outbreaks of epidemics,

which may affect the procurement of raw materials and construction of our projects.

Epidemics, pandemics or outbreaks or escalation of diseases, including, among others, Severe

Acute Respiratory Syndromes (SARS), avian influenza, swine flu (H1N1), novel coronavirus

in 2019 (COVID-19) and other diseases may affect the livelihood of people in the PRC as well

as others in the entire world. We cannot guarantee that we will be able to adequately control

the impact of such events, or secure alternative workforce to fulfill our project progress in a

timely and cost-effective manner, or at all. These natural disasters, outbreaks of contagious

diseases, and other adverse public health developments in the PRC could severely disrupt our

RISK FACTORS

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business operations by restricting site constructions and delaying delivery of our raw materials,

impact the productivity of our workforce, which may materially and adversely affect our

business, financial condition and results of operations.

For example, the outbreak of the COVID-19 pandemic has endangered the health of many

people residing in China and significantly disrupted travel and the local economy across the

country. These events may also materially impact our industry and cause temporary closures

of many businesses, including our suppliers and customers, which would severely disrupt our

business operations. The COVID-19 pandemic, if it is prolonged, may adversely affect our

ability to discharge obligations under existing contracts and our customers’ willingness to

continue to perform the contract with us, which, in turn, may adversely affect our financial

condition in the upcoming financial years. Our operations could be further disrupted if any of

our employees were suspected of contracting a contagious disease, since this could require us

to quarantine some or all of our employees and disinfect the facilities used in our business

operations. The landscaping and municipal construction industry in the PRC may be adversely

impacted. The development of this pandemic is beyond our control. We expect that if such

pandemic continues for a prolonged period of time, our business, results of operations and

financial condition may be materially and adversely affected.

A significant portion of our revenue is derived from our five largest customers in terms

of revenue generated.

During the Track Record Period, our customer base was to a certain extent concentrated.

Our revenue generated from contracts with our five largest customers accounted for 56.0%,

75.7%, 72.9% and 80.9% of our total revenue for the years ended 31 December 2018, 2019,

2020 and the six months ended 30 June 2021, respectively. During the Track Record Period,

our major customers were state-owned enterprises, local governments and private enterprises

for our provision of landscaping and municipal construction services. These major customers

may continue to account for similar or even higher proportion of our revenue in the future. If

there is any deterioration in our major customers’ businesses, the number of projects awarded

to us may also decline correspondingly.

There is also no assurance that any of our major customers will maintain the current

business relationship with us upon the expiry of our existing contract and engage us in the

future with similar terms. If the number of projects awarded to us by any of our major

customers reduce significantly or they cease their business relationships with us, we cannot

assure you that we would be able to find new customers on comparable terms, or at all, in

which case our business, operating results and financial position may be materially and

adversely affected.

In the event of defaulting payments by any of our major customers, we may be unable to

recover significant amounts of receivables and thus our cash flow, business and financial

position could be adversely affected. We may not be able to meet our working capital

requirement if we experience significant increase in trade receivables and accrued contract

revenue. We also cannot assure you that we can diversify the composition of our customer base.

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Our operating results may be significantly affected by changes in the prices and

availability of raw materials.

For some landscaping and municipal construction projects undertaken by us, we are

responsible for the procurement of raw materials, which principally include plants, saplings

cement, steels, timbers, pipes and stones. Generally, the raw materials purchased by us shall

comply with the special terms of the contract and the project design as well as the customer’s

relevant standards and requirements. We shall provide the product qualification certificate and

breakdown of purchased materials to the customer for his review. We may also be required to

purchase the designated materials from the owner of the project according to the requirements

of the contract. For the years ended 31 December 2018, 2019, 2020 and the six months ended

30 June 2021, our cost of raw materials accounted for 40.8%, 44.8%, 46.3% and 59.0%,

respectively, of our cost of sales. The profitability of our operations depends on our ability to

continue to procure high-quality and sufficient raw materials from our suppliers on a timely

basis and at competitive prices. Supply of raw materials may be subject to fluctuation for

reasons beyond our control, such as climatic changes, greater industry demand and breakdown

in the transportation system, leading to the shortage of supply and hence delay in our project

schedule. We cannot assure you that the prices of raw materials will remain stable or there

would not be any shortage or disruption in the supply of raw materials required by us in the

future. Our ability to secure main raw materials with competitive price may also be affected

by any change in business relationship with our major suppliers. We also cannot assure you that

our major suppliers will not consolidate their business, such that they may have stronger

bargaining power when negotiating a contract with us. Any loss of major supplier and our

inability to find alternative supplier for the required raw materials with commercially

acceptable terms in a timely manner would disrupt our operations and increase our cost of raw

materials to some extent. Any significant increase in our cost of raw materials and our inability

to pass on the increased cost to our customers could have a material adverse effect on our

business, financial condition and results of operations.

Any material discrepancies between the estimated costs and the actual costs ultimately

incurred may materially and adversely affect our financial condition and results of

operations.

Generally, our initial contract value is mainly determined by reference to our tender

documents and is fixed at the time a project is awarded to us. We are responsible for our costs,

and our ability to achieve our target profitability on any project depends on our ability to

accurately estimate and control these costs. Although we could usually acquire those main raw

materials one to three weeks in advance to avoid a sudden change in price, we cannot assure

that it could adequately protect us in the event of a cost overrun. The total costs we incur on

each project could be affected by a variety of factors, including fluctuations in the price of raw

materials, variations in labor costs during the term of a contract, changes in project scope or

conditions and the time of delivery. If our costs for a project significantly exceed its contract

value and any price adjustment provisions in the relevant contract do not adequately cover the

cost overrun, we may incur losses, which could materially and adversely affect our financial

condition and results of operations.

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Our cash flows may deteriorate due to potential mismatches in time between receipt of

progress payments from our customers, and payments to our subcontractors and suppliers,

and we recorded negative operating cash flow for the years ended 31 December 2018 and

2020.

Our cash inflow is dependent on prompt settlement of progress payments and timely

release of retention monies from our customers. Turnover days of our average trade receivables

were 204 days, 209 days, 189 days and 182 days for the years ended 31 December 2018, 2019,

2020 and the six months ended 30 June 2021, while turnover days of our average trade payables

were 269 days, 305 days, 247 days and 185 days for the same period. We did not experience

any material cash flow mismatch during the Track Record Period. However, even if our

customers settle such payments on time and in full, we cannot assure you that we would not

experience any significant cash flow mismatch in the future. We may incur negative operating

cash flow. For the years ended 31 December 2018 and 2020, our net cash used in operating

activities amounted to RMB10.2 million and RMB46.0 million, respectively. If there is any

significant and substantial cash flow mismatch, we may have to raise funds by resorting to

internal resources and/or banking facilities in order to meet our payment obligations on time

and in full, which may adversely affect our liquidity and financial condition.

Our financial performance may be affected by the recoverability of trade receivables and

contract assets.

Contract assets include retention monies and construction works performed but not yet

billed. While the Group estimates the amount of provision for expected credit losses on trade

receivables and contract assets based on reasonable and supportable information that is

available at the reporting date about past event, current conditions and forecasts of future

economic conditions without undue cost or effort, there is no assurance that the Group will be

able to recover the full amount of trade receivables and contract assets. If we are not able to

do so, our results of operation, liquidity and financial position may be adversely affected. For

more details of our contract assets please see “Financial Information – Analysis of Various

Items from the Consolidated Statements of Financial Position – Contract assets” in this

Document.

We may fail to realize return or suffer liquidity risks from our short-term investments

measured at amortized cost.

During the Track Record Period, we invested in short-term investments measured at

amortized cost, which the wealth management products were purchased from commercial

banks in the PRC listed on the Shanghai Stock Exchange. As of 31 December 2018, 2019, 2020

and 30 June 2021, all of the wealth management products were denominated in RMB and

principal guaranteed and carried interest at a fixed rate of 3.70% to 4.35% per annum. The

amount of such investments as of 31 December 2018, 2019, 2020 and 30 June 2021, was

RMB40.0 million, nil, RMB41.5 million and nil, respectively. The performance of our

investments relies heavily on our investment judgements and decisions based on our

assessment of current and future market conditions. We cannot assure you that our investments

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will be profitable in the future. If we fail to evaluate investment products properly or to

effectively minimize losses while capturing gains, or our forecasts do not conform to actual

changes in the market conditions, our investment may not achieve the investment returns we

anticipate or we may even suffer material losses. If our business operations require a large

amount of cash, our investments in wealth management products with fixed redemption periods

may lead us to be exposed to liquidity risks, thereby resulting the inability to seize business

development opportunities. In some extreme circumstances, the bankruptcy of commercial

banks may also prevent us from getting back the principal. All of the above situations could

materially and adversely affect our business, financial conditions or results of operations.

We may be subject to penalties from the PBOC as a result of providing loans to third

parties during the Track Record Period.

We provided loans, which were all non-trade, unsecured, non-interest bearing and

repayable on demand, to third parties during the Track Record Period. As of 31 December 2018

and 2019, our loans to third parties amounted to RMB22.7 million and RMB28.0 million,

respectively, while we did not have loans to third parties as of 30 June 2021. As of the Latest

Practicable Date, all the loans to third parties were fully settled. Our PRC legal Advisors have

advised us that the provisions of such loans did not fully comply with the PRC laws and

regulations. According to the General Lending Provisions (《貸款通則》) issued by the PBOC,

only financial institutions may legally engage in the business of lending services or disguised

lending services, and loans between companies that are not financial institutions are prohibited.

Enterprises, which offer loans but are not financial institutions, may be subject to a fine in the

amount equivalent to one to five times of the income generated (being interests charged) from

lending activities. However, according to the Provisions of the Supreme People’s Court on

Several Issues concerning the Application of Law in the Trial of Private Lending Cases (《最高人民法院關於審理民間借貸案件適用法律若干問題的規定》) (the “Provisions”), loan

agreements between companies, which are not financial institutions, shall be classified as

private lending contracts and should be valid if such loans are for business operation purposes

and do not fall into situations leading to invalidity of a contract under the Civil Code (《民法典》) and the Provisions. The people’s courts in the PRC shall support the claim by the lender

for the payment of the interests under the lending contract, where the annual interest rates

agreed by the parties to the lending contract does not exceed four times of the one-year loan

prime rate at the time the private lending contract is established. Our PRC Legal Advisors are

of the view that the likelihood of us being penalized in respect of the above-mentioned loans

pursuant to the General Lending Provisions is very low under the condition that there are no

material changes in current laws and regulations, interpretation or implementation thereof in

the PRC. Nevertheless, the final determination of the relevant regulatory authorities could be

different, therefore we cannot assure you that we may not to be subject to penalties from the

PBOC as a result of our provision of abovementioned loans to third parties during the Track

Record Period. Any of these penalties could have a material adverse effect on our business,

financial position and results of operations.

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Our delay in the completion of projects undertaken by us could lead to litigation,compensation and additional costs, which may adversely affect our business, financialcondition, results of operations and reputation.

We are required to complete each project according to the schedule as agreed between ourcustomers and us. If we fail to complete the project within an agreed timeframe, we may beliable to compensate our customers for losses or damage caused by the delay. For the projectsundertaken by us, the construction contracts might contain a penalty clause for late delivery ofwork, which generally calculated on the basis of contract value. Any claim for the damages asa result of the delay in the completion of the projects will affect our profitability, if anextension of time is not granted by our customers.

Project delay is not uncommon in the construction industry. During the Track RecordPeriod, we did not have any material dispute in relation to construction project delay. However,we can not assure you that we can complete every construction project on time in the futureor receive an extension of time granted by our customers. Any failure on our part to completea project in a timely manner could harm our reputation in the industry and hinder our abilityto win future contracts, and as a result, our business, financial condition and results ofoperations could be materially and adversely affected.

We have limited control over the quality, availability and performance of our constructionsubcontractors.

For our landscaping and municipal construction services, we normally hire laborsubcontractors and professional subcontractors as our construction subcontractors. We adopt aseries of strict measures to conduct regular quality management of our subcontractors’ work.However, we cannot guarantee the performance and work quality of our constructionsubcontractors as we may not be able to monitor the daily operations of our subcontractors asdirectly and efficiently as we do with our own operations. If a construction subcontractor failsto meet our quality standards or breaches our subcontracting agreement, or if we are unable totimely hire alternative construction subcontractors on favorable terms, our operations may bedelayed, which could harm our reputation and adversely affect our business, financial conditionand results of operations. Moreover, we may be subject to additional costs if we are requiredto hire alternative construction subcontractors, which would lower the efficiency andprofitability of our operation.

In addition, we may be required to bear the liability arising from any defects in ourconstruction subcontractors’ work and thus may be subject to claims arising from any suchdefective work. We may attempt to seek indemnity from relevant construction subcontractorsin the event a liability claim is brought against us with respect to their performance, but wemay be required to compensate our customers first, which happens before we are able torecover such amounts from the involved subcontractors. In the event that we are unable to seekindemnity from our construction subcontractors or we remain uncompensated for a protractedperiod of time, we will be required to bear significant financial burdens, in which case ourbusiness, financial condition and results of operations could be materially and adverselyaffected.

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We relied on our professional subcontractors to provide certain construction services.

During the Track Record Period, we engaged professional subcontractors from time to

time to provide certain construction services, mainly include the construction of earthwork (土石方), rockery (假山), steel structure (鋼結構), antiseptic wood (防腐木) and simulated lawn

(仿真草坪), due to either the lack of relevant qualification(s) or the execution efficiency of the

project, which is common in our industry. We have maintained good relationships with our

professional subcontractors throughout the years of our operation. However, professional

subcontractors may not be readily available when we need to outsource our construction work.

Our ability to complete our projects on time may be impaired if we are unable to secure

qualified professional subcontractors. If in the event that we have disputes with, or lose the

services of, any of our existing professional subcontractors, we may not be able to find suitable

alternative professional subcontractors on a timely basis to complete the work, which could

adversely affect our business, financial condition and results of operations. As we do not enter

into any framework agreements with our professional subcontractors, there is no assurance that

our professional subcontractors will maintain the current business relationship with us in the

future. Any deterioration in the business relationship or termination of business relationship

with our professional subcontractors may adversely affect our financial position if we fail to

find replacement in time or on similar terms. And there is no assurance that we will obtain such

qualifications to undertake certain work by ourselves in the future.

We are exposed to risks associated with entering into contracts with local governments in

the PRC, and our performance may be significantly affected by government spending on

infrastructure and other projects.

For the years ended 31 December 2018, 2019, 2020 and the six months ended 30 June

2021, revenue generated from public landscaping construction service and municipal

construction service accounted for 96.1%, 85.2%, 98.2% and 100.0% of our total revenue,

respectively. To a great extent that our major projects are funded by state-owned enterprises

and local governments, they may be subject to delays or changes as a result of changes in local

governments’ budgets or for other policy consideration. The spending on infrastructure and

other construction projects by local government has historically been and will continue to be,

cyclical in nature and vulnerable to fluctuate in line with the development of the PRC economy

and changes in local government policies. As a result, we have significant exposure to risks

associated with concentrating with local governments in the PRC. Changes in governmental

budgets and policies relating to our projects and any deterioration in the liquidity and cash flow

of local governments, which are our customers, could result in delays in project

commencement or completion.

Furthermore, in some circumstances, local governments may require us to: (i) upgrade our

construction methods, equipment, or other performance terms; (ii) direct us to reconfigure our

designs or purchase specific equipment; or (iii) undertake additional obligations or change

other contractual terms, thereby subjecting us to additional costs.

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Moreover, any disputes with governmental entities and other public organizations could

potentially result in contract termination if the disputes are unresolved. Such disputes may take

a considerably longer period to resolve than disputes with counterparties in the private sector.

Payments due to us from these entities and organizations may be delayed as well. If the

government entities or other organizations terminate the contract with us, our projects could be

reduced, our business plans may need to be modified and our business in this area may be

materially and adversely affected.

We may be required to pay liquidated damages due to breach of contract terms in relation

to subcontracting.

During the Track Record Period, we entered into the subcontracting agreements with our

customers on a project-by-project basis. Usually, we were not allowed to subcontract certain

parts of our projects without the permission from our customers. If we breach the contract

terms, we may face claims against us for liquidated damages from them.

As advised by our PRC Legal Advisors, if we breach the contract terms, we may be liable

for confiscation of performance guarantee or subject to deduction of part of the subcontracting

contract amount. During the Track Record Period and up to the Latest Practicable Date, we

have one pending litigation arising from our breach of subcontracting. A subcontractor entered

into proceedings against us on 23 June 2021, demanding compensatory damages of RMB0.7

million, which is the maximum amount of damage we may be held severally and jointly liable

with our co-defendant. As of the Latest Practicable Date, the case is in trial stage and pending

for judgement. There is no assurance that we may not be involved in such potential dispute with

relevant parties in the future. Any claims due to our failure to meet the subcontracting

requirements of the contracts could cause us to pay significant liquidated damages, which

would adversely affect our liquidity, cash flows, our business and reputation.

We are subject to covenants under certain banking facilities and we may not be able to

comply with them all the times.

During the year ended 31 December 2019, we did not comply with the covenant that

requires us to obtain the bank’s written consent prior to the changes in our shareholding

structures in respect of certain bank borrowings with an aggregate carrying amount of

RMB13.0 million, which became repayable on demand and were included in the current

liabilities. As of 31 December 2019, such bank borrowings were fully settled. See “Financial

Information – Indebtedness and Contingent Liabilities” in this Document for more details. Our

banking facilities are subject to certain covenants. We cannot assure you that we will not

breach any covenants under the respective loan agreements in the future, or that lending banks

will not accelerate the repayment obligations or enforce other remedies against us. If we are

required to make early repayment, our liquidity position may be materially affected. Further,

if we fail to renew the existing or obtain new bank borrowings due to failure to fulfill the

covenants in the future, our business, results of operations, liquidity and financial position may

also be materially and adversely affected.

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Deterioration in our brand names and corporate image could adversely affect our

business.

According to Frost & Sullivan, we were the second largest landscaping service provider

in terms of revenue from landscaping construction projects in Nanjing in 2020. The Company’s

ability to secure new projects depends heavily upon our brand and company image as we

generally obtain our business by tendering. We have obtained and maintained an increasingly

high credit rating and ranking by our strong track record of marketing activities, which

enhanced our success rate of tender and bargaining power. Maintaining and enhancing our

brand recognition and reputation depends primarily on the efficiency and quality of our

projects, as well as the level of customer satisfaction and loyalty. Deterioration in our brand

names and corporate image could result in the loss of customers or lead to increasing difficulty

to be awarded new projects in the tendering process. In the event that: (i) any customer,

state-owned company or private company is not satisfied with our work; (ii) any delay in

completing a project because of the quality of our work or other parties; and (iii) any party

raises any complaint regarding the Company which comes to the attention of the public, our

existing or potential customers, the business, brand and reputation of the Company may be

adversely affected, which will in turn adversely affect our growth prospects and financial

condition.

We may suffer loss from EPC projects in the future.

According to Frost & Sullivan, with the maturation of the landscaping market in Jiangsu

Province, the landscaping industry is moving towards consolidation and higher concentration,

and the landscaping companies are committing more resources into EPC models. The EPC

model refers to the business model in which contractors are responsible for all activities,

including design, procurement, installation and commission. Generally, the contractors are

responsible for the management and control of the progress, cost, quality and safety of the

project, and shall deliver a functioning facility or asset to their clients. As state-owned

enterprises and local governments are our substantial customers, we are seeking different

opportunities to diversify the cooperation with them. In the future, we plan to cooperate with

local governments and state-owned enterprises in various forms, especially engaging in more

EPC projects.

While EPC presents to us attractive business opportunities, if we undertake any project

on an EPC basis in the future, we will be exposed to credit and liquidity risks, such as the

inability of our customers to make payment on time, or at all, significant increase in our

financing cost, and inaccurate estimate of the project’s performance, as result of which, the

profitability and prospects of the EPC projects undertaken by us and our liquidity will be

materially and adversely affected. As we plan to undertake more construction projects under

the EPC model, we will be exposed to the credit and liquidity risks arising from the potential

default of our customers.

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Moreover, the occurrence of EPC in the PRC landscaping and municipal construction

industry is relatively recent, and we have limited experience in assessing and managing the

risks particular to EPC. Our inability to execute or handle EPC projects may materially and

adversely affect our business, financial condition, results of operations and prospects.

Our failure to maintain or upgrade the relevant licenses, qualifications, certificates and

permits would materially and adversely affect our ability to conduct or expand our business.

We have obtained all relevant licenses, qualifications, certificates and permits required

for our landscaping and municipal construction services. These licenses, qualifications,

certificates and permits held by us are subject to periodic renewal and/or reassessment by the

relevant PRC government authorities. We intend to renew or upgrade of these licenses,

qualifications, certificates and permits when required by applicable laws, rules, and

regulations. However, the standards of such renewal or reassessment may change from time to

time. There is no assurance that we will be able to successfully renew or upgrade all of these

licenses, qualifications, certificates and permits upon their expiry in the future. Any inability

to renew or upgrade any licenses, qualifications, certificates and permits that are material to

our operations may severely disrupt, as well as prevent us from conducting our business.

Furthermore, if any interpretation or implementation of the relevant regulations or new

regulations requires us to obtain additional licenses, qualifications, certificates and permits,

there is no assurance that we will successfully obtain them in the future. Even if we receive

such licenses, qualifications, certificates and permits, there may be significant additional costs

and expenses involved which may materially and adversely affect our financial condition and

results of operations.

Moreover, we are subject to regular inspections, examinations, inquiries, and audits by

the regulatory authorities as part of the process of maintaining or upgrading the various

licenses, qualifications, certificates and permits required for the construction projects. If any

of our projects or facilities fails to satisfy such inspections requirements, our reputation,

business, financial condition and results of operations may be materially and adversely

affected.

We may be involved in intellectual property disputes and claims of infringement, which

may divert our management’s attention and harm our reputation and profitability.

We have registered 41 patents, one trademark and two domain names in China for

protection against infringement. For more details, see “Business – Intellectual Property” in this

Document. Notwithstanding our effort in protecting our intellectual property rights, there is no

assurance that we will always be able to identify cases of infringement of our intellectual

property rights. Any case of such infringements may result in a decrease in our revenue, an

erosion of our goodwill, brand image and our reputation. We may also face considerable

difficulties and time consuming and costly litigation in order to enforce our intellectual

property rights. Further, if there is any negative publicity, disputes or complaints relating to our

intellectual property, our business, reputation and prospects may be adversely affected.

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In addition to the registration of our intellectual property rights, we have taken other

measures, such as providing the confidentiality and intellectual property terms in labor

contracts and entering into employee confidentiality agreements with our employees. There is

no assurance that any of the above measures will be sufficient to prevent misappropriation of

our intellectual property. If we are not able to adequately protect our intellectual property

rights, our business, results of operations and reputation could be adversely affected.

Further, there is no assurance that there has and will have no infringements of intellectual

property rights claimed against us. Intellectual property disputes, in particular, patent disputes,

may last a significant period and require considerable personal and financial resources. If the

outcome of such a legal dispute is adverse to us, we could be ordered to pay substantial license

fees, royalties and/or damage. Any infringement of third-party patents or other intellectual

rights or any lawsuits relating hereto could have a material adverse effect on our business,

financial condition, results of operations and reputation.

Our business operations may be adversely affected by present or future environmental

regulations or enforcement.

Since the beginning of the 1980s, the PRC has formulated and implemented a series of

environmental protection laws and regulations. Our operations are subject to these

environmental protection laws and regulations in the PRC. These laws and regulations impose

fees for the discharge of waste substances, permit the levy of fines and claims for damages for

serious environmental offenses and authorize the PRC Government, at its discretion, to close

any facility that fails to correct or stop operations causing environmental damage. In addition,

to better achieve sustainable development in China, the Chinese government announced

“Beautiful China” as a significant development strategy in its 13th Five-year Plan in 2015,

which highlights the prominent position of ecological civilization construction to achieve

sustainable development in China.

As confirmed by our PRC Legal Advisors, our operations were in compliance with PRC

environmental regulations in all material aspects during the Track Record Period. We cannot

assure you that we will not subject to any fines or administrative punishments for

environmental protection in the future. The PRC Government has taken steps and may take

additional steps towards enforcing more stringent environmental laws and standards. If the

PRC Government or local authorities enact additional regulations or enforce current or new

regulations in a more rigorous manner, we may be required to make additional expenditures on

environmental matters, which could have an adverse impact on our financial condition and

results of operations. In addition, environmental liability insurance is not typical in China.

Therefore, any significant environmental liability claimed against us would adversely affect

our business, financial condition and results of operations.

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We have previous incidents of non-compliance with the laws and regulations and any

enforcement action against us may adversely affect our financial condition and our

reputation.

We did not fully comply with certain legal and statutory requirements in the PRC with

respect to our business operations during the Track Record Period. Such non-compliance

incidents include: (i) our failure to fully make contributions to social insurance and housing

provident fund for our employees as required under PRC law; (ii) our four structures without

valid building ownership certificates; (iii) non-compliant subcontracting; (iv) non-compliant

labor dispatch; (v) non-compliant sales of nursery stock; and (vi) non-compliant operation of

the staff’s canteen. Please refer to the section headed “Business – Compliance and Legal

Proceedings – Non-compliance” in this Document for more details of these incidents, possible

legal consequences, maximum financial impact and the rectification measures taken by us. If

any of the governmental authorities takes enforcement action against us for these non-

compliance incidents, we may be ordered to pay fines and/or other penalties, make up the

outstanding payment, incur legal costs arising from any legal action against us, and may be

exposed to negative media coverage, which could adversely affect our business, results of

operations and reputation.

Our insurance coverage may not be adequate to cover all risks of loss related to our

business operations.

We obtain and maintain insurance policies in accordance with our business needs and the

requirements under relevant laws and regulations. During the Track Record Period, we

maintained personal accident insurance for part of our personnel onsite our landscaping and

municipal construction projects and mandatory social insurance policies for our employees.

However, we cannot guarantee that our insurance policies will provide adequate coverage for

all of the risks in connection with our business operations. For instance, we do not carry any

property insurance with respect to our real estate or the production facilities we are involved

in, or carry third-party liability insurance for personal injuries for all of our employees.

Furthermore, due to a variety of factors, such as an increase in claims, we may not be able to

obtain insurance at an acceptable rate with the coverage we need.

Accidents or natural disasters may result in significant property damage, disruption of our

operations and personal injuries or fatalities, and our insurance coverage may be inadequate to

cover such losses. In the event of accidents or natural disasters, we may also lose all or a

portion of our production facilities, which may result in failure to meet the orders of our

customers, loss of customers as well as damage to our reputation. All or part of such losses we

suffered may not be recoverable from our insurance policy. As such, our business, financial

condition and results of operations may be adversely affected.

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Our operations are subject to inherent operational risks and occupational hazards, which

could cause us to incur substantial costs, damage to reputation and loss of future business.

Construction sites are potentially dangerous workplaces. Our landscaping and municipal

construction projects routinely place our employees and dispatched workers in close proximity

to heavy-duty construction machinery and moving motor vehicles. We may be subject to the

risks in relation to these machinery and equipment, such as equipment failure, industrial

accidents, geological catastrophes, fire and explosions. For more information on our

implementation of safety policies and standardized construction methods and technologies, see

“Business – Occupational Health and Safety” in this Document.

We cannot guarantee those material workplace accidents will not occur in the future

despite the implementation of our safety policies and measures mentioned above. Even if such

accidents were not caused by our fault or negligence, such accidents may still cause us to incur

substantial costs and damage to our reputation. The damage to our reputation, as a result of

workplace accidents, whether or not at our fault, may cause us to lose future business, which

may materially and adversely affect our business and results of operations.

Our inability to attract, retain or secure senior management and key personnel for our

operations could hinder our continuing growth and success.

The Company’s success depends on the continuing service of our management team as

well as our ability to attract, motivate and retain our key personnel. Our Board is led by Mr.

Lin, our chairperson, who runs the family business and has nearly six years of full-time

experience in the landscaping industry and is responsible for the overall business development

of the Group. All members of our senior management team had played a significant role in the

business operations of our Group during the Track Record Period and will continue to play a

pivotal role in the future growth and success of our business. For more details about our

management skills and experience of our Directors and our senior management, see “Directors

and Senior Management” section in this Document.

There is no assurance that our Directors and our senior management will continue to

perform as well as they did so in the past, or we will be able to retain their services when their

contracts expire. If any of our Directors or members of our senior management team is unable

or is unwilling to continue to serve his current position, and we fail to recruit suitable

replacement personnel with similar qualifications or talents in a timely manner, it may cause

disruption to our business operation and may have an adverse impact on our ability to manage

our business effectively and efficiently. As a result, our profitability and results of operations

may be adversely affected.

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Increased labor costs could slow down our growth and adversely affect our profitability.

Since our operations are labor-intensive and our operations, to a certain extent, require the

use of technical skills and know-how of our employees, our success depends in part on our

ability to attract, retain and motivate a sufficient number of qualified employees. We have

implemented a number of initiatives in an effort to attract, retain and motivate our qualified and

competent staff. There is no assurance that these measures will be effective or that supply of

skilled labor in local markets will be sufficient to fulfill our needs. Competition for competent

and skilled labor is intensive in the industry. Our failure to hire and retain sufficient skilled

employees could delay the construction schedule of the works undertaken by us or result in our

expenses exceeding our initial budget, either of which could have a material adverse effect on

our business, profitability and prospects.

Further, our entire workforce is employed in the PRC. The average labor cost in the PRC

has been steadily increasing over the past years as a result of government-mandated wage

increases and other changes in the PRC labor laws. Further changes in the labor laws, rules and

regulations may be promulgated by the PRC Government in the future and our operations may

be materially and adversely affected if such laws, rules or regulations impose additional burden

on the employers. The labor cost expects to increase in the future which is in line with the

economic growth in the PRC. Competition for employees would urge us to pay higher wages,

which would result in higher labor cost.

Our business expansion plan may not be completed as planned and may not achieve

commercial viability or the intended economic results.

Our future success depends to a certain extent on our ability to expand our business. We

plan to expand our business to other field of construction industry and other regions outside

Nanjing. Our expansion plans may involve the following risks: (i) the proposed acquisition of

potential target companies may not be able to complete on terms favorable or acceptable to us

or in a timely manner; (ii) the successful implementation of our expansion plan may be affected

by a number of factors including the availability of sufficient funds, government policies

related to our industry, the economic conditions, our ability to maintain our existing

competitive strengths, our relationships with our customers and the threat of substitutes and

new market entrants; (iii) we expect to incur increased costs, such as direct staff cost, rental

expenses and depreciation charges. We therefore cannot guarantee our expansion plans will be

successfully implemented without any delay or at all. If there is any delay in our expansion

plans, we may not be able to provide services demanded by our customers and, our reputation

and future business opportunities may therefore be adversely affected. Moreover, these plans

may not achieve the commercial viability or the intended economic results, which in turn could

weaken our competitive position in the market and adversely affect our business and financial

condition and operating results.

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Our risk management and internal control systems may not fully protect us againstvarious risks inherent in our business.

We have established risk management and internal control systems, consisting of therelevant organizational framework policies, risk management policies and internal controlprocedures to manage our risk exposures, primarily our operational risk, legal risk and liquidityrisk. However, we may not be successful in implementing our management and internal controlsystems. While we seek to continue to enhance those systems from time to time, we cannotassure you that those systems are adequate, and any failure to address any potential risks andinternal control deficiencies could materially and adversely affect our business, financialcondition and results of operations.

While our risk management and internal control systems depend on their implementationby our employees, we cannot assure you that all our employees will adhere to such policies andprocedures, and the implementation of such policies and procedures may involve human errorsor mistakes. We are unable to guarantee that our risk management and internal control systemswill be effective in preventing the occurrence of corruption, bribery or other illegal activities.Moreover, our growth and expansion may affect our ability to implement stringent riskmanagement and internal control policies and procedures. If we fail to timely adopt, implementand modify, as applicable, our risk management and internal control policies and procedures,our business, financial condition and results of operations could be materially and adverselyaffected.

We face intense competition in our industry and failure to compete effectively may causeus to lose market share.

The landscaping and municipal construction industries in the PRC are highly competitive.Our principal competitors include regional landscaping and municipal construction serviceproviders. According to Frost & Sullivan, we ranked seventh in the landscaping market witha market share of 0.28% in 2020 in terms of revenue from landscaping construction projectsin Jiangsu Province, and second in Nanjing with a market share of 3.6%. We cannot assure youthat we will be able to remain competitive by continually distinguishing our services, ormaintain good relationships with our business partners, nor can we assure you that we will beable to increase or maintain our existing market share. Some competitors have a larger nurseryand more established relationships with local governments, sub-contractors, suppliers andcustomers in certain markets than us. Such landscaping and municipal construction serviceproviders may be able to respond to changes in market conditions more promptly andeffectively than we can, or may be more competitive during the tendering process.

Competition among landscaping and municipal construction service providers may resultin higher costs for raw materials, shortages of skilled sub-contractors, a decrease in tenderprices and an increase in administrative costs for hiring or retaining qualified personnel, anyof which may materially and adversely affect our business, results of operations and financialcondition. If we are unable to maintain a competitive position and adapt to changing marketconditions or otherwise compete successfully against our competitors, our prospects, business,financial condition and results of operations may be materially and adversely affected.

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Working progress of our construction projects is subject to adverse weather conditions,

natural disasters and other operating hazards.

Most of our construction contracting services are conducted outdoors and may be

materially and adversely affected by adverse weather conditions. For example, we may

experience significant project delays caused by inclement weather, protracted periods of

precipitation or extreme temperatures, which could result in our inability to meet key

milestones set forth in our construction contracting contracts. In addition, natural disasters and

other operating hazards, such as earthquakes, floods, typhoons, landslides and fires, may

interrupt our landscaping and municipal construction projects. In the event that any delay is

caused by such adverse weather conditions, we may have to accelerate our work progress

afterward so as to meet the time for completion as scheduled, and such acceleration works will

typically involve additional costs, thereby adversely affecting the profitability of our business.

If there is any delay in completion of the projects, we may be subject to the payment of

liquidated damages or penalties, which could materially and adversely affect our business,

financial condition and results of operations.

Our historical financial and operating results may not be indicative of our future

performance and our financial and operating results may be difficult to forecast.

Our financial condition and results of operations may fluctuate due to a number of other

factors, many of which are beyond our control, including:

• general economic and social conditions and government regulations or actions

pertaining to the industries where we operate;

• increased competition and changing market demands;

• expansion and related costs in a given period; and

• our ability to control our cost of sales and other operating costs, and to enhance our

operational efficiency.

In addition, we may not sustain our past growth rates in future periods, and we may not

sustain profitability in the future. Our historical results, growth rates and profitability may not

be indicative of our future performance. Our Shares could be subject to significant price

volatility should our earnings fail to meet the expectations of the investment community. Any

of these events could cause the price of our Shares to materially decrease.

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RISKS RELATING TO CONDUCTING BUSINESS IN CHINA

As all of our operations are conducted in China, we are vulnerable to adverse changes ineconomic, political and social conditions and government policies in China.

All of our operations and assets are located in China, and all of our revenue is derivedfrom our business in China. Accordingly, our financial condition, results of operations andprospects are, to a significant degree, subject to the economic, political, social and legalcondition in China. The PRC economy differs from that of most developed countries in manyrespects, including the extent of government involvement, level of economic development,investment control, resource allocation, growth rate and control over foreign exchange. Webelieve the PRC Government has indicated its commitment to the continued reform of theeconomic system as well as the structure of the government. The PRC Government’s reformpolicies have emphasized the independence of enterprises and the use of market mechanisms.Since the introduction of these reforms, significant progress has been achieved in economicdevelopment, and enterprises have enjoyed an improved environment for their development.However, any changes in the political, economic or social conditions in China may materiallyand adversely affect our business, financial condition and results of operations.

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

Our business in the PRC is growing, and its contribution to our revenue and profit isexpected to further grow. Our business in the PRC is subject to PRC laws and regulationsapplicable to foreign investment in the PRC. The PRC legal system is a civil law system basedon written statutes. Unlike in the Common Law System, prior cases have limited precedentialvalue in deciding subsequent cases in the civil law legal system. Additionally, PRC writtenstatutes are often principle-oriented and require detailed interpretations by the enforcementbodies for their application and enforcement. When the PRC Government started its economicreforms in 1978, it began to build a comprehensive system of laws and regulations to regulatethe overall economic order and business practices of the country. The PRC has made significantprogress in the promulgation of laws and regulations dealing with business and commercialaffairs of various participants of the economy, involving foreign investment, corporateorganization, and governance, commercial transactions, taxation and trade. However, thepromulgation of new laws, changes in existing laws and abrogation of local regulations bynational laws may have a negative effect on our business and prospects.

Additionally, given the involvement of different enforcement bodies of the relevant rulesand regulations and the non-binding nature of prior court decisions and administrative rulings,the interpretation, and enforcement of PRC laws and regulations involve significantuncertainties under the current legal environment. As a result, there are substantialuncertainties in the legal protection available to us. In addition, such uncertainties, includingthe inability to enforce the contracts we have entered into with our business partners,customers, and suppliers, together with any development or interpretation of laws that areadverse to us, could materially and adversely affect our business and operations. We cannotpredict the effect of future developments in the legal systems of the PRC, including thepromulgation of new laws, changes to existing laws or the interpretation or enforcementthereof, or the pre-emption of local regulations by national laws.

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We may be deemed a PRC resident enterprise for PRC EIT purposes under the EIT law

and be subject to PRC taxation on our global income.

Pursuant to the EIT Law, an enterprise established outside of 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. The EIT Regulation defines “de facto management body” as the organization body that

effectively exercises management and control over aspects such as the business operations,

personnel, accounting and properties of the enterprise.

On 22 April 2009, the SAT released the Notice Regarding the Determination ofChinese-Controlled Offshore Incorporated Enterprises as PRC Tax Resident Enterprises on theBasis 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》) (“Circular 82”), as amended on 29 December 2017, whichsets out the standards and procedures for determining whether the “de facto management body”of an enterprise registered outside of China and controlled by PRC enterprises or PRCenterprise groups is located within China. Under Circular 82, a foreign enterprise controlled bya PRC enterprise or a PRC enterprise group is considered a PRC resident enterprise if all ofthe following apply: (i) the senior management and core management departments in charge ofdaily operations are located mainly within China; (ii) financial and human resources decisionsare subject to determination or approval by persons or bodies in China; (iii) major assets,accounting books, company seals and minutes and files of board and shareholders’ meetingsare located or kept within China; and (iv) at least half of the enterprise’s directors with votingrights or senior management reside within China. Further to Circular 82, the SAT issuedChinese-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)》) (“Bulletin 45”), which took effect on 1September 2011 and last amended on 15 June 2018, to provide more guidance on theimplementation of Circular 82 and clarify the reporting and filing obligations of such“Chinese-controlled offshore incorporated resident enterprises.” Bulletin 45 providesprocedures and administrative details for the determination of resident status andadministration of post-determination matters. Although Circular 82 and Bulletin 45 explicitlyprovide that the above standards apply to enterprises which are registered outside of China andcontrolled by PRC enterprises or PRC enterprise groups, Circular 82 may reflect SAT’s criteriafor determining the tax residence of foreign enterprises in general. If our global income wereto be taxed under the EIT Law, our financial condition and results of operations may bematerially and adversely affected.

You may be subject to PRC income tax on dividends from us or on any gain realized onthe sale or other disposition of our shares under PRC law.

Under the EIT Law, subject to any applicable tax treaty or similar arrangement betweenChina 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 sources withinChina payable to investors that are non-PRC resident enterprises, which do not have anestablishment or place of business in China, or which have such establishment or place ofbusiness if the relevant income is not effectively connected with the establishment or place of

RISK FACTORS

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business. Any gain realized on the transfer of shares by such investors is subject to 10% PRCincome tax if such gain is regarded as income derived from sources within China unless a treatyor similar arrangement otherwise provides. Under the PRC Individual Income Tax Law (《中華人民共和國個人所得稅法》), enacted on 10 September 1980, effective from the same date,last amended on 31 August 2018 by the SCNPC and newly effective on 1 January 2019, andits implementation rules, dividends from sources within China paid to foreign individualinvestors who are not PRC residents are generally subject to a PRC withholding tax at a rateof 20%, and gains from PRC sources realized by such investors on the transfer of shares aregenerally subject to 20% PRC income tax, in each case, subject to any reduction or exemptionset forth in applicable tax treaties and PRC laws.

Although 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 China 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-PRC resident investors,

the value of our investors’ 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.

You may experience difficulties in effecting service of legal process, enforcing foreign

judgements or bringing original actions in China or Hong Kong based on foreign laws

against us, our Directors and senior management residing in the PRC.

Some of our executive officers reside within the PRC, and all of our assets are located

within the PRC. It may not be possible for investors to affect service of process upon us or

those persons inside the PRC or to enforce against them or us in the PRC any judgments

obtained from non-PRC courts. The PRC does not have treaties providing for the reciprocal

recognition and enforcement of judgements of courts in the United States, Canada, and the

United Kingdom, Japan or most other western countries. However, judgements rendered by

Hong Kong courts may be recognized and enforced in the PRC if the requirements set forth by

the Arrangement on Mutual Recognition and Enforcement of Judgements in Civil and

Commercial Matters by Courts of Mainland and of the Hong Kong Special Administrative

Region Pursuant to Agreed Jurisdiction by Parties Concerned (《關於內地與香港特別行政區法院相互認可和執行當事人協議管轄的民商事案件判決的安排》) (the “2006 Arrangement”),

which are entered into between the Supreme People’s Court of the PRC and Department of

Justice of Hong Kong on 14 July 2006 and became effective as of 1 August 2008. Recognition

and enforcement in the PRC of judgements of a court in any those jurisdictions other than Hong

Kong in relation to any matter not subject to bind arbitration provisions may be difficult or

impossible. Although the 2006 Arrangement has become effective on 1 August 2008, the

outcome and effectiveness of any action brought under the 2006 Arrangement may still be

uncertain.

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On 18 January 2019, the Supreme People’s Court of the PRC and Department of Justice

of 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 (《關於內地與香港特別行政區法院相互認可和執行民商事案件判決的安排)) (the “2019 Arrangement”). The 2019 Arrangement sets forth the scope,

applicable rulings, procedures and manners to apply for recognition and enforcement

examination on jurisdiction of the original court, conditions to refuse recognize and enforce,

and remedies of reciprocal recognition and enforcement of judgments in civil and commercial

matters. Following the promulgation of a judicial interpretation by the Supreme People’s Court

and the completion of the relevant procedures in Hong Kong, both sides shall announce a date

on which the 2019 Arrangement shall become effective. The 2019 Arrangement shall apply to

judgments made by the courts of the Mainland and of the Hong Kong on or after the effective

date. When the 2019 Arrangement becomes effective, the 2006 Arrangement shall be

terminated. However, the 2006 Arrangement still remains applicable to a choice of court

agreement in writing within the meaning of the 2006 Arrangement and signed before the

effective date of the 2019 Arrangement. Although the 2019 Arrangement has been signed, it

remains unclear when such agreement will come into effect, and effectiveness and outcome of

any action brought under the 2019 Arrangement may still be uncertain.

The PRC Government’s control over currency conversion may limit our foreign exchange

transactions, including dividend payments on our shares.

The Renminbi is not presently a freely convertible currency, and conversion and

remittance of foreign currencies are subject to PRC foreign exchange regulations. There is 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 completion of the [REDACTED], 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. There is no assurance that we will be able to receive these approvals in time, or

at all. This could restrict the ability of our PRC subsidiaries to obtain debt or equity financing

in foreign currencies.

The existing foreign regulations allow us, following completion of the [REDACTED], to

pay dividends in foreign currencies without prior approval from the SAFE by complying with

certain procedural requirements. However, there is no assurance that the PRC Government will

continue to adopt this policy going forward. The PRC Government may also restrict our access

to foreign currencies for current account transactions at its discretion. Any insufficiency of

foreign currencies may impair our ability to obtain sufficient foreign currencies for dividend

payments to our Shareholders or to satisfy any other foreign exchange requirements.

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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

subsidiaries’ ability to pay dividends or make distributions to us and our ability to increase

investment in our PRC subsidiaries.

The SAFE promulgated Circular 37 in July 2014. Pursuant to Circular 37, PRC residents

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 or any inbound investment through SPVs. Such PRC residents are also required to

amend their registrations with the 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 or division of the SPV. In

accordance with Circular 13, the foreign exchange registration aforesaid has been directly

reviewed and handled by banks since 1 June 2015, and the SAFE and its branches perform

indirect regulation over such foreign exchange registration through local banks. Under this

regulation, failure to comply with the registration procedures set forth in Circular 37 may result

in restrictions being imposed on the foreign exchange activities of WFOE, 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. However, there is no assurance

that the PRC Government will not have a different interpretation of the requirements of

Circular 37 in the future. Moreover, we may not at all times be fully aware or informed of the

identities of all of our Shareholders who are PRC residents, and we may not always be able to

compel our Shareholders to comply with the requirements of Circular 37.

Current PRC regulations of loans and direct investments by offshore holding companies

to PRC entities may delay or prevent us from using the [REDACTED] of the [REDACTED]

to grant loans or additional capital contributions to our PRC subsidiaries.

Any loans or capital contributions that we, as an offshore entity, make to our PRC

subsidiaries, including those from the [REDACTED] of the [REDACTED], are subject to

PRC regulations. For example, any overseas loans to our PRC subsidiaries cannot exceed the

difference between the total amount of investment that our PRC subsidiaries are approved to

make under the relevant PRC laws and the amount of their registered capitals. Such loans must

also be registered or filed on record. Furthermore, capital contributions we may make to our

PRC subsidiaries must be approved by MOFCOM or its local counterpart. We cannot assure

you that we will be able to obtain such registrations and approvals or to complete such filing

procedures on a timely basis, or at all, with respect to future loans or capital contributions that

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we may make to our PRC subsidiaries. If we fail to receive such registrations or approvals, or

to complete such filing procedures, our ability to use the [REDACTED] of the [REDACTED]

and to fund our operations may be negatively affected, which would in turn materially and

adversely affect our liquidity and ability to expand our business.

In addition, pursuant to Circular 19, foreign-invested enterprises shall be allowed to settle

foreign exchange capitals on a discretionary basis. Furthermore, where the foreign-invested

enterprises engaged in equity investment in the PRC, it shall follow the regulations on

reinvestment in territory of PRC. Circular 19 unlocks the restriction on foreign exchange

capital settlement, but it is still uncertain whether it is practicable and may adversely affect our

prospects.

Fluctuations in the value of Renminbi could have an adverse effect on our business,

financial condition and results of operations.

The value of the Renminbi against the Hong Kong dollar, the U.S. dollar and other

currencies fluctuates, is subject to changes resulting from the PRC Government’s policies and

depends to a large extent on domestic and international economic and political developments

as well as supply and demand in the local market. From 1994 to July 2005, the official

exchange rate for the conversion of the Renminbi to the U.S. dollar was generally stable. In

July 2005, the PRC Government changed its decade-old policy of pegging the value of the

Renminbi to the U.S. dollar. The current policy permits the Renminbi to fluctuate within a

regulated band against a basket of foreign currencies. In general, the Renminbi has depreciated

since the end of 2015 from approximately RMB6.5 per U.S. dollar as of 31 December 2015 to

approximately RMB6.9 per U.S. dollar as of 30 December 2016, subsequently appreciated to

approximately RMB6.3 per U.S. dollar as of 30 March 2018, and then depreciated to

approximately RMB7.0 per U.S. dollar as of 31 December 2019. It is difficult to predict how

market forces and the PRC Government’s policies will continue to impact Renminbi exchange

rates going forward. The Renminbi may appreciate or depreciate significantly in value against

the Hong Kong dollar, the U.S. dollar or other foreign currencies in the long term, depending

on the fluctuation of the basket of currencies against which it is currently valued, or it may be

permitted to enter into a full float, which may also result in significant appreciation or

depreciation of the Renminbi against the U.S. dollar or other foreign currencies.

Even though all of our revenue and expenses are denominated in RMB, fluctuations in

exchange rates may nonetheless in the future adversely affect the value of our net assets and

earnings. In particular, distributions to our Shareholders are made in Hong Kong dollars. Any

unfavorable movement in the exchange rate of the Renminbi against the Hong Kong dollar may

adversely affect the value of our distribution.

RISK FACTORS

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RISKS RELATING TO THE SHARES AND THE [REDACTED]

There has been no prior public market in Hong Kong for our Shares and the liquidity,market price and trading volume may be volatile.

Prior to the [REDACTED], there is no public market for our Shares. The [REDACTED]of, and the permission to [REDACTED], the Shares on the Stock Exchange do not guaranteethe development of an active public market or the sustainability thereof following completionof the [REDACTED]. Factors such as variation in our turnover, earnings and cash flows,liability claims brought against us based on, for example, fluctuations in the market prices ofour services, our failure to execute our business strategies, unexpected business interruptionsresulting from operational breakdowns or natural disasters, inadequate protection of ourintellectual property or legal proceedings brought against us for infringement of third parties’intellectual property rights, any major changes in our key personnel or senior management, ourinability to obtain or maintain regulatory approval for our services/projects, and political,economic, financial and social developments, could cause the market price of our Sharesfollowing the [REDACTED] to vary significantly from the [REDACTED]. In addition, boththe market price and liquidity of our Shares could be adversely affected by factors beyond ourcontrol and unrelated to the performance of our business, especially if the financial market inHong Kong experiences significant price and volume fluctuation. In such cases, investors maynot be able to sell their Shares at or above the [REDACTED].

Substantial future sales or the expectation of substantial sales of our shares in the publicmarket could cause the price of our Shares to decline.

Sales of substantial amounts of Shares in the public market after the completion of the[REDACTED], or the perception that these sales could occur, could adversely affect themarket price of our Shares. There will be [REDACTED] Shares outstanding immediatelyfollowing the [REDACTED], assuming the [REDACTED] is not exercised. Our ControllingShareholders agreed that any Shares held by them will be subject to a lock-up after the[REDACTED]. For more information, see “[REDACTED] – [REDACTED] and Expenses”in this Document. However, the [REDACTED] may release these securities from theserestrictions at any time and such Shares will be freely tradable after the expiry of the lock-upperiod. Shares which are not subject to a lock-up arrangement represent approximately 32.58%of the total issued share capital immediately following the [REDACTED] and will be freelytradable immediately following the [REDACTED].

Our Controlling Shareholders have substantial influence over the Company and theirrespective interests may not be aligned with the interests of shareholders who subscribe forshares in the [REDACTED].

Immediately following the completion of the [REDACTED] and the [REDACTED],assuming the [REDACTED] is not exercised, our Controlling Shareholders will directly andindirectly own an aggregate of approximately [REDACTED]% of our Shares. The interests ofour Controlling Shareholders may differ from the interests of our other Shareholders. OurControlling Shareholders could have significant influence in determining the outcome of any

RISK FACTORS

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corporate transaction or other matters submitted to our Shareholders for approval, includingmergers, consolidations and the sale of all or substantially all of our assets, election ofDirectors 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 ourShareholders of an opportunity to receive a premium for their Shares in a sale of the Companyor may reduce the market price of our Shares. In addition, to the extent the interests of ourControlling Shareholders conflict with the interest of our other Shareholders, the interests ofour other Shareholders may be disadvantaged or harmed.

Since there will be a gap of several days between [REDACTED] and [REDACTED] ofour shares, holders of our shares are subject to the risk that the price of our Shares couldfall during the period before [REDACTED] of our shares begins.

The [REDACTED] of our [REDACTED] is expected to be determined on the[REDACTED]. However, our Shares will not commence [REDACTED] on the StockExchange until they are delivered, which is expected to be four Business Days after the[REDACTED]. As a result, investors may not be able to sell or deal in our Shares during thatperiod. Accordingly, holders of our Shares are subject to the risk that the price of our Sharescould fall before [REDACTED] begins as a result of adverse market conditions or otheradverse developments, that could occur between the time of sale and the time [REDACTED]begins.

The state of political environment in Hong Kong may affect the liquidity, market price and[REDACTED] volume of our Shares following the [REDACTED].

Hong Kong is a special administrative region of the PRC and enjoys a high level ofautonomy under the principle of “one country, two systems” according to the Basic Law ofHong Kong. However, we are not in any position to guarantee the implementation of the “onecountry, two systems” principle and the level of autonomy as currently in place at the moment.Any changes in the state of political environment in Hong Kong may materially and adverselyaffect the liquidity, market price and [REDACTED] volume of our Shares after the[REDACTED].

Prior dividend distributions are not an indication of our future dividend policy and wemay not be able to pay any dividend on our Shares.

Our ability to pay dividends will depend on whether we are able to generate sufficientearnings. Distribution of dividends will be formulated by our Board of Directors at theirdiscretion and will be subject to our Shareholders’ approval. The actual amount of anydividends to be declared or distributed will depend on various factors, including but not limitedto our results of operations, cash flows and financial condition, operating and capitalexpenditure requirements, distributable profits, our Articles of Association, any applicablelaws and regulations, market conditions, our strategic plans and prospects for businessdevelopment, contractual limits and obligations, payment of dividends to us by our operatingsubsidiaries, taxation, regulatory restrictions and any other factors determined by our Board ofDirectors from time to time to be relevant. As a result, we cannot guarantee you when, if andin what form dividends will be paid in the future.

RISK FACTORS

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We have significant discretion as to how we will use the [REDACTED] of the

[REDACTED], and you may not necessarily agree with how we use them.

Our management may spend the [REDACTED] from the [REDACTED] in ways you

may not agree with or that do not yield a favorable return to our Shareholders. We plan to use

the [REDACTED] from the [REDACTED] (i) to fund the potential acquisition of two

construction companies; (ii) to enhance our market shares in Jiangsu Province and its

surrounding areas; (iii) to purchase construction equipment and machinery; (iv) to upgrade our

qualifications; (v) to invest in the development of Pearl Spring Design as our design institute

and set up an exhibition room; (vi) to be used for performance guarantee; (vii) to develop our

information management system; and (viii) to be used for brand building and promotion. For

more information, see “Future Plans and Use of [REDACTED] – Use of [REDACTED]” in

this Document. However, our management will have discretion as to the actual application of

our net [REDACTED]. You are entrusting your funds to our management, upon whose

judgment you must depend, for the specific uses we will make of the net [REDACTED] from

the [REDACTED].

Future financing may cause a dilution in your shareholding or place restrictions on our

operations.

We believe that our current cash and cash equivalents, anticipated cash flows from

operations and the [REDACTED] from the [REDACTED] will be sufficient to meet our

anticipated cash needs for the foreseeable future. We may, however, require additional cash

resources due to changing business conditions or other future developments relating to our

existing operations, acquisitions or strategic alliances. If additional funds are raised through

the issuance of new equity or equity-linked securities of the Company other than on a pro rata

basis to existing Shareholders, the percentage ownership of such Shareholders in the Company

may be reduced, and such new securities may confer rights and privileges that take priority

over those conferred by the Shares.

Possible setting of the [REDACTED] after making a [REDACTED].

We have the flexibility to make a [REDACTED] to set the final [REDACTED] at up to

[REDACTED]% below the bottom end of the indicative [REDACTED] range per

[REDACTED]. It is therefore possible that the final [REDACTED] will be set at

[HK$[REDACTED]] per [REDACTED] upon the making of a full [REDACTED]. In such a

situation, the [REDACTED] will proceed and the Withdrawal Mechanism will not apply.

If the final [REDACTED] is set at [HK$[REDACTED]] per [REDACTED], the

estimated [REDACTED] we will receive from the [REDACTED] will be reduced to

HK$[REDACTED], and such reduced [REDACTED] will be used as described in the section

headed “Future Plans and Use of [REDACTED] – Use of [REDACTED]” in this Document.

RISK FACTORS

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RISKS RELATING TO THIS DOCUMENT

We cannot guarantee the accuracy of facts and other statistics with respect to certain

information obtained from the report prepared by Frost & Sullivan contained in this

Document.

Certain facts and statistics in this Document, including but not limited to information and

statistics relating to the PRC landscaping and municipal construction industry, are based on the

report prepared by Frost & Sullivan, or are derived from various publicly available

publications, which our Directors believe to be reliable. We cannot, however, guarantee the

quality or reliability of such facts and statistics. Although we have taken reasonable care to

ensure that the facts and statistics presented are accurately extracted and reproduced from such

publications and the report prepared by Frost & Sullivan, they have not been independently

verified by us or any other party involved in the [REDACTED] and no representation is given

as to its accuracy. We therefore make no representation as to the accuracy of such facts and

statistics, which may not be consistent with other information compiled by other sources and

[REDACTED] should not place undue reliance on any facts and statistics derived from public

sources or the report prepared by Frost & Sullivan, contained in this Document.

Forward-looking statements contained in this Document are subject to risks and

uncertainties.

This Document contains certain statements and information that are forward-looking and

uses forward-looking terminology such as “anticipate,” “believe,” “could,” “going forward,”

“intend,” “plan,” “project,” “seek,” “expect,” “may,” “might,” “ought to,” “should,” “would”

or “will” and similar expressions. You are cautioned that reliance on any forward-looking

statement involves risks and uncertainties and that any or all of those assumptions could prove

to be inaccurate and as a result, the forward-looking statements based on those assumptions

could also be incorrect. In light of these and other risks and uncertainties, the inclusion of

forward-looking statements in this Document should not be regarded as representations or

warranties by us that our plans and objectives will be achieved and these forward-looking

statements should be considered in light of various important factors, including those set forth

in this section. Subject to the requirements of the Listing Rules, we do not intend to update or

otherwise revise the forward-looking statements in this Document to the public, whether as a

result of new information, future events or otherwise. Accordingly, you should not place undue

reliance on any forward-looking information. All forward-looking statements in this Document

are qualified by reference to this cautionary statement.

RISK FACTORS

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You may face difficulties in protecting your interests under the laws of the Cayman

Islands.

Our corporate affairs are governed by, among other things, our Memorandum and

Articles, the Cayman Companies Act and common law of the Cayman Islands. The rights of

Shareholders to take action against our Directors, actions by minority shareholders and the

fiduciary responsibilities of our Directors to us under Cayman Islands law are to a large extent

governed by the common law of the Cayman Islands. The common law of the Cayman Islands

is derived in part from comparatively limited judicial precedent in the Cayman Islands as well

as that from English common law, which has persuasive, but not binding, authority on a court

in the Cayman Islands. The laws of the Cayman Islands relating to the protection of the

interests of minority shareholders differ in some respects from those in other jurisdictions.

You should read the entire Document carefully, and we strongly caution you not to place

any reliance on any information contained in press articles or other media regarding us or

the [REDACTED].

There may be, subsequent to the date of this Document but prior to the completion of the

[REDACTED], press and media coverage regarding us and the [REDACTED], which may

contain, among other things, certain financial information, projections, valuations and other

forward-looking information about us and the [REDACTED]. We have not authorized the

disclosure of any such information in the press or other media and do not accept responsibility

for the accuracy or completeness of such press articles or other media coverage. To the extent

such information is inconsistent with, or conflicts with, the information contained in this

Document, we disclaim responsibility for them. Accordingly, [REDACTED] are cautioned to

make their investment decisions on the basis of the information contained in this Document

only and should not rely on any other information.

You should rely solely upon the information contained in this Document, the

[REDACTED] and any formal announcements made by us in Hong Kong in making your

investment decision regarding our Shares. We do not accept any responsibility for the accuracy

or completeness of any information reported by the press or other media, nor the fairness or

appropriateness of any forecasts, views or opinions expressed by the press or other media

regarding our Shares, the [REDACTED] or us. Accordingly, [REDACTED] should not rely

on any such information, reports or publications in making their decisions as to whether to

invest in the [REDACTED]. By applying to purchase our Shares in the [REDACTED], you

will be deemed to have agreed that you will not rely on any information other than that

contained in this Document and the [REDACTED].

RISK FACTORS

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HIP21100046e Project Triumph 2nd ReAP

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Transcript of HIP21100046e Project Triumph 2nd ReAP