Our business strategies and future plans for the continued growth of our business are as follows:

Setup of R&D centre to strengthen our R&D capabilities

We intend to setup an R&D centre in Shanghai, PRC called "Shanghai R&D Centre", which will be equipped with up-to-date R&D equipment and staffed by additional technical personnel to be recruited to strengthen our R&D capabilities.

Apart from conducting R&D to improve product quality and efficiency of our production processes, and monitoring market trends in the stamping machine industry, our proposed Shanghai R&D Centre will also focus on increasing the efficiency, tonnage and performance of our stamping machines and the development of new stamping machine features.

We have earmarked approximately RMB 10 million for the establishment of our proposed Shanghai R&D Centre.

Setup of sales representative office and the expansion of our existing sales network

We intend to set up a sales representative office in Guangdong province in PRC to increase the presence of our Group in this region and facilitate the provision of on-site pre-sales and after-sales services to our customers as the office will serve as a satellite warehouse for timely delivery of products to our customers.

We also intend to expand our sales network to the central PRC regions such as Hunan, Hubei, Sichuan, Chongqing as well as the North-Eastern regions of the PRC, which we have identified as regions for growth, with a view to increasing our market share in the PRC stamping machines market. We intend to increase our sales staff to approximately 100 personnel, to be deployed to the above regions.

We have earmarked approximately RMB 5 million to fund the establishment of our proposed Guangdong sales representative office.

Expansion of our production capacity

We intend to focus on the production of high-efficiency, high-tonnage and high performance stamping machines so as to achieve long-term growth as we believe that such machines are more resilient to aggressive pricing strategies and also serve to better meet the wide-ranging demands of our customers.

With our Danyang plant operating at close to full capacity, we have earmarked approximately RMB 108 million to expand our production capacity as follows:-

1. Set up of a new production facility by acquiring a plot of land (adjacent to our Danyang plant) of approximately 133,334 sqm in land area from the local government to build our proposed production facility, for which we have earmarked approximately RMB 95.9 million. The proposed production facility will be equipped with production equipment for the manufacture of high-tonnage, high-performance and high-efficiency stamping machines.

2. Increase of production capabilities of our existing Danyang plant through the acquisition of additional production equipment for the production of such stamping machines, for which we have earmarked approximately RMB 4.6 million for use.

3. Increase of resin-casted components production capacity through the acquisition of additional resin-casted component production equipment, for which we have earmarked approximately RMB 7.5 million for use.

Expansion of business into the manufacture of manufacturing-related equipment whose functions are complementary to our stamping machines

The manufacturing processes of our customers would typically involve the use of other manufacturing-related equipment such as cutting and folding machines. We have identified the manufacture of such manufacturing-related equipment as a possible area for business expansion. We believe that our existing know-how and production facilities for the manufacture of our stamping machines may be adapted and utilised in the manufacture of such equipment which may be packaged for sale together with our stamping machines to these customers.