Group Overview

The group is a sofa and sofa set manufacturer that designs, produces and sells various sofas, sofa sets and other furniture products through the three business models of OEM, ODM and OBM. In terms of OEM business, the group produces sofa sets based on the design and standards provided by the customer; under the ODM model, the group designs, develops, produces and sells sofa sets according to the customer's requirements. As for the OBM model, the sofa is mainly sold under its own brands “Morris HoldingsLimited” and “Morris Zou”.

The Group's saffas are mainly exported to the US. In the past three years ending December 31, 2015, sales revenue in the US market accounted for more than 90% of the group's revenue.

Industry Overview

According to Euromonitor's report, the market size of the US retail software sofa market increased from $13.3 billion in 2011 to $15.3 billion in 2015, with a compound annual growth rate of 3.6%. Euromonitor expects the US retail software software market to reach 19.3 billion US dollars in 2020, with a compound annual growth rate of 4.6% from 2015 to 2020.

Risks

The Group's asset liability ratio increased from 45.1% at the end of 2014 to 264.0% at the end of 2015. The group's current level of debt may limit its ability to obtain the required loans or obtain favorable loan terms to finance future capital expenses and working capital. The above restrictions may reduce the competitiveness of the Group and limit the flexibility of the Group's operations, which in turn will have a significant adverse impact on the Group's financial situation and operating results.

valuations

According to the prospectus, assuming that the global offering was completed on August 31, 2016, the net worth range of merged tangible assets adjusted for unaudited notes was HK$332 million to HK$399 million, on the assumption that the global offering was completed on August 31, 2016 (converted at the exchange rate of RMB 0.8944 to HK$1.00).