Business summary

The Group is a well-known and active supplier of outbound travel products and services in China, with a special focus on providing Japanese tour groups and free travel related products to customers in East China. In fiscal year 2018, in terms of Japan's outbound travel revenue, the group ranked fifth in East China, accounting for about 1.2% of East China's outbound travel agencies' total Japanese travel revenue. In fiscal year 2016, fiscal year 2017, and fiscal year 2018, the revenue generated by Japanese tour groups accounted for about 63.7%, 85.1% and 78.4% of the total revenue of group tours and local tours, while the revenue generated from selling Japanese destination freestyle products accounted for about 90.4%, 96.7% and 79.4% of the total revenue of freestyle travel products for each year. The directors acknowledged that sales of such Japan-related travel products and services will continue to account for the main part of the Group's total revenue in the foreseeable future.

Competitive advantage

The Group is fully prepared to profit from the market opportunities brought about by China's growing outbound tourism

The Group has established a stable base and brand in China, and has maintained good business relationships with airlines and other suppliers

Through the Group's comprehensive sales network of multiple online sales platforms and online travel agencies in China, it can provide various outbound travel products and services to end customers in different regions

Risk Factors

Any changes in visa application policies of the Chinese government and the Japanese government in the future may adversely affect business and earnings

Most of the Group's earnings come from Chinese customers, and China's economic downturn will have a major adverse impact on the Group's business and operating performance

Changes in the Japanese yen exchange rate will affect the Group's operating performance and financial position

Use of proceeds

Approximately 2.0% is used to develop new products and services

Approximately 13.0% were used to purchase tour buses and hire third party tour bus operators

Approximately 20.0% will be used to establish a sales network in Hong Kong

Approximately 20.0% was used to acquire hotel assets in Kyoto, Japan

Approximately 20.0% was used to invest in a travel agency company in Tokyo, Japan

Approximately 15.0% will be used to recruit more personnel in Japan

Approximately 10.0% is used as general working capital