Company Profile Smart China International is a subcontractor engaged in the design, supply and installation services for exterior wall engineering and building metal finishing projects in Hong Kong. The company participated in projects including the installation of aluminized floors and ceilings in the MTR station and giant support columns in the station lobby of Hong Kong West Kowloon Station. According to the Chinese and Thai views, Hong Kong's exterior engineering industry will grow steadily in the future, and the industry market is mature and integrated: as the government promotes a pilot land sharing program and uses private agricultural land for residential development, this move will support the future development of Hong Kong's building construction industry and exterior engineering industry. According to the Ipsos report, the exterior wall engineering industry is expected to increase from HK$5.56 billion in 2019 to HK$6.11 billion in 2023, with a compound annual growth rate of about 2.4%. The market for the exterior wall engineering industry in Hong Kong is mature and integrated. In March 2020, there were 30 to 40 exterior wall projects, and contractors actively carried out exterior wall projects. The exterior wall engineering industry in Hong Kong is dominated by a small number of well-developed industry practitioners. In 2018, the top five exterior construction contractors accounted for about 50.8% of the exterior wall project revenue. In terms of operating performance: For the 2017-2019 fiscal year and as of September 30, 2019, the company's revenue was HK$110 million, HK$170 million, HK$200 million and HK$130 million respectively, of which revenue from exterior works accounted for nearly 70%, and revenue contributions from the five major customers accounted for about 82.8%, 94.2%, 80.9% and 94.0% of total revenue for the same period; gross margins were 29.2%, 30.5%, 30.5% and 28.6%, respectively; building materials costs accounted for 47.0%, 45.6%, 42.5% of sales costs, and 47.0%; net margins were 15.5%, 19.5%, 18.0% and 14.3%, respectively. Furthermore, the winning rates for exterior wall projects in the three fiscal years were 26.7%, 25.0%, and 26.0%, respectively, while the winning rates for building metal finishing projects were 28.6%, zero, and 16.7%, respectively. Valuation aspects: Based on the 2 billion share capital after the global public offering, the company's market capitalization is HK$5-580 million, which is lower than the average of the Hong Kong stock industry. The company's price-earnings ratio in '19 was about 13.7-15.9 times, at the industry average; the net price-earnings ratio was about 3.57-3.63 times, which was the industry average. In terms of profitability, ROE and ROA in '19 were 129.8% and 35.0% respectively, which is higher than the industry average. The sponsor's historical track record in recent years has declined 3 times, 1 flat, and 1 up. Furthermore, we found that the two recent companies that are also mainly engaged in façade engineering had no breakouts on the first day. However, considering the poor atmosphere in the IPO market, we gave them 54 points and rated them “no subscription.” Risk warning: (1) market competition risk, (2) impact on project bid rate, (3) high concentration of the five major customers