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1. 2 This powerpoint contains identifying important factors that could cause actual results to differ from the projected results. All statements, other.

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Presentation on theme: "1. 2 This powerpoint contains identifying important factors that could cause actual results to differ from the projected results. All statements, other."— Presentation transcript:

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2 2 This powerpoint contains identifying important factors that could cause actual results to differ from the projected results. All statements, other than statements of historical fact, including statements regarding industry prospects and future results of operations or financial position, made in this powerpoint are forward looking. Words such as anticipates, believes, expects, future and intends and similar expressions are intended to identify forward- looking statements. These forward-looking statements include, without limitation, statements relating to: our future performance, our expansion efforts, demand for our products; the state of economic conditions and our markets; currency and exchange rate fluctuations; and our ability to meet our liquidity requirements. These forward-looking statements are based on assumptions and analyses made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors we believe to be appropriate in particular circumstances. However, whether actual results and developments will meet our expectations and predictions depend on a number of known and unknown risks and uncertainties and other factors, any or all of which could cause actual results, performance or achievements to differ materially from our expectations, whether expressed or implied by such forward-looking statements (which may relate to, among other things, the Companys sales, costs and expenses, income, inventory performance, and receivables). Primarily engaged in the processing and trading of pearls and pearl jewelry products, and in real estate investment, our ability to achieve our objectives and expectations are derived at least in part from assumptions regarding economic conditions, consumer tastes, and developments in our competitive environment. The following assumptions, among others, could materially affect the likelihood that we will achieve our objectives and expectations communicated through these forward-looking statements: (i) that low or negative growth in the economies or the financial markets of our customers, particularly in the United States and in Europe, will not occur and reduce discretionary spending on goods that might be perceived as luxuries; (ii) that the Hong Kong dollar will remain pegged to the U.S. dollar at US$1 to RMB$7.8; (iii) that customers choice of pearls vis-à-vis other precious stones and metals will not change adversely; (iv) that we will continue to obtain a stable supply of pearls in the quantities, of the quality and on terms we require; (v) that there will not be a substantial adverse change in the exchange relationship between the Renminbi and the Hong Kong dollar or U.S. dollar; (vi) that there will not be a substantial increase in the tax burdens of our subsidiaries operating in the PRC; (vii) that there will not be a substantial change in climate and environmental conditions at the source regions of pearls that could have a material adverse effect on the supply and pricing of pearls; and (viii) that there will not be a substantial adverse change in the real estate market conditions in the PRC and in Hong Kong. The following discussion of our results of operation, and liquidity and capital resources should be read in conjunction with the financial statements and the notes thereto included elsewhere in this powerpoint and this powerpoint, which contains a further description of risks and uncertainties related to forward-looking statements, as well as other aspects of our business. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this powerpoint. We will not publicly release any revisions to these forward-looking statements after the date hereof. Readers are urged, however, to review the factors set forth in periodic reports that we file from time to time with the Securities and Exchange Commission. Disclaimer

3 3 Introduction of Presenters Mr. Sonny Hung Executive Director Mr. C K Kwang Assistant Company Secretary Mr. Martin Pak Chief Financial Officer

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5 5 One of the World Largest Pearl Merchants One of the Largest Purchasers & Processors of Saltwater Pearls Vertically integrated business including: Purchasing Processing & Assembling Merchandising & Wholesale Distribution of Pearls and non-Pearl Jewelry products Company Overview

6 6 Types of Cultured Pearls

7 7 Company & Industry Overview Grading Drilling Waxing Polishing Bleaching Man Sang Techniques

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9 9 Pearls One of the Worlds largest Pearl processors and merchants Assembled Pearls and Non-pearl Jewelry Vertically integrated China Pearls and Jewellery City in Zhuji, Zhejiang – China Pearls and Jewellery City in Zhuji, Zhejiang – The Worlds Largest Pearl & Jewelry Trading Platform Core Business & Development

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11 11 One of the Worlds Largest Pearl Merchants One of the Worlds Largest purchasers and processors of saltwater pearls One of the Worlds largest processors and suppliers of Chinese Akoyas Advanced pearl processing techniques Subsidiary corporation MSIL (Stock Code: 0938), the first pearl company listed on the Hong Kong Stock Exchange in 1997 Over 25 years of professional experience in the pearl business One-stop shopping services, full product range – pearl, pearl jewelry and non-pearl jewelry products Provision one-stop solution to all customers Vertically integrated business from purchasing, processing & assembling to merchandizing and wholesale distribution of Pearl and non-Pearl products Strengths

12 12 Strengths (Contd) First pearl company in the PRC to obtain ISO 9001 certification Quality System Standard Certification Professional sales and marketing team Experienced management team – the Group founders have over 25 years of experience in business management of jewelry industry Knowledge of market trends Own and operate production base – Man Sang Industrial City in Shenzhen, PRC Sound financial position Bulk purchasing power and lower processing costs Stable and long-term relationships with suppliers and customers Well established and long history diversified customers profile

13 13 Weaknesses Narrow customer base – derive a large portion of sales from customers in Europe, North America and other Asian countries Dependent on certain major customers Dependent on certain major suppliers – The Five largest suppliers of the Group accounted for over 60% of supply

14 14 Opportunities Brand extension - to sell directly to consumers Distribution extension -to sell directly to retail & discount store chains (in China) Marketing extension -to sell to corporate buyers Vertically Integration - joined by five major pearls and jewelry players, established world largest pearl and jewellery trading platform in Zhuji, Zhejiang Province in PRC – Phase I expected to be complete late 2007

15 15 Threats Global warming threatens pearl supply Operate in a highly competitive industry – increasing competition Business is heavily dependent on the global and regional economic environment Exposed to pearls, diamond and bullion price fluctuations Exposed to currency exchange fluctuations Possibility of losing existing customers Short product life cycle and fast replicas

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17 17 Net Sales Financial Performance

18 18 Net Sales Net Sales by Product2002/03 69.1% 10.8% 20.1% Seawater Pearls Freshwater Pearls Assembled Pearl Jewelry 56.2%37.5% 6.3%2003/04 45.8%45.7% 8.5%2004/05 2005/06 43.0% 10.2% 46.8%2006/07 39.2% 6.7% 54.1%

19 19 Operating Income Financial Performance (Contd) $3.7 $2.7

20 20 Financial Performance (continued) Net Income after Minority Interest * Includes a gain on sale of a real estate investment amounting to US$4.4m The translations of HK$ into US$ have been made at the exchange rate of HK$7.80 for US$1 for reference purpose

21 21 Gross Profit Margin is continue enhancing Financial Highlights Net sales Net sales for 9 months ended December 31, 2006 decreased by 0.6% to US$38.48 million as compared to the same period last year Gross profit Gross profit increased by US$131,000, or 1.2%, to US$10.69 million, as compared with the same period last year. Gross profit margin Gross profit margin has increased by 0.5% to 27.8% Net income Net income for the 9 months ended December 31, 2006 increased 25%, to US$1.8 million as compared to net income of US$1.44 million for the 9 months ended December 31, 2005. Return on capital Return on capital employed (annualized net income/capital employed) increased from 5.29% for the period ended December 31, 2005 to 6% for the period ended December 31, 2006. Return On Capital is continue enhancing Net Income has great improvement

22 22 For more information please visit CP&J web site at

23 23 The Worlds Total Freshwater Pearl Production YearExport (g)Export US$Average (US$/g) 2001 628,714,845 35,802,5250.0569 2002 666,298,864 61,383,9900.0921 2003 771,014,624 87,198,4610.1131 2004 1,103,712,413 151,581,3840.1373 2005 1,267,448,938 177,569,5960.1401 2006 1,336,548,126 203,556,2800.1523 Source: Department of Customs Administrations - Ministry of Finance, P.R.C.

24 24 The Worlds Total Saltwater Pearl Production Source: Pearl World -the International Pearling Journal Jan 2007 YearBlack-lipWhite-LipAkoyaTotal 2001141217131489 2002150225127502 2003141235125501 2004130240130500 2005125248135508 2006128250132510 US$ Million

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