Major Shareholder:

• Mr. Yang Jai Sung ¡V 37.4% interest
• Kwang Sung Korea ¡V 31.6% interest

Company Subsidiaries:

• Shenzhen Kwang Sung (100%): Manufacturing of electronic components

The Group is a recognized manufacturer and supplier of a broad line lf electronic components for electronic appliances and communication equipment. The Group has its headquarter in Hong Kong and its manufacturing plant in Shenzhen, China. the Group's products are primarily used for transmitting and receiving radio frequencies through electronic circuits. Most of the Group's products are designed and manufactured according to the specifications and requirements of its customers. The Group's products are broadly categorized into two main product groups: composite components,. Such as FM front-end-tuners and AM/FM tuner modules; and unit electronic components, such as coils, ceramic components, transformers and antennae. The Group has achieved constant growth in turnover and maintained profitability over the past ten years.

The Group's customers include ODMs and OEMs in Korea, Hong Kong and China. in order to meet different requirements of customers in these areas, the Group has developed production lines for essential unit components and a sales and marketing department headed by experienced senior management personnel. The Group markets its products through its own direct sales force and distributors.

The Group operates in an industry characterized by rapid changes caused by the frequent emergence of new technologies, as a result of which the life cycles of the Group's products are relatively short. The Directors believe that the Group can anticipate and respond rapidly to changes in industry standards and customers needs and to develop and introduce new and enhanced products on a timely and cost effective basis. The PRC R&D team emphasizes close cooperation with the Group's customers with a view to designing high quality and innovative products and to improving its manufacturing processes.

All of the Group's products are manufactured in the PRC. Its manufacturing facilities are equipped with modern technologies and design techniques. These facilities implement a quality management assurance system in compliance with ISO 9002 guidelines. The Group was awarded ISO9002 certification since 1998.

The Directors believe that the Group has the following competitive advantages:

• A strong and effective management team;
• A proven track record of steady growth in business;
• Recognition of quality and reliability of the Group's products;
• Efficient and cost effective production capability of the Group;
• Strong business relationship with reputable customers; and
• Competitive pricing and product range of electronic components;

• Relationship with and reliance on Kwang Sung Korea
• Competition from Kwang Sung Korea
• Supply and cost of raw materials
• Currency risk
• Inventory risk
• Reliance on major customers

The Group seeks to expand its business through providing product solutions in different application areas such as home and car audio, telecommunication and mobile phones. In order to achieve this, the Directors intend to enhance its marketing and engineering capabilities to achieve growth in revenue and profitability and revenue diversification across different application.

The Group seeks to expand and penetrate its products by leveraging on its design and manufacturing expertise into growth markets which represent potential customers based in the PRC, other southeastern Asian countries such as Taiwan and Turkey. In order to achieve this, the Directors intend to achieve growth in profitability and revenue diversification across and markets, geographies and customers.

The Group will continue to take advantage of the engineering and design capabilities of Kwang Sung Korea in order to provide high quality products for the Group's customers. the Group's customers, collaborative design capabilities enable the Group to produce customized products early in their life cycle and provide the Group with the higher margin opportunities. As major customers are, and the development of new products is mainly by customers based in Korea, the Directors believe that Korea is currently one of the leaders in the electronics industry in Asia.

The Director intend to pursue acquisitions and outsourcing opportunities to complement the Group's organic growth, enter into new market sectors and expand the Group's design and manufacturing capabilities. The Directors believe this strategy will increase the Group's market exposure, consolidate markets within the Group's existing product lines and increase operational synergies.

The net proceeds from the Placing, after deducting the related expenses, are estimated to amount to approximately HK$68.0 million (based on the offer price HK$1.30 per share). The Group at present intends to apply the net proceeds as follows: