Major Shareholder:

• Professor Xiao Liang Yong ¡V 27.80% interest
• Xian Jiefeng Group ¡V 15.5% interest
• XITIC ¡V 10.8% interest

The Company is principally engaged in the research and development, production and sale of base station antennas and related products. In connection with such principal business, the Company also provides technical support, system integration and installation services of base station antennas. The products and services of the Company are provided to corporate clients comprising mobile communication network operators in the PRC (namely, members of China Mobile Group and China Unicom Group) and mobile communication equipment vendors/system integrators (such as UTstarcom, Lucent Qingdao, Shanghai Bell and Datang Telecom).

When carrying on its business, the Company is required to hold a valid business licence and, in some cases, to provide to its customers quality testing report and the Network Access Licence for the relevant products (which are within the scope of The Measures for Administration of Network Access for Telecommunication Equipment and, in relation to the Company, refers to its GSM/CDMA repeater and RF device products). According to Jingtian & Gongcheng, the Company has obtained all necessary licenses or permits to conduct its business. The business actually carried on by the Company is within that as set out in its business licence.

According to the relevant regulations of the Foreign Trade Law of the PRC, permission from the Foreign Economic Trade authority of the State Council is required for conducting foreign trade business. Prior to the obtaining of its export licence, the Company conducted its foreign trade through foreign trade agents in the PRC with foreign trade right and such trade activities were in compliance with the Foreign Trade Law of the PRC. After the Company obtained its export licence on 8 February 2001, the Company can conduct export trading on its own. The Company's export licence is presently valid.

The Directors consider that the Company's workforce comprises a balanced mix of research and development staff with high educational background, experienced production staff in the base station antenna sector and sales and marketing staff familiar with the mobile communication industry. As at the Latest Practicable Date, the Company employed 535 staff, of which 149 was research and development staff. Among such 149 research and development staff, over 80% of them is university graduates or possesses higher academic qualifications.

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

• Professional and key management staff has more than 10 years' experience in researching and developing base station antennas and related products and solving related technical problems.

• Advanced production facilities and test instruments, including 29 vector network analyzers imported from the United States, 4 passive intermodulation distortion analyzers and 22 anechoic chambers.

• Strong research and development capability in terms of developing new applications of the existing technology and enhancement of the existing products.

• Pioneer in the base station antenna sector of PRC mobile communication industry. State policy for encouraging local mobile communication industry.

Mobile communication is one of the fastest growing sectors in the PRC communications industry. According to the statistics compiled by ITU and published at its website www.itu.int) in April 2003, the number of mobile phone service subscribers in the PRC increased from approximately 3.7 million at the end of 1995 to approximately 207 million at the end of 2002, representing a compound annual growth rate of approximately 78.1%.

The MII promulgated the State II Tenth Five-year Plan in May 2001. The State II Tenth Five-year Plan states that the information industry will become one of the State's fundamental and leading industries in the coming years. Accordingly, the Directors anticipate that mobile communication network operators will need to establish more base stations (and hence demand for more base station antennas) as part of their networks, and as a result, the Directors expect that there will be significant potential growth for the market of the Company.

• Risk involved in accumulation of trade receivables
• High debt to equity ratio and consequence of realization of security
• Reliance on major customers
• Risk involved in the pledge of trade receivables
• Risk involved in the discounting of bills of exchange
• Dividend policy
• Reliance on senior management and core technology team

As the Company aims to become a leading provider of base station antennas and related products in the PRC, the Directors consider that it is crucial to further improve the Company's current technology research team in broadening its product range and improving product research and development. As such, the Company plans to recruit additional experts to join its research and development team, purchase more research and development equipment, provide continuing training to improve its technical know-how and increase its participation in overseas exhibitions and workshops to keep abreast of the latest mobile telecommunication technology.

The Directors believe that the current capacity of its production facilities is sufficient to support the Company's short-term business growth up to the end of 2004. In order to prepare for and facilitate the Company's medium to long-term growth, the Directors intend to increase its production capacity by enhancing the three existing production lines to improve their efficiency and outputs and installing two additional production lines. In addition, the Company out-sourced the main production of WLL/PHS antennas from January 2003 to August 2003 and only a small part of production was remained to be done by the Company. The out-sourcing rate was close to 100% during this period. The full capacity of this production line (original production capacity of 500,000¡V750,000 sets/year) is still available for the use of the Company in future for producing other products.

The Directors intend to further expand the Company's sales and distribution network to provide better services to its customers in provinces including Chengdu of Sichuan, Guiyang of Guizhou, Changsha of Hunan, Guangzhou of Guangdong, Changchun of Jilin, Chongqing, Shijiazhuang of Hebei, Nanchang of Jiangxi, Harbin of Heilongjiang, Urmuqi of Xinjiang, Lanzhou of Ganzhou, Hefei of Anhui, Taiyuan of Shanxi, Nanning of Guangxi, Kunming of Yunnan, Jinan of Shandong, Shenyang of Liaoning and Hohhot of Inner Mongolia.

The Company will continue to establish strategic alliances with domestic and international communication companies to enhance its research and development capability, brand awareness, undertake bilateral joint sales and cross-promotional activities and expand distribution capabilities. The Company will also consider investing in or acquiring communication-related companies, by which the Directors expect that synergic effects may further enhance shareholders' value. Save for the agreement entered into with Datang Mobile for the joint development of intelligent antenna arrays in TD-SCDMA mobile communication system.

The net proceeds from the Placing, after deducting the related expenses, are estimated to amount to approximately HK$62.0 million (based on the offer price HK$0.55 per share). The Group at present intends to apply the net proceeds as follows: