NEW YORK, NY / ACCESSWIRE / May 10, 2018 / SSLJ.com Limited (SSLJ) operates as a vertically integrated online-to-offline home improvement service and smart home device provider in China. The company offers its products and services through sales and service network, including 46 showrooms and Website, mobile applications, and third party online shopping platforms. SSLJ was founded in 2016 and is headquartered in Wuhan and Shenzhen, China for management team and R&D/smart home product respectively.

Investment Thesis

Full coverage of the entire home improvement supply value chain reducing cost and driving sustainable growth

SSLJ's business model spans from raw material procurement, smart home device design and production, all the way to sales distribution, smart home furnishing and after-sales service, with strategically crafted standardized products and services under own brand to address all aspects of the smart home furnishing supply chain. By way of cutting off the intermediary agencies, SSLJ plans to reduce its production costs, which would allow the company to price its products competitively, boost its operation and logistics efficiencies, as well as simplify after-sales service processes. SSLJ's ability to capitalize on the entire supply value chain and eliminate middleman to cut cost has proved crucial to sustainable growth in a highly fragmented, region-bound home improvement industry in China.

Strategically positioned to gain market share of targeted age demographics

According to the 2017 China Home Furnishing and Decoration Survey by JD, the 20 - 40 years old demographics accounted for about 79% of total home decoration and improvement services spending. Currently people from this specific age demographic with a budget for home improvement & decoration ranging from 100k to 200k RMB contributed to the highest percentage of total industry spending. With its own and 3rd party online shopping sites coupled with mobile apps served as the company's main sales channels, SSLJ is strategically positioned to address and capitalize on the consumption behavior of this age demographic.

Smart home product innovation complementary to home furnishing services, laying foundation for a smart home ecosystem

SSLJ is one of the few vertically integrated O2O home improvement service providers that integrate the smart home products into service packages. Currently the company has developed under its own brand of more than 20 smart home products used in its smart home improvement packages, such as smart home security and smart home environment system. Furthermore, the innovations on smart home devices are driving subsequent orders from the returning customers, in addition to attracting new customers, extending the company's addressable markets and solidifying its leading position within the smart home ecosystem.

I. Growth Catalysts

Heightened contribution from maturing existing branches and new branches opening

During 2015, SSLJ had 3 branches which contributed $0.44 million revenue. During 2016, 6 new branches were added, with the revenue of $5.42 million. As of December 31, 2017, SSLJ had 9 branches to provide home improving and furnishing service with revenue increased to $10.49 million (YoY rate of ~94%).

This positive development from the maturing existing branches and new branches opening should secure a very high year-over-year revenue growth in the first quarter of 2018, off a relative low base in the first half of 2017 when the company's main focus was on product development.

Rapid expansion through franchise stores to capture new market opportunity

Besides expanding the company-owned sales chain branches, SSLJ also picks up the pace of franchise retail stores rollout. Under the franchising structure, SSLJ plans to charge each franchise store management fee. Meanwhile SSLJ could also charge a mark-up on raw material and products ordered by the franchise stores, as well as sell information of potential customers to the franchisees. The profit margin and earnings contribution from the franchisees could prove meaningful and higher than the direct branches'. Besides, SSLJ is not responsible for the operational expenses of the franchise stores. Through the franchise stores collaboration across Tier 1, 2 and 3 cities in China, SSLJ could expand its business operational footprint from scattered single points to cover much broader areas, and significantly enhance the utilities of the company's resources.

Online store coupled with new business segments launch to drive near term growth

The launch of online store and further expansion of smart home products in 2nd half of 2017 have paved way for the company's revenue growth starting in 2018. Additionally, advertising services rendered to merchants are expected to provide incremental revenue stream to the company.

SSLJ launched its online store in 2017 to facilitate sales of its smart home products. This online store allows the company's existing customers to purchase smart home devices and components on top of its home improvement packages. The company also further expanded its smart home product business with the introduction of its first smart home product in June 2017, followed by launching several additional new smart home products in the third quarter of 2017.

Rising contract prices stipulates growth visibility

There is a clear price uptrend in new contract signed in the back-end of 2017 following the rollout of the 3rd generation smart home products, evidenced by a YoY jump of 73% in contract unit price from the 1H-2017, and that price momentum driven revenue growth is yet to be realized in 2018.

Exhibit 1. SSLJ's Contract Unit Price (USD)

Source: SSLJ 20F Company filing

Strategic partnership to boost operation efficiencies and build business scale

SSLJ entered into a nationwide strategic business cooperation agreement with JD.com (''JD'') in February 2018. Overall, this strategic alliance between SSLJ and JD should further enhance the operation efficiency and commercial value for both parties.

Later in February 2018, SSLJ entered into a strategic cooperation framework agreement (the "Agreement") with Hubei Rural Credit Cooperatives ("HBRCC"). This partnership shall provide opportunities for SSLJ to leverage HBRCC's large consumer base, while open the door for SSLJ to grow into several other areas and take advantage of increasing opportunities.

In February 2018, SSLJ entered into a strategic cooperation agreement with Tianmen Han Da Technology Co., Ltd. ("Han Da"), pursuant to which, SSLJ is now the featured contractor to handle the decoration design and construction of Han Da's projects. In the initial phase of the Number Zero Yard project, the construction and decoration of a total of 110,000 square meters' project (Tianmen commercial project) has been entrusted to SSLJ. To put Tianmen commercial project's scale in perspective, the total construction and decoration area of the Tianmen commercial project of up to 110,000 square meters includes 724 luxury residential units, 30 ground floor stores as well as an 8,000-square-meter-large Agricultural Products Exhibition Center. The Tianmen commercial project is tentatively scheduled to commence no later than June 30, 2018.

B2B business model and the policy guidance of long-term rental building to lock in mid-to-long term revenues growth

SSLJ continues to grow its business momentum with the launch of B2B business on top of its existing B2C model. The company's new B2B efforts have become evident with a RMB 110 million (US$17.3 million) contract awarded by Han Da, a leading construction and e-commerce platform company in China, for the decoration design and construction of Han Da's Tianmen commercial project, which marks the initial phase of HanDa's Number Zero Yard project, with the second phase of the project covering an area of another 100 mu (16.5 acres). According to the Agreement entered with Han Da in February 2018, the estimated value of the entire Number Zero Yard projects expects to reach at least RMB 170 million (US$26.8 million), with the potential to reach RMB 200 million in revenues, which is expected to fully realize in the 1H 2019.

In addition, according to latest series of policies and regulations released, the government encourages to renovate existing leased houses and converting commercial buildings into the long-term rental buildings. The modern, standardized, and durable furnishing styles are common used for rental buildings, fitting the marketing position of SSLJ. As the development of long-term rental building, it may bring more opportunities for the high-efficient furnishing service provider, such as SSLJ.

II. Competitive Advantages

Speedier product turnaround facilitated by users' behavioral analysis

SSLJ's comprehensive network of operation catered to the habits of customers who regularly conduct commerce using the Internet or mobile devices and through social media platforms.

Relative to the traditional home furnishing and decoration companies, SSLJ utilizes the internet platform and mobile applications, in addition to its physical sales stores to connect consumers while offer standardized products and services. The company uses these platforms to promote its services and products to consumers, including website, mobile applications, 3rd party online shopping and social media networks, such as Tmall.com, JD.com, Taobao.com, and WeChat. It also utilizes a variety of user behavioral analysis to enable targeted promotion and marketing.

Utilizing online and mobile sales channels coupled with the standardized product and service package offerings have enabled the company to significantly shorten consumer's shopping process and order confirmation process, as well as allow the company to delivery product and turn service around at a much faster pace, compared to the general 58 working day project cycle offered by the traditional home improvement service providers to complete the whole project. The condensed project delivery cycle of high quality services has considerably raised the company's competitive advantages over those traditional service providers.

First mover in proven vertically integrated O2O business model

The O2O business model is proved to be the future for the home decoration/improvement service providers in China to compete in a highly fragmented market constrained by the regionality limitation.

Compared to traditional home improvement service providers, SSLJ's O2O business model provides the customers with a highly cost efficient, one stop home improvement package with shortened order confirmation and project implementation cycle, to attract the targeted high-spending age demographics accustomed to online shopping and high-quality services.

SSLJ's O2O business model utilizes the internet platform and mobile applications to connect consumers and offering standardized products/services. The model not only allows the company to establish a comprehensive product database of all its home improvement products, and to implement strict quality controls on its products and suppliers, it also enables the company to provide customized design modules according to individual customer style, preference and practical needs, in addition to the standardized product and service offerings. Its capacity to integrate online client acquisitions, big data analytics and offline physical smart home decoration construction has created a very high entry barrier for SSLJ's competitors, while allowed SSLJ to continue to compete with strong competitive advantages.

Exhibit 2. SSLJ's Supply Chain Flowchart

Source: Stone Street Group compiled

Comprehensive operation network creating economies of scale

In 2015, the company expanded from merely 3 branches, while currently SSLJ owns 12 sales offices and 9 branches, and maintains 10 warehouses and 46 showrooms throughout 10 large cities in China.

The company further plans to add 30 franchise stores in the adjacent neighboring cities in the near term. According to the management, the company's direct stores have already covered 17 cities, and is currently in talks with additional 18 potential franchising stores.

The company centralizes procurement and distribution of materials and products through its logistic distribution centers, as well as standardizes its services and products offering, aiming to reduce the cost of goods sold/produced through greater economy of scale. SSLJ is able to minimize the overall costs and maximize operation efficiency, as well as to deliver high-quality products and services to its customers at a competitive price.

Exhibit 3. SSLJ Coverage in China Market (Orange Spot: Covered Cities; Dash Lines: Developing)

Source: Marketing Department of SSLJ

Self-brand smart home products sales supplementary to service package contracts bring about returning customers

SSLJ is one of the few vertically integrated O2O home improvement service providers that essentially integrates smart home products into the standardized service and product packages offering. SSLJ uses high quality, environmentally friendly materials and works with the suppliers in developing its own brand of smart home products to bring smart home solutions into the customer's everyday life, where energy saving, and home security are highly desired.

Currently, there are over 20 innovative smart home products used in the company's smart home improvement packages. Every smart home product is connected to the smart home systems, and can therefore transmit signals through wireless communication to the console and provide real time feedback that allows remote control of the home appliance switches, such as the lighting, curtains, door locks, etc. The smart home system is able to support up to 50 different settings.

Adding smart home products/materials to its standardized home improvement service packages has further enhanced the company's competitive advantages, and laid the foundation for the future sales growth. Customers used the company's home furnishing services could return for additional purchases of the company's stand-alone smart home products, generating incremental revenues for the company and converting one-time or low-frequency consumption into high-frequency consumption. With the market for smart products further expanding, revenues from the company's smart products sales are expected to catch up with its home improvement service business not too far down the road.

Building Information Management system (''BIM'') allows supply chain competitive pricing; Enterprise Resource Planning (''ERP'') enhances customer experience

SSLJ uses its ERP system to monitor construction and customer acceptance, and uses its BIM system to efficiently complete high quality design, streamline the service chain, and offer competitive pricing to its customers by cutting the layered middlemen.

SSLJ's BIM system allows efficient, high quality completion of the design and streamlines the service chain. By cutting the intermediaries, SSLJ is able to enhance efficiency, reduce costs, and offer competitive prices for the company's packages. In addition, the information collected by the database should further strengthen the company's research and development capabilities.

Exhibit 4. SSLJ's Factory to Customer Model

Source: Company Website

SSLJ also uses an ERP system to monitor construction and customer acceptance. The combination of SSLJ's ERP system and the BIM system allows the company's account managers to track the status of projects right from the start till the projects are completed.

The innovative computer systems enable SSLJ to offer customer with competitive pricing by cutting off middlemen and tightly control project quality. As a result, both the company's operation efficiency and customer's shopping experiences are greatly enhanced.

III. Company Overview

Introduction

SSLJ.com Limited was founded in 2016 incorporated under the laws of the Cayman Islands, and is headquartered in Wuhan and Shenzhen, China.

The company operates as a vertically integrated online-to-offline home decoration service and product provider. Through its online platforms and offline sales and service network in China, SSLJ provides its customers with a solution for their home improvement needs by offering consulting, design, construction, and furnishing services, as well as high-tech products. The company also offers furnishing services for new constructions, as well as renovation and remodeling of old apartments.

Operations

The company has 9 branch companies and 12 sales offices, including 46 showrooms, in 10 cities, namely Beijing, Shanghai, Shenzhen, Wuhan, Suzhou, Hefei, Zhengzhou, Tianjin, Chengdu, and Xi'an.

The Company also offers its services and products on its own Website at http://www.sslj.com and various mobile applications, as well as its stores on third party platforms, such as Tmall.com, JD.com and Taobao.com. Customers might either make appointments for free consultation and measurements or purchase its home improvement services and products on those online sites.

The company launched its new online shopping mall in 2017. This mall serves as another primary online sales channel in addition to the third party platforms. The company's customers could purchase furniture and smart home devices used/included in its home improvement packages, as well as making deposits for its home improvement services.

Products and Services

To offer the company's customers a full-service home improvement solution, the company sells standardized packages of services and products. Such packages include consultation, design, construction and furnishing services in connection with home improvement, as well as products, such as furniture, lighting, appliances, customized cabinets and smart home systems. Packages are listed and described in full details on the company's Website, mobile applications, and third party online shopping platforms.

In 2017, SSLJ launched its third generation of services and products, which were improved versions of its earlier products due to the inclusion of electrical appliances and upgraded smart home products. The company's first smart home product, the ultra-thin sweeping robot was introduced to the market in June 2017, followed by the launch of various additional new smart home products in the third quarter of 2017, including rice cooker, power bank and air purifier.

Services

The company's services include design, project management, water and electricity circuit reconstruction, and masonry work, transportation of materials, bathroom backfilling, floor screening, garbage disposal, furnishing, installation and environmental treatment. The company guarantees to complete the project within 58 working days for its standard packages.

The company's services also include environmental testing and formaldehyde removal. At the end of the construction, the company conducts environmental testing of the property to make sure it is formaldehyde free.

Products

The Company's standard packages cover a range of materials and products, mainly consisting of various categories, such as materials, hardware and appliances, furniture, decoration, and smart home products.

Smart home health ecosystem strategies

SSLJ intends to satisfy its customer needs by offering standardized design and enhanced customer experience. The company also intends to continue to integrate healthcare service in the company's smart home service packages to build its smart home health ecosystem.

Intellectual Property

As of September 30, 2017, the company had registered seven domain names relating to its business, including the company's www.sslj.com website, with the Internet Corporation for Assigned Names and Numbers and China Internet Network Information Center. The company also held 5 works of art copyrights, 21 registered software copyrights, 2 industrial design patents and 8 trademarks in the PRC.

IV. Residential Decoration & Improvement Industry Analysis

China's home decoration & improvement industry is massive and currently undergone rapid-growth, however remains highly fragmented, age demographic concentrated, and bounded by regionality limitation.

Industry players with strong competitive advantage to benefit from the massive yet highly fragmented market as the industry undergoing consolidation

Though the total market size of China's residential decoration industry is massive (with an estimated market value of ~RMB 1.8 trillion in 2016), it is also highly fragmented and dispersed, constrained by regionality/locality. The industry is composed of many small local players, while majority of the local players have not been able to successfully transform themselves to compete with the larger national players due to limited resources. Most of these local players had been suffering from operating net losses, and in some extreme cases, ended up bankrupted due to the competition from the larger national home decoration companies.

To illustrate how fragmented the industry is, there are only 3 listed companies (namely SSLJ, Dong-Yi-Ri-Sheng, MingDiao) under the home decoration and improvement category in China, with an aggregate market share of merely 0.21%. And among these three listed companies, only SSLJ is Internet based, with the other two are the traditional home furnishing service providers.

Such fragmentation provides a huge market potential for companies with technologies and product services strongly tied to modern consumption behavior to continue to expand their business scale and take market shares for a very long way to go.

Exhibit 5. Consumption of Home Decoration & Improvement by Price Range

Source: Wind

As the industry continues to evolve, the competition is also becoming increasingly intensified, prompting increasing industry consolidation and pushing forward a more concentrated market constituted of larger players, evidenced by the reduced numbers of overall industry service providers, down to 132,000 in 2017 from over 150,000 in 2010.

This development is anticipated to qualify companies with O2O business models and national geographic footprint to take a leading role as an industry consolidator, such as SSLJ. And with greater economies of scale and higher operation efficiencies achieved through consolidation, these national players are set to take further market shares from the smaller local players, with their own logistics & distribution centers and warehouses, as well as extensive O2O sales channels and networks.

Exhibit 6. China Home Decoration & Improvement Industry Total Market Value & Number of Decoration Companies (Traditional + Internet)

Source: China Construction & Decoration Association

Consumer concentration on age 20-40 demographics and mid-end packages

China's B2C home decoration & improvement market is massive, the home decoration and improvement market data is broken down by age demographic, home decoration budget, and consumer's annual income per household, as well as by area division ratio of housing type. Currently the age demographic of 20-40 years old accounted for the highest percentage (about 80%) of total home improvement & decoration spending/consumption. Moreover, over half of the consumers are willing to pay 2000~5000 RMB per square meter for new home decorations, supported by improving spending power and demand for higher construction and product quality.

Exhibit 7 & 8 Consumer Age Demographic and Consumption of Home Decoration & Improvement by Price Range

Source: 2017 China Home Furnishing and Decoration Survey, JD

Internet, mobile sales channel and one-stop, full service product offering are essential to attract young demographic

With young demographic, especially people of age 20 - 40, making up the major consumption pool of home decoration, internet, mobile and full decoration services are essential to address the new consumption behavior and preference. People from this particular demographic grew up in the Internet era, with mobile phones the main channel for almost everything, including banking and shopping.

As people from this demographic tend not to focus their time on supervising the entire decoration processes, which could get very tedious at times, companies that offer time-efficient, cost-effective and standardized products and services powered by the convenient O2O business model are naturally becoming the top choices for this demographic. This trend is expected to continue and be the dominant force driving the industry growth.

China's Internet housing decoration & improvement market grew 25.7% from 2016 to 2017 and plans to grow another 20.1% YoY in 2018 followed by another 19.8% in 2019, according to iResearch Consulting Group. Despite the strong growth, the Internet housing decoration & improvement market remains relatively small compared to the overall market size, or RMB246 billion versus RMB1.87 trillion in 2017, leaving a huge untapped market for the Internet home decoration & improvement service providers to grab.

Exhibit 9. China Internet Housing Decoration & Improvement Market Size Forecast (RMB 100 Million)

Source: Chinese Internet Household Decoration Survey Report by iResearch Consulting Group

Home decoration industry to benefit from the improving housing market in China

Recent housing industry data showed an increase in residential gross areas sold (GAS). An increase in GAS is anticipated to lead to a rise in both the construction-start and the completed floor areas in one to two years out, providing the industry players with greater revenue visibility for at least the next few years. This recent development in the housing market in turn should boost the overall size of the home decoration industry, basing on areas demanding for home decoration or improvement.

Exhibit 10. YoY Change (%) - Gross Areas Sold Vs. New Construction Areas

Source: Wind

Explosive demand to renovate or upgrade the old houses continues to support the industry growth

According to the China National Information Center, the pace of urbanizing shanty towns and old cities in China has been accelerating at an explosive rate, and the rate of old housing stock demolition has also remained at its high level. Basing on the urban population estimate of 670 million and the per capita housing construction area of 31.6 square meters at the end of 2010, the total housing stock of urban residents was approximately 21.17 billion square meters at the end of 2010. We could then estimate that a total of 4.66 billion square meters in old housing stock would require upgrade, renovation or even-reconstruction by 2020, assuming 22% of the total housing areas coming from buildings built before 1990.

By further applying a conservative assumption for per square meter renovation cost of 100 yuan, the old housing built before 1990 could then be expected to have a reconstruction market value of about 466 billion yuan. As the area of houses built in 1990-2000 is expected to increase further in the future, the market size of transforming old into new houses in urban areas is expected to continue to increase.

New government policies encourage rental building conversion, favoring companies with sufficient business scale and capital backbone

Since April 2016, the National Development and Reform Commission, the State Council, the Central Financial Leadership Group, the Ministry of Housing and Urban-Rural Development, and nine ministries and commissions have successively issued documents to accelerate the marketization of rental housing, regulate the housing market and to curb the real estate bubble through the establishment of a rent-purchase co-existence housing system. In December 2017, the Central Economic Work Conference put forward multifaceted policies to encourage real estate developers in renovating the existing leased houses, as well as in converting commercial building (buying and selling units by individual owners) into the long-term lease rental building (solely owned by the developer).

On such new real estate policies backdrop, various developers such as Vanke, Country Garden, and Evergrande Group have successively introduced long-term rental properties. The Construction Bank also announced its entry into the long-term rental market under the New Deal. The residential renovation demand resulting from these policy developments that encourage long-term lease building conversion should benefit companies with prudent business scales and financial backbone to take on renovation projects of grand-scales, significantly boosting their growth prospects down the road, such as SSLJ, where the company's capital is backed by its US IPO earlier this year, as well as the one billion yuan credit line secured recently from the local Three Gorges Rural Commercial Bank of Hubei Province.

V. Growth Analysis and Earnings Review (FY2016 versus FY2017 ending Dec. 31, 2017)

2017 was a transformative year for SSLJ. The company not only expanded its operations footprint throughout China, but also added new business segments contributing to incremental revenue streams.

The concentration of sales from Wuhan decreases from 84.9% in 2015 to 34.2% in 2017, along with the increases of sales concentrations from other cities, showing SSLJ has a more diversified geographic presence year after year. Additionally, the company started to provide advertising services for its merchants in 2017, including an endorsement agreement with celebrity and online marketing campaign, which had driven the company's revenues growth by 201% from 2016 to 2017 and are expected to further increase the revenue and improve operating performance in 2018.

Build on the company's strong operating momentum in 2017, the company is also taking up its marketing efforts, including celebrity endorsement and online marketing campaigns on the third party websites and search engines, to lay a solid foundation for extended growth momentum into 2018.

Robust revenue growth from higher number of contract completion and new business segments

SSLJ's 2017 revenues increased by 201% to $16.33 million from 2016 of $5.42 million. The near tripled revenues were mainly attributed to the increases in both the number of contracts completed and the average revenue per contract, which collectively contributed to higher contract revenues of home improving and furnishing projects.

The robust revenues growth in 2017 was also driven by new sales of the company's smart home products and materials, as well as by its new advertising services rendered to the merchants.

During 2017, the company employed 692 employees, up 24% compared to the prior year, and majority of the new hired were sales-focused, which had translated into higher numbers of contract signed and completed.

Exhibit 11. Revenues Breakdown by Segment (In USD Millions)

Source: SSLJ 20F Company filing

Exhibit 12. Total Revenues (Thousands USD)

Exhibit 13. Yearly Employee Numbers (FY15-FY17)

Source: SSLJ 20F Company filing

Profitability - Robust gross profit growth from higher service contract prices

The company's gross profit increased by 133% YoY to $1.41 million in 2017, however its gross margin declined by 2.5% to 8.7% in 2017, mainly due to higher incentives offered to its subcontractors in the first half of 2017 leading to lower margin in the company's home improvement and furnishing projects.

Nevertheless, the company's new pricing on its service packages had resulted in a rapid increase in the unit price of its order contracts. The unit price of new contracts signed in the second half of 2017 was as high as US$21,800, nearly doubled that in 2016 of only US$12,210. Precise positioning of consumer group, high price and high quality of the new model had replaced the original operating model of quick turnover of low-margined product offering. Under the original model, the gross margin of the company's home improvement business was very low, with the average gross profit margin per contract of below 4% in the first half of 2017. While upon the launch of its third-generation products, the average gross profit margin per contract jumped to 15% in the second half of 2017, almost quadrupled.

Exhibit 14. Gross Profit (Thousands USD) and Gross Margin (%) (FY15 to FY17)

Source: Company filing

The company's home furnishing contract unit price jumped 73% in 2nd half of 2017 from the first half, following the rollout of 3rd-generation smart home products.

On the flip side, the company ended FY2017 with a net loss of $23.7 million, or $0.59 per share, reflective of significant operational costs incurred from its rapid expansion during the year, such as additional rent paid for new branches and expenses associated with the new sale teams set up, as well as from the efforts devoted to the company's new marketing activities in the 2nd quarter of the year and new smart home product development.

The company's contract signing was put temporarily on hold in the middle of 3rd-generation smart product rollout in late Q1 and early Q2 of 2017, leading to a lower level of signed contract number. Additionally, the revenues realized from the 2H of 2017 were mainly from the prior version of 2nd-generation product series, returning an overall gross margin of 8.7% in 2017.

Looking ahead, the high operation costs are possibly to ease throughout 2018 as the capital intensive investment phase out down the road, together with the rising gross margin, SSLJ has a very good chance of turning profitable in 2H of 2018, if not earlier.

VI. Risk

Sales of smart products risk

There is an uncertainty about the progress of launching the smart products. If the sales of smart products could not meet the expectation, it may adversely affect the performance of the company.

Policy risk

The policies in China relating to renovating the old houses, the encouragement of conversion to rental building, and furnishing and decoration industry perhaps change, adversely affecting the development and performance of the company in the future.

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