Ming Yuan Cloud group Holdings liMited 明源雲集團控股有限公司360storage.hkej.com/ipo/00909.pdf · Notes: (1) All times and dates refer to Hong Kong local time and date,

g l o B a l o F F e r i n g

Joint Sponsors, Joint Global Coordinators and Joint Bookrunners

(Incorporated in the Cayman Islands with limited liability)

Ming Yuan Cloud group Holdings liMited

明源雲集團控股有限公司Stock Code : 909

Other Joint Bookrunners

IMPORTANT: If you have doubt about any of the contents in this prospectus, you should obtain independent professionaladvice.

Ming Yuan Cloud Group Holdings Limited明源雲集團控股有限公司

(Incorporated in the Cayman Islands with limited liability)

GLOBAL OFFERING

Number of Offer Shares underthe Global Offering

: 374,204,000 Shares (subject to the Over-allotment Option)

Number of Hong KongOffer Shares

: 37,422,000 Shares (subject to reallocation)

Number of International Offer Shares : 336,782,000 Shares (subject to reallocationand the Over-allotment Option)

Maximum Offer Price : HK$16.50 per Offer Share plus brokerageof 1.0%, SFC transaction levyof 0.0027% and Hong KongStock Exchange trading feeof 0.005% (payable in full on applicationin Hong Kong dollars, subject to refund)

Nominal value : HK$0.0001 per ShareStock code : 909

Joint Sponsors, Joint Global Coordinators and Joint Bookrunners

Other Joint Bookrunners

Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsibilityfor the contents of this prospectus, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoeverarising from or in reliance upon the whole or any part of the contents of this prospectus.A copy of this prospectus, having attached thereto the documents specified in the section headed “Documents Delivered to the Registrar of Companies and availablefor inspection” in Appendix V to this prospectus, has been registered by the Registrar of Companies in Hong Kong as required by Section 342C of the Companies(Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong). The Securities and Futures Commission and the Registrar ofCompanies in Hong Kong take no responsibility for the contents of this prospectus or any other documents referred to above.The Offer Price is expected to be determined by agreement between the Joint Global Coordinators (for themselves and on behalf of the Underwriters) and ourCompany on the Price Determination Date. The Price Determination Date is expected to be on or around Friday, September 18, 2020 and, in any event, not later thanMonday, September 21, 2020.The Offer Price will be not more than HK$16.50 and is currently expected to be not less than HK$15.00 unless otherwise announced. If, for any reason, the OfferPrice is not agreed by Monday, September 21, 2020 between the Joint Global Coordinators (for themselves and on behalf of the Underwriters) and our Company,the Global Offering will not proceed and will lapse.The Joint Global Coordinators (for themselves and on behalf of the Underwriters) may, with our consent, reduce the number of Offer Shares being offeredunder the Global Offering and/or the indicative Offer Price range below that stated in this prospectus at any time on or prior to the morning of the last dayfor lodging applications under the Hong Kong Public Offering. In such a case, an announcement will be published on the websites of the Stock Exchangeat www.hkexnews.hk and our Company at www.mingyuanyun.com not later than the morning of the day which is the last day for lodging applications underthe Hong Kong Public Offering. For further information, please refer to the sections headed “Structure of the Global Offering” and “How to apply for HongKong Offer Shares” in this prospectus.The obligations of the Hong Kong Underwriters under the Hong Kong Underwriting Agreement are subject to termination by the Joint Global Coordinators (on behalfof the Underwriters) if certain grounds arise prior to 8:00 a.m. on the Listing Date. See the section headed “Underwriting – Underwriting Arrangements and Expenses– Hong Kong Public Offering – Grounds for Termination” in this prospectus.Prior to making an investment decision, prospective investors should consider carefully all of the information set out in this prospectus, including the risk factorsset out in the section headed “Risk Factors” in this prospectus.The Offer Shares have not been and will not be registered under the U.S. Securities Act or any state securities law in the United States and may not be offered, sold,pledged or transferred within the United States, except that Offer Shares may be offered, sold or delivered (a) in the United States solely to QIBs in reliance on Rule144A or another exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act or (b) outside the United States in offshoretransactions in reliance on Regulation S.

IMPORTANT

September 15, 2020

If there is any change in the following expected timetable of the Hong Kong Public

Offering, we will issue an announcement in Hong Kong to be published on the websites of the

Stock Exchange at www.hkexnews.hk and our Company at www.mingyuanyun.com.

Hong Kong Public Offering commences and WHITE andYELLOW Application Forms available from . . . . . . . . . . . . . . . . . .9:00 a.m. on Tuesday,

September 15, 2020

Latest time to complete electronic applications under

White Form eIPO service through the designatedwebsite www.eipo.com.hk(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11:30 a.m. on Friday,

September 18, 2020

Application lists of the Hong Kong Public Offering open(3) . . . . . . . . .11:45 a.m. on Friday,

September 18, 2020

Latest time to lodge WHITE and YELLOW Application Forms . . . . .12:00 noon on Friday,September 18, 2020

Latest time to give electronic application instructionsto HKSCC(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12:00 noon on Friday,

September 18, 2020

Latest time to complete payment of White Form eIPOapplications by effecting internet bank transfer(s)

or PPS payment transfer(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12:00 noon on Friday,

September 18, 2020

Application lists of the Hong Kong Public Offering close . . . . . . . . . .12:00 noon on Friday,

September 18, 2020

Expected Price Determination Date(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Friday,

September 18, 2020

(1) Announcement of:

• the Offer Price;

• the level of applications in the Hong Kong Public Offering;

• an indication of the level of interest in the International Offering; and

EXPECTED TIMETABLE

– i –

• the basis of allocation of the Hong Kong Offer Shares,

to be published on the websites of the Stock Exchange

at www.hkexnews.hk and our Companyat www.mingyuanyun.com on or before(6) . . . . . . . . . . . . . . . . . . . . . . .Thursday,

September 24, 2020

(2) Announcement of results of allocations in

the Hong Kong Public Offering (with successful applicants’

identification document numbers, where appropriate) to

be available through a variety of channels including

the websites of the Stock Exchange at www.hkexnews.hkand our Company at www.mingyuanyun.com(see the section headed “How to Apply for Hong Kong

Offer Shares – 11. Publication of Results” in

this prospectus) from . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Thursday,

September 24, 2020

(3) A full announcement of the Hong Kong Public Offering

containing (1) and (2) above to be published on the websites

of the Stock Exchange at www.hkexnews.hk(7) and ourCompany at www.mingyuanyun.com from . . . . . . . . . . . . . . . . . . . . . . . . . .Thursday,

September 24, 2020

Results of allocations for the Hong Kong Public Offering will be

available at www.iporesults.com.hk (alternatively:English https://www.eipo.com.hk/en/Allotment;Chinese https://www.eipo.com.hk/zh-hk/Allotment)with a “search by ID” function from . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Thursday,

September 24, 2020

Dispatch/collection of Share certificates or deposit of Share certificates

into CCASS in respect of wholly or partially successful applications

pursuant to the Hong Kong Public Offering on or before . . . . . . . . . . . . . . . . . .Thursday,

September 24, 2020

Dispatch/collection of White Form e-Refundpayment instructions/refund cheques in respect of wholly

successful (if applicable) or wholly or partially unsuccessful

applications on or before . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Thursday,

September 24, 2020

Dealings in Shares on the Stock Exchange to commence on . . . . . . . . . .9:00 a.m. on Friday,

September 25, 2020

EXPECTED TIMETABLE

– ii –

Notes:

(1) All times and dates refer to Hong Kong local time and date, except as otherwise stated.

(2) You will not be permitted to submit your application through the designated website at www.eipo.com.hk after11:30 a.m. on the last day for submitting applications. If you have already submitted your application andobtained a payment reference number from the designated website prior to 11:30 a.m., you will be permittedto continue the application process (by completing payment of application monies) until 12:00 noon on the lastday for submitting applications, when the application lists close.

(3) If there is a tropical cyclone warning signal number 8 or above, or a “black” rainstorm warning and/or ExtremeConditions in force in Hong Kong at any time between 9:00 a.m. and 12:00 noon on Friday, September 18,2020, the application lists will not open a on that day. See the section headed “How to Apply for Hong KongOffer Shares – 10. Effect of Bad Weather on the Opening and Closing of the Application Lists” in thisprospectus.

(4) Applicants who apply for Hong Kong Offer Shares by giving electronic application instructions to HKSCCshould refer to the section headed “How to Apply for Hong Kong Offer Shares – 6. Applying by GivingElectronic Application Instructions to HKSCC via CCASS” in this prospectus.

(5) The Price Determination Date is expected to be on or around Friday, September 18, 2020, and in any event,not later than Monday, September 21, 2020. If, for any reason, the Offer Price is not agreed between the JointGlobal Coordinators (for themselves and on behalf of the Underwriters) and our Company by Monday,September 21, 2020, or such other date as agreed between parties, the Global Offering will not proceed andwill lapse.

(6) Share certificates are expected to be issued on Thursday, September 24, 2020 but will only become validprovided that the Global Offering has become unconditional in all respects and neither of the UnderwritingAgreements has been terminated in accordance with its terms before 8:00 a.m. on Friday, September 25, 2020.Investors who trade Shares on the basis of publicly available allocation details prior to the receipt of sharecertificates and before they become valid do so entirely of their own risk.

(7) The announcement will be available for viewing on the “Main Board – Allotment of Results” page on the StockExchange’s website at www.hkexnews.hk, and our Company’s website at www.mingyuanyun.com.

(8) None of the websites or any of the information contained on the website forms part of this prospectus.

(9) e-Refund payment instructions/refund checks will be issued in respect of wholly or partially unsuccessfulapplications and also in respect of successful applicants in the event that the Offer Price is less than the initialprice per Hong Kong Offer Share payable on application. Part of your Hong Kong identity cardnumber/passport number, or, if you are joint applicants, part of the Hong Kong identity card/passport numberof the first-named applicant, provided by you may be printed on your refund check, if any. Such data wouldalso be transferred to a third party to facilitate your refund. Your banker may require verification of your HongKong identity card number/passport number before encashment of your refund check. Inaccurate completionof your Hong Kong identity card number/passport number may lead to delay in encashment of your refundcheck or may invalidate your refund check. Further information is set out in the section headed “How to Applyfor Hong Kong Offer Shares” in this prospectus.

Applicants who apply through the White Form eIPO service and paid their application monies through singlebank account may have refund monies (if any) despatched to their application payment bank account, in theform of e-Refund payment instructions. Applicants who apply through the White Form eIPO service and paidtheir application monies through multiple bank accounts may have refund monies (if any) despatched to theaddress as specified in their application instructions to the White Form eIPO Services Provider, in the formof refund checks, by ordinary post at their own risk.

The above expected timetable is a summary only. You should read carefully thesections headed “Structure of the Global Offering” and “How to Apply for Hong KongOffer Shares” in this prospectus for details relating to the structure of the GlobalOffering, procedures on the applications for Hong Kong Offer Shares and the expectedtimetable, including conditions, effect of bad weather and the dispatch of refund checksand Share certificates.

EXPECTED TIMETABLE

– iii –

IMPORTANT NOTICE TO PROSPECTIVE INVESTORS

This prospectus is issued by us solely in connection with the Hong Kong PublicOffering and the Hong Kong Offer Shares and does not constitute an offer to sell ora solicitation of an offer to buy any security other than the Hong Kong Offer Sharesoffered by this prospectus pursuant to the Hong Kong Public Offering. This prospectusmay not be used for the purpose of making, and does not constitute, an offer orinvitation in any other jurisdiction or in any other circumstances. No action has beentaken to permit a public offering of the Hong Kong Offer Shares in any jurisdictionother than Hong Kong and no action has been taken to permit the distribution of thisprospectus in any jurisdiction other than Hong Kong. The distribution of thisprospectus for purposes of a public offering and the offering and sale of the Hong KongOffer Shares in other jurisdictions are subject to restrictions and may not be madeexcept as permitted under the applicable securities laws of such jurisdictions pursuantto registration with or authorization by the relevant securities regulatory authorities oran exemption therefrom.

You should rely only on the information contained in this prospectus and theApplication Forms to make your investment decision. The Hong Kong Public Offeringis made solely on the basis of the information contained and the representations madein this prospectus. We have not authorized anyone to provide you with information thatis different from what is contained in this prospectus. Any information orrepresentation not contained nor made in this prospectus and the Application Formsmust not be relied on by you as having been authorized by us, the Joint Sponsors, theJoint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, any of theUnderwriters, any of our or their respective directors, officers, employees, agents, orrepresentatives of any of them or any other parties involved in the Global Offering.

Expected Timetable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Glossary of Technical Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Forward-Looking Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Waivers from Strict Compliance with the Listing Rules . . . . . . . . . . . . . . . . . . . . 84

Information about this Prospectus and the Global Offering . . . . . . . . . . . . . . . . . 89

CONTENTS

– iv –

Directors and Parties Involved in the Global Offering . . . . . . . . . . . . . . . . . . . . . 94

Corporate Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101

Industry Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104

History, Reorganization and Corporate Structure . . . . . . . . . . . . . . . . . . . . . . . . . 122

Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150

Contractual Arrangements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233

Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 258

Relationship with the Controlling Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . 276

Connected Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 281

Directors and Senior Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287

Substantial Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 298

Cornerstone Investors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 301

Share Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 310

Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 313

Future Plans and Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 393

Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 398

Structure of the Global Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 411

How to Apply for Hong Kong Offer Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 422

Appendix I Accountant’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1

Appendix II Unaudited Pro Forma Financial Information . . . . . . . . . . . . . . II-1

Appendix III Summary of the Constitution of the Company and CaymanCompany Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-1

Appendix IV Statutory and General Information . . . . . . . . . . . . . . . . . . . . . IV-1

Appendix V Documents Delivered to the Registrar of Companies andAvailable for Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1

CONTENTS

– v –

This summary aims to give you an overview of the information contained in thisprospectus. As it is a summary, it does not contain all the information that may be importantto you and is qualified in its entirety by, and should be read in conjunction with, the full textof this prospectus. You should read the entire prospectus before you decide to invest in theOffer Shares.

There are risks associated with any investment. Some of the particular risks in investingin the Offer Shares are set out in “Risk Factors” in this prospectus. You should read thatsection carefully before you decide to invest in the Offer Shares.

OVERVIEW

We provide enterprise-grade ERP solutions and SaaS products to property developers andother industry participants along the real estate value chain in China. We are the No. 1 softwaresolution provider for property developers in China with a market share of 18.5% in terms of revenuein 2019, according to Frost & Sullivan. Within this market, we are also the No. 1 provider of bothERP solutions and SaaS products in terms of revenue, with leading market shares of 16.6% and23.3%, respectively. Our ERP solutions and SaaS products enable property developers and otherreal estate industry participants such as construction materials suppliers and property assetmanagement companies to streamline and digitalize their business operations.

Since our founding in 2003, we have been dedicated to driving the digital transformation ofChina’s real estate industry. Through integrating our deep industry expertise with relentless productinnovation, we have developed a comprehensive suite of industry-specific ERP solutions and SaaSproducts for property developers and other real estate industry participants to manage a wide rangeof business operations, including sales and marketing, procurement, cost management, projectmanagement, budgeting, and property asset management. For details of the key milestones in ouroperational history, see “History, Reorganization and Corporate Structure – Key Milestones.”

We have a broad and high-quality customer base with long-term relationships. In 2019, wedirectly and indirectly served approximately 4,000 paying end group customers, including nearly3,000 property developers. We directly and indirectly served 99 paying end group customers thatwere Top 100 property developers in 2019, which collectively contributed 42% of our total revenuesin the same year. More than 70 of the Top 100 property developers had used our software solutionsfor more than five years. During the Track Record Period, we had approximately 900, 1,200, 1,500and 1,000 paying end group customers for our ERP solutions in 2017, 2018, 2019 and for the threemonths ended March 31, 2020, respectively. During the same periods, we had approximately 1,600,2,500, 3,600 and 3,100 paying end group customers for our SaaS products, respectively. 90 of theTop 100 property developers in 2019 used both our ERP solutions and at least one of our SaaSproducts.

At the heart of our offerings is our unwavering commitment to product and technologydevelopment so we can build software solutions for China’s evolving real estate industry. Ourcomprehensive software solutions are designed to digitalize essential business operations of ourcustomers and enhance business interactions between our customers and their customers, suppliersand partners. Our cloud-based technologies enable rapid and cost-effective implementation as wellas support and customization of our ERP solutions to incorporate the latest technologies andindustry practices. Our reliable and mobile-friendly SaaS products enable our customers to rapidlydigitalize their business operations and allow us to continuously upgrade our products with newtechnology without incremental costs to our customers. Through building and offering ourproprietary PaaS, we expect to further enhance the development and customization of our SaaSproducts.

We achieved strong growth during the Track Record Period. Our total revenues increased ata CAGR of 47.7% from RMB579.6 million in 2017 to RMB1,264.0 million in 2019, and increasedfrom RMB194.8 million for the three months ended March 31, 2019 to RMB253.8 million for thethree months ended March 31, 2020. Our gross profit increased at a CAGR of 47.0% fromRMB460.3 million in 2017 to RMB994.6 million in 2019, and increased from RMB144.1 millionfor the three months ended March 31, 2019 to RMB193.3 million for the three months ended March31, 2020. Our net profit increased at a CAGR of 78.4% from RMB72.8 million in 2017 toRMB231.6 million in 2019, and increased from RMB6.9 million for the three months ended March31, 2019 to RMB14.7 million for the three months ended March 31, 2020. In 2017, 2018 and 2019and for the three months ended March 31, 2019 and 2020, our non-IFRS adjusted EBITDA wasRMB124.5 million, RMB201.5 million, RMB276.7 million, RMB14.3 million and RMB36.0million, respectively. In the same periods, our non-IFRS adjusted net income was RMB96.3 million,RMB163.0 million, RMB235.9 million, RMB6.9 million and RMB26.5 million, respectively. See“Financial Information – Non-IFRS Measures” for a complete reconciliation of our non-IFRSmeasures to their most comparable IFRS measures.

SUMMARY

– 1 –

Our Offerings

We provide a comprehensive set of industry-specific ERP solutions and SaaS products, bothof which can be purchased on a standalone or integrated basis with other solutions. With our ERPopen platform and PaaS infrastructure, which allows for strong scalability, connectivity andintegration of our software solutions, our ERP solutions and SaaS products enable our customers tooperate more efficiently and intelligently both within their enterprises and with their businesspartners.

Our ERP solutions allow property developers to effectively integrate and manage enterpriseresources and optimize core business functions including sales and marketing, procurement, costmanagement, project management, budgeting, and property asset management. In addition tosoftware licensing, we offer implementation services, product support services, and value-addedservices to deliver an effective integration of our ERP solutions into our customers’ own businessprocesses, databases and systems with enhanced performance and customization. The cloud versionof our ERP solutions, launched in 2017, offers substantial scalability benefits to our customers,while allowing us to achieve greater implementation flexibility and development efficiency. Wecharge customers software licensing fees, implementation fees as well as other fees in connectionwith ERP solutions. In 2017, 2018 and 2019 and the three months ended March 31, 2020, wegenerated revenues from sales of our ERP solutions in the amounts of RMB400.1 million,RMB583.5 million, RMB754.1 million and RMB124.1 million from approximately 900, 1,200,1,500 and 1,000 paying end group customers, respectively. See “Business – Our Offerings – OurERP Solutions – Helping Property Developers Run Their Business Optimally” for further detailsabout pricing and fee models of our ERP solutions.

Our SaaS products, which are cloud-based software applications containing various digitaltools and functions that are accessed by users through web portals, mobile apps and Weixin/WeChatmini program via both PC and mobile devices, help property developers and other real estateindustry participants to optimize their procurement, construction, marketing and sales, propertyasset management and other property related operations. Our SaaS products consist of CRM Cloud(雲客), Construction Cloud (雲鏈), Procurement Cloud (雲採購) and Asset Management Cloud (雲空間), catering to the diverse needs of property developers, suppliers, asset managers, propertyoperators, and other industry participants along the real estate value chain. We equip our CRMCloud (雲客) and Construction Cloud (雲鏈) with certain integrated smart devices such as POSterminals and smart cameras to enhance the overall performance of such SaaS products and furtherimprove user experience, thereby attracting more customers. 95, 94, 97 and 94 of the Top 100property developers subscribed for at least one of our SaaS products in 2017, 2018 and 2019 andthe first quarter of 2020, respectively. Through the adoption of cloud-based technologies, our SaaSproducts are fully integrated with our ERP solutions. For a description of our SaaS products, see“Business – Our Offerings – Our SaaS Products – Delivering Intelligent Solutions to Various RealEstate Industry Participants.”

During the Track Record Period, we generated revenues from sales of our SaaS products inthe amounts of RMB179.5 million, RMB329.3 million, RMB509.8 million and RMB129.6 millionfrom approximately 1,600, 2,500, 3,600 and 3,100 paying end group customers in 2017, 2018 and2019 and the three months ended March 31, 2020, respectively. See “Business – Our Offerings –Our SaaS Products – Delivering Intelligent Solutions to Various Real Estate Industry Participants”for further details.

Sales and Distribution Network

We sell and deliver ERP solutions and SaaS products through our direct sales force and anationwide network of regional channel partners. Our sales team is organized by geographic regionand divided into different teams targeting different types of customers and offerings, which resultsin a deep understanding of customers’ varying needs. We conduct direct sales through our salesteams based in tier-1 cities including Beijing, Shanghai, Shenzhen and Guangzhou, and closelywork with our regional channel partners to market our ERP solutions and SaaS products tocustomers in the rest of China for better cost efficiency.

The following table sets forth our revenue breakdown by direct sales and sales of our ERPsolutions and SaaS products through regional channel partners for the periods indicated.

For the year ended December 31, For the three months ended March 31,2017 2018 2019 2019 2020

Amount % Amount % Amount % Amount % Amount %(unaudited)

(RMB in thousands, except percentages)

Direct sales 393,488 67.9 538,448 59.0 713,404 56.4 97,485 50.0 123,711 48.7Regional channel partners 186,120 32.1 374,347 41.0 550,565 43.6 97,353 50.0 130,079 51.3

Total 579,608 100.0 912,795 100.0 1,263,969 100.0 194,838 100.0 253,790 100.0

SUMMARY

– 2 –

See “Business – Sales, Marketing and Distribution” and “– Our Regional Channel PartnersNetwork” and for further details.

Our Customers and Suppliers

Our end customers are predominantly property developers, from whom we derivesubstantially all of our revenue. See “Business – Our Customers” for further details.

Our suppliers primarily include cloud computing service providers, outsourcing softwareservice providers, software dongle suppliers and smart device providers. See “Business – OurSuppliers” for further details.

OUR STRENGTHS

We believe the following competitive advantages have contributed to our success and willhelp drive our growth in the future:

• The leading software solution provider for property developers in China;• Comprehensive, industry-specific solutions with strong growth and monetization

capabilities;• A broad and high-quality customer base with long-term relationships;• Effective and long-standing nationwide sales network;• Strong product development and technology capabilities; and• Visionary and experienced management team.

For further details, see “Business – Our Strengths.”

OUR STRATEGIES

To achieve our mission and further solidify our leadership, we intend to pursue the followingstrategies:

• Continue to invest in and expand our SaaS business along the real estate value chain;• Focus on product and technology innovation;• Strengthen sales and marketing to diversify customer base of regional property

developers and other participants along the real estate value chain;• Integrate industry resources to deepen and broaden relationships with leading property

developers; and• Pursue investment, acquisition and strategic opportunities.

For further details, see “Business – Our Strategies.”

OUR REGIONAL CHANNEL PARTNERS NETWORK

We have since our inception worked with a selected group of regional channel partners whotogether form an extensive sales and service network across China for us to rapidly scale up ourpresence in regional markets in a cost-effective manner. As of March 31, 2020, we cooperated with69 regional channel partners, covering 27 provinces across China.

To the best of our Directors’ knowledge, all of the 69 regional channel partners areIndependent Third Parties as of March 31, 2020. Based on the due diligence work conducted by theJoint Sponsors, there is nothing that came to the attention of the Joint Sponsors that would causethem to believe that any of the regional channel partners is not an Independent Third Party.

Our regional channel partners are contractually required, according to the agreement with us,to only serve us. To the best of our Directors’ knowledge, all of our 69 regional channel partnersonly served us during the Track Record Period. We believe such commercial arrangement ismutually beneficial to both our regional channel partners and ourselves. As advised by Frost &Sullivan, it is consistent with the industry norm to have a network of regional channel partners whoonly serve a particular software solutions provider. Based on the due diligence work conducted bythe Joint Sponsors, nothing has come to the Joint Sponsors’ attention that would cause them todisagree with Frost & Sullivan’s views that having a network of regional channel partners who onlyserve a particular software solutions provider is in line with the industry norm. For furtherinformation about our regional channel partners’ backgrounds, see “Business – Sales, Marketingand Distribution – Our Regional Channel Partner Network.”Why We Use Regional Channel Partners

We primarily leverage our effective network of regional channel partners to rapidly penetrateinto more fragmented regional markets in China and drive top-line growth to scale our business. Fora detailed discussion of our business rationale to use regional channel partners, see “Business –Sales, Marketing and Distribution – Our Regional Channel Partner Network – Why We UseRegional Channel Partners.” According to Frost & Sullivan, the engagement of regional channelpartners is consistent with the industry norm.

SUMMARY

– 3 –

Distinct Roles in Transactions and Accounting TreatmentsOur regional channel partners play distinct roles in transactions with us due to the different

nature of our ERP solutions and SaaS products. With respect to our ERP solutions where ourregional channel partners purchase the software license of our ERP solutions from us and resellthem to our end customers, we regard our regional channel partners as direct buyers of our ERPsolutions. Under this business model, we recognize revenues generated from sales of softwarelicense of our ERP solutions to our regional channel partners at the amounts billed to such regionalchannel partners. With respect to our SaaS products, our regional channel partners act as our agentsfor the sales of our SaaS products. Accordingly, we recognize revenues generated from sales of ourSaaS products through our regional channel partners at the gross amounts billed to end customers,and the commission expenses paid to such regional channel partners are recognized as part of ourselling and marketing expenses. For details of such commercial arrangement, see “Business – Sales,Marketing and Distribution – Our Regional Channel Partner Network – Key CommercialArrangements with Regional Channel Partners.”How We Compensate Regional Channel PartnersERP Solutions

We grant our regional channel partners different levels of discounts ranging from 50% to 65%for the sales of software license of our ERP solutions, based on their sales performance.

For illustrative purpose, the following table sets forth a weighted average discount rate thatwe granted to our regional channel partners during the Track Record Period, which is calculated bydividing (i) the aggregate amount of the discounts offered to each of the relevant regional channelpartners for their sales of software license of our ERP solutions in the same period, by (ii) the totalgross sales amount (namely without discounts) calculated based on the standard price of suchsoftware license sold to such regional channel partners in a given period.

For the year ended December 31,

For the threemonths ended

March 31,2017 2018 2019 2020

Weighted Average Discount Rates 63.1% 63.3% 62.9% 62.6%In 2017, 2018 and 2019 and the first quarter of 2020, revenues generated from our regional

channel partners for the sales of software license of our ERP solutions totaled RMB63.0 million,RMB115.3 million, RMB124.0 million and RMB17.0 million, respectively.

As confirmed by Frost & Sullivan who has taken into consideration the discount rates offeredby our comparable companies, we believe the discount rates we offered for ERP solutions duringthe Track Record Period are in line with the industry norm. As we continue to enhance our leadingposition in the market and improve our bargaining power, we have been and will continueoptimizing our discount rates to ensure our sustainable growth.

SaaS ProductsWe compensate our regional channel partners by offering them commissions for the sales of

our SaaS products, which include, in addition to different levels of product sales rebates rangingfrom 35% to 65% which is the largest component of the total commission expenses, one-offperformance incentives and fixed product delivery commissions. With respect to renewal ofsubscription of our SaaS products by end customers, we also grant the relevant regional channelpartners sales rebate at applicable rates. During the Track Record Period, the sales rebate rate thatwe granted to most of our regional channel partners ranged from 50% to 65%.

The following table sets forth the total commission expenses paid by us to our regionalchannel partners of SaaS business during the Track Record Period in both absolute amounts and asa percentage of the total SaaS revenues generated from regional channel partners.

For the year ended December 31,

For the threemonths ended

March 31,2017 2018 2019 2020

RMB % RMB % RMB % RMB %(unaudited)

(RMB in millions, except percentages)

Commission Expenses 77.1 77.9 141.8 74.9 202.1 68.0 50.8 64.4We believe the sales rebates we currently offer to our regional channel partners are reasonable

and fair, and such sales rebates are on normal commercial terms and in line with the industry norm,as confirmed by Frost & Sullivan who has taken into consideration the sales rebate offered by ourcomparable companies.

SUMMARY

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Profitability Analysis by Sales ChannelOur business operations are not organized in a way that all costs are identifiable and separable

between sales through our direct sales force and regional channel partners. As a substantial portionof our costs are incurred in connection with the relevant services provided by our staff to our endcustomers, regardless of whether such end customers are acquired by our direct sales force orregional channel partners, our accounting system does not keep track of or allocate all costs by saleschannel. For example, a substantial portion of our total cost of sales during the Track Record Periodwas staff costs that are not separable between sales through our direct sales force and regionalchannel partners. As a result, it requires significant management judgement to allocate unclassifiedcosts between sales generated from our direct sales force and regional channel partners, which maynot be accurate or appropriate. As such, we cannot separately track the profitability, including grossmargin and operating margin, of either our ERP solutions or SaaS products by sales channel.

To evaluate the effectiveness and cost efficiency of our regional channel partner network, weprimarily focus on (i) the weighted average discount rates with respect to ERP solutions and (ii)total commission expenses both in absolute amounts and as a percentage of our total SaaS revenuesgenerated from regional channel partners with respect to SaaS products, while balancing theirimpacts on the overall profitability of our ERP solutions and SaaS products. In addition, we alsoactively track and separately evaluate the operating margin of our ERP solutions and SaaS productsto ensure the long-profitable growth of both segments.

• With respect to our ERP solutions, the weighted average discount rate that we grantedto our regional channel partners for the sales of software license of our ERP solutionswas 63.1%, 63.3%, 62.9% and 62.6% in 2017, 2018 and 2019 and the first quarter of2020, respectively. Our weighted average discount rates remained stable during theTrack Record Period, and are anticipated to remain stable in the near term given we donot intend to materially change our current discount framework that is proven to beeffective in incentivizing our regional channel partners. Despite the increasedpercentages of sales through regional channel partners as a result of our continuouspenetration into regional markets, the overall net profit margin of ERP solutionsremained stably healthy at 36.4%, 34.7% and 36.2% in 2017, 2018 and 2019,respectively, which was largely attributable to our improved economies of scale andimproved operating efficiency.

• With respect to our SaaS products, we incurred net losses during the Track RecordPeriod primarily because we have made substantial upfront investment in productdevelopment and sales and marketing activities to drive customer acceptance of our SaaSproducts and the rapid growth of our SaaS business, which we believe are instrumentalto the future profitability and sustainability of our fast-growing SaaS business in thelong term. The commission expenses paid by us to our regional channel partners forSaaS business amounted to RMB77.1 million, RMB141.8 million, RMB202.1 millionand RMB50.8 million, respectively, representing 77.9%, 74.9%, 68.0% and 64.4% of thetotal SaaS revenues generated from regional channel partners in 2017, 2018 and 2019and the first quarter of 2020, respectively. During the Track Record Period, suchcommission expenses as a percentage of the total SaaS revenues generated from regionalchannel partners steadily decreased. As we continue to rapidly scale our SaaS businessin regional markets, we expect our commission expenses as a percentage of the totalSaaS revenues generated from regional channel partners to continue to decrease, leadingto improved profitability of our SaaS business. As a proof of our improved economiesof scale (which was partly attributable to the rapid growth driven by regional channelpartners), the net loss margin for our SaaS products substantially decreased from 28.4%in 2017 to 8.2% in 2019, and from 23.1% for the three months ended March 31, 2019to 6.1% for the three months ended March 31, 2020.

As we continue to focus on driving top-line growth in the near future to scale our business,our management will closely and prudently manage the overall profitability of each of our ERP andSaaS segments as a whole, taking into consideration the distinct costs and expenses structures underdifferent sales channels. Going forward, our management will continue to dynamically monitor andoptimize the allocation of our sales and marketing resources based on our business expansion plansat different growth stages, with a view to achieving an optimal balance of rapid revenue growth andsustainable profitability at scale.

Having considered, among others, the background of our regional channel partners, the rangesof discounts and sales rebates that we offer to them, and other key commercial arrangements, ourDirectors believe that the commercial arrangements with regional channel partners are on normalcommercial terms and in line with the industry norm. Based on the due diligence work conductedby the Joint Sponsors, nothing has come to the Joint Sponsors’ attention that would cause them todisagree with the Directors’ and Frost & Sullivan’s views that the engagement of regional channelpartners is consistent with the industry norm and the commercial arrangements with regionalchannel partners are on normal commercial terms and in line with the industry norm. For furtherdetails, see “Business – Sales, Marketing and Distribution – Our Regional Channel PartnerNetwork.”RISK FACTORS

Our business and the Global Offering involve certain risks as set out in “Risk Factors” in thisprospectus. You should read that section in its entirety carefully before you decide to invest in ourShares. Some of the major risks we face include the following:

• If we fail to improve and enhance the functions, performance, reliability, design,security, and scalability of our products and services to suit our customers’ evolvingneeds, we may lose our customers.

SUMMARY

– 5 –

• A downturn or any adverse developments in China’s real estate industry may decreasethe demand for our products and services.

• Our success depends on the growth in market acceptance for our products and services.• We operate in a competitive market and may not be able to compete successfully against

our existing and future competitors.• If we fail to maintain and grow our customer base, keep our customers engaged through

our products and services, and expand our SaaS business, our business growth may notbe sustainable.

• We have a history of net losses in our SaaS business segment, and we may not be ableto achieve profitability in the future.

• If we fail to continue innovating and keep pace with technological developments, ourbusiness may be materially and adversely affected.

• Our initiatives to develop new products and introduce new technologies may notsucceed, which may limit our future growth.

• If our software solutions contain material errors, defects or security issues, we may loseour customers and incur significant remedial costs.

• Our brand is integral to our success. If we fail to effectively maintain, promote andenhance our brand, our business and competitive advantage may be harmed.

• We work with regional channel partners to market, promote and implement our productsand services and generate a considerable portion of revenue from our regional channelpartners. If we are unable to maintain stable relationships with our regional channelpartners, our business, operating results, and financial condition could be adverselyaffected.

CONTRACTUAL ARRANGEMENTS

Our Consolidated Affiliated Entity, Ming Yuan Cloud Procurement, operates a procurementand supply chain management platform, which involves the provision of procurement informationfor property developers, construction materials suppliers and other service vendors. The operationof procurement and supply chain management platform is subject to restrictions under current PRClaws and regulations. After consultation with our PRC Legal Advisor, we determined that it was notviable for our Company to hold our Consolidated Affiliated Entity directly through equityownership. Instead, we decided that, in line with common practice in industries subject to foreigninvestment restrictions in the PRC, we would gain effective control over, and receive 80% of all theeconomic benefits generated by the businesses currently operated by our Consolidated AffiliatedEntity through the Contractual Arrangements between Ming Yuan Cloud Technology, on the onehand, and our Consolidated Affiliated Entity and the Relevant Shareholders, on the other hand. Thefollowing simplified diagram illustrates the flow of 80% economic benefits from our ConsolidatedAffiliated Entity to our Group stipulated under the Contractual Arrangements:

Our Company

Ming Yuan CloudTechnology

RelevantShareholders(1)

Management andconsultation services

Servicesfees

80%

100%

Ming Yuan Cloud Procurement(5)

(3) (2)

(4)

Notes:

1. Relevant Shareholders refer to the relevant shareholders of Ming Yuan Cloud Procurement, namely, Mr. Gao,Mr. Chen and Mr. Jiang, who hold 36.0%, 27.2% and 16.8% of the equity interest in Ming Yuan CloudProcurement respectively.

2. “—>” denotes legal and beneficial ownership in the equity interest.

3. “--->” denotes contractual relationship.

4. “----” denotes the control by Ming Yuan Cloud Technology over the Relevant Shareholders and Ming YuanCloud Procurement through (1) powers of attorney to exercise all shareholders’ rights of the RelevantShareholders in Ming Yuan Cloud Procurement, (2) exclusive options to acquire all or part of the equityinterests of the Relevant Shareholders in Ming Yuan Cloud Procurement and (3) equity pledges over the equityinterests of the Relevant Shareholders in Ming Yuan Cloud Procurement.

SUMMARY

– 6 –

5. The remaining 20% equity interest is held by Shenzhen Mingyuan Cloud Tai Qi Investment Partnership(Limited Partnership) (深圳市明源雲泰啟投資合夥企業(有限合夥)), a shareholding platform held by 13employees of our Group as at the Latest Practicable Date.

For the risks relating to the Contractual Arrangements, see the section headed “Risk Factors– Risks Relating to Our Contractual Arrangements” in this prospectus for further details.

CONTROLLING SHAREHOLDERS

Immediately upon completion of the Global Offering (without taking into account any Sharesto be allotted and issued upon the exercise of the Over-allotment Option), Mr. Gao, Mr. Chen andMr. Jiang will be interested in and will control, through various intermediary entities, an aggregateof approximately 46.98% of the issued share capital of our Company and will remain as ControllingShareholders of our Group. For further details of our Controlling Shareholders, see “Relationshipwith the Controlling Shareholders”.

OUR PRE-IPO INVESTORS

Since the establishment of our Company, we have entered into subscription agreement withtwo Pre-IPO Investors, namely Profitech Investments and Glodon. For further details of the identityand background of the Pre-IPO Investors, and the principal terms of the Pre-IPO Investments, see“History, Reorganization and Corporate Structure – Pre-IPO Investments”.

SUMMARY OF HISTORICAL FINANCIAL INFORMATION

The following tables set forth a summary of the financial information from our combinedfinancial information for the Track Record Period, extracted from the Accountant’s Report set outin Appendix I. The summary of combined financial data set forth below should be read togetherwith, and is qualified in its entirety by reference to, the combined financial statements in thisprospectus, including the related notes. Our combined financial information has been prepared inaccordance with IFRS.

Summary of Consolidated Statements of Comprehensive Income

For the year ended December 31,For the three months

ended March 31,2017 2018 2019 2019 2020

(unaudited)(RMB in thousands)

Revenues 579,608 912,795 1,263,969 194,838 253,790Cost of sales (119,323) (177,115) (269,400) (50,776) (60,456)

Gross profit 460,285 735,680 994,569 144,062 193,334

Selling and marketing expenses (194,461) (342,242) (441,124) (69,850) (102,337)General and administrative expenses (82,988) (80,063) (108,391) (16,872) (24,193)Research and development expenses (156,720) (218,120) (286,326) (56,081) (64,501)Net impairment losses on financial

assets and contract assets (491) (4,041) (2,139) (1,999) (2,758)Other income 61,427 83,088 82,953 7,209 17,952Other gains, net 1,540 5,997 4,549 1,530 7,526

Operating profit 88,592 180,299 244,091 7,999 25,023

Finance income 130 121 184 71 471Finance costs (3,593) (2,028) (1,897) (465) (528)

Finance costs, net (3,463) (1,907) (1,713) (394) (57)Net losses upon financial liabilities

at fair value through profit or losstransferred to equity (1,847) – – – –

Fair value changes of convertibleredeemable preferred shares – – – – (8,987)

Profit before income tax 83,282 178,392 242,378 7,605 15,979Income tax expense (10,480) (15,358) (10,729) (722) (1,262)

Profit for the year/period 72,802 163,034 231,649 6,883 14,717

SUMMARY

– 7 –


ended March 31,2017 2018 2019 2019 2020


Profit/(loss) attributable to:Owners of the Company 73,151 157,132 216,421 5,438 10,055Non-controlling interests (349) 5,902 15,228 1,445 4,662

72,802 163,034 231,649 6,883 14,717

Non-IFRS MeasuresTo supplement our consolidated financial statements that are presented in accordance with

IFRS, we also use EBITDA, adjusted EBITDA and adjusted net income as additional financialmeasures, which are not required by, or presented in accordance with, IFRS. We believe that thesenon-IFRS measures facilitate comparisons of operating performance from period to period andcompany to company by eliminating potential impacts of items that our management does notconsider to be indicative of our operating performance. However, our presentation of the EBITDA,adjusted EBITDA and adjusted net income may not be comparable to similarly titled measurespresented by other companies. The use of these non-IFRS measures has limitations as an analyticaltool, and you should not consider them in isolation from, or as substitute for analysis of, our resultsof operations or financial condition as reported under IFRS.

The following table sets out EBITDA and adjusted EBITDA and a reconciliation fromoperating income for the year to EBITDA and adjusted EBITDA for the periods indicated.


ended March 31,2017 2018 2019 2019 2020


Reconciliation of operating incomeand adjusted EBITDA

Operating income for the period 88,592 180,299 244,091 7,999 25,023Add:

Depreciation of right-of-use assets 12,472 16,030 21,427 4,909 6,039Depreciation of property, plant and

equipment 3,429 4,625 6,333 1,275 1,933Amortization of intangible assets 549 534 552 118 182

EBITDA (NON-IFRS) 105,042 201,488 272,403 14,301 33,177

Add:Share-based compensation(1) 19,419 – – – –Listing expenses(2) – – 4,271 – 2,836

Adjusted EBITDA (NON-IFRS) 124,461 201,488 276,674 14,301 36,013

Notes:(1) Share-based compensation relates to the share rewards we offered to our employees, which is a non-cash

expense that is commonly excluded from similar non-IFRS measures adopted by other companies in ourindustry.

(2) Listing expenses relates to this Global Offering of the Company, which is one-off in nature and is not directlyrelated to our operating activities.

The following table reconciles our adjusted net income for the periods presented to the mostdirectly comparable financial measure calculated and presented in accordance with IFRS, which isnet income for the periods.


ended March 31,2017 2018 2019 2019 2020


Reconciliation of net income andadjusted net income

Net income for the period 72,802 163,034 231,649 6,883 14,717

SUMMARY

– 8 –


ended March 31,2017 2018 2019 2019 2020


Add:Net losses upon financial liabilities

at fair value through profit orloss transferred to equity(1) 1,847 – – – –

Fair value changes of convertibleredeemable preferred shares(2) – – – – 8,987

Dividends paid to holders offinancial liabilities at fair valuethrough profit or loss(3) 2,191 – – – –

Share-based compensation(4) 19,419 – – – –Listing expenses(5) – – 4,271 – 2,836

Adjusted net income (non-IFRS) 96,259 163,034 235,920 6,883 26,540

Notes:

(1) Net losses upon financial liabilities at fair value through profit or loss transferred to equity represent the lossesrecognized at fair value through profit or loss when reclassifying the redeemable shares we initially issued toan investor into equity instrument due to change of contract terms. Such changes are one-off and non-cash innature and are not directly related to our operating activities.

(2) Fair value changes of convertible redeemable preferred shares represent the gains or losses arising from changein fair value of our issued Series A convertible redeemable preferred shares, which was recognised as afinancial liability at fair value through profit or loss. Such changes are one-off and non-cash in nature and arenot directly related to our operating activities.

(3) Dividends paid to holders of financial liabilities at fair value through profit or loss represent the dividends wepaid to the holders of our redeemable shares, which is one-off in nature and is not directly related to ouroperating activities.

(4) Share-based compensation relates to the share rewards we offered to our employees, which is a non-cashexpense that is commonly excluded from similar non-IFRS measures adopted by other companies in ourindustry.

(5) Listing expenses relates to this Global Offering of the Company, which is one-off in nature and is not directlyrelated to our operating activities.

Business Segments

The following table sets forth our revenues by business segments for the periods indicated.

For the year ended December 31, For the three months ended March 31,2017 2018 2019 2019 2020

Amount %YoY

Change Amount %YoY

Change Amount %YoY

Change Amount %PoP

Change Amount %PoP

Change(unaudited)

(RMB in thousands, except percentages)

SaaS products 179,491 31.0 N/A 329,293 36.1 83.5% 509,827 40.3 54.8% 77,873 40.0 N/A 129,647 51.1 66.5%ERP solutions 400,117 69.0 N/A 583,502 63.9 45.8% 754,142 59.7 29.2% 116,965 60.0 N/A 124,143 48.9 6.1%

Total 579,608 100.0 N/A 912,795 100.0 57.5% 1,263,969 100.0 38.5% 194,838 100.0 N/A 253,790 100.0 30.3%

The following table sets forth a breakdown of our operating profit/(losses) by businesssegment in absolute amounts for the periods indicated.

For the yearended December 31,

For the three monthsended March 31,

2017 2018 2019 2019 2020(unaudited)

(RMB in thousands)

SaaS products (50,698) (45,114) (41,439) (17,875) (7,749)ERP solutions 157,188 219,362 284,932 24,344 28,799Others (17,898) 6,051 598 1,530 3,973

Total 88,592 180,299 244,091 7,999 25,023

SUMMARY

– 9 –

We incurred operating losses for our SaaS products during the Track Record Period, primarilybecause our SaaS business is at its nascent stage and we have made substantial investments to drivethe rapid growth of our SaaS business, which we believe are indispensable to establish compellingcompetitive advantages for the profitable growth of our SaaS business. See “Financial Information– Description of Major Components of Our Results of Operations – Operating Profits” for a detaileddiscussion of the profitability of our SaaS business.

Our ERP business has been and will continue supporting our sustainable growth given ourlarge, growing and loyal customer base and strong product development and technologycapabilities. We believe we will continue to benefit from the high visibility into the future revenuesand profitability of our ERP business through executing our growth strategies for our ERP business.See “Business – Our Offerings – Our ERP Solutions – Helping Property Developers Run TheirBusiness Optimally” for details of such growth strategies.

Summary of Consolidated Statements of Financial Position

As of December 31,As of

March 31,2017 2018 2019 2020

(RMB in thousands)

Total non-current assets 185,043 236,784 246,200 249,674Total current assets 458,415 549,958 988,488 899,644Total non-current liabilities 33,789 48,934 49,085 45,854Total current liabilities 272,467 439,811 914,651 828,054Net current assets 185,948 110,147 73,837 71,590Total equity 337,202 297,997 270,952 275,410

Our total equity decreased from RMB337.2 million as of December 31, 2017 to RMB298.0million as of December 31, 2018, and further to RMB271.0 million as of December 31, 2019,primarily due to our dividend distribution to the then shareholders of one of our subsidiary ofRMB206.4 million in 2018 and a deemed distribution to the shareholders of our Company ofRMB266.4 million in 2019, respectively. Such decreases in total equity were partially offset by ournet profit generated during the relevant periods. Our total equity increased from RMB271.0 millionas of December 31, 2019 to RMB275.4 million as of March 31, 2020, primarily due to the increasein net profit in the first quarter of 2020.

For further details, see “Financial Information – Discussion of Certain Key Balance SheetItems.”

Summary of Consolidated Statements of Cash Flows


ended March 31,2017 2018 2019 2019 2020


Operating cash flows beforemovement in working capital 115,001 182,838 254,898 11,599 25,040

Cash flows from operating activitiesCash generated from/(used in)

operations 210,029 298,249 350,197 (75,273) (99,607)Interest received 130 121 184 71 471Income taxes paid (7,371) (13,800) (11,509) (3,725) (5,129)

Net cash generated from/(used in)operating activities 202,788 284,570 338,872 (78,927) (104,265)

Net cash (used in)/generated frominvesting activities (137,596) 334,118 (82,667) (351,281) 87,451

Net cash (used in)/generated fromfinancing activities (35,947) (220,931) 29,500 (4,510) (6,442)

Net increase/(decrease) in cash andcash equivalents 29,245 397,757 285,705 (434,718) (23,256)

Cash and cash equivalents atbeginning of the year/period 20,920 50,165 447,922 447,922 732,207

SUMMARY

– 10 –


ended March 31,2017 2018 2019 2019 2020


Effects of exchange rate changes oncash and cash equivalents – – (1,420) – (251)

Cash and cash equivalent at end ofthe year/period 50,165 447,922 732,207 13,204 708,700

We have historically used more cash in our operating activities in the first quarter of a givenyear due to, in addition to the seasonality effects in our revenues as further discussed below,lump-sum payments of employee bonus and benefits that were typically made at the beginning ofthe year. See “Risk Factors – Risk Relating to Our Business and Industry – Our Operating Resultsare Subject to Seasonal Fluctuations” for details. Our cash flow position typically improves over therest of the year when our customers commence procurement of our software solutions after theirprolonged internal process and revenues from such customers ramp up accordingly. In themeantime, we also enhance our cash flow position through continuous efforts to collect paymentsand receivables, accelerate delivery of our software solutions and relevant prescribed services, andadvance the progress of our projects with our customers.

Key Financial Ratios

The following table sets forth certain of our key financial ratios for the periods indicated.


ended March 31,2017 2018 2019 2019 2020

(unaudited)

Total revenue growth N/A 57.5% 38.5% N/A 30.3%SaaS products N/A 83.5% 54.8% N/A 66.5%ERP solutions N/A 45.8% 29.2% N/A 6.1%Net margin 12.6% 17.9% 18.3% 3.5% 5.8%SaaS products (28.4%) (13.8%) (8.2%) (23.1%) (6.1%)ERP solutions 36.4% 34.7% 36.2% 20.0% 22.3%Non-IFRS adjusted EBITDA

margin 21.5% 22.1% 21.9% 7.3% 14.2%Non-IFRS adjusted net margin 16.6% 17.9% 18.7% 3.5% 10.5%

During the Track Record Period, we have experienced seasonal fluctuations in our results ofoperations. We have historically generated lower revenue, which in turn led to lower gross profit,in our first quarter of any given year, primarily due to (i) the relatively prolonged annual budgetingand procurement cycles of our customers, especially leading property developers headquartered intier-1 cities in China, (ii) fewer openings of new sales offices and commencement of constructionprojects, and (iii) slower and reduced levels of sales and marketing activities of both our direct salesforce and regional channel partners, as a result of annual leave of employees and annual corporateevents during the Chinese New Year holiday season. Our revenues typically ramp up in the secondhalf of a year as normal business operations accelerate after the Chinese New Year holiday season.Seasonal fluctuations in revenues of software solution providers serving China’s real estate industryis an industry norm, according to Frost & Sullivan. Such fluctuations are generally in line with theseasonality of property development and new house sales in China. See “Risk Factors – RiskRelating to Our Business and Industry – Our Operating Results are Subject to SeasonalFluctuations” for details.

We recorded increases in our adjusted net margin during the Track Record Period primarilydue to improvement in overall operating efficiency. As our business continues to scale, we haveachieved improved economies of scale and cost efficiency in general. In particular, our general andadministrative expenses as a percentage of revenue significantly decreased from 14.3% in 2017 to8.6% in 2019, primarily because we managed to streamline our daily operations by enhancing ourcentralized management structure, optimizing corporate functions, and applying a variety oftechnologies and tools at our workplace. Similarly, our research and development expenses as apercentage of revenue decreased from 27.0% in 2017 to 22.7% in 2019 as the technology foundationthat we successfully built through significant investment allowed us to conduct subsequent R&D

SUMMARY

– 11 –

activities in a more cost-effective manner. For details, see “– Summary of Consolidated Statementsof Comprehensive Income – Non-IFRS Measures” and “Financial Information – Description ofMajor Components of Our Results of Operations.”

KEY OPERATING DATA

The following table sets forth certain of our key operating metrics for the periods indicated:

Year ended December 31,

Three monthsended

March 31,2017 2018 2019 2020

Total number of paying end group customers 2,000 3,200 4,000 3,500Total number of Top 100 property developers 97 95 99 97

ERP solutions(1)Total number of paying end group customers 900 1,200 1,500 1,000Total number of Top 100 property developers 88 92 92 81SaaS productsTotal number of paying end group customers 1,600 2,500 3,600 3,100Total number of Top 100 property developers(2) 95 94 97 94

Number of paying end group customers forCRM Cloud (雲客) 1,200 1,700 2,400 2,200

Repeated customers(3) for CRM Cloud (雲客) N/A 920 1,300 N/A

Number of paying end group customers forConstruction Cloud (雲鏈)) 200 300 400 400

Repeated customers(3) for Construction Cloud(雲鏈) N/A 140 230 N/A

Number of paying end group customers forProcurement Cloud (雲採購)(4) 350 750 1,100 800

Number of paying end group customers forAsset Management Cloud (雲空間) (4) 90 140 200 170

Notes:

(1) ERP solutions are not a subscription-based software solutions. Our end customers for ERP solutions typicallypurchase the software license of our ERP solutions on a one-time basis, and may continuously use our ERPsolutions in accordance with the terms of the license, without paying additional amount to renew the licenseeach year and regardless of whether there is any subsequent transactions with us for our ongoing productsupport and other services.

(2) refers to the number of Top 100 property developers who subscribed for at least one of our SaaS products.

(3) for a given year refers to the number of paying end group customers in the prior year that remain as our payingend group customers in the current year.

(4) this SaaS product is still at a nascent ramp-up stage without a meaningful track record and sufficiently largecustomer base to analyze customer retention. This SaaS products only contributed a very small portion of ourtotal SaaS revenues during the Track Record Period.

(5) unless otherwise indicated, numbers set forth in the table are approximate numbers.

RECENT DEVELOPMENT

Save as otherwise disclosed below, our Directors confirm that, as of the date of thisprospectus, there has been no material adverse change in our financial or trading position,indebtedness, mortgage, contingent liabilities, guarantees or prospects of our Group since March31, 2020, the end of the period reported on in the Accountant’s Report set out in Appendix I to thisprospectus.

Our revenues increased by 37.3% from RMB488.3 million for the six months ended June 30,2019 to RMB670.7 million for the six months ended June 30, 2020, due to the increases in revenuesgenerated from both of our SaaS products and ERP solutions as a result of our continuous businessexpansion and enhanced reputation among our existing and prospective customers.

• Revenues generated from our SaaS products increased significantly by 64.9% fromRMB202.2 million for the six months ended June 30, 2019 to RMB333.4 million for thesix months ended June 30, 2020, primarily attributable to increase in revenues derivedfrom our CRM Cloud (雲客), as a result of (i) the growing market acceptance of its

SUMMARY

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cloud-based product functions, especially amidst the COVID-19 outbreak during whichour SaaS products experienced greater demands since they effectively addressedpandemic-related challenges by digitally facilitating our end customers’ businessoperations while minimizing or eliminating the need for direct person-to-person contact,and (ii) successful cross-sales among our existing customers between SaaS products andERP solutions.

• Revenues generated from our ERP solutions increased by 17.9% from RMB286.2million for the six months ended June 30, 2019 to RMB337.3 million for the six monthsended June 30, 2020, mainly due to increases in revenues derived from our value-addedservices and implementation services, which were primarily attributable to our expandedongoing customer service capacity and enhancement of our centralized management anddispatch of technical specialists.

We reported gross profit of RMB529.4 million for the six months ended June 30, 2020, ascompared to that of RMB377.0 million for the six months ended June 30, 2019. Gross profit fromour SaaS products increased from RMB190.4 million for the six months ended June 30, 2019 toRMB301.5 million for the six months ended June 30, 2020. Gross profit from our ERP solutionsincreased from RMB186.6 million for the six months ended June 30, 2019 to RMB227.9 million forthe six months ended June 30, 2020.

The financial data of the Group for the six months ended June 30, 2020 disclosed above arederived from the Company’s unaudited interim financial statements for the six months ended June30, 2020, which have been prepared in accordance with the International Accounting Standard 34,“Interim Financial Reporting” and reviewed by our reporting accountant in accordance withInternational Standard on Review Engagements 2410, “Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity”.

COVID-19 Outbreak and Effects on Our Business

Since the end of December 2019, the outbreak of a novel strain of coronavirus namedCOVID-19 has materially and adversely affected the global economy. In response, China hasimposed widespread lockdowns, closure of work places and restrictions on mobility and travel tocontain the spread of the virus. As of the Latest Practicable Date, most Chinese cities had eased orlifted travel restrictions and resumed work and production.

To varying degrees, our business operations, including both of our ERP and SaaS businesses,had been affected by the COVID-19 outbreak, as discussed in more details below. Due to thenationwide lockdowns across China during the COVID-19 outbreak, certain of our marketingactivities and customer services had been temporarily delayed to the extent that physical meetingswith our customers or large-scale onsite services were otherwise required or preferred. Despite thetemporary disruptions, based on the knowledge of our Directors, as of the Latest Practicable Date,there had not been any cancellation of any of our major ongoing projects due to our failure todeliver our services in time as a result of the COVID-19 outbreak. For more details related to theCOVID-19 outbreak , its effects on our business and our remedial measures, see “FinancialInformation – COVID-19 Outbreak and Effects on Our Business.”

DIVIDENDS

As advised by our Cayman Islands legal advisor, under Cayman Islands law, a position ofaccumulated losses and net liabilities does not necessarily restrict our Company from declaring andpaying dividends to our Shareholders out of either our profit or our share premium account,provided this would not result in our Company being unable to pay its debts as they fall due in theordinary course of business. As we are a holding company incorporated under the laws of theCayman Islands, the payment and amount of any future dividends will also depend on theavailability of dividends received from our subsidiaries. Any dividends we pay will be determinedat the absolute discretion of our Board, taking into account factors including our actual andexpected results of operations, cash flow and financial position, general business conditions andbusiness strategies, expected working capital requirements and future expansion plans, legal,regulatory and other contractual restrictions, and other factors that our Board deems to beappropriate. Our Shareholders may approve, in a general meeting, any declaration of dividends,which must not exceed the amount recommended by our Board.

No dividends have been paid or declared by our Company since its incorporation. Ming YuanCloud Technology, a subsidiary of our Company, had paid dividends of RMB32,528,000,RMB206,434,000, nil, nil and nil to its then shareholders for the years ended 31 December 2017,2018 and 2019 and for the three months ended March 31, 2019 and 2020. Currently, we do not havea fixed dividend distribution ratio.

SUMMARY

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GLOBAL OFFERING

This prospectus is published in connection with the Hong Kong Public Offering as part of theGlobal Offering.

China International Capital Corporation Hong Kong Securities Limited and Citigroup GlobalMarkets Asia Limited are the Joint Global Coordinators of the Global Offering.

The listing of the Shares on the Stock Exchange is sponsored by the Joint Sponsors. The JointSponsors have made an application on behalf of our Company to the Stock Exchange for the listingof, and permission to deal in, the Shares in issue (assuming the Series A Preferred Shares areconverted into ordinary shares on a 1:1 basis) and to be issued as mentioned in this prospectus.

374,204,000 Offer Shares will initially be made available under the Global Offeringcomprising:

(a) the Hong Kong Public Offering of initially 37,422,000 Shares (subject to reallocation)as described in “Structure of the Global Offering – The Hong Kong Public Offering”;and

(b) the International Offering of initially 336,782,000 Shares (subject to reallocation and theOver-allotment Option) (i) sold to QIBs pursuant to exemption from registrationrequirements of the U.S. Securities Act under Rule 144; and (ii) sold outside of theUnited States via offshore transactions pursuant to Regulation S, as described in“Structure of the Global Offering – The International Offering”.

Investors may either (i) apply for Hong Kong Offer Shares under the Hong Kong PublicOffering; or (ii) apply for or indicate an interest for International Offer Shares under theInternational Offering, but may not do both.

The Offer Shares will represent approximately 20.0% of the total Shares in issue immediatelyfollowing the completion of the Global Offering, assuming the Over-allotment Option is notexercised. If the Over-allotment Option is exercised in full, the Offer Shares will representapproximately 22.3% of the total Shares in issue immediately following the completion of theGlobal Offering.

OFFERING STATISTICS

All statistics in the following table are based on the assumptions that: (i) the Global Offeringhas been completed and 374,204,000 Shares are issued pursuant to the Global Offering, (ii) all ofthe Series A Preferred Shares have been converted into ordinary shares of our Company on a 1:1basis, (iii) the Over-allotment Option is not exercised, and (iv) 1,871,019,990 Shares are issued andoutstanding following the completion of the Global Offering.

Based on an OfferPrice of HK$15.00

per Offer Share

Based on an OfferPrice of HK$16.50

per Offer Share

Market capitalization immediatelyafter the Global Offering

HK$28,065million

HK$30,872million

Unaudited pro forma adjustednet tangible assets per Share HK$3.23 HK$3.52

LISTING EXPENSES

Listing expenses represent professional fees, underwriting commissions, and other feesincurred in connection with the Global Offering. The estimated total listing expenses (based on themid-point of the Offer Price range and assuming that the Over-allotment Option is not exercised)for the Global Offering are approximately RMB227.4 million (equivalent to approximatelyHK$257.9 million, accounting for approximately 4.4% of our gross proceeds. ApproximatelyRMB191.7 million (equivalent to approximately HK$217.4 million) of the estimated listingexpenses is directly attributable to the issue of new Shares to the public and will be account for asa deduction from equity upon completion of the Global Offering. The remaining estimated listingexpenses of approximately RMB35.7 million (equivalent to approximately HK$40.5 million) wasor will be charged to profit or loss, of which, nil, nil, approximately RMB4.3 million (equivalentto approximately HK$4.8 million) and approximately RMB2.8 million (equivalent to approximatelyHK$3.2 million) were charged in the years ended 31 December 2017, 2018, 2019 and three monthsended 2020 respectively. Approximately RMB28.6 million (equivalent to approximately HK$32.4million) is expected to be charged in profit or loss before or upon completion of the GlobalOffering. This calculation is subject to adjustment based on the actual amount incurred or to beincurred.

SUMMARY

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USE OF PROCEEDS

The table below sets forth the estimated net proceeds of the Global Offering which we willreceive after deduction of underwriting fees and commissions and estimated expenses payable byus in connection with the Global Offering (assuming the Over-allotment Option is not exercised):

Assuming an Offer Price of HK$15.75 per Offer Share(being the mid-point of the Offer Price range stated in thisprospectus)

HK$5,635.9million

Assuming an Offer Price of HK$16.50 per Offer Share(being the high end of the Offer Price range stated in this prospectus)

HK$5,906.7million

Assuming an Offer Price of HK$15.00 per Offer Share(being the low end of the Offer Price range stated in this prospectus)

HK$5,365.0million

We intend to use the net proceeds as follows (based on the mid-point of the Offer Price rangestated in this prospectus):

• approximately 30%, or HK$1,690.8 million, will be used over the next one to five yearsto further upgrade and enhance the functionalities and features of our existing SaaSproducts, with a goal to address more diversified business scenarios and continuouslyimprove the user experience of such SaaS products;

• approximately 20%, or HK$1,127.2 million, will be used over the next one to five yearsto enhance research and development efforts in cutting-edge technologies such as AIoT,data analytics and virtual reality;

• approximately 10%, or HK$563.6 million, will be used over the next one to three yearsto further upgrade and enhance the functionalities and features our cloud-based ERPsolutions;

• approximately 10%, or HK$563.6 million, will be used over the next one to three yearsto enhance our sales and marketing capabilities and strengthen our brand reputationamong China’s real estate market participants;

• approximately 20%, or HK$1,127.2 million, will be used to selectively pursue strategicinvestments and acquisitions that we believe will allow us to expand our existing SaaSproduct offerings, enhance our technology capabilities, and acquire customers inselected markets, with a goal to complement our organic business growth and fulfill ourmission to intelligize the real estate value chain; and

• the remaining approximately 10%, or HK$563.6 million, will be used for workingcapital and general corporate purposes.

The above allocation of the proceeds will be adjusted on a pro rata basis in the event that theOffer Price is fixed at a higher or lower level compared to the mid-point of the estimated offer pricerange.

If the Over-allotment Option is fully exercised, our Company will receive additional netproceeds of approximately HK$853.0 million for 56,130,000 Shares to be allotted and issued uponthe full exercise of the Over-allotment Option based on the Offer Price of HK$15.75 per OfferShare, being the mid-point of the Offer Price range, and after deducting the underwriting fees andcommissions payable by our Company. The additional amount raised will be applied to the aboveareas of use of proceeds on pro-rata basis.

For further details, see “Future Plans and Use of Proceeds.”

SUMMARY

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In this prospectus, unless the context otherwise requires, the following terms shall

have the following meanings. Certain technical terms are explained in the section

headed “Glossary of Technical Terms” in this prospectus.

“%” per cent

“affiliate” with respect to any specified person, any other person,directly or indirectly, controlling or controlled by or

under direct or indirect common control with such

specified person

“Application Form(s)” WHITE Application Form(s), YELLOW ApplicationForm(s) or GREEN Application Form(s), individually orcollectively, as the context so requires, which is used in

relation to the Hong Kong Public Offering

“Articles” or “Articles ofAssociation”

the amended and restated articles of association of our

Company conditionally adopted on September 4, 2020

which shall become effective on the Listing Date and as

amended from time to time, a summary of which is set

out in the section headed “Summary of the Constitution

of the Company and Cayman Company Law” in

Appendix III to this prospectus

“associate(s)” has the meaning ascribed thereto under the Listing Rules

“Audit Committee” the audit committee of the Board

“Audited Financial Statements” the audited combined financial statements of our Groupfor the financial years ended December 31, 2017, 2018

and 2019 and for the three months ended March 31, 2020

as included in the section headed “Accountant’s Report”

in Appendix I to this prospectus

“Board” the board of directors of our Company

“business day” any day (other than a Saturday, Sunday or public holidayin Hong Kong) on which banks in Hong Kong are

generally open for normal banking business

“BVI” the British Virgin Islands

DEFINITIONS

– 16 –

“CAC” Cyberspace Administration of China (中華人民共和國國家互聯網信息辦公室)

“Cayman Companies Law” or“Companies Law”

the Companies Law, Cap. 22 (Law 3 of 1961, as

consolidated and revised) of the Cayman Islands

“Cayman Registrar” the Registrar of Companies of the Cayman Islands

“CCASS” the Central Clearing and Settlement System establishedand operated by HKSCC

“CCASS Clearing Participant” a person admitted to participate in CCASS as a directclearing participant or a general clearing participant

“CCASS CustodianParticipant”

a person admitted to participate in CCASS as a custodian

participant

“CCASS Investor Participant” a person admitted to participate in CCASS as an investorparticipant who may be an individual or joint individuals

or a corporation

“CCASS Participant” a CCASS Clearing Participant, a CCASS CustodianParticipant or a CCASS Investor Participant

“China” or “PRC” People’s Republic of China, except where the contextrequires otherwise and only for the purposes of this

prospectus, excluding Hong Kong, the Macau Special

Administrative Region of the People’s Republic of China

and Taiwan

“Companies Ordinance” the Companies Ordinance (Chapter 622 of the Laws ofHong Kong), as amended, supplemented or otherwise

modified from time to time

“Companies (Winding Up andMiscellaneous Provisions)Ordinance”

the Companies (Winding Up and Miscellaneous

Provisions) Ordinance (Chapter 32 of the Laws of Hong

Kong), as amended, supplemented or otherwise modified

from time to time

“Company”, “our Company”, or“the Company”

Ming Yuan Cloud Group Holdings Limited (明源雲集團控股有限公司), an exempted company with limitedliability incorporated in the Cayman Islands on July 3,

2019

DEFINITIONS

– 17 –

“connected person(s)” has the meaning ascribed to it under the Listing Rules

“connected transaction(s)” has the meaning ascribed to it under the Listing Rules

“Consolidated Affiliated Entity” the entity that we control through the ContractualArrangements which is Ming Yuan Cloud Procurement

“Contractual Arrangement(s)” the series of contractual arrangements entered into byMing Yuan Cloud Technology with Ming Yuan CloudProcurement, the Relevant Shareholders and ShenzhenMingyuan Cloud Tai Qi Investment Partnership (LimitedPartnership) (深圳市明源雲泰啟投資合夥企業(有限合夥)) (as applicable), details of which are described in thesection headed “Contractual Arrangements” in thisprospectus

“Controlling Shareholders” or“Individual ControllingShareholders”

has the meaning ascribed to it under the Listing Rules andunless the context otherwise requires, refers to Mr. Gao,Mr. Chen, Mr. Jiang, GHTongRui Investment Limited,MYTongRui Holdings Limited, GHTongRui HoldingsLimited, HengXinYuan Investment Limited,SunshineMorning Holdings Limited, HengXinYuanHoldings Limited, LINGFAN Investment Limited,Mindfree Holdings Limited and BANGZHEN HoldingsLimited. Each of Mr. Gao, Mr. Chen and Mr. Jiang is anIndividual Controlling Shareholder. See the sectionheaded “Relationship with the Controlling Shareholders”in this prospectus.

“core connected person(s)” has the meaning ascribed thereto under the Listing Rules

“Corporate Governance Code” the Corporate Governance Code set out in Appendix 14 tothe Listing Rules

“CSRC” China Securities Regulatory Commission

“Director(s)” the director(s) of our Company

“Extreme Conditions” Any extreme conditions or events, the occurrence ofwhich will cause interruption to the ordinary course ofbusiness operations in Hong Kong and/or that may affectthe Price Determination Date or the Listing Date

DEFINITIONS

– 18 –

“FITE Regulations” the Regulations for the Administration of Foreign-Invested Telecommunications Enterprises (《外商投資電信企業管理規定》) promulgated by the State Council onDecember 11, 2001 and last amended on February 6,2016

“GAC” the General Administration of Customs of the PRC (中華人民共和國海關總署)

“GDP” Gross Domestic Product

“Global Offering” the Hong Kong Public Offering and the I