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Title: This powerpoint contains identifying important factors that could cause actual results to differ from the projected results. All statements, other than statements of historical fact, including statements regarding industry prospects and future results of


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Disclaimer
This powerpoint contains identifying important
factors that could cause actual results to differ
from the projected results. All statements, other
than statements of historical fact, including
statements regarding industry prospects and
future results of operations or financial
position, made in this powerpoint are forward
looking. Words such as anticipates, believes,
expects, future and intends and similar
expressions are intended to identify
forward-looking statements. These
forward-looking statements include, without
limitation, statements relating to our future
performance, our expansion efforts, demand for
our products the state of economic conditions
and our markets currency and exchange rate
fluctuations and our ability to meet our
liquidity requirements. These forward-looking
statements are based on assumptions and analyses
made by us in light of our experience and
perception of historical trends, current
conditions and expected future developments, as
well as other factors we believe to be
appropriate in particular circumstances.
However, whether actual results and developments
will meet our expectations and predictions depend
on a number of known and unknown risks and
uncertainties and other factors, any or all of
which could cause actual results, performance or
achievements to differ materially from our
expectations, whether expressed or implied by
such forward-looking statements (which may relate
to, among other things, the Companys sales,
costs and expenses, income, inventory
performance, and receivables). Primarily engaged
in the processing and trading of pearls and pearl
jewelry products, and in real estate investment,
our ability to achieve our objectives and
expectations are derived at least in part from
assumptions regarding economic conditions,
consumer tastes, and developments in our
competitive environment. The following
assumptions, among others, could materially
affect the likelihood that we will achieve our
objectives and expectations communicated through
these forward-looking statements (i) that low or
negative growth in the economies or the financial
markets of our customers, particularly in the
United States and in Europe, will not occur and
reduce discretionary spending on goods that might
be perceived as luxuries (ii) that the Hong
Kong dollar will remain pegged to the U.S. dollar
at US1 to RMB7.8 (iii) that customers choice
of pearls vis-à-vis other precious stones and
metals will not change adversely (iv) that we
will continue to obtain a stable supply of pearls
in the quantities, of the quality and on terms we
require (v) that there will not be a substantial
adverse change in the exchange relationship
between the Renminbi and the Hong Kong dollar or
U.S. dollar (vi) that there will not be a
substantial increase in the tax burdens of our
subsidiaries operating in the PRC (vii) that
there will not be a substantial change in climate
and environmental conditions at the source
regions of pearls that could have a material
adverse effect on the supply and pricing of
pearls and (viii) that there will not be a
substantial adverse change in the real estate
market conditions in the PRC and in Hong Kong.
The following discussion of our results of
operation, and liquidity and capital resources
should be read in conjunction with the financial
statements and the notes thereto included
elsewhere in this powerpoint and this powerpoint,
which contains a further description of risks and
uncertainties related to forward-looking
statements, as well as other aspects of our
business. Readers are cautioned not to place
undue reliance on these forward-looking
statements, which speak only as of the date of
this powerpoint. We will not publicly release
any revisions to these forward-looking statements
after the date hereof. Readers are urged,
however, to review the factors set forth in
periodic reports that we file from time to time
with the Securities and Exchange Commission.
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Introduction of Presenters
  • Mr. Sonny Hung
  • Executive Director

Mr. Martin Pak Chief Financial Officer
Mr. C K Kwang Assistant Company Secretary
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Company Overview
  • One of the World Largest Pearl Merchants
  • One of the Largest Purchasers Processors of
    Saltwater Pearls
  • Vertically integrated business including
  • Purchasing
  • Processing Assembling
  • Merchandising Wholesale Distribution of Pearls
    and non-Pearl Jewelry products

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Types of Cultured Pearls
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Company Industry Overview
Bleaching
Drilling
Man Sang Techniques
Waxing
Polishing
Grading
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Core Business Development
Pearls One of the Worlds largest Pearl
processors and merchants
Assembled Pearls and Non-pearl
Jewelry Vertically integrated
China Pearls and Jewellery City in Zhuji,
Zhejiang The Worlds Largest Pearl
Jewelry Trading Platform
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Strengths
  • One of the Worlds Largest Pearl Merchants
  • One of the Worlds Largest purchasers and
    processors of saltwater pearls
  • One of the Worlds largest processors and
    suppliers of Chinese Akoyas
  • Advanced pearl processing techniques
  • Subsidiary corporation MSIL (Stock Code 0938),
    the first pearl company listed on the Hong Kong
    Stock Exchange in 1997
  • Over 25 years of professional experience in the
    pearl business
  • One-stop shopping services, full product range
    pearl, pearl jewelry and non-pearl jewelry
    products
  • Provision one-stop solution to all customers
  • Vertically integrated business from purchasing,
    processing assembling to merchandizing and
    wholesale distribution of Pearl and non-Pearl
    products

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

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

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

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

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Financial Performance
Net Sales
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Net Sales
Net Sales by Product
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Financial Performance (Contd)
Operating Income
3.7
2.7
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Financial Performance (continued)
Net Income after Minority Interest
Includes a gain on sale of a real estate
investment amounting to US4.4m The
translations of HK into US have been made at
the exchange rate of HK7.80 for US1 for
reference purpose
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Financial Highlights
  • Gross Profit Margin is continue enhancing
  • Net sales for 9 months ended December 31, 2006
    decreased by 0.6 to US38.48 million as compared
    to the same period last year
  • Gross profit increased by US131,000, or 1.2, to
    US10.69 million, as compared with the same
    period last year.
  • Gross profit margin has increased by 0.5 to 27.8
  • Net Income has great improvement
  • Net income for the 9 months ended December 31,
    2006 increased 25, to US1.8 million as compared
    to net income of US1.44 million for the 9 months
    ended December 31, 2005.
  • Return On Capital is continue enhancing
  • Return on capital employed (annualized net
    income/capital employed) increased from 5.29 for
    the period ended December 31, 2005 to 6 for the
    period ended December 31, 2006.

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For more information please visit CPJ web site at
http//www.cpjcity.com
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The Worlds Total Freshwater Pearl Production
Year Export (g) Export US Average (US/g)
2001 628,714,845 35,802,525 0.0569
2002 666,298,864 61,383,990 0.0921
2003 771,014,624 87,198,461 0.1131
2004 1,103,712,413 151,581,384 0.1373
2005 1,267,448,938 177,569,596 0.1401
2006 1,336,548,126 203,556,280 0.1523
Source Department of Customs Administrations -
Ministry of Finance, P.R.C.
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The Worlds Total Saltwater Pearl Production

US Million
Year Black-lip White-Lip Akoya Total
2001 141 217 131 489
2002 150 225 127 502
2003 141 235 125 501
2004 130 240 130 500
2005 125 248 135 508
2006 128 250 132 510
Source Pearl World -the International Pearling
Journal Jan 2007
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