Recently, certain European countries had suffered from national debt crises sequentially, as well as the US credit rating was being downgraded, the global markets for equity, forex and commodity fluctuated violently. This further weakens the already sluggish aggregate demand. Looking ahead towards the second half of the year, the business environment will not be optimistic. It is expected that the hi-tech manufacturing business will continue to be affected by a couple of adverse factors including the rise in costs, the appreciation of RMB and the fluctuation in domestic and foreign markets. The hi-tech manufacturing business will continue to strengthen its management, control costs and risks, intensify technical enhancement, and reinforce efforts on market exploration of domestic and foreign markets in order to endeavour to maintain a stable business.

The construction of both hi-tech property projects, the Shenzhen Aerospace Science & Technology Plaza and the Complex Zone of the Launching Site in Hainan Province, will be proceeded as scheduled. Hainan Aerospace Investment Management Company Limited* (海南航天投資管理有限公司) will strengthen its communications with the local government and enhance the business model.  Meanwhile, the Company will put more efforts to introduce strategic partners for the cooperation of project development. Under the impacts of factors such as inflation and policy measures in the PRC, the hi-tech property business may encounter increased pressures on cost control and financing in the short run. The Company will keep itself highly alert of cost and price fluctuations in order to strictly mitigate the short-term risks brought by the relevant policies. However, it is believed that both projects of the hi-tech property in Shenzhen and Hainan, principally providing accommodation services to the industrial bases, will develop healthily in the long run.

In connection with the new materials business, the annual production capacity of the high-performance polyimide films of Shenzhen Rayitek is about 300 tonnes, subject to change in accordance with different product specifications. In the second half of the year, Shenzhen Rayitek will gradually increase its sales and production volume and begin to consider its expansion plan for the next stage. With the support from CASC, the Company has made an initial step, through the acquisition of Shenzhen Rayitek, towards the development of new organic polymer materials industry. At the same time, the Company expects the relevant acquisition will have synergy effect to the hi-tech manufacturing business of the Company.