Highlights

• A
  Hong Kong-based building protection solution provider
• Providing
  solutions which integrate the provision of building protection works with a
  focus on waterproofing works and the supply of building protection products
• Ranked
  second in the building protection work market in Hong Kong with a market share
  of approximately 3.0% in terms of revenue in FY2019, according to a Frost &
  Sullivan Report
• A
  distributor of nine brands covering more than 400 building protection products,
  as at 22 March 2020 (the Latest Practicable Date)
• Supplying
  its own-brand "DP ChemTech" and "DP" products since 2011

Financial Highlights

HONG KONG, CHINA
- Media OutReach - 31
March 2020 - Sunray Engineering Group Limited ("Sunray
Engineering Group", together with its subsidiaries, the "Group"; stock
code: 8616), a Hong Kong-based building protection solution provider, announces
the details of its plan to list on GEM of The Stock Exchange of Hong Kong
Limited ("SEHK") today.

A total of 250,000,000
shares will be offered under the Share Offer, of which 225,000,000 Shares
(subject to reallocation and the Offer Size Adjustment Option), representing
90% of the total number of Offer Shares under the Share Offer, will be offered
by way of Placing; while the remaining 25,000,000 Shares (subject to
re-allocation), representing 10% of the total number of Offer Shares under the
Share Offer, will be offered under the Public Offer. The Offer Price per Offer
Share is expected to be not less than HK$0.24 and not more than HK$0.28
(subject to a Downward Offer Price Adjustment). The Public Offer will commence
at 9:00 a.m. on 31 March 2020 (Tuesday) and close at 12:00 noon on 7 April 2020
(Tuesday). The final offer price and the allotment results are expected to be
announced on 22 April 2020 (Wednesday). Dealings in the shares of Sunray Engineering Group on GEM of the SEHK are
expected to commence on 23 April 2020 (Thursday).

Assuming an Offer Price
of HK$0.26 per Offer Share (being the midpoint of the Offer Price range), the
aggregated net proceeds from the Share Offer, after deducting related expenses,
will be approximately HK$29.0 million. Sunray
Engineering Group intends to use these net proceeds for the following
purposes: 1) approximately 9.8% will be used for acquiring additional machinery
and equipment for building protection works; 2) approximately 29.1% will be
used for expanding its workforce; 3) approximately 31.0% will be used for strengthening
its financial position for payment of upfront cost; and 4) 30.1% will be used
for expanding its building protection product mix and continuing to develop its
own-brand "DP ChemTech" and "DP" products.

Ample Capital Limited
is the Sole Sponsor. Alpha Financial Group Limited and Lego Securities Limited
are the Joint Global Coordinators. Alpha Financial Group Limited, Lego
Securities Limited and Enhanced Securities Limited are the Joint Bookrunners.
Alpha Financial Group Limited, Lego Securities Limited, Enhanced Securities
Limited, AFG Securities Limited, All EverGreen Securities Limited, Brilliant
Norton Securities Company Limited, China-Hong Kong Link Securities Company
Limited, CIS Securities Asset Management Limited, Grand Partners Securities
Limited, Lee Go Securities Limited and Orient Securities Limited are the Joint
Lead Managers.

Industry Overview

According to a Frost
& Sullivan Report, Hong Kong's gross value in construction industry embraced
stable growth from approximately HK$278.2 billion in 2013 to approximately
HK$470.2 billion in 2019 at a CAGR of approximately 9.1%, which could be
attributed to many mega infrastructure construction projects in Hong Kong. By
the end of 2023, it is estimated that growth will remain stable at a CAGR of
approximately 4.2% driven by strong demand for housing. The gross value of
construction work in Macau has reached HK$15.2 billion in 2019 and it is
estimated that the growth will remain stable at a CAGR of approximately 4.6%
driven by demand derived from the tourism and related sector.

The market size of
building protection work in Hong Kong is projected to reach HK$4,323.0 million
by 2023, at a CAGR of 4.4% between 2019 and 2023. The growing demand from major
applications such as waterproofing on external wall and roof is expected to
drive the demand for building protection
work market. The growing construction sector is a major driving factor for the building
protection work market. For building protection products, it is estimated that
the market size is expected to grow at a CAGR of 4.2% during the future period
from 2019 to 2023, reaching HK$2,094.6 million in 2023.

Business Overview

The Group is a Hong
Kong-based building protection solution provider and its solutions integrate
the provision of building protection works with a focus on waterproofing works;
and the supply of building protection products. According to the Frost &
Sullivan Report, it ranked second in the building protection work market in
Hong Kong with a market share of approximately 3.0% in terms of revenue in
FY2019.

The Group's building
protection works were carried out with the building protection products sourced
and procured by it, and in various types of buildings in both public and
private sectors such as residential buildings, commercial buildings and
community facilities. The building protection products supplied by the Group
can be broadly categorised into waterproofing products, tiling products and
flooring and other products. As at 22 March 2020 (the Latest Practicable Date),
it was the distributor of nine brands covering more than 400 building
protection products, which were sourced from Independent Third Party brand
owners and manufacturers from Germany, Switzerland and the United States. Since
2011, the Group also supplied its own-brand "DP ChemTech" and "DP" products,
which are sourced from selected Independent Third Party suppliers from
different jurisdictions such as PRC, Taiwan and Singapore.

Competitive Strengths

1)      
A synergistic business model integrating the provision of
building protection works and the supply of building protection products, which
complement each other

The Group believes that
its expansion into the distribution and supply of building protection products
has created a synergy effect on its business. On one hand, it boosted the sale
of its building protection products whereby it can bargain for better terms
with the brand owners or manufacturers of the products in terms of purchase
price, duration of its distribution right, range of products covered, and
geographical coverage of its distribution right etc. of the products. On the
other hand, the Group is also in a better position to select the appropriate
type of products to be applied in its building protection works projects, and
more accurately assess their cost and the quantity required, which would
facilitate the Group in its preparation of realistic and competitive quotation.

2)      
An established operating
history and proven track record as a provider of building protection solutions,
which enables the Group to maintain a stable relationship with its customers

The Group has over 30
years of operating history in the building protection industry in Hong Kong. During
the Track Record Period, it completed over 80 building protection works
projects; and on the other hand, supplied its own-brand building protection
products and acted as the distributor of over 400 building protection products
in nine brands, which together have enabled it to provide integrated building
protection solutions to its customers and to maintain a stable relationship
with its customers.

3)      
Offering an extensive brand portfolio of building
protection products and maintaining a stable relationship with its building
protection products suppliers and subcontractors

The extensive brand
portfolio of building protection products enables the Group to maintain its
position as a provider of building protection products in Hong Kong and Macau.
It also gives the Group a greater flexibility in selecting suitable building
protection products for undertaking building protection works in different
buildings and developments.

4)      
A dedicated management
team with extensive industry experience

The Group's senior
management team members generally have over 20 years of experience in the
building protection industry or construction industry. Its management team's extensive
industry experience and knowledge will enable the Group to formulate
competitive quotations, manage and implement its projects effectively, and
control the costs of its projects.

BUSINESS STRATEGIES

1)   
Acquiring additional machinery and equipment for carrying
out building protection works to cope with the Group's business expansion

Having its own
machinery and equipment enhances the Group's competitive strength over other
building protection work providers to the extent that, (i) it allows the Group to
have more flexibility in allocating its resources in undertaking building
protection work projects of varying scale and duration and cover different
scale and scope of building protection works; and (ii) there is a higher chance
that its quotations would be accepted by potential customers as the Group can
ensure stable and sufficient machinery to carry out the works effectively and
efficiently.

2)   
Expanding the Group's workforce

In granting a contract,
customer will assess, among other things, the availability of the Group's
manpower resources. Hence, to increase the Group's chance in winning a contract
by quotation, it is necessary for it to enhance its competitiveness by
expanding its workforce.

3)   
Strengthening its financial position to pay for the upfront
cost of its projects

To commence a new
project and in the course of carrying out the project, the Group generally has
to incur substantial upfront costs in the early stage and working capital
during the course of implementation of the project before such costs can be
recovered from its customers after more than approximately three months. To
ensure that the Group has sufficient cash to pay the upfront cost, it will review
the allocation of the net proceeds for payment of upfront costs for its
projects regularly.

4)   
Expanding the Group's building protection product mix and
continuing to develop its own-brand "DP ChemTech" and "DP" products

The Group plans to
solidify its relationship with existing suppliers of building protection
products, identify and introduce new brands and new products from its existing
suppliers and new suppliers of building protection products. It also plans to
enhance the market recognition of its own-brand "DP ChemTech" and "DP"
products.

MEASURES ON
COVID-19 OUTBREAK

The Group believes that
the occurrence of the outbreak of COVID-19 has not resulted in any material
adverse impact on the business operation and financial performance of the Group,
as at 22 March 2020 (the Latest Practicable Date). There is no loss or
cancellation of its contracts or purchase orders. None of the Group's customers
have, or have expressed their intention to delay, suspend or terminate the
Group's existing building protection projects or their purchase orders for the
Group's building protection products, or reduce their demand of the Group's services
and products. The Group has not experienced any instance of material labour
shortage or suspension of works of its subcontractors in its building
protection works projects.

To avoid shortage in
supply of building protection products due to temporary closure of its suppliers'
production facilities, transportation restrictions or disruption of the supply
chain of building protection products, the Group would obtain quotations from
different suppliers and subcontractors and retain the quotations of the other
suppliers/subcontractors for back-up purpose. As at 31 January 2020, the cash
balance of the Group was approximately HK$49.7 million, and its Directors
believe that the Group's cash balance will be able to support the monthly cash
demands for not less than 12 months assuming there is no redundant or pay cut
to current staff.

About the Group

Sunray
Engineering Group Limited is a Hong Kong-based building protection solution
provider and its solutions integrate the provision of building protection works
with a focus on waterproofing works and the supply of building protection
products. According to the Frost & Sullivan Report, the Group ranked second
in the building protection work market in Hong Kong with a market share of
approximately 3.0% in terms of revenue in FY2019.

For FY2018 and FY2019, the
Group's overall revenue increased by approximately 25.1% from approximately
HK$153.2 million to HK$191.7 million. As at 22 March 2020 (the Latest
Practicable Date), the Group had undertaken 287 building protection works
projects in Hong Kong, and the total original contract sum of these projects
amounted to approximately HK$657.5 million.