理财产品及结构性存款

During the Track Record Period, financial assets at fair value through profit or loss represented the investments in wealth management products issued by banks in the PRC with expected investment return rates ranged from 2.10% to 3.88% per annum.

As at 31 December 2020, 2021 and 2022, we had financial assets at fair value through profit or loss of approximately RMB11.0 million, RMB17.1 million and nil, respectively.

Our investment in wealth management products is categorised within level 3 of fair value measurement.

Our financial assets at fair value through profit or loss increased from RMB344.6 million as of 31 December 2020 to RMB512.9 million as of 31 December 2021 and further increased to RMB711.1 million as of 31 December 2022, primarily because we invested in more wealth management products with low risks so as to generate some returns from idle fund.

As of 31 December 2020, 2021 and 2022, all of our financial assets at fair value through profit or loss were classified as Level 2 financial instruments and the fair value was measured by reference to quoted value from commercial banks.

Board approval for investing in financial products is required when the total outstanding balance of the financial products purchased by us exceeds 20% of our total assets.

Our financial assets at FVTPL at the end of each reporting period mainly represented short-term investments issued by reputable banks with no predetermined or guaranteed return which are not principal protected investments which is subject to the compliance with Chapter 14 of the Listing Rules upon Listing.

Financial products | 405,492 | 43,496

Prior to making any material investments in financial products or modifying our existing investment portfolio, the proposal shall be reviewed and approved by our chief executive officer and the Board.

As part of our cash management policy to manage the excess cash, we have invested in certain financial products issued by PRC commercial banks to achieve higher interest income.

We carefully balance our need for interest income and the risks associated with financial products by investing in simple financial products with principal-protection investment strategies issued by reputable financial institutions.

Our other gains and losses primarily consist of: (i) fair value change of financial assets at FVTPL in connection with structured deposits we purchased;

Our financial assets at fair value through profit or loss represented short-term treasury investment products issued by reputable licensed commercial banks in the PRC.

The main level 3 inputs used by the Group are return rates of the financial assets at FVPL which are derived and evaluated based on the yield rate written in contracts by the counterparties.

Based on the above considerations, our Directors are of the view that the valuation of our Group's level 3 financial instruments are fair and reasonable and the financial statements of our Group are properly prepared.

During the Track Record Period, our other gains and losses, net, primarily consisted of (i) fair value gains on financial assets at FVTPL mainly representing the gains from our wealth management products, (ii) loss on disposal of property, plant and equipment, and (iii) net foreign exchange gains.

Our net other gains increased from RMB10.8 million in 2021 to RMB15.1 million in 2022, primarily arising from an increase of fair value gains on financial assets at FVTPL of RMB3.1 million, mainly as we purchased additional wealth management products using proceeds from our Pre-IPO Investments.

In addition, RMB512.7 million was recorded as financial assets at FVTPL as of December 31, 2022, which represented highly liquid investments in wealth management products and can be used to fund our working capital when necessary.

The fair value of wealth management products is determined using a valuation model for which not all inputs are observable and is within Level 3 of the fair value hierarchy.

We have implemented internal policies to ensure the reasonableness of fair value measurement on the level 3 financial assets.

Having considered the work done by the Directors and Reporting Accountants and the relevant due diligence done as stated above, nothing has come to the Joint Sponsors’ attention that would cause the Joint Sponsors to question the valuation analysis performed by the valuers on the financial assets and liabilities.

During the Track Record Period, our financial assets at fair value through profit or loss consisted primarily of our investment in certain structured deposits and wealth management products issued by major and reputable commercial banks in the PRC, and equity investment in Beijing Black Mirror and Beisen Shengya.

Our investment in structured deposit increased significantly from RMB122.3 million as of March 31, 2021 to RMB1,297.6 million as of March 31, 2022, mainly because we received the proceeds from our Series F financing round.

Our investment strategy related to structured deposits and wealth management product portfolio focuses on minimizing the financial risks by reasonably and conservatively matching the maturities of the portfolio to anticipated operating cash needs, while generating desirable investment returns for the benefits of our shareholders.

As of December 31, 2019, 2020 and 2021 and September 30, 2022, we had financial assets measured at fair value through profit or loss of US$0.6 million, US$1.4 million, US$1.5 million and US$1.5 million, respectively, representing the fair value of the deposit component of certain life insurance products we purchased from a licensed insurance company in Hong Kong, pursuant to which we are entitled to a guaranteed minimum return, as well as an unguaranteed investment return.

The Level 3 fair value measurement of the deposit component of the insurance contracts held by our Group during the Track Record Period was measured based on the value in the statements provided by the insurance company.

Our Directors have conducted the following to be satisfied with the reasonableness of the valuation of such financial assets within Level 3 of fair value measurement: (i) reviewing the terms of the insurance contracts, (ii) obtaining the statement from the insurance company and checking the balances of the deposit component of the insurance contracts, and (iii) considering our internal controls over the investment of such insurance contracts.

Our financial assets at fair value through profit or loss were RMB127.4 million, RMB398.4 million, RMB801.4 million and RMB810.4 million as of December 31, 2019, 2020, 2021 and October 31, 2022, respectively.

All the wealth management products that we invested in during the Track Record Period were issued by Ping An Bank and China Merchants Bank, and were not principal protected.

Amounts invested in high-risk products should not exceed 10% of the total investable amount. Amounts invested in high-risk and medium-risk products combined should not exceed 50% of the total investable amount.

Financial assets at fair value through profit or loss ("FVTPL") primarily consist of low-risk wealth management products issued by some of the major banks in the PRC, such as China Everbright Bank and Ping An Bank. Such wealth management products generally have a term of less than a month.

Our financial assets at FVTPL balances increased from RMB5.0 million as of December 31, 2021 to RMB110.0 million as of September 30, 2022, primarily attributable to the significant increase in our investments in certain wealth management products in the nine months ended September 30, 2022.

We have in place an internal investment policy regarding the supervision and approval process for our investments and we have implemented prudent investment strategies during the course of our business.