Management Focus and Prospects

Soon Kweung Wah, Thomas Director & General Manager Majestic Engineering Co Ltd

Majestic is always well prepared to strive for challenges and will closely monitor the operational environment and adhere to cautious precaution policies. To reduce operational costs and stay competitive, the group will continue to focus on its core competencies as well as its strategies on cost control, E&M service quality and improving productivity. The group also adopts a prudent approach on treasury management. On the other hand, it is our management belief that intangible capital including Human, Information and Organization are the three main categories that our group continues to concrete and enhance for implementing strategy.

Business Outlook - Hong Kong Market

The Hong Kong Economy expanded briskly in 2Q 2007 with GDP accelerating to 6.9% growth, comparing with 5.7% in 1Q 2007. With the recent notable improvement in the Property Market sentiment and the progressive stepping up of works at some large commercial and residential building sites, the construction industry bound to recover and the gross value of construction work performed at private sector sites totaled HK$7.4 billion in 2Q 2007, surged by 20.7% in nominal terms from a year earlier. Moreover, under 2007/08 Policy Address, the government had reiterated that it would continue to speed up the implementation of 10 major infrastructure projects for economic growth:
1. Transport Infrastructure:
    South Island Line;
    The Sha Tin to Central Link;
    The Tuen Mun Western Bypass and Tuen Mun – Chek Lap Kok Link;
2. Cross-boundary Infrastructure Projects:
    The Guangzhou-Shenzhen-Hong Kong Express Rail Link;
    Hong Kong – Zhuhai – Macao Bridge; Hong Kong – Shenzhen Airport Co-operation;
    Hong Kong – Shenzhen Joint Development of the Lok Ma Chau Loop;
3. New Urban Development Areas:
    West Kowloon Cultural District;
    Kai Tak Development Plan;
    New Development Areas.
Together with Tamar Development project and other potential ones like the improvement and upgrading works for the 2009 East Asian Games sports facilities, Stage 2 of the Replacement and Rehabilitation Programme for Water Mains, drainage works in various districts and the concept plan for Lantau, these mega infrastructure projects provide ample opportunities for E&M industry.

Business Outlook - PRC Market

The national economy maintains good momentum with relatively fast growth. The proactive financial and monetary policy yield notable results, bringing a growing domestic demand. In view of 2007 economic indicators, the cooling macro-economic measures are now having desired effect and overheating is under control and may be no longer a threat to mainland's economy. A more mature domestic economy takes shape and the opportunities being untapped in both construction and E&M industries are far more reliable and concrete.

Business Outlook - Macau Market

Anticipating 2008, in terms of domestic demand, private consumption will grow at a steady pace. The investment in gaming and tourism facilities will remain strong and the government will continue to expand the investment in public works. With regards to external demand, the opening of some new large-scale gaming and tourism facilities will definitely attract more visitors and start a new era for this sector which will in turn have a positive impact on the economy. Macao's economy is expected to be optimistic in 2008. The M&E market in Macao especially with those gaming and tourism sector will offer remarkable opportunities to our Group in the next few years.

Overall

Despite the robust global economy, the rising delinquencies on US sub-prime mortgages spread rapidly in these few months, the Hong Kong's economic prospects in the remaining period of 2007 and 2008 will hinge critically on the evolvement of the sub-prime crisis and its related impact on various markets. Coupled with the severe challenges and difficulties from tender price war, material fluctuation and substantial upsurge of workers' salary, our Group should equip with effective business model and dynamic process transformation to adapt for these ever-changing operational and management pressure.

Our company will continue to focus on its core competencies as well as its strategies on cost control, M&E service quality and improving productivity. The management strongly believes that our company could maintain its top position in M&E industry, to commit total satisfaction to the customers and to enhance shareholder's value.

November 2007