At present, both overseas projects and domestic projects account for about 50% respectively. We hope to increase the proportion of overseas projects to 60% in the future. We will conduct an assessment of the business environment in all regions every six months, and will actively opt out of high-risk areas. We will use the insurance services provided by Sinosure to avoid the losses caused by overseas political risks and commercial risks. Through risk management, our overseas projects are successfully implemented without outstanding payment problems thus far.

We will make an advance assessment when signing the project contract For projects that may be suspended due to environmental protection or financial problems, we will only undertake the design part , or sign the contract in stages, or even refuse to sign the project contract, so we can maintain our conversion rate of nearly 100%.

Under normal circumstances, a project will start within 3 months after signing the contract. The implementation cycle varies according to the scale and difficulties of the project. For example, an order with a contract amount of RMB 2 billion takes 24-30 months to complete.

Dividend is declared by the board of directors of our Company. In determining whether to pay dividend and the amount of dividend, the Board will consider the Company's earnings, cash flow, financial performance, future financing needs, legal restrictions, other reserve requirements, and any other conditions that the Board considers relevant.

Wison resumed paying dividends in mid-2018 and hope to continue to share the Company's profit with shareholders. In the future, we will strive to continue to pay annual dividends. Although there is no fixed dividend payout ratio, our goal is to make the Company's dividend policy more competitive and in line with our industry.

The revenue recognition period is generally 2-3 years and it is normally calculated according to the percentage of completion. The early stage of the project is mainly for design and preparation work. The revenue recognition is low in the early stage. As the project enters the large-scale equipment installation and site construction, the proportion of project completion will increase leading to the rapid growth of the revenue. In the final project stage after the handover, there will be small-scale construction including rectification and maintenance work, thus the revenue recognition will be substantially lower.

For example, a project with a contract amount of RMB 2.5 billion and an execution period of 36 months, only 15-25% of the project revenue can be recognized in the first 12 months. By the 24th month, the revenue can be recognized to 60-75%. By the 30th month, the revenue can be recognized to 90-95%. In the last six months, only 5-10% can be recognized as income.

In China, the gross profit margin of coal chemical industry is lower than that of petrochemical industry. In the international markets, gross margin is only 5%-10% in mature markets such as the United States and Saudi Arabia. On the contrary, gross margin can reach 15%-20% in non-competitive markets such as Africa. Additionally, gross margin can be 35% in Venezuela.

Gross profit margin fluctuations are affected by revenue recognition and project portfolio. In 2016, the proportion of high-margin projects was large so that the gross profit margin is relatively high. In 2019, gross margin of the whole market is at a lower point. However, at this time, our company still maintains a margin of three to four points higher than the industry average level. At present, there is no indication of a significant increase in gross margin, but it may change with supply and demand factors in the future.

Wison has established a brand in overseas markets in the past few years. In the future, our advantages will be reflected in EPC execution capacity and Chinese manufacturing capabilities, as well as Wison's modular production capacity. For the next 3-5 years it is not realistic for Chinese engineering companies to compete with overseas companies. At present, Chinese engineering companies compete with the advantages of price, project delivery capacity and schedule control. In addition, the cooperation between Wison and overseas technology providers will help the Company to develop the overseas markets.

Modularization can reduce the construction period and labor costs, while minimizing the constraints of the project site environment and greatly improving the quality and safety. At present, the Group has completed Zhejiang Petrochemical 1,400kta ethylene cracking furnace module project and the Group’s first modularized LDPE pipe rack project in Texas, the United States. In addition, the Group was awarded another EPC for modular conversion design, supply, material procurement, on-site construction and installation of a petrochemical project located in Texas, the United States with a contract amount of US$360 million. The project is currently the largest modular project undertaken by a Chinese energy and chemical engineering company in the United States. It fully demonstrated the recognition for the Group’s overall process management and execution capabilities in modular design, construction, shipping and delivery.

Currently, Wison’s major domestic customers include local state-owned enterprises and private enterprises. In the future, the foreign-invested enterprises will be our new target once the domestic market is opened to the foreign-invested enterprises.

Implemented strategic initiatives of “Promoting development and strengthening business with technologies”, Wison is committed to becoming a technical engineering service company, and the strengthening R&D of technology is an important foundation for Company's long-term development. Meanwhile, the Company's R&D expenses budget accounts for at least 3%, and there is no ceiling for the budget.

There will be two main aspects for the capital expenditure in the next few years. First, capital will be used for the research and development of technology, especially for the development of some pilot plants. Secondly, M&A investment will be the other major capital expenditure, as we consider projects related to Wison’s industrial chain or technology-oriented projects.

The implementation of overseas market strategies will be the driver for the Company's business growth. With more than a decade of development in overseas markets, the Company has demonstrated its capabilities of EPC projects in Saudi Arabia, Abu Dhabi, the United States and other regions whose mature international markets will remain the major focus for Wison in the future. For overseas markets expansion, we plan to explore high-quality projects in Russia, Southeast Asia, Central Asia, Latin America and Africa to leverage our expertise and boost Wison’s business development.

For the domestic markets, the Company continues to consolidate its core business, including refining and chemical integration projects, light hydrocarbon cracking projects, propane dehydrogenation projects, new downstream materials of ethylene and propylene , and the coal chemical industry chain. Our main target customers include local state-owned enterprises, private enterprises and wholly foreign-owned chemical enterprises. Meanwhile, the strengthening of the application and R&D of technology, modular prefabrication and digitalization will enhance Wison’s competitiveness, which will help the Company to develop new markets and strive for larger market shares.

Wison’s major competitors in overseas markets include Japanese engineering companies such as Toyo Engineering Corporation and JGC Corporation, as well as Korean engineering companies such as Samsung Engineering and Hyundai Engineering. At present, our prices are not much lower than these other overseas competitors. However, we have made substantial progress in supporting Chinese suppliers enabling them to enter the overseas project owners’ supplier list which will help us to control the project costs. Currently, our biggest advantage lies in project management and delivery capabilities. We can deliver the projects in advance to minimize the construction period while our financing advantages help our clients with capital sources to support their projects.