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Deciphering a company's prospectus

A prospectus concludes five parts: cover; catalogue; main contents; appendix; references.

When an investor reads a company's prospectus, attention should be paid to the following aspects:

● Risks and counter measures: it explains the existing risks of the company and whether the company's counter measures are effective;

● Use of proceeds: it summarizes how the raised fund will be used by the company;

● Dividend policy: it dictates how much cash is returned to shareholders;

● Financial results: this part will help investors evaluate the stability and flexibility of the company's operating performance;

● Main information of the offering: relevant information about the issuer, principal shareholders;

● Earnings forecasts: it is directly related to the issuance of the company's stock shares. Generally speaking, listed companies are more willing to predict profits optimistically and make the profit figures larger;

● Development plan: it explains the management's plan for company's future development;

● Other matters that the issuer considers to have a significant impact on investors' judgment.