Continental Aerospace Technologies Holding Limited — Proxy Solicitation & Information Statement 2007

Dec 2, 2007

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in CATIC International Holdings Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

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CATIC INTERNATIONAL HOLDINGS LIMITED

*

(Incorporated in Bermuda with limited liability)

(Stock Code: 232)

DISCLOSEABLE AND CONNECTED TRANSACTION ACQUISITION OF 29.4% INTEREST IN CATIC SIWEI CO., LTD.

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

A notice convening a special general meeting of CATIC International Holdings Limited to be held at Narcissus Room, 27/F., The Park Lane Hong Kong, 310 Gloucester Road, Hong Kong on 20 December 2007 at 10:00 a.m. is set out on pages 24 to 25 of this circular. Whether or not you are able to attend the meeting, please complete and return the enclosed form of proxy in accordance with the instructions printed thereon as soon as possible and in any event by no later than 48 hours before the time appointed for the holding of the meeting. Completion of the form of proxy shall not preclude you from attending and voting at the meeting or any adjournment thereof should you so wish.

• For identification purpose only

3 December 2007

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Letter from KGI Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Appendix – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19
Notice of SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	24

– i –

DEFINITIONS

Capitalised terms used in this circular shall have the following meanings unless the context requires otherwise:

“associate(s)”	has the meaning ascribed thereto under the Listing Rules
“Board”	the board of Directors
“BVI”	the British Virgin Islands
“CATIC” or “Vendor”	China National Aero-Technology Import & Export
	Corporation, a state-owned enterprise in the PRC which
	through its subsidiaries indirectly holds an aggregate
	38.54% equity interest in the Company
“Company”	CATIC International Holdings Limited, a company
	incorporated in Bermuda with limited liability, the issued
	shares of which are listed on the Stock Exchange
“Completion”	completion of the Share Transfer Agreement
“Completion Date”	a day within ten business days after the effective date of
	the Share Transfer Agreement
“connected person(s)”	has the meaning ascribed to it under the Listing Rules
“Director(s)”	the director(s) of the Company, including the independent
	non-executive directors of the Company
“Group”	the Company and its subsidiaries
“HK$”	Hong Kong dollar, the lawful currency of Hong Kong
“Hong Kong”	The Hong Kong Special Administrative Region of the
	People’s Republic of China
“Independent Board Committee”	a committee of the Board, comprising Mr. Chu Yu Lin,
	David, Mr. Li Ka Cheung, Eric and Mr. Li Zhaoxi, the
	independent non-executive Directors, formed to advise
	the Independent Shareholders in respect of the Share
	Transfer Agreement
“Independent Third Party”	a third party independent of the Company and connected
	persons of the Company

– 1 –

DEFINITIONS

“Independent Shareholders”	Shareholders of the Company except CATIC and its
	associates
“KGI Capital”	KGI Capital Asia Limited, a licensed corporation under
	the SFO to carry out Type 1 (dealing in securities), Type
	4 (advising on securities) and Type 6 (advising on
	corporate finance) regulated activities, and the
	independent financial adviser appointed by the Company
	to advise the Independent Board Committee and the
	Independent Shareholders in respect of the Share
	Transfer Agreement
“Latest Practicable Date”	30 November 2007, being the latest practicable date prior
	to the printing of this circular of the purpose of
	ascertaining certain information contained in this circular
“Listing Rules”	the Rules Governing the Listing of Securities on the
	Stock Exchange
“PRC”	the People’s Republic of China and for the purpose of this
	circular, excluding Hong Kong, the Macau Special
	Administrative Region of the People’s Republic of China
	and Taiwan
“Purchaser”	CATIC General Aviation Holdings Limited, a company
	incorporated in BVI and is wholly-owned by the
	Company
“RMB”	Renminbi, the lawful currency of the PRC
“SFO”	The Securities and Futures Ordinance (Chapter 571 of the
	Laws of Hong Kong)
“SGM”	a special general meeting of the Company to be convened
	to approve the Share Transfer Agreement
“Share Transfer Agreement”	the agreement entered into between the Purchaser and the
	Vendor on 7 November 2007 regarding the transfer of the
	Siwei Interest
“Shareholders”	shareholders of the Company
“Shares”	ordinary share(s) of HK$0.10 each in the issued share
	capital of the Company

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DEFINITIONS

“Siwei” CATIC Siwei Co., Ltd, a company incorporated in the PRC which is owned as to 40% by the Purchaser, 29.4% by CATIC and 30.6% by (China Siwei Surveying & Mapping Technology Corporation*), an Independent Third Party “Siwei Interest” 29.4% interest of Siwei owned by CATIC “Speed Profit” Speed Profit Enterprises Limited, a company incorporated in BVI with limited liability and a whollyowned subsidiary of Tacko “Stock Exchange” The Stock Exchange of Hong Kong Limited “subsidiary(ies)” has the meaning ascribed thereto in section 2 of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong) “Tacko” Tacko International Limited, a company incorporated in BVI with limited liability and a wholly-owned subsidiary of CATIC (H.K.) Limited which in turn is wholly-owned by CATIC “%” percent

In this circular, RMB is converted into HK$ at a conversion price of RMB1 = HK$1 for illustration purposes.

• For identification purpose only

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LETTER FROM THE BOARD

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CATIC INTERNATIONAL HOLDINGS LIMITED

---

(Incorporated in Bermuda with limited liability)

(Stock Code: 232)

Executive Directors: Mr. Fu Shula (Chairman) Mr. Wang Xinkuo (Deputy Chairman) Mr. Ji Guirong (Deputy Chairman and Chief Executive Officer) Mr. Ma Zhiping Mr. Diao Weicheng Mr. Liu Rongchun Mr. Ren Haifeng (Deputy Chief Executive Officer)

Non-executive Director:

Mr. Ip Tak Chuen, Edmond

Registered office: Canon’s Court 22 Victoria Street Hamilton HM 12 Bermuda

Head office and principal place of business in Hong Kong: Unit B, 15/F United Centre 95 Queensway Hong Kong

Independent non-executive Directors:

Mr. Chu Yu Lin, David Mr. Li Ka Cheung, Eric Mr. Li Zhaoxi

3 December 2007

To the Shareholders

Dear Sir and Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION ACQUISITION OF 29.4% INTEREST IN CATIC SIWEI CO., LTD.

INTRODUCTION

Reference is made to the announcement of the Company dated 7 November 2007. On 7 November 2007, the Purchaser, a wholly owned subsidiary of the Company, entered into the Share Transfer Agreement with the Vendor, pursuant to which the Purchaser agreed to

• For identification purpose only

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LETTER FROM THE BOARD

purchase, and the Vendor agreed to sell, the Siwei Interest, representing 29.4% interest of Siwei, for a consideration of RMB18.4 million (equivalent to approximately HK$18.4 million) in cash.

Siwei is owned as to 40% by the Purchaser, 29.4% by the Vendor and 30.6% by (China Siwei Surveying & Mapping Technology Corporation*), an Independent Third Party. Upon Completion, Siwei will be owned as to 69.4% by, and become a non-wholly owned subsidiary of, the Purchaser.

The Vendor is a connected person of the Company by reason of its being a controlling shareholder holding 38.54% in the issued share capital of the Company. As the relevant percentage ratios calculated under Chapter 14 of the Listing Rules in respect of the Share Transfer Agreement exceed 5% but are less than 25%, the entering into of the Share Transfer Agreement constitutes a discloseable and connected transaction for the Company under Chapters 14 and 14A of the Listing Rules and is subject to the approval by the Independent Shareholders at the SGM. CATIC and its associates will abstain from voting on the ordinary resolution proposed at the SGM.

The purpose of this circular is to provide the Shareholders with further information on the Share Transfer Agreement, the recommendation of the Independent Board Committee, a letter of advice from KGI Capital and a notice of the SGM to be held on 20 December 2007 at which resolution to approve the Share Transfer Agreement will be considered and voted upon as required by the Listing Rules.

THE SHARE TRANSFER AGREEMENT

Date

7 November 2007

Parties

Purchaser : CATIC General Aviation Holdings Limited, a wholly owned subsidiary of the Company Vendor : CATIC

Assets to be acquired

The Siwei Interest which represents 29.4% interest of Siwei held by the Vendor. Siwei, an associate of the Company incorporated in the PRC, is beneficially owned as to 40% by the Purchaser, 29.4% by the Vendor and 30.6% by (China Siwei Surveying & Mapping Technology Corporation*), an Independent Third Party. Upon Completion, Siwei will be beneficially owned as to 69.4% by, and become a non-wholly owned subsidiary of, the Purchaser.

For the year ended 31 December 2006, the PRC audited net profit before and after tax and extraordinary items attributable to the Siwei Interest was approximately RMB0.24 million (equivalent to approximately HK$0.24 million) and RMB0.21 million (equivalent to

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LETTER FROM THE BOARD

approximately HK$0.21 million) respectively. For the year ended 31 December 2005, the PRC audited net profit before and after tax and extraordinary items attributable to the Siwei Interest was approximately RMB0.40 million (equivalent to approximately HK$0.40 million) and RMB0.36 million (equivalent to approximately HK$0.36 million) respectively. The PRC audited net asset value of the Siwei Interest as at 31 December 2006 was approximately RMB22.35 million (equivalent to approximately HK$22.35 million). The original purchase cost of the Siwei Interest paid by the Vendor was RMB16.69 million (equivalent to approximately HK$16.69 million), being capital contribution into Siwei at the time of its incorporation.

Consideration

The consideration of RMB18.4 million (equivalent to approximately HK$18.4 million) shall be satisfied in cash on the Completion Date. The consideration is principally determined based on the amount of PRC audited net asset value as at 31 December 2006 as represented by the Siwei Interest.

Conditions

The Share Transfer Agreement will become effective upon (i) the approvals by the Board and the Independent Shareholders having been obtained; and (ii) the obtaining of the relevant approvals from the relevant PRC authorities.

SHAREHOLDING STRUCTURE OF THE GROUP

The following chart illustrates the simplified Group structure immediately and after the Completion:

Immediately before the Completion

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LETTER FROM THE BOARD

Immediately after the Completion

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The Company is indirectly owned as to 38.54% by CATIC.

• For identification purpose only

REASONS FOR AND BENEFIT OF ENTERING INTO THE SHARE TRANSFER AGREEMENT

As stated in the 2006 annual report of the Company, the Group recorded investment profit in associates in an aggregate of HK$4,469,000 (equivalent to approximately RMB4,469,000) in 2006, as compared to that of HK$2,588,000 (equivalent to approximately RMB2,588,000) in 2005, from Siwei and China Nav-Info Co., Ltd. (“China Nav-Info”).

Siwei is principally engaged in the provision of aero-survey operations in the PRC. Upon Completion, Siwei will be owned as to 69.4% and become a non-wholly owned subsidiary of the Company. China Nav-Info is principally engaged in the business of utilizing geographical information system (“GIS”) and global positioning system (“GPS”) technologies to manufacture location-based navigation products and to provide related services. The Board considers that GIS and GPS technologies have become a widely used aid to navigation worldwide, and a useful tool for map-making, land surveying, commerce and scientific uses. GIS and GPS technologies also provide a precise time reference used in many applications including scientific study of earthquakes, and synchronization of telecommunications networks. The existing shareholders of China Nav-Info entered into a new joint venture agreement dated 16 November 2007 with certain independent third parties under which such independent third parties have contributed RMB18.78 million (approximately HK$18.78 million) in cash to the registered capital of China Nav-Info. Upon obtaining the approval by

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LETTER FROM THE BOARD

the relevant PRC authorities for such increase of registered capital of China Nav-Info, the Company will indirectly, and through Siwei, indirectly owns approximately 20.14% and 22.83% respectively before and after Completion.

The Board is optimistic about the future prospects of aero-survey operations and GIS-related business and believes that the gain of controlling interest in Siwei resulting from the Share Transfer Agreement represents a good opportunity for the Group to gain further foothold into the aero-survey operation and GIS-related business.

The Board considers that the business of Siwei is in the ordinary and usual course of business of the Group. The Directors believe that the terms of the Share Transfer Agreement are fair and reasonable and on normal commercial terms and that the entering into of the Share Transfer Agreement is in the interest of the Company and the Shareholders as a whole.

FINANCIAL EFFECTS OF THE SHARE TRANSFER AGREEMENT

The Directors intend that the consideration for the Siwei Interest be financed by internal resources of the Group. Immediately following the Completion, the earnings, assets and liabilities of Siwei will be consolidated into the financial statements of the Group. The Directors do not expect any immediate financial effects on the earnings and net assets of the Group as a result of the acquisition. Based on the unaudited management accounts of Siwei as at 31 October 2007, a goodwill of approximately HK$2.1 million arising from the acquisition will be recorded in the consolidated balance sheet of the Group. Save for the abovementioned, the Directors do not expect any immediate significant financial effects arising from the acquisition.

INFORMATION OF THE GROUP AND THE VENDOR

The Group is principally engaged in the undertaking of building facade projects, generation and sale of electricity and steam power, and investments in aero-technology related businesses including helicopter manufacturing, aero-survey operations and GIS products and services. On 29 August 2007, the Company entered into an agreement with an independent third party in relation to the disposal of the entire issued share capital of FEA Holdings Limited, a direct wholly-owned subsidiary which is principally engaged in the undertaking of building facade projects, by the Company. For details, please refer to the circular of the Company dated 16 November 2007.

The Vendor is a leading trading company of aviation products in the PRC.

IMPLICATIONS UNDER THE LISTING RULES

The Vendor is a connected person of the Company by reason of its being a controlling shareholder holding 38.54% in the issued share capital of the Company. As the relevant percentage ratios calculated under Chapter 14 of the Listing Rules in respect of the Share Transfer Agreement exceed 5% but are less than 25%, the entering into of the Share Transfer

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LETTER FROM THE BOARD

Agreement constitutes a discloseable and connected transaction for the Company under Chapters 14 and 14A of the Listing Rules and is subject to the approval by the Independent Shareholders at the SGM. CATIC and its associates will abstain from voting on the ordinary resolution proposed at the SGM.

SGM

Set out on pages 24 to 25 of this circular is a notice of the SGM to be held on 20 December 2007. In accordance with the requirement of the Listing Rules, resolution will be voted on by poll by the Independent Shareholders.

A form of proxy for use at the SGM is herewith enclosed. Whether or not you are able to attend the meeting in person, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return to the Company’s principal office at Unit B, 15/F., United Centre, 95 Queensway, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for the holding of such meeting or any adjournment thereof. You are urged to complete and return the form of proxy enclosed, whether or not you intend to attend the SGM. Completion and return of the form of proxy shall not preclude you from attending and voting at the SGM or any adjourned meeting thereof should you desire.

PROCEDURES FOR DEMANDING A POLL

Pursuant to Article 70 of the Bye-laws of the Company, a poll (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) may be demanded by the Chairman of the meeting or:

• (i) by at least three Shareholders present in person or by a duly authorized corporate representative or by proxy for the time being entitled to vote at the meeting; or

• (ii) by any Shareholder present in person or by a duly authorized corporate representative or by proxy and representing not less than one-tenth of the total voting rights of all the Shareholders having the right to vote at the meeting; or

• (iii) by any Shareholder present in person or by a duly authorized corporate representative or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the shares conferring that right.

The demand for a poll may be withdrawn, with the consent of the Chairman of the meeting, at any time before the close of the meeting or the taking of the poll, whichever is the earlier. According to Rule 14A.52 of the Listing Rules, the votes taken at the SGM to seek approval of the Share Transfer Agreement and the transactions contemplated thereunder will be taken by poll.

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LETTER FROM THE BOARD

RECOMMENDATIONS

The Independent Board Committee has been formed to consider and advise the Independent Shareholders on whether the terms of the Share Transfer Agreement are fair and reasonable and in the interest of Independent Shareholders and the Company as a whole. KGI Capital has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.

Your attention is drawn to the letter from the Independent Board Committee to the Independent Shareholders set out on page 11 of this circular and the letter from KGI Capital to the Independent Board Committee and the Independent Shareholder.

The Independent Board Committee, having taken into account the advice of KGI Capital, considered that the terms of the Share Transfer Agreement are fair and reasonable and are in the interest of the Independent Shareholders and the Company as a whole.

ADDITIONAL INFORMATION

Your attention is drawn to the general information set out in the appendix in this circular.

Your faithfully, By order of the Board CATIC International Holdings Limited Fu Shula

Chairman

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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CATIC INTERNATIONAL HOLDINGS LIMITED

*

(Incorporated in Bermuda with limited liability)

(Stock Code: 232)

3 December 2007

To the Independent Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION ACQUISITION OF 29.4% INTEREST IN CATIC SIWEI CO., LTD.

We refer to the circular of the Company dated 3 December 2007 of which this letter forms part (the “Circular”). Terms used in this letter shall have the same meanings as defined in the Circular unless the context otherwise requires.

As independent non-executive Directors, we have been appointed by the Board to advise you as to whether the terms of the Share Transfer Agreement are fair and reasonable and in the interest of the Independent Shareholders and the Company as a whole.

We wish to draw your attention to the advice of KGI Capital, the independent financial adviser, in respect of the Share Transfer Agreement as set out in the Letter from KGI Capital in the Circular.

Having considered the Share Transfer Agreement and the advice and opinion of KGI Capital in relation thereto, we are of the opinion that the terms of the Share Transfer Agreement are on normal commercial terms, fair and reasonable and in the interest of the Independent Shareholders and the Company as a whole. We therefore recommend that the Independent Shareholders vote in favour of the ordinary resolution to be proposed at the SGM to approve the Share Transfer Agreement.

Your faithfully,

For and on behalf of

The Independent Board Committee

Mr. Chu Yu Lin, David Mr. Li Ka Cheung Eric Mr. Li Zhaoxi

Independent Non-executive Directors

• For identification purpose only

– 11 –

LETTER FROM KGI CAPITAL

Set out below is the text of the letter of advice from KGI Capital Asia Limited, the independent financial adviser to the Independent Board Committee and the Independent Shareholders, prepared for inclusion in this circular.

27/F ICBC Tower Citibank Plaza 3 Garden Road Central Hong Kong Tel: 2878 6888 Fax: 2970 0080

3 December 2007

To the Independent Board Committee and the Independent Shareholders CATIC International Holdings Limited Unit B, 15th Floor United Centre 95 Queensway Hong Kong

Dear Sir and Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION ACQUISITION OF 29.4% INTEREST IN CATIC SIWEI CO., LTD.

INTRODUCTION

We refer to our appointment as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the proposed acquisition of 29.4% interest of Siwei under the Share Transfer Agreement, particulars of which are set out in the “Letter from the Board” (the “Letter”) contained in the circular dated 3 December 2007 (the “Circular”), of which this letter forms part. Terms used in this letter shall have the same meanings as defined in the Circular unless the context otherwise requires.

As stated in the Letter, on 7 November 2007, the Purchaser, a wholly owned subsidiary of the Company, entered into the Share Transfer Agreement with the Vendor, pursuant to which the Purchaser agreed to purchase, and the Vendor agreed to sell, the Siwei Interest, representing 29.4% interest of Siwei, for a consideration of RMB18.4 million (equivalent to approximately HK$18.4 million) in cash (the “Consideration”). As also referred to in the Letter, Siwei is beneficially owned as to 40% by the Purchaser, 29.4% by the Vendor and 30.6% by (China Siwei Surveying & Mapping Technology Corporation), an Independent Third Party. Upon Completion, Siwei will be beneficially owned as to 69.4% by, and become a non-wholly owned subsidiary of, the Purchaser.

– 12 –

LETTER FROM KGI CAPITAL

As stated in the Letter, the Vendor is a connected person of the Company by reason of its being a controlling shareholder holding 38.54% in the issued share capital of the Company. Based on the applicable size tests performed regarding the proposed acquisition, the relevant percentage ratios under Rule 14.07 of the Listing Rules exceed 5% but are less than 25%. Therefore, the entering into the Share Transfer Agreement constitutes a discloseable and connected transaction for the Company under Chapter 14A of the Listing Rules and is subject to the approval by the Independent Shareholders at the SGM. CATIC and its associates will abstain from voting on the resolution proposed at the SGM.

THE INDEPENDENT BOARD COMMITTEE

The Independent Board Committee, comprising all three independent non-executive Directors, namely Mr. Chu Yu Lin, David, Mr. Li Ka Cheung, Eric and Mr. Li Zhaoxi, has been established to consider the terms of the Share Transfer Agreement and the connected transaction thereunder and to advise the Independent Shareholders as to whether the terms of the Share Transfer Agreement are fair and reasonable and are in the interests of the Company and the Independent Shareholders as a whole.

We, KGI Capital Asia Limited, have been appointed to advise the Independent Board Committee and the Independent Shareholders as to whether or not the terms of the Share Transfer Agreement are fair and reasonable and are in the interests of the Independent Shareholders and the Company so far as the Independent Shareholders are concerned.

BASIS OF OUR OPINION

In formulating our opinion and recommendation, we have relied on the information, financial information and facts supplied to us and representations expressed by the Company, its Directors and/or the management of the Company and have assumed that all such information, financial information, facts, statements of belief, opinion and intention and any representation made to us, or referred to in the Circular, in all material aspect, are true, accurate and complete as at the time they were made and as at the date of the Circular and shall continue to be true, accurate and complete at the date of the SGM, and has been properly extracted from the relevant underlying accounting records (in the case of financial information) and made after due and careful inquiry by the Company and/or the management of the Company, and are based on honestly-held opinions. The Directors and/or the management of the Company have confirmed that, having made all reasonable enquiries and to the best of their knowledge and belief, all relevant information has been supplied to us and that no material facts have been omitted from the information supplied and representations expressed to us. We have also relied on certain information available to the public and have assumed such information to be accurate and reliable. We have also assumed that all statement of intention of the Company, its Directors and management of the Company as set out in the Circular will be implemented. We have no reason to doubt the completeness, truth or accuracy of the information and facts provided to us and we are not aware of any facts or circumstances which would render such information provided and representations made to us untrue, inaccurate or misleading.

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LETTER FROM KGI CAPITAL

In formulating our opinion, we have obtained and reviewed relevant information and documents provided by the Company and its Directors and management of the Company in connection with the transaction and discussed with the management of the Company so as to assess the fairness and reasonableness of the terms of the Share Transfer Agreement. Relevant information and documents included, among other things, the Share Transfer Agreement, the annual report of the Company for the year ended 31 December 2006, the interim report of the Company for the six months ended 30 June 2007, the PRC audited financial report of Siwei for the year ended 31 December 2006, the unaudited management account of Siwei for the nine months ended 30 September 2007 and sales orders of Siwei which are expected to be completed in the remaining months of 2007 and 2008. We believe that we have reviewed sufficient information to enable us to reach an informed view, to justify our reliance on the accuracy of the information contained in the Circular and to provide a reasonable basis for our opinion regarding the terms of the Share Transfer Agreement. We have not, however, carried out any independent verification of the information and representations provided to us by the management of the Company and the Directors nor have we conducted any form of independent investigation into the businesses and affairs, financial position or the future prospects of the Company, Siwei, China Nav-Info, CATIC, or their respective subsidiaries or associated companies. We have not studied, investigated nor verified the validity of all the legal aspects of, and procedural aspects for, the acquisition under the Share Transfer Agreement.

Our opinion is necessarily based upon the financial, economic, market, regulatory and other conditions as they existed on, and the facts, information, representations and opinions made available to us as of, the Latest Practicable Date. Our opinion does not in any manner address the Company’s own decision to proceed with the entering into the Share Transfer Agreement. We disclaim any undertaking or obligation to advise any person of any change in any fact or matter affecting the opinion expressed herein, which may come or be brought to our attention after the Latest Practicable Date. Except for its inclusion in the Circular, this letter is not to be quoted or referred to, in whole or in part, nor shall this letter be used for any other purpose, without our prior written consent.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion and recommendation to the Independent Board Committee and the Independent Shareholders in relation to the proposed acquisition, we have taken the following principal factors and reasons into consideration:

1. Reasons for and benefits of the proposed acquisition

As set out in the Letter, the Group is principally engaged in the undertaking of building facade projects, generation and sale of electricity and steam power, and investments in aero-technology based businesses including helicopter manufacturing, aero-survey operations and geographical information system (“GIS”) products and services. As stated in an announcement of the Company dated 30 August 2007, on 29 August 2007, the Company entered into an agreement with an independent third party in relation to the disposal by the

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LETTER FROM KGI CAPITAL

Company of the entire issued share capital of FEA Holdings Limited, a direct wholly-owned subsidiary of the Company which, through its subsidiaries, is principally engaged in design, manufacture and installation of curtain walls, aluminium windows and other related products. As stated in such announcement, it is the long term strategy of the Group to further develop and diversify its aero-technology related business. As stated in the 2006 annual report of the Company, the Group recorded investment profit in associates in an aggregate of HK$4,469,000 (equivalent to approximately RMB4,469,000) in 2006, as compared to that of HK$2,588,000 (equivalent to approximately RMB2,588,000) in 2005, from Siwei and China Nav-Info Co., Ltd (“China Nav-Info”).

Siwei is principally engaged in the provision of aero-survey operation in the PRC. Upon Completion, Siwei will be beneficially owned as to 69.4% by, and become a non-wholly owned subsidiary of, the Company. Before entering the Share Transfer Agreement, Siwei held 11.53% of the registered capital of China Nav-Info. China Nav-Info is principally engaged in the business of utilizing GIS and global positioning system (“GPS”) technologies to manufacture location-based navigation products and to provide related services. As set out in the Letter, the existing shareholders of China Nav-Info entered into a new joint venture agreement dated 16 November 2007 with certain independent third parties under which such independent third parties have contributed RMB18.78 million (approximately HK$18.78 million) in cash to the registered capital of China Nav-Info. Upon obtaining the necessary approval by the relevant PRC authorities for such increase of registered capital of China Nav-Info, the Company will, and also through Siwei, indirectly owns approximately 20.14% and 22.83% of the registered capital of China Nav-Info respectively before and after Completion.

According to the Current Market Outlook 2007 published by Boeing, one of the world’s leading aerospace companies and a large manufacturer of commercial jetliners and military aircraft combined, 28,600 new airplanes will be delivered over the next 20 years from 2006 and will make up 80% of the 36,400 airplanes in service in 2026. The intense competitiveness of the airline industry demands that these new airplanes bring substantial benefits in the closely related areas of airplane performance and economics.

Boeing further forecasted that, over the next 20 years, the center of gravity of the world airline fleet will move substantially toward the Asia-Pacific region. China leads long-term growth in domestic air travel markets. Its capacity growth rate of 8.1% will combine with increased load factors to propel its airline traffic from just under a fifth the size of the North American domestic market today to over half the size of the North American market in 20 years’ time. In light of the aforesaid prospects of the world aviation market, the Directors consider that the future of the aero-technology related business and the business of Siwei of providing aero-survey operation in the PRC will benefit from the expected continuous growth of the world aviation market, in particular, the PRC aviation market.

As advised by the Directors, Siwei is a major market player in aero-survey industry in the PRC. The Board is optimistic about the future prospects of aero-survey operations and GIS-related business and believes that the gain of controlling interest in Siwei resulting from the Share Transfer Agreement represents a good opportunity for the Group to gain further foothold into the aero-survey operation and GIS-related business.

– 15 –

LETTER FROM KGI CAPITAL

Based on the above, we concur with the view of the Directors that the acquisition of the Siwei Interest would enable the Group to more efficiently control and manage Siwei’s operations and business strategy and will align Siwei’s business objectives with those of the Group and enable the Group to further increase its market share in aero-survey market in the PRC. Therefore, we are of the view that the proposed acquisition of the Siwei Interest is in the interest of the Company and the Independent Shareholders as a whole.

2. Principal terms of the Share Transfer Agreement

Pursuant to the Share Transfer Agreement, the Purchaser agreed to purchase, and the Vendor agreed to sell, the Siwei Interest, representing 29.4% interest of Siwei, for a consideration of RMB18.4 million (equivalent to approximately HK$18.4 million) in cash.

As stated in the Letter, the Board considers that the business of Siwei is in the ordinary and usual course of business of the Group and the Directors believe that the terms of the Share Transfer Agreement are fair and reasonable and on normal commercial terms and that the entering into the Share Transfer Agreement is in the interest of the Company and the Shareholders as a whole.

One of the commonly used methods in valuing an entity is by price/earnings multiple comparison. We note that the net profit after tax and extraordinary items attributable to the Siwei Interest was approximately RMB0.21 million (equivalent to approximately HK$0.21 million) according to Siwei’s PRC audited financial report for the year ended 31 December 2006, which represented only approximately 0.72% of the PRC audited total asset attributable to the Siwei Interest as at 31 December 2006. The management of the Company considers that Siwei is still at its initial stage of development and its turnover and profit are expected to grow in the future. The management of the Company has confirmed that Siwei’s sales orders on hand which are expected to be completed in year 2008 have amounted to over RMB80 million. Having considered the above-mentioned factors, we are of the view that the price/earnings multiple comparison might not necessarily be meaningful for the Siwei Interest and therefore is not appropriate in valuing the Siwei Interest. Since no apparently better method is available in valuing the Siwei Interest, we consider that valuing the Siwei Interest with reference to the net assets value as represented by the Siwei Interest is justifiable.

As stated in the Letter, the Consideration of RMB18.4 million (equivalent to approximately HK$18.4 million) was principally determined based on the amount of PRC audited net assets value as at 31 December 2006 as represented by the Siwei Interest. As also stated in the Letter, the PRC audited net assets value of the Siwei Interest as at 31 December 2006 was approximately RMB22.35 million (equivalent to approximately HK$22.35 million). The Consideration represents approximately 17.67% discount to the PRC audited net assets value of the Siwei Interest as at 31 December 2006. We have also reviewed the unaudited management account of Siwei for the nine months ended 30 September 2007 and note that as at 30 September 2007, the unaudited net asset value of the Siwei Interest was approximately RMB22.7 million (equivalent to approximately HK$22.7 million). The Consideration represents approximately 18.94% discount to the unaudited net assets value of the Siwei Interest as at 30 September 2007. We also note from an announcement of the Company dated

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LETTER FROM KGI CAPITAL

5 November 2007 that the Purchaser submitted a bid for the Siwei Interest which was put to open tender on the Shanghai United Assets and Equity Exchange ( ) by the Vendor. The open tender ended on 5 November 2007 and the Purchaser was the sole bidder. In view that the acquisition of the Siwei Interest by the Purchaser was under open tender and the Consideration represents a discount to the PRC audited net assets value of the Siwei Interest as 31 December 2006, we are of the view that the Consideration is fair and reasonable and in the interests of the Company and Independent Shareholders as a whole.

3. Financial effects on the Group

Siwei is currently an 40%-owned associate of the Company and will become a 69.4%-owned subsidiary of the Company upon Completion.

Effect on net asset value

As confirmed by the Directors, the assets and liabilities of Siwei will be consolidated into the financial statements of the Group immediately following the Completion and the Directors do not expect any immediate material effects on the net asset value of the Group as a result of the acquisition. As stated in the Letter, based on the unaudited management accounts of Siwei as at 31 October 2007, a goodwill of approximately HK$2.1 million arising from the acquisition of the Siwei Interest will be recorded in the consolidated balance sheet of the Group.

Effects on earnings

As stated in the Letter, for the year ended 31 December 2006, the PRC audited net profit before and after tax and extraordinary items attributable to the Siwei Interest was approximately RMB0.24 million (equivalent to approximately HK$0.24 million) and RMB0.21 million (equivalent to approximately HK$0.21 million) respectively. For the year ended 31 December 2005, the PRC audited net profit before and after tax and extraordinary items attributable to the Siwei Interest was approximately RMB0.40 million (equivalent to approximately HK$0.40 million) and RMB0.36 million (equivalent to approximately HK$0.36 million) respectively. We have also reviewed the unaudited management account of Siwei for the nine months ended 30 September 2007 and note that the unaudited net profit after tax attributable to the Siwei Interest for the nine months ended 30 September 2007 was approximately RMB0.38 million (equivalent to approximately HK$0.38 million). Immediately before the proposed acquisition of the Siwei Interest, the Group is interested in 40% equity interests in Siwei and the results of the Siwei are equity-accounted for in the financial statements of the Group. Upon completion of the proposed acquisition, Siwei will become a 69.4%-owned subsidiary of the Company and the Directors confirmed that the financial statements of Siwei will be consolidated into the financial statements of the Group.

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LETTER FROM KGI CAPITAL

Effects on working capital

As confirmed by the Directors, the Company will satisfy the Consideration of RMB18.4 million (equivalent to approximately HK$18.4 million) in cash by the Group’s internal resources. According to the interim report of the Company for the six months ended 30 June 2007, the unaudited consolidated cash and cash equivalents balance of the Group as at 30 June 2007 was approximately HK$417.4 million. As confirmed by the Company, such payment of the Consideration in cash will not have material adverse impact on the financial position of the Group.

Having considered that (i) the Group could more efficiently control and management the operations of Siwei after completion of the proposed acquisition of the Siwei Interest as mentioned before; (ii) the proposed acquisition will not have material adverse impact on the Group’s consolidated net assets and financial position; and (iii) we consider the Consideration to be fair and reasonable and in the interests of the Company and the Independent Shareholders as discussed before, we consider that the terms of the Share Transfer Agreement are fair and reasonable and are in the interests of the Company and the Independent Shareholders as a whole.

RECOMMENDATION

Having considered the above principal factors and reasons, we consider that the business of Siwei is in the ordinary and usual course of business of the Group and the terms of the Share Transfer Agreement are on normal commercial terms and are fair and reasonable and in the interests of the Company and the Independent Shareholders as a whole. Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders and recommend the Independent Shareholders to vote in favour of the ordinary resolution to approve the Share Transfer Agreement which will be proposed at the SGM.

Yours faithfully, For and on behalf of KGI Capital Asia Limited Laurent Leung Jimmy Chan Director Senior Vice President

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GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief there are no other facts the omission of which would make any statement in this circular misleading.

2. DISCLOSURE OF INTERESTS

(a) Directors and chief executives

As at the Latest Practicable Date, the interests and short positions of the Directors and chief executives of the Company in the Shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which are required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO) or which are required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or which are required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies to be notified to the Company and the Stock Exchange were as follows:

				Approximate
Name of	Interests in Shares/		Type of	percentage of
Director	underlying Shares	Capacity	interest	issued capital
Mr. Ji Guirong	20,000,000	Beneficial	Personal	0.41%
	share options (L)	owner

Note: The letter “L” stands for long position. The above-mentioned share options are granted by the Company pursuant to its share option schemes.

Certain directors have non-beneficial personal equity interests in certain subsidiaries held for the benefit of the Company.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or chief executives of the Company had any interest or short position in the Shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which are required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO) or which are required, pursuant to section 352 of the SFO to be entered in the register referred to therein or which are required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies, to be notified to the Company and the Stock Exchange.

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GENERAL INFORMATION

APPENDIX

Substantial Shareholders

As at the Latest Practicable Date, as far as is known to the Directors and the chief executives of the Company, the following person (not being a Director or chief executive of the Company) had an interest or short position in the Shares or underlying shares of the Company which would fall to be disclosed to the Company under provisions of Divisions 2 and 3 of Part XV of the SFO:

		Approximate
		percentage of the
	Number of	Company’s
	ordinary Shares	issued share
Name of Shareholders (Note)	held	capital
Speed Profit	508,616,000*	10.63%
Tacko	1,335,767,000*	27.91%
	508,616,000#	10.63%
CATIC (H.K.) Limited (“CATIC H.K.”)	1,844,383,000#	38.54%
CATIC	1,844,383,000#	38.54%
China Aviation Industry Corporation I	1,844,383,000#	38.54%
(“AVIC I”)
China Aviation Industry Corporation II	1,844,383,000#	38.54%
(“AVIC II”)
Atlantis Investment Management Ltd.	402,000,000*	8.40%

• These shares were directly beneficially owned by these shareholders.

These shares were owned through controlled corporations.

Note: Speed Profit is a wholly-owned subsidiary of Tacko, which is in turn a wholly-owned subsidiary of CATIC (H.K.). CATIC (H.K.) is a wholly-owned subsidiary of CATIC, which is in turn owned as to 50% by AVIC I and as to 50% by AVIC II. Pursuant to the SFO, Tacko is deemed to be interested in the shares held by Speed Profit; and each of CATIC (H.K.), CATIC, AVIC I and AVIC II is deemed to be interested in the aggregate shares held directly by Speed Profit and Tacko.

Saved as disclosed above, the Directors and the chief executives of the Company are not aware of any person (other than a Director or chief executive of the Company) who, as at the Latest Practicable Date, had any interest or short position in the Shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

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GENERAL INFORMATION

APPENDIX

Interest in other members of the Group

Save as disclosed below, as at the Latest Practicable Date, so far as is known to the Directors and the chief executives of the Company, no other person was, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of other members of the Group or has any option in respect of such capital:

		Perecentage of
Name of Owner	Name of subsidiary	shares held
Asia Capital Financial Group	Hangzhou Sealand Electric	30%
Limited	Power Company Limited

Note: Asia Capital Financial Group Limited is an independent third party not related to the Company.

• (b) As at the Latest Practicable Date, none of the Directors has any existing or proposed service contract with any member of the Group which is not terminable by the employer within one year without payment of compensation other than statutory compensation.

• (c) None of the Directors is materially interested in any contract or arrangement subsisting at the Latest Practicable Date which is significant in relation to the business of the Group taken as a whole.

• (d) None of the Directors has any direct and indirect interest in any assets acquired or disposed of by or leased to any member of the Group or is proposed to be acquired or disposed of by or leased to any member of the Group since 30 June 2007, being the date to which the latest published audited accounts of the Group were made up.

3. DIRECTORS’ INTERESTS IN COMPETING BUSINESS

As at the Latest Practicable Date, none of the Directors or chief executives of the Company or their respective associates has any beneficial interest in other businesses which compete or are likely to compete with business of the Group.

4. LITIGATION

As at the Latest Practicable Date, neither the Company nor any of its subsidiaries was involved in any litigation or claim of material importance and there was no litigation or claim of material importance known to the Directors to be pending or threatened against the Company and any of its subsidiaries.

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GENERAL INFORMATION

APPENDIX

5. EXPERT

The following is a qualification of the expert who has given opinion or advice which is contained in this circular:

Name

Qualification

KGI Capital

a licensed corporation to carry out Type 1 (dealing in securities), Type 4 (advising on securities) and Type 6 (advising on corporate finance) regulated activities under the SFO

As at the Latest Practicable Date, KGI Capital is not beneficially interested in the share capital of any member of the Group nor has any right, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for securities in any member of the Group and does not have any interest, either directly or indirectly, in any assets which have been, since the date to which the latest published audited financial statements of the Company were made up, acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Group.

KGI Capital has given and has not withdrawn its written consent to the issue of this circular with inclusion of its letter and references to its names in the form and context in which it is included.

6. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Board confirmed that there was no material adverse change in the financial or trading position of the Group since 30 June 2007 (the date to which the latest published audited consolidated accounts of the Group were made up).

7. MISCELLANEOUS

• (i) The principal place of business of the Company is Unit B, 15/F., United Centre, 95 Queensway, Hong Kong.

• (ii) The secretary of the Company is Ms. Leung Yuen Chee, Sara (associate member of The Hong Kong Institute of Chartered Secretaries and The Institute of Chartered Secretaries and Administrators).

• (iii) The qualified accountant of the Company is Ms. Wong, Anne (associate member of the Hong Kong Institute of Certified Public Accountants).

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GENERAL INFORMATION

APPENDIX

• (iv) The transfer office of the Company is situated at the office of its branch share registrars, Computershare Hong Kong Investor Services Limited at 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

• (v) The English text of this document shall prevail over the Chinese text.

8. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours at the office of the Company at Unit B, 15/F., United Centre, 95 Queensway, Hong Kong up to and including 16 December 2007:

• (a) the memorandum of association and bye-laws of the Company;

• (b) the Share Transfer Agreement;

• (c) the 2005 and 2006 annual reports and 2007 interim report of the Company for the two financial years ended 31 December 2006 and the period ended 30 June 2007 respectively;

• (d) the letter addressed to the Independent Shareholders from the Independent Board Committee, the text of which is set out on page 11 of this circular;

• (e) the letter of advice from KGI Capital to the Independent Board Committee and the Independent Shareholders, the text of which is set out on pages 12 to 18 of this circular; and

• (f) the letter of consent from KGI Capital referred to in paragraph 3 under section headed “EXPERT” of this appendix.

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NOTICE OF SGM

==> picture [78 x 64] intentionally omitted <==

CATIC INTERNATIONAL HOLDINGS LIMITED

*

(Incorporated in Bermuda with limited liability)

(Stock Code: 232)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT a special general meeting (the “SGM”) of CATIC International Holdings Limited (the “Company”) will be held at Narcissus Room, 27/F., The Park Lane Hong Kong, 310 Gloucester Road, Hong Kong on 20 December 2007 at 10:00 a.m. for the following purposes of considering and, if though fit, passing, with or without modifications, the following resolution:

ORDINARY RESOLUTION

(1) “ THAT :

• (a) the share transfer agreement dated 7 November 2007 (the “ Share Transfer Agreement ”), entered into by CATIC General Aviation Holdings Limited (the “ Purchaser ”), a wholly-owned subsidiary of CATIC International Holdings Limited (the “ Company ”), and China National Aero-Technology Import & Export Corporation (the “ Vendor ”), pursuant to which the Vendor has agreed to sell and the Purchaser has agreed to acquire 29.4% interests of CATIC Siwei Co., Ltd, details of the Share Transfer Agreement are set out in the circular of the Company dated 3 December 2007 (the “ Circular ”) (a copy of the Share Transfer Agreement and the Circular having been produced to the meeting marked “ A ” and “ B ” respectively and initialed for the purposes of identification by the chairman of the meeting) and the transactions contemplated thereunder be and are hereby approved, confirmed and ratified; and

• (b) any one director of the Company be and is hereby generally and unconditionally authorised to do all such acts and things, to sign and execute all such further documents for and on behalf of the Company, or in case of execution of documents under seal, to do so jointly with any of a second director or the secretary of the Company and to take such steps as he/she

* For identification purpose only

– 24 –

NOTICE OF SGM

may in his/her absolute discretion consider necessary, appropriate, desirable or expedient to give effect to or in connection with the transactions under the Share Transfer Agreement.”

By Order of the Board Leung Yuen Chee, Sara Company Secretary

Hong Kong, 3 December 2007

Head office and principal

place of business in Hong Kong:

Unit B, 15/F.

United Centre 95 Queensway Hong Kong

Notes:

1. A member entitled to attend and vote at the above meeting (or at any adjournment thereof) is entitled to appoint one or more proxies to attend and vote in his stead. A proxy need not be a member of the Company.

2. Where there are joint registered holders of any shares, any one of such persons may vote at the above meeting (or at any adjournment thereof), either personally or by proxy, in respect of such shares as if he were solely entitled thereto; but if more than one of such joint holders be present at the above meeting personally or by proxy, that one of the said persons so present whose name stands first on the register of members of the Company in respect of such share shall alone be entitled to vote in respect thereof.

3. In order to be valid, the forms of proxy, together with the power of attorney or other authority (if any) under which it is signed or a certified copy of that power of attorney or authority (such certification to be made by either a notary public or a solicitor qualified to practise in Hong Kong), must be deposited with the branch share registrar of the Company in Hong Kong, Computershare Hong Kong, Investor Services Limited, at 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong, not less than 48 hours before the time fixed for holding the above meeting or any adjournment thereof.

4. The translation into Chinese language of this notice is for reference only. In case of any inconsistency, the English version shall prevail.

5. The Chairman intends to demand poll voting for the resolution set out in the notice of the SGM.

As at the date of this notice, the Board comprises Mr. Fu Shula, Mr. Wang Xinkuo, Mr. Ji Guirong, Mr. Ma Zhiping, Mr. Diao Weicheng, Mr. Liu Rongchun, Mr. Ren Haifeng as executive Directors, Mr. Ip Tak Chuen, Edmond as non-executive Director and Mr. Chu Yu Lin, David, Mr. Li Ka Cheung, Eric and Mr. Li Zhaoxi as independent non-executive Directors.

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