Cowell e Holdings Inc. - Proxy Solicitation & Information Statement 2024

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 Cowell e Holdings Inc., you should at once hand this circular, together with the enclosed form of proxy, to the purchaser(s) or the transferee(s) or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or the transferee(s).

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

Cowell e Holdings Inc. 高偉電子控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 1415)

REVISION OF ANNUAL CAPS FOR CONTINUING CONNECTED TRANSACTIONS AND NOTICE OF EXTRAORDINARY GENERAL MEETING

Independent financial adviser to the Independent Board Committee and the Independent Shareholders

==> picture [123 x 41] intentionally omitted <==

A notice convening the extraordinary general meeting (the “ EGM ”) of Cowell e Holdings Inc. to be held by way of virtual meeting on 29 August, 2024 at 10 a.m. is set out on pages 86 to 88 of this circular. If you are not able to attend and/or vote at the EGM, you are strongly urged to complete and return the form of proxy, a copy of which is enclosed, in accordance with the instructions printed thereon as soon as possible and in any event not later than 27 August, 2024 at 10 a.m. (Hong Kong Time).

The Shareholders and/or their proxies will NOT be able to attend the extraordinary general meeting in person, and can only attend the extraordinary general meeting via visiting the website at http://meetings.computershare.com/Cowelle2024FirstEGM which enables audio live streaming of the extraordinary general meeting.

Completion and return of the form of proxy will not preclude you from attending and voting at the meeting should you so wish.

14 August, 2024

		Page
GUIDANCE FOR THE EGM . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . .	1
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . .	3
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . .	12
LETTER FROM THE INDEPENDENT BOARD COMMITTEE	. . . . . . . . . . . . . . . . .	35
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER	. . . . . . . . . . . . . . . .	37
APPENDIX — GENERAL INFORMATION . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . .	81
NOTICE OF THE EXTRAORDINARY GENERAL MEETING	. . . . . . . . . . . . . . . . .	86

– i –

GUIDANCE FOR THE EGM

ATTENDING THE EGM BY MEANS OF ELECTRONIC FACILITIES

No Shareholder, proxy or corporate representative should attend the EGM in person. The Company strongly encourages Shareholders to attend, participate and vote at the EGM through online access by visiting the website — http://meetings.computershare.com/Cowelle2024FirstEGM (the “ Online Platform ”). Shareholders participating in the EGM using the Online Platform will also be counted towards the quorum and they will be able to cast their vote and submit questions through the Online Platform.

The Online Platform permits a “split vote” on a resolution, in other words, a Shareholder casting his/her/its votes through the Online Platform does not have to vote all of his/her/its shares in the same way (“ For ” or “ Against ”). In the case of a proxy, he/she can vote such number of shares in respect of which he/she has been appointed as a proxy. Votes cast through the Online Platform are irrevocable once the voting session at the EGM ends.

The Online Platform will be open for registered Shareholders and non-registered Shareholders (see below for login details and arrangements) to log in approximately 30 minutes prior to the commencement of the EGM and can be accessed from any location with internet connection by a smartphone, tablet device or computer. Shareholders should allow ample time to check into the Online Platform to complete the related procedures. Please refer to the Online User Guide for the EGM sent together with this circular for assistance. Any missed contents as a result of connection issues arisen from the Shareholders will not be repeated.

Login details for registered Shareholders

Details regarding the EGM arrangements including login details to access the Online Platform are included in the Company’s notification letter to registered Shareholders sent together with this circular.

Login details for non-registered Shareholders

Non-registered Shareholders who wish to attend, participate and vote at the EGM using the Online Platform should:

(1) contact and instruct their banks, brokers, custodians, nominees or HKSCC Nominees Limited through which their shares are held (together, the “ Intermediary ”) to appoint themselves as proxy or corporate representative to attend the EGM; and
(2) provide their email address to their Intermediary before the time limit required by the relevant Intermediary.

– 1 –

GUIDANCE FOR THE EGM

Details regarding the EGM arrangements including login details to access the Online Platform will be sent by the Hong Kong branch share registrar of the Company, Computershare Hong Kong Investor Services Limited, to the email address of the non-registered Shareholders provided by the Intermediary. Any non-registered Shareholder who has provided an email address through the relevant Intermediary for this purpose but has not received the login details by email by 12:00 noon on Wednesday, 28 August 2024 should reach out to the Hong Kong branch share registrar of the Company for assistance. Without the login details, non-registered Shareholders will not be able to participate and vote using the Online Platform. Non-registered Shareholders should therefore give clear and specific instructions to their Intermediary in respect of both (1) and (2) above.

Login details for proxies

Registered and non-registered Shareholders should note that only one device is allowed in respect of each set of login details. Please also keep the login details in safe custody for use at the EGM and do not disclose them to anyone else. Neither the Company nor its agents assume any obligation or liability whatsoever in connection with the transmission of the login details or any use of the login details for voting or otherwise. For enquiries regarding the login details to access the Online Platform, please call Computershare Hong Kong Investor Services Limited on (852) 2862 8555 for assistance.

If any Shareholder has any question relating to the EGM, please contact the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited as follows:

Computershare Hong Kong Investor Services Limited 17M Floor, Hopewell Centre 183 Queen’s Road East, Wanchai, Hong Kong

Website: www.computershare.com/hk/contact Tel: (852) 2862 8555 Fax: (852) 2865 0990

– 2 –

DEFINITIONS

In this circular, unless the context otherwise requires, the following expressions shall have the following meanings:

“2024 and/or 2025 Annual Cap(s)” the existing annual caps for the two years ending 31 December 2024 and 31 December 2025 under the Second Supplemental Purchase Framework Agreement; and the existing annual caps for the year ending 31 December 2024 under the Second Supplemental ST Supply Framework Agreement and the Third Supplemental Materials Procurement Framework Agreement

“Articles”

the memorandum and articles of association of the Company, as amended from time to time

“associates” has the meaning ascribed to it under the Listing Rules
“Board” the board of Directors
“Company” Cowell e Holdings Inc. (高偉電子控股有限公司), a company incorporated in the Cayman Islands with limited liability, the Shares of which are listed on the Main Board of the Stock Exchange
“connected person(s)” has the meaning ascribed to it under the Listing Rules “controlling Shareholder” has the meaning ascribed to it under the Listing Rules
“Director(s)” director(s) of the Company “EGM” the extraordinary general meeting to be held by way of virtual meeting on 29 August, 2024 at 10 a.m. to consider, and if thought fit, approve, among others, the Supplemental Agreements, the transactions contemplated there under and the respective Proposed Annual Caps

“Existing Agreements” the Purchase Framework Agreement, the ST Supply Framework Agreement and the Materials Procurement Framework Agreement

– 3 –

DEFINITIONS

“Group”
“GZ Luxvisions”
“GZ Luxvisions Group”
“Hong Kong”
“Independent Board Committee”
“Independent Financial Adviser” or “Honestum International Limited”
“Independent Shareholders”
“Latest Practicable Date”

the Company and its subsidiaries

Guangzhou Luxvisions Innovation Technology Limited (廣州立景創新科技有限公司), a company established under the laws of the PRC and a subsidiary of LIL

GZ Luxvisions and its subsidiaries (for the purpose of this circular excluding, except where the context indicates otherwise, the Group)
the Hong Kong Special Administrative Region of the People’s Republic of China
a committee of the Board comprising Ms. Su Yen-Hsueh, Mr. Tsai Chen-Lung and Ms. Liu Xia, being the independent non-executive Directors
Honestum International Limited, a corporation licensed to carry out Type 6 (advising on corporate finance) regulated activities under the SFO, being independent financial adviser to the Independent Board Committee and Independent Shareholders in relation to the Supplemental Agreements, the transactions contemplated thereunder and the respective Proposal Annual Cap(s)
the Shareholders who are not required to abstain from voting at the EGM
9 August, 2024, being the latest practicable date prior to the printing of this circular for ascertaining certain information in this circular

– 4 –

DEFINITIONS

“LIL”
Luxvisions Innovation Limited (立景創新有限公司), a company incorporated in Hong Kong with limited liability. As at the Latest Practicable Date, LIL is owed as to:
(i) approximately 56.342% by Mr. Wang Laixi (a controlling Shareholder); and
(ii) approximately 43.659% by Luxsan Limited (景汕有限公司), which is a company incorporated in Hong Kong with limited liability and owned as to by Ms. Wang Laichun (an elder sister of Mr. Wang Laixi), Mr. Wang Laisheng (an elder brother of Mr. Wang Laixi) and Ms. Wang Laijiao (an elder sister of Mr. Wang Laixi) as to 34%, 33% and 33%, respectively
“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange
“LITL”
Luxvisions Innovation Technology Limited, a limited liability company incorporated in Hong Kong, is a wholly-owned subsidiary of GZ Luxvisions
“LS Products”
the equipment primarily comprising modules and light detection and ranging machines to be supplied by Luxsense to the Suteng Group in accordance with the terms and conditions of the ST Supply Framework Agreement
“Luxsense”
東莞立騰創新電子有限公司 (Dongguan Luxsense Innovation Electronics Limited)*, a limited liability company established under the law of the PRC and is a subsidiary of the Company owned as to 51% by the Company and 49% by Suteng as at the Latest Practicable Date
“Luxshare Limited”
Luxshare Limited (立訊有限公司), a company incorporated in Hong Kong with limited liability

– 5 –

DEFINITIONS

“Luxshare Precision”
“Luxshare Precision Group”
“Materials”
“Materials Procurement Framework Agreement”

Luxshare Precision Industry Co., Limited (立訊精密工業股份有限公司), a company incorporated in the PRC with limited liability and listed on the Shenzhen Stock Exchange (stock code: 002475). As at the Latest Practicable Date, approximately 37.83% of the equity interest of Luxshare Precision is directly held by Luxshare Limited (立訊有限公司) which in turn is owned by Ms. Wang Laichun and Mr. Wang Laisheng, who are siblings of Mr. Wang Laixi, one of the controlling Shareholders

Luxshare Precision and its subsidiaries

the materials to be supplied by the GZ Luxvisions Group to the Group under the Materials Procurement Framework Agreement according to the specifications as requested by the Group, including but not limited to circuit board assembly (including LiDAR printed circuit board assembly (LiDAR PCBA)) and related raw materials, stores, consumables and other materials in relation to the production of the Group

the materials procurement framework agreement dated 29 December 2022 entered into between the Company and GZ Luxvisions in relation to the purchase of the Materials by the Group from the GZ Luxvisions Group, as amended and supplemented by the Supplemental Materials Procurement Framework Agreement, the Second Supplemental Materials Procurement Framework Agreement and the Third Supplemental Materials Procurement Framework Agreement

For details of the Materials Procurement Framework Agreement, the Supplemental Materials Procurement Framework Agreement and the Second Supplemental Materials Procurement Framework Agreement, please refer to the announcements of the Company dated 29 December 2022, 19 April 2023 and 10 November 2023 and the circulars of the Company dated 8 June 2023 and 5 December 2023

– 6 –

DEFINITIONS

“PRC” the People’s Republic of China, for the purpose of this circular, excluding Hong Kong, Macau Special Administrative Region of the People’s Republic of China and Taiwan

“Products”

the products to be supplied by the Luxshare Precision Group to the Group under the Purchase Framework Agreement according to the specifications as requested by the Group, including but not limited to front and rear facing cameras of smartphones and cameras of tablets for the production of the Group

“Proposed Annual Cap(s)”

(1) the proposed 2024 annual cap and the proposed 2025 annual cap for the two years ending 31 December 2025 under the Purchase Framework Agreement as revised by the Second Supplemental Purchase Framework Agreement, subject to the approval by the Independent Shareholders at the EGM;
(2) the proposed 2024 annual cap for the year ending 31 December 2024 under the ST Supply Framework Agreement as revised by the Second Supplemental ST Supply Framework Agreement, subject to the approval by the Independent Shareholders at the EGM; and
(3) the proposed 2024 annual cap for the year ending 31 December 2024 under the Materials Procurement Framework Agreement as revised by the Third Supplemental Materials Procurement Framework Agreement, subject to the approval by the Independent Shareholders at the EGM
“Purchase Framework Agreement”
the product purchase framework agreement entered into between the Company and Luxshare Precision on 29 December 2022 in relation to the purchase of the Products by the Group from the Luxshare Precision Group, as amended and supplemented by the Supplemental Purchase Framework Agreement and the Second Supplemental Purchase Framework Agreement

– 7 –

DEFINITIONS

For details of the Purchase Framework Agreement and the Supplemental Purchase Framework Agreement, please refer to the announcements of the Company dated 29 December 2022 and 19 April 2023 and the circular of the Company dated 8 June 2023

“RMB”

Renminbi, the lawful currency of the PRC

“Second Supplemental Materials Procurement Framework Agreement”

the second supplemental materials procurement framework agreement dated 10 November 2023 entered into between the Company and GZ Luxvisions to revise the annual cap for the year ending 31 December 2023 under the Materials Procurement Framework Agreement

For details of the Second Supplemental Materials Procurement Agreement, please refer to the announcement of the Company dated 10 November 2023 and the circular of the Company dated 5 December 2023
“Second Supplemental Purchase Framework Agreement”
the second supplemental products purchase framework agreement dated 17 July 2024 entered into between the Company and Luxshare Precision to revise the 2024 and the 2025 Annual Caps for the two years ending 31 December 2025 under the Purchase Framework Agreement
“Second Supplemental ST Supply Framework Agreement”
the second supplemental supply framework agreement dated 17 July 2024 entered into between the Luxsense and Suteng to revise the 2024 Annual Cap for the year ending 31 December 2024 under the ST Supply Framework Agreement

“SFO”

the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), as amended or supplemented from time to time
“Share Option Scheme” the share option scheme adopted by the Company pursuant to a resolution passed by the shareholders of the Company on 5 May, 2021

– 8 –

DEFINITIONS

“Share(s)”

ordinary share(s) of USD0.004 each in the capital of the Company or if there has been a subsequent sub-division, consolidation, reclassification or reconstruction of the share capital of the Company, shares forming part of the ordinary equity share capital of the Company

“Shareholder(s)” holders of the Shares of the Company
“ST Supply Framework Agreement” the supply framework agreement dated 19 April 2023 entered into between Luxsense and Suteng in relation to the supply of the LS Products by Luxsense to the Suteng Group, as amended and supplemented by the Supplemental ST Supply Framework Agreement and the Second Supplemental Purchase Framework Agreement

For details of the ST Supply Framework Agreement, please refer to the announcement of the Company dated 19 April 2023 and the circular of the Company dated 8 June 2023

“Stock Exchange” The Stock Exchange of Hong Kong Limited
“subsidiary(ies)”
has the meaning ascribed to it under the Listing Rules
“Supplemental Agreements”

the Second Supplemental Purchase Framework Agreement, the Second Supplemental ST Supply Framework Agreement and the Third Supplemental Materials Procurement Framework Agreement

“Supplemental Materials the supplemental materials procurement framework Procurement Framework agreement dated 19 April 2023 entered into between the Agreement” Company and GZ Luxvisions to revise the Materials Procurement Framework Agreement

For further details of the Supplemental Materials Procurement Framework Agreement, please refer to the announcement of the Company dated 19 April 2023 and the circular of the Company dated 8 June 2023

– 9 –

DEFINITIONS

“Supplemental Purchase Framework Agreement”
“Supplemental ST Supply Framework Agreement”
“Suteng”
“Suteng Group”
“Takeovers Code”

the supplemental product purchase framework agreement dated 19 April 2023 entered between the Company and Luxshare Precision to revise the Purchase Framework Agreement. For further details of the Supplemental Purchase Framework Agreement, please refer to the announcement of the Company dated 19 April 2023 and the circular of the Company dated 8 June 2023

the supplemental supply framework agreement dated 10 November 2023 entered into between Luxsense and Suteng to revise the ST Supply Framework Agreement. For details of the Supplemental ST Supply Framework Agreement, please refer to the announcement of the Company dated 10 November 2023 and the circular of the Company dated 5 December 2023

深圳市速騰聚創科技有限公司 (Suteng Innovation Technology Co., Ltd.), a limited liability company established under the law of the PRC, and an indirectly wholly-owned subsidiary of RoboSense Technology Co., Ltd (速騰聚創科技有限公司) (“ RoboSense ”) which in turn is an exempted company incorporated in the Cayman Islands and listed on the Main Board of the Stock Exchange (stock code: 2498) in January 2024. To the best of the Directors’ knowledge, information and belief after having made all reasonable enquiries, Luxshare Limited (which in turn is owned by Ms. Wang Laichun and Mr. Wang Laisheng who are the controlling Shareholders indirectly interested in approximately 70.76% of the issued share capital of the Company through LITL as at the Latest Practicable Date) is interested in approximately 2.23% of the issued shares of Robosense

Suteng and its subsidiaries

The Code on Takeovers and Mergers and Share Buy-backs published by the Securities and Futures Commission of Hong Kong, as amended or supplemented from time to time

– 10 –

DEFINITIONS

“Third Supplemental Materials the third supplemental materials procurement framework Procurement Framework agreement dated 17 July 2024 entered into between the Agreement” Company and GZ Luxvisions to revise the 2024 Annual Cap for the year ending 31 December 2024 under the Materials Procurement Framework Agreement “USD” U.S. dollars, the lawful currency of the United States of America “%” per cent.

– 11 –

LETTER FROM THE BOARD

Cowell e Holdings Inc. 高偉電子控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 1415)

Executive Directors Mr. Meng Yan (Chairman) Mr. Wu Ying-Cheng

Non-executive Directors Mr. Chen Han-Yang Mr. Yang Li

Independent non-executive Directors Ms. Su Yen-Hsueh Mr. Tsai Chen-Lung Ms. Liu Xia

Registered Office PO Box 309 Ugland House Grand Cayman KY1-1104 Cayman Islands

Headquarter and Principal Place of Business in the PRC No. 1 Songbai Road Huanan Industrial Zone Liaobu Town Dongguan City Guangdong Province, PRC

Principal Place of Business in Hong Kong Suite 1620

16/F, Ocean Centre 5 Canton Road Tsimshatsui Kowloon Hong Kong

14 August, 2024

To the Shareholders

Dear Sir or Madam,

REVISION OF ANNUAL CAPS FOR CONTINUING CONNECTED TRANSACTIONS AND NOTICE OF EXTRAORDINARY GENERAL MEETING

1. INTRODUCTION

Reference is made to the announcement of the Company dated 17 July 2024 in relation to, among others, the entering of the Supplemental Agreements by the Group for purpose of revising certain 2024 and/or 2025 Annul Caps (as the case may be).

– 12 –

LETTER FROM THE BOARD

The purpose of this circular is to provide you with further information in relation to the Supplemental Agreements, the transactions contemplated thereunder and the Proposed Annual Caps, together with the recommendations of the Independent Board Committee and the advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders.

2. REVISION OF ANNUAL CAPS FOR CONTINUING CONNECTED TRANSACTIONS

References are made to (1) the announcements of the Company dated 19 April 2023 and 10 November 2023 and the circulars of the Company dated 8 June 2023 and 5 December 2023 in relation to, among others, the ST Supply Framework Agreement entered into between Luxsense and Suteng, pursuant to which Luxsense shall supply the LS Products to the Suteng Group; and (2) the announcements of the Company dated 29 December 2022, 19 April 2023 and 10 November 2023 and the circulars of the Company dated 8 June 2023 and 5 December 2023 in relation to, among others, (i) the Purchase Framework Agreement entered into between the Company and Luxshare Precision, pursuant to which the Group shall purchase certain Products from the Luxshare Precision Group in accordance with the terms and conditions thereunder; and (ii) the Materials Procurement Framework Agreement entered into between the Company and GZ Luxvisions, pursuant to which the Group shall purchase the Materials from the GZ Luxvisions Group in accordance with the terms and conditions thereunder.

As a result of the unexpected increase in demand for the Group’s products, on 17 July 2024 (after trading hours), the Group entered into the Supplemental Agreements with Luxshare Precision, Suteng and GZ Luxvisions, respectively, to revise certain 2024 and/or 2025 Annual Caps (as the case may be). Save for the revision of certain 2024 and/or 2025 Annual Caps (as the case may be), all other terms and conditions under the Existing Agreements remain the same.

Details of the Supplemental Agreements are as follows:

A. The Second Supplemental Purchase Framework Agreement

Date: 17 July 2024 (after trading hours)

Parties: 1. Luxshare Precision (as supplier)

The Company (as purchaser)

– 13 –

LETTER FROM THE BOARD

Subject: Pursuant to the Second Supplemental Purchase Framework Agreement, the existing 2024 annual cap of USD 61,776,000 and the 2025 annual cap of USD 80,352,000 for the two financial years ending 31 December 2025 under the Purchase Framework Agreement is revised as follows:

Proposed 2024 annual cap: USD 260,000,000 Proposed 2025 annual cap: USD 360,000,000

Save for the aforementioned revision of the 2024 and/or 2025 Annual Caps, all other terms and conditions under the Purchase Framework Agreement remain the same.

Principal terms and price determination

The parties shall execute separate orders in accordance with the terms of the Purchase Framework Agreement setting out, among others, the specifications and quantity of the Products required and delivery schedules, and must comply with the terms of the Listing Rules and applicable laws.

Selling prices of the Products shall be determined with reference to, and generally shall not be lower than, prices charged by the Luxshare Precision Group to other independent third party customers of the Products of same or similar specifications, which represents the then prevailing market prices.

In accordance with the Company’s internal policies, the transactions under the Purchase Framework Agreement will be properly recorded, including but not limited to prices determined and transaction amounts. Depending on the specifications of the Products required, the Group will also conduct a review and evaluation process by making reference with other independent third party/parties with similar procurement qualifications and capabilities for provision of similar Products (if available) to compare and determine if the prices and terms offered by the Luxshare Precision Group are better, and are fair and reasonable and comparable to those terms offered by independent third parties. The review and evaluation process will be conducted from both technical and commercial perspectives. If there are situations where the Company could not obtain quotation and/or could only obtain one quotation due to the limitations on, among others, the technical specifications of the Products required and/or qualification of the suppliers expected by the Group, the Company will evaluate the price and terms offered by the Luxshare Precision Group by making reference to, if available, the recent purchase price of such Products and the market fluctuation of the costs of the materials. If the Company is able to secure the provision of any of the Products contemplated under the Purchase Framework Agreement from independent third parties on more favourable terms, the Group shall be entitled to terminate the transactions contemplated thereunder

– 14 –

LETTER FROM THE BOARD

by giving the Luxshare Precision Group not less than 30 days’ prior written notice. As the management of the Group will review the aforesaid pricing policy on a regular basis in every quarter, the Directors (including the independent non-executive Directors) are of the view that the aforesaid method and procedures can ensure that the transactions contemplated under the Purchase Framework Agreement will be conducted on normal commercial terms and not prejudicial to the interest of the Company’s minority Shareholders.

Payment terms

Specific payment terms shall be stipulated in the relevant order forms, which is normally payable within 90 days after month end.

Basis for determination of the proposed 2024 annual cap and the 2025 annual cap under the Second Supplemental Purchase Framework Agreement and the historical transaction amounts

The proposed annual caps for the two years ending 31 December 2025 under the Purchase Framework Agreement was determined primarily based on arm’s length negotiations between Luxshare Precision and the Company with reference to, among others:

(i) the sudden sharp demand for our Group’s products which may at least continue until the financial year ending 31 December 2025. Based on the latest discussion with, and the latest development and production plan of, the largest customer of the Group, it was expected that there might potentially be a sharp increase in the contract and/or order amount that might be awarded to the Group due to a substantial increase in the demand for our existing products, as well as for our production and assembly of new rear camera modules for the launch of new models of smartphone of our customer for the two years ending 31 December 2025. As a result of the potential demand from our largest customer, our Group had revised our production and procurement plans to a very large extent in which there will be a huge corresponding increase in our demand for the Products which are primarily used for our productions of existing and new smartphone camera modules. The existing annual cap(s) were primarily formulated based on the expected demand for the Products for production of smartphone camera modules to the largest customer of the Group, and over 90% of each of the existing annual cap(s) was represented by the expected purchase amount of voice coil motor products (“ VCM ”), which are the primary raw materials for production of cameras modules of the new and upcoming models and generations of the smartphones, as well as one of the major constituents of the Products, to be purchased by the Group. As additional new raw materials under the head of VCM is required for production of the new rear camera modules, the Group had increased its purchase amount of VCM by approximately 65% and 443% in each of June and July 2024 (as compared with the average actual amount

– 15 –

LETTER FROM THE BOARD

of VCM purchased in the first quarter in 2024). As at least three or more rear camera modules are required for production of each of the new models of the smartphone, the Group projected that the expected demand of VCM will further increase in a greater extent in September 2024 by approximately 638% (as compared with the average actual amount of VCM purchased in the first quarter in 2024) when the Group commences mass production of the rear camera modules. Based on the revised production plan of the Group, the purchase amount of the VCM is then expected to continue with an average growth rate of 465% per month for the last quarter in 2024, and increase by approximately 38% for the financial year ending 31 December 2025 based on the expected purchase amount of VCM for the year ending 31 December 2024;

(ii) the historical transaction amounts incurred under the Purchase Framework Agreement and the recent purchase orders placed. For the financial year ended 31 December 2023 and for the six months ended 30 June 2024, the actual transaction amount incurred under the Purchase Framework Agreement was approximately USD6,632,000 and USD4,142,000, representing approximately 14.7% of the annual cap for the year ended 31 December 2023 of USD45,000,000 and approximately 6.7% of the existing annual cap for the year ending 31 December 2024 of USD61,776,000 under the Purchase Framework Agreement. The aforementioned actual transaction amounts were lower than expected, and therefore of comparatively less important reference value, as our major customers had placed substantially fewer orders for our products which therefore led to our low demand for the Products. The Company views that the actual transaction amount for the six months ended 30 June 2024 is also significantly obscured by seasonality (which the sales and production volume in the first quarter when Chinese New Year and Spring Festival fell are usually the lowest in the yearly production and sale cycle of the Group, and as a result of the inherent seasonality of the business when, among others, launching of new models and/or such seasonal demands are usually the highest by the end of the year).

However, as a result of the sudden and unexpected sharp demand for our Group’s (i) existing products since May 2024 and (ii) preliminary production of new rear camera modules samples for the launch of new models of smartphone of our largest customer, our Group had commenced placing more purchase orders with the Luxshare Precision Group since May 2024. From May 2024 to the Latest Practicable Date, the new purchase orders placed by the Group with the Luxshare Precision Group amount to approximately USD95,300,000. Having considered the actual transaction amounts incurred, and the delivery and payment schedules on hand, it was expected that the transaction amount for the nine months ending 30 September 2024 under the Purchase Framework Agreement will be not less than USD90,000,000 which will exceed the existing 2024 annual cap of USD61,776,000. Coupled with (i) the seasonality factor

– 16 –

LETTER FROM THE BOARD

(which, for illustration purpose, our average monthly procurement volume in the last quarter in 2023 was approximately 90% higher than the average monthly procurement volume in the other quarters in 2023) and (ii) to cope with the latest production and product launch plan of our largest customer and the Group, our demand for the Products is expected to increase exponentially that more larger amount of purchase orders are expected to be placed by the Group with the Luxshare Precision Group from September 2024 (when the Group commences mass production and assembly of the new rear camera modules) and continue to increase at least until the end of the financial year ending 31 December 2025, which is primarily due to the increase in the purchase amount of the VCM as detailed in paragraph (i) above;

(iii) the expected costs of the Products. While on a per unit cost basis the Group did not expect the existing constituents of the Products to have material fluctuation with reference to the historical trend and market research for the two financial years ending 31 December 2025, new raw materials (under the head of VCM) for our production of the new rear camera modules have a substantially higher unit cost than other constituents of the Products which represent over 16 times of the average costs of the raw materials for the existing camera modules in the Product. As such, the substantial increase in the amount of the proposed annual caps for the two financial years ending 31 December 2025 is a compound effect of (i) the proposed substantial purchase of new raw materials for production of the new rear camera modules; (ii) the high cost of such new raw materials; and (iii) the corresponding increase in demand for the Products in line with our revised production and procurement plans to cope with the product launch cycle of our customers; and
(iv) a buffer of 10% was applied to the estimated transaction amounts for the two financial years ending 31 December 2025 to accommodate any unexpected increase in the demands on the Products, unexpected increase in the costs of the Products and any unexpected change such as advancement of the product launch cycle of our customers.

The above projection is assumed solely based on the information currently available to the Group for determining the proposed 2024 and 2025 annual caps and shall not be regarded as any indication directly or indirectly as to the respective revenue, profitability or trading prospects of the Company or the Group.

If the total transaction amounts under the Purchase Framework Agreement are expected to exceed the annual cap(s), the Company will re-comply with the relevant requirements in accordance with the Listing Rules such as by publishing a further announcement and seeking approval from Independent Shareholders, if applicable.

– 17 –

LETTER FROM THE BOARD

As the transactions contemplated under the Second Supplemental Purchase Framework Agreement constitute non-exempt continuing connected transactions of the Company under Chapter 14A of the Listing Rules, the Second Supplemental Purchase Framework Agreement and the proposed annual caps for the two years ending 31 December 2025 are subject to the approval of the Independent Shareholders at the EGM.

B. The Second Supplemental ST Supply Framework Agreement

Date:

17 July 2024 (after trading hours)

Parties: 1. Luxsense (as supplier) 2. Suteng (as purchaser)

Subject: Pursuant to the Second Supplemental ST Supply Framework Agreement, the 2024 Annual Cap under the ST Supply Framework Agreement is revised from RMB414,000,000 to RMB580,000,000.

Save for the aforementioned revision of the 2024 annual cap, all other terms and conditions including the existing 2025 annual cap of RMB634,000,000 under the ST Supply Framework Agreement remain the same.

Principal terms and price determination

Pursuant to the ST Supply Framework Agreement, the parties shall execute separate orders in accordance with the terms of the ST Supply Framework Agreement setting out, among others, the specifications and quantity of the LS Products required and delivery schedules, and must comply with the terms of the Listing Rules and applicable laws.

– 18 –

LETTER FROM THE BOARD

requirements from Suteng such that the rates and/or terms negotiated for the LS Products to be sold to Suteng may potentially become less favourable (from the Group’ perspective) than the rates charged and terms for equivalent or similar LS Products sold by the Group to independent third parties, or in the event that there are no other independent third parties which the Group had supplied certain specific LS Products to, Luxsense and Suteng agree to use their best endeavour (such as by referring to the quotations obtained by Suteng for the required LS Products of comparable specifications from its suppliers as reference) to negotiate and ensure that the terms of the transactions are fair and reasonable which is no less favourable than the terms offered by the Group to its independent third party customers, and to the benefit of the Company and the Shareholders as a whole. As the management of the Group shall review the aforesaid pricing policy on a regular basis in every quarter, the Directors are of the view that the aforesaid method and procedures can ensure that the transactions contemplated under the ST Supply Framework Agreement will be conducted on normal commercial terms and not prejudicial to the interest of the Company’s minority Shareholders.

Payment terms

Specific payment terms shall be stipulated in the relevant order forms, which is normally payable within 90 days after month end.

Basis for the determination of the proposed 2024 annual cap under the Second Supplemental ST Supply Framework Agreement and the historical transaction amounts

The proposed annual cap for the year ending 31 December 2024 under the Second Supplemental ST Supply Framework Agreement was determined primarily based on arm’s length negotiations between Luxsense and Suteng with reference to, among others:

(i) the actual transaction amount incurred under the ST Supply Framework Agreement. In particular, for the financial year ended 31 December 2023 and for the six months ended 30 June 2024, the actual transaction amount incurred under the ST Supply Framework Agreement was approximately RMB373,797,000 and RMB251,310,000, representing approximately 93.4% of the annual cap for the year ended 31 December 2023 of RMB400,000,000 and approximately 60.7% of the existing annual cap for the year ending 31 December 2024 of RMB414,000,000 under the ST Supply Framework Agreement. The actual transaction amount recorded for the first half of 2024 was higher than expected despite the seasonality factor which sales and production volume in the first quarter are usually the lowest in the yearly production and sale cycle of the Group. Having considered the actual transaction amounts incurred, and the delivery and payment schedules on hand, it was expected that the transaction amount for the eight

– 19 –

LETTER FROM THE BOARD

months ending 31 August 2024 under the ST Supply Framework Agreement will be not less than RMB300,000,000 which will account for approximately 72.5% of the existing annual cap for the year ending 31 December 2024;

(ii) the unexpected increasing demand for LS Products from the Suteng Group. As communicated with Suteng, the unexpected increase in the demand for LS Products, which represented an average increase of 37.6% than the forecasted volume/amount for the first six months ended 30 June 2024 when determining the existing annual caps, will continue until at least to the end of the 2024 financial year;
(iii) the corresponding increase in the production plan of Luxsense from May to December 2024 to cope with the unexpected increase in demand for the LS Products;
(iv) the estimated market price of the required LS Products, which the Group had assumed that the estimated costs of production of the required LS Products will not experience material price fluctuation with reference to the historical trend and market research during the remaining term of the ST Supply Framework Agreement; and
(v) a buffer of 10% was applied on the estimated transaction amount to accommodate any further unexpected increase in the demands of the LS Products and unexpected increase in the costs of production of the LS Products.

The above projection is assumed solely based on the information currently available to the Group for determining the proposed 2024 annual cap and shall not be regarded as any indication directly or indirectly as to the respective revenue, profitability or trading prospects of the Company or the Group.

If the total transaction amounts under the ST Supply Framework Agreement are expected to exceed the annual cap(s), the Company will re-comply with the relevant requirements in accordance with the Listing Rules such as by publishing a further announcement and seeking approval from Independent Shareholders, if applicable.

As the transactions contemplated under the Second Supplemental ST Supply Framework Agreement constitute non-exempt continuing connected transactions of the Company under Chapter 14A of the Listing Rules, the Second Supplemental ST Supply Framework Agreement and the proposed 2024 annual cap are subject to the approval of the Independent Shareholders at the EGM.

– 20 –

LETTER FROM THE BOARD

C. The Third Supplemental Materials Procurement Framework Agreement

Date: 17 July 2024 (after trading hours) Parties: 1. The Company (as purchaser) 2. GZ Luxvisions (as supplier)

Subject: Pursuant to the Third Supplemental Materials Procurement Framework Agreement, the 2024 annual cap under the Materials Procurement Framework Agreement is revised from RMB133,000,000 to RMB195,000,000.

Save for the revision of the 2024 annual cap, all other terms and conditions including the existing 2025 annual cap of RMB199,000,000 under the Materials Procurement Framework Agreement remain the same.

Principal terms and price determination

The parties shall execute separate orders in accordance with the terms of the Materials Procurement Framework Agreement setting out, among others, the specifications and quantity of the Materials required and delivery schedules and must comply with the terms of the Listing Rules and applicable laws.

Selling prices of the Materials shall be determined with reference to, and generally shall not be lower than, the prices charged by the GZ Luxvisions Group to other independent third party customers of the Materials of same or similar specifications, which represents the then prevailing market prices.

– 21 –

LETTER FROM THE BOARD

suppliers expected by the Group, the Company shall evaluate the price and terms offered by the GZ Luxvisions Group by making reference to, if available, the recent purchase price of such Materials and the market fluctuation of the costs of the materials. If the Company is able to secure the provision of any of the Materials contemplated under the Materials Procurement Framework Agreement from independent third parties on more favourable terms, the Group shall be entitled to terminate the transactions contemplated thereunder by giving the GZ Luxvisions Group not less than 30 days’ prior written notice.

As the management of the Group shall review the aforesaid pricing policy on a regular basis in every quarter, the Directors (including the independent non-executive Directors) are of the view that the aforesaid method and procedures can ensure that the transactions contemplated under the Materials Procurement Framework Agreement will be conducted on normal commercial terms and not prejudicial to the interest of the Company’s minority Shareholders.

Payment terms

Specific payment terms shall be stipulated in the relevant order forms, which is normally payable within 90 days after month end.

Basis for the determination of the proposed 2024 annual cap under the Third Supplemental Materials Procurement Framework Agreement and the historical transaction amounts

The proposed annual cap for the year ending 31 December 2024 under the Third Supplemental Materials Procurement Framework Agreement was determined primarily based on arm’s length negotiations between the Company and GZ Luxvisions with reference to, among others: (i) the actual transaction amount incurred under the Materials Procurement Framework Agreement. In particular, for the financial year ended 31 December 2023 and for the six months ended 30 June 2024, the actual transaction amount incurred under the Materials Procurement Framework Agreement was approximately RMB69,755,000 and RMB66,873,000, representing approximately 56.7% of the annual cap for the year ended 31 December 2023 of RMB123,000,000 and approximately 50.3% of the existing annual cap for the year ending 31 December 2024 of RMB133,000,000 under the Materials Procurement Framework Agreement; The actual transaction amount recorded for the first half of 2024 was higher than expected despite the seasonality factor which the procurement and production volume in the first quarter are usually the lowest in the yearly procurement and production cycle of the Group;

– 22 –

LETTER FROM THE BOARD

(ii) the increase in demand for the Materials from May to December 2024 with reference to, among others, the current discussion with the major customers of the Group and the business and production plan of the Group from May to December 2024. In particular, over 90% of the annual caps under the Materials Procurement Framework Agreement were primarily formulated based on the expected demand for the Printed Circuit Board Assembly materials (“ LiDAR PCBA ”), which are the primary raw materials for production of different radar modules of the LS Products, and one of the major constituents of the Materials for production of the LS Products of the Group which will in turn be sold to the Suteng Group for its production of the Light Detection And Ranging (LiDAR) sensors under the ST Supply Framework Agreement. Considering the fact that production of one unit of radar modules and/or radar systems of the LS Products by the Group requires at least two to five units of LiDAR PCBA, the corresponding expected volume of the LiDAR PCBA required by the Group from the GZ Luxvisions Group (and therefore as reflected in the proposed 2024 annual cap under the Third Supplemental Materials Procurement Framework Agreement) increased at a slightly higher rate than the expected increase in demand of the LS Products. The proposed increase in the 2024 annual cap of approximately 46.6% of the existing 2024 annual cap under the Materials Procurement Framework Agreement represents a corresponding increase, and is in line with the increase, in the supply of the LS Products of the Group (with an average increase of 37.6% than the forecasted volume/amount for the first six months ended 30 June 2024) and the proposed revision of the 2024 annual cap of approximately 40.10% of the existing 2024 annual cap under the ST Supply Framework Agreement;
(iii) the estimated costs of production of the required Materials which the Group expected would not experience material price fluctuation with reference to the historical trend and market research;
(iv) the estimated market price of the required Materials which the Group expected would not experience material price fluctuation with reference to the historical trend and market research; and
(v) a buffer of 10% was applied on the estimated transaction amount to accommodate any further unexpected increase in the demands on the Materials and unexpected increase in the prices of the Materials.

– 23 –

LETTER FROM THE BOARD

If the total transaction amounts under the Materials Procurement Framework Agreement are expected to exceed the annual cap(s), the Company will re-comply with the relevant requirements in accordance with the Listing Rules such as by publishing a further announcement and seeking approval from Independent Shareholders, if applicable.

As the transactions contemplated under the Third Supplemental Materials Procurement Framework Agreement constitute non-exempt continuing connected transactions of the Company under Chapter 14A of the Listing Rules, the Third Supplemental Materials Procurement Framework Agreement and the proposed 2024 annual cap are subject to the approval of the Independent Shareholders at the EGM.

3. REASONS FOR AND THE BENEFITS OF ENTERING INTO THE SUPPLEMENTAL AGREEMENTS

The Group is principally engaged in the design, development, manufacture and sale of a variety of modules and systems integration products that are used in smartphones, multimedia tablets, smart driving and other mobile devices of internationally-renowned brands.

Luxshare Precision is principally engaged in the research, development, manufacturing and sales of products in the fields of consumer electronics, communication, auto electronics and medical solutions.

Suteng is principally engaged in the production of LiDAR solutions which are supplied to various cities in the PRC, North America, Europe and Asia-Pacific.

The GZ Luxvisions Group is principally engaged in the business of production of mass-produced mobile phone camera modules, tablet camera modules, notebook camera modules, car camera module, and display module, etc. and have a broad market presence and customer network.

As a result of the sudden sharp demand for our Group’s products since May 2024 and the continuing increase in the demand for LS Products from the Suteng Group which are expected to continue at least until the financial year ending 31 December 2025 and 31 December 2024, respectively, in order to capture the business opportunities, the Group believes it is prudent, if not necessary, to enter into the Supplemental Agreements to revise the 2024 and/or 2025 Annual Caps

– 24 –

LETTER FROM THE BOARD

(as the case may be) under the Existing Agreements to ensure compliance with the Listing Rules and actively facilitate the increase in the production need of the Group. In particular, given the wide geographical reach of Suteng’s products, the supply of the LS Products to the Suteng Group under the ST Supply Framework Agreement can enable Luxsense to efficiently supply the LS Products based on the principal terms and pricing policies thereto subject to the annual caps without incurring substantial negotiation time and costs among the parties which therefore allow Luxsense to efficiently raise the profile of the LS Products, enhance the LS Products’ penetration into new markets, expand the source of revenue and improve the profitability for Luxsense. The Existing Agreements and the Supplemental Agreements can provide a framework for the long-term supply of the LS Products to the Suteng Group and procurement of the Products and Materials from the Luxshare Precision Group and the GZ Luxvisions Group, respectively by the Group on a non-exclusive basis and will help reduce negotiation time and costs among the parties.

The Directors (including the independent non-executive Directors who form their view after considering the advice of the Independent Financial Adviser) consider that each of the Supplemental Agreements and the transactions contemplated thereunder are entered into in the ordinary and usual course of business of the Group and on normal commercial terms after arm’s length negotiations between the parties, and the terms thereof (including the Proposed Annual Caps) are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

4. INTERNAL CONTROL MEASURES

In order to safeguard the interests of the Company and the Shareholders as a whole, the Company has adopted certain measures to monitor the continuing connected transactions of the Company.

In addition to our compliance with the requirements on annual review by external auditors and independent non-executive Directors under the Listing Rules in respect of continuing connected transactions, the internal compliance review department of the Company is responsible for the review of individual orders on a regular basis to ensure that the terms thereunder are made in accordance with the terms and conditions of the relevant framework agreements.

To ensure that transaction prices under the framework agreements will be fair and reasonable and on normal commercial terms before the transactions are entered into, our price control procedures which include the following major steps and features are complied with on an ongoing basis:

when the Group receives a request for quotation from the Suteng Group for the purchase of the LS Products and/or when the Group intends to procure the Products and/or Materials with new specifications, the project manager (or his authorised personnel) or

– 25 –

LETTER FROM THE BOARD

the R&D department will be responsible for considering and updating the specifications required, as well as other potential consideration factors including not limited to, the quantity of goods required, the estimate cost of engineering work (if any) which are caused by any necessary product customisation and the estimated cost and expenses relating to, among others, packaging, shipping, temporary storage and/or insurance required;

the strategic procurement team is responsible for collecting market information, and conducting price inquiries, price comparisons, and price negotiations (if applicable) to estimate the reference price(s) (the “ Reference Price(s) ”) of the Products and/or Materials and the LS Products respectively, which will be subsequently referred to for the benchmarking and determination of the highest acceptable price for purchase of the Products and/or Materials (as the case may be) and/or the selling price(s) of the LS Products;
specifically, for the purchases made under the Purchase Framework Agreement and the Materials Procurement Framework Agreement, depending on the specifications of the Products/Materials required, the Group will conduct a review and evaluation process by making reference with other independent third party/parties with similar procurement qualifications and capabilities for provision of similar Products/Materials (if available) to compare and determine if the prices and terms offered by the Luxshare Precision Group or the GZ Luxvisions Group are better, and are fair and reasonable and comparable to those terms offered by independent third parties. If there are situations where the Company could not obtain quotation and/or could only obtain one quotation due to the limitations on, among others, the technical specifications of the Products/Materials required and/or qualification of the suppliers expected by the Group, the Company will evaluate the price and terms offered by the Luxshare Precision Group or the GZ Luxvisions Group by making reference to, if available, the recent purchase price of such Products/Materials and the market fluctuation of the costs of the materials. The aforementioned review and evaluation process will be conducted from both technical and commercial perspectives.

For the transactions under the ST Supply Framework Agreement, considering the LS Products are highly customized and advanced technology goods and thus the Reference Price may not be easily determined due to lack of market information or suppliers for conducting price comparisons, if the Company is of the view that the rates and/or the terms which could have been charged and/or offered by Luxsense for the LS Products to be sold to the Suteng Group are less favourable (from the Group’ perspective) than the rates and the terms for equivalent or similar LS Products sold by the Group to other potential independent third parties, Luxsense and Suteng agree to use

– 26 –

LETTER FROM THE BOARD

their best endeavour to adjust the rates and/or terms to ensure that the terms of the transactions are fair and reasonable, and to the benefit of the Company and the Shareholders as a whole. In particular,

the Reference Price(s) will then be reviewed at least semi-annually and approved by the head of the strategic procurement team of the Group who is also responsible to ensure such prices are updated from time-to-time if necessary;
the approved Reference Price(s) will then be updated to the enterprise resources planning (ERP) system of the Group; and
by referring to the approved Reference Prices, the material control team is responsible for ensuring (assuming in the circumstances with same or comparable specifications, volume, delivery schedules and terms): (i) the selling price of the LS Products to be supplied to the Suteng Group will not be lower than those charged to independent third parties; and (ii) the purchase price(s) of the Materials to be purchased by the Group will not be higher than those offered by other independent third parties suppliers.

To ensure the transactions contemplated under the framework agreements do not exceed the respective Proposed Annual Caps, the business department of the Group shall fill in and submit statistical charts for the continuing connected transactions at least quarterly. In the event that the amount of the transactions incurred and/or to be incurred under the framework agreements for a financial year is expected to reach the relevant annual cap(s), the business department will follow-up forthwith by reporting and proposing a response to the management of the Company, and in case that an amendment to the annual cap(s) is required, report particulars to the Board and hold a Board meeting for considering the matters thereabout to ensure compliance of the requirements under the Listing Rules.

The Company also arranges compliance trainings for the Directors, senior management and staff from the relevant departments of the Company and its subsidiaries, primarily focusing on the rules relating to connected transactions under Chapter 14A of the Listing Rules.

5. INFORMATION ABOUT THE PARTIES

The Company and the Group

The Company is incorporated in the Cayman Islands with limited liability whose Shares are listed on the Stock Exchange. The Group is principally engaged in the design, development, manufacture and sale of a variety of modules and systems integration products that are used in

– 27 –

LETTER FROM THE BOARD

smartphones, multimedia tablets, smart driving and other mobile devices of internationally-renowned brands. As at the Latest Practicable Date, approximately 70.76% of the Shares are directly held by LITL which is a subsidiary of LIL.

GZ Luxvisions

GZ Luxvisions, a company established under the laws of the PRC with limited liability, is a subsidiary of LIL. As at the Latest Practicable Date, LIL is owed as to (i) approximately 56.342% by Mr. Wang Laixi (a controlling Shareholder); and (ii) approximately 43.659% by Luxsan Limited (景汕有限公司), which is a company incorporated in Hong Kong with limited liability and owned as to by Ms. Wang Laichun (an elder sister of Mr. Wang Laixi), Mr. Wang Laisheng (an elder brother of Mr. Wang Laixi) and Ms. Wang Laijiao (an elder sister of Mr. Wang Laixi) as to 34%, 33% and 33%, respectively. The GZ Luxvisions Group is principally engaged in the business of production of mass-produced mobile phone camera modules, tablet camera modules, notebook camera modules, car camera module, and display module, etc.

Luxsense

Luxsense is a limited liability company established under the law of the PRC and is a non-wholly owned subsidiary which is owned as to 51% by the Group and 49% by Suteng as at the Latest Practicable Date. Luxsense is principally engaged in the production of modules and light detection and ranging machines.

Luxshare Precision

Luxshare Precision is a company incorporated in the PRC with limited liability and listed on the Shenzhen Stock Exchange (stock code: 002475). As at the Latest Practicable Date, approximately 37.83% of the equity interest of Luxshare Precision is directly held by Luxshare Limited which in turn is owned as to 50% by Ms. Wang Laichun and 50% by Mr. Wang Laisheng, who are siblings of Mr. Wang Laixi, one of the controlling Shareholders. The Luxshare Precision Group is principally engaged in the research, development, manufacturing and sales of products in the fields of consumer electronics, communication, auto electronics and healthcare.

Suteng

Suteng is a limited liability company established under the law of the PRC and is principally engaged in the production of LiDAR and perception solutions which are sold to various geographical locations such as North America, Europe and Asia-Pacific. It is an indirectly wholly-owned subsidiary of RoboSense Technology Co., Ltd (速騰聚創科技有限公司) (“ RoboSense ”) which in turn is an exempted company incorporated in the Cayman Islands and

– 28 –

LETTER FROM THE BOARD

listed on the Main Board of the Stock Exchange (stock code: 2498) in January 2024. Suteng is interested in 49% of the equity interest of Luxsense since February 2023 and is therefore a connected person at the subsidiary level of the Group. Save as disclosed above, to the best knowledge, information and belief of the Directors after having made all reasonable enquiries, Luxshare Limited (which in turn is owned by Ms. Wang Laichun and Mr. Wang Laisheng who are the controlling Shareholders indirectly interested in approximately 70.76% of the issued share capital of the Company through LITL as at the Latest Practicable Date) is interested in approximately 2.23% of the issued shares (excluding treasury shares) of Robosense.

Below is a simplified organisational chart disclosing the shareholding structure of the relevant connected persons of the Company as at the Latest Practical Date:

==> picture [387 x 259] intentionally omitted <==

----- Start of picture text -----

WLS WLC WLJ
50% 50%
37.83% 34% 33% 33%
0.21% Luxshare Precision Luxsan Limited WLX
43.659% 56.342%
2.23%
Suteng
LIL
48.06%
GZ Luxvisions
70.76%
The Company
51%
49%
Luxsense
Indirect Interest
Direct Interest
----- End of picture text -----

Note:

WLS, WLC, WLJ and WLX denotes Wang Laisheng, Wang Laichun, Wang Laijiao and Wang Laixi, who are siblings and the controlling shareholders of the Company, respectively.

6. IMPLICATIONS UNDER THE LISTING RULES

– 29 –

LETTER FROM THE BOARD

Wang Laisheng is also directly interested in approximately 0.21% equity interests, of Luxshare Precision. Hence, Luxshare Precision is an associate (as defined under Chapter 14A of the Listing Rules) of Ms. Wang Laichun and Mr. Wang Laisheng and a connected person of the Group. As such, the transactions contemplated under the Second Supplemental Purchase Framework Agreement constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.

Luxsense is a subsidiary of the Group which is jointly owned by the Group and Suteng as to 51% and 49% respectively as at the Latest Practicable Date. Therefore, Suteng is a substantial shareholder of Luxsense and a connected person at the subsidiary level of the Group. As such, the transactions contemplated under the Second Supplemental ST Supply Framework Agreement constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.

As GZ Luxvisions is a controlling Shareholder indirectly interested in approximately 70.76% of the entire issued share capital of the Company through LITL as at the Latest Practicable Date, it is a connected person of the Company. As such, the transactions contemplated under the Third Supplemental Materials Procurement Framework Agreement constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.

Pursuant to Rule 14A.54 of the Listing Rules, if the Company intends to revise the annual caps for continuing connected transactions, the Company will be required to re-comply with relevant provisions of Chapter 14A of the Listing Rules in respect of the relevant continuing connected transactions.

As the applicable percentage ratios stipulated under Rule 14.07 of the Listing Rules in respect of the highest Proposed Annual Cap under the Second Supplemental Purchase Framework Agreement is more than 5%, the transactions contemplated thereunder constitute non-exempt continuing connected transactions of the Company and are subject to the reporting, announcement, annual review and Independent Shareholders’ approval requirement as set out under Chapter 14A of the Listing Rules.

As the applicable percentage ratios stipulated under Rule 14.07 of the Listing Rules in respect of the proposed 2024 or the highest annual cap under the Second Supplemental ST Supply Framework Agreement is more than 5%, the transactions contemplated thereunder constitute non-exempt continuing connected transactions of the Company and are subject to the reporting, announcement, annual review and Independent Shareholders’ approval requirement as set out under Chapter 14A of the Listing Rules.

– 30 –

LETTER FROM THE BOARD

Pursuant to Rule 14A.81 of the Listing Rules, a series of connected transactions shall be treated as if they were one transaction if they were all entered into or completed within a 12-month period or are otherwise related. Given that (i) the Third Supplemental Materials Procurement Framework Agreement and the Second Supplemental Purchase Framework Agreement were entered into at the same time and the transactions contemplated thereunder are of similar nature in relation to the purchases by the Group of similar materials for its production; and (ii) Luxshare Precision is ultimately controlled by Ms. Wang Laichun and Mr. Wang Laisheng, who are controlling Shareholders indirectly interested in approximately 70.76% of the issued share capital of the Company and have indirect control interest in GZ Luxvisions, both GZ Luxvisions and Luxshare Precision are associates of Ms. Wang Laichun and Mr. Wang Laisheng, the transactions contemplated under the Third Supplemental Materials Procurement Framework Agreement and the Second Supplemental Purchase Framework Agreement shall be aggregated as if they were one transaction.

While one or more of the applicable percentage ratio(s) stipulated under Rule 14.07 of the Listing Rules in respect of the proposed 2024 annual cap or the highest annual cap under the Third Supplemental Materials Procurement Framework Agreement exceeds 0.1% but are less than 5%, more than one of the applicable percentage ratio(s) stipulated under Rule 14.07 of the Listing Rules in respect of the highest annual cap under the Third Supplemental Materials Procurement Framework Agreement and the highest annual cap under the Second Supplemental Purchase Framework Agreement, on an aggregated basis, is more than 5%. As such, the transactions contemplated under the Third Supplemental Materials Procurement Framework Agreement are also subject to the reporting, announcement, annual review requirements and Independent Shareholders’ approval requirement set out in Chapter 14A of the Listing Rules.

The Independent Board Committee, comprising all the independent non-executive Directors, has been established to advise the Independent Shareholders on the terms of the Supplemental Agreements, the transactions contemplated thereunder and the respective Proposed Annual Caps. Honestum International Limited has been appointed as the independent financial adviser of the Company to advise the Independent Board Committee and the Independent Shareholders in this regard. The EGM will be convened and held for the Independent Shareholders to consider and, if thought fit, to approve by way of poll, among other matters, the Supplemental Agreements, transactions contemplated thereunder and the respective Proposed Annual Caps. As Ms. Wang Laichun and Mr. Wang Laisheng, who are controlling Shareholders indirectly interested in approximately 70.76% of the issued share capital of the Company and have interests in Luxshare Precision, have indirect control interest in GZ Luxvisions which in turn is interested in approximately 70.76% of the entire issued share capital of the Company through LITL as at the Latest Practicable Date, LITL is considered to have a material interest in the Second Supplemental Purchase Framework Agreement and the Third Supplemental Materials Procurement Agreement, and is required to abstain from voting at the EGM on the resolutions approving the Second

– 31 –

LETTER FROM THE BOARD

Supplemental Purchase Framework Agreement and the Third Supplemental Materials Procurement Agreement. As Ms. Wang Laichun and Mr. Wang Laisheng are also indirectly interested in Suteng through their interest in Luxshare Limited, LITL will also voluntarily abstain from voting of the resolution in respect of the Second Supplemental ST Supply Framework Agreement at the EGM.

None of the Directors have any material interest in the transactions under each of the Supplemental Agreements and none of them were required to abstain from voting on the resolution(s) of the Board in relation to the transactions pursuant to the Articles.

7. THE EGM

A notice convening the EGM to be held by way of virtual meeting on 29 August, 2024 at 10 a.m. is set out on pages 86 to 88 of this circular. At the EGM, ordinary resolutions will be proposed for Independent Shareholders to consider and, if thought fit, to approve, inter alia, (i) the Second Supplemental Purchase Framework Agreement, the transactions contemplated thereunder and the revised annual caps thereunder; (ii) the Second Supplemental ST Supply Framework Agreement, the transactions contemplated thereunder and the revised annual cap thereunder; and (iii) the Third Supplemental Materials Procurement Framework Agreement, the transactions contemplated thereunder and the revised annual cap thereunder by way of poll. As Ms. Wang Laichun and Mr. Wang Laisheng, who are controlling Shareholders indirectly interested in approximately 70.76% of the issued share capital of the Company and have indirect control interest in GZ Luxvisions which in turn is interested in approximately 70.76% of the entire issued share capital of the Company through LITL as at the Latest Practicable Date, LITL has a material interests in the Second Supplemental Purchase Framework Agreement and the Third Supplemental Materials Procurement Framework Agreement, and is required to abstain from voting at the EGM on the resolutions approving the Second Supplemental Purchase Framework Agreement and the Third Supplemental Materials Procurement Framework Agreement. As Ms. Wang Laichun and Mr. Wang Laisheng are also indirectly interested in Suteng through their interest in Luxshare Limited, LITL will also voluntarily abstain from voting of the resolution in respect of the Second Supplemental ST Supply Framework Agreement at the EGM.

If you are not able to attend and/or vote at the EGM, you are strongly urged to complete and return the form of proxy, a copy of which is enclosed, in accordance with the instructions printed thereon and return it to the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, as soon as possible and in any event not later than 27 August, 2024 at 10:00 a.m. (Hong Kong Time).

Completion and return of the form of proxy will not preclude you from attending and voting in person at the meeting should you so wish.

– 32 –

LETTER FROM THE BOARD

All the resolutions proposed to be approved at the EGM will be taken by poll and an announcement will be made by the Company on the poll results of the EGM as soon as possible after the conclusion of the EGM.

8. CLOSURE OF REGISTER OF MEMBERS

For determining the entitlement to attend and vote at the EGM, the register of members of the Company will be closed from Monday, 26 August 2024 to Thursday, 29 August 2024, both dates inclusive, during which period no transfers of shares of the Company will be registered. In order to qualify for attending and voting at the EGM, Shareholders must complete and lodge all transfer documents accompanied by the relevant share certificates with the Share Registrar, at Shops 1712−1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong for registration not later than 4:30 p.m. on Friday, 23 August, 2024.

9. RECOMMENDATIONS

The Independent Board Committee, after taking into account the advice from the Independent Financial Adviser, considers that the terms of each of the Supplemental Agreements, the transactions contemplated thereunder and respective Proposed Annual Caps are entered into in the ordinary and usual course of business of the Group and on normal commercial terms after arm’s length negotiations between the parties, and the terms thereof (including the Proposed Annual Caps) are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Accordingly, the Board (including the independent non-executive Directors) recommends the Independent Shareholders to vote in favour of the ordinary resolutions to be proposed at the EGM to approve the Supplemental Agreements, the transactions contemplated thereunder and respective Proposed Annual Caps.

The text of the letter from the Independent Board Committee is set out on pages 35 to 36 of this circular. The text of the letter from the Independent Financial Adviser containing its advice to the Independent Board Committee and the Independent Shareholders and the principal factors and reasons which it has taken into account in arriving at its advice is set out on pages 37 to 80 of this circular. Independent Shareholders are strongly recommended to read carefully these two letters for details of the advice.

– 33 –

LETTER FROM THE BOARD

10. ADDITIONAL INFORMATION

Your attention is drawn to the additional information contained in the appendix to this circular and the notice of the EGM.

Yours faithfully, By order of the Board Cowell e Holdings Inc. Meng Yan Chairman

– 34 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

The following is the full text of a letter from the Independent Board Committee setting out its recommendation to the Independent Shareholders in relation to the Supplemental Agreements, the transactions contemplated thereunder and the respective Proposed Annual Caps.

Cowell e Holdings Inc. 高偉電子控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 1415)

14 August, 2024

To the Independent Shareholders

Dear Sir or Madam,

REVISION OF ANNUAL CAPS FOR CONTINUING CONNECTED TRANSACTIONS AND NOTICE OF EXTRAORDINARY GENERAL MEETING

We refer to the circular dated 14 August, 2024 issued by the Company (the “ Circular ”) of which this letter forms part. Terms defined in the Circular bear the same meanings herein unless the context otherwise requires.

We have been appointed by the Board as the members of the Independent Board Committee to consider the Supplemental Agreements, the transactions contemplated thereunder and the respective Proposed Annual Caps and to advise the Independent Shareholders as to the fairness and reasonableness of the same. Honestum International Limited has been appointed to advise the Independent Board Committee and the Independent Shareholders in this regard.

RECOMMENDATIONS

We wish to draw your attention to the letter from the Board, as set out on pages 12 to 34 of the Circular, and the letter from the Independent Financial Adviser which contains its advice to the Independent Board Committee and the Independent Shareholders in respect of the Supplemental Agreements, the transactions contemplated thereunder and the respective Proposal Annual Caps as set out on pages 37 to 80 of the Circular.

– 35 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

After taking into consideration the advice from the Independent Financial Adviser, we concur with the views of the Independent Financial Adviser and consider that the terms of each of the Supplemental Agreements, the transactions contemplated thereunder and respective Proposed Annual Caps are entered into in the ordinary and usual course of business of the Group and on normal commercial terms after arm’s length negotiations between the parties, and the terms thereof (including the Proposed Annual Caps) are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the resolutions to be proposed at the EGM to approve the Supplemental Agreements, the transactions contemplated thereunder and respective Proposed Annual Caps.

Yours faithfully,

Independent Board Committee

Su Yen-Hsueh

Independent non-executive Director

Tsai Chen-Lung

Independent non-executive Director

Liu Xia

Independent non-executive Director

– 36 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the full text of a letter of advice from Honestum International Limited to the Independent Board Committee and the Independent Shareholders prepared for the purpose of inclusion in this circular.

==> picture [123 x 41] intentionally omitted <==

14 August 2024

To the Independent Board Committee and the Independent Shareholders

Dear Sir or Madam,

REVISION OF ANNUAL CAPS FOR CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

We refer to our engagement to advise the Independent Board Committee and the Independent Shareholders in respect of the entering into of (i) the Second Supplemental Purchase Framework Agreement with Luxshare Precision; (ii) the Second Supplemental ST Supply Framework Agreement with Suteng; and (iii) the Third Supplemental Materials Procurement Framework Agreement with GZ Luxvisions, respectively, for revision of existing annual caps under the Existing Agreements, the details of which are set out in the circular of the Company to the Shareholders dated 14 August 2024 (the “ Circular ”), of which this letter forms part. Unless the context otherwise requires, terms used in this letter shall have the same meanings as those defined in the Circular.

Reference is made to (i) the announcements of the Company dated 29 December 2022, 19 April 2023 and 17 July 2024 and the circulars of the Company dated 8 June 2023 in relation to, among others, the Purchase Framework Agreement and the Supplemental Purchase Framework Agreement entered into between the Company and Luxshare Precision pursuant to which the Group shall purchase products from the Luxshare Precision Group; (ii) the announcements of the Company dated 19 April 2023, 10 November 2023 and 17 July 2024 and the circulars of the Company dated 8 June 2023 and 5 December 2023 in relation to, among others, the ST Supply Framework Agreement entered into between Luxsense and Suteng, pursuant to which the Group shall supply the products to the Suteng Group; and (iii) the announcements of the Company dated 29 December 2022, 19 April 2023, 10 November 2023 and 17 July 2024 and the circulars of the Company dated 8 June 2023 and 5 December 2023 in relation to, among others, the Materials

– 37 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Procurement Framework Agreement and the Supplemental Materials Procurement Framework Agreement entered into between the Company and GZ Luxvisions pursuant to which the Group shall purchase materials from the GZ Luxvisions Group in accordance with the terms and conditions thereunder. As stated in the Letter from the Board, due to the unexpected increase in demand for the Group’s products and the expansion of the Group’s business operations, the Board anticipated that the existing annual cap(s) under the Purchase Framework Agreement, ST Supply Framework Agreement and the Materials Procurement Framework Agreement for the years ending 31 December 2024 and/or 2025 (as the case may be) will be exceeded. As such, the Directors propose to revise the existing annual cap(s) of each of the Existing Agreements for the years ending 31 December 2024 and/or 2025 (as the case may be). On 17 July 2024 (after trading hours), the Group entered into (i) the Second Supplemental Purchase Framework Agreement with Luxshare Precision; (ii) the Second Supplemental ST Supply Framework Agreement with Suteng; and (iii) the Third Supplemental Materials Procurement Framework Agreement with GZ Luxvisions, respectively to revise the existing annual cap(s) of the Existing Agreements.

LISTING RULE IMPLICATION

Luxsense is a subsidiary of the Company, which is jointly owned by the Group and Suteng as to 51% and 49% respectively. Therefore, Suteng is a substantial shareholder of Luxsense and a connected person at the subsidiary level of the Group. As such, the transactions contemplated under the Second Supplemental ST Supply Framework Agreement constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.

Ms. Wang Laichun and Mr. Wang Laisheng, who are the controlling Shareholders and indirectly interested in approximately 70.76% of the issued share capital of the Company, together are also indirectly interested in approximately 37.83% of the equity interests, and Mr. Wang Laisheng is also directly interested in approximately 0.21% equity interests, of Luxshare Precision. Hence, Luxshare Precision is an associate (as defined under Chapter 14A of the Listing Rules) of Ms. Wang Laichun and Mr. Wang Laisheng and a connected person of the Group. Therefore, the transactions contemplated under the Second Supplemental Purchase Framework Agreement constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.

Furthermore, as GZ Luxvisions is a controlling Shareholder indirectly interested in approximately 70.76% of the entire issued share capital of the Company through LITL as at the date of this letter, it is a connected person of the Company. As such, the transactions contemplated under the Third Supplemental Materials Procurement Framework Agreement constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules

– 38 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Pursuant to Rule 14A.54 of the Listing Rules, if the Company intends to revise annual caps for existing continuing connected transactions, the Company will be required to re-comply with relevant provisions of Chapter 14A of the Listing Rules in respect of the relevant continuing connected transactions.

Pursuant to Rule 14A.81 of the Listing Rules, a series of connected transactions shall be treated as if they were one transaction if they were all entered into or completed within a 12-month period or are otherwise related. Given that (i) the Third Supplemental Materials Procurement Framework Agreement and the Second Supplemental Purchase Framework Agreement were entered into within a 12-month period and the transactions contemplated thereunder are of similar nature in relation to the purchases by the Group of similar materials for its production; and (ii) Luxshare Precision is ultimately controlled by Ms. Wang Laichun and Mr. Wang Laisheng, who are controlling Shareholders indirectly interested in approximately 70.76% of the issued share capital of the Company and have interests in Luxshare Precision, have indirect control interest in GZ Luxvisions, both GZ Luxvisions and Luxshare Precision are associates of Ms. Wang Laichun and Mr. Wang Laisheng and the transactions contemplated under the Second Supplemental Purchase Framework Agreement and the Third Supplemental Materials Procurement Framework Agreement shall be aggregated as if they were one transaction.

As one or more of the applicable percentage ratios (as defined under Rule 14.07 of the Listing Rules) in respect of the Proposed Annual Caps of each of the Supplemental Agreements are more than 5%, the transactions contemplated under the Supplemental Agreements and the relevant Proposed Annual Caps are subject to the reporting, announcement, annual review and independent Shareholders’ approval requirement as set out under Chapter 14A of the Listing Rules.

THE INDEPENDENT BOARD COMMITTEE

The Independent Board Committee, comprising all the independent non-executive Directors, namely Ms. Su Yen-Hsueh, Mr. Tsai Chen-Lung and Ms. Liu Xia, has been established to advise the Independent Shareholders on the terms of the Supplemental Agreements, the transactions contemplated thereunder and the relevant Proposed Annual Caps. We, Honestum International Limited, have been appointed to advise the Independent Board Committee and the Independent Shareholders in this regard.

– 39 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

OUR INDEPENDENCE

We did not act as financial adviser to the Group and its respective connected persons in the past two years immediately preceding the Latest Practicable Date.

In the past two years immediately preceding the Latest Practicable Date, we have acted as the independent financial adviser to the then independent board committee and the then independent shareholders of the Company for the continuing connected transactions (the “ Previous Engagements ”), details of which are set out in the circular of the Company dated 8 June 2023 and 5 December 2023, respectively. Under the Previous Engagements, we were required to express our opinion on and give recommendations to the independent board committee and independent shareholders of the Company in relation to (i) the continuing connected transactions under the Supplemental ST Supply Framework Agreement and the Second Supplemental Materials Procurement Framework Agreement; and (ii) the continuing connected transactions under the ST Supply Framework Agreement, the Supplemental Purchase Framework Agreement and the Supplemental Materials Procurement Framework Agreement, respectively. Apart from the independent financial adviser roles in connection with the Previous Engagements and the transactions disclosed in the Circular, we have not acted in any capacity of the Group in the past two years immediately preceding the Latest Practicable Date. We did not have any relationships or interests between us, the Group, the Luxshare Precision Group, the Suteng Group and the GZ Luxvisions Group within the past two years from the Latest Practicable Date under the Listing Rules that could be reasonably regarded as a hindrance to our independence as defined under Rule 13.84 of the Listing Rules to act as the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Supplemental Agreements. We consider ourselves independent to form our opinion in respect of the Supplemental Agreements. Apart from normal professional fees paid or payable to us in connection with this appointment as the independent financial adviser, no arrangement exist whereby we had received or will receive any fees or benefits from the Company or any other party to the transactions disclosed in the Circular.

BASIS OF ADVICE

In putting forth our opinion and recommendation, we have relied on the accuracy of the information and representations included in the Circular and provided to us by the management of the Group. We have assumed that all such information and representations made or referred to in the Circular and provided to us by the management of the Group were true at the time they were made and continued to be true up to the Latest Practicable Date. We have also assumed that all statements of belief, opinion and intention made in the Circular were reasonably made after due enquiry. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the management of the Group and have been advised that no

– 40 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

material facts have been withheld or omitted from the information provided and referred to in the Circular. We consider that we have reviewed sufficient information to reach an informed view and to justify reliance on the accuracy of the information contained in the Circular and to provide a reasonable basis for our advice. We have not, however, conducted any independent verification of the information included in the Circular and provided to us by the management of the Group nor have we conducted any form of investigation into the business, affairs or future prospects of the Group, the Luxshare Precision Group, the Suteng Group and the GZ Luxvisions Group.

The Directors jointly and severally accept full responsibility for the accuracy of the information disclosed and confirm, having made all reasonable enquiries that to the best of their knowledge and belief, there are no other facts not contained in this letter, the omission of which would make any statement herein misleading.

This letter is issued to the Independent Board Committee and the Independent Shareholders solely in connection for their consideration in respect of the Supplemental Agreements, and except for its inclusion in the Circular, 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 formulating our opinion on the terms of the Supplemental Agreements, the transactions contemplated thereunder and the relevant Proposed Annual Caps, we have taken into account the following principal factors and reasons:

1. Background of the parties

(i) Background information on the Group

The Group is a major supplier of delicate optical modules and components for electronic mobile devices. It principally engages in the design, development, manufacture and sale of a variety of optical modules and parts that are used in smartphones, multimedia tablets and other mobile devices of internationally-renowned brands. As at the date of this letter, approximately 70.76% of the entire issued share capital of the Company is directly held by LITL which is a wholly-owned subsidiary of GZ Luxvisions.

– 41 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following table sets out a summary of the recent financial performance of the Group.

	For the year ended	For the year ended
	31 December
	2022	2023
	US$’000	US$’000
	(audited)	(audited)
Revenue	1,116,210	923,846
Gross profit	174,447	127,766
Profit for the year	83,816	46,390

For the year ended 31 December 2023, the Group recorded revenue of approximately US$923.8 million, representing a decline of approximately 17.2% from approximately US$1,116.2 million for the year ended 31 December 2022. Such decrease was mainly attributable to the decreased orders from customers due to the impact of the unfavorable macro-environment and negative factors such as geopolitical tensions, regional conflicts, and inflation, as a result of which the global economic recovery did not meet the anticipated level and the growth remained sluggish. The Group will continue to increase resource investment in research and development, promote technological innovation in production and accelerate the introduction of automation, in order to further enhance added value for customers.

The Group recorded net profit of approximately US$46.4 million for the year ended 31 December 2023, representing a decrease of approximately 44.7% from the prior year. The decrease was mainly due to (i) the decrease in gross profit of approximately US$46.7 million resulted from the declining demand of the Group’s products from its customer; and (ii) the increase in finance costs of approximately US$4.5 million during the year.

(ii) Background information on Luxsense

Luxsense is a limited liability company established under the law of the PRC and is a non-wholly owned subsidiary of the Company, which is owned as to 51% by the Group and 49% by Suteng as at the date of this letter. Luxsense is principally engaged in the production of modules and light detection and ranging machines.

(iii) Background information on Suteng

– 42 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

wholly-owned subsidiary of RoboSense Technology Co., Ltd (速騰聚創科技有限公司) (“ RoboSense ”) which in turn is an exempted company incorporated in the Cayman Islands and listed on the Main Board of the Stock Exchange (stock code: 2498) in January 2024. Suteng is interested in 49% of the equity interest of Luxsense since February 2023 and is therefore a connected person at the subsidiary level of the Group. Save as disclosed above, to the best knowledge, information and belief of the Directors after having made all reasonable enquiries, Luxshare Limited (which in turn is owned by Ms. Wang Laichun and Mr. Wang Laisheng who are the controlling Shareholders indirectly interested in approximately 70.76% of the issued share capital of the Company through LITL as at the date of this announcement) is interested in approximately 2.23% of the issued shares of RoboSense.

(iv) Background information on Luxshare Precision

Luxshare Precision is a company incorporated in the PRC with limited liability and listed on the Shenzhen Stock Exchange (stock code: 002475). As at the date of this letter, approximately 37.83% of the equity interest of Luxshare Precision is directly held by Luxshare Limited which in turn is owned as to 50% by Ms. Wang Laichun and 50% by Mr. Wang Laisheng, who are siblings of Mr. Wang Laixi, one of the controlling Shareholders. The Luxshare Precision Group is principally engaged in the research, development, manufacturing and sales of products in the fields of consumer electronics, communication, auto electronics and healthcare.

(v) Background information on GZ Luxvisions

GZ Luxvisions, a company established under the laws of the PRC with limited liability, is a subsidiary of LIL. As at the date of this letter, LIL is owed as to (i) approximately 56.342% by Mr. Wang Laixi (a controlling Shareholder); and (ii) approximately 43.659% by Luxsan Limited (景汕有限公司), which is a company incorporated in Hong Kong with limited liability and owned as to by Ms. Wang Laichun (an elder sister of Mr. Wang Laixi), Mr. Wang Laisheng (an elder brother of Mr. Wang Laixi) and Ms. Wang Laijiao (an elder sister of Mr. Wang Laixi) as to 34%, 33% and 33%, respectively. The GZ Luxvisions Group is principally engaged in the business of production of mass-produced mobile phone camera modules, tablet camera modules, notebook camera modules, car camera module, and display module, etc.

2. Background and reasons for the Supplemental Agreements

As disclosed in the announcements of the Company dated 29 December 2022, 19 April 2023 and 17 July 2024 and the circulars of the Company dated 8 June 2023, the Company and Luxshare Precision entered into the Purchase Framework Agreement and the Supplemental Purchase Framework Agreement, pursuant to which the Group shall purchase products from the Luxshare Precision Group according to the specifications as requested by the Group, including but not

– 43 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

limited to front and rear facing cameras of smartphones and cameras of tablets, which are required for the production of the Group. The Group actively enhances its research and development and manufacturing capability of various optical modules and parts for electronic devices. The Company believes that it is in the benefit of the Group to continue and increase the existing transactions of purchasing the relevant products from the Luxshare Precision Group under the Purchase Framework Agreement which can enable the Group to have a reliable source of supply of the products for production.

As disclosed in the announcements of the Company dated 19 April 2023, 10 November 2023 and 17 July 2024 and the circulars of the Company dated 8 June 2023 and 5 December 2023, the Group and Suteng entered into the ST Supply Framework Agreement, pursuant to which the Group shall supply the LS Products to the Suteng Group according to the specifications as requested by the Suteng Group, which are required for the production of the Suteng Group. Leveraging on the Group’s exceptional commitment on research and development, production and quality, the Group’s LS Products are highly customized and sophisticated goods produced based on the specifications required by the Suteng Group. With the friendly business relationship and cooperation maintained between the Group and the Suteng Group, the parties are familiar with the production standards, business practice and transaction terms of each other which can in turn save significant negotiation time and costs and reduce the rework rates. Aside from the increase in demand of the Suteng Group’s products, the Company believes all the aforementioned reasons are attributable to the increase of the sale of the LS Products such that the Group does not have to aggressively compete on price for the LS Products. As a result, the Company believes that it is in the benefit of the Group to continue and increase the existing transactions of the supply of the LS Products to the Suteng Group under the ST Supply Framework Agreement which can allow the Group to raise the profile of the LS Products, enhance the LS Products’ penetration into new markets, expand the source of revenue and improve the profitability for the Group.

As disclosed in the announcements of the Company dated 29 December 2022, 19 April 2023, 10 November 2023 and 17 July 2024 and the circulars of the Company dated 8 June 2023 and 5 December 2023, the Group and GZ Luxvisions entered into the Materials Procurement Framework Agreement and the Supplemental Materials Procurement Framework Agreement, pursuant to which the Group shall purchase materials supplied by the GZ Luxvisions Group according to the specifications as requested by the Group, including but not limited to circuit board assembly (including LIDAR printed circuit board assembly) and related raw materials, stores, consumables and other materials, which are required for the production of the Group. The Group actively enhances its research and development and manufacturing capability of various optical modules and parts for electronic devices. The Company believes that it is in the benefit of the Group to continue and increase the existing transactions of purchasing the relevant materials from the GZ Luxvisions Group under the Materials Procurement Framework Agreement which can enable the Group to have a reliable source of supply of the materials for production.

– 44 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As advised by the Directors, the Group has been and will continue to actively enhance its research and development and manufacturing capability of various optical modules and parts for electronic devices. As the Group has been supplying the LS products to the Suteng Group and purchasing the relevant products and materials from the Luxshare Precision Group and the GZ Luxvisions Group, respectively, and a friendly business relationship was established among the Group and each of the Suteng Group, the Luxshare Precision Group and the GZ Luxvisions Group, the Company believes that it is in the benefit of the Group to continue and increase the existing transactions under the Existing Agreements which can provide a framework for the long-term supply of the LS Products to the Suteng Group and procurement of the products and materials from the Luxshare Precision Group and the GZ Luxvisions Group, which will help reduce negotiation time and costs among the parties and enhance the operational efficiency of the Group.

As set out in the Letter from the Board, due to increased demand from customers and the expansion of the Group’s business operations and production capacity, the Board anticipated that the existing annual cap(s) under the Existing Agreements will be exceeded. In order to capture the business opportunities, the Group believes it is prudent, if not necessary, to enter into the Supplemental Agreements to revise the existing annual cap(s) under the Existing Agreements to ensure compliance with the Listing Rules and actively facilitate the increase in the production need of the Group.

Having considered the above, we are of the view that the transactions contemplated under the Supplemental Agreements are conducted in the ordinary and usual course of business of the Group and are in the interests of the Company and its Shareholders as a whole.

3. Principal terms of the Supplemental Agreements

(i) The Second Supplemental Purchase Framework Agreement

Principal terms of the Second Supplemental Purchase Framework Agreement

Set out below are the principal terms of the Second Supplemental Purchase Framework Agreement, details of which are set out in the sub-section headed “A. The Second Supplemental Purchase Framework Agreement” under the section headed “2. Revision of annual caps for continuing connected transactions” of the Letter from the Board.

– 45 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Parties

(a) Company (as purchaser); and
(b) Luxshare Precision (as supplier)

Date

17 July 2024 (after trading hours)

Subject Matter

Pursuant to the Second Supplemental Purchase Framework Agreement, the existing annual caps for the transactions contemplated under the Purchase Framework Agreement for the years ending 31 December 2024 and 2025 are revised from US$61.8 million to US$260.0 million and from US$80.4 million to US$360.0 million, respectively.

Pursuant to the Letter from the Board, save for the aforesaid changes, all other terms and conditions of the Purchase Framework Agreement will remain unchanged and in full force and effect.

Principal terms and price determination

Selling prices of the Products shall be determined with reference to, and generally shall not be lower than, prices charged by the Luxshare Precision Group to other independent third party customers of the products of same or similar specifications, which represents the then prevailing market prices.

– 46 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

independent third parties. The review and evaluation process will be conducted from both technical and commercial perspectives. If there are situations where the Company could not obtain quotation and/or could only obtain one quotation due to the limitations on, among others, the technical specifications of the products required and/or qualification of the suppliers expected by the Group, the Company will evaluate the price and terms offered by the Luxshare Precision Group by making reference to, if available, the recent purchase price of such Products and the market fluctuation of the costs of the materials. If the Company is able to secure the provision of any of the products contemplated under the Purchase Framework Agreement from independent third parties on more favourable terms, the Group shall be entitled to terminate the transactions contemplated thereunder by giving the Luxshare Precision Group not less than 30 days’ prior written notice. As the management of the Group will review the aforesaid pricing policy on a regular basis in every quarter, we concur with the view of the Directors that the aforesaid method and procedures can ensure that the transactions contemplated under the Purchase Framework Agreement will be conducted on normal commercial terms and not prejudicial to the interest of the Company’s minority Shareholders.

Payment terms

Specific payment terms shall be stipulated in the relevant order forms, which is normally payable within 90 days after month end.

In order to assess the fairness and reasonableness of the terms of purchase of products by the Group from the Luxshare Precision Group, we have obtained and reviewed the sample documents (such as orders and invoices) of 12 randomly selected purchase transactions between the Group and the Luxshare Precision Group under the Purchase Framework Agreement during the 12-month period immediately before the date of this letter (the “ Review Period ”). We have then compared the sample documents against 12 sets of sample documents of similar transactions between the Group and its independent third party suppliers during the Review Period. We consider the sample transaction documents that we have selected and reviewed to be fair and representative because (i) the relevant transactions were randomly selected and involved the relevant purchases by the Group from the Luxshare Precision Group spreading across the Review Period; (ii) the selected transactions took place within the past year, which can reflect the Group’s latest business practice in its ordinary and usual course of business; and (iii) we did not identify any anomaly when we reviewed such samples and hence we did not require further samples.

Based on our review of the aforesaid documents, we noted that (i) the sales prices offered by the Luxshare Precision Group were not higher than those offered by the independent third party suppliers for similar type of products; and (ii) the payment terms offered to the Group by its independent third party suppliers were less favourable (from the Group’s perspective) than the payment terms offered by the Luxshare Precision Group. Besides, we also noted that the business

– 47 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

department of the Group has considered the price and payment terms offered to the Group by its independent third party suppliers for similar products to determine the price and payment terms offered by the Luxshare Precision Group. In view of the above, we are of the view that the Group had compared the terms offered by its independent third party suppliers, and purchased the relevant products under the Purchase Framework Agreement at the terms no less favourable than terms available for the Group for similar products supplied by its independent third party suppliers.

For payment terms, purchases from the Luxshare Precision Group were payable within 90 days after delivery of the products. We have discussed with and are advised by the management of the Group that the trade payables of the Group are normally settled within terms of 30 to 90 days. Therefore, we consider that the payment terms offered by the Luxshare Precision Group to the Group are generally in line with that offered by its independent third party suppliers.

Based on the above, we consider the transactions under the Purchase Framework Agreement have been conducted on terms that are fair and reasonable, which shall in turn safeguard the interests of the Company and the Shareholders as a whole. In view of the facts that (i) all sample documents were selected on a random basis and spread across the period; and (ii) the Second Supplemental Purchase Framework Agreement is solely for the revision of existing cap and does not amend the pricing and payment terms of the Purchase Framework Agreement, we are of the view that the samples we selected are fair and reasonable for assessment of the recent pricing and payment terms of the transactions.

In conclusion, based on our review as stated above, we are of the view that the purchase prices and payment terms with the Luxshare Precision Group for these transactions were no less favourable than those with independent third parties and such transactions have been adhered to the internal control measures of the Group in respect of reviews of the terms with independent third parties. Taking into account the above and the fact that (i) save for the revision of existing cap, all other terms of the Purchase Framework Agreement will remain unchanged and in full force and effect; and (ii) the Group will continue to implement the same policy to review and ensure the terms offered by the Luxshare Precision Group to the Group be no less favourable than those by independent third parties, we are of the view that the terms of the Second Supplemental Purchase Framework Agreement are fair and reasonable so far as the Independent Shareholders are concerned.

– 48 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Proposed Annual Caps

The following table sets forth the comparison between the historical transaction amount of the transactions contemplated under the Purchase Framework Agreement and the existing annual cap for the year ending 31 December 2024 (“ FY2024 ”):

	Historical
	amount for
	the six months	Existing
	ended 30 June	Annual Cap	Utilisation
	2024	for FY2024	rate
	US$’000	US$’000	%
Purchase of products from the
Luxshare Precision Group under the
Existing Purchase Framework
Agreement	4,142	61,776	6.7

The following table sets forth the comparison between the existing annual cap and the proposed annual caps for the years ending 31 December 2024 and 2025:

	For the year ending	For the year ending
	31 December
	2024		2025
	US$’000	US$’000
Maximum aggregate amount of purchase from the
Luxshare Precision Group
Existing annual cap
(“Existing Annual Cap(s) A”)	61,776	80,352
Proposed annual caps
(“Proposed Annual Cap(s) A”)	260,000	360,000

In respect of the fairness and reasonableness of the Proposed Annual Caps A, we have performed the following work and analysis.

we have reviewed the historical actual and the expected upcoming transaction amounts in relation to the Second Supplemental Purchase Framework Agreement as mentioned in the Letter from the Board. We noted that (i) the historical actual transaction amount was approximately US$4.1 million for the six months ended 30 June 2024, representing

– 49 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

approximately 6.7% of the existing annual cap for the year ending 31 December 2024; (ii) the Proposed Annual Cap A for the years ending 31 December 2024 and 2025 represents an increase of approximately 320.9% and 348.0% as compared to the Existing Annual Cap A for the same period; and (iii) the Proposed Annual Cap A for the year ending 31 December 2025 represents an annual growth of approximately 38.5%;

• we have reviewed the breakdown of the calculation of the Proposed Annual Caps A and we have discussed with and are advised by the management of the Group that the reasons that the Proposed Annual Caps A for the years ending 31 December 2024 and 2025 are much higher as compared with the Existing Annual Cap A are mainly attributable to the expected increase in the number and average unit cost of procurements of voice coil motor products (the “ VCM Products ”) and the amounts of the Proposed Annual Caps A are principally determined based on the revised estimated procurement amount (including the forecast sales volume) and revised unit prices of VCM Products which the Group liaised with the Luxshare Precision Group in view of the upcoming production and sales plans of the Group. Based on the revised plans of the Group, it is estimated that the number of procurements of the VCM Products with the Luxshare Precision Group will increase by approximately 133% for the year ending 31 December 2024 as compared with that for the year ended 31 December 2023 and the number will further increase by approximately 43% for the year ending 31 December 2025. On the other hand, the estimated unit prices of the VCM Products are expected to increase by approximately 15 times for the year ending 31 December 2024 as compared with that for the year ended 31 December 2023. Thereafter, the unit prices are expected to remain constant for the year ending 31 December 2025. The estimated transaction amounts for the VCM Products are estimated by the responsible business representatives of the Group mainly with reference to the actual historical transaction amount for the year ended 31 December 2023 and the six months ended 30 June 2024 and the anticipated demand for the relevant products (including the VCM Products for rear-end camera modules to be discussed below) after taking into account the nature of products, the market development trend as well as the expected business growth of the Group. Further, the management has mainly made reference to the upcoming production and sales plans of the Group’s camera modules products and the recent actual unit prices of the VCM Products sold by the Luxshare Precision Group to the Group.

– 50 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

was conducted to assess the achievability of the Group’s production and sales plans; and (iii) the production and sales plans of the Group were benchmarked against industry trends and growth projections to evaluate their reasonableness. Particularly, according to the report by the research firm International Data Corporation (“ IDC ”), the high-end smartphone market has experienced unexpected growth, primarily driven by the rapid development of generative AI (GenAI) smartphone. It is forecasted that the GenAI smartphone market will reach 234.2 million units shipped in 2024, increased by approximately 363.6% from 2023. Shipments of GenAI smartphone is forecasted to further increase to 912.0 million units in 2028, resulting in a CAGR of approximately 78.4%. On the other hand, according to the report by IDC, the global AR and VR market size is projected to reach US$13.8 billion in 2023, surging to US$50.9 billion by 2026, with a five-year compound annual growth rate expected to reach 32.3%. Under the impetus of technological innovation, it is expected that the demand for camera modules continues to grow at a high rate and market penetration continues to rise. Furthermore, as a result of the potential demand from its largest customer, the Group had revised the production and procurement plans to a very large extent in which there will be a huge corresponding increase in the demand for the relevant products (including the VCM Products for rear-end camera modules to be discussed below) which are primarily used for the Group’s productions of existing and new smartphone camera modules. Based on the above assessment, which will be further discussed in detail below, we are of the view that the Group’s production and sales plans and the resulting Proposed Annual Caps A are reasonable;

VCM is a type of actuator commonly used in the camera of mobile phones and other digital cameras which is a critical component for quick and precise adjustments to the lens position, and is essential for capturing high-quality photos and videos. VCM plays an irreplaceable role as an intermediate for the production of front-end and rear-end camera modules which the Group has been provided for its customers. When the Existing Annual Cap A was set, the VCM Products which the Group purchased from the Luxshare Precision Group were only for the production of front-end camera modules. We have discussed with and are advised by the management of the Group that as the market of camera modules products is emerging and experiencing exponential growth, the Group was given to understand that the demand of the VCM Products had also increased magnificently at a faster pace than anticipated. In particular, based on the latest discussion with, and the latest development and production plan of the largest customer of the Group, there was an unexpected and sudden increase of sales orders from its largest customer for new rear-end camera modules since May 2024 for the launch of new models of smartphone of the customer. Correspondingly, the Group had commenced purchase of VCM Products for the production of rear-end camera modules (“ Rear-end VCM Products ”) from the Luxshare Precision Group since May 2024.

– 51 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Taking into account the potential demand from the largest customer, the Group had revised the production and procurement plans to a very large extent and it is expected that there will be a surge of orders for the Luxshare Precision Group’s Rear-end VCM Products in order to satisfy the increasing orders from its customers. In addition, while on a per unit cost basis the Group did not expect the existing constituents of the VCM Products to have material fluctuation with reference to the historical trend for the two years ending 31 December 2025, the Rear-end VCM Products for the production of the new rear-end camera modules have a substantially higher unit cost (i.e. over 16 times) than other constituents of the VCM Products. As a result of the above, based on the above information from the Company, the Group’s original projection for the Existing Annual Caps A for the years ending 31 December 2024 and 2025, which principally took consideration the purchase of VCM Products for front-end camera modules, would have been largely exceeded if no revisions of the Existing Annual Caps A were to be made.

In assessing the reasonableness of the expected procurement amount of the Rear-end VCM Products from the Luxshare Precision Group, (i) we have discussed with the management of the Group and understood that the expected procurement amount of the Rear-end VCM Products is estimated by the Group principally with reference to the estimated number of rear-end camera modules products to be sold by the Group in the coming years, where we have reviewed, including but not limited to documents on the actual number of rear-end camera modules products sold by the Group for the six months ended 30 June 2024, the current purchases orders on hands with the Luxshare Precision Group for the procurement of the Rear-end VCM Products and the upcoming production and sales plans of rear-end camera modules products of the Group. We also noted that at least three or more rear camera modules are required for production of the new models of the smartphone, therefore the expected demand of the Rear-end VCM Products will further increase in a greater extent in the last quarter of 2024 when the Group commences mass production of the rear camera modules; and (ii) we have evaluated the unit cost of the Rear-end VCM Products, where we have selected and reviewed six recent procurement invoices in respect of the Rear-end VCM Products purchased by the Group from its independent third party suppliers and compared them against the unit prices of the forecasted purchase of the Rear-end VCM Products from the Luxshare Precision Group and noted that such expected unit prices are at a similar level with the recent actual unit prices from its independent third party suppliers, which is substantially higher than other constituents of the VCM Products.

the historical actual transaction amount under the Existing Purchase Framework Agreement of approximately US$4.1 million for the six months ended 30 June 2024 represented only approximately 6.7% of the Existing Annual Cap A for the year ending

– 52 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

31 December 2024. The actual transaction amounts were lower than expected as the major customers of the Group had placed fewer orders for its products which therefore led to the low demand of the VCM Products. However, as discussed above, in order to cope with the increasing demand for the Group’s rear-end camera modules from its largest customer, the Group had commenced placing more purchases orders with the Luxshare Precision Group and the actual transaction amount under the Purchase Framework Agreement had increased rapidly since May 2024. We have obtained and reviewed the current purchases orders on hands with the Luxshare Precision Group, which amount to approximately US$95.3 million. Having considered the actual transaction amounts incurred and the upcoming delivery and payment schedules, particularly the aforementioned purchases orders on hands of approximately US$95.3 million, it is expected that the transaction amount for the nine months ending 30 September 2024 under the Purchase Framework Agreement will be not less than US$90 million, which will exceed the Existing Annual Cap A for the year ending 31 December 2024.

We have discussed with and are advised by the management of the Group that the amount of orders to be placed with the Luxshare Precision Group will further increase substantially in the last quarter of 2024 and the year ending 31 December 2025. Furthermore, as advised by the management of the Group, the operation of the Group is generally subject to the product development and launch cycles of its major customers, which tend to introduce new or enhanced models to the market during the second half of the year. Correspondingly, the production and sales levels of the Group also tend to be the lowest in the first and second quarters of each year. On the other hand, as the Group intends to launch new or enhanced camera module products during the second half of the year, and to avoid any potential supply disruptions caused by the Chinese New Year holidays, the Group’s procurement volumes is expected to be higher towards the end of the year. We have reviewed the monthly result of operation of the Group for the year ended 31 December 2023 and noted that the Group has experienced the highest procurement and sales volume in the fourth quarter of the year when its customers increase their inventories of mobile devices in light of increased seasonal demand. In particular, for the year ended 31 December 2023, the Group’s average monthly procurement volume of the VCM Products in the fourth quarter was approximately 90% higher than the average monthly procurement volume in the other quarters. Similarly, the Group’s average monthly sales volume in the fourth quarter was approximately 40% higher than the average monthly sales volume in the other quarters. Furthermore, we have obtained and reviewed the monthly results of the Group’s operations for the years ended 31 December 2022 and 2021 and we noted that the Group had also experienced similar seasonal trends in these two years. As such, it is reasonable that the estimation

– 53 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

of the Proposed Annual Caps A has taken into account of the aforementioned seasonality factors. Based on the above, we are of the view that the Existing Annual Cap A for each of the two years ending 31 December 2024 and 2025 may be insufficient;

the transaction amount under the Second Supplemental Purchase Framework Agreement is estimated by the Group with reference to the estimated number of camera modules products to be sold by the Group in the coming years and the recent actual unit prices of the VCM Products (including the Rear-end VCM Products) purchased from the Luxshare Precision Group, where we have reviewed, including but not limited to documents on the recent actual unit prices of the VCM Products (including the Rear-end VCM Products), the actual number of camera modules products sold by the Group and the upcoming production and sales plans of camera modules products of the Group, and considered them to be acceptable for the purpose of determining the Proposed Annual Caps A taking into account:
(a) in assessing the reasonableness of the price in determining the Proposed Annual Caps A with regard to the purchase of the VCM Products from the Luxshare Precision Group, we have (i) reviewed the average unit prices of the VCM Products (including the Rear-end VCM Products) purchased from the Luxshare Precision Group for the six months ended 30 June 2024 and noted that the unit price remained relatively stable during the period; (ii) discussed with the management of the Group and understood that the Group expected there would not be material fluctuation in such unit prices based on the historical trend; and (iii) reviewed 12 procurement invoices in respect of the VCM Products purchased by the Group from the Luxshare Precision Group and compared them against the unit prices of the forecasted purchase of the VCM Products from the Luxshare Precision Group and noted that such expected unit prices are at a similar level with the recent actual unit prices. Given that there is no material difference in the unit prices for all the samples selected and that such unit prices are also at a similar level with the historical average unit price of the VCM Products purchased from the Luxshare Precision Group for the six months ended 30 June 2024, we consider that the samples selected are fair and representative of the prices of the VCM Products;
(b) we noted from the recent announcements of the Group that (i) the Group continuously enhanced its core competitiveness, increased its investment in the research and development of new products and new technologies and fulfilled the multidimensional demands of the customers; (ii) the economic downturn has not affected the upward phases of development of emerging sectors such as augmented reality (“ AR ”), virtual reality (“ VR ”), mixed reality (“ MR ”), intelligent driving,

– 54 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

micro-display, and healthcare which will serve as primary drivers for the Group’s future growth. The Group is continuously optimistic of the business opportunities brought about by new technologies and applications in the optical industry; and (iii) despite the relatively lower annual volume of global smartphone shipments in 2023, a resurgence in growth during the latter half of the year reversed the trend, restoring optimism for recovery in 2024 from the global economy and market sentiment, and accordingly, it is expected that the Group will require more VCM Products for the production of the aforementioned camera modules products. In view of the above strategic move and business expansion by the Group, we concur with the view of the Directors that the sales of the camera modules products will further increase for the years ending 31 December 2024 and 2025. Accordingly, we understand the percentage growth rates of the Proposed Annual Caps A mentioned previously are primarily driven by the estimated procurement amounts by the Group to satisfy its needs of the VCM Products, where such transactions are revenue in nature and on fair and reasonable terms to the Group;

(c) we have obtained and reviewed the Group’s upcoming production plan of camera modules products. We have enquired with the management of the Company and are given to understand that based on the recent discussion with, and the latest development and production plan of, the largest customer of the Group, the Group expected that the demand for the Group’s camera modules products, particularly for the rear-end camera modules, will substantially increase. With reference to the production plan of the Group, over 90% of each of the Proposed Annual Caps A is represented by the projected purchase amount of the VCM Products, which are the primary raw materials for production of cameras modules of the new and upcoming models and generations of the smartphones.

In assessing the reasonableness of the expected transaction amount in determining the Proposed Annual Caps A with regard to the purchase of the VCM Products from the Luxshare Precision Group, we have (i) conducted an analysis on the actual transaction amounts incurred and the upcoming delivery and payment schedules. We noted that as additional new raw materials of the Rear-end VCM Products is required for production of the Group’s new rear camera modules, the Group had increased its purchase amount of VCM Products by approximately 65% and 443% in each of June and July 2024 (as compared with the average actual amount of VCM Products purchased in the first quarter in 2024). It is expected that the demand of VCM Products will further increase in a greater extent in September 2024 by approximately 638% (as compared with the average actual amount of VCM Products purchased in the first quarter in 2024) when the Group commences mass production of the new rear camera modules. Based on the revised production

– 55 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

plan of the Group, the purchase amount of the VCM Products is expected to continue with an average growth rate of 465% per month for the last quarter in 2024; and (ii) considered the aforementioned seasonality factors in determining the Proposed Annual Caps A and particularly, the Group’s average monthly procurement volume of the VCM Products in the fourth quarter of 2023 was approximately 90% higher than the average monthly procurement volume in the other quarters. Coupled with the Group’s production plan to commence mass production and assembly of the new rear camera modules in September 2024 as mentioned above, the demand for the VCM Products is expected to increase exponentially and much larger amount of purchase orders is expected to be placed by the Group with the Luxshare Precision Group in the last quarter of 2024. Having considered the above, we are of the view that the Proposed Annual Caps A for the year ending 31 December 2024 can be justified;

We noted from the Group’s production plan that the Group’s procurement volume of the VCM Products for the year ending 31 December 2025 is expected to increase significantly by approximately 41% as compared with the volume of the VCM Products to be purchased by the Group from the Luxshare Precision Group for the year ending 31 December 2024, to cope with the production and product launch plan of the largest customer and the Group. In assessing the reasonableness of the expected procurement amount of the VCM Products from the Luxshare Precision Group for the year ending 31 December 2025, we have discussed with the management of the Group and understood that the expected procurement amount of the VCM Products is estimated by the Group principally with reference to the estimated number of camera modules products (including the rear-end camera modules) to be sold by the Group in the year, where we have reviewed, including but not limited to documents on the actual number of rear-end camera modules products sold by the Group for the six months ended 30 June 2024 and the upcoming production and sales plans of rear-end camera modules products of the Group. Having taken into account (i) the commencement of purchase of Rear-end VCM Products from the Luxshare Precision Group for the production of rear-end camera modules since May 2024; (ii) despite the aforementioned seasonality factors in relation to the procurement of the VCM Products, the Group’s purchases orders on hands with the Luxshare Precision Group revealed a remarkable growth as compared with that for the six months ended 30 June 2024; (iii) the aforementioned strategic move and business expansion by the Group and particularly, the Group’s production plan to commence mass production and assembly of the new rear camera modules in September 2024 as mentioned above; and (iv) the latest development of technology and the expected growth in camera modules industry to be elaborated below, we are satisfied that the expected

– 56 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

quantity of the VCM Products to be purchased by the Group in formulating the Proposed Annual Caps A could meet the needs under the production plan of the Group for the years ending 31 December 2024 and 2025; and

(d) the Group is a supplier of delicate optical modules for electronic mobile devices and engages in the design, development, manufacture and sale of a variety of modules and systems integration products that are applied in smartphones, multimedia tablets, smart driving and other mobile devices of internationally-renowned brands. According to the report by the research firm International Data Corporation (“ IDC ”), the global AR and VR market size is projected to reach US$13.8 billion in 2023, surging to US$50.9 billion by 2026, with a five-year compound annual growth rate expected to reach 32.3%. IDC’s report anticipates the AR market in China to attain a shipment of 240,000 units in 2023, representing a year-on-year growth of 133.9%. Additionally, IDC predicts 2024 as the “Year of AR/VR Devices,” with the market witnessing continued high-volume shipment growth due to the market impact of new products from leading manufacturers, exhibiting a strong growth momentum. On new racetracks such as AR, VR, intelligent driving, drone, healthcare and education, the innovation, precision and quantity of delicate optical modules have all enhanced rapidly and, together with the popularization of 5G high-speed transmission technologies and the promulgation of various policies on promoting the construction of 5G network, will serve towards the realization of optical industry in every application scenario, providing crucial conditions for the industrial development. Under the impetus of favorable policies and technological innovation, it is expected that the demand for camera modules continues to grow at a high rate and market penetration continues to rise.

As discussed above, to project the estimated number of the VCM Products to be procured by the Group for the coming years, the management of the Group have taken into account, among other things, (i) the actual number of camera modules product sold by the Group for the six months ended 30 June 2024; (ii) the upcoming sales plan of camera modules product of the Group including the new array of products to be released for the coming years; and (iii) the overall camera modules industry for the coming years. Based on our review of information and documents in relation to the aforementioned factors, in particular, (i) the Proposed Annual Caps A for the years ending 31 December 2024 and 2025 are projected mainly based on the estimated number of the VCM Products to be procured by the Group in the coming years multiplied by the recent actual unit price of the VCM Products purchased from the Luxshare Precision Group; (ii) to cope with the production and product launch plan of the largest customer and the Group, the Group’s procurement volume of the VCM Products is expected to increase by approximately 41% for the year ending 31 December 2025 according to the Group’s upcoming production plan, which is in

– 57 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

line with the fluctuation in the Proposed Annual Caps A during the period; and (iii) it is expected that the unit price of each existing constituents of the VCM Products would not have material fluctuation with reference to the historical trend, we are of the view that the Proposed Annual Caps A for the years ending 31 December 2024 and 2025 are fair and reasonable.

(ii) The Second Supplemental ST Supply Framework Agreement

Principal terms of the Second Supplemental ST Supply Framework Agreement

Set out below are the principal terms of the Second Supplemental ST Supply Framework Agreement, details of which are set out in the sub-section headed “B. The Second Supplemental ST Supply Framework Agreement” under the section headed “2. Revision of annual caps for continuing connected transactions” of the Letter from the Board.

Parties

(a) Luxsense (as supplier); and
(b) Suteng (as purchaser)

Date

17 July 2024 (after trading hours)

Subject Matter

Pursuant to the Second Supplemental ST Supply Framework Agreement, the existing annual cap for the transactions contemplated under the ST Supply Framework Agreement for the year ending 31 December 2024 is revised from RMB414.0 million to RMB580.0 million.

Pursuant to the Letter from the Board, save for the aforesaid changes, all other terms and conditions of the ST Supply Framework Agreement will remain unchanged and in full force and effect.

Principal terms and price determination

– 58 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Considering the LS Products are highly customized goods, Luxsense shall determine the selling prices of the LS Products with reference to the production cost of the Group, as well as a reasonable profit margin (which may vary depending on the specifications, production quantity and the popularity of the LS Products), and generally shall not be lower than, prices charged by Luxsense to other independent third party customers of the LS Products of same or similar specifications, which represents the then prevailing market prices. For our due diligence purpose, we have discussed with management to understand the Group’s price determination mechanism. We have also obtained and reviewed 12 randomly selected sample documents in relation to the production cost and profit margin data of the Group’s LS Products sold to the Suteng Group during the 12-month period immediately before the date of this letter (the “ Review Period ”), and we noted that the above price determination mechanism are properly adopted. We consider the sample transaction documents that we have selected and reviewed to be fair and representative because (i) the relevant transactions were randomly selected and involved the relevant sales by the Group to the Suteng Group spreading across the Review Period; (ii) the selected transactions took place within the past year, which can reflect the Group’s latest business practice in its ordinary and usual course of business; and (iii) we did not identify any anomaly when we reviewed such samples and hence we did not require further samples.

In accordance with the Company’s internal policies, the transactions (including but not limited to prices determined and transaction amounts) under the ST Supply Framework Agreement shall be properly recorded. Considering the LS Products are highly customized goods, if in the event there are any subsequent raw material price fluctuations and/or special customization requirements from the Suteng Group such that the rates and/or terms negotiated for the LS Products to be sold to the Suteng Group may potentially become less favourable (from the Group’ perspective) than the rates charged and terms for equivalent or similar LS Products sold by the Group to independent third parties, or in the event that there are no other independent third parties which the Group had supplied certain specific LS Products to, Luxsense and the Suteng Group agree to use their best endeavour (such as by referring to the quotations obtained by the Suteng Group for the required LS Products of comparable specifications from its suppliers as reference) to negotiate and ensure that the terms of the transactions are fair and reasonable which is no less favourable than the terms offered by the Group to any independent third party customers, and to the benefit of the Company and the Shareholders as a whole. As the management of the Group has reviewed and will continue to review the aforesaid pricing policy on a regular basis in every quarter, we concur with the view of the Directors that the aforesaid method and procedures can ensure that the transactions contemplated under the ST Supply Framework Agreement will be conducted on normal commercial terms and not prejudicial to the interest of the Company’s minority Shareholders.

– 59 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Payment terms

Specific payment terms shall be stipulated in the relevant order forms, which is normally payable within 90 days after delivery of the LS Products.

In order to assess the fairness and reasonableness of the terms of supply of the Group’s products to the Suteng Group, we have obtained and reviewed the sample documents (such as orders and invoices) of 12 randomly selected sales transactions between the Group and the Suteng Group under the ST Supply Framework Agreement during the Review Period. The products supplied by the Group under the ST Supply Framework Agreement are made-to-order in accordance with specifications required by the Suteng Group which is the only customer for the Group’s LS Products. Further, as advised by the Directors, apart from the Group, the Suteng Group had not purchased similar products from other independent third party suppliers. We have obtained and reviewed the sales list of the Group’s LS Products and we noted that, apart from the Suteng Group, the Company had not sold similar products to other independent third party customers during the Review Period. In this connection, we have compared the quotation offered by the Group for similar products to its independent third party customers which requested for, among others, price and payment terms. Based on the documents reviewed, we noted that (i) the price of products offered to the independent third party customers by the Group was less favourable (from the Group’s perspective) than that offered to the Suteng Group for similar products; and (ii) the payment terms offered to the independent third party customers by the Group were payable within 90 days after delivery of the LS Products which were the same as the payment terms offered to the Suteng Group. Besides, we also noted that the business department of the Group has considered the price and payment terms offered to the independent third party customers by the Group for similar products to determine the price and payment terms offered to the Suteng Group. In view of the above, we are of the view that the Group had compared the terms offered to the Suteng Group by its independent third party customers, and sold the relevant products under the ST Supply Framework Agreement at the terms no less favourable than terms available for the Group offered to its independent third party customers.

For payment terms, sales from the Group to the Suteng Group were payable within 90 days after delivery of the LS Products. We have reviewed the latest annual report of the Company for the year ended 31 December 2023, where we noted that the trading terms of the Group with its customers are mainly on credit and the credit period is generally within 30 to 90 days. As a result, we are of the view that the payment terms offered by the Group to the Suteng Group are generally in line with that offered to its independent third party customers and do not deviate significantly from the Group’s normal settlement pattern. Therefore, we consider that the payment terms offered by the Group to the Suteng Group are generally in line with that offered to its independent third party customers.

– 60 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Based on the above, we consider the transactions under the ST Supply Framework Agreement have been conducted on terms that are fair and reasonable, which shall in turn safeguard the interests of the Company and the Shareholders as a whole. In view of the facts that (i) all sample documents were selected on a random basis and spread across the period; and (ii) the Second Supplemental ST Supply Framework Agreement is solely for the revision of existing cap and does not amend the pricing and payment terms of the ST Supply Framework Agreement, we are of the view that the samples we selected are fair and reasonable for assessment of the recent pricing and payment terms of the transactions.

In conclusion, based on our review as stated above, we are of the view that the sales prices and payment terms with the Suteng Group for these transactions were no less favourable than those with independent third parties and such transactions have been adhered to the internal control measures of the Group in respect of reviews of the terms with independent third parties. Taking into account the above and the fact that (i) save for the revision of existing cap for the year ending 31 December 2024, all other terms of the ST Supply Framework Agreement will remain unchanged and in full force and effect; and (ii) the Group will continue to implement the same policy to review and ensure the terms offered by the Group to the Suteng Group be no less favourable than those by independent third parties, we are of the view that the terms of the Second Supplemental ST Supply Framework Agreement are fair and reasonable so far as the Independent Shareholders are concerned.

Proposed Annual Caps

The following table sets forth the comparison between the historical transaction amount of the transactions contemplated under the ST Supply Framework Agreement and the existing annual cap for the year ending 31 December 2024 (“ FY2024 ”):

	Historical
	amount for
	the six months	Existing
	ended 30 June	Annual Cap	Utilisation
	2024	for FY2024	rate
	RMB’000	RMB’000	%
Supply of products to the Suteng
Group under the ST Supply
Framework Agreement	251,310	414,000	60.7

– 61 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following table sets forth the comparison between the existing annual caps and the proposed annual caps for the years ending 31 December 2024 and 2025:

	For the year	ending	ending
	31 December
	2024		2025
	RMB’000		RMB’000
Maximum aggregate amount of sales to the Suteng
Group
Existing annual caps (“Existing Annual Cap(s) B”)	414,000		634,000
Proposed annual cap	580,000		634,000
	(“Proposed
	Annual
	Cap B”)
% change	40.1%	unchanged

In respect of the fairness and reasonableness of the Proposed Annual Cap B, we have performed the following work and analysis.

we have reviewed the historical actual and the expected upcoming transaction amounts in relation to the Second Supplemental ST Supply Framework Agreement as mentioned in the Letter from the Board. We noted that (i) the historical actual transaction amount of approximately RMB251.3 million for the six months ended 30 June 2024 represented 60.7% of the Existing Annual Cap B; (ii) the average monthly transaction amount was approximately RMB41.9 million for the six months ended 30 June 2024, representing an increase of approximately 183% as compared with the average monthly transaction amount of approximately RMB14.8 million for the same period in 2023. Accordingly, we noted that the transaction amounts have recently demonstrated a growth trend; (iii) the Proposed Annual Cap B represents an increase of approximately 40.1% as compared to the Existing Annual Cap B for the same period; and (iv) the Existing Annual Cap B for the year ending 31 December 2025 remain unchanged;
we have reviewed the breakdown of the calculation of the Proposed Annual Cap B and we have discussed with and are advised by the management of the Group that the amounts of the Proposed Annual Cap B are principally determined based on the revised estimated procurement amount (including the forecast sales volume) of each major category of products which the Suteng Group liaised with the Group in view of the upcoming production plans of the Suteng Group. We have discussed with the management and noted that the estimated transaction amounts for each major category

– 62 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

of products for the year ending 31 December 2024 are estimated by the responsible business representative of the Suteng Group mainly with reference to the actual historical transaction amount for the six months ended 30 June 2024 and the anticipated demand for the relevant products in the second half of 2024 principally after taking into account the nature of products, the market development trend as well as the expected business growth of the Suteng Group. We have reviewed the breakdown of the calculation of the Proposed Annual Cap B and noticed that the Proposed Annual Cap B are primarily contributed by the sales of transceiver module and Light Detection And Ranging (LiDAR) products. In respect of the estimated transaction amounts for such products, the management also makes reference to the upcoming production and sales plans of the Suteng Group and the recent actual unit prices of transceiver module and LiDAR products sold by the Group to the Suteng Group. We have obtained and reviewed the relevant production and sales plans prepared by the Suteng Group and consider that such proposed plans are reasonable based on the factors as discussed below;

• we have obtained and reviewed the Proposed Annual Cap B estimation schedule prepared by the management of the Group and noted that (i) the higher amount of the Proposed Annual Cap B as compared with the Existing Annual Cap B are attributable to the expected increase in number of the LS Products to be sold to the Suteng Group by approximately 90% for the year ending 31 December 2024 as compared with the actual number of the LS Products sold for the year ended 31 December 2023. LS Products play an irreplaceable role as an intermediate and were primarily used for the production of the Suteng Group’s LiDAR sensors which are sold by the Suteng Group to its customers and have been widely applied in various field, including autonomous driving passenger cars, commercial vehicles, automated logistics vehicles, robots etc. We have discussed with and are advised by the management of the Group that as the market of LiDAR sensors products is emerging and experiencing exponential growth, the Group was given to understand that the production scale of the Suteng Group and demand of the LS Products had also increased magnificently at a faster pace than anticipated. We have reviewed the monthly results of operation of the Group and the historical actual transaction amount in relation to the ST Supply Framework Agreement for the six months ended 30 June 2024 and noted that the amount of sales order from the Suteng Group was 37.6% higher than the forecasted and expected amount for the same period as communicated between the parties when the Existing Annual Cap B was set. Furthermore, we have discussed with and are advised by the management of the Group that the amount of orders from the Suteng Group will further increase substantially in the second half of 2024. We have obtained and reviewed the updated product procurement forecast plan for the year ending 31 December 2024 provided by the Suteng Group. Given the increased forecast number of LS Products required by the

– 63 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Suteng Group and the Group’s expected delivery schedules, it is considered that the Existing Annual Cap B for the year ending 31 December 2024 may be insufficient; and (ii) the transaction amount under the Second Supplemental ST Supply Framework Agreement is estimated by the Group with reference to the estimated number of LiDAR sensors to be sold by the Suteng Group in the coming years and the recent actual unit prices of the LS Products sold to the Suteng Group. The fairness and reasonableness of the Proposed Annual Caps B can be made reference to the expected unit prices and the forecast sales volume demand of the LS Products, where we have reviewed, including but not limited to documents on the recent actual unit prices of the LS Products, the actual number of the LS Products sold by the Group and the upcoming sales plan of LiDAR sensors of the Suteng Group, and considered them to be acceptable for the purpose of determining the Proposed Annual Cap B taking into account:

(a) in assessing the reasonableness of the prices in determining the Proposed Annual Cap B with regard to the sales of the LS Products to the Suteng Group, we have (i) reviewed the average unit prices of the LS Products sold to the Suteng Group for the six months ended 30 June 2024 and noted that the unit prices remained relatively stable during the period; (ii) discussed with the management of the Group and understood that the Group expected there would not be material fluctuation in such unit prices based on the historical trend; and (iii) reviewed 12 sales invoices in respect of the LS Products sold by the Group to the Suteng Group and compared them against the unit prices of the forecasted sales of the LS Products to the Suteng Group and noted that such expected unit prices are at a similar level with the recent actual unit prices;
(b) we noted that the historical actual transaction amount was approximately RMB251.3 million for the six months ended 30 June 2024, representing an average monthly transaction amount of approximately RMB41.9 million. For illustrative purpose only, based on such average monthly transaction amount, the annualised transaction amount under the ST Supply Framework Agreement for the year ending 31 December 2024 would be approximately RMB502.6 million. Furthermore, we have discussed with and are advised by the management of the Group that the first half of the year is usually an inactive season for the Group’s business operation as a result of the Chinese New Year holidays, which in turn, reduces the business activities and demand in the market. Furthermore, the autonomous vehicle markets are characterized by seasonal increases in production and sales volume in the latter part of the year, which is primarily driven by increased consumer spending during the year-end holiday season. Correspondingly, the Group’s production and sales levels of the LS Products tend to be the lowest in the first and second quarters of the year and the highest in the fourth quarter of the year. As a result of the inherent

– 64 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

seasonality of the business, the annualised analysis of the actual transaction amount for the six months ended 30 June 2024 may not be a meaningful and reliable indicator of the overall trends in the Group’s business. We have reviewed the monthly results of operation of the Group and the historical actual transaction amount in relation to the ST Supply Framework Agreement for the year ended 31 December 2023 and noted that the Group has experienced a growth trend in the sales amount in the second half of the year in light of increased seasonal demand. Based on the above, in particular that (i) the annualised transaction amount under the ST Supply Framework Agreement for the year ending 31 December 2024 have exceeded the Existing Annual Cap B for the year; (ii) despite the aforementioned seasonality factor in relation to the demand on the LS Products, up to 30 June 2024, a substantial portion (i.e. approximately 60.7%) of the approved Existing Annual Cap B for the year ending 31 December 2024 have been utilised; and (iii) the increasing trend of transaction amounts of the sales of LS Products, we are of the view that the Existing Annual Cap B for the year ending 31 December 2024 may be insufficient;

(c) we noted from the recent announcements of the Suteng Group and also advised by the management of the Group that, for the three months ended 31 March 2024, the Suteng Group’s sales volume of LiDAR products amounted to approximately 120,400 units, representing an increase of 457.4% compared to the same period in 2023. It is noted that the Suteng Group remains committed to supporting the gradual mass production and delivery phases of several vehicle models. Furthermore, in the first half of 2024, the Suteng Group had also launched various new LiDAR products such as its latest long-range LiDAR product for autonomous driving systems and new generation of automotive-grade mid-range LiDAR product. Accordingly, it is expected that the LiDAR products produced by the Suteng Group will continue to maintain rapid growth in the future. As a result, in view of the expansion of the Suteng Group’s business, the expected demand of the Group’s LS Products required for the production of the Suteng Group’s products will increase substantially in the second half of 2024; and
(d) with the development of technology and the improvement of relevant laws and regulations and the accelerated progress of the new energy and autonomous vehicle industry, the intelligent driving applications market is expected to grow greatly, among which the market scale of LiDAR has been expanding as well, and it is expected to become a standard equipment in the industry in the future. According to the 2023 Report on the Global Automotive Laser Radar Market and Technology released by Yole Intelligence, the global automotive laser radar market size is anticipated to experience continuous growth from US$332 million in 2022 to

– 65 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

US$4.65 billion by 2028, with household passenger vehicles projected to achieve a CAGR of 69% between 2022 and 2028. In the Chinese market, as of the third quarter of 2023, a total of 36 Chinese automobile manufacturers have announced the adoption of LiDAR technology. It is envisaged that up to 106 vehicle models equipped with LiDAR will be launched in the domestic market, accounting for nearly 90% of the globally projected new vehicle models equipped with LiDAR during the same period. Leveraging its advantages in visibility, precision, and reliability, LiDAR remains integral to automated driving technology and is expected to witness rapid growth, emerging as a pivotal driver in the evolution of automated driving technology in the forthcoming years. The Group will meet the needs of customers and continue to invest resources in order to grasp the market opportunity. With the expansion of the global new energy and autonomous vehicle market, the continuous enrichment of the LiDAR sensors product matrix and the continuous improvement of the brand image of the Group and the Suteng Group, the demand of LiDAR sensors of the Suteng Group and the LS Products of the Group will continue to increase in the future. Accordingly, we understand the percentage growth rates represented by the Proposed Annual Cap B mentioned previously are primarily driven by the estimated procurement amounts by the Suteng Group to satisfy its increasing needs of LiDAR sensors for production, where such transactions are revenue in nature and on fair and reasonable terms to the Group.

As discussed above, to project the estimated number of the LS Products to be sold by the Group, the management of the Group have taken into account, among other things, (i) the actual number of the LS Product sold by the Group for the six months ended 30 June 2024; (ii) the upcoming sales plan of the LS Product of the Group having taking into account the recent business development of the Suteng Group; and (iii) the overall LiDAR industry for the coming years. Based on our review of information and documents in relation to the aforementioned factors, in particular, (i) despite the aforementioned seasonality factor in relation to the demand on the LS Products, up to 30 June 2024, a substantial portion (i.e. approximately 60.7%) of the approved Existing Annual Cap B for the year ending 31 December 2024 have been utilised; (ii) the increasing trend of transaction amounts of the sales of LS Products to the Suteng Group for the six months ended 30 June 2024; (iii) the Proposed Annual Cap B and the Existing Annual Cap for the year ending 31 December 2025 are projected mainly based on the estimated number of the transceiver module to be sold by the Group in the coming years multiplied by the recent actual unit price of the transceiver module sold by the Group; (iv) to cope with the expected increase in demand of the Group’s LS Products from the Suteng Group for its production of LiDAR sensors, the Group’s sales volume of transceiver module is expected to increase for the years ending 31 December 2024 and 2025 according to the Group’s upcoming sales plan, which is in line with the fluctuation in the Proposed Annual Caps B during the period; and (v) it is expected that the unit

– 66 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

price of the transceiver module would not have material fluctuation with reference to the historical trend, we are of the view that the Proposed Annual Cap B for the year ending 31 December 2024 and the Existing Annual Cap B for the year ending 31 December 2025 are fair and reasonable.

(iii) The Third Supplemental Materials Procurement Framework Agreement

Principal terms of the Third Supplemental Materials Procurement Framework Agreement

Set out below are the principal terms of the Third Supplemental Materials Procurement Framework Agreement, details of which are set out in the sub-section headed “C. The Third Supplemental Materials Procurement Framework Agreement” under the section headed “2. Revision of annual caps for continuing connected transactions” of the Letter from the Board.

Parties

(a) Company (as purchaser); and
(b) GZ Luxvisions (as supplier)

Date

17 July 2024 (after trading hours)

Subject Matter

Pursuant to the Third Supplemental Materials Procurement Framework Agreement, the existing annual cap for the transactions contemplated under the Materials Procurement Framework Agreement for the year ending 31 December 2024 is revised from RMB133.0 million to RMB195.0 million.

Pursuant to the Letter from the Board, save for the aforesaid changes, all other terms and conditions of the Materials Procurement Framework Agreement will remain unchanged and in full force and effect.

– 67 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Principal terms and price determination

The parties shall execute separate orders in accordance with the terms of the Materials Procurement Framework Agreement setting out, among others, the specifications and quantity of the materials required and delivery schedules, and must comply with the terms of the Listing Rules and applicable laws.

Selling prices of the materials shall be determined with reference to, and generally shall not be lower than, the prices charged by the GZ Luxvisions Group to other independent third party customers of the materials of same or similar specifications, which represents the then prevailing market prices.

In accordance with the Company’s internal policies, the transactions under the Materials Procurement Framework Agreement shall be properly recorded, including but not limited to prices determined and transaction amounts. Depending on the specifications of the materials required, the Group shall also conduct review and evaluation process by making reference with other independent third party/parties with similar procurement qualifications and capabilities for provision of similar materials (if available) to compare and determine if the prices and terms offered by the GZ Luxvisions Group are better, and are fair and reasonable and comparable to those terms offered by independent third parties. The review and evaluation process shall be conducted from both technical and commercial perspectives. If there are situations where the Company could not obtain quotation and/or could only obtain one quotation due to the limitations on, among others, the technical specifications of the materials required and/or qualification of the suppliers expected by the Group, the Company shall evaluate the price and terms offered by the GZ Luxvisions Group by making reference to, if available, the recent purchase price of such materials and the market fluctuation of the costs of the materials. If the Company is able to secure the provision of any of the materials contemplated under the Materials Procurement Framework Agreement from independent third parties on more favourable terms, the Group shall be entitled to terminate the transactions contemplated thereunder by giving the GZ Luxvisions Group not less than 30 days’ prior written notice. As the management of the Group has reviewed and will continue to review the aforesaid pricing policy on a regular basis in every quarter, we concur with the view of the Directors that the aforesaid method and procedures can ensure that the transactions contemplated under the Materials Procurement Framework Agreement will be conducted on normal commercial terms and not prejudicial to the interest of the Company’s minority Shareholders.

– 68 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Payment terms

Specific payment terms shall be stipulated in the relevant order forms, which is normally payable within 90 days after month end.

In order to assess the fairness and reasonableness of the terms of purchase of products by the Group from the GZ Luxvisions Group, we have obtained and reviewed the sample documents (such as orders and invoices) of 12 randomly selected purchase transactions between the Group and the GZ Luxvisions Group under the Materials Procurement Framework Agreement during the 12-month period immediately before the date of this letter (the “ Review Period ”). The products supplied by the GZ Luxvisions Group (mainly the LiDAR PCBA Products, the details of which are set out below) under the Materials Procurement Framework Agreement are made-to-order in accordance with specifications required by the Group which is the only customer for the GZ Luxvisions Group’s LiDAR PCBA Products. Further, as advised by the Directors, apart from the GZ Luxvisions Group, the Company had not purchased similar products from other independent third party suppliers. We have obtained and reviewed the purchase list of the Group’s LiDAR PCBA Products and we noted that, apart from the GZ Luxvisions Group, the Company had not purchased similar products from other independent third party suppliers during the Review Period. In this connection, we have compared the quotation obtained by the Group for similar products from its independent third party suppliers which requested for, among others, price and payment terms. Based on the documents reviewed, we noted that (i) the price of products offered to the Group by its independent third party suppliers was less favourable (from the Group’s perspective) than that offered by the GZ Luxvisions Group for similar products; and (ii) the payment terms offered to the Group by its independent third party suppliers were payable within 90 days after month end which were the same as the payment terms offered by the GZ Luxvisions Group. Besides, we also noted that the business department of the Group has considered the price and payment terms offered to the Group by its independent third party suppliers for similar products to determine the price and payment terms offered by the GZ Luxvisions Group. In view of the above, we are of the view that the Group had compared the terms offered by its independent third party suppliers, and purchased the relevant products under the Materials Procurement Framework Agreement at the terms no less favourable than terms available for the Group for similar products supplied by its independent third party suppliers.

For payment terms, purchases from the GZ Luxvisions Group were payable within 90 days after month end. We have discussed with and are advised by the management of the Group that the trade payables of the Group are normally settled within terms of 30 to 90 days. Therefore, we consider that the payment terms offered by the GZ Luxvisions Group to the Group are generally in line with that offered by its independent third party suppliers.

– 69 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Based on the above, we consider the transactions under the Materials Procurement Framework Agreement have been conducted on terms that are fair and reasonable, which shall in turn safeguard the interests of the Company and the Shareholders as a whole. In view of the facts that (i) all sample documents were selected on a random basis and spread across the period; and (ii) the Third Supplemental Materials Procurement Framework Agreement is solely for the revision of existing cap and does not amend the pricing and payment terms of the Materials Procurement Framework Agreement, we are of the view that the samples we selected are fair and reasonable for assessment of the recent pricing and payment terms of the transactions.

In conclusion, based on our review as stated above, we are of the view that the purchase prices and payment terms with the GZ Luxvisions Group for these transactions were no less favourable than those offered by independent third parties and such transactions have been adhered to the internal control measures of the Group in respect of reviews of the terms offered by independent third parties. Taking into account the above and the fact that (i) save for the revision of existing cap, all other terms of the Materials Procurement Framework Agreement will remain unchanged and in full force and effect; and (ii) the Group will continue to implement the same policy to review and ensure the terms offered by the GZ Luxvisions Group to the Group be no less favourable than those by independent third parties, we are of the view that the terms of the Third Supplemental Materials Procurement Framework Agreement are fair and reasonable so far as the Independent Shareholders are concerned.

Proposed Annual Caps

The following table sets forth the comparison between the historical transaction amount of the transaction contemplated under the Materials Procurement Framework Agreement and the existing annual cap for the year ending 31 December 2024 (“ FY2024 ”):

	Historical
	amount for
	the six months	Existing
	ended 30 June	Annual Cap	Utilisation
	2024	for FY2024	rate
	RMB’000	RMB’000	%
Purchase of products from the GZ
Luxvisions Group under the
Materials Procurement Framework
Agreement	66,873	133,000	50.3

– 70 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following table sets forth the comparison between the existing annual caps and the proposed annual caps for the years ending 31 December 2024 and 2025:

	For the year	ending	ending
	31 December
	2024		2025
	RMB’000		RMB’000
Maximum aggregate amount of purchase from the GZ
Luxvisions Group
Existing annual caps (“Existing Annual Cap(s) C”)	133,000		199,000
Proposed annual caps	195,000		199,000
	(“Proposed
	Annual
	Cap C”)
% change	46.6%	unchanged

In respect of the fairness and reasonableness of the Proposed Annual Cap C, we have performed the following work and analysis.

we have reviewed the historical actual and the expected upcoming transaction amounts in relation to the Third Supplemental Materials Procurement Framework Agreement as mentioned in the Letter from the Board. We noted that (i) the historical actual transaction amount of approximately RMB66.9 million for the six months ended 30 June 2024 represented 50.3% of the Existing Annual Cap C for the year ending 31 December 2024; (ii) the average monthly transaction amount was approximately RMB11.2 million for the six months ended 30 June 2024, representing an increase of approximately 220% as compared with the average monthly transaction amount of approximately RMB3.5 million for the same period in 2023. Accordingly, we note that the transaction amounts have demonstrated a growth trend; (iii) the Proposed Annual Cap C represents an increase of approximately 46.6% as compared to the Existing Annual Cap C for the same period; and (iv) the Existing Annual Cap C for the year ending 31 December 2025 remain unchanged;
we have reviewed the breakdown of the calculation of the Proposed Annual Cap C and we have discussed with and are advised by the management of the Group that the amounts of the Proposed Annual Cap C are principally determined based on the revised estimated procurement amount (including the forecast sales volume) of LiDAR printed circuit board assembly (the “ LiDAR PCBA Products ”) and related raw materials and consumables which the Group liaised with the GZ Luxvisions Group in view of the

– 71 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

upcoming production and sales plans of the Group. The estimated transaction amounts for the LiDAR PCBA Products are estimated by the responsible business representatives of the Group mainly with reference to the actual historical transaction amount for the six months ended 30 June 2024 and the anticipated demand for the relevant products in the second half of 2024 principally after taking into account the nature of products, the market development trend as well as the expected business growth of the Group. Further, the management has mainly made reference to the upcoming production and sales plans of the Group’s LS Products and the recent actual unit price of the LiDAR PCBA Products sold by the GZ Luxvisions Group to the Group.

To assess the reasonableness of the Group’s production and sales plans, we have conducted the following works to exam the Group’s production and sales estimation that served as the foundation for the Proposed Annual Cap C: (i) in-depth discussions with the Group’s management were held to gain insight into the underlying assumptions and drivers behind the revised estimated procurement amount of the LiDAR PCBA Products; (ii) an analysis of historical production and sales data and other relevant financial information was conducted to assess the achievability of the Group’s production and sales plans; and (iii) the production and sales plans of the Group were benchmarked against industry trends and growth projections to evaluate their reasonableness. The proposed increase in the Proposed Annual Cap C of approximately 46.6% of the Existing Annual Cap C under the Materials Procurement Framework Agreement represents a corresponding increase, and is in line with the expected increase, in the supply of the LS Products of the Group (with an average increase of 37.6% than the forecasted volume/amount for the first six months ended 30 June 2024) and the proposed revision of the Proposed Annual Cap B of approximately 40.1% of the Existing Annual Cap B under the ST Supply Framework Agreement. Based on the above assessment, which will be further discussed in detail below, we are of the view that the Group’s production and sales plans and the resulting Proposed Annual Cap C are reasonable;

we have obtained and reviewed the Proposed Annual Caps C estimation schedule prepared by the management of the Group and noted that (i) over 90% of the annual caps under the Materials Procurement Framework Agreement were primarily formulated based on the expected demand for the LiDAR PCBA Products. The higher amounts of the Proposed Annual Cap C as compared with the Existing Annual Cap C for the year ending 31 December 2024 are mainly attributable to the expected increase in the number of procurements of the LiDAR PCBA Products by approximately 160% for the year ending 31 December 2024 as compared with the actual number of the LiDAR PCBA Products purchased for the year ended 31 December 2023. LiDAR PCBA is a printed circuit board containing a lidar sensor’s components, which plays an irreplaceable role

– 72 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

as an intermediate for the production of the Group’s LS Products which has been provided by the Group to the Suteng Group under the ST Supply Framework Agreement as mentioned in the sub-section headed “(ii) the Second Supplemental ST Supply Framework Agreement” of this letter. We have discussed with and are advised by the management of the Group that as the market of LiDAR sensors products is emerging and experiencing exponential growth, the Group was given to understand that the production scale of the Suteng Group and demand of the LS Products had also increased magnificently at a faster pace than anticipated. We have reviewed the monthly results of operation of the Group and the historical actual transaction amount in relation to the ST Supply Framework Agreement for the six months ended 30 June 2024 and noted that the amount of sales order from the Suteng Group was 37.6% higher than the forecasted and expected amount for the same period as communicated between the parties when the Existing Annual Cap B was set. As a result of the unexpected and sudden increase of sales orders from the Suteng Group since 2024, correspondingly, the Group had placed more purchases orders and the actual transaction amount under the Materials Procurement Framework Agreement had increased rapidly in 2024. Furthermore, we have discussed with and are advised by the management of the Group that the amount of orders to the GZ Luxvisions Group will further increase substantially in the second half of 2024; (ii) the transaction amount under the Third Supplemental Materials Procurement Framework Agreement is estimated by the Group with reference to the estimated number of the LS Products to be sold by the Group in the coming years and the recent actual unit prices of the LiDAR PCBA Products purchased from the GZ Luxvisions Group; and (iii) the fairness and reasonableness of the Proposed Annual Cap C can be made reference to the projection by the management of the Group which is calculated by the estimated number of the LiDAR PCBA Products to be procured by the Group in the coming years multiplied by the recent actual unit prices of LiDAR PCBA Products purchased from the GZ Luxvisions Group, where we have reviewed, including but not limited to documents on the recent actual unit price of the LiDAR PCBA Products, the actual number of the LS Products sold by the Group and the upcoming sales plans of the LS Products of the Group, and considered them to be acceptable for the purpose of determining the Proposed Annual Cap C taking into account:

(a) in assessing the reasonableness of the price in determining the Proposed Annual Cap C with regard to the purchase of the LiDAR PCBA Products from the GZ Luxvisions Group, we have (i) reviewed the average unit prices of the LiDAR PCBA Products purchased from the GZ Luxvisions Group for the six months ended 30 June 2024 and noted that the unit price remained relatively stable during the period; (ii) discussed with the management of the Group and understood that the Group expected there would not be material fluctuation in such unit prices based on the historical trend; and (iii) reviewed 12 procurement invoices in respect of the

– 73 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

LiDAR PCBA Products purchased by the Group from the GZ Luxvisions Group and compared them against the unit prices of the forecasted purchase of the LiDAR PCBA Products from the GZ Luxvisions Group and noted that such expected unit prices are at a similar level with the recent actual unit prices. Given that there is no material difference in the unit prices for all the samples selected and that such unit prices are also at a similar level with the historical average unit price of the LiDAR PCBA Products purchased from the GZ Luxvisions Group during the Review Period, we consider that the samples selected are fair and representative of the prices of the LiDAR PCBA Products;

(b) we noted that the historical actual transaction amount was approximately RMB66.9 million for the six months ended 30 June 2024, representing an average monthly transaction amount of approximately RMB11.2 million. For illustrative purpose only, based on such average monthly transaction amount, the annualised transaction amount under the Materials Procurement Framework Agreement for the year ending 31 December 2024 would be approximately RMB133.8 million. Furthermore, as mentioned in the sub-section headed “(ii) the Second Supplemental ST Supply Framework Agreement” of this letter, we have discussed with and are advised by the management of the Group that the first half of the year is usually an inactive season for the Group’s business operation as a result of the Chinese New Year holidays, while the autonomous vehicle markets are characterized by seasonal increases in production and sales volume in the latter part of the year, which is primarily driven by increased consumer spending during the year-end holiday season. Correspondingly, the Group’s production and sales levels of the LS Products and the demand on the LiDAR PCBA Products tend to be the lowest in the first and second quarters of the year and the highest in the fourth quarter of the year. As a result of the inherent seasonality of the business, the annualised analysis of the actual transaction amount for the six months ended 30 June 2024 may not be a meaningful and reliable indicator of the overall trends in the Group’s business. We have reviewed the monthly result of operation of the Group and historical actual transaction amount in relation to the Materials Procurement Framework Agreement for the year ended 31 December 2023 and noted that the Group has experienced a growth trend in the purchase amount in the second half of the year in light of increased seasonal demand. Based on the above, in particular that (i) the annualised transaction amount under the Materials Procurement Framework Agreement for the year ending 31 December 2024 have exceeded the Existing Annual Cap C for the year; (ii) despite the aforementioned seasonality factor in

– 74 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

relation to the demand on the LiDAR PCBA Products, up to 30 June 2024, a substantial portion (i.e. approximately 50.3%) of the approved Existing Annual Cap C for the year ending 31 December 2024 have been utilised; and (iii) the increasing trend of transaction amounts of the purchase of the LiDAR PCBA Products, we are of the view that the Existing Annual Cap C for the year ending 31 December 2024 may be insufficient;

(c) as mentioned in the sub-section headed “(ii) the Second Supplemental ST Supply Framework Agreement” of this letter, for the three months ended 31 March 2024, the Suteng Group’s sales volume of LiDAR products amounted to approximately 120,400 units, representing an increase of 457.4% compared to the same period in 2023. It is noted that the Suteng Group remains committed to supporting the gradual mass production and delivery phases of several vehicle models. Furthermore, in the first half of 2024, the Suteng Group had also launched various new LiDAR products such as its latest long-range LiDAR product for autonomous driving systems and new generation of automotive-grade mid-range LiDAR product. Accordingly, it is expected that the Group will require more LiDAR PCBA Products for the production and stable supply of the aforementioned LS Products to the Suteng Group. In view of the above, we concur with the view of the Directors that the procurement of the LiDAR PCBA Products will increase substantially in the second half of 2024; and
(d) as mentioned in the sub-section headed “(ii) the Second Supplemental ST Supply Framework Agreement” of this letter, with the development of technology and the improvement of relevant laws and regulations and the accelerated progress of the new energy and autonomous vehicle industry, the intelligent driving applications market is expected to grow greatly, among which the market scale of LiDAR has been expanding as well, and it is expected to become a standard equipment in the industry in the future. The Group will meet the needs of customers and continue to invest resources in order to grasp the market opportunity. With the expansion of the global new energy and autonomous vehicle market, the continuous enrichment of the LiDAR sensors product matrix and the continuous improvement of the brand image of the Group and the Suteng Group, the demand of the LS Products of the Group will continue to increase in the future. Accordingly, we understand the percentage growth rates represented by the Proposed Annual Cap C mentioned previously are primarily driven by the estimated procurement amounts by the Group to satisfy its needs of the production of the LS Products, where such transactions are revenue in nature and on fair and reasonable terms to the Group.

– 75 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As discussed above, to project the estimated number of the LiDAR PCBA Products to be procured by the Group, the management of the Group have taken into account, among other things, (i) the actual number of the LS Product sold by the Group for the six months ended 30 June 2024; (ii) the upcoming production and sales plan of the LS Product of the Group having taking into account the recent business development of the Suteng Group; and (iii) the overall LiDAR industry for the coming years. Based on our review of information and documents in relation to the aforementioned factors, in particular, (i) despite the aforementioned seasonality factor in relation to the demand on the LiDAR PCBA Products, up to 30 June 2024, a substantial portion (i.e. approximately 50.3%) of the approved Existing Annual Cap C have been utilised; (ii) the increasing trend of transaction amounts of the purchase of LiDAR PCBA Products from the GZ Luxvisions Group for the six months ended 30 June 2024; (iii) the Proposed Annual Cap C for the year ending 31 December 2024 and the Existing Annual Cap C for the year ending 31 December 2025 are projected mainly based on the estimated number of the LiDAR PCBA Products to be procured by the Group in the coming years multiplied by the recent actual unit price of the LiDAR PCBA Products purchased from the GZ Luxvisions Group; (iv) to cope with the expected increase in demand of the Group’s LS Products from the Suteng Group for its production of LiDAR sensors, the Group’s procurement volume of the LiDAR PCBA Products is expected to increase for each of the years ending 31 December 2024 and 2025 according to the Group’s upcoming production plan, which is in line with the fluctuation in the Proposed Annual Cap C during the period; and (v) it is expected that the unit price of the LiDAR PCBA Products would not have material fluctuation with reference to the historical trend, we are of the view that the Proposed Annual Cap C for the year ending 31 December 2024 and the Existing Annual Cap C for the year ending 31 December 2025 are fair and reasonable.

4. Internal measures

As stated in the Letter from the Board, the Group has established the following internal control measures for the purpose of monitoring the continuing connected transactions of the Company:

in addition to compliance with the requirements on annual review by external auditors and independent non-executive Directors under the Listing Rules in respect of continuing connected transactions, the internal compliance review department of the Company is responsible for the review of individual orders on a regular basis to ensure that the terms thereunder are made in accordance with the terms and conditions of the relevant framework agreements;

– 76 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

— when the Group receives a request for quotation from the Suteng Group for the purchase of the LS Products and/or when the Group intends to procure the materials with new specifications, the project manager (or his authorised personnel) or the R&D department will be responsible for considering and updating the specifications required, as well as other potential consideration factors including not limited to, the quantity of goods required, the estimate cost of engineering work (if any) which are caused by any necessary product customisation and the estimated cost and expenses relating to, among others, packaging, shipping, temporary storage and/or insurance required;

— the strategic procurement team is responsible for collecting market information, and conducting price inquiries, price comparisons, and price negotiations (if applicable) to estimate the reference price(s) (the “ Reference Price(s) ”) of the materials and the LS Products respectively, which will be subsequently referred to for the benchmarking and determination of the selling price(s) of the LS Products and/or the highest acceptable price for purchase of the materials (as the case may be);

— for the transactions under the ST Supply Framework Agreement, considering the LS Products are highly customized and advanced technology goods and thus the Reference Price may not be easily determined due to lack of market information or suppliers for conducting price comparisons, if in the event there are any subsequent raw material price fluctuations and/or special customization requirements from the Suteng Group such that the rates and/or the terms negotiated for the LS Products to be sold to the Suteng Group may potentially become less favourable (from the Group’s perspective) than the rates and the terms for equivalent or similar LS Products sold by the Group to other potential independent third parties, or in the event that there are no other independent third parties which the Group had supplied certain specific LS Products to, the Group and the Suteng Group agree to use their best endeavour (such as by referring to the quotations obtained by the Suteng Group for the required LS Products of comparable specifications from its suppliers as reference) to negotiate and ensure that the terms of the transactions are fair and reasonable which is no less favourable than the terms offered by the Group to any independent third party customers, and to the benefit of the Company and the Shareholders as a whole. In particular, (a) the Reference Price(s) will then be reviewed at least semi-annually and approved by the head of the strategic procurement team of the Group who is also responsible to ensure such prices are updated from time-to-time if necessary; (b) the approved Reference Price(s) will then be updated to the enterprise resources planning (ERP) system of the Group; and (c) to ensure that transaction prices under the relevant framework agreements will be fair and reasonable and on normal commercial terms, the business department of the Group will regularly (i) review its prices charged to independent third parties customers for the supply of the LS Products with same or similar specifications under the Second

– 77 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Supplemental ST Supply Framework Agreement (if available); and (ii) review and compare the purchase prices incurred and/or to be incurred under the Second Supplemental Purchase Framework Agreement and the Third Supplemental Materials Procurement Framework Agreement with those under the same type of transactions of the Company entered into with third parties who may or may not be connected to the Company for the purchase of the relevant materials with the same or similar specifications (if available);

— to ensure the transactions contemplated under the relevant framework agreements do not exceed the respective proposed annual caps, the business department of the Group shall fill in and submit statistical charts for the continuing connected transactions at least quarterly. In the event that the amount of the transactions incurred and/or to be incurred under the relevant framework agreements for a financial year is expected to reach the relevant annual cap(s), the business department will follow up forthwith by reporting and proposing a response to the management of the Company, and in case that an amendment to the annual cap(s) is required, report particulars to the Board and hold a Board meeting for considering the matters thereabout to ensure compliance of the requirements under the Listing Rules; and

— the Company also arranges compliance trainings for the Directors, senior management and staff from the relevant departments of the Company and its subsidiaries, primarily focusing on the rules relating to connected transactions under Chapter 14A of the Listing Rules.

As part of our independent work performed, we have discussed with management to understand the aforementioned internal control procedures and have obtained and reviewed the relevant internal control policy. We have also reviewed sample documents in relation to the abovementioned internal control measures, included but not limited to reference prices report prepared by the strategic procurement team, approval from the head of the strategic procurement team regarding the reference prices, sample documents of similar transactions between the Group and its independent third party suppliers for the VCM Products, the quotation obtained by the Suteng Group for the required LS Products of comparable specifications from its independent third party suppliers and the quotation obtained by the Group for required LiDAR PCBA Products of comparable specifications from its independent third party suppliers, we noted that the above internal control measures on the pricing terms are properly adopted. Given such internal control procedures in place, in particular that the internal compliance review department and the business department of the Company has assisted and will continue to assist in reviewing and controlling particular terms and conditions and actual transaction amounts of the continuing connected transactions, we consider that the Group has the appropriate internal control procedures in place to

– 78 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

ensure the terms under the Supplemental Agreements be no less favourable than those with independent third parties and the relevant Proposed Annual Caps under the respective agreements will not be exceeded.

Taking into account, in particular, (i) our review on the terms of the transactions contemplated under the Supplemental Agreements which shall be no less favourable than those with independent third parties; and (ii) the aforementioned internal control measures of the Group in respect of reviews of the terms with independent third parties, we are of the view that the terms of the Supplemental Agreements, the transactions contemplated thereunder and the relevant Proposed Annual Caps are fair and reasonable so far as the Independent Shareholders are concerned.

5. Listing Rules implication

The Directors confirmed that the Company shall comply with the requirements of Rules 14A.53 to 14A.59 of the Listing Rules pursuant to which (i) the values of transactions contemplated under the Supplemental Agreements must be restricted by the relevant Proposed Annual Caps; (ii) the terms of the Supplemental Agreements must be reviewed by the independent non-executive Directors annually; and (iii) details of independent non-executive Directors’ annual review on the terms of the Supplemental Agreements must be included in the Company’s subsequent published annual reports. Furthermore, it is also required by the Listing Rules that the auditors of the Company must provide a letter to the Board confirming, among other things, whether anything has come to their attention that causes them to believe that the transactions (i) have not been approved by the Board; (ii) were not entered into, in all material respects, in accordance with the relevant Supplemental Agreements; and (iii) have exceeded the relevant Proposed Annual Caps. In the event that the total amounts of transactions contemplated under the Supplemental Agreements are anticipated to exceed the relevant Proposed Annual Caps, or that there is any proposed material amendment to the terms of the Supplemental Agreements, as confirmed by the Directors, the Company shall comply with the applicable provisions of the Listing Rules governing continuing connected transaction.

In light of the aforementioned review and reporting requirements attached to the Supplemental Agreements, we are of the view that appropriate measures have been in place to govern the conduct of the Supplemental Agreements and safeguard the interests of the Company and the Independent Shareholders as a whole.

– 79 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

RECOMMENDATION

Having considered the above principal factors, we are of the opinion that the entering into of the Supplemental Agreements is in the ordinary and usual course of business of the Group and is in the interests of the Company and the Shareholders as a whole. We are also of the opinion that the terms of the Supplemental Agreements are on normal commercial terms and, together with the relevant Proposed Annual Caps, are fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, we advise the Independent Board Committee to recommend, and we ourselves recommend, the Independent Shareholders to vote in favour of the resolutions to approve the Supplemental Agreements, the transactions contemplated thereunder and the relevant Proposed Annual Caps at the EGM.

Yours faithfully,
For and on behalf of
Honestum International Limited
Michael Chum Sam Yip
Chairman Associate Director

Note: Mr. Michael Chum is a licensed person registered with the Securities and Futures Commission and as a responsible officer of Honestum International Limited to carry out type 6 (advising on corporate finance) regulated activities under the SFO and has over 25 years of experience in corporate finance industry. Mr. Sam Yip is a licensed person registered with the Securities and Futures Commission and as a responsible officer of Honestum International Limited to carry out type 6 (advising on corporate finance) regulated activities under the SFO and has over 10 years of experience in corporate finance industry.

– 80 –

GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Group. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief, the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DISCLOSURE OF INTERESTS

(a) Directors’ and Chief Executive Officers’ interests and short positions in the securities of the Company or its associated corporations

As at the Latest Practicable Date, the interests and short positions of the Directors and chief executive of the Company in the Shares, underlying Shares and debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO which were required (a) to be notified to the Company and the Hong Kong Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they have taken or deemed to have under such provisions of the SFO); or (b) to be recorded in the register required to be kept pursuant to Section 352 of the SFO; or (c) as otherwise to be notified to the Company and the Hong Kong Stock Exchange pursuant to the Model Code were as follows:

Name of Director Meng Yan Wu Ying-Cheng Chen Han-Yang Yang Li	Title Executive Director and Chairman Executive Director, Chief executive officer and Chief financial officer Non-executive Director Non-executive Director	Nature of Interest Beneficial interest (Note) Beneficial interest (Note) Beneficial interest (Note) Beneficial interest (Note)	Number of Shares or underlying Shares 2,197,000 1,980,000 1,480,000 1,120,000	Approximate percentage of shareholding interest
				0.26 0.23 0.17 0.13

Note: These interests represented the interests in underlying shares in respect of the share options granted by the Company to the Directors under the Share Option Scheme.

– 81 –

GENERAL INFORMATION

APPENDIX

Save as disclosed above, as at the Latest Practicable Date, so far as is known to the Directors or chief executive of the Company, none of the Directors or chief executive of the Company had interests or short positions in the Shares, underlying Shares and debentures of the Company or its associated corporations which (a) were required to be notified to the Company and the Hong Kong 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 (b) were required, pursuant to Section 352 of the SFO, to be recorded in the register referred to therein; or (c) were required, pursuant to the Model Code, to be notified to the Company and the Hong Kong Stock Exchange.

(b) Interests and short positions of substantial shareholders in shares, underlying shares of the Company

As at the Latest Practicable Date, the following persons (other than the Directors or chief executive officer of the Company) had interests or short positions in the Shares or relevant Shares which were required to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO or as recorded in the register required to be kept by the Company pursuant to section 336 of the SFO:

Name of shareholder Luxvisions Innovation Technology Limited(1) Mr. Wang Laichun(1) Mr. Wang Laisheng(1) Ms. Wang Laijiao(1) Mr. Wang Laixi(1)	Nature of interest Beneficial interest Interest in a controlled corporation Interest in a controlled corporation Interest in a controlled corporation Interest in a controlled corporation	Number of Shares or underlying Shares 607,455,760 (L) 551,229,760 (S) 607,455,760 (L) 551,229,760 (S) 607,455,760 (L) 551,229,760 (S) 607,455,760 (L) 551,229,760 (S) 607,455,760 (L) 551,229,760 (S)	Approximate percentage of shareholding interest(2)
			70.76% (L) 64.21% (S)(3) 70.76% (L) 64.21% (S)(3) 70.76% (L) 64.21% (S)(3) 70.76% (L) 64.21% (S)(3) 70.76% (L) 64.21% (S)(3)

– 82 –

GENERAL INFORMATION

APPENDIX

Name of shareholder Luxsan(1) LIL(1) GLITL(1) Notes:	Nature of interest Interest in a controlled corporation Interest in a controlled corporation Interest in a controlled corporation	Number of Shares or underlying Shares 607,455,760 (L) 551,229,760 (S) 607,455,760 (L) 551,229,760 (S) 607,455,760 (L) 551,229,760 (S)	Approximate percentage of shareholding interest(2)
			70.76% (L) 64.21% (S)(3) 70.76% (L) 64.21% (S)(3) 70.76% (L) 64.21% (S)(3)

(1) Luxvisions Innovation Technology Limited (“ LITL ”), is a limited liability company incorporated in Hong Kong and a wholly-owned subsidiary of Guangzhou Luxvisions Innovation Technology Limited (“ GLITL ”), which is a company incorporated in the PRC. GLITL is owned as to approximately 48.06% by Luxvisions Innovation Limited (“ LIL ”), a company incorporated in Hong Kong with limited liability, which is owned as to approximately 56.342% by Mr. Wang Laixi, and 43.659% by Luxsan Limited (“ Luxsan ”). Luxsan is a company incorporated in Hong Kong with limited liability and owned as to by Ms. Wang Laichun (an elder sister of Mr. Wang Laixi), Mr. Wang Laisheng (an elder brother of Mr. Wang Laixi) and Ms. Wang Laijiao (an elder sister of Mr. Wang Laixi) as to 34%, 33% and 33% respectively. Each of Ms. Wang Laichun, Mr. Wang Laisheng, Ms. Wang Laijiao, Mr. Wang Laixi, Luxsan, LIL and GLITL is deemed, or taken to be, interested in the Shares held by LITL for the purposes of the SFO.
(2) At as the Latest Practicable Date, the total number of issued shares of the Company was 858,515,800 ordinary shares. (L) denotes long position, and (S) denotes short position.
(3) LITL has pledged an aggregate of 551,229,760 Shares in favour of a licensed bank in Hong Kong as security for its banking facilities granted by said bank, representing approximately 64.21% of the total issued share capital of the Company as at the Latest Practicable Date.

Saved as disclosed above, as at the Latest Practicable Date, the Directors were not aware of any person (other than Directors or chief executive officer and substantial shareholders of the Company the interests of which were disclosed above) who had an interest or short position in the securities of the Company that were required to be entered in the register of the Company pursuant to section 336 of the SFO as at the Latest Practicable Date.

– 83 –

GENERAL INFORMATION

APPENDIX

3. DIRECTORS’ INTERESTS IN CONTRACTS

As at the Latest Practicable Date:

(a) none of the Directors had entered, or proposed to enter into a service contract with any member of the Group which is not expiring or determinable by the Group within one year without payment of compensation, other than statutory compensation;
(b) none of the Directors had any interest, direct or indirect, in any assets which had been, since 31 December, 2023, being the date to which the latest published audited accounts of the Company were made up, acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group.
(c) none of the Directors was materially interested in any contract or arrangement entered into by any member of the Group which was subsisting as at the Latest Practicable Date and was significant in relation to the business of the Group.

4. DIRECTORS’ INTEREST IN COMPETING BUSINESS

As at the Latest Practicable Date, none of the Directors or their respective close associates (as defined in the Listing Rules) had any interest in a business which competed or might compete with the business of the Group, or had or might have any other conflicts of interest with the Group pursuant to Rule 8.10 of the Listing Rules.

5. MATERIAL ADVERSE CHANGE

The Directors confirm that, as at the Latest Practicable Date, there had been no material adverse change in the financial or trading positions of the Group since 31 December, 2023 (being the date to which the latest published audited financial statements of the Group were made up).

– 84 –

GENERAL INFORMATION

APPENDIX

6. EXPERT

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

Name Honestum International Limited	Qualification
	A corporation licensed to carry out Type 6 (advising on corporate finance) regulated activities under the SFO

Honestum International Limited has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its letter and references to its name in the form and context in which they appear.

As at the Latest Practicable Date, Honestum International Limited did not have any shareholding in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

As at the Latest Practicable Date, Honestum International Limited did not have any direct or indirect interest in any assets which had been, since 31 December, 2023 (being the date to which the latest published audited accounts of the Company were made up), acquired or disposed of by or leased to any member of the Group, or which were proposed to be acquired or disposed of by or leased to any member of the Group.

7. GENERAL

In the event of any inconsistency, the English language text of this circular shall prevail over the Chinese language text.

8. DOCUMENTS ON DISPLAY

Copies of the following documents will be published on the websites of the Stock Exchange ( http://www.hkexnews.hk/ ) and the Company ( http://www.cowelleholdings.com ) for a period of 14 days from the date of this circular:

(a) the Second Supplemental Purchase Framework Agreement;
(b) the Second Supplemental ST Supply Framework Agreement; and
(c) the Third Supplemental Materials Procurement Framework Agreement.

– 85 –

NOTICE OF THE EXTRAORDINARY GENERAL MEETING

Cowell e Holdings Inc. 高偉電子控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 1415)

NOTICE IS HEREBY GIVEN that the extraordinary general meeting (the “ EGM ”) of Cowell e Holdings Inc. (the “ Company ”) will be held by way of virtual meeting on 29 August, 2024 at 10 a.m. for considering and, if thought fit, passing, with or without modifications, the following resolutions as ordinary resolutions of the Company:

ORDINARY RESOLUTIONS

“ THAT the second supplemental purchase framework agreement referred to in the sub-section headed “2. A. Second Supplemental Purchase Framework Agreement” in the “Letter from the Board” contained in the in the circular of the Company (the “ Circular ”) of which this notice forms part, the transactions contemplated thereunder and the proposed annual cap for each of the two financial years ending 31 December 2025 under the aforesaid second supplemental purchase framework agreement be and are hereby approved.”
“ THAT the second supplemental ST supply framework agreement referred to in the sub-section headed “2. B. Second Supplemental ST Supply Framework Agreement” in the “Letter from the Board” contained in the Circular of which this notice forms part, the transactions contemplated thereunder and the proposed annual cap for the financial year ending 31 December 2024 under the aforesaid second supplemental ST supply framework agreement be and are hereby approved.”

– 86 –

NOTICE OF THE EXTRAORDINARY GENERAL MEETING

“ THAT the third supplemental materials procurement framework agreement referred to in the sub-section headed “2. C. Third Supplemental Materials Procurement Framework Agreement” in the “Letter from the Board” contained in the Circular of which this notice forms part, the transactions contemplated thereunder and the proposed annual cap for the financial year ending 31 December 2024 under the aforesaid third supplemental materials procurement framework agreement be and are hereby approved.”

By order of the Board Cowell e Holdings Inc. Meng Yan Chairman

Hong Kong, 14 August, 2024

Notes:

The Company will conduct the extraordinary general meeting by way of a virtual meeting. Both registered Shareholders and non-registered Shareholders can (i) attend the EGM and vote by way of electronic means; or (ii) exercise their right to vote at the EGM by appointing their own proxy or the Company’s designated proxy(ies), to act as their proxy. By logging in the dedicated online platform, Shareholders will be able to view a live webcast of the EGM, submit questions, and cast vote in real-time.

The online platform will be opened for registered Shareholders and non-registered Shareholders to log in 30 minutes prior to the commencement of the extraordinary general meeting, and only those Shareholders who logged in 5 minutes before the start of the Online Platform will be entitled to attend and vote at the Online EGM. The online platform can be accessed from any location with internet connection by a smartphone, tablet device or computer. Shareholders should allow ample time to check into the online platform to complete the login procedure and remain logged in until the commencement of and during the Online Platform. For online voting, Shareholders can refer to the enclosed notification letter and the Online Meeting User Guide for details. Any missed contents as a result of connection issues arise from the Shareholders will not be repeated.

A member entitled to attend and vote at the EGM is entitled to appoint one or more proxy to attend and, subject to the provisions of the Articles of Association of the Company, vote in his stead. A proxy need to be a member of the Company.
A form of proxy for use at the EGM (or at any adjournment thereof) is dispatched together with this notice of meeting. In order to be valid, the form of proxy, together with a power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power or authority, must be completed and lodged with the offices of the Company’s branch share registrar and transfer office in Hong Kong, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not later than 27 August, 2024 at 10 a.m. (Hong Kong Time).
Completion and return of the form of proxy will not preclude members from attending and voting at the EGM or any adjournment thereof, and in such event, the relevant form of proxy shall be deemed revoked.
Where there are joint registered holders of any Share, any one of such joint holders may attend and vote at the EGM, either in personal or by proxy, in respect of such Share(s) as if he/she were solely entitled thereto, but if more than one of such joint registered holders are present at the EGM or any adjournment thereof (as the case may

– 87 –

NOTICE OF THE EXTRAORDINARY GENERAL MEETING

be), the most senior shall alone be entitled to vote, whether in person or by proxy. For this purpose, seniority shall be determined by the order in which the names stand in the register of members of the Company in respect of the joint holding.

For determining the entitlement to attend and vote at the EGM, the register of members of the Company will be closed from 26 August, 2024 to 29 August, 2024, both dates inclusive, during which period no transfers of shares of the Company will be registered. In order to qualify for attending and voting at the EGM, shareholders must complete and lodge all transfer documents accompanied by the relevant share certificates with the Share Registrar at Shops 1712−1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong for registration not later than 4:30 p.m. on 23 August, 2024.
If typhoon signal no. 8 or above remains hoisted or a black rainstorm warning signal is in force at 8:00 a.m. at the date of the EGM, the EGM will be postponed. Members are requested to visit the website of the Company at www.cowelleholdings.com for details of alternative meeting arrangements. The EGM will be held as scheduled when an amber or red rainstorm warning signal is in force. Shareholders should make their own decision as to whether they would attend the EGM under the bad weather conditions bearing in mind their own situation and if they should choose to do so, they are advised to exercise care and caution.

As at the date hereof, the Board comprises Mr. Meng Yan and Mr. Wu Ying-Cheng as executive Directors; Mr. Chen Han-Yang and Mr. Yang Li as non-executive Directors; and Ms. Su Yen-Hsueh, Mr. Tsai Chen-Lung and Ms. Liu Xia as independent non-executive Directors.

– 88 –

AI assistant

Cowell e Holdings Inc. — Proxy Solicitation & Information Statement 2024

49910_rns_2024-08-13_9b51c264-16bc-4edb-bd12-0b2bc366d73e.pdf

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

Cowell e Holdings Inc. 高偉電子控股有限公司

REVISION OF ANNUAL CAPS FOR CONTINUING CONNECTED TRANSACTIONS AND NOTICE OF EXTRAORDINARY GENERAL MEETING

CONTENTS

GUIDANCE FOR THE EGM

ATTENDING THE EGM BY MEANS OF ELECTRONIC FACILITIES

Login details for registered Shareholders

Login details for non-registered Shareholders

GUIDANCE FOR THE EGM

Login details for proxies

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

“RMB”

DEFINITIONS

DEFINITIONS

DEFINITIONS

Cowell e Holdings Inc. 高偉電子控股有限公司

To the Shareholders

REVISION OF ANNUAL CAPS FOR CONTINUING CONNECTED TRANSACTIONS AND NOTICE OF EXTRAORDINARY GENERAL MEETING

1. INTRODUCTION

LETTER FROM THE BOARD

2. REVISION OF ANNUAL CAPS FOR CONTINUING CONNECTED TRANSACTIONS

A. The Second Supplemental Purchase Framework Agreement

LETTER FROM THE BOARD

Principal terms and price determination

LETTER FROM THE BOARD

Payment terms

Basis for determination of the proposed 2024 annual cap and the 2025 annual cap under the Second Supplemental Purchase Framework Agreement and the historical transaction amounts

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

B. The Second Supplemental ST Supply Framework Agreement

Principal terms and price determination

LETTER FROM THE BOARD

Payment terms

Basis for the determination of the proposed 2024 annual cap under the Second Supplemental ST Supply Framework Agreement and the historical transaction amounts

C. The Third Supplemental Materials Procurement Framework Agreement

Principal terms and price determination

LETTER FROM THE BOARD

Payment terms

Basis for the determination of the proposed 2024 annual cap under the Third Supplemental Materials Procurement Framework Agreement and the historical transaction amounts

LETTER FROM THE BOARD

LETTER FROM THE BOARD

3. REASONS FOR AND THE BENEFITS OF ENTERING INTO THE SUPPLEMENTAL AGREEMENTS

LETTER FROM THE BOARD

4. INTERNAL CONTROL MEASURES

LETTER FROM THE BOARD

LETTER FROM THE BOARD

5. INFORMATION ABOUT THE PARTIES

The Company and the Group

GZ Luxvisions

Luxsense

Luxshare Precision

Suteng

LETTER FROM THE BOARD

6. IMPLICATIONS UNDER THE LISTING RULES

LETTER FROM THE BOARD

LETTER FROM THE BOARD

7. THE EGM

8. CLOSURE OF REGISTER OF MEMBERS

9. RECOMMENDATIONS

LETTER FROM THE BOARD

10. ADDITIONAL INFORMATION

Cowell e Holdings Inc. 高偉電子控股有限公司

REVISION OF ANNUAL CAPS FOR CONTINUING CONNECTED TRANSACTIONS AND NOTICE OF EXTRAORDINARY GENERAL MEETING

RECOMMENDATIONS

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Yours faithfully,

Independent Board Committee

Su Yen-Hsueh

Tsai Chen-Lung

Liu Xia

REVISION OF ANNUAL CAPS FOR CONTINUING CONNECTED TRANSACTIONS

Cowell e Holdings Inc. Proxy Solicitation & Information Statement 2024