Gudou Holdings Limited — Proxy Solicitation & Information Statement 2020

Aug 19, 2020

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 licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Gudou Holdings Limited, you should at once hand this circular to the purchaser or transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was affected for transmission to the purchaser or transferee.

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.

This circular appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for the securities of Gudou Holdings Limited.

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GUDOU HOLDINGS LIMITED 古兜控股有限公司

(incorporated in the Cayman Islands with limited liability)

(stock code: 8308)

MAJOR AND CONNECTED TRANSACTION IN RELATION TO THE SECOND COOPERATION AGREEMENT

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

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Terms defined in the section headed “Definitions” of this circular have the same meanings when used in this cover page, unless the context otherwise requires.

A letter from the Board is set out on pages 5 to 13 and a letter from the Independent Board Committee is set out on pages 14 to 15 of this circular. A letter from the Independent Financial Adviser containing its advice and recommendation to the Independent Board Committee and the Independent Shareholders is set out on pages 16 to 36 of this circular.

A notice convening the EGM to be held at 19th Floor, Tower One of Tern Centre, No. 237 Queen’s Road Central, Hong Kong on Wednesday, 9 September 2020 at 2:00 p.m., is set out on pages N-1 to N-2 of this circular. Whether or not you are able to attend the EGM, please complete the enclosed form of proxy in accordance with the instructions printed thereon and return it to the Company’s branch share registrar in Hong Kong, Tricor Investor Services Limited at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for the holding of the EGM or any adjourned meeting. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or at any adjourned meeting thereof if you so wish and, in such event, the relevant form of proxy shall be deemed to be revoked. This circular is published on the website of The Stock Exchange of Hong Kong Limited at http://www.hkexnews.hk and on the website of the Company at https://www.gudouholdings.com.

19 August 2020

CHARACTERISTICS OF GEM

GEM has been positioned as a market designed to accommodate small and mid-sized companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration.

Given that the companies listed on GEM are generally small and mid-sized companies, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board and no assurance is given that there will be a liquid market in the securities traded on GEM.

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CONTENTS

	Page
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
LETTER FROM THE INDEPENDENT BOARD COMMITTEE. . . . . . . . . . . . .	14
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER. . . . . . . . . . . . .	16
APPENDIX I — FINANCIAL INFORMATION OF THE GROUP. . . . . . . . .	I-1
APPENDIX II — VALUATION REPORT. . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-1
APPENDIX III — GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . .	III-1
NOTICE OF EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	N-1

— ii —

DEFINITIONS

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

• “associate(s)”

has the meaning ascribed thereto in the GEM Listing Rules

• “Board”

the board of Directors

• “China Aoyuan”

China Aoyuan Group Limited（中國奧園集團股份有限公 司）, a company incorporated under the laws of the Cayman Islands with limited liability, the shares of which are listed on the Stock Exchange (stock code: 3883), and a substantial Shareholder

• “Company”

• Gudou Holdings Limited（古兜控股有限公司）, a company incorporated in the Cayman Islands with limited liability, the shares of which are listed on GEM of the Stock Exchange (stock code: 8308)

• “Connected Person”

• has the meaning ascribed thereto in the GEM Listing Rules

• “Director(s)”

• the director(s) of the Company

• “EGM”

an extraordinary general meeting of the Company to be convened and held for the purpose of considering, and if thought fit, approving the Second Cooperation Agreement and the transactions contemplated therein

• “First Cooperation Agreement”

• a cooperation and development agreement dated 16 July 2019 and entered into between Guangdong Gudou and GD Aoyuan in relation to the development of Target Land A, the details of which are set out in the announcement of the Company dated 16 July 2019 and the circular of the Company dated 2 September 2019

• “GD Aoyuan”

• Guangdong Aoyuan Co., Ltd.*（奧園集團（廣東）有限公司）, a company established under the laws of the PRC and an indirect wholly-owned subsidiary of China Aoyuan

— 1 —

DEFINITIONS

• “GEM Listing Rules”

• the Rules Governing the Listing of Securities on GEM of the Stock Exchange

• “Group” the Company and its subsidiaries

• “Guangdong Gudou” Guangdong Gudou Travel Group Company Limited*（廣東 古兜旅遊集團有限公司）, a wholly foreign-owned enterprise established under the laws of the PRC and an indirect wholly-owned subsidiary of the Company

• “Guanshanyue Apartments” Guanshanyue Apartments（觀山悅公館）, also known as Gudou Phase II Apartments（古兜二期公寓）, a tourism property project under development jointly developed by Guangdong Gudou and GD Aoyuan at Gudou Hot Spring Resort under the First Cooperation Agreement

• “Gudou Hot Spring Resort”

• Gudou Hot Spring Resort*（古兜温泉綜合度假村）, the hot spring resort located at Jiangmen City, Guangdong Province, the PRC and operated by the Group

• “Gudou Yishui Mingting Apartments”

• Gudou Yishui Mingting Apartments（古兜依水茗亭）, also known as Yunfeng Apartments（雲峰公寓）, a tourism property project under development jointly developed by Guangdong Gudou and GD Aoyuan at Gudou Hot Spring Resort under the First Cooperation Agreement

• “HK$”

Hong Kong dollars, the lawful currency of Hong Kong

• “Hong Kong”

• the Hong Kong Special Administrative Region of the PRC

• “Independent Board Committee”

• an independent committee of the Board comprising all the independent non-executive Directors, namely Mr. Wu Sai Him, Mr. Chiu Chi Wing and Prof. Wang Dawu

• “Independent Financial Adviser”

Lego Corporate Finance Limited, a corporation licensed to carry out Type 6 (advising on corporate finance) regulated activities as defined under the SFO, and the independent financial adviser appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in relation to the Second Cooperation Agreement and transactions contemplated therein

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DEFINITIONS

• “Independent Shareholder(s) other than China Aoyuan and its associates Shareholder(s)”

• “Latest Practicable Date” 13 August 2020, being the latest practicable date prior to the printing of this circular to ascertain certain information contained herein

• “PRC” the People’s Republic of China

• “RMB” Renminbi, the lawful currency of the PRC

• “Second Cooperation Agreement”

• a cooperation and development agreement dated 30 June 2020 and entered into between Guangdong Gudou and GD Aoyuan in relation to the development of Target Land B

• “SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

• “Share(s)” ordinary share(s) of HK$0.01 each in the share capital of the Company

• “Shareholder(s)” holder(s) of the Shares

• “Share Options”

• the options granted under the share option scheme conditionally adopted by the Company on 18 November 2016 which became unconditional upon listing of the Shares on GEM of the Stock Exchange on 9 December 2016 for a period of ten years

• “sq.m.” square metres

• “Stock Exchange” The Stock Exchange of Hong Kong Limited

• “subsidiaries” has the meaning ascribed to it in the Companies Ordinance (Chapter 622 of the Laws of Hong Kong)

• “Target Land A” the five parcels of land of approximately 67,860.7 sq.m. in total located at Gudou Hot Spring Resort and legally and beneficially owned by Guangdong Gudou

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DEFINITIONS

• “Target Land B”

the three parcels of land of approximately 63,797 sq.m. in total located at Gudou Hot Spring Resort and legally and beneficially owned by Guangdong Gudou

• “Yunshanjing Mansion” Yunshanjing Mansion（雲山境公館）, also known as Gudou Phase III（古兜三期）, a tourism property project under development jointly developed by Guangdong Gudou and GD Aoyuan at Gudou Hot Spring Resort under the First Cooperation Agreement

• “%” per cent

• The English translation of the Chinese names marked with “*” is for identification purpose only.

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LETTER FROM THE BOARD

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GUDOU HOLDINGS LIMITED 古兜控股有限公司

(incorporated in the Cayman Islands with limited liability)

(stock code: 8308)

Executive Directors:

Mr. Hon Chi Ming Mr. Huang Zhanxiong Ms. Zhen Yaman Mr. Hon Ka Fung

Registered office: Clifton House, 75 Fort Street P.O. Box 1350 Grand Cayman KY1-1108 Cayman Islands

Non-executive Director:

Mr. Ruan Yongxi

Independent non-executive Directors:

Mr. Wu Sai Him Mr. Chiu Chi Wing Prof. Wang Dawu

Principal place of business in Hong Kong: 19th Floor Tower One of Tern Centre No. 237 Queen’s Road Central Hong Kong

Hong Kong, 19 August 2020

To the Shareholders:

Dear Sir or Madam,

MAJOR AND CONNECTED TRANSACTION IN RELATION TO THE SECOND COOPERATION AGREEMENT

INTRODUCTION

Reference is made to the announcement of the Company dated 30 June 2020 regarding the Second Cooperation Agreement and transactions contemplated therein.

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LETTER FROM THE BOARD

The purpose of this circular is to provide the Shareholders with, among other things, (i) further details of the Second Cooperation Agreement and the transactions contemplated therein; (ii) a letter from the Independent Financial Adviser containing its advice to the Independent Board Committee and the Independent Shareholders on the Second Cooperation Agreement and the transactions contemplated therein; (iii) recommendation of the Independent Board Committee to the Independent Shareholders; and (iv) the notice of the EGM to the Shareholders.

BACKGROUND INFORMATION

Guangdong Gudou entered into the First Cooperation Agreement with GD Aoyuan on 16 July 2019, pursuant to which Guangdong Gudou and GD Aoyuan had agreed to cooperate with each other for the planning, development and operation of Target Land A. The entering into of the First Cooperation Agreement constituted a discloseable and connected transaction of the Company under the GEM Listing Rules. For details regarding the First Cooperation Agreement, please refer to the announcement of the Company dated 16 July 2019 and the circular of the Company dated 2 September 2019.

As at the Latest Practicable Date, the Group had been jointly developing Target Land A with GD Aoyuan for three tourism property development projects at Gudou Hot Spring Resort, namely Gudou Yishui Mingting Apartments, Guanshanyue Apartments and Yunshanjing Mansion. The construction of Gudou Yishui Mingting Apartments and Guanshanyue Apartments commenced in 2019, while the construction of Yunshanjing Mansion commenced in the second quarter of 2020.

Considering the positive outcomes of entering into the First Cooperation Agreement, the Second Cooperation Agreement was entered into between Guangdong Gudou and GD Aoyuan to further cooperate with each other for the planning, development and operation of Target Land B, which is located in close proximity to Target Land A.

THE SECOND COOPERATION AGREEMENT

Summarised below are the principal terms of the Second Cooperation Agreement which are substantially similar to those of the First Cooperation Agreement:

Date: 30 June 2020

Parties: (a) Guangdong Gudou; and (b) GD Aoyuan

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LETTER FROM THE BOARD

As at the Latest Practicable Date, to the best of the Directors’ knowledge, information and belief, and having made all reasonable enquiries, GD Aoyuan is an indirect wholly-owned subsidiary of China Aoyuan, which is a substantial Shareholder and thus a Connected Person of the Company. Accordingly, GD Aoyuan is a Connected Person of the Company by virtue of being an associate of China Aoyuan.

Cooperation and investment amount

Pursuant to the Second Cooperation Agreement, Guangdong Gudou and GD Aoyuan have agreed to cooperate with each other for the planning, development and operation of Target Land B. Target Land B, which is legally and beneficially owned by the Group, is located at Gudou Hot Spring Resort and has a total site area of 63,797 sq.m. and an expected gross floor area of approximately 54,323 sq.m.

As part of the cooperation and joint arrangement:

• (a) Guangdong Gudou would contribute Target Land B to the joint arrangement, which was valued at approximately RMB152,850,000 as at 31 March 2020 by an independent valuer; and

• (b) GD Aoyuan would be responsible for funding the development, construction and management of Target Land B and the buildings and structures to be erected thereon with a maximum investment amount of RMB356,650,000, which was calculated based on RMB6,565.3 per sq.m. on an expected gross floor area of 54,323 sq.m. By parties’ mutual agreement, it is estimated that approximately RMB6,565.3 per sq.m. will be utilised as construction costs for erecting the tourism properties, facilities and other infrastructures incidental to the erection of tourism properties on Target Land B.

The cooperation and joint arrangement does not involve a disposal of Target Land B by the Group or the setting up of any joint venture entity.

Condition precedent

The commencement of the transactions contemplated under the Second Cooperation Agreement is conditional upon the passing of resolution(s) by the Independent Shareholders at the EGM to be convened and held for the purpose of approving the Second Cooperation Agreement and transactions contemplated therein.

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LETTER FROM THE BOARD

Revenue sharing arrangement

Within five business days after satisfaction of the condition precedent, Guangdong Gudou and GD Aoyuan will commence the joint planning and development of Target Land B. Guangdong Gudou and GD Aoyuan are entitled to 30% and 70% of the income derived from Target Land B, respectively, which is determined with reference to their respective investments in the development project on Target Land B, including the market value of Target Land B contributed by Guangdong Gudou as valued by an independent valuer and the amount of capital injection by GD Aoyuan for the development of Target Land B. GD Aoyuan’s investment amount is capped at RMB356,650,000 regardless of the actual costs incurred by GD Aoyuan in the development project on Target Land B which could exceed the capped amount.

Considering that (a) Target Land B has remained undeveloped since it was acquired by the Group; (b) the Group could benefit from China Aoyuan’s experience in property development and management; (c) the construction cost (which includes the day-to-day management and operation cost) of approximately RMB6,565.3 per sq.m. was determined with reference to the historical construction cost per sq.m. of the Company’s projects of similar nature within Gudou Hot Spring Resort; and (d) the revenue sharing ratio of 30:70 was fixed and determined with reference to the valuation of Target Land B and the estimated and agreed total construction costs for the development project on Target Land B, the Directors are of the view that the revenue sharing arrangement is fair and reasonable.

Termination

If any party fails to perform its obligations or breaches its representations and warranties under the Second Cooperation Agreement, the other party may terminate the Second Cooperation Agreement and be entitled to RMB10,000,000 as compensation if the party in default fails to rectify the breaches within 30 days after receiving notice from the other party. In particular, either party shall not enter into any agreement with any third parties in respect of the transactions contemplated under the Second Cooperation Agreement, failure of which the non-defaulting party will be entitled to a compensation of RMB10,000,000 payable by the other party and a right to terminate the Second Cooperation Agreement.

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LETTER FROM THE BOARD

PARTICULARS OF TARGET LAND B

Target Land B consists of three parcels of land with a total site area of 63,797 sq.m. and an expected gross floor area of 54,323 sq.m., which is located in close proximity to Target Land A. Further particulars of Target Land B are as follows:

Site area specified

	Site area specified
	in the land use
	right certificate			Status of
	（國土證）(sq.m.)	Approved usages	Status	mortgage
1	16,856	accommodation and	to be developed	mortgaged
		food and beverage
2	36,955	accommodation and	to be developed	mortgaged
		food and beverage
3	9,986	accommodation and	to be developed	mortgaged
		food and beverage

Under the current tentative development plan, tourism properties will be erected on Target Land B as part of the integrated tourism and leisure projects of Gudou Hot Spring Resort. The intended tourism properties to be erected on Target Land B are categorised principally as residential units, retail units, parking spaces and other facilities incidental to any of them.

REASONS FOR AND BENEFITS OF ENTERING INTO THE SECOND COOPERATION AGREEMENT

The Group is principally engaged in (i) the operation and management of Gudou Hot Spring Resort and provision of consultancy and/or management services; and (ii) the development and sale of tourism properties in Guangdong Province, the PRC.

GD Aoyuan is a wholly-owned subsidiary of China Aoyuan, which is a conglomerate enterprise covering various business segments, including property development, health and wellness, cultural tourism and cross-border e-commerce.

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LETTER FROM THE BOARD

Considering the outcomes of entering into the First Cooperation Agreement, the Board is of the view that having GD Aoyuan to join the development project in respect of Target Land B under the Second Cooperation Agreement could (i) ensure sufficient investment funds would be in place to support and further the Group’s strategic planning and development and sale of tourism properties within Gudou Hot Spring Resort; (ii) benefit the development project in respect of Target Land B by leveraging China Aoyuan’s expertise in property development and cultural tourism to create synergy through their established networks and resources in the Guangdong — Hong Kong — Macao Greater Bay Area; and (iii) achieve greater effectiveness and efficiency in developing Target Land B in light of the experience of developing Target Land A under the First Cooperation Agreement.

Having considered the above, the Board is of the view that the terms of the Second Cooperation Agreement and the transactions contemplated therein are fair and reasonable and in the interests of the Shareholders as a whole.

IMPLICATIONS UNDER THE GEM LISTING RULES

The transactions contemplated under the Second Cooperation Agreement, together with those contemplated under the First Cooperation Agreement, constitute a series of transactions made by the Company within a 12-month period and shall be aggregated as if they were one transaction pursuant to Rule 19.22 of the GEM Listing Rules.

As one or more of the applicable percentage ratios (as defined under the GEM Listing Rules) in respect of the transactions contemplated under the Second Cooperation Agreement, when aggregated with those contemplated under the First Cooperation Agreement, exceed 25% but less than 100%, the entering into of the Second Cooperation Agreement, on an aggregated basis, constitutes a major transaction of the Company under Chapter 19 of the GEM Listing Rules and is subject to the reporting, announcement, circular and the shareholders’ approval requirements under Chapter 19 of the GEM Listing Rules.

GD Aoyuan is an indirect wholly-owned subsidiary of China Aoyuan, which is a substantial Shareholder holding 29.18% of the issued share capital of the Company in the Company and thus a Connected Person of the Company. Accordingly, GD Aoyuan is a Connected Person of the Company by virtue of being an associate of China Aoyuan. As the total consideration exceeds HK$10 million, the transactions contemplated under the Second Cooperation Agreement are subject to the reporting and announcement and independent shareholders’ approval requirements under Chapter 20 of the GEM Listing Rules.

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LETTER FROM THE BOARD

None of the Directors have any material interest in the Second Cooperation Agreement and transactions contemplated therein. Ms. Zhen Yaman, being an executive Director, is an assistant general manager of the risk control and compliance centre of Aoyuan Capital Investment Group Limited（奧園資本投資集團有限公司）(formerly known as Guangdong Aoyuan Jinkong Company Limited（廣東奧園金控有限公司）), which is a subsidiary of China Aoyuan. Mr. Ruan Yongxi, being a non-executive Director, is also an assistant to the group president and the director of the group strategic investment centre in China Aoyuan. Both of them had elected to abstain from voting on the relevant Board resolution.

E S T A B L I S H M E N T O F I N D E P E N D E N T B O A R D C O M M I T T E E A N D APPOINTMENT OF THE INDEPENDENT FINANCIAL ADVISER

The Board has established the Independent Board Committee comprising all the independent non-executive Directors, namely Mr. Wu Sai Him, Mr. Chiu Chi Wing and Prof. Wang Dawu, to advise the Independent Shareholders in respect of the Second Cooperation Agreement and to advise the Independent Shareholders on how to vote on the relevant resolution at the EGM taking into account the advice of the Independent Financial Adviser.

The Independent Board Committee has approved the appointment of the Independent Financial Adviser as the independent financial adviser of the Company to advise the Independent Board Committee and the Independent Shareholders on the Second Cooperation Agreement.

NOTICE OF EGM AND VOTING ARRANGEMENT

A notice convening the EGM to be held at 19th Floor, Tower One of Tern Centre, No. 237 Queen’s Road Central, Hong Kong on Wednesday, 9 September 2020 at 2:00 p.m., to consider and, if thought fit, approve the resolution in connection with the Second Cooperation Agreement and transactions contemplated therein is set out on pages N-1 to N-2 of this circular.

Pursuant to Rule 17.47(4) of the GEM Listing Rules, any vote of the Shareholders at a general meeting must be conducted by way of poll. The chairman of the meeting will therefore demand a poll for every resolution put to vote for the EGM in accordance with the articles of association of the Company. An announcement on the poll results of the EGM will be made by the Company after the EGM pursuant to the GEM Listing Rules.

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LETTER FROM THE BOARD

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, Phoenix Virtue Limited (an indirect wholly-owned subsidiary of China Aoyuan) controlled or was entitled to control over the voting rights in respect of 286,000,000 Shares, representing approximately 29.18% of the issued share capital of the Company, as at the Latest Practicable Date and is considered to be materially interested in the joint arrangement contemplated under the Second Cooperation Agreement. As a result, Phoenix Virtue Limited will abstain from voting on the relevant resolutions to be proposed at the EGM. Save for Phoenix Virtue Limited, to the best of the Director’s knowledge, no other Shareholder is required to abstain from voting in relation to the resolution to approve the Second Cooperation Agreement at the EGM.

A form of proxy for use at the EGM is enclosed with this circular. Whether or not you are able to attend and vote at such meeting, you are advised to complete the form of proxy enclosed in accordance with the instructions printed thereon and return to the Company’s branch share registrar in Hong Kong, Tricor Investor Services Limited of Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as practicable and in any event not less than 48 hours before the time appointed for holding the EGM or any adjournment thereof (as the case may be). Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjourned meeting (as the case may be) should you so wish.

CLOSURE OF REGISTER OF MEMBERS

Shareholders whose names appear on the Company’s register of members on Wednesday, 9 September 2020, will be eligible to attend and vote at the EGM. The register of members of the Company will be closed from Friday, 4 September 2020 to Wednesday, 9 September 2020 (both dates inclusive) for determining eligibility to attend and vote at the EGM. All transfer of Share(s), accompanied by the relevant share certificate(s) with the properly completed transfer form(s) either overleaf or separately, must be lodged with the branch share registrar and transfer office of the Company in Hong Kong, Tricor Investor Services Limited at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong, for registration not later than 4:30 p.m., Thursday, 3 September 2020.

RECOMMENDATION

Your attention is drawn to the letter from the Independent Board Committee set out on pages 14 to 15 in this circular which contains its recommendation to the Independent Shareholders as to voting at the EGM in relation to the Second Cooperation Agreement.

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LETTER FROM THE BOARD

Your attention is also drawn to the letter from the Independent Financial Adviser set out on pages 16 to 36 in this circular which contains its advice to the Independent Board Committee and the Independent Shareholders as regards to the Second Cooperation Agreement.

The Directors (including the independent non-executive Directors) consider that the Second Cooperation Agreement and the transactions contemplated therein are fair and reasonable and are in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend the Independent Shareholders to vote in favour of the resolution to be proposed at the EGM to approve the Second Cooperation Agreement.

You are advised to read the letter from the Independent Board Committee and the letter from the Independent Financial Adviser mentioned above before deciding how to vote on the resolution to be proposed at the EGM.

Yours faithfully,

For and on behalf of the Board GUDOU HOLDINGS LIMITED

Hon Chi Ming

Chairman and Executive Director

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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GUDOU HOLDINGS LIMITED 古兜控股有限公司

(incorporated in the Cayman Islands with limited liability)

(stock code: 8308)

19 August 2020

To the Independent Shareholders

Dear Sir or Madam,

MAJOR AND CONNECTED TRANSACTIONS IN RELATION TO THE SECOND COOPERATION AGREEMENT

We refer to the circular of the Company to the Shareholders dated 19 August 2020 (the “ Circular ”), of which this letter forms part. Terms defined in the Circular shall bear the same meanings when used herein unless the context requires otherwise.

We have been appointed to form the Independent Board Committee to consider and advise the Independent Shareholders on whether the Second Cooperation Agreement and the transactions contemplated therein are fair and reasonable so far as the Independent Shareholders are concerned and are in the interest of the Company and the Shareholders as a whole. The Independent Financial Adviser has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in this respect.

Your attention is drawn to the letter from the Board and the letter from the Independent Financial Adviser containing its advice to us and the Independent Shareholders as set out in this circular respectively.

— 14 —

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Having considered, among other things, the factors and reasons considered by, and the opinion of the Independent Financial Adviser, we are of the opinion that the Second Cooperation Agreement and the transactions contemplated therein have been entered into in the ordinary and usual course of business of the Group, and are based on normal commercial terms, and the terms of the Second Cooperation Agreement are fair and reasonable so far as the Independent Shareholders are concerned and are in the interest of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the relevant ordinary resolution to be proposed at the EGM.

Mr. Wu Sai Him

Yours faithfully, Mr. Chiu Chi Wing Independent Board Committee

Prof. Wang Dawu

— 15 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the full text of the letter from the Independent Financial Adviser setting out its advice to the Independent Board Committee and the Independent Shareholders in respect of the Second Cooperation Agreement and the transactions contemplated thereunder, which has been prepared for the purpose of inclusion in this circular.

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19 August 2020

To the Independent Board Committee and the Independent Shareholders

Dear Sirs and Madams,

MAJOR AND CONNECTED TRANSACTION

SECOND COOPERATION AGREEMENT

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in relation to the Second Cooperation Agreement and the transactions contemplated thereunder, details of which are set out in the letter from the board (the “ Letter from the Board ”) contained in the circular of the Company dated 19 August 2020 (the “ Circular ”), of which this letter forms part. Unless specified otherwise, capitalised terms used herein shall have the same meanings as those defined in the Circular.

On 30 June 2020 (after trading hours), Guangdong Gudou, an indirect wholly-owned subsidiary of the Company, entered into the Second Cooperation Agreement with GD Aoyuan, pursuant to which Guangdong Gudou and GD Aoyuan had agreed to further cooperate with each other for the planning, development and operation of Target Land B located at Gudou Hot Spring Resort in addition to Target Land A under the First Cooperation Agreement.

According to the Letter from the Board, to the best of the Directors’ knowledge, information and belief and having made all reasonable enquiries, GD Aoyuan is an indirect wholly-owned subsidiary of China Aoyuan, which is a substantial Shareholder holding 29.18% of the issued share capital of the Company in the Company and is thus a connected

— 16 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

person of the Company. Accordingly, GD Aoyuan is a connected person of the Company by virtue of being an associate of China Aoyuan. As the total consideration exceeds HK$10 million, the transactions contemplated under the Second Cooperation Agreement are subject to the reporting, announcement and the independent shareholders’ approval requirements under Chapter 20 of the GEM Listing Rules.

Pursuant to Rule 19.22 of the GEM Listing Rules, the transactions contemplated under the Second Cooperation Agreement, together with those contemplated under the First Cooperation Agreement, constitute a series of transactions made by the Company within a 12-month period and shall be aggregated as if they were one transaction.

As one or more of the applicable percentage ratios (as defined under the GEM Listing Rules) in respect of the transactions contemplated under the Second Cooperation Agreement, when aggregated with those contemplated under the First Cooperation Agreement, exceed 25% but is less than 100%, the entering into of the Second Cooperation Agreement, on an aggregated basis, constitute a major transaction of the Company and are subject to the reporting, announcement, circular and shareholders’ approval requirements under Chapter 19 of the GEM Listing Rules.

The EGM will be held to seek approval from the Independent Shareholders for the transactions contemplated under the Second Cooperation Agreement. China Aoyuan, holding a total of 286,000,000 Shares (representing approximately 29.18% of the issued share capital of the Company as at the Latest Practicable Date), and its associates are required to abstain from voting in respect of the relevant resolution(s) at the EGM.

Save for the aforesaid and to the best of the Directors’ knowledge, information and belief and having made all reasonable enquiries, as at the Latest Practicable Date, no other Shareholder had a material interest in the Second Cooperation Agreement and the transactions contemplated thereunder, and therefore no other Shareholder was required to abstain from voting on the relevant resolution(s) at the EGM.

THE INDEPENDENT BOARD COMMITTEE

The Independent Board Committee comprising all the independent non-executive Directors, namely Mr. Wu Sai Him, Mr. Chiu Chi Wing and Prof. Wang Dawu, has been established to advise the Independent Shareholders in connection with the Second Cooperation Agreement and the transactions contemplated thereunder.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We, Lego Corporate Finance Limited, have been appointed by the Company as the Independent Financial Adviser in accordance with the GEM Listing Rules to advise the Independent Board Committee and the Independent Shareholders in relation to the Second Cooperation Agreement and the transactions contemplated thereunder and to make recommendations as to, among others, whether the terms of the Second Cooperation Agreement and the transactions contemplated thereunder are fair and reasonable, are normal commercial terms and in the interests of the Company and the Independent Shareholders as a whole, and as to voting in respect of the relevant resolution(s) at the EGM. Our appointment as the Independent Financial Adviser has been approved by the Independent Board Committee.

During the past two years, save for the engagement in connection with the Second Cooperation Agreement and the transactions contemplated thereunder, we had not been engaged by the Company for the provision of other services that would affect our independence. As at the Latest Practicable Date, save for the normal professional fees for our services provided to the Company in relation to the engagement described above, there was no other arrangement whereby we would receive any fees and/or benefits from the Group, and we were not aware of any relationships or interests between us and the Group, GD Aoyuan or any of their respective substantial shareholders, directors or chief executives, or any of their respective associates that could reasonably be regarded as relevant to our independence. We are independent under Rule 17.96 of the GEM Listing Rules to act as the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in connection with the Second Cooperation Agreement and the transactions contemplated thereunder.

BASIS OF OUR ADVICE

In formulating our opinion and recommendation, we have reviewed, inter alia, the announcement of the Company dated 30 June 2020, the First Cooperation Agreement, the Second Cooperation Agreement, the annual reports of the Company for each of the years ended 31 December 2018 and 2019 (respectively, the “ Annual Report 2018 ” and the “ Annual Report 2019 ”), the interim report of the Company for the six months ended 30 June 2020 (the “ First Half Year Report 2020 ”), the valuation report (the “ Valuation Report ”) as prepared by the Valuer in respect of the aggregate appraised value of Target Land B (the “ Valuation ”) as at 30 June 2020 (the “ Valuation Date ”), and certain information provided by the management of the Company (the “ Management ”) relating to the operations, financial condition and prospects of the Group. We have also (i) considered such other information, analyses, market data which we deemed relevant; (ii) conducted verbal discussions with the Management regarding the terms of the Second Cooperation Agreement and the transactions contemplated thereunder, as well as the businesses and future outlook of the Group; and (iii) discussed with the Valuer the methodologies, bases and assumptions adopted in the Valuation.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

All Directors collectively and individually accept full responsibility for the purpose of giving information with regard to the Company in the Circular and, having made all reasonable enquiries, confirm that to the best of their knowledge and belief, the information contained in the Circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters not contained in the Circular, the omission of which would make any statement in the Circular misleading. We have assumed that all such statements, information, opinions and representations contained or referred to in the Circular or otherwise made to us by the Directors and the management of the Company for which they are solely responsible, were true, accurate and complete at the time they were made and continue to be true, accurate and complete in all material respects as at the Latest Practicable Date and Shareholders will be notified of material changes (if any) of the information contained in the Circular. We consider that we have been provided with, and we have reviewed, all currently available information and documents which are available under present circumstances to enable us to reach an informed view regarding the Second Cooperation Agreement and the transactions contemplated thereunder to justify reliance on the accuracy of the information contained in the Circular so as to provide a reasonable basis of our opinion. We have no reasons to suspect that any material information has been withheld by the Directors or the Management, or is misleading, untrue or inaccurate. We have not, however, for the purpose of this exercise, conducted any independent detailed investigation or audit into the business, affairs, operations, financial position or future prospects of the Group. Our opinion is necessarily based on financial, economic, market and other conditions in effect, and the information made available to us as at the Latest Practicable Date.

This letter is issued for the information of the Independent Board Committee and the Independent Shareholders solely in connection with their consideration of the Second Cooperation Agreement and the transactions contemplated thereunder. Except for its inclusion in the Circular, this letter shall not be quoted or referred to, in whole or in part, nor shall it be used for any other purposes, without our prior written consent.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In giving our recommendations with respect to the Second Cooperation Agreement and the transactions contemplated thereunder, we have taken into account the following principal factors and reasons:

1. Background information of the Group

The Group is principally engaged in (i) the operation and management of Gudou Hot Spring Resort and provision of consultancy and/or management services; and (ii) the development and sale of tourism properties in Guangdong Province, the PRC. Set out in Table 1 below is a summary of the consolidated financial information of

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

the Group for each of the three years ended 31 December 2017, 2018 and 2019 as extracted from the Annual Report 2018 and the Annual Report 2019, and each of the six months ended 30 June 2019 and 2020 as extracted from the First Half Year Report 2020, respectively.

Table 1: Financial highlights of the Group

	For the six	months ended	months ended	months ended	For the year ended	For the year ended
	30 June				31 December
	2020			2019	2019 2018	2017
	(unaudited)	(unaudited)			(audited) (audited)	(audited)
	RMB’000			RMB’000	RMB’000 RMB’000	RMB’000
Revenue
— Property sales	—			14,146	48,697 105,997	193,047
— Properties renovation income	1,404			—	28,250 —	—
— Room revenue	10,186			17,932	64,712 53,605	49,961
— Admission income	3,897			8,317	38,257 34,518	25,891
— Catering income	5,956			9,710	24,916 27,559	25,985
— Others_(Note)_	2,814			6,206	33,389 27,050	23,645
	24,257			56,311	238,221 248,729	318,529
Profit/(Loss) for the period/year
attributable to owners of the
Company	(35,373)			(19,106)	24,614 15,570	52,422
	As at
	30 June				As at 31 December
	2020			2019 2018		2017
	(unaudited)			(audited) (audited)		(audited)
	RMB’000			RMB’000 RMB’000		RMB’000
Non-current assets	955,888			968,292 921,170		852,614
Current assets	220,101			247,277 188,071		220,368
Current liabilities	(339,104)			(327,759) (275,425)		(266,275)
Non-current liabilities	(423,545)			(439,763) (411,380)		(399,250)
Net current liabilities	(119,003)			(80,482) (87,354)		(45,907)
Net assets	413,340			448,047 422,436		407,457

Note: Others include rental income, massage service income, conference fee income, consultancy service income and other service income.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

For the year ended 31 December 2018

For the year ended 31 December 2018, the Group recorded revenue of approximately RMB248.73 million, representing a decrease of approximately 21.91% as compared to the revenue of approximately RMB318.53 million as recorded in the previous year. With reference to the Annual Report 2018, such decrease in revenue was mainly attributable to a decrease in revenue generated from the Group’s tourism property development, which was primarily attributable to a decrease in gross floor area sold and delivered during 2018 as most units of the then completed tourism property projects were sold and delivered in the previous year, partially offset by the increase in revenue generated from the Group’s hot spring resort and hotel operations.

The Group recorded profit for the year ended 31 December 2018 attributable to owners of the Company of approximately RMB15.57 million, representing a decrease of approximately 70.30% as compared to that of approximately RMB52.42 million in the previous year. The decrease in profit was mainly attributable to a decrease in revenue recognized for the Group’s tourism property development business as a result of less than expected gross floor area delivered and sold in the period and a decrease in other income in relation to a one-off gain on disposal of property, plant and equipment and prepaid land lease payments in 2017.

As at 31 December 2018, net current liabilities and net assets of the Group amounted to approximately RMB87.35 million and approximately RMB422.44 million, respectively.

For the year ended 31 December 2019

For the year ended 31 December 2019, the Group recorded revenue of approximately RMB238.22 million, representing a decrease of approximately 4.23% as compared to revenue of approximately HK$248.73 million in the previous year. According to the Annual Report 2019, such decrease in revenue was mainly attributable to the decrease in revenue generated from the Group’s tourism property development, which was in turn mainly due to a decrease in gross floor area sold and delivered during 2019 as most units of the then completed tourism property projects were sold and delivered in the previous year, partially offset by the increase in revenue generated from the Group’s hot spring resort and hotel operations.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Group recorded profit for the year ended 31 December 2019 attributable to owners of the Company of approximately RMB24.61 million, representing an increase of approximately 58.06% as compared to that of approximately RMB15.57 million in the previous year. The increase in profit was primarily attributable to an increase in revenue recognized for the Group’s hot spring resort and hotel operations business as the new themed hotel complex, Yuequan Huju Hotel, commenced operations and attracted more visitors to Gudou Hot Spring Resort.

As at 31 December 2019, net current liabilities and net assets of the Group amounted to approximately RMB80.48 million and approximately RMB448.05 million, respectively.

For the six months ended 30 June 2020

For the six months ended 30 June 2020, the Group recorded revenue of approximately RMB24.26 million, representing a decrease of approximately 56.92% as compared to the revenue of approximately RMB56.31 million in the previous corresponding period. With reference to the First Half year Report 2020, such decrease in revenue was mainly attributable to the drop in revenue generated from the Group’s hot spring resort and hotel operations business, which was in turn mainly attributable to the temporary suspension of the operation of Gudou Hot Spring Resort in response to the precautionary policies and measures implemented by the Guangdong provincial government to deter the spread of COVID-19.

The Group recorded loss for the six months ended 30 June 2020 attributable to the owners of the Company of approximately RMB35.37 million, representing an increase in loss of approximately 85.09% as compared to that of approximately RMB19.11 million in the previous corresponding period. The increase in loss was in line with the Group’s decreased revenue, which was in turn mainly due to a decrease in the hot spring resort and hotel operations business and a decrease in revenue generated from the Group’s tourism property development business.

As at 30 June 2020, net current liabilities and net assets of the Group amounted to approximately RMB119.00 million and approximately RMB413.34 million, respectively.

2. Information on Target Land B

According to the Letter from the Board, Target Land B, which is legally and beneficially owned by the Group, consists of three parcels of land with a total site area of 63,797 sq.m. and an expected gross floor area of approximately 54,323 sq.m., and is located in close proximity to Target Land A at Gudou Hot Spring Resort.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following table sets forth further information about Target Land B:

Site area specified
in the land use right			Status of
certificate (sq.m.)	Land usages	Status	mortgage
16,856	accommodation and	to be developed	mortgaged
	food and beverage
36,955	accommodation and	to be developed	mortgaged
	food and beverage
9,986	accommodation and	to be developed	mortgaged
	food and beverage

Under the current tentative development plan, tourism properties will be erected on Target Land B as part of the integrated tourism and leisure projects of Gudou Hot Spring Resort. The intended tourism properties to be erected on Target Land B are categorized principally as residential units, retail units, parking spaces and other facilities incidental to any of them.

3. Reasons for and benefits of entering into the Second Cooperation Agreement and the transactions contemplated thereunder

The Group is principally engaged in (i) the operation and management of Gudou Hot Spring Resort and provision of consultancy and/or management services; and (ii) the development and sale of tourism properties in Guangdong Province, the PRC, a hot spring resort located at Jiangmen city, Guangdong Province, the PRC. According to the Annual Report 2019, the Group’s business objectives are to continue to enhance the Group’s position in the hot spring and hotel industry, expand the tourism property development business of the Group and continue to enhance the Group’s “Gudou” brand across the PRC by providing quality products and services to the customers. Based on our discussions with the Management, under the current tentative development plan, it is expected that those tourism properties to be developed on Target Land B under the Second Cooperation Agreement will be sold to public under the Group’s business segment of tourism property development.

In assessing the fairness and reasonableness of entering into the Second Cooperation Agreement and the transactions contemplated thereunder, we have primarily taken into account of (i) the outlook and prospects of tourism property development in Guangdong Province, the PRC; (ii) the recent development of the Group’s business of tourism property development; and (iii) the background of China Aoyuan and the potential diversification of risks.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(i) Outlook and prospects of tourism property development in Guangdong Province, the PRC

In assessing the future prospects of the tourism property market development in the PRC, we have primarily performed research on the overall economy of Guangdong Province, the PRC and its property market development prospects.

Overall economy of Guangdong Province, the PRC

With reference to the statistics of the International Monetary Fund ( https://www.imf.org/ ), despite the outbreak of the COVID-19 pandemic and the projected year-over-year decrease in the global gross domestic product (the “ GDP ”) for 2020, it is expected that the GDP of the PRC would manage to maintain a growth of 1.2% for 2020, and such growth is expected to increase and reach 9.2% for 2021. According to the National Bureau of Statistics of China ( http://data.stats.gov.cn/ ), Guangdong Province was best-performing among all of the provinces of the PRC in terms of GDP during the first quarter of 2020. For the second quarter of 2020, the GDP of Guangdong Province reached RMB2.67 trillion, accounting for nearly 10.68% of the national GDP of RMB25.01 trillion, and the GDP of Guangdong Province experienced a 1.35% increase in the second quarter of 2020 compared to that of the second quarter of 2019. Further, per capita disposable income of Guangdong Province was recorded to be RMB20,774 in the second quarter of 2020, representing an approximate 2.22% increase in comparison with the per capita disposable income of RMB20,322 in the second quarter of 2019. Based on an article published by the Bureau of Statistics of Guangdong Province ( http://stats.gd.gov.cn/ ) in July 2020, amid the consolidating epidemic prevention and control by the government as well as the resumption of work and production, the economy of Guangdong Province for the first half of 2020 has generally improved as compared to the preceding months.

Real estate market development in Guangdong Province, the PRC

With reference to the National Bureau of Statistics of China ( http://data.stats.gov.cn/ ), sales of commodity housing sold nationwide in 2019 increased by 7.5% yearover-year to approximately RMB16.76 trillion as compared to the preceding year. Since the outbreak of the COVID-19 epidemic at the beginning of 2020, the real estate market of the PRC was affected as construction was forced to cease operations temporarily. However, according to a news report named “Covid-19 coronavirus: Impact on the real estate market in China” published

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

by Allen & Overy LLP ( https://www.allenovery.com/ ), an international law firm providing legal services covering a wide range of practices and sectors, on 2 April 2020, adverse impacts of COVID-19 on real estate markets in the PRC are anticipated to be short-lived, and the deal volumes are expected to gradually pick up during the second and third quarter of 2020 as the impact of stimulus policies implemented by governments begins to be felt. Based on the research report named “Are green shoots emerging in China? COVID-19 impact on property markets” published in April 2020 by Jones Lang LaSalle Incorporation ( https://www.jll.com/ ), a global real estate services firm specialising in commercial property and investment management, following the outbreak of COVID-19, certain industries in the PRC are seizing emerging growth opportunities with potential positive impacts for real estate markets. It is also suggested in the report that resilience was observed in the Chinese real estate demand, generally from individuals and companies who take a longerterm view of the market. Consistent with the above suggested views, recent statistics released by the National Bureau of Statistics of China generally demonstrate a recovering trend in the real estate market of the PRC. Following a significant period-over-period drop in the completed investment amount for real estate development in the PRC during the first two months of 2020, such figure has been consistently improving during the following months and a corresponding period-over-period growth was recorded in June 2020, representing a turnaround since the outbreak of COVID-19.

On the other hand, it is noted that the real estate market of Guangdong Province generally exhibited similar trends as the national market both in 2019 and following the outbreak of COVID-19 at the beginning of 2020. According to the statistics published by the Bureau of Statistics of Guangdong Province ( http://stats.gd.gov.cn/ ), completed investment amount for real estate development in Guangdong Province of 2019 recorded a 10.0% increase in comparison to that of 2018, slightly higher than the corresponding growth rate of the nation of 9.9%. For the first four months of 2020, notwithstanding that a period-over-period decrease of 4.3% was recorded as a result of the outbreak of COVID-19, such decrease was narrowed by 4.0 percentage points as compared to that for the first quarter of 2020. In May and June 2020, performance of the real estate market of Guangdong Province further improved and the provincial completed investment amount for the first half of 2020 exhibited a turnaround from the previous months by recording a growth of 2.6% as compared to that for the first half of 2019, demonstrating the general recovery of market confidence.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

In addition to the improving statistics, it is expected that certain policies implemented or to be implemented by the PRC government shall have positive impacts on the future development of the real estate market in Guangdong Province. For instance, since the outbreak of COVID-19, the local government has been employing different precautionary and control works including but not limited to locking down cities with the most confirmed cases such as Wuhan and Guangzhou; setting up more than sufficient monitoring points such that confirmed cases could be identified and quarantine actions could be implemented efficiently; and testing every person in the area where a confirmed case was identified. Such precautionary and control works are expected to help mitigate and contain the pandemic which shall in turn have positive impacts on the real estate market in terms of, among others, the overall economy and the investment atmosphere. Further, based on the reports named 《2019 年廣東房地產開發完成情況分析》(“The Analysis of the Guangdong Real Estate Development in 2019”) and 《2020 年一季度 廣東房地產開發完成情況分析》(“The analysis of Guangdong Real Estate Development in the First Quarter of 2020”) published by the Bureau of Statistics of Guangdong Province respectively in February and April 2020, the PRC government would promote the development of the secondary market, while adhering to the objectives of stabilizing the land prices, housing prices and people’s speculation of the market. As suggested in the reports, despite the influences of COVID-19, considering the potential decrease in the interest rate, the accelerated development of infrastructure by the government which shall help stimulate domestic demand and investment, as well as the potential decrease in the 5-year loan prime rate and accordingly the mortgage interest rate, it is expected that the overall performance of Guangdong Province in the real estate market would continue to improve.

In view of the above, the prospects of tourism property development in Guangdong Province, the PRC are expected to be generally positive in the future.

(ii) Recent development of the Group’s business of tourism property development

Along with hot spring resort and hotel operations, the Group develops and sells tourism properties including villas, apartments, studio flats and commercial units within Gudou Hot Spring Resort. As at the Latest Practicable Date, the Group had completed six tourism property projects, namely, South Asia Villas, Baden Town Villas, Mountain Seaview Vacation Apartments, Joyful Apartments, Mountain Seaview Vacation Residence and Heart of Spring

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Apartments with a total saleable gross floor area of approximately 142,000 sq.m.. As advised by the Management, units of the abovementioned property projects had almost been sold out and delivered, and the decrease in gross floor area available for sale had resulted in a decrease in the Group’s revenue from the tourism property development segment in the past two years.

According to the Annual Report 2019, tourism property development business will continue to be one of the Company’s business focuses in 2020. As a strategy to expand the tourism property development business, the Group entered into the First Cooperation Agreement with GD Aoyuan on 16 July 2019, pursuant to which Guangdong Gudou and GD Aoyuan had agreed to cooperate with each other for the planning, development and operation of Target Land A, being five parcels of land of approximately 67,860.7 sq.m. in total located at Gudou Hot Spring Resort and legally and beneficially owned by Guangdong Gudou. The First Cooperation Agreement consisted of three tourism property development projects, namely Guanshanyue Apartments, Gudou Yishui Mingting Apartments and Yunshanjing Mansion. According to the Annual Report 2019, the first two projects were granted pre-sale permit in the fourth quarter of 2019. As advised by the Management, as at 30 June 2020, nine units of Guanshanyue Apartments and 110 units of Gudou Yishui Mingting Apartments were pre-sold, respectively. The Group and GD Aoyuan planned to further sell the properties in 2020. With respect to Yunshanjing Mansion, its construction commenced in the second quarter of 2020 and is expected to be completed by 2021.

As such, the development of Target Land B pursuant to the Second Cooperation Agreement is expected to help expand the Group’s property portfolio for sale in the future and accordingly signifies the furtherance of the Group into the tourism property development industry in Guangdong Province, the PRC, which is in line with the Group’s business strategy and objectives.

(iii) Background of China Aoyuan and the potential diversification of risks

According to the Letter from the Board, GD Aoyuan is an indirect whollyowned subsidiary of China Aoyuan (collectively with its subsidiary, “ China Aoyuan Group ”), which is a conglomerate enterprise listed on the Stock Exchange (stock code: 3883) covering various business segments, including property development, health and wellness, culture tourism and cross-border e-commerce. With reference to the annual report of China Aoyuan for the year ended 31 December 2019, China Aoyuan Group is a constituent of the MSCI

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

China index, the Hang Seng Composite LargeCap & MidCap Index, Hang Seng Stock Connect and Hang Seng Stock Connect Greater Bay Area Composite Index. During 2019, China Aoyuan Group achieved significant year-on-year increases of approximately 62.97% and approximately 77.68% in revenue and net profits, respectively. As at 31 December 2019, China Aoyuan Group had 280 projects with total gross floor area of approximately 45.03 million sq.m. and over 30 urban redevelopment projects with estimated saleable resources of approximately RMB226 billion, 89% of which are located in the GuangdongHong Kong-Macao Greater Bay Area, providing a strong foundation for its growth and development. Further, in 2019, China Aoyuan Group ranked 25th among PRC real estate companies in terms of comprehensive strength by 上海億翰商務諮詢股份有限公司 (“ EH Consulting Limited *”) ( www.ehcinsulting.com.cn ), a research institution specialised in real estate industry and established in Shanghai in 2013, and earned various honours including but not limited to “Fortune China 500” (up 103 places from 2018) by FORTUNE China magazine and “China Top 500 Private Enterprises” (up 223 places from 2018) by All-China Federation of Industry and Commerce, demonstrating the well recognition of China Aoyuan Group across the industries.

As advised by the Management, there are both benefits and the sharing of risks upon entering into the Second Cooperation Agreement with GD Aoyuan on the development of Target Land B. Generally, during the construction period, cost overruns or delays caused by a number of factors, including shortages of, or price increases in, energy, raw materials or skilled labour and unforeseen environmental problems may lead to material increases in the cost of completion or significant delays in the delivery of projects or even failure to complete the construction of projects, failure of which may have a significant negative effect on the Group’s financial performance. Accordingly, in light of the expertise and experience of China Auyuan Group, we are of the view that the Group’s involvement with GD Aoyuan for the joint planning, development and operation of Target Land B by entering into the Second Cooperation Agreement would diversify the risk undertaken by the Group to a certain extent.

In view of the above and (i) leveraging on the generally positive prospects of tourism property development in Guangdong Province; (ii) the recent development of the Group’s tourism property development business; and (iii) China Aoyuan’s expertise in the real estate market of the PRC, the entering into of the Second Cooperation Agreement and the transactions contemplated thereunder would enable the Group

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

to, on one hand, expand the existing portfolio of tourism properties in order to facilitate its future enhancement in the tourism property development business and seize any opportunities from the market, which are in line with the Group’s business objectives, and, on the other hand, enjoy the future economic benefits of Target Land B while share with GD Aoyuan the costs and risks associated with the development thereof. Accordingly, we are of the view that the entering into of the Second Cooperation Agreement and the transactions contemplated thereunder is in the interests of the Company and the Independent Shareholders as a whole.

4. Principal terms of the Second Cooperation Agreement ant the transactions contemplated thereunder

Pursuant to the Second Cooperation Agreement, (i) Guangdong Gudou would contribute Target Land B to the joint arrangement; and (ii) GD Aoyuan would be responsible for funding the development, construction and management of Target Land B and the buildings and structures to be erected thereon with a maximum investment amount of RMB356,650,000 (the “ Maximum Investment Amount ”), which shall be capped at RMB356,650,000 regardless of the actual costs to be incurred.

Within five business days after satisfaction of the condition precedent to the Second Cooperation Agreement, Guangdong Gudou and GD Aoyuan will commence the joint planning and development of Target Land B. Guangdong Gudou and GD Aoyuan are entitled to 30% and 70% of income derived from Target Land B, respectively.

In assessing the fairness and reasonableness of the terms of the Second Cooperation Agreement and the transactions contemplated thereunder, we have primarily considered the investments to be made by the respective parties thereto in the development of Target Land B, as well as the underlying revenue sharing arrangement.

Investments by the parties under the Second Cooperation Agreement

(i) Target Land B

Guangdong Gudou would contribute Target Land B to the joint arrangement, which was valued at approximately RMB153,400,000 as at 30 June 2020 by the Valuer. Details of the Valuation Report are set out in Appendix I to the Circular.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

In assessing the fairness and reasonableness of the determination of the appraised value of Target Land B, we have reviewed the Valuation Report and conducted interviews with the Valuer regarding, among others, its relevant qualifications and experiences, independence and principal bases and assumptions adopted therein. According to the relevant information provided by the Valuer and our independent research conducted from the public domain, with a presence in Hong Kong for more than 25 years, the Valuer is a firm of professional surveyors and international valuation consultants specialised in valuing various assets including but not limited to real properties, plants and machineries and financial assets, and its client portfolio covers a board clientele including publicly traded companies on various stock exchanges such as Hong Kong, Taiwan, the PRC, Singapore, United Kingdom and the United States of America. Based on our interview with the Valuer, in relation to their experiences, we were given to understand that Ms. Elsa Ng, the person-incharge of the Valuation, is a member of the Royal Institution of Chartered Surveyors (UK), Fellow of the Hong Kong Institute of Surveyors (HK) and Registered Professional Surveyor of Hong Kong SAR (General Practice) (HK). The Valuer confirmed that it was an independent third party to the Group, GD Aoyuan and their respective connected persons as at the Latest Practicable Date. Upon review of the engagement letter between the Company and the Valuer in respect of the Valuation, we noted that the scope of work is appropriate to the opinion required to be given, and we are not aware of any limitation on the scope of work which might have an adverse impact on the degree of assurance given by the Valuer in the Valuation Report.

During our review, we noted that the Valuation was conducted based on the key assumptions that, among others, as at the Valuation Date, (i) the legally interested party had absolute title to its relevant property interests as well as free and uninterrupted rights to assign its interests for the whole of the unexpired terms as granted; (ii) the relevant government’s approval for the sale of Target Land B had been obtained, and Target Land B could be freely disposed of and transferred free of all encumbrances for its existing use in the market; and (iii) the legally interested party sold its relevant property interests in the market in its existing state without the benefit of a deferred terms contract, leaseback, joint venture, management agreement or any other similar arrangement which would serve to increase the value of the property interests. We have discussed with the Valuer regarding the assumptions adopted in the Valuation and were given to understand that the abovementioned assumptions are in line with the general market practice.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

In obtaining the appraised value of Target Land B, the Valuer has adopted sales comparison approach by making reference to comparable transactions in the market (the “ Comparables ”). The Valuer has initially identified sale and purchase transactions based on the criteria that (i) the underlying properties were land parcels located in Xinhui district, which is the same as Target Land B; (ii) the approved usages of the underlying properties were the same as those of Target Land B, being accommodation and food and beverages; (iii) the underlying properties had comparable location characteristics as Target Land B in terms of distance from the city centre; and (iv) the transactions were executed since 2018 and up to and including the Valuation Date. However, as no transaction was identified based on the above selection criteria, the Valuer has subsequently extended the first two selection criteria to also take into account those transactions with the underlying properties (i) being located in, in addition to Xinhui district, Zhuhai city which is next to and considered to be of the same tier as Xinhui district; and (ii) having the approved usage of accommodation. As confirmed by the Valuer, on a best-effort basis, the Comparables represent an exhaustive list of comparables having met all of the aforesaid extended selection criteria. It is noted that corresponding adjustments have been made to the unit rates of the Comparables to reflect the differences in the characteristics of the underlying properties as compared to Target Land B. The Valuer has relied on 中國土地市場網 (“China Land Market Website*”) ( http://landchina.com/ ) as the source of information on the Comparables. Based on our independent search, China Land Market Website is a website operated by the Real Estate Registration Centre, MNR, PRC. (Law Centre, MNR, PRC) ( http://www.rerc.com.cn/ ), which is in turn an institution directly under the Ministry of Natural Resources of the PRC engaged in, among others, real estate registration in the PRC. In light of the foregoing, we are of the view that the source of information on the Comparables is reliable and the Comparables are fair and reasonable.

As advised by the Valuer, they have initially considered three different generally accepted approaches, namely the sales comparison approach, income approach and cost approach, in arriving at the appraised value of Target Land B as at the Valuation Date. Generally, sales comparison approach has always been considered by the valuation industry as the best approach for valuing properties if there are market evidences of sales or listings, as those market evidences are based on publicly available information which require fewer subjective assumptions. In respect of the other two approaches, as Target Land B was vacant and was not an income generating asset as at the Valuation Date, the Valuer considered income approach inappropriate, whereas

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

cost approach would normally be considered when there is no market price evidence of comparable transactions. Accordingly, despite the number of comparable transactions near the Valuation Date was adversely affected by the recent outbreak of COVID-19, considering the overall availability of market information on the identifiable comparable transactions, the Valuer considered sales comparison approach as a relatively appropriate method and has adopted such approach for the purpose of the Valuation. It is advised by the Valuer that it is a normal market practice to conduct valuation of land parcels in the PRC via sales comparison approach. Based on our independent research, it is noted that the sales comparison approach has been commonly adopted for valuing assets including land parcels of other listed companies in Hong Kong during the recent months after the outbreak of COVID-19.

As confirmed by the Valuer, during the course of the Valuation, it has complied with the reporting guidelines set by the International Valuation Standards 2020 and published by the International Valuation Standards Council. During our review of the Valuation Report and discussions with the Valuer, we have not identified any major factors that cause us to doubt the fairness and reasonableness of the principal bases and assumptions adopted in arriving at the Valuation.

Taking into account of the above, we consider that the valuation bases and assumptions adopted by the Valuer in the Valuation are fair and reasonable. According to the Valuation Report, the appraised value of Target Land B was approximately RMB153,400,000 as at the Valuation Date.

(ii) The Maximum Investment Amount

According to the Letter from the Board, the Maximum Investment Amount of RMB356,650,000 to be contributed by GD Aoyuan was calculated based on RMB6,565.3 per sq.m. on an expected gross floor area of 54,323 sq.m.. By parties’ mutual agreement, it is estimated that approximately RMB6,565.3 per sq.m. will be utilised as construction costs for erecting the tourism properties, facilities and other infrastructures incidental to the erection of tourism properties on Target Land B. The Maximum Investment Amount shall be capped at RMB356,650,000 regardless of the actual costs incurred by GD Aoyuan in the development project on Target Land B which could exceed the capped amount.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

In assessing the fairness and reasonableness of the determination of the Maximum Investment Amount, we have primarily made reference to three quotations obtained by the Company from independent construction companies for the construction of tourism properties, facilities and other infrastructures to be erected on Target Land B (the “ Quotation Samples ”). Based on our review of the Company’s latest internal control manual, it is the Company’s internal control policy to obtain quotations from not less than three construction companies for comparison in selecting the contractor for its real estate development projects shall the amount exceed RMB30,000,000. For the purpose of the assessment regarding the Maximum Investment Amount, the Company has requested quotations from all of the seven independent construction companies on the latest approved vendor list, of which those three construction companies underlying the Quotation Samples had reverted as at the Latest Practicable Date. Considering (i) the Company has attempted to obtain quotations from all construction companies on the approved vendor list and the Quotation Samples represented all relevant quotations received as at the Latest Practicable Date, of which the reference made to three quotations is in line with the Company’s internal control policy and hence we consider such quotations are reasonably adequate for our analysis purpose; (ii) each of the Quotation Samples was obtained within one month preceding the date of the Second Cooperation Agreement and is therefore considered to be recent and under similar market conditions; and (iii) the Quotation Samples were obtained with reference to the prevailing latest development plan of Target Land B, we consider that the Quotation Samples are fair and representative. Based on our review, the estimated construction cost of RMB6,565.3 per sq.m. under the Second Cooperation Agreement is lower than that under each of the Quotation Samples.

As further analysed in the following sub-section of this letter, the revenue sharing ratio of 30:70 between Guangdong Gudou and GD Aoyuan under the Second Cooperation Agreement in respect of Target Land B was determined with reference to their respective investment amounts in the development project on Target Land B. Accordingly, the investment amount from Guangdong Gudou is equivalent to the market value of Target Land B while that from GD Aoyuan is equivalent to the capped Maximum Investment Amount, the latter of which is derived with reference to the estimated construction cost per sq.m and the expected gross floor area. The estimated construction cost of RMB6,565.3 per sq.m. under the Second Cooperation Agreement, which is lower than that under each of the Quotation Samples

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

offered by independent third parties, therefore implies a relatively lower and capped investment amount counted towards the potential revenue sharing by GD Aoyuan, which in turn implies a relatively higher proportion of revenue to be retained by Guangdong Gudou regardless of the actual construction costs to be incurred by GD Aoyuan. In light of the above, we are of the view that the Maximum Investment Amount, which was determined with reference to the estimated construction cost, is fair and reasonable and in the interests of the Company and the Independent Shareholders as a whole.

Revenue sharing arrangement

According to the Letter from the Board, the revenue sharing ratio of 30:70 between Guangdong Gudou and GD Aoyuan under the Second Cooperation Agreement in respect of Target Land B was determined with reference to their respective investments amounts in the development project on Target Land B. Considering the above and (i) the appraised value of Target Land B of approximately RMB153,400,000 as at the Valuation Date and the Maximum Investment Amount of RMB356,650,000 are respectively approximately equivalent to 30% and 70% of the total implied investment under the Second Cooperation Agreement; (ii) the appraised value of Target Land B was arrived at in the Valuation, the adopted principal methodology, bases and assumptions of which are, in our view, fair and reasonable; (iii) the Maximum Investment Amount was determined with reference to the estimated construction cost of RMB6,565.3 per sq.m., which was lower than that under each of the Quotation Samples offered by independent third parties and accordingly implies a relatively higher proportion of revenue from Target Land B to be retained by Guangdong Gudou; and (iv) the revenue sharing ratio of 30:70 is fixed and the Maximum Investment Amount shall be capped at RMB356,650,000 regardless of the actual construction costs to be incurred by GD Aoyuan which could exceed the capped amount; we are of the view that the terms of the revenue sharing arrangement under the Second Cooperation Agreement are fair and reasonable.

In light of the foregoing, we are of the view that the principal terms of the Second Cooperation Agreement and the transactions contemplated thereunder are fair and reasonable and in the interests of the Company and the Independent Shareholders as a whole.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

5. Possible financial effects of the Second Cooperation Agreement and the transactions contemplated thereunder

When assessing the financial impacts of the Second Cooperation Agreement and the transactions contemplated thereunder, we have primarily taken into account the following aspects:

Total assets and total liabilities

Upon completion of the development of Target Land B, it is expected that total assets of the Group will increase as a result of the injection of the Maximum Investment Amount by GD Aoyuan, whereas total liabilities of the Group will increase simultaneously as a result of the recognition of an amount due to connected party due to the construction of Target Land B by GD Aoyuan.

Earnings

According to Annual Report 2019, profit of the Group for the year ended 31 December 2019 was approximately RMB24.61 million. Upon completion of the development of Target Land B, it is expected that the Group’s total gross floor area of tourism properties for sale will increase. Considering the generally positive prospect of the Group’s tourism property development as analysed in the subsection headed “3. Reasons for and benefits of entering into the Second Cooperation Agreements and the transactions contemplated thereunder” of this letter, it is expected that sales of tourism properties and accordingly earnings of the Group will increase in the long run.

In light of the above, we consider that the overall financial effects on the Group as a result of the Second Cooperation Agreement and the transactions contemplated thereunder are justifiable.

The above analyses are for illustrative purpose only and do not purport to represent the financial position of the Group upon completion of the Second Cooperation Agreement and the transactions contemplated thereunder.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

RECOMMENDATIONS

Having considered the above principal factors and reasons, we are of the view that the terms of the Second Cooperation Agreement and the transactions contemplated thereunder are fair and reasonable; and the Second Cooperation Agreement and the transactions contemplated thereunder are conducted in the ordinary and usual course of business of the Company, on normal commercial terms and in the interests of the Company and the Independent Shareholders as a whole. Accordingly, we recommend the Independent Shareholders, as well as the Independent Board Committee to advise the Independent Shareholders, to vote in favour of the relevant resolution(s) to be proposed at the EGM.

Yours faithfully, For and on behalf of Lego Corporate Finance Limited Billy Tang Managing Director

Mr. Billy Tang is a licensed person registered with the Securities and Futures Commission and a responsible officer of Lego Corporate Finance Limited to carry out Type 6 (advising on corporate finance) regulated activity under the Securities and Futures Ordinance (Chapter 571 of the laws of Hong Kong). He has over 20 years of experience in the corporate finance advisory profession.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP

The published audited consolidated financial statements of the Group for each of the three financial years ended 31 December 2017, 2018 and 2019 are disclosed in the annual reports of the Company for each of the three years ended 31 December 2017, 2018 and 2019. Quick links to the annual reports of the Company are set out below:

• annual report 2017 of the Company for the year ended 31 December 2017 which was published on 27 March 2018 (pages 68 to 145)

• https://www1.hkexnews.hk/listedco/listconews/gem/2018/0327/gln20180327183.pdf

• annual report 2018 of the Company for the year ended 31 December 2018 which was published on 28 March 2019 (pages 74 to 151)

• https://www1.hkexnews.hk/listedco/listconews/gem/2019/0328/gln20190328549.pdf

• annual report 2019 of the Company for the year ended 31 December 2019 which was published on 30 March 2020 (pages 75 to 161)

• https://www1.hkexnews.hk/listedco/listconews/gem/2020/0330/2020033002259.pdf

2. INDEBTEDNESS

At the close of business on 30 June 2020, being the latest practicable date for the purpose of this statement of indebtedness, the Group had banking facilities in the aggregate sum of approximately RMB664.0 million, of which approximately RMB169.0 million had not been utilised and approximately RMB495.0 million had been utilised. The Group’s banking facilities were secured by guarantees issued by a subsidiary and pledges of the Group’s assets with carrying value of approximately RMB554.1 million as at 30 June 2020.

Save as aforesaid, as at the Latest Practicable Date, the Group did not have other outstanding mortgages, charges, debentures or other loan capital, bank overdrafts or loans, other similar indebtedness, finance lease or hire purchase commitments, liabilities under acceptance or acceptance credits, guarantees or other material contingent liabilities, which are either guaranteed, unguaranteed, secured or unsecured.

Save as disclosed above, the Directors were not aware of any material changes in the indebtedness and contingent liabilities of the Group up to the Latest Practicable Date.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

3. FINANCIAL AND TRADING PROSPECT OF THE GROUP

The Group is principally engaged in (i) the operation and management of Gudou Hot Spring Resort and provision of consultancy and/or management services; and (ii) the development and sale of tourism properties in Guangdong Province, the PRC.

As stated in the annual report 2019 of the Company, the outbreak of the novel coronavirus (COVID-19) has slowed down the economic activities in China and exerted pressure to the Group’s hot spring resort and hotel operations businesses. In late January 2020, the Group decided to temporarily suspend the operation of Gudou Hot Spring Resort, which was partially resumed in early March 2020 as the situation showed signs of recovery.

Notwithstanding such unfavourable factor, the Group’s persistence in upholding its core values and its belief in the importance of health regimen to human beings and well-being of body and mind will certainly create opportunities in the mid and long run. Particularly, the Group’s health-oriented hot spring resort, which offers 62 public hot spring pools and six themed hotel complexes, is a desirable vacation destination for increasingly health-conscious customers.

Looking forward, the Directors remain cautiously optimistic towards the future of the Group’s businesses. The Group will remain focused on strengthening its “Gudou” brand by enhancing the ambiance and facilities of Gudou Hot Spring Resort. In addition, the Group will continue to explore new business opportunities in consultancy services and management services to leisure hotels and resorts and other hot spring resort operators. Further, the Group will embark on new tourism property development projects.

4. WORKING CAPITAL

Taking into account the financial resources available to the Group, including the internally generated funds and available banking facilities of the Group, the Directors after due and careful enquiry are of the opinion that the Group has sufficient working capital to satisfy its present requirements, that is for at least the next 12 months from the date of publication of this circular.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

5. MATERIAL ADVERSE CHANGE

As disclosed in (i) the profit warning announcement of the Company dated 24 April 2020; (ii) the first quarterly results announcement for the three months ended 31 March 2020 of the Company dated 12 May 2020; and (iii) the first quarterly report for the three months ended 31 March 2020 of the Company dated 13 May 2020, the recent outbreak of the novel coronavirus (COVID-19) in early 2020 has adversely affected the Group’s financial performance for the three months ended 31 March 2020. On 28 January 2020, in response to the precautionary policies and measures implemented by the Guangdong provincial government to control the outbreak of COVID-19, the Group decided to temporarily suspend the operation of Gudou Hot Spring Resort, which had been partially resumed as at the Latest Practicable Date.

Save as disclosed above, as at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 December 2019, being the date of which the latest published audited consolidated financial statements of the Group were made up.

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VALUATION REPORT

APPENDIX II

The following is the valuation report prepared for the purpose of incorporation in this document received from LCH (Asia-Pacific) Surveyors Limited, an independent property valuer, in connection with its valuation as at 30 June 2020 of the TARGET LAND B.

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The readers are reminded that the report which follows has been prepared in accordance with the reporting guidelines set by the International Valuation Standards (“ IVS ”) and published by the International Valuation Standards Council (“ IVSC ”). IVS entitles the valuer to make assumptions which may on further investigation, for instance by the readers’ legal representative, prove to be inaccurate. Any exception is clearly stated below. Headings are inserted for convenient reference only and have no effect in limiting or extending the language of the paragraphs to which they refer. Translations of terms in English or in Chinese are for reader’s identification purpose only and have no legal status or implication in this report. This report was prepared and signed off in English format, translation of this report in language other than English shall only be used as a reference and should not be regarded as a substitute for this report. Piecemeal reference to this report is considered to be inappropriate and no responsibility is assumed from our part for such piecemeal reference. It is emphasised that the findings and conclusion presented below are based on the documents and facts known to us at the Latest Practicable Date of this document. If additional documents and facts are made available, we reserve the right to amend this report and its conclusions.

17th Floor Champion Building 287-291 Des Voeux Road Central Hong Kong

19 August 2020

The Board of Directors Gudou Holdings Limited 19th Floor, Tower One of Tern Centre No. 237 Queen’s Road Central Hong Kong

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VALUATION REPORT

APPENDIX II

Dear Sirs,

In accordance with the instructions given by the present management of Gudou Holdings Limited (hereinafter referred to as the “ Instructing Party ”) to us to conduct a valuation of a real property (same as the word property in this report) in which Gudou Holdings Limited (hereinafter referred to as the “ Company ”) and its subsidiaries (collectively, together with the Company hereinafter referred to as the “ Group ”) have interests in the mainland of the People’s Republic of China (hereinafter referred to as the “ PRC ” or “ China ”), we confirm that we have conducted inspections, made relevant enquiries and obtained such further information as we consider necessary to support our findings and our conclusion of value of the property as at 30 June 2020 (collectively hereinafter referred to as the “ Valuation Date ”) for the Instructing Party’s internal management reference purpose. This valuation report comprises the text section and property particulars section. We understand that this report will be included in a Company’s circular for its shareholders’ reference.

We further understand that the use of our work product (regardless of form of presentation) will form part of the Instructing Party’s due diligence but we have not been engaged to make specific sales or purchase recommendations, or to give opinion for any financing arrangement. We further understand that the use of our work product will not supplant other due diligence which the Instructing Party should conduct in reaching its business decision regarding the property valued. Our work is designed solely to provide information that will give the Instructing Party a reference in its due diligence process, and our work should not be the only factor to be referenced by the Instructing Party. Our findings and conclusion of value of the property are documented in this valuation report as at today’s date.

VALUATION OF THE PROPERTY

Basis of Value and Assumptions

According to the IVS, there are two valuation bases, namely, market value basis and valuation bases other than market value. In this engagement, we have provided our value of the property on the market value basis.

The term “Market Value” is defined by the IVS as “the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion”.

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VALUATION REPORT

APPENDIX II

Unless otherwise stated, our valuation of the property has been made on the assumptions, that, as at the Valuation Date:

1. the legally interested party in the property has absolute title to its relevant property interests;

2. the legally interested party in the property has free and uninterrupted rights to assign its relevant property interests for the whole of the unexpired term as granted, and any premiums payable have already been fully paid;

3. the legally interested party in the property sells its relevant property interests in the market in its existing state without the benefit of a deferred terms contract, leaseback, joint venture, management agreement or any other similar arrangement which would serve to increase the value of the property interests;

4. the property has obtained relevant government’s approval for the sale of the property and is able to be disposed of and transferred it free of all encumbrances (including but not limited to the cost of transaction) in the market; and

5. the property can be freely disposed and transferred free of all encumbrances at of the Valuation Date for its existing use in the market to both local and overseas purchasers without payment of any premium to the government.

Should any of the above not be the case, it will have adverse impact to the value as reported.

Approach to Value

Unless otherwise stated, in valuing the property, we have adopted the sales comparison approach on the assumption that the property was sold with the benefit of vacant possession as at the Valuation Date. The approach considers the sales, listing or offerings of similar or substitute property and related market data to establish a value estimate of a property that a reasonable investor would have to pay for a similar property of comparable utility.

In valuing the property, transactions of comparable land transactions in Xinhui District of Jiangmen City and Zhuhai City have been considered. Adjustments have been made to various factors such as time (including transaction time), land use terms, usage and location factors.

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VALUATION REPORT

APPENDIX II

MATTERS THAT MIGHT AFFECT THE VALUE REPORTED

For the sake of valuation, we have adopted the areas as they appeared in the copies of the documents as provided, and no further verification work has been conducted. Should it be established subsequently that the adopted areas were not the latest approved, we reserve the right to revise our report and the valuation accordingly.

Unless otherwise stated, in our valuation, we have assumed that the property is able to be sold and purchased in the market without any legal impediment (especially from the regulators). Should this not be the case, it will affect the reported value significantly. The readers are reminded to have their own legal due diligence work on such issues. No responsibility or liability is assumed.

As at the Latest Practicable Date of this document, we are unable to identify any adverse news against the property which may affect the reported findings or value in our work product. Thus, we are not in the position to report and comment on its impact (if any) to the property. However, should it be established subsequently that such news did exist at the Valuation Date, we reserve the right to adjust the findings or value reported herein.

With the outbreak of the Novel Coronavirus (COVID-19), declared by the World Health Organisation as a ‘Global Pandemic’ on the 11 March 2020, the real estate market is greatly affected leading to comparatively lower levels of transactional activity and liquidity. There has been a shortage of market evidence for comparison purposes to make a well informed opinion of value as at the Valuation Date. As a general reminder to the readers as advised by the IVSC, our valuation of the property is therefore reported as being subject to valuation uncertainty at times of market unrest as set out in IVS. As a consequence, less certainty – and a higher degree of caution – should be accorded to our valuation than would normally be the case. For the avoidance of doubt, this valuation uncertainty clause does not mean that the valuation cannot be relied upon. Rather, this is to ensure transparency of the fact that – under the current extraordinary circumstances – less certainty can be accorded to the valuation than would otherwise be the case. This clause serves as a precaution and it does not invalidate the valuation. With the unknown future impact that COVID-19 might have on the real estate market and the difficulty in differentiating between short term impacts and long-term structural changes, we recommend that the valuation contained within this report should be under frequent review.

The sales comparison approach is always considered by the market as the best approach in valuing a property if there is available market evidence of sales or listings. As affected by the state regulations and rules in relation to the lockdown of the cities under the COVID-19, there were less identified market transactions close to the Valuation Date to support an informed view. Thus, we consider that it would be appropriate to reference to transactions at an earlier time by making suitable time adjustment.

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VALUATION REPORT

APPENDIX II

ESTABLISHMENT OF TITLES

Due to the purpose of this engagement, the Instructing Party or the appointed personnel of the Group provided us the necessary documents to support that the legally interested party in the property has free and uninterrupted rights to assign, to transfer, to mortgage, to let or to use the property at its existing use (in this instance, an absolute title), for the whole of the unexpired terms as granted, free of all encumbrances and any premiums payable have already been paid in full or outstanding procedures have been completed, and that the Group has the right to occupy or to use the property. Our agreed procedures to value, as agreed with the Instructing Party, did not require us to conduct legal due diligence on the legality and formality on the way that the legally interested party obtained the property from the relevant authorities. We agreed with the Instructing Party that this should be the responsibility of the legal adviser to the Instructing Party. Thus, no responsibility or liability is assumed from our part to the origin and continuity of the titles to the property.

We have been provided with copies of the title documents of the property. However, we have not examined the original documents to verify the ownership and encumbrances or to ascertain the existence of any amendments, which may not appear on the copies handed to us. All documents disclosed (if any) are for reference only and no responsibility is assumed for any legal matters concerning the legal titles and the rights (if any) to the property valued. Any responsibility for our misinterpretation of the documents cannot be accepted.

The land registration system of China forbids us to search the original documents of the property that are filed in the relevant authorities, and to verify legal titles or to verify any material encumbrances or amendment which may not appear on the copies handed to us. We need to state that we are not legal professionals and are not qualified to ascertain the titles and to report any encumbrances that may be registered against the property in China. However, we have relied solely on the copies of title documents; Real Estate / Land Registration records; and, the copy of the PRC legal opinions provided by the Instructing Party with regard to the legal titles of the property. We are given to understand that the PRC legal opinions were prepared by the Company’s PRC legal adviser, 廣東恆 益律師事務所 GFE Law Office, in November 2016. According to the Real Estate / Land Registration records of the property dated in February and March 2020 and provided by the Instructing Party, the legally interested party in the property is 廣東古兜旅遊集團有限 公司 (translated as Guangdong Gudou Travel Group Company Limited), a wholly-owned subsidiary of the Company, and the property is subject to mortgage. Moreover, according to the records, there are no seizure and, no idle land record registered against the property. No responsibility or liability from our part is assumed in relation to those legal opinions.

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APPENDIX II

VALUATION REPORT

In our report, we have assumed that the legally interested party in the property has obtained all the approval and/or endorsement from the relevant authorities, and that there would have no legal impediment (especially from the regulators) for the legally interested party to continue its titles in the property. Should this not be the case, it will affect our value in this report significantly. The readers are reminded to have their own legal due diligence work on such issues. No responsibility or liability from our part is assumed.

INSPECTIONS AND INVESTIGATIONS OF THE PROPERTY

As agreed prior to commencing of our valuation, we did not conduct any on-site inspection due to the prevailing Novel Coronavirus (COVID — 19) outbreak in China and Hong Kong, and taking the travel advice recommended by the Hong Kong SAR Government. Thus, we have relied on our previous inspection records, the documents and information provided to us and our independent research in preparing the valuation. The property was last inspected by Sr Elsa Ng in May 2019. In our last inspection, we have inspected the exterior, and where possible, the interior of the property in respect of which we have been provided with such information as we have requested for the purpose of our valuation. We have not inspected those parts of the property which were covered, unexposed or inaccessible and such parts have been assumed to be in reasonable condition. We cannot express an opinion about or advice upon the condition of uninspected parts and our work should not be taken as making any implied representation or statement about such parts. No building survey, structural survey, investigation or examination has been made, but in the course of our inspections we did not note any serious defects in the property valued. We are not, however, able to report that the property is free from rot, infestation or any other structural defects. No tests were carried out to the services (if any) and we are unable to identify those services either covered, unexposed or inaccessible.

We have not carried out on-site measurements to verify the correctness of the areas of the property, but have assumed that the areas shown on the documents and official plans handed to us are correct. All dimensions, measurements and areas are approximations.

Our engagement and the agreed procedures to value the property did not include an independent land survey to verify the legal boundaries of the property. We need to state that we are not in the land survey profession, therefore, we are not in the position to verify or ascertain the correctness of the legal boundaries of the property that appeared on the documents handed to us. No responsibility from our part is assumed. The Instructing Party or interested party in the property should conduct their own legal boundaries due diligence work.

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APPENDIX II

VALUATION REPORT

We have not arranged for any investigation to be carried out to determine whether or not any deleterious or hazardous materials have been used in the construction of the property, or have since been incorporated into the property, and we are therefore unable to report that the property is free from risk in this respect. For the purpose of this valuation, we have assumed that such investigations would not disclose the presence of any such materials to any significant extent.

We are not aware of the content of any environmental audit or other environmental investigation or soil survey which may have been carried out on the property and which may draw attention to any contamination or the possibility of any such contamination. In undertaking our work, we have assumed that no contaminative or potentially contaminative uses have ever been carried out in the property. We have not carried out any investigation into past or present uses, either of the property or of any neighbouring land, to establish whether there is any contamination or potential for contamination to the property from these uses or sites, and have therefore assumed that none exists. However, should it be established subsequently that contamination, seepage or pollution exists at the property or on any neighbouring land, or that the premises have been or are being put to a contaminative use, this might reduce the value now reported.

SOURCES OF INFORMATION AND ITS VERIFICATION

In the course of our work, we have been provided with copies of the documents regarding the property, and these copies have been referenced without further verifying with the relevant bodies and/or authorities. Our agreed procedures to value did not require us to conduct any searches or inspect the original documents to verify ownership or to verify any amendment which may not appear on the copies handed to us. We need to state that we are not legal professionals, therefore, we are not in the position to advise and comment on the legality and effectiveness of the documents provided by the Instructing Party or the appointed personnel of the Group.

We have relied solely on the information provided by the appointed personnel of the Group or the Instructing Party without further verification, and have fully accepted advice given to us on such matters as planning approvals or statutory notices, locations, titles, easements, tenure, occupation, site and floor areas and all other relevant matters.

For the purpose of this valuation, the scope of our work has been determined by reference to the property list provided by the Instructing Party. All property on the list has been included in our report. The Instructing Party has confirmed to us that the Group has no property interest other than those specified on the list supplied to us.

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APPENDIX II

VALUATION REPORT

Information furnished by others, upon which all or portions of our work product are based, is believed to be reliable but has not been verified in all cases. Our agreed procedures to value or work do not constitute an audit, review, or compilation of the information provided. Thus, no warranty is made nor liability assumed for the accuracy of any data, advice, opinions, or estimates identified as being furnished by others which have been used in formulating our work product.

Our valuation has been made only based on the advice and information made available to us. While a limited scope of general inquiries have been made to the local property market practitioners, we are not in a position to verify and ascertain the correctness of the advice given by the relevant personnel. No responsibility or liability is assumed.

When we adopted the work products from other professions, external data providers and the appointed personnel of the Group or the Instructing Party in our valuation, the assumptions and caveats that adopted by them in arriving at their figures also applied in our valuation. The procedures we have taken as agreed do not provide all the evidence that would be required in an audit and, as we have not performed an audit, accordingly, we do not express an audit opinion.

We are unable to accept any responsibility for the information that has not been supplied to us by the appointed personnel of the Group or the Instructing Party. Also, we have sought and received confirmation from the appointed personnel of the Group or the Instructing Party that no materials factors have been omitted from the information supplied. Our analysis and valuation are based upon full disclosure between us and the Instructing Party or the Group of material and latent facts that may affect our works.

We have had no reason to doubt the truth and accuracy of the information provided to us by the appointed personnel of the Group or the Instructing Party. We consider that we have been provided with sufficient information to reach an informed view, and have had no reason to suspect that any material information has been withheld.

Unless otherwise stated, all monetary amounts are in Renminbi Yuan (“ RMB ”).

OPINION OF VALUE

Based on the above information and assumptions, we are of the opinion that the Market Value of the property held by the Group for internal management reference purpose as at the Valuation Date in its existing states assuming free of all encumbrances was in the order of RENMINBI ONE HUNDRED FIFTY THREE MILLION AND FOUR HUNDRED THOUSAND YUAN ONLY (RMB153,400,000).

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VALUATION REPORT

APPENDIX II

LIMITING CONDITIONS

Our findings or conclusion of value of the property in this report are valid only for the stated purpose and only at each of the Valuation Date, and for the sole use of the Instructing Party. We or our personnel shall not be required to give testimony or attendance in court or to any government agency by reason of this report, and we accept no responsibility whatsoever to any other person.

Our valuation has been made on the assumption that no unauthorised alteration, extension or addition has been made in the property, and that the inspection and the use of this report do not purport to be a building survey of the property. We have assumed that the property is free of unsuitable materials and techniques.

No responsibility is taken for changes in market conditions and local government policy, and no obligation is assumed to revise this report to reflect events or conditions, which occur or make known to us subsequent to the date hereof.

Neither the whole nor any part of this report or any reference made hereto may be included in any published documents, circular or statement, or published in any way, without our written approval of the form and context in which it may appear. Nonetheless, we consent the Company to include this report into a circular for its shareholders’ reference.

Our liability for loss or damage shall be limited to such sum as we ought reasonably to pay having regard to our responsibility for the same on the basis that all other consultants and specialists, where appointed, shall be deemed to have provided to the Instructing Party contractual undertakings in respect of their services and shall be deemed to have paid to the Instructing Party such contribution as may be appropriate having regard to the extent of their responsibility for such loss or damage.

Our liability for any loss or damage arising out of the action or proceedings aforesaid shall, notwithstanding the preceding provisions, in any event be limited to a sum not exceeding the charges paid to us for the portion of services or work products giving rise to liability. In no event shall we be liable for consequential, special, incidental or punitive loss, damage or expense (including without limitation, loss of profits, opportunity cost etc.), even if it has been advised of their possible existence. For the avoidance of doubt our liability shall never exceed the lower of the sum calculated in accordance with the preceding provisions and the sum provided for in this clause.

It is agreed that the Instructing Party and the Company are required to indemnify and hold us and our personnel harmless from any claims, liabilities, costs and expenses (including, without limitation, attorney’s fees and the time of our personnel involved) brought against, paid or incurred by us at a time and in any way based on the information made available

— II-9 —

VALUATION REPORT

APPENDIX II

in connection with our engagement except to the extent that any such losses, expenses, damages or liabilities are ultimately determined to be the result of gross negligence, misconduct, wilful default or fraud of our engagement team in conducting its work. This provision shall survive even after the termination of this engagement for any reason.

STATEMENTS

Our report is prepared in line with the reporting guidelines contained in the IVS. The valuation has been undertaken by us, acting as external valuer, for the purpose of the valuation.

We retain a copy of this report together with the data and documents provided by the Instructing Party for the purpose of this assignment, and these data and documents will, according to the Laws of Hong Kong, be kept for a period of 6 years from the date it provided to us and to be destroyed thereafter. We considered these records confidential, and we do not permit access to them by anyone, with the exception for law enforcement authorities or court order, without the Instructing Party’s authorisation and prior arrangement made with us in writing. Moreover, we will add the Company’s information into our client list for our future reference.

The analysis and valuation of the property depend solely on the assumptions made in this report and not all of which can be easily quantified or ascertained exactly. Should some or all of the assumptions prove to be inaccurate at a later date, it will affect the reported findings or conclusion of value significantly.

We hereby certify that the fee for this service is not contingent upon our conclusion of values and we have no significant interests in the property, the Group or the value reported.

Yours faithfully, For and on behalf of

LCH (Asia-Pacific) Surveyors Limited

Elsa Ng Hung Mui B.Sc. M.Sc. R.P.S. (GP) Executive Director

Sr Elsa Ng Hung Mui has been conducting valuation of real property in Hong Kong, Macau and mainland China since 1994. She is a Fellow of The HKIS and a valuer on the List of Property Valuers for Undertaking Valuation for Incorporation or Reference in Listing Particulars and Circulars and Valuation in Connection with Takeovers and Mergers published by The Hong Kong Institute of Surveyors.

— II-10 —

VALUATION REPORT

APPENDIX II

PROPERTY PARTICULARS

Property held by the Group under long-term title certificates in the PRC and valued on market value basis

Property

Description and tenure

Particulars of occupancy

Three various parcels of land located at Gudou Hot Spring Resort Gudou Village, Yamen Town, Xinhui District, Jiangmen City, Guangdong Province, The People’s Republic of China 529149

The property comprises three various parcels of land having a total site area of approximately 63,797 square meters (“ sq. m. ”). with the maximum allowable gross floor area of approximately 54,323.2 sq.m. (See Notes 1 and 2).

The property is located at the Gudou Hot Spring Resort.

As inspected and confirmed by the Instructing Party and the appointed personnel of the Company, the property was vacant as at the Valuation Date.

The property is subject to a right to use the land for various terms with the latest term till 6 December 2042 for accommodation and beverage usages.

(See Note 1)

Notes:

1. The right to possess the land is held by the State and the right to use the land has been granted by the State to 廣東古兜旅遊集團有限公司 (translated as Guangdong Gudou Travel Group Company Limited and hereinafter referred to as “ Guangdong Gudou ”) via the following ways:

2. (i) A parcel of land having a site area of 16,856 sq. m.

Pursuant to a Real Estate Ownership Certificate known as Yue (2019) Jiang Men Shi Bu Dong Chan Quan Di 2052760 Hao（粵 (2019) 江門市不動產權第 2052760 號）and issued by the Jiangmen Municipal People’s Government （江門市人民政府）, Guangdong Gudou has the right to use the land having a site area of 16,856 sq. m. for a term till 12 July 2042 for accommodation and beverage usages.

• (ii) A parcel of land having a site area of 36,955 sq.m.

Pursuant to a State-owned Land Use Rights Certificate known as Xin Guo Yong (2012) Di 00703 Hao（新國用 (2012) 第 00703 號）dated 5 April 2012 and issued by the Jiangmen Municipal People’s Government（江門市人民政府）, Guangdong Gudou has the right to use the land having a site area of 36,955 sq. m. for a term till 12 July 2042 for accommodation and beverage usages.

• (iii) A parcel of land having a site area of 9,986 sq.m.

Pursuant to a Real Estate Ownership Certificate known as Yue (2018) Jiang Men Shi Bu Dong Chan Quan Di 2068160 Hao（粵 (2018) 江門市不動產權第 2068160 號）and issued by the Jiangmen Municipal People’s Government（江門市人民政府）, Guangdong Gudou has the right to use the land having a site area of 9,986 sq. m. for a term till 6 December 2042 for accommodation and beverage usages.

— II-11 —

VALUATION REPORT

APPENDIX II

1. Pursuant to the Xinhui Gudou Hot Spring Resort Outline Zoning Plan issued by the Planning and Survey Design Research Institute of Jiangmen City（江門市規劃勘察設計研究院）, the property is mainly subject to the following development parameters:

			Building
			Height
Certificate No	Plot Ratio	Site Coverage	Restriction (m)	Greenery Area	Usage
Yue (2018) Jiang Men	≤0.6	≤20%	≤15	≥35%	Technological
Shi Bu Dong Chan
Quan Di 2068160
Hao
Xin Guo Yong (2012)	≤0.6_(portion)_	≤20%	≤15	≥35%	Technological
Di 00703 Hao	≤2.0_(portion)_		≤60		Commercial
Yue (2019) Jiang Men	≤2.0	≤40%	≤100	≥35%	Commercial
Shi Bu Dong Chan
Quan Di 2052760
Hao

1. Pursuant to a copy of the Business Licence（營業執照）dated 16 November 2015, Guangdong Gudou is a limited liability company registered in the PRC for an operational period commencing from 25 October 2001 to 24 October 2051.

2. According to the legal opinions as prepared by the Company’s PRC legal adviser, 廣東恆益律師事務所 GFE Law Office, in 2016, the following opinions are noted:

3. i. Guangdong Gudou legally obtained the land use rights of the property by way of land grant, and all the considerations have been paid;

4. ii. Guangdong Gudou is the legally interested party in the land use rights of the property and has the right to transfer, lease and mortgage the land use rights of the property; and

5. iii. construction of hotel or health regimen facilities, subject to obtaining all relevant approvals, including but not limited to construction and planning permits, would not violate the laws, rules and regulations in the PRC.

6. According to the information provided by the Instructing Party or its appointed personnel, we are given to understand that the property was subject to mortgage as at the Valuation Date.

7. For information purpose, the Market Value of the Property as at 31 March 2020 for internal management reference purpose was RENMINBI ONE HUNDRED FIFTY TWO MILLION EIGHT HUNDRED AND FIFTY THOUSAND YUAN ONLY (RMB152,850,000).

— II-12 —

GENERAL INFORMATION

APPENDIX III

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the GEM 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) Director’s interests and short positions in the securities of the Company and its associated corporations

As at the Latest Practicable Date, the following Directors or the chief executive of the Company had or were deemed to have interests or short positions in the shares, underlying shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) (i) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provision of the SFO); or (ii) which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies contained in the Listing Rules:

(i) Long position in the Shares

			Approximate
			percentage of
			the Company’s
	Nature of	Number of	issued share
Name of Director	interest	Shares held	capital
Mr. Hon Chi Ming	Interest of	336,500,000	34.34%
	controlled	(Note 1)
	corporation

— III-1 —

GENERAL INFORMATION

APPENDIX III

• (ii) Interests in the underlying Shares held under equity derivatives

	Number of		Exercise
	Share		price per
Name of Director	Options held	Date of grant	Share	Exercise period
			(HK$)
Mr. Hon Chi Ming	4,900,000	5 April 2017	0.62	Subject to the
				vesting schedule
				in Note 2
Mr. Huang Zhanxiong	4,900,000	5 April 2017	0.62
Ms. Zhen Yaman	2,450,000	5 April 2017	0.62
Mr. Hon Ka Fung	2,450,000	5 April 2017	0.62
Mr. Wu Sai Him	2,450,000	5 April 2017	0.62
Mr. Chiu Chi Wing	2,450,000	5 April 2017	0.62
Prof. Wang Dawu	2,450,000	5 April 2017	0.62

Notes:

1. The Shares were held by Harvest Talent Investments Limited, a company wholly-owned by Mr. Hon Chi Ming. Under the SFO, Mr. Hon Chi Ming is deemed to be interested in all the Shares held by Harvest Talent Investments Limited.

2. The Share Options are subject to the vesting schedule below and are exercisable during each exercise period specified below:

Exercise period	Number of underlying Shares subject to the Share Options
5 April 2018 to	25% of the total number of Shares fall to be issued on exercise of
4 April 2025	the Share Options
5 April 2019 to	25% of the total number of Shares fall to be issued on exercise of
4 April 2025	the Share Options
5 April 2020 to	25% of the total number of Shares fall to be issued on exercise of
4 April 2025	the Share Options
5 April 2021 to	25% of the total number of Shares fall to be issued on exercise of
4 April 2025	the Share Options

— III-2 —

APPENDIX III

GENERAL INFORMATION

Save as disclosed above, as at the Latest Practicable Date, none of the Directors and the chief executive of the Company had or was deemed to have any interests or short positions in the shares, underlying shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) (i) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies contained in the Listing Rules, to be notified to the Company and the Stock Exchange.

(b) Interests of substantial shareholders

So far as is known to the Directors and the chief executive of the Company, as at the Latest Practicable Date, the following persons (not being Directors or chief executive of the Company) had, or were deemed to have, interests or short positions in the Shares or underlying Shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO:

Long position in Shares of the Company

			Approximate
			percentage of
			the Company’s
		Number of	issued
Name	Nature of interest	Shares held	share capital
Ms. Li Wai Ling	Interest held by spouse	336,500,000	34.34%
	(Note 1)
Harvest Talent	Beneficial owner	336,500,000	34.34%
Investments Limited
Phoenix Virtue Limited	Beneficial owner_(Note 2)_	286,000,000	29.18%
Add Hero Holdings	Interest of controlled	286,000,000	29.18%
Limited	corporations_(Note 2)_
China Aoyuan	Interest of controlled	286,000,000	29.18%
	corporations_(Note 2)_

— III-3 —

GENERAL INFORMATION

APPENDIX III

			Approximate
			percentage of
			the Company’s
		Number of	issued
Name	Nature of interest	Shares held	share capital
Ace Rise Profits Limited	Interest of controlled	286,000,000	29.18%
	corporations_(Note 2)_
Asia Square Holdings Ltd	Interest of controlled	286,000,000	29.18%
	corporations_(Note 2)_
Guo Ziwen	Settlor of a discretionary	286,000,000	29.18%
	trust_(Note 2)_
J. Safra Sarasin Trust	Trustee_(Note 2)_	286,000,000	29.18%
Company (Singapore)
Limited
Jiang Miner	Settlor of a discretionary	286,000,000	29.18%
	trust_(Note 2)_
Joy Pacific Group Limited	Interest of controlled	286,000,000	29.18%
	corporations_(Note 2)_
Sturgeon Limited	Interest of controlled	286,000,000	29.18%
	corporations_(Note 2)_
Fu An International	Beneficial owner	60,000,000	6.12%
Investments Limited	(Note 3)
Wealth Promise Holdings	Nominee for another	60,000,000	6.12%
Limited	person_(Note 3)_
Mr. Li Chao Wang	Interest of a controlled	97,500,000	9.95%
	corporation_(Note 4)_
Ms. Song Min	Interest of spouse_(Note 5)_	97,500,000	9.95%

— III-4 —

GENERAL INFORMATION

APPENDIX III

Notes:

1. Ms. Li Wai Ling was the spouse of Mr. Hon Chi Ming. By virtue of the SFO, Ms. Li Wai Ling was deemed to be interested in the Shares in which Mr. Hon Chi Ming is interested.

2. Phoenix Virtue Limited was a company wholly-owned by Add Hero Holdings Limited, which in turn was wholly-owned by China Aoyuan, which in turn was owned as to 51.62% by Ace Rise Profits Limited and 55.0% by Joy Pacific Group Limited (including interests held by Ace Rise Profits Limited). Ace Rise Profits Limited was a company held as to 90.00% by Joy Pacific Group Limited, which in turn was whollyowned by Sturgeon Limited. Sturgeon Limited was a company wholly-owned by Asia Square Holdings Limited, as a nominee and trustee for J. Safra Sarasin Trust Company (Singapore) Limited. J. Safra Sarasin Trust Company (Singapore) Limited as the trustee held such interests on trust for the beneficiaries of The Golden Jade Trust, which was a discretionary family trust established under the laws and regulations of Singapore. Mr. Guo Ziwen and Ms. Jiang Miner were the settlors of The Golden Jade Trust. By virtue of the SFO, each of Add Hero Holdings Limited, China Aoyuan, Ace Rise Profits Limited, Joy Pacific Group Limited, Sturgeon Limited, Asia Square Holdings Limited, J. Safra Sarasin Trust Company (Singapore) Limited, Mr. Guo Ziwen and Ms. Jiang Miner were all deemed to be interested in the Shares in which Phoenix Virtue Limited was interested.

3. These Shares are registered in the name of Wealth Promise Holdings Limited as the nominee of Fu An International Investments Limited. Wealth Promise is wholly-owned by Fu An International Investments Limited.

4. Fu An International Investments Limited is beneficially owned as to 74.21% by Mr. Li Chao Wang. By virtue of the SFO, Mr. Li Chao Wang is deemed to be interested in all the Shares owned by Fu An. Mr. Li Chao Wang is also deemed to be interested in all the Shares beneficially owned by Grand Luck Ventures Limited, namely 37,500,000 Shares, by virtue of the SFO, as he beneficially owns the entire issued share capital of Grand Luck Ventures Limited. Accordingly, Mr. Li Chao Wang is deemed to be interested in a total of 97,500,000 Shares under the SFO.

5. By virtue of the SFO, Ms. Song Min, the spouse of Mr. Li Chao Wang, is deemed to be interested in all the Shares in which Mr. Li Chao Wang is interested.

Save as disclosed above, as at the Latest Practicable Date, the Directors were not aware of any other person (other than the Directors and the chief executive of the Company) who had, or was deemed to have, interests or short positions in the Shares or underlying Shares (including any interests in options in respect of such share capital), which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, and none of the Directors or proposed Director is a director or employee of the above-mentioned companies.

— III-5 —

GENERAL INFORMATION

APPENDIX III

DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had entered, or proposed to enter, into a service contract or appointment letter with any member of the Group which is not determinable by the Group within one year without payment of compensation (other than statutory compensation).

LITIGATION

As at the Latest Practicable Date, no member of the Group was engaged in any litigation or claims of material importance and no litigation or claim of material importance was known to the Directors to be pending or threatened against any member of the Group.

MATERIAL CONTRACTS

The following contracts (not being contracts entered not in the ordinary course of business) have been entered into by the member of the Group within two years immediately preceding the date of this circular and are or may be material:

• (a) the capital increase agreement dated 30 May 2019 as amended by a supplemental agreement dated 29 November 2019 entered into among Guangdong Gudou, Yangjiang City Shijia Property Development Company Limited（陽江市世嘉房 地產開發有限公司）(“ Yangjiang Shijia* ”) and the then shareholders of Yangjiang Shijia in relation to, among other things, the capital injection of an aggregate of RMB65,170,000 into Yangjiang Shijia by Guangdong Gudou;

• (b) a tenancy agreement dated 28 November 2019 entered into between View Top Holding Limited, an indirect wholly owned subsidiary of the Company, as tenant and Rainbow Vast Limited as landlord of 19th Floor, Tower One of Tern Centre, No. 237 Queen’s Road Central, Hong Kong, for a term of two years commencing on 1 December 2019 with monthly rental of HK$45,780;

• (c) the First Cooperation Agreement; and

• (d) the Second Cooperation Agreement.

Save as disclosed above, no other material contract (being contracts not entered into in the ordinary course of business) has been entered into by the Group within two years immediately preceding the Latest Practicable Date.

— III-6 —

GENERAL INFORMATION

APPENDIX III

COMPETING INTERESTS

As at the Latest Practicable Date, none of the controlling Shareholder(s) or Directors and their respective associates had any interests in a business which competes or is likely to compete, either directly or indirectly, with the business of the Group.

DIRECTORS’ INTERESTS IN CONTRACTS/ASSETS AND OTHER INTERESTS

As at the Latest Practicable Date, none of the Directors had any interest in any assets which have been, since 31 December 2019 (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. As at the Latest Practicable Date, none of the Directors was materially interested in any contract or arrangement, subsisting at the date of this circular, which is significant in relation to the business of the Group.

EXPERTS AND CONSENTS

The following are the qualifications of the experts having given opinions contained in and referred to in this circular:

Name	Qualification
Lego Corporate Finance	A corporation licensed to carry out Type 6 (advising on
Limited	corporate finance) regulated activities under the SFO
GFE Law Office	Qualified PRC lawyers
（廣東恆益律師事務所）
(“PRC Legal Adviser”)
LCH (Asia-Pacific)	Professional surveyor
Surveyors Limited
(“Valuer”)

As at the Latest Practicable Date, the Independent Financial Adviser, PRC Legal Adviser and Valuer had no shareholding, directly or indirectly, in any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

— III-7 —

APPENDIX III

GENERAL INFORMATION

The Independent Financial Adviser, PRC Legal Adviser and Valuer have given and have not withdrawn their respective written consent to the issue of this circular, with the inclusion of the references to their name and/or their opinions in the form and context in which they are included.

The Independent Financial Adviser, PRC Legal Adviser and Valuer have no direct or indirect interest in any assets which had been acquired, or disposed of by, or leased to any member of the Group, or was proposed to be acquired, or disposed of by, or leased to any member of the Group since 31 December 2019, the date to which the latest published audited consolidated financial statements of the Group were made up.

MATERIAL ADVERSE CHANGE

As disclosed in (i) the profit warning announcement of the Company dated 24 April 2020; (ii) the first quarterly results announcement for the three months ended 31 March 2020 of the Company dated 12 May 2020; and (iii) the first quarterly report for the three months ended 31 March 2020 of the Company dated 13 May 2020, the recent outbreak of the novel coronavirus (COVID-19) in early 2020 has adversely affected the Group’s financial performance for the three months ended 31 March 2020. On 28 January 2020, in response to the precautionary policies and measures implemented by the Guangdong provincial government to control the outbreak of COVID-19, the Group decided to temporarily suspend the operation of Gudou Hot Spring Resort, which had been partially resumed as at the Latest Practicable Date.

Save as disclosed above, as at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 December 2019, being the date to which the latest published audited consolidated financial statements of the Group were made up.

MISCELLANEOUS

• (a) The registered office of the Company is situated at Clifton House, 75 Fort Street, P.O. Box 1350, Grand Cayman, KY1-1108, Cayman Islands.

• (b) The principal place of business of the Company in Hong Kong is situated at 19th Floor, Tower One of Tern Centre, No.237 Queen’s Road Central, Hong Kong.

• (c) The principal place of business of the Company in the PRC is situated at Gudou Hot Spring Resort, Yamen Town, Xinhui District, Jiangmen City, Guangdong Province, the PRC.

— III-8 —

GENERAL INFORMATION

APPENDIX III

• (d) Tricor Investor Services Limited, the Hong Kong branch share registrar and transfer office of the Company, is situated at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

• (e) Ocorian Trust (Cayman) Limited, the principal share registrar and transfer office of the Company, is situated at Clifton House, 75 Fort Street, P.O. Box 1350 Grand Cayman, KY1-1108, Cayman Islands.

• (f) The company secretary of the Company is Ms. Wan Shun Man. Mr. Wan has been a member of the Hong Kong Institute of Certificate Public Accountants since 2014.

• (g) The audit committee of the Company was established on 18 November 2016 in compliance with Rule 5.28 of the GEM Listing Rules. Written terms of reference in compliance with Rule 5.29 of the GEM Listing Rules and code provision C.3.3 of the Corporate Governance Code as set out in Appendix 15 to the GEM Listing Rules have been adopted. The primary duties of the audit committee are mainly to make recommendation to the Board on the appointment, re-appointment and removal of external auditors, monitor the integrity of the financial statements, annual reports, half-yearly reports and quarterly reports and review significant financial judgments contained therein, oversee financial reporting system and review risk management and internal control systems of the Company. The audit committee of the Company consists of three independent non-executive Directors, namely Mr. Chiu Chi Wing, Mr. Wu Sai Him and Prof. Wang Dawu. Mr. Chiu Chi Wing is the chairman of the audit committee. Set forth below is the background of each member of the audit committee:

• (i) Mr. Chiu Chi Wing graduated from Lingnan College (now known as Lingnan University) with an honours diploma in accountancy in November 1986. Mr. Chiu is a Certified Public Accountant and has been a fellow member of the Hong Kong Institute of Certified Public Accountants (formerly known as Hong Kong Society of Accountants) since September 1997. He has also been a member of the Society of Chinese Accountants and Auditors since July 1993. Since February 2017, Mr. Chiu has been an independent non-executive director of Hing Ming Holdings Limited (stock code: 8425), a company listed on GEM of the Stock Exchange.

— III-9 —

APPENDIX III

GENERAL INFORMATION

• (ii) Mr. Wu Sai Him graduated from National Taiwan University with a bachelor of science in engineering in June 1969. He then obtained his master of science in structural engineering from University of Strathclyde in August 1974. He is also an individual founder member of the Hong Kong Institution of Highways and Transportation. Mr. Wu is a fellow of The Institution of Structural Engineers and The Hong Kong Institution of Engineers. From May 1995 to May 2016, Mr. Wu was the chairman of The Lighthouse Club (Hong Kong branch). Mr. Wu was an adjunct professor at the Department of Real Estate and Construction at the University of Hong Kong from June 2014 to September 2020.

• (iii) Prof. Wang Dawu graduated from Shanghai Academy of Social Sciences with a master’s degree in economics in December 1982. Prof. Wang was appointed as a student advisor for the doctorate of philosophy students in the field of industrial economics from September 2006 to August 2009. From January 2009 to December 2012, he was a part-time lecturer under the cooperative education program at the Shanghai Normal University. In March 2011, Prof. Wang was appointed as a guest lecturer of the Shanghai Institute of Visual Art of Fudan University.

• (h) In the event of any inconsistency, the English text of this circular shall prevail over the Chinese text.

— III-10 —

GENERAL INFORMATION

APPENDIX III

DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal business hours (except Saturdays, Sundays and public holidays) at 19th Floor, Tower One of Tern Centre, No. 237 Queen’s Road Central, Hong Kong for a period of 14 days from the date of this circular:

• (a) the memorandum and articles of association of the Company;

• (b) this circular;

• (c) the First Cooperation Agreement;

• (d) the Second Cooperation Agreement;

• (e) the annual reports of the Company for the two financial years ended 31 December 2018 and 2019, respectively;

• (f) the letter from the Independent Financial Adviser as set out in this circular;

• (g) the letter from the Independent Board Committee as set out in this circular;

• (h) the valuation report prepared by Valuer as set out in this circular;

• (i) the material contracts referred to in the section headed “Material Contracts” in this appendix; and

• (j) the written consents of each of the experts referred to in the section headed “Experts and Consents” in this appendix.

— III-11 —

NOTICE OF EGM

==> picture [83 x 72] intentionally omitted <==

GUDOU HOLDINGS LIMITED 古兜控股有限公司

(incorporated in the Cayman Islands with limited liability)

(stock code: 8308)

NOTICE IS HEREBY GIVEN THAT an extraordinary general meeting (the “ EGM ”) of Gudou Holdings Limited (the “ Company ”) will be held at 19th Floor, Tower One of Tern Centre, No.237 Queen’s Road Central, Hong Kong on Wednesday, 9 September 2020 at 2:00 p.m., for the purpose of considering and, if thought fit, passing with or without modifications, the following ordinary resolution of the Company.

“ THAT :

• (a) the second cooperation and development agreement (the “ Second Cooperation Agreement ”) dated 30 June 2020 entered into between 廣東古兜旅遊集團有限公 司 (in English, for identification purpose only, Guangdong Gudou Travel Group Company Limited) (“ Guangdong Gudou ”) and 奧園集團（廣東）有限公司 (in English, for identification purpose only, Guangdong Aoyuan Co., Ltd.) (“ GD Aoyuan ”) pursuant to which Guangdong Gudou and GD Aoyuan had agreed to cooperate with each other for the planning, development and operation of three parcels of land situated at Gudou hot spring resort at Jiangmen City, Guangdong Province, the PRC and operated by the Company and its subsidiaries, be and are hereby confirmed, approved and ratified; and

• (b) the directors of the Company be and are hereby authorised to execute such other documents, do all other acts and things and take such action as they may consider necessary, desirable or expedient to implement and/or give effect to or otherwise in connection with the Second Cooperation Agreement.”

By order of the Board

GUDOU HOLDINGS LIMITED Hon Chi Ming Chairman and Executive Director

Hong Kong, 19 August 2020

— N-1 —

NOTICE OF EGM

Registered office: Clifton House, 75 Fort Street P.O. Box 1350 Grand Cayman KY1-1108 Cayman Islands

Principal place of business in Hong Kong: 19th Floor Tower One of Tern Centre No. 237 Queen’s Road Central Hong Kong

Notes:

1. A member (who is the holder of two or more shares) entitled to attend and vote at the EGM is entitled to appoint one or more proxies to attend and, on a poll, vote on his/her behalf. A proxy need not be a member of the Company.

2. To be valid, a form of proxy and the power of attorney or other authority (if any) under which it is signed or a notarial certified copy of such power of attorney or authority, must be deposited with the Hong Kong branch share registrar of the Company, Tricor Investor Services Limited of Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong not less than 48 hours before the time appointed for holding the EGM or any adjourned meeting.

3. Shareholders whose names appear on the Company’s register of members on Wednesday, 9 September 2020, will be eligible to attend and vote at the EGM. The register of members of the Company will be closed from Friday, 4 September 2020 to Wednesday, 9 September 2020 (both dates inclusive) for determining eligibility to attend and vote at the EGM. All transfer of share(s), accompanied by the relevant share certificate(s) with the properly completed transfer form(s) either overleaf or separately, must be lodged with the branch share registrar and transfer office of the Company in Hong Kong, Tricor Investor Services Limited at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong, for registration not later than 4:30 p.m., Thursday, 3 September 2020.

4. In the case of joint holders of shares in the Company, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the vote(s) of the other joint holder(s), seniority being determined by the order in which names stand in the register of members.

5. Taking into account of the recent development of the epidemic caused by COVID-19, the Company will implement the following precaution and control measures at the meeting against the epidemic to protect the members from the risk of infection:

6. (i) Compulsory body temperature check will be conducted for every member or proxy at the entrance of the venue. Any person with a body temperature of over 37.5 degrees Celsius will not be admitted to the venue.

7. (ii) Every member or proxy is required to wear a surgical facial mask throughout the meeting. Furthermore, the Company wishes to advise a the members, particularly the members who are subject to quarantine in relation to COVID-19, that they may appoint any person or the chairman of the meeting as a proxy to vote on the resolutions, instead of attending the meeting in person.

8. Completion and return of the form of proxy will not preclude members from attending and voting at the EGM.

— N-2 —

NOTICE OF EGM

As at the date of this notice, the board of directors of the Company comprises:

Executive Directors:

Mr. Hon Chi Ming

Mr. Huang Zhanxiong

Ms. Zhen Yaman

Mr. Hon Ka Fung

Non-executive Director:

Mr. Ruan Yongxi

Independent non-executive Directors:

Mr. Wu Sai Him

Mr. Chiu Chi Wing Prof. Wang Dawu

— N-3 —