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 Kaisa Prosperity Holdings Limited 佳兆業美好集團有限公司, you should at once hand this circular, together with the enclosed form of proxy, to the purchaser or transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected 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.

==> picture [45 x 40] intentionally omitted <==

KAISA PROSPERITY HOLDINGS LIMITED 佳兆業美好集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2168)

(1) REVISION OF ANNUAL CAPS FOR CONTINUING CONNECTED TRANSACTIONS (2) RENEWAL OF CONTINUING CONNECTED TRANSACTIONS AND

(3) NOTICE OF EXTRAORDINARY GENERAL MEETING

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

Capitalised terms used in this cover page shall have the same meanings as those defined in the section headed “Definitions” in this circular.

A letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders is set out on pages 22 to 38 of this circular. The letter from the Independent Board Committee containing its recommendation to the Independent Shareholders is set out on page 20 of this circular.

A notice convening the EGM to be held at Regus Conference Centre, 35/F, Central Plaza, 18 Harbour Road, Wanchai, Hong Kong at 11 a.m. on Tuesday, 15 December 2020 is set out on pages EGM-1 to EGM-3 of this circular. A form of proxy for use at the EGM is enclosed with this circular.

Whether or not you are able to attend the EGM, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon to the branch share registrar and transfer office of the Company, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the EGM (i.e. 11 a.m. on Sunday, 13 December 2020) 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 adjournment thereof (as the case may be) should you so desire. In such event, the instrument appointing a proxy will be deemed to be revoked.

24 November 2020

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . .	20
Letter from the Independent Financial Adviser . . . . . . . . . . . . . . . . . . . . . . . . .	22
Appendix – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	39
Notice of EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	EGM-1

DEFINITIONS

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

“2018 CCT Agreements”

2018 Property Management Services Framework Agreement, 2018 Equipment Installation Services Framework Agreement, 2018 Sales Assistance Services Framework Agreement and 2018 Property Lease Framework Agreement

“2018 Equipment Installation Services Framework Agreement”

the agreement entered into between Kaisa Holdings and the Company dated 20 November 2018 in relation to the provision of Equipment Installation Services by the Group to the Kaisa Group

“2018 Property Lease Framework Agreement”

the agreement entered into between Kaisa Holdings and the Company dated 20 November 2018 in relation to leasing from the Kaisa Group and/or its associates (i) certain properties for office use; and (ii) car parking lots for sub-leasing

“2018 Property Management Services Framework Agreement”

the agreement entered into between Kaisa Holdings and the Company dated 20 November 2018 in relation to the provision of Property Management Services by the Group to the Kaisa Group, as amended by the supplemental agreement dated 29 November 2019

“2018 Sales Assistance Services Framework Agreement”
the agreement entered into between Kaisa Holdings and the Company dated 20 November 2018 in relation to the provision of Sales Assistance Services by the Group to the Kaisa Group
“2020 CCT Agreements”

2020 Property Management Services Framework Agreement, 2020 Equipment Installation Services Framework Agreement, 2020 Sales Assistance Services Framework Agreement and 2020 Property Lease Framework Agreement

“2020 Equipment Installation Services Framework Agreement”

the agreement entered into between Kaisa Holdings and the Company dated 4 November 2020 in relation to the provision of Equipment Installation Services by the Group to the Kaisa Group

– 1 –

DEFINITIONS

“2020 Property Lease Framework Agreement”
“2020 Property Management Services Framework Agreement”
“2020 Sales Assistance Services Framework Agreement”
“Board”
“Company”
“Director(s)”
“EGM”
“Equipment Installation Services”
“First Supplemental Agreement”
“GFA”
the agreement entered into between Kaisa Holdings and the Company dated 4 November 2020 in relation to leasing from the Kaisa Group and/or its associates (i) certain properties for office use; and (ii) car parking lots for sub-leasing
the agreement entered into between Kaisa Holdings and the Company dated 4 November 2020 in relation to the provision of Property Management Services by the Group to the Kaisa Group
the agreement entered into between Kaisa Holdings and the Company dated 4 November 2020 in relation to the provision of Sales Assistance Services by the Group to the Kaisa Group
the board of Directors
Kaisa Prosperity Holdings Limited. (佳兆業美好集團有限公司) (stock code: 2168), a company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the Main Board of the Stock Exchange
director(s) of the Company
the extraordinary general meeting of the Company to be convened and to consider and, if thought fit, approve, (i) the Supplemental Agreements (including the proposed annual caps); and (ii) the 2020 CCT Agreements (including the proposed annual caps)
equipment installation services including mainly installation of (i) access control system; (ii) intercom system; (iii) surveillance system; (iv) car-parking management system; and (v) other intelligent engineering for residential properties before the delivery of such properties to property owners
the supplemental agreement dated 4 November 2020 entered into between Kaisa Holdings and the Company to amend the annual cap of the 2018 Property Management Services Framework Agreement for the year ending 31 December 2020
gross floor area

– 2 –

DEFINITIONS

“Group”
“Hong Kong”
“Independent Board Committee”
“Independent Financial Adviser”
“Independent Shareholders”
“Kaisa Group”
“Kaisa Holdings”
“Latest Practicable Date”
“Listing Rules”
“Mr. Kwok”
“PRC”
the Company and its subsidiaries
the Hong Kong Special Administrative Region of the People’s Republic of China
a committee of the Board comprising all the independent non-executive Directors
Messis Capital Limited, a licensed corporation to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the Securities and Futures Ordinance (Chapter 571 of the laws of Hong Kong)
the Shareholders, other than Kaisa Holdings, Mr. Kwok and their respective associates (as defined in the Listing Rules)
Kaisa Holdings and its subsidiaries excluding the Group
Kaisa Group Holdings Ltd. (佳兆業集團控股有限公司) (stock code: 1638), an exempted company with limited liability incorporated in the Cayman Islands and the shares of which are listed on the Main Board of the Stock Exchange
23 November 2020, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information for inclusion in this circular
the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
Mr. Kwok Ying Shing, the Chairman of the board of directors of Kaisa Holdings and an executive director of Kaisa Holdings
the People’s Republic of China

– 3 –

DEFINITIONS

“Property Management Services”
“Prospectus”
“RMB”
“Sale Assistance Services”
“Second Supplemental Agreement”
“Shareholder(s)”
“Shares”
“Stock Exchange”
“Supplemental Agreements”
“%”
property management services, including but not limited to (i) pre-delivery services including (a) construction sites management services; and (b) display units and property sales venues management services; and (ii) property management services for properties owned, used or operated by Kaisa Group and/or its associates
the prospectus of the Company dated 26 November 2018
Renminbi, the lawful currency of the PRC
sales assistance services, including but not limited to, referring potential buyers to the Kaisa Group and/or its associates for the sales of the unsold properties in residential communities managed by the Group
the supplemental agreement dated 4 November 2020 entered into between Kaisa Holdings and the Company to amend the annual cap of the 2018 Equipment Installation Services Framework Agreement for the year ending 31 December 2020
holder(s) of share(s) of the Company
ordinary shares in the capital of the Company with nominal value of HK$0.01 each
The Stock Exchange of Hong Kong Limited
the First Supplemental Agreement and the Second Supplemental Agreement

per cent.

– 4 –

LETTER FROM THE BOARD

==> picture [45 x 41] intentionally omitted <==

KAISA PROSPERITY HOLDINGS LIMITED 佳兆業美好集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2168)

Executive Directors: Mr. LIAO Chuanqiang (Chairman) Ms. KWOK Hiu Ting (Vice Chairwoman) Mr. LI Haiming Mr. WU Jianxin Ms. GUO Li

Registered office: Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman, KY1-1111 Cayman Islands

Independent non-executive Directors: Mr. LIU Hongbai Ms. MA Xiumin Mr. CHEN Bin

Principal place of business in Hong Kong: Room 1901, 19/F Lee Garden One 33 Hysan Avenue Causeway Bay Hong Kong

24 November 2020

To the Shareholders

Dear Sir or Madam,

(1) REVISION OF ANNUAL CAPS FOR CONTINUING CONNECTED TRANSACTIONS (2) RENEWAL OF CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

Reference is made to the announcement of the Company dated 4 November 2020 in relation to, among others, the Supplemental Agreements and the 2020 CCT Agreements.

The purpose of this circular is to provide you with further details about (i) the transactions contemplated under the (1) 2018 Property Management Services Framework Agreement (as amended by the First Supplemental Agreement); (2) 2018 Equipment Installation Services Framework Agreement (as amended by the Second Supplemental Agreement); (3) 2020 Property Management Services Framework Agreement; and (4) 2020 Equipment Installation Services Framework Agreement; (ii) the recommendation of the Independent Board Committee; (iii) the advice of the Independent Financial Adviser; and (iv) a notice convening the EGM.

– 5 –

LETTER FROM THE BOARD

REVISION OF ANNUAL CAPS FOR CONTINUING CONNECTED TRANSACTIONS

On 4 November 2020, the Company and Kaisa Holdings entered into the Supplemental Agreements to revise the 2020 annual caps for the 2018 Property Management Services Framework Agreement and 2018 Equipment Installation Services Framework Agreement.

(A) Revision of annual cap for the 2018 Property Management Services Framework Agreement

(1) Introduction

Reference is made to (i) the section headed “CONNECTED TRANSACTIONS” of the Prospectus in relation to, among others, the 2018 Property Management Services Framework Agreement; and (ii) the announcement of the Company dated 29 November 2019 and the circular of the Company dated 6 December 2019 in relation to revision of the annual caps under the 2018 Property Management Services Framework Agreement for the year ended 31 December 2019 and the year ending 31 December 2020.

On 4 November 2020, the Company entered into the First Supplemental Agreement to revise the annual cap of the 2018 Property Management Services Framework Agreement for the year ending 31 December 2020.

(2) Revision of the annual cap

The principal terms of the 2018 Property Management Services Framework Agreement have been set out in the paragraph headed “CONNECTED TRANSACTIONS – (C) CONTINUING CONNECTED TRANSACTIONS SUBJECT TO THE REPORTING, ANNUAL REVIEW, ANNOUNCEMENT AND INDEPENDENT SHAREHOLDERS’ APPROVAL REQUIREMENTS” of the Prospectus.

Under the First Supplemental Agreement, the annual cap is proposed to be revised as follows:

			For	the year ending
			31	December 2020
				(RMB’000)
Original	annual	cap*		550,000
Revised	annual	cap		660,000

Except for the annual cap, the principal terms of the 2018 Property Management Services Framework Agreement remain unchanged.

– 6 –

LETTER FROM THE BOARD

(3) Reasons for the revision of the annual cap

Set out in the table below are the actual transaction amounts for the two years ended 31 December 2019 and the ten months ended 31 October 2020.

	For the year	For the year	For the year
	ended	ended	ending
	31 December	31 December	31 December
	2018	2019	2020
	(RMB’000)	(RMB’000)	(RMB’000)
Original annual cap	405,000	500,000*	550,000*
Actual transaction	402,758	467,916	453,691
amount			(for the ten
			months ended
			31 October
			2020)

The revised annual cap are determined with reference to the following factors:

a) the actual transaction amount for the ten months ended 31 October 2020 as shown in the table above, which has reached more than 82% of the original annual cap for the year ending 31 December 2020. It represents more than 96% of the actual transaction amount took place in the year ended 31 December 2019, with a growing trend observed in the second half of 2020;
b) the estimated increase in capacity of the Group to provide property management services; and
c) the anticipated increase in demand for property management services from Kaisa Group for the two months ending 31 December 2020 due to the expected increase in the total contracted GFA of Kaisa Group as evidenced by an increase of approximately 29.6% in the total contracted GFA for the ten months ended 31 October 2020 as compared to the same for the corresponding period in 2019 as published by Kaisa Group.

As at the Latest Practicable Date, the annual cap for the year ending 31 December 2020 under the 2018 Property Management Services Framework Agreement has not been exceeded.

The Company has put in place internal control measures to ensure that the existing annual cap will not be exceeded. Such measures include (1) appointing one dedicated employee with financial background holding the position of the general

As approved in the extraordinary general meeting on 24 December 2019

– 7 –

LETTER FROM THE BOARD

manager of the financial planning department in the Group to report directly to the Directors to monitor the transaction amount on a weekly basis until the revision of annual cap is approved in the EGM; and (2) circulated a reminder to all personnel reminding them that the 2020 transaction amount has reached an amount more than 80% of the 2020 annual cap and that such annual cap must not be exceeded before the Company is in compliance with the requirements under Rule 14A.54 of the Listing Rules.

(B) Revision of annual cap for the 2018 Equipment Installation Services Framework Agreement

(1) Introduction

Reference is made to the section headed “CONNECTED TRANSACTIONS” of the Prospectus in relation to, among others, the 2018 Equipment Installation Services Framework Agreement.

On 4 November 2020, the Company entered into the Second Supplemental Agreement to revise the annual cap of the 2018 Equipment Installation Services Framework Agreement for the year ending 31 December 2020.

(2) Revision of the annual cap

The principal terms of the 2018 Equipment Installation Services Framework Agreement have been set out in the paragraph headed “CONNECTED TRANSACTIONS – (C) CONTINUING CONNECTED TRANSACTIONS SUBJECT TO THE REPORTING, ANNUAL REVIEW, ANNOUNCEMENT AND INDEPENDENT SHAREHOLDERS’ APPROVAL REQUIREMENTS” of the Prospectus.

Under the Second Supplemental Agreement, the annual cap is proposed to be revised as follows:

			For the
			year ending
			31 December
			2020
			(RMB’000)
Original	annual	cap	80,000
Revised	annual	cap	110,000

Except for the annual cap, the principal terms of the 2018 Equipment Installation Services Framework Agreement remain unchanged.

– 8 –

LETTER FROM THE BOARD

(3) Reasons for the revision of the annual cap

Set out in the table below are the actual transaction amounts for the two years ended 31 December 2019 and the ten months ended 31 October 2020.

	For the year	For the year	For the year
	ended	ended	ending
	31 December	31 December	31 December
	2018	2019	2020
	(RMB’000)	(RMB’000)	(RMB’000)
Original annual cap	52,000	60,000	80,000
Actual transaction	45,266	59,513	71,112
amount			(for the ten
			months ended
			31 October
			2020)

The revised annual cap are determined with reference to the following factors:

a) the actual transaction amount for the ten months ended 31 October 2020 has reached more than 88% of the original annual cap for the year ending 31 December 2020. It represents more than 119% of the actual transaction amount for the year ended 31 December 2019, with a growing trend observed in the second half of 2020;
b) the estimated increase in capacity of the Group to provide Equipment Installation Services;
c) the anticipated increase in demand for equipment installation services from Kaisa Group for the two months ending 31 December 2020 due to the expected increase in the total contracted GFA of Kaisa Group as evidenced by an increase of approximately 29.6% in the total contracted GFA for the ten months ended 31 October 2020 as compared to the same for the corresponding period in 2019 as published by Kaisa Group; and
d) the increase in number of Kaisa Group companies to which the Group provides equipment installation services. As at the Latest Practicable Date, the Group has 288 equipment installation contracts with Kaisa Group on hand with a total contract value of approximately RMB204.8 million. Based on the installation schedule provided by Kaisa Group, the Group is expected to complete installation contracts generating revenue in a total amount of approximately RMB110 million for the year ending 2020.

– 9 –

LETTER FROM THE BOARD

As at the Latest Practicable Date, the annual cap for the year ending 31 December 2020 under the 2018 Equipment Installation Services Framework has not been exceeded.

The Company has put in place internal control measures (as set out in the paragraph headed “ (3) Reasons for the revision of the annual cap ” in the section headed “(A) Revision of annual cap for the 2018 Property Management Services Framework Agreement” above) to ensure that the existing annual cap for the 2018 Equipment Installation Services Framework Agreement will not be exceeded.

THE 2020 PROPERTY MANAGEMENT SERVICES FRAMEWORK AGREEMENT

The term of the 2018 Property Management Services Framework Agreement will expire on 31 December 2020. On 4 November 2020, the Company entered in the 2020 Property Management Services Framework Agreement to renew the 2018 Property Management Services Framework Agreement.

The principal terms of the 2020 Property Management Services Framework Agreement are set out below:

Date : 4 November 2020 Parties : Kaisa Holdings and the Company Term : The period commencing from 1 January 2021 to 31 December 2023 Subject matter : The Group will provide Property Management Services to Kaisa Group and/or its associates Pricing basis : The fees to be charged for the Property Management Services will be determined after arm’s length negotiations and taking into account (i) the size, location and positioning of the properties to be sold by the sales centers; and (ii) the anticipated operational costs (including labour costs, material costs and administrative costs) with reference to the fees for similar services and similar type of projects in the market.

The service fees shall not be higher than the standard fees designated by the relevant regulatory authorities (if applicable) or lower than the standard fees to be charged to independent third parties for similar Property Management Services.

– 10 –

LETTER FROM THE BOARD

Proposed annual caps :

	For the year	For the year	For the year
	ending	ending	ending
	31 December	31 December	31 December
	2021	2022	2023
	(RMB’000)	(RMB’000)	(RMB’000)
Annual cap	1,200,000	1,450,000	1,750,000

Basis of the annual : The annual caps were determined with reference to: caps

(i) the historical transaction amounts realised under the 2018 Property Management Services Framework Agreement and its supplementals which recorded a CAGR of approximately 20.2% from approximately RMB324.1 million for the year ended 31 December 2017 to approximately RMB467.9 million for the year ended 31 December 2019.

	For the year	For the year	For the year
	ended 31	ended 31	ending 31
	December	December	December
	2018	2019	2020
	(RMB’000)	(RMB’000)	(RMB’000)
Annual cap	405,000	50,000	550,000
			(Note 1)
Actual
transaction
amount	402,758	467,916	453,691
			(Note 2)

Notes:

(1) Subject to Independent Shareholders’ approval to increase the cap amount to RMB660,000,000 as explained in the section headed “Revision of annual cap to the 2018 Property Management Services Framework Agreement”.
(2) Transaction amount for the ten months ended 31 October 2020.
(ii) the estimated increase in capacity of the Group to provide property management services for existing properties owned, used or operated by Kaisa Group and/or its associates;

– 11 –

LETTER FROM THE BOARD

(iii) the anticipated increase in demand for property management services from Kaisa Group based on the Kaisa Group’s historical GFA growth and growth in contracted sales; and
(iv) the expected increase in staffing level and operational costs for the property management services to be provided to Kaisa Group from 2017 to October 2020, the property management services provided by the Group mostly comprise of support services including for example security, site management and hygiene related services.

The Group supplied approximately 50% of the staff at sales centers of Kaisa Group for the three years ended 31 December 2019, while Kaisa Group outsourced the remaining staff at sales centers to independent third party service providers. To allow potential home buyers experience consistent and high quality sales services, the Group will be engaged by Kaisa Group to supply all staff at Kaisa Group’s sales centers from 2021 to 2023. It is expected that the staffing level to be supplied by the Group will be doubled starting from 2021.

As a result of the significant increase in staffing level to be supplied by the Group under the 2020 Property Management Services Framework Agreement, the proposed annual cap for 2021 will increase significantly by approximately 81.8% as compare with the revised 2020 annual cap of approximately RMB660 million. After 2021, the Company expects that the increase in staffing level will return to a more stable rate of between approximately 10% to 20% per year.

– 12 –

LETTER FROM THE BOARD

THE 2020 EQUIPMENT INSTALLATION SERVICES FRAMEWORK AGREEMENT

The term of the 2018 Equipment Installation Services Framework Agreement will expire on 31 December 2020. On 4 November 2020, the Company entered in the 2020 Equipment Installation Services Framework Agreement to renew the 2018 Equipment Installation Services Framework Agreement.

The principal terms of the 2020 Equipment Installation Services Framework Agreement are set out below:

Date : 4 November 2020 Parties : Kaisa Holdings and the Company Term : The period commencing from 1 January 2021 to 31 December 2023
Subject matter : The Group will provide Equipment Installation Services to Kaisa Group and/or its associates.
Pricing basis : The fees to be charged for the Equipment Installation Services will be determined after arm’s length negotiations and taking into account (i) the location of the project; and (ii) the anticipated operational costs (including labor costs, material costs and administrative costs) with reference to the fees for similar services and similar type of projects in the market.

The service fees shall not be higher than the standard fees designated by the relevant regulatory authorities (if applicable) or lower than the standard fees to be charged from independent third parties for similar Equipment Installation Services.

	For the year	For the year	For the year
	ending	ending	ending
	31 December	31 December	31 December
	2021	2022	2023
	(RMB’000)	(RMB’000)	(RMB’000)
Annual cap	140,000	180,000	230,000

– 13 –

LETTER FROM THE BOARD

Basis of the annual caps

: The annual caps were determined with reference to:

(i) the historical transaction amounts realised under the 2018 Equipment Installation Services Framework Agreement, which grew at a CAGR of approximately 44.9% from the year ended 31 December 2017 to the year ended 31 December 2019.

	For the year	For the year	For the year
	ended	ended	ending
	31 December	31 December	31 December
	2018	2019	2020
	(RMB’000)	(RMB’000)	(RMB’000)
Annual cap	52,000	60,000	80,000
			(Note 1)
Actual
transaction
amount	45,266	59,513	71,112
			(Note 2)

Notes:

(1) Subject to Independent Shareholders’ approval to increase the cap amount to RMB110,000,000 as explained in the section headed “Revision of annual cap to the 2018 Equipment Installation Services Framework Agreement”.
(2) Transaction amount for the ten months ended 31 October 2020.
(ii) the estimated increase in capacity of the Group to provide for equipment installation services; and
(iii) the expected increase in number of Kaisa Group companies that will use Equipment Installation Services and the associated operational costs based on an estimated annual growth rate of approximately 28%, which is in-line with the contracted GFA year-on-year growth rate of Kaisa Group of approximately 30% from the 10-month ended 31 October 2020 as published by Kaisa Group.

Since before the listing of the Shares, the Group has provided Equipment Installation Services to Kaisa Group. Given the good track record in the quality of Equipment Installation Services provided by the Group, coupled with the increase in property projects of Kaisa Group, the Company believes that this growth trend will continue and the Group’s geographical coverage will continue to expand to new cities which the projects are located.

– 14 –

LETTER FROM THE BOARD

INTERNAL CONTROL

The Company has established various internal control measures to monitor the transactions contemplated under the 2018 CCT Agreements (as amended by the Supplemental Agreements) and 2020 CCT Agreements, including:

(i) prior to confirming the pricing under the 2018 CCT Agreements (as amended by the Supplemental Agreements) and 2020 CCT Agreements, the operating department shall obtain the prevailing market price of the relevant services for reference. In addition, the operating department shall check the recent transactions engaged by the Group with independent third parties to ensure that the pricing for transactions with Kaisa Group shall not be less favorable than that to be engaged with independent third parties;
(ii) the Company has a designated employee, who is familiar with the finance and business operations of the Group, to monitor the aggregate amount of the transactions contemplated under the 2018 CCT Agreements (as amended by the Supplemental Agreements) and the 2020 CCT Agreements and assesses on a monthly basis whether any of the annual caps thereunder may be exceeded;
(iii) the independent non-executive Directors will conduct annual reviews with respect to the transactions contemplated under the 2018 CCT Agreements (as amended by the Supplemental Agreements) and the 2020 CCT Agreements and confirm in the annual report, pursuant to the requirements under the Listing Rules, whether such continuing connected transactions have been entered into in the ordinary and usual course of business of the Group, are on normal commercial terms, and in accordance with the 2018 CCT Agreements (as amended by the Supplemental Agreements) and 2020 CCT Agreements on terms that are fair and reasonable and in the interests of the Company and its Shareholders as a whole; and
(iv) the Company’s external auditors will conduct annual reviews of the 2018 CCT Agreements (as amended by the Supplemental Agreements) and the 2020 CCT Agreements and the transactions contemplated thereunder in accordance to the Listing Rules.

INFORMATION ON THE PARTIES

(i) The Company

The Group is principally engaged in the provision of property management services, pre-delivery and consulting services, community value-added services and smart solution services in the PRC.

– 15 –

LETTER FROM THE BOARD

(ii) Kaisa Holdings

The Kaisa Group is principally engaged in property development, property investment, property management, hotel and catering operations, cinema, department store and cultural centre operations, water-way passenger and cargo transportation and healthcare business in the PRC.

REASONS AND BENEFITS

The provision of Property Management Services and Equipment Installation Services are in the ordinary and usual course of business of the Group. The revision of the annual caps under the Supplemental Agreements are necessary to ensure that the caps will not be exceeded for the year ending 31 December 2020 and that the Group may continue to provide the relevant services to Kaisa Group in its ordinary course of business for the remaining term of the 2018 CCT Agreements.

Despite the increase in the scale of all types of CCTs provided by the Group to Kaisa Group, the Group has been generating and will continue to generate a substantial portion of its revenue from independent third parties. Set out below is the revenue contribution from Kaisa Group and that from independent third parties for the three years ended 31 December 2019.

		Year ended
	2017	2018	2019
	(RMB’ million)	(RMB’ million)	(RMB’ million)
Revenue generated from Kaisa Group (A)	359	451	550
Total revenue of the Group (B)	669	896	1,262
Percentage of total revenue of the Group
(A/B)	53.7%	50.3%	43.6%

On the assumption that (i) the growth rate in revenue of the Group increases at a rate of 40% which is the same as the rate of increase from 2018 to 2019; and (ii) using the annual caps under the 2020 CCT Agreements as basis for calculating the expected revenue generated from Kaisa Group under all types of CCTs, the hypothetical revenue contribution from Kaisa Group and that from independent third parties is set out below.

		Year	ending
	2020	2021	2022	2023
	(RMB’ million)	(RMB’ million)	(RMB’ million)	(RMB’ million)
Revenue generated from Kaisa
Group (A)	777	1,348	1,645	2,000
Total revenue of the Group (B)	1,767	2,473	3,463	4,848
Approximate Percentage of total
revenue of the Group (A/B)	44.0%	54.5%	47.5%	41.3%

– 16 –

LETTER FROM THE BOARD

The entering into of the 2020 CCT Agreements are renewals of the 2018 CCT Agreements which formalize and regulate existing arrangements under the 2018 CCT Agreements.

The Directors (excluding Ms. Kwok Hiu Ting, Mr. Li Haiming and Mr. Wu Jianxin but including the independent non-executive Directors after taking the advice from the Independent Financial Adviser (for the Supplemental Agreements, 2020 Property Management Services Framework Agreement and 2020 Equipment Installation Services Framework Agreement only)) consider that the Supplemental Agreements and the 2020 CCT Agreements are entered into in the usual and ordinary course of business of the Group, are conducted on an arm’s length basis and on normal commercial terms (including the proposed annual caps), and are fair and reasonable and in the interests of the Company and its Shareholders as a whole.

Ms. Kwok Hiu Ting is the daughter of Mr. Kwok Ying Shing, the Chairman and an Executive Director of Kaisa Group. Mr. Li Haiming is a director of Kaisa Holdings. Mr. Wu Jianxin is the chief financial officer of Kaisa Group. Each of them has abstained from voting in the relevant Board resolutions.

LISTING RULES IMPLICATIONS

As at the Latest Practicable Date, Kaisa Holdings is interested in 103,530,000 Shares, representing 67.23% of the Shares in issue. Kaisa Holdings is a controlling Shareholder and hence a connected person (as defined in the Listing Rules) of the Company.

The transactions contemplated under each of the (i) 2018 Property Management Services Framework Agreement (as amended by the First Supplemental Agreement); (ii) 2018 Equipment Installation Services Framework Agreement (as amended by the Second Supplemental Agreement); (iii) 2020 Property Management Services Framework Agreement; (iv) 2020 Equipment Installation Services Framework Agreement; (v) 2020 Sales Assistance Services Framework Agreement; and (vi) 2020 Property Lease Framework Agreement constitute continuing connected transactions of the Company.

As one or more applicable percentage ratios (other than the profits ratio) in respect of each of the (i) 2018 Property Management Services Framework Agreement (as amended by the First Supplemental Agreement); (ii) 2018 Equipment Installation Services Framework Agreement (as amended by the Second Supplemental Agreement); (iii) 2020 Property Management Services Framework Agreement; and (iv) 2020 Equipment Installation Services Framework Agreement are over 5%, each the (i) 2018 Property Management Services Framework Agreement (as amended by the First Supplemental Agreement); (ii) 2018 Equipment Installation Services Framework Agreement (as amended by the Second Supplemental Agreement); (iii) 2020 Property Management Services Framework Agreement; and (iv) 2020 Equipment Installation Services Framework Agreement is subject to the reporting, announcement, annual review and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

– 17 –

LETTER FROM THE BOARD

The Independent Board Committee has been formed to consider whether the terms of the (i) 2018 Property Management Services Framework Agreement (as amended by the First Supplemental Agreement); (ii) 2018 Equipment Installation Services Framework Agreement (as amended by the Second Supplemental Agreement); (iii) 2020 Property Management Services Framework Agreement; and (iv) 2020 Equipment Installation Services Framework Agreement, and the transactions contemplated thereunder, and the annual caps are fair and reasonable, and are in the interests of the Company and the Shareholders as a whole, and to advise the Independent Shareholders as to voting at the EGM.

The Independent Financial Adviser has been appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in this regard.

Any Shareholder with a material interest and his/her/its associate(s) is (are) required to abstain from voting at the EGM to approve the Supplemental Agreements, the 2020 Property Management Services Framework Agreement; and the 2020 Equipment Installation Services Framework Agreement.

As at the Latest Practicable Date:

(i) Kaisa Holdings is interested in 103,530,000 Shares, representing approximately 67.23% of the Shares in issue; and
(ii) Mr. Kwok is interested in 1,143,000 Shares, representing approximately 0.94% of the Shares in issue. Kaisa Holdings is a controlling Shareholder and hence a connected person (as defined in the Listing Rules) of the Company. Mr. Kwok is the chairman of the board of directors of Kaisa Holdings and an executive director of Kaisa Holdings.

Each of Mr. Kwok and Kaisa Holdings shall abstain from voting on the resolutions approving the Supplemental Agreements, the 2020 Property Management Services Framework Agreement; and the 2020 Equipment Installation Services Framework Agreement.

Except as disclosed above, to the best of their knowledge and belief, no other Shareholder is required to abstain from voting at the EGM.

EGM AND VOTING

The notice of the EGM is set out on pages EGM-1 to EGM-3 of this circular.

Pursuant to the Listing Rules, any vote of the Shareholders at a general meeting must be taken by poll. An announcement on the poll vote results will be published by the Company after the EGM in the manner prescribed under Rule 13.39(5) of the Listing Rules.

A form of proxy for use at the EGM are enclosed with this circular and also published on the website of the Stock Exchange (www.hkexnews.hk). Whether or not you are able to attend the EGM, you are requested to complete and return the accompanying

– 18 –

LETTER FROM THE BOARD

form of proxy in accordance with the instructions printed thereon to the branch share registrar and transfer office of the Company, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the EGM (i.e. 11 a.m. on Sunday, 13 December 2020) 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 adjournment thereof (as the case may be) should you so desire. In such event, the instrument appointing a proxy will be deemed to be revoked.

RECOMMENDATION

The Directors (including the independent non-executive Directors but excluding Ms. Kwok Hiu Ting, Mr. Li Haiming and Mr. Wu Jianxin) consider that the terms of the (i) 2018 Property Management Services Framework Agreement (as amended by the First Supplemental Agreement); (ii) 2018 Equipment Installation Services Framework Agreement (as amended by the Second Supplemental Agreement); (iii) 2020 Property Management Services Framework Agreement; and (iv) 2020 Equipment Installation Services Framework Agreement and the transactions contemplated thereunder are on normal commercial terms, are conducted in the ordinary and usual course of business of the Group, are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend the Shareholders to vote in favour of the relevant resolutions at the EGM.

ADDITIONAL INFORMATION

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

By order of the Board Kaisa Prosperity Holdings Limited LIAO Chuanqiang Chairman

– 19 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

==> picture [45 x 41] intentionally omitted <==

KAISA PROSPERITY HOLDINGS LIMITED 佳兆業美好集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2168)

24 November 2020

To the Independent Shareholders

Dear Sir or Madam,

(1) REVISION OF ANNUAL CAPS FOR CONTINUING CONNECTED TRANSACTIONS (2) RENEWAL OF CONTINUING CONNECTED TRANSACTIONS

We refer to the circular of the Company to the Shareholders dated 24 November 2020 (the “ Circular ”), in which this letter forms a part. Unless the context requires otherwise, capitalized terms used in this letter will have the same meanings given to them in the Circular.

We have been authorised by the Board to form the Independent Board Committee to advise the Independent Shareholders on whether the terms of the (i) 2018 Property Management Services Framework Agreement (as amended by the First Supplemental Agreement); (ii) 2018 Equipment Installation Services Framework Agreement (as amended by the Second Supplemental Agreement); (iii) 2020 Property Management Services Framework Agreement; and (iv) 2020 Equipment Installation Services Framework Agreement are fair and reasonable so far as the Independent Shareholders are concerned.

We wish to draw your attention to the letter of advice from Messis Capital Limited, the Independent Financial Adviser appointed to advise the Independent Board Committee and the Independent Shareholders on the terms of the (i) 2018 Property Management Services Framework Agreement (as amended by the First Supplemental Agreement); (ii) 2018 Equipment Installation Services Framework Agreement (as amended by the Second Supplemental Agreement); (iii) 2020 Property Management Services Framework Agreement; and (iv) 2020 Equipment Installation Services Framework Agreement as set out on pages 22 to 38 of the Circular and the letter from the Board as set out on pages 5 to 19 of the Circular.

– 20 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Having considered, among other matters, the factors and reasons considered by, and the opinion of the Independent Financial Adviser as stated in its letter of advice, we consider that the terms of the (i) 2018 Property Management Services Framework Agreement (as amended by the First Supplemental Agreement); (ii) 2018 Equipment Installation Services Framework Agreement (as amended by the Second Supplemental Agreement); (iii) 2020 Property Management Services Framework Agreement; and (iv) 2020 Equipment Installation Services Framework Agreement and the transactions contemplated thereunder are on normal commercial terms, are conducted in the ordinary and usual course of business of the Group, are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the resolutions proposed at the EGM to approve the (i) 2018 Property Management Services Framework Agreement (as amended by the First Supplemental Agreement); (ii) 2018 Equipment Installation Services Framework Agreement (as amended by the Second Supplemental Agreement); (iii) 2020 Property Management Services Framework Agreement; and (iv) 2020 Equipment Installation Services Framework Agreement.

Yours faithfully, For and on behalf of the Independent Board Committee

Mr. LIU Hongbai Ms. MA Xiumin Mr. CHEN Bin Independent non-executive Independent non-executive Independent non-executive Director Director Director

– 21 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the letter of advice from the Independent Financial Adviser, Messis Capital Limited, to the Independent Board Committee and the Independent Shareholders in relation to the terms of the (i) 2018 Property Management Services Framework Agreement (as amended by the First Supplemental Agreement); (ii) 2018 Equipment Installation Services Framework Agreement (as amended by the Second Supplemental Agreement); (iii) 2020 Property Management Services Framework Agreement; and (iv) 2020 Equipment Installation Services Framework Agreement, which has been prepared for the purpose of inclusion in this circular.

==> picture [202 x 39] intentionally omitted <==

24 November 2020

To: The Independent Board Committee and the Independent Shareholders of Kaisa Prosperity Holdings Limited

Dear Sirs,

CONTINUING CONNECTED TRANSACTIONS IN RELATION TO

(I) 2018 PROPERTY MANAGEMENT SERVICES FRAMEWORK AGREEMENT;

(II) 2018 EQUIPMENT INSTALLATION SERVICES FRAMEWORK AGREEMENT;

(III) 2020 PROPERTY MANAGEMENT SERVICES FRAMEWORK AGREEMENT; AND

(IV) 2020 EQUIPMENT INSTALLATION SERVICES FRAMEWORK AGREEMENT

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of (i) 2018 Property Management Services Framework Agreement (as amended by the First Supplemental Agreement); (ii) 2018 Equipment Installation Services Framework Agreement (as amended by the Second Supplemental Agreement); (iii) 2020 Property Management Services Framework Agreement; and (iv) 2020 Equipment Installation Services Framework Agreement (all together the “ Framework Agreements ”), and the transactions contemplated thereunder, including the respective proposed annual caps. Details of the relevant Framework Agreements are set out in (i) the letter from the Board (the “ Letter from the Board ”) contained in the circular of the Company to the Shareholders dated 24 November 2020 (the “ Circular ”), of which this letter forms part; (ii) the circular of the Company dated 6 December 2019 in relation to revision of the annual caps under the 2018 Property Management Services Framework Agreement; and (iii) the paragraph headed “Connected transactions – Continuing connected transactions subject

– 22 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

to the reporting, annual review, announcement and independent shareholders’ approval requirements” in the Company’s prospectus dated 26 November 2018 (the “ Prospectus ”). Capitalised terms used in this letter shall have the same meanings as defined in the Circular unless the context otherwise requires.

(A) Revision of annual caps for the year ending 31 December 2020

On 20 November 2018, the Company entered into the 2018 Property Management Services Framework Agreement with Kaisa Holdings, pursuant to which the Company agreed to provide to Kaisa Group and/or its associates property management services, including but not limited to (i) pre-delivery services including (a) construction sites management services; and (b) display units and property sales venues management services; and (ii) property management services for properties owned, used or operated by Kaisa Group and/or its associates. On 24 December 2019, an ordinary resolution was passed at the EGM to revise the annual caps under the 2018 Property Management Services Framework Agreement such that the FY2020 annual cap was increased to RMB550 million. However, owe to the higher-than-expected increase in sales of properties by Kaisa Holdings and other relevant factors that drive the growth of the Company’s revenue generated from the 2018 Property Management Services Framework Agreement, the Company entered into the First Supplemental Agreement on 4 November 2020 to further increase the FY2020 annual cap under 2018 Property Management Services Framework Agreement to RMB660 million.

The Company also entered into the 2018 Equipment Installation Services Framework Agreement with Kaisa Holdings on 20 November 2018, pursuant to which the Company agreed to provide to Kaisa Group and/or its associates equipment installation services, including mainly installation of (i) access control system; (ii) intercom system; (iii) surveillance system; (iv) car-parking management system; and (v) other intelligent engineering for residential properties before the delivery of such properties to property owners, for a term commencing from the Listing Date until 31 December 2020. A waiver exempting the Company from strict compliance with the announcement and independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules in respect of the continuing connected transactions was granted by the Stock Exchange on the condition that the aggregate amounts of the continuing connected transactions contemplated under the 2018 Equipment Installation Services Framework Agreement for each financial year (i.e. FY2018, FY2019 and FY2020) shall not exceed the relevant amounts set forth in the respective annual caps which are RMB52 million, RMB60 million and RMB80 million, respectively. Details of the then waiver are set out in the Prospectus. Having considered the contracts with Kaisa Group on hand and the expected work progress in relation to the Equipment Installation Services, the Company considered that the original FY2020 annual cap is insufficient and therefore entered into the Second Supplemental Agreement on 4 November 2020 to increase the annual cap to RMB110 million.

– 23 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(B) Renewal of framework agreements for the three years ending 31 December 2023

Since the 2018 Property Management Services Framework Agreement (as amended by the First Supplemental Agreement) and 2018 Equipment Installation Services Framework Agreement (as amended by the Second Supplemental Agreement) are going to expire on 31 December 2020, the Company entered into the 2020 CCT Agreements on 4 November 2020 to continue its businesses with Kaisa Holdings for the coming three years ending 31 December 2023. Principal terms of the 2020 CCT Agreements are set out in the Letter from the Board with the proposed annual caps summarized as below:

	Year	ending 31 December	ending 31 December
	2021	2022	2023
	RMB’ million	RMB’ million	RMB’ million
2020 Property Management
Services Framework Agreement	1,200	1,450	1,750
2020 Equipment Installation
Services Framework Agreement	140	180	230

As at the Latest Practicable Date, Kaisa Holdings is a controlling shareholder of the Company and therefore a connected person of the Company under the Listing Rules. Accordingly, the (i) 2018 Property Management Services Framework Agreement (as amended by the First Supplemental Agreement); (ii) 2018 Equipment Installation Services Framework Agreement (as amended by the Second Supplemental Agreement); (iii) 2020 Property Management Services Framework Agreement; and (iv) 2020 Equipment Installation Services Framework Agreement, and the transactions contemplated thereunder constitute continuing connected transactions of the Company under the Listing Rules. As one or more applicable percentage ratios (other than the profits ratio) in respect of each of the Framework Agreements are over 5%, the Framework Agreements are subject to the reporting, announcement, annual review and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

The Independent Board Committee, comprising all three independent non-executive Directors, namely Mr. Liu Hongbai, Ms. Ma Xiumin and Mr. Chen Bin, has been established to consider and make a recommendation to the Independent Shareholders on whether the (i) 2018 Property Management Services Framework Agreement (as amended by the First Supplemental Agreement); (ii) 2018 Equipment Installation Services Framework Agreement (as amended by the Second Supplemental Agreement); (iii) 2020 Property Management Services Framework Agreement; and (iv) 2020 Equipment Installation Services Framework Agreement, and the transactions contemplated thereunder, and the respective annual caps are fair and reasonable, and are in the interests of the Company and the Shareholders as a whole. We, Messis Capital Limited, have been appointed to advise the Independent Board Committee and the Independent Shareholders in this regard.

– 24 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Ms. Kwok Hiu Ting is the daughter of Mr. Kwok Ying Shing, the Chairman and an executive Director of Kaisa Group. Mr. Li Haiming is a director of Kaisa Holdings. Mr. Wu Jianxin is the chief financial officer of Kaisa Group. Since Kaisa Holdings is a controlling shareholder of the Company who has material interest in the transaction, each of Ms. Kwok Hiu Ting, Mr. Li Haiming and Mr. Wu Jianxin shall abstained from voting in the relevant resolutions of the board meeting of the Company.

Messis Capital Limited is not connected with the Directors or substantial shareholders of the Company or any of their respective associates and therefore is considered suitable to give independent advice to the Independent Board Committee and the Independent Shareholders. In the past two years, except for our advice regarding the 2018 Property Management Services Framework Agreement which was contained in the circular of the Company dated 6 December 2019, there was no engagement between the Company and us. Apart from normal professional fees payable to us in connection with this appointment of us as independent financial adviser, no arrangement exists whereby Messis Capital Limited will receive any fees or benefits from the Company or the Directors or substantial shareholders of the Company or any of their respective associates.

BASIS OF OUR OPINION

In arriving at our recommendations, we have relied on the statements, information and representations contained in the Circular and the information and representations provided to us by the Company, the Directors and the management of the Company. We have assumed that all information, representations and opinions contained or referred to in the Circular and all information and representations which have been provided by the Company, the Directors and the management of the Company for which they are solely and wholly responsible, are true and accurate at the time they were made and will continue to be accurate as at the Latest Practicable Date. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the management of the Company.

The Circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors 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 the omission of which would make any statement therein or the document misleading.

We consider that we have been provided with sufficient information on which to form a reasonable basis for our opinion. We have no reason to suspect that any relevant information has been withheld, nor are we aware of any material facts or circumstances which would render the information provided and representations made to us untrue, inaccurate or misleading. We consider that we have performed all the necessary steps to enable us to reach an informed view and to justify our reliance on the information provided so as to provide a reasonable basis for our opinion. We have not, however, carried out any independent verification of the information provided by the Company, the Directors and the management of the Company, nor have we conducted an independent investigation into the business and affairs of the Group and any parties in relation to the Framework Agreements.

– 25 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

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

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion and recommendations to the Independent Board Committee and the Independent Shareholders, we have considered the following principal factors and reasons:

1. Background to and reasons for the Framework Agreements

The Group is principally engaged in the provision of property management services, pre-delivery and consulting services, community value-added services and smart solution services in the PRC. Prior to the spin-off and separate listing of the Company, the Company was part of the Kaisa Group to provide property management services to properties developed by the Kaisa Group and other independent third party property developers. On 6 December 2018, the Company was separately listed on the Main Board and all Property Management Services including (i) pre-delivery services; and (ii) property management services, provided by the Company to the Kaisa Group are regarded as continuing connected transactions governed by the 2018 Property Management Services Framework Agreement (to be renewed by 2020 Property Management Services Framework Agreement) while all Equipment Installation Services provided by the Company to the Kaisa Group including installation of (i) access control system; (ii) intercom system; (iii) surveillance system; (iv) car-parking management system; and (v) other intelligent engineering for residential properties before the delivery of such properties to property owners, are regarded as continuing connected transactions governed by the 2018 Equipment Installation Services Framework Agreement (to be renewed by 2020 Equipment Installation Services Framework Agreement).

The table below sets forth the revenue generated from provision of Property Management Services and Equipment Installation Services to Kaisa Group for the three years ended 31 December 2019 as extracted from the Company’s management account and annual report for the year ended 31 December 2019 (the “ Annual Report ”):

	Year	ended 31 December	ended 31 December
	2017	2018	2019
	RMB’000	RMB’000	RMB’000
Revenue from Kaisa Group
– Property Management Services [A]	324,121	402,758	467,916
– Equipment Installation Services [B]	28,345	45,266	59,513
Total revenue [C]	669,159	895,768	1,261,909
[A] + [B] / [C]	52.7%	50.0%	41.8%

– 26 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The table above shows that revenue generated from provision of Property Management Services and Equipment Installation Services to Kaisa Group represented a material source of revenue to the Group in the past three years. The executive Directors confirm that such close business relationship with the Kaisa Group is attributable to the fact that substantially all of the properties developed and owned by the Kaisa Group are under the Group’s management. Accordingly, the executive Directors consider, and we concur, that the provision of Property Management Services and Equipment Installation Services to Kaisa Group are in the ordinary and usual course of business of the Company and the Framework Agreements allow the Group to continue its long standing business relationship with Kaisa Group while safeguarding the interest of both parties in any future engagement, which is beneficial to the development of the Group.

2. Principal terms of the 2018 Property Management Services Framework Agreement (as amended by the First Supplemental Agreement) and 2020 Property Management Services Framework Agreement

On 24 December 2019, an ordinary resolution was passed at the EGM to revise the annual caps under the 2018 Property Management Services Framework Agreement. Details of the principal terms of the 2018 Property Management Services Framework Agreement and our advice thereto were set out in the circular of the Company dated 6 December 2019. On 4 November 2020, the Company entered into the First Supplemental Agreement to further raise the FY2020 annual cap of Property Management Services from RMB550 million to RMB660 million while keeping other terms in the 2018 Property Management Services Framework Agreement unchanged. For analysis on the revised FY2020 annual cap, please refer to the paragraph headed “4. The proposed annual caps – A. 2018 Property Management Services Framework Agreement (as amended by the First Supplemental Agreement)” in this letter below.

In light of the upcoming expiration of the 2018 Property Management Services Framework Agreement (as amended by the First Supplemental Agreement) on 31 December 2020, the Company entered into the 2020 Property Management Services Framework Agreement to continue its businesses with Kaisa Holdings, with the principal terms set out as below:

Date: 4 November 2020

Parties: (1) the Company (2) Kaisa Holdings, a controlling shareholder of the Company

Term: The period commencing from 1 January 2021 to 31 December 2023.

– 27 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Scope of services:

The Group shall provide the following services to Kaisa Group and/or its associates, including but not limited to (i) pre-delivery services including (a) construction sites management services; and (b) display units and property sales venues management services; and (ii) property management services for properties owned, used or operated by the Kaisa Group and/or its associates.

Annual caps: FY2021: RMB1,200 million FY2022: RMB1,450 million FY2023: RMB1,750 million

Pricing basis:

The fees to be charged for the Property Management Services will be determined after arm’s length negotiations and taking into account (i) the size, location and positioning of the properties to be sold by the sales centers; and (ii) the anticipated operational costs (including labour costs, material costs and administrative costs) with reference to the fees for similar services and similar type of projects in the market.

In assessing the fairness and reasonableness of the pricing basis under the 2020 Property Management Services Framework Agreement, we have obtained and reviewed a comparison table from the management of the Group presenting the historical gross profit margin of Property Management Services provided to Kaisa Group and relevant services provided to independent third party customers. According to the management of the Group, gross profits amounting to approximately RMB16.4 million, representing approximately 14.2% of the gross profits generated from independent third party customers for the six months ended 30 June 2020, were attributable to the property management services under commission basis solely provided to independent third party customers in the period. Such property management services under commission basis carrying 100% gross profit margins have inflated the overall gross profit margins generated from independent third party customers in the period. After excluding those property management services under commission basis which are not provided to Kaisa Group, the Group generated gross profit margins of approximately 33.9% from Kaisa Group and 28.8% from independent third party customers for the six months ended 30 June 2020. Given that each individual project is different in terms of scope of services, properties under management and operational costs incurred, the executive Directors consider, and we concur, that the gross profit margins generated from projects with Kaisa Group is generally in line with that generated from projects with independent third party customers.

– 28 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We have also reviewed and compared sample documents provided by the Company (including, among other things, invoices, contracts and other related documents) with respect to similar property management projects with Kaisa Group and other independent third party customers. Shortlisted projects that are considered comparable in terms of (i) location of properties under management; (ii) contract size; and/or (iii) scope of services, are selected from project list prepared by management covering the six months ended 30 June 2020 (the “ Review Period ”). We consider it fair and reasonable to select comparable projects from the Review Period because it covers the latest published financial period. We therefore reviewed comparable projects that aggregately contributed approximately 50% of revenue generated from provision of Property Management Services to Kaisa Group during the Review Period. Based on the review of these comparable projects, we note that there is no significant difference in pricing and terms given by the Company to Kaisa Group and other independent third party customers.

Having considered that the 2020 Property Management Services Framework Agreement is to succeed the 2018 Property Management Services Framework Agreement (as amended by the First Supplemental Agreement), and the principal terms in particular that the service fee charged to Kaisa Group is generally in line with that charged to independent third party customers as evidenced by the fact that (i) gross profit margins generated from projects with Kaisa Group were better than that generated from projects with independent third party customers in the six months ended 30 June 2020; and (ii) sample comparable projects reveal no significant difference in pricing and terms given by the Company to Kaisa Group and other independent third party customers, we concur with the executive Directors’ view that the terms of the 2020 Property Management Services Framework Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned.

3. Principal terms of the 2018 Equipment Installation Services Framework Agreement (as amended by the Second Supplemental Agreement) and 2020 Equipment Installation Services Framework Agreement

The principal terms of the 2018 Equipment Installation Services Framework Agreement (as amended by the Second Supplemental Agreement) and 2020 Equipment Installation Services Framework Agreement, among others, are set out below:

Date: 2018 Equipment Installation Services Framework Agreement 20 November 2018 2020 Equipment Installation Services Framework Agreement 4 November 2020 Parties: (1) the Company (2) Kaisa Holdings, a controlling shareholder of the Company

– 29 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Term:

2018 Equipment Installation Services Framework Agreement The period commencing from the Listing Date to 31 December 2020.

2020 Equipment Installation Services Framework Agreement

The period commencing from the 1 January 2021 to 31 December 2023.

Scope of services: The Group shall provide the following services to Kaisa Group and/or its associates, including mainly installation of (i) access control system; (ii) intercom system; (iii) surveillance system; (iv) car-parking management system; and (v) other intelligent engineering for residential properties before the delivery of such properties to property owners

Annual caps:

2018 Equipment Installation Services Framework Agreement (as amended by the Second Supplemental Agreement) FY2020: RMB110 million

2020 Equipment Installation Services Framework Agreement FY2021: RMB140 million FY2022: RMB180 million FY2023: RMB230 million

Pricing basis:

The fees to be charged for the Equipment Installation Services will be determined after arm’s length negotiations and taking into account (i) the location of the project; and (ii) the anticipated operational costs (including labor costs, material costs and administrative costs) with reference to the fees for similar services and similar type of projects in the market.

In assessing the fairness and reasonableness of the pricing basis under the 2020 Equipment Installation Services Framework Agreement, we have obtained and reviewed a comparison table from the management of the Group presenting the historical gross profit margin of Equipment Installation Services provided to Kaisa Group and relevant services provided to independent third party customers. The Group generated gross profit margins of approximately 34.6% from Kaisa Group and 27.1% from independent third party customers for the six months ended 30 June 2020. Given that each individual project is different in terms of scope of services, location of properties and operational costs incurred, the executive Directors consider, and we concur, that the gross profit margins generated from projects with Kaisa Group is generally in line with that generated from projects with independent third party customers.

– 30 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We have also reviewed and compared sample documents provided by the Company (including, among other things, invoices, contracts and other related documents) with respect to similar equipment installation projects with Kaisa Group and other independent third party customers. Shortlisted projects that are considered comparable in terms of (i) location of properties; (ii) contract size; and/or (iii) scope of services, are selected from project list prepared by management covering the six months ended 30 June 2020 (the “ Review Period ”). We consider it fair and reasonable to select comparable projects from the Review Period because it covers the latest published financial period. We therefore reviewed comparable projects that aggregately contributed approximately 50% of revenue generated from provision of Equipment Installation Services to Kaisa Group during the Review Period. Based on the review of these comparable projects, we note that there is no significant difference in pricing and terms given by the Company to Kaisa Group and other independent third party customers.

Having considered that the 2020 Equipment Installation Services Framework Agreement is to succeed the 2018 Equipment Installation Services Framework Agreement (as amended by the Second Supplemental Agreement), and the principal terms in particular that the service fee charged to Kaisa Group is generally in line with that charged to independent third party customers as evidenced by the fact that (i) gross profit margins generated from projects with Kaisa Group were better than that generated from projects with independent third party customers in the six months ended 30 June 2020; and (ii) sample comparable projects reveal no significant difference in pricing and terms given by the Company to Kaisa Group and other independent third party customers, we concur with the executive Directors’ view that the terms of the 2020 Equipment Installation Services Framework Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned.

4. The proposed annual caps

A. 2018 Property Management Services Framework Agreement (as amended by the First Supplemental Agreement)

On 24 December 2019, an ordinary resolution was passed at the EGM to revise the annual caps under the 2018 Property Management Services Framework Agreement such that the FY2019 and FY2020 annual cap were increased to RMB500 million and RMB550 million respectively (the “ Property Management Services Original Annual Caps ”). With reference to the circular of the Company dated 6 December 2019, the Property Management Services Original Annual Caps were determined with reference to the then estimated contracted sales of Kaisa Group of approximately RMB76,000 million and RMB85,000 million for the two years ending 31 December 2020 (the “ Then Estimated Contracted Sales ”). The table below sets forth (i) revenue generated from provision of Property Management Services to Kaisa Group; and (ii) Kaisa Group’s contracted sales, for the three years ended 31 December 2019 as extracted from (a) Kaisa Group’s annual reports for the years

– 31 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

ended 31 December 2018 and 2019 (the “ Kaisa Group Annual Reports ”); and (b) the Annual Report:

	Year ended 31 December	Year ended 31 December
	2017	2018	2019
Revenue from Kaisa Group
(RMB’000)	324,121	402,758	467,916
Kaisa Group’s contracted
sales (RMB in million)	44,714	70,059	88,120

As shown in the table above, revenue generated from provision of property management services to Kaisa Group increased significantly in the past three years by approximately RMB143.8 million or 44.4% from approximately RMB324.1 million for the year ended 31 December 2017 to approximately RMB467.9 million for the year ended 31 December 2019. Such increase in revenue from the provision of Property Management Services follows a more significant increase in Kaisa Group’s contracted sales of properties in the past three years by approximately RMB43,406 million or 97.1% from approximately RMB44,714 million for the year ended 31 December 2017 to approximately RMB88,120 million for the year ended 31 December 2019.

With reference to the circular of the Company dated 6 December 2019, the Then Estimated Contracted Sales of RMB76,000 million and RMB85,000 million in FY2019 and FY2020 respectively were derived from a conservative annual average growth rate of approximately 10%. In light of the fact that FY2019 actual contracted sales of Kaisa Group of RMB88,120 million surpassed the Then Estimated Contracted Sales by approximately RMB12,120 million or 15.9% and achieved a growth of approximately 25.8% as compared with the actual contracted sales of RMB70,059 million for the year ended 31 December 2018, the executive Directors consider that FY2020 estimated contracted sales of Kaisa Group shall be adjusted upwards accordingly. The executive Directors estimate that the Kaisa Group’s contracted sales could reach approximately RMB100,000 million in FY2020, based on a conservative growth rate of approximately 13.5% which is lower than the annual average growth rate of over 40% achieved in the past three years.

Since revenue generated from provision of Property Management Services to Kaisa Group is closely related to the amount of Kaisa Group’s contracted sales of properties where an increase in contracted sales is associated with more sales activities organized by the Kaisa Group at sales centers that require Property Management Services provided by the Group, the executive Directors decide to raise the corresponding FY2020 annual cap of Property Management Services to RMB660 million in accordance with the adjusted FY2020 estimated contracted sales of Kaisa Group.

– 32 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Set out below is the actual transaction amounts for the ten months ended 31 October 2020 as extracted from the Letter from the Board:

	Ten months
	ended
	31 October
	2020
	RMB’000
Property Management Services Original Annual Caps [A]	550,000
Actual transaction amount [B]	453,691
[B] / [A]	82.5%

The actual transaction amount for the ten months ended 31 October 2020 has reached more than 82% of the Property Management Services Original Annual Caps in FY2020. The executive Directors are of the view that revenue of the Group in FY2020 will be hindered if the annual cap is not increased with the higher-than-expected growth of Kaisa Group’s contracted sales of properties as discussed above. Therefore, the First Supplemental Agreement was entered into on 4 November 2020 to revise the annual caps upward to RMB660 million for the year ending 31 December 2020.

After taking into consideration (i) the significant increase in historical revenue generated from provision of Property Management Services to Kaisa Group by approximately 44.4% in the past three years; (ii) the expected increase in Property Management Services to be provided by the Group owe to the strong increase in sales activities of Kaisa Group as evidenced by the record high contracted sales achieved by the Kaisa Group in FY2019; and (iii) the upward-adjusted estimated Kaisa Group’s contracted sales of properties in FY2020, we concur with the executive Directors’ view that the revised FY2020 annual cap is fair and reasonable so far as the Independent Shareholders are concerned.

B. 2020 Property Management Services Framework Agreement

In addition to the growth in Kaisa Group’s contracted sales of properties that drives the demand for the Group’s Property Management Services as discussed above, it is expected that increase in staffing level for the Property Management Services will further bolster the revenue generated from provision of Property Management Services. Set out below is the staffing level supplied by the Group as compare with the total number of staff deployed at the sales centers of Kaisa Group for the three years ended 31 December 2019:

	Year ended 31 December	Year ended 31 December
	2017	2018	2019
Staff provided by the Group [A]	1,605	1,866	2,095
Total number of staff at Kaisa
Group’s sales centers [B]	2,697	3,348	4,014
[A] / [B]	59.5%	55.7%	52.2%

– 33 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As shown in the table above, the Group supplied approximately 50% of the staff at sales centers of Kaisa Group for the three years ended 31 December 2019. To the best knowledge and information of the management of the Group, Kaisa Group outsourced the remaining 50% of staff at sales centers to independent third party service providers. With reference to the 2020 Property Management Services Framework Agreement, the Group will be engaged to supply all staff at Kaisa Group’s sales centers from FY2021 to FY2023. Accordingly, it is expected that the staffing level to be provided by the Group will be double starting from FY2021. Set out below are (i) the proposed annual caps of Property Management Services; (ii) estimated number of staff to be provided by the Group; and (iii) estimated monthly revenue generated per staff, for the coming three years ending 31 December 2023:

	Year ending 31 December	Year ending 31 December
	2021	2022	2023
Proposed annual caps
(RMB in million)	1,200	1,450	1,750
Estimated number of staff to be
provided by the Group	5,143	5,914	6,801
Estimated monthly revenue
generated per staff (RMB)	19,400	20,400	21,400

As discussed with management of the Group, the average monthly revenue per staff generated from the provision of Property Management Services was approximately RMB18,235 for the past three years and ten months ended 31 October 2020. It is expected that the monthly revenue generated per staff would maintain a stable growth of approximately 5% in the coming three years ending 31 December 2023 as shown in the table above. To the best knowledge and information of the management of the Group, Kaisa Group is currently deploying approximately 4,675 staff at various sales centers in FY2020. The executive Directors estimate that the total number of staff to be deployed by Kaisa Group at sales centers could reach approximately 6,801 by FY2023 based on a conservative annual growth rate of 10% to 15% which is lower than the average annual growth rate of approximately 20% achieved in the past three years. Since the Group will be engaged to supply all staff at Kaisa Group’s sales centers from FY2021 to FY2023, the proposed annual caps in relation to the provision of Property Management Services are determined with reference to the significant increase in number of staff to be provided by the Group and the relatively stable monthly revenue generated per staff.

Owe to the doubled staffing level to be supplied by the Group under the 2020 Property Management Services Framework Agreement, the proposed annual cap for FY2021 will increase significantly by approximately 81.8% as compare with the revised FY2020 annual cap of approximately RMB660 million. The executive Directors estimate that the proposed annual caps for the subsequent two years (i.e. FY2022 and FY2023) will increase at an annual rate of approximately 20% which is in line with the annual average growth rate of total number of staff at Kaisa Group’s sales centers in the past three years.

Further to the strong growth in the Group’s historical revenue generated from provision of Property Management Services and Kaisa Group’s contracted sales over the past three years as discussed earlier, having considered that (i) the ongoing increase in total number of staff deployed at Kaisa Group’s sales centers; and (ii) the

– 34 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

double in size of staffing level to be provided by the Group under the 2020 Property Management Services Framework Agreement, the executive Directors are of the view and we concur that the proposed annual caps for the coming three years ending 31 December 2023 governed by the 2020 Property Management Services Framework Agreement is fair and reasonable so far as the Independent Shareholders are concerned.

C. 2018 Equipment Installation Services Framework Agreement (as amended by the Second Supplemental Agreement)

The table below sets forth (i) the number of contracts and contract value in relation to provision of Equipment Installation Services; and (ii) Kaisa Group’s contracted sales GFA as extracted from Kaisa Group Annual Reports, for the three years ended 31 December 2019:

	Year	ended 31 December	ended 31 December
	2017	2018	2019
Number of contracts	59	105	121
Contract value (RMB’000)	38,675	65,325	102,110
Revenue from Kaisa Group
(RMB’000)	28,345	45,266	59,513
Kaisa Group’s contracted sales
GFA_(sq.m.)_	2,786,289	3,836,621	4,642,075

The number of contracts in relation to provision of Equipment Installation Services to Kaisa Group doubled in the past three years and the total contract value increased significantly by approximately RMB63.4 million or 164.0% from approximately RMB38.7 million for the year ended 31 December 2017 to approximately RMB102.1 million for the year ended 31 December 2019. We are given to understand that revenue generated from provision of Equipment Installation Services is closely related to Kaisa Group’s contracted sales GFA where Kaisa Group would engage the Group to install various building systems when properties developed by Kaisa Group are sold and about to be delivered to property owners.

As shown in the table above, revenue generated from provision of equipment installation services to Kaisa Group increased significantly by approximately RMB31.2 million or 110.0% from approximately RMB28.3 million for the year ended 31 December 2017 to approximately RMB59.5 million for the year ended 31 December 2019 while Kaisa Group’s contracted sales GFA increased by approximately 1,855,786 sq.m. or 66.6% over the past three years.

As at the Latest Practicable Date, the Group has 288 contracts with Kaisa Group on hand with a total contract value of approximately RMB204.8 million. As discussed with management of the Group, revenue to be recognized by the end of FY2020 will reach approximately RMB110 million in accordance with the work schedule provided by Kaisa Group, and therefore the executive Directors decide to raise the FY2020 annual cap of Equipment Installation Services accordingly.

– 35 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Set out below is the actual transaction amounts for the ten months ended 31 October 2020 as extracted from the Letter from the Board:

	Ten months
	ended
	31 October
	2020
	RMB’000
Equipment Installation Services Original Annual Caps [A]	80,000
Actual transaction amount [B]	71,112
[B] / [A]	88.9%

The actual transaction amount for the ten months ended 31 October 2020 has reached more than 88% of the original FY2020 annual cap under the 2018 Equipment Installation Services Framework Agreement. The executive Directors are of the view that work progress and revenue to be recognised by the Group in FY2020 will be hindered if the annual cap is not increased in accordance with the work schedule of contracts on hand provided by Kaisa Group. Therefore, the Second Supplemental Agreement was entered into on 4 November 2020 to revise the annual caps upward to RMB110 million for the year ending 31 December 2020.

Having considered (i) the significant increase in historical revenue generated from provision of Equipment Installation Services to Kaisa Group by approximately 110.0% in the past three years; (ii) the significant increase in number of contracts and contract value in relation to provision of Equipment Installation Services which were mainly driven by the growth of Kaisa Group’s contracted sales GFA over the past three years; and (iii) the contracts with Kaisa Group on hand and work schedule provided by Kaisa Group for FY2020, we concur with the executive Directors’ view that the revised FY2020 annual cap is fair and reasonable so far as the Independent Shareholders are concerned.

D. 2020 Equipment Installation Services Framework Agreement

Set out below are (i) the proposed annual caps of Equipment Installation Services; and (ii) the estimated Kaisa Group’s contracted sales GFA, for the coming three years ending 31 December 2023:

	Year	ending 31 December	ending 31 December
	2021	2022	2023
Proposed annual caps
(RMB in million)	140	180	230
Estimated Kaisa Group’s
contracted sales GFA_(sq.m.)_	7,534,894	9,581,067	12,182,898

The executive Directors estimate that the proposed annual caps for the three years ending 31 December 2023 will increase at an annual rate of approximately 30%

– 36 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

which is lower than the annual average growth rate of revenue generated from provision of Equipment Installation Services of approximately 45% achieved in the past three years and in line with the expected growth in Kaisa Group’s contracted sales GFA.

Given the strong growth in Kaisa Group’s contracted sales GFA and the associated increase in number of contracts and contract value awarded by Kaisa Group in relation to the provision of Equipment Installation Services as discussed earlier, we concur with the executive Directors’ view that the proposed annual caps under the 2020 Equipment Installation Services Framework Agreement determined with reference to a conservative annual growth rate of approximately 30% is fair and reasonable so far as the Independent Shareholders are concerned.

5. Internal control measures regarding the transactions contemplated under the Framework Agreements

The Company has established various internal control measures to monitor the transactions contemplated under the Framework Agreements, including:

(i) prior to confirming the pricing under the 2018 CCT Agreements (as amended by the Supplemental Agreements) and 2020 CCT Agreements, the operating department shall obtain the prevailing market price of the relevant services for reference. In addition, the operating department shall check the recent transactions engaged by the Group with independent third parties to ensure that the pricing for transactions with Kaisa Group shall not be less favorable than that to be engaged with independent third parties;
(ii) the Company has a designated employee, who is familiar with the finance and business operations of the Group, to monitor the aggregate amount of the transactions contemplated under the 2018 CCT Agreements (as amended by the Supplemental Agreements) and the 2020 CCT Agreements and assesses on a monthly basis whether any of the annual caps thereunder may be exceeded;
(iii) the independent non-executive Directors will conduct annual reviews with respect to the transactions contemplated under the 2018 CCT Agreements (as amended by the Supplemental Agreements) and the 2020 CCT Agreements and confirm in the annual report, pursuant to the requirements under the Listing Rules, whether such continuing connected transactions have been entered into in the ordinary and usual course of business of the Group, are on normal commercial terms, and in accordance with the 2018 CCT Agreements (as amended by the Supplemental Agreements) and 2020 CCT Agreements on terms that are fair and reasonable and in the interests of the Company and its Shareholders as a whole; and
(iv) the Company’s external auditors will conduct annual reviews of the 2018 CCT Agreements (as amended by the Supplemental Agreements) and the 2020 CCT Agreements and the transactions contemplated thereunder in accordance to the Listing Rules.

– 37 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We consider that the abovementioned measures are in the interests of the Independent Shareholders as their interests are safeguarded by (a) setting up of the pricing management procedures; (b) ensuring terms of continuing connected transactions are determined with reference to the prevailing market information and terms of similar transactions to be entered into with independent third parties; and (c) setting up of the review and approval process.

OPINION AND RECOMMENDATION

Having taken into consideration the factors and reasons as stated above, we are of the view that (i) the transactions contemplated under the Framework Agreements are in the ordinary and usual course of business of the Company; (ii) the terms of the Framework Agreements are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; (iii) the entering into of the Framework Agreements is in the interests of the Company and the Shareholders as a whole; and (iv) the proposed annual caps are fair and reasonable so far as the Independent Shareholders are concerned.

Accordingly, we recommend the Independent Shareholders, as well as the Independent Board Committee to recommend the Independent Shareholders, to vote in favour of the relevant resolutions to be proposed at the EGM to approve (i) 2018 Property Management Services Framework Agreement (as amended by the First Supplemental Agreement); (ii) 2018 Equipment Installation Services Framework Agreement (as amended by the Second Supplemental Agreement); (iii) 2020 Property Management Services Framework Agreement; and (iv) 2020 Equipment Installation Services Framework Agreement, and the proposed annual caps thereof.

Yours faithfully, For and on behalf of Messis Capital Limited Wallace Cheung Director

Mr. Wallace Cheung is a licensed person registered with the Securities and Futures Commission and regarded as a responsible officer of Messis Capital Limited to carry out type 6 (advising on corporate finance) regulated activities under the SFO and has over 10 years of experience in corporate finance industry.

– 38 –

APPENDIX

GENERAL INFORMATION

1. RESPONSIBILITY STATEMENT

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

2. DISCLOSURE OF INTERESTS

(I) Directors’ and chief executive’s interests in Shares, underlying Shares or debentures

As at the Latest Practicable Date, the interests of the Directors and the chief executive in the Shares, underlying Shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) (the “ Associated Corporations ”) as recorded in the register required to be kept by the Company under section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under provisions of the SFO) or the Model Code for Securities Transactions by Directors of Listed Issuers (the “ Model Code ”) were as follows:

A. Long positions in the underlying Shares of the Company:

		Number of
		underlying	Approximate
	Nature of	Shares	percentage
Name of Director	interest	interested	of interest
		(Note 1)	(Note 2)
LIAO Chuanqiang	Beneficial	2,000,000	1.30%
GUO Li	Beneficial	600,000	0.39%
MA Xiumin	Beneficial	50,000	0.03%
LIU Hongbai	Beneficial	50,000	0.03%
CHEN Bin	Beneficial	50,000	0.03%

Notes:

The underlying Shares represents underlying Shares under the share option scheme.
The percentages are calculated based on 154,000,000 Shares in issue as at the Latest Practicable Date and before the consideration of Shares issued upon exercised of options.

– 39 –

APPENDIX

GENERAL INFORMATION

B. Long positions in the shares of the Associated Corporations:

	Name of	Number of	Approximate
	Associated	Shares	percentage
Name of Director	Corporation	interested	of interest
			(Note)
LIAO Chuanqiang	Kaisa Holdings	4,000,000	0.07%
LI Haiming	Kaisa Holdings	9,370,000	0.15%
WU Jianxin	Kaisa Holdings	4,000,000	0.07%

Note:

The percentages are calculated based on 6,131,277,697 shares in issue of Kaisa Holdings as at the Latest Practicable Date and before the consideration of shares issued upon exercise of options.

(II) Substantial interests in the share capital of the Company

As at the Latest Practicable Date, so far as was known to the Directors and chief executive of the Company, the following persons (other than a Director or chief executive of the Company) had an interest or short position in the Shares and underlying Shares which would fall to be disclosed to the Company under the provisions of Division 2 and 3 of Part XV of the SFO, or who were, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group or had any options in respect of such capital:

Long positions in the shares and/or underlying shares of the Company:

			Approximate
			percentage of
			the issued
		Number of	share capital
Name of substantial		shares	of the
shareholder	Capacity	interested	Company
			(%)
			(Note 2)
Kaisa Holdings	Interest in controlled	103,530,000	67.23
	corporation	(Note 1)
Paramount Access Investments	Interest in controlled	103,530,000	67.23
Limited (“Paramount Access”)	corporation	(Note 1)
Ye Chang Investment Company	Beneficial owner	103,530,000	67.23
Limited (“Ye Chang”)		(Note 1)

– 40 –

APPENDIX

GENERAL INFORMATION

Notes:

Ye Chang is beneficially wholly-owned by Paramount Access, which in turn is beneficially wholly-owned by Kaisa Holdings. By virtue of the SFO, each of Kaisa Holdings and Paramount Access is deemed to be interested in the same number of Shares which Ye Chang is interested in.
The percentages are calculated based on 154,000,000 Shares in issue as at the Latest Practicable Date and before the consideration of Shares issued upon exercised of options.

Save as disclosed above, as at the Latest Practicable Date, so far as was known to the Directors and the chief executive of the Company, no other person had interests or short positions in the Shares or underlying Shares of any of its Associated Corporations which were required to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who were, directly or indirectly, beneficially interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group or in any options in respect of such capital.

3. DIRECTORS’ INTERESTS IN ASSETS, CONTRACT OR ARRANGEMENT

None of the Directors had any direct or indirect interest in any assets which had been acquired or disposed of by or leased to any member of the Group or proposed to be so acquired, disposed of by or leased to any member of the Group since 31 December 2019, being the date to which the latest published audited accounts of the Company were made up, and up to the Latest Practicable Date.

None of the Directors was materially interested in any contract or arrangement entered into by the Company or any of its subsidiaries which contract or arrangement is subsisting at the Latest Practicable Date and which is significant in relation to the business of the Group.

4. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contract with any member of the Group which does not expire or is not determinable by such member of the Group within one year without payment of compensation other than statutory compensation.

5. MATERIAL ADVERSE CHANGE

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).

6. COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors or any of their respective close associates (as defined in the Listing Rules) was interested in any business apart from

– 41 –

APPENDIX

GENERAL INFORMATION

the business of the Group, which competes or is likely to compete, either directly or indirectly, with that of the Group.

7. EXPERT’S QUALIFICATION AND CONSENT

Set out below is the qualification of the expert who has given its letter of advice in this circular:

Name

Qualification

Messis Capital Limited a corporation licensed under the SFO to engage in type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities

The Independent Financial Adviser has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its letter or reference to its name in the form and context in which it appears.

As at the Latest Practicable Date, the Independent Financial Adviser did not have any shareholding 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.

As at the Latest Practicable Date, the Independent Financial Adviser did not have any direct or indirect interests in any assets which had been, since 31 December 2019 (being the date to which the latest published audited consolidated financial statements of the Group were made up), acquired or disposed of by or leased to or were proposed to be acquired or disposed of by or leased to any member of the Group.

8. LITIGATION

So far as the Company is aware, as at the Latest Practicable Date, no member of the Group was engaged in any litigation or arbitration of material importance and there is no litigation or claim of material importance known to the Directors pending or threatened by or against any member of the Group.

9. MISCELLANEOUS

In the event of inconsistency, the English text of this circular and the accompanying form of proxy shall prevail over the Chinese text.

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours at 30/F, The Center, 99 Queen’s Road Central, Hong Kong from the date of this circular up to and including the date of the EGM:

(i) the 2020 Property Management Services Framework Agreement;

– 42 –

APPENDIX

GENERAL INFORMATION

(ii) the 2020 Equipment Installation Services Framework Agreement;
(iii) the Supplemental Agreements;
(iv) the letter of recommendation from the Independent Board Committee to the Independent Shareholders;
(v) the letter from the Independent Financial Adviser;
(vi) the written consent as referred to under the section headed “Expert’s qualification and consent” in this appendix;
(vii) the articles of association of the Company; and
(viii) this circular.

– 43 –

NOTICE OF EGM

==> picture [45 x 41] intentionally omitted <==

KAISA PROSPERITY HOLDINGS LIMITED 佳兆業美好集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2168)

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “ EGM ”) of the shareholders (the “ Shareholders ”) of Kaisa Prosperity Holdings Limited (the “ Company ”) will be held at Regus Conference Centre, 35/F, Central Plaza, 18 Harbour Road, Wanchai, Hong Kong on Tuesday, 15 December 2020 at 11 a.m. for the purpose of considering and, if thought fit, passing with or without amendments, the following resolutions of the Company:

Capitalised terms used herein have the same meanings as those defined in the circular of the Company dated 24 November 2020.

ORDINARY RESOLUTIONS

“ THAT the 2018 Property Management Services Framework Agreement (as amended by the First Supplemental Agreement), a copy of which is produced at the meeting and marked “A” and initialed by the chairman of the meeting for the purpose of identification, and the transactions contemplated thereby (including the annual caps) be and is hereby approved and confirmed and any one director of the Company be and is hereby authorised to do all such acts or things and sign all documents deemed necessary by him/her for the purpose of giving effect to the 2018 Property Management Services Framework Agreement (as amended by the First Supplemental Agreement) and the transactions contemplated thereunder.”
“ THAT the 2018 Equipment Installation Services Framework Agreement (as amended by the Second Supplemental Agreement), a copy of which is produced at the meeting and marked “B” and initialed by the chairman of the meeting for the purpose of identification, and the transactions contemplated thereby (including the annual caps) be and is hereby approved and confirmed and any one director of the Company be and is hereby authorised to do all such acts or things and sign all documents deemed necessary by him/her for the purpose of giving effect to the 2018 Equipment Installation Services Framework Agreement (as amended by the Second Supplemental Agreement) and the transactions contemplated thereunder.”
“ THAT the 2020 Property Management Services Framework Agreement, a copy of which is produced at the meeting and marked “C” and initialed by the chairman of the meeting for the purpose of identification, and the transactions contemplated thereby (including the annual caps) be and is hereby approved

– EGM-1 –

NOTICE OF EGM

and confirmed and any one director of the Company be and is hereby authorised to do all such acts or things and sign all documents deemed necessary by him/her for the purpose of giving effect to the 2020 Property Management Services Framework Agreement and the transactions contemplated thereunder.”

“ THAT the 2020 Equipment Installation Services Framework Agreement, a copy of which is produced at the meeting and marked “D” and initialed by the chairman of the meeting for the purpose of identification, and the transactions contemplated thereby (including the annual caps) be and is hereby approved and confirmed and any one director of the Company be and is hereby authorised to do all such acts or things and sign all documents deemed necessary by him/her for the purpose of giving effect to 2020 Equipment Installation Services Framework Agreement and the transactions contemplated thereunder.”

By order of the Board KAISA PROSPERITY HOLDINGS LIMITED LIAO Chuanqiang Chairman

Hong Kong, 24 November 2020

Registered Office: Principal Place of Business Cricket Square in Hong Kong: Hutchins Drive Room 1901 P.O. Box 2681 19/F, Lee Garden One Grand Cayman, KY1-1111 33 Hysan Avenue Cayman Islands Causeway Bay Hong Kong

Notes:

Any Shareholder entitled to attend and vote at the EGM shall be entitled to appoint another person as his proxy to attend and vote instead of him. A proxy need not be a Shareholder. If more than one proxy is so appointed, the appointment shall specify the number and class of Shares in respect of which each such proxy is so appointed.
In the case of joint holders, the vote of the senior who tenders a vote, whether in person or by proxy, will be accepted to the exclusion of the vote(s) of the other joint holder(s); and for this purpose seniority shall be determined as the person so present whose name stands first on the register of members in respect of such share shall alone be entitled to vote in respect thereof.
In order to be valid, a form of proxy must be deposited at the Company’s Hong Kong branch share registrar and transfer office, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong together with the power of attorney or other authority (if any) under which it is signed (or a certified copy thereof) not less than 48 hours before the time appointed for the holding of the above meeting or any adjournment thereof (as the case may be). The completion and return of the form of proxy shall not preclude members of the Company from attending and voting in person at the above meeting (or any adjourned meeting thereof) if they so wish.

– EGM-2 –

NOTICE OF EGM

The register of members of the Company will be closed for the following periods:

For the purpose of determining shareholders of the Company who are entitled to attend and vote at the forthcoming EGM to be held on Tuesday, 15 December 2020, the register of members of the Company will be closed from Thursday, 10 December 2020 to Tuesday, 15 December 2020, both days inclusive. In order to qualify for attending and voting at the EGM, all transfer documents should be lodged for registration with Company’s Hong Kong branch share registrar, Computershare Hong Kong Investor Services Limited at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not later than 4:30 p.m. on Wednesday, 9 December 2020.

– EGM-3 –

AI assistant

Kaisa Prosperity Holdings Limited — Proxy Solicitation & Information Statement 2020

50417_rns_2020-11-24_0fe5750a-5a34-41f9-bdce-8a793ab67948.pdf

KAISA PROSPERITY HOLDINGS LIMITED 佳兆業美好集團有限公司

(1) REVISION OF ANNUAL CAPS FOR CONTINUING CONNECTED TRANSACTIONS (2) RENEWAL OF CONTINUING CONNECTED TRANSACTIONS AND

(3) NOTICE OF EXTRAORDINARY GENERAL MEETING

CONTENTS

DEFINITIONS

KAISA PROSPERITY HOLDINGS LIMITED 佳兆業美好集團有限公司

(Stock Code: 2168)

(1) REVISION OF ANNUAL CAPS FOR CONTINUING CONNECTED TRANSACTIONS (2) RENEWAL OF CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

REVISION OF ANNUAL CAPS FOR CONTINUING CONNECTED TRANSACTIONS

(A) Revision of annual cap for the 2018 Property Management Services Framework Agreement

(1) Introduction

(2) Revision of the annual cap

(3) Reasons for the revision of the annual cap

(B) Revision of annual cap for the 2018 Equipment Installation Services Framework Agreement

(1) Introduction

(2) Revision of the annual cap

(3) Reasons for the revision of the annual cap

THE 2020 PROPERTY MANAGEMENT SERVICES FRAMEWORK AGREEMENT

THE 2020 EQUIPMENT INSTALLATION SERVICES FRAMEWORK AGREEMENT

LETTER FROM THE BOARD

INTERNAL CONTROL

INFORMATION ON THE PARTIES

(i) The Company

(ii) Kaisa Holdings

REASONS AND BENEFITS

LISTING RULES IMPLICATIONS

EGM AND VOTING

RECOMMENDATION

ADDITIONAL INFORMATION

KAISA PROSPERITY HOLDINGS LIMITED 佳兆業美好集團有限公司

(1) REVISION OF ANNUAL CAPS FOR CONTINUING CONNECTED TRANSACTIONS (2) RENEWAL OF CONTINUING CONNECTED TRANSACTIONS

Yours faithfully, For and on behalf of the Independent Board Committee

24 November 2020

CONTINUING CONNECTED TRANSACTIONS IN RELATION TO

(I) 2018 PROPERTY MANAGEMENT SERVICES FRAMEWORK AGREEMENT;

(III) 2020 PROPERTY MANAGEMENT SERVICES FRAMEWORK AGREEMENT; AND

(IV) 2020 EQUIPMENT INSTALLATION SERVICES FRAMEWORK AGREEMENT

INTRODUCTION

(A) Revision of annual caps for the year ending 31 December 2020

(B) Renewal of framework agreements for the three years ending 31 December 2023

BASIS OF OUR OPINION

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Background to and reasons for the Framework Agreements

4. The proposed annual caps

A. 2018 Property Management Services Framework Agreement (as amended by the First Supplemental Agreement)

B. 2020 Property Management Services Framework Agreement

C. 2018 Equipment Installation Services Framework Agreement (as amended by the Second Supplemental Agreement)

D. 2020 Equipment Installation Services Framework Agreement

5. Internal control measures regarding the transactions contemplated under the Framework Agreements

OPINION AND RECOMMENDATION

1. RESPONSIBILITY STATEMENT

2. DISCLOSURE OF INTERESTS

(I) Directors’ and chief executive’s interests in Shares, underlying Shares or debentures

(II) Substantial interests in the share capital of the Company

3. DIRECTORS’ INTERESTS IN ASSETS, CONTRACT OR ARRANGEMENT

4. SERVICE CONTRACTS

5. MATERIAL ADVERSE CHANGE

6. COMPETING INTERESTS

7. EXPERT’S QUALIFICATION AND CONSENT

Qualification

8. LITIGATION

9. MISCELLANEOUS

10. DOCUMENTS AVAILABLE FOR INSPECTION

KAISA PROSPERITY HOLDINGS LIMITED 佳兆業美好集團有限公司

(Stock Code: 2168)

ORDINARY RESOLUTIONS

By order of the Board KAISA PROSPERITY HOLDINGS LIMITED LIAO Chuanqiang Chairman

NOTICE OF EGM

More from Kaisa Prosperity Holdings Limited

Kaisa Prosperity Holdings Limited Proxy Solicitation & Information Statement 2020