Liaoning Port Co., Ltd. — Proxy Solicitation & Information Statement 2021

Nov 29, 2021

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Liaoning Port Co., Ltd.*, you should at once hand this circular, together with the accompanying proxy form to the purchaser(s) or transferee(s) or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser(s) or transferee(s).

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

(a sino-foreign joint stock limited company incorporated in the People’s Republic of China) (Stock Code: 2880)

MAJOR AND CONNECTED TRANSACTION IN RELATION TO ACQUISITION OF PORT ASSETS

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

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

A letter from the Board is set out on pages 5 to 15 of this circular.

A notice convening the EGM to be held at Room 109, Liaoning Port Group Building, No. 1 Gangwan Street, Zhongshan District, Dalian, Liaoning, the PRC on Tuesday, 14 December 2021 at 9:00 a.m. is published by the Company on 24 November 2021. Form of proxy for use at the EGM is published on 24 November 2021. Whether or not you are able to attend the meetings, you are requested to complete and return the form of proxy in accordance with the instructions printed thereon as soon as possible but in any event not less than 24 hours before the time appointed for the holding of the EGM or any adjournment thereof. Delivery of the form of proxy shall not preclude a shareholder of the Company from attending and voting in person at the EGM and, in such event, the form of proxy shall be deemed to be revoked. The Company strongly recommends you to monitor the development of the situation with the COVID-19 and to assess, based on the social distancing policies, the necessity for attending the EGM in person.

* The Company is registered as Non-Hong Kong company under Part XI of the previous Hong Kong Companies Ordinance (equivalent to Part 16 of the Hong Kong Companies Ordinance with effect from 3 March 2014) under the English name “Liaoning Port Co., Ltd.” .

• For identification purposes only

29 November 2021

CONTENTS

			Page
DEFINITIONS . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
**LETTER FROM THE **		BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
**LETTER FROM THE **		INDEPENDENT BOARD COMMITTEE. . . . . . . . . . . . .	16
**LETTER FROM THE **		INDEPENDENT FINANCIAL ADVISER. . . . . . . . . . . . .	17
APPENDIX I	–	FINANCIAL INFORMATION OF THE GROUP . . . . .	I-1
APPENDIX II-1	–	ACCOUNTANT REPORT OF THE ASSETS. . . . . . . . .	II-1-1
APPENDIX II-2	–	STATUTORY ACCOUNT OF THE SPV . . . . . . . . . . . .	II-2-1
APPENDIX III-1	–	VALUATION REPORT A. . . . . . . . . . . . . . . . . . . . . . . .	III-1-1
APPENDIX III-2	–	VALUATION REPORT B. . . . . . . . . . . . . . . . . . . . . . . .	III-2-1
APPENDIX III-3	–	VALUATION REPORT C. . . . . . . . . . . . . . . . . . . . . . . .	III-3-1
APPENDIX IV	–	PROPERTY VALUATION REPORT . . . . . . . . . . . . . . .	IV-1
APPENDIX V	–	UNAUDITED PRO FORMA FINANCIAL
		INFORMATION OF THE GROUP. . . . . . . . . . . . . . .	V-1
APPENDIX VI	–	GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . .	VI-1

– i –

DEFINITIONS

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

• “A Share(s)”

• A Share(s) of RMB1.00 each in the capital of the Company which is/are listed and traded on the Shanghai Stock Exchange;

• “Agreements”

• means the transaction documents entered by the Company (as the purchaser) and YKP (as the vendor) on 28 October 2021 pursuant to which the Company agreed to acquire and YKP agreed to sell the Assets at a total consideration of RMB8,524,108,000;

• “Announcement”

• means the announcement dated 28 October 2021 of the Company in relation to the entering of the Agreements;

• “Articles of Association”

• means the articles of association of the Company;

• “Assets”

• means the assets owned by YKP Group with a total book value of RMB6,526,083,400 and an appraised value of RMB8,524,108,000 according to the Valuation, including berths and yards, machinery and equipment, barge assets, hydropower assets, coal business related assets, land in the Bayuquan Port Area;

• “associates”

• has the meaning ascribed thereto under the Listing Rules;

• “Board”

• means the board of directors of the Company;

• “CMG”

• means China Merchants Group Limited (招商局集團有限 公司), a state wholly-owned enterprise established under the laws of the PRC under the direct control of the SASAC;

• “Company”

means Liaoning Port Co., Ltd. (遼寧港口股份有限公司), a joint stock limited company established in the PRC whose H Shares and A Shares are listed on the Main Board of the Stock Exchange (stock code: 2880) and the Shanghai Stock Exchange (stock code: 601880) respectively;

• “connected person”

has the meaning ascribed thereto under the Listing Rules;

• “controlling shareholder”

has the meaning ascribed thereto under the Listing Rules;

– 1 –

DEFINITIONS

“CSRC”

means the China Securities Regulatory Commission;

• “Directors”

means the directors of the Company;

• “EGM”

• means the extraordinary general meeting of the Company to be convened on Tuesday, 14 December 2021, or any adjournment thereof, to consider, and if thought fit, approve the Agreements and the Transaction contemplated thereunder;

• “Group” the Company and its subsidiaries;

• “H Share(s)”

• H Share(s) of RMB1.00 each in the capital of the Company which is/are listed and traded on the Stock Exchange;

• “HK$” means Hong Kong dollars, the lawful currency of Hong Kong;

• “Hong Kong” means the Hong Kong Special Administrative Region of the PRC;

• “Independent Board Committee”

• means the independent committee of the Board, comprising the independent non-executive Directors, namely LI Zhiwei, LIU Chunyan and LAW Man Tat;

• “Independent Financial Adviser”

• means TC Capital International Limited, a licensed corporation under the SFO to engage in type 1 (dealing in securities) and type 6 (advising on corporate finance) of the regulated activities as set out in schedule 5 of the SFO;

• “Independent Shareholders”

• means the shareholders of the Company, other than CMG and its associates;

• “Latest Practicable Date”

• means 25 November 2021, being the latest practicable date prior to the despatch of this circular for ascertaining certain information contained in this circular;

• “Liaoning Port Group”

means Liaoning Port Group Limited (遼寧港口集團有限 公司), formerly known as Liaoning North East Asia Gang Hang Development Co., Ltd. (遼寧東北亞港航發展有限 公司), a limited liability company established in the PRC;

– 2 –

DEFINITIONS

“Listing Rules” means the Rules Governing the Listing of Securities on the Stock Exchange; “PDA” Dalian Port Corporation Limited* (大連港集團有限公 司), a limited liability company established in the PRC on 1 January 1951; “PRC” or “China” means the People’s Republic of China; “RMB” means Renminbi, the lawful currency of the PRC; “SASAC” State-owned Assets Supervision and Administration Commission of the State Council of the PRC; “SFO” the Securities and Futures Ordinance; “Shareholders” means the shareholders of the Company; “Shares” means A Shares and H Shares;

• “SPV” means Yingkou Port Bulk Cargo Terminal Co., Ltd* (營 口港散雜貨碼頭有限公司), a company incorporated in the PRC with limited liabilities and is wholly owned by YKP as at the date of this announcement;

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

• “substantial shareholder” has the meaning ascribed thereto under the Listing Rules;

• “trading day”

• with respect to A shares, means a day on which the Shanghai Stock Exchange is open for dealing or trading in securities; and with respect to H shares, means a day on which the Stock Exchange is open for dealing or trading in securities;

• “Transaction” means the transaction contemplated under the Agreements in connection to the acquisition of the Assets (including the SPV) by the Company from YKP;

• “Valuation”

• the valuation as at 31 August 2021 by China Tong Cheng Assets Appraisal Co., Ltd., being an independent valuer qualified in the PRC, using the results of the asset based approach as the conclusion;

– 3 –

DEFINITIONS

“YKP”	means Ying Kou Port Group Corporation Limited (營口
	港務集團有限公司), a limited liability company
	established in the PRC and is recognised as a subsidiary
	in the consolidated financial statements of Liaoning Port
	Group;
“YKP Group”	means YKP and its subsidiaries (excluding the Group);
	and
“%”	per cent.

– 4 –

LETTER FROM THE BOARD

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(a sino-foreign joint stock limited company incorporated in the People’s Republic of China) (Stock Code: 2880)

Directors:

Executive Directors : ZHANG Yi WEI Minghui

Non-executive Directors : ZHOU Qinghong SI Zheng XU Song YANG Bing

Independent Non-executive Directors : LI Zhiwei LIU Chunyan LAW Man Tat

Registered Office : Xingang Commercial Building Dayao Bay Dalian Free Trade Zone PRC

Place of Business in the PRC : Xingang Commercial Building Jingang Road Dalian International Logistic Park Zone Liaoning Province PRC 29 November 2021

To the Shareholders

Dear Sir or Madam,

MAJOR AND CONNECTED TRANSACTION IN RELATION TO ACQUISITION OF PORT ASSETS

1. INTRODUCTION

Reference is made to the announcement of the Company dated 28 October 2021 (the “ Announcement ”) in relation to, among other things, the proposed Transaction pursuant to the Agreements.

The purpose of this circular is to provide you with, inter alia , (i) further information on the proposed Transaction pursuant to the Agreements; (ii) the recommendation of the Independent Board Committee in relation to the Transaction pursuant to the Agreements; (iii) a letter of advice from the Independent Financial Adviser to the Independent Board Committee

* For identification purposes only

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LETTER FROM THE BOARD

and the Independent Shareholders in relation to the Transaction and the Agreements, and (iv) other information as required under the Listing Rules.

2. THE TRANSACTION

The principal terms of the Transaction are set out as follows:

Date : 28 October 2021 Parties : (i) the Company (as the purchaser); and

• (ii) YKP (as the vendor)

• Subject asset : A group of assets with a total book value of RMB6,526,083,400 (reference date: 31 August 2021) and an appraised value of RMB8,524,108,000 (reference date: 31 August 2021) according to the Valuation, comprising:

• (i) the assets (to the extent not transferred to the SPV), including berths and yards, machinery and equipment, barge assets, hydropower assets, coal business related assets, land in the Bayuquan Port Area; and

• (ii) the entire issued share capital of the SPV (the registered capital is RMB50,000), which owns assets (to the extent of the Assets which to be transferred to the SPV) with an appraised value of approximately RMB7,299,443,700 according to the Valuation, including berths and yards, machinery and equipment, barge assets, hydropower assets, coal business related assets, land in the Bayuquan Port Area.

The SPV is a wholly owned subsidiary of YKP and has no other assets or any business operation save for the part of Assets to be transferred to it. As at the Latest Practicable Date, the relevant Assets has not yet been transferred into the SPV. As such, the indicators in the statutory account of the SPV (as set out in Appendix II-2) are nil.

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LETTER FROM THE BOARD

The original costs of the Assets are RMB9,554,922,703.67.

Net profit

			(before taxation and	(after taxation and
			extraordinary items)	extraordinary items)
2019			349,858,859.56	262,842,909.12
2020			467,968,047.06	350,579,969.83
Eight	months	ended
31	August	2021	310,155,405.94	232,566,276.56

• Conditions precedent : The Agreements shall take effect upon the satisfaction of the following conditions precedent:

• (i) the Transaction being approved by the Board and independent Shareholders of the Company;

• (ii) CMG having approved the Transaction in accordance with the procedures of the SASAC for the supervision and administration of state owned assets transactions and completed the filing of valuation reports;

• (iii) the relevant authority of YKP having approved the Transaction;

• (iv) the relevant authority of the relevant subsidiary of the Company having approved the Transaction; and

• (v) the Stock Exchange having no objection to the announcement(s) and circular(s) issued by the Company related to the Transaction.

As at the Latest Practicable Date:

1. above condition precedent (i) has been partially completed as the Board of the Company has approved the Transaction;

2. above condition precedent (ii) has been completed;

3. above condition precedent (iii) has been completed; and

4. above condition precedent (v) has been completed.

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LETTER FROM THE BOARD

In addition to above, the transfer of SPV is also conditional upon the registered capital of the SPV having been increased to RMB500,000,000 by YKP Group through injection of assets with an appraised value of approximately RMB7,299,443,700 (the surplus will be contributed to the capital reserve of the SPV). As at the Latest Practicable Date, the increasing of the registered capital of the SPV has not been completed.

• Consideration : A total consideration of RMB8,524,108,000 in cash.

• Basis of consideration : The consideration was determined after arm’s length negotiation and with reference to the Valuation.

• Payment : The Group shall (i) transfer RMB4,524,108,000 in cash to YKP on or before 31 December 2021; and (ii) transfer the rest of the consideration in cash to YKP on or before 30 September 2022.

Funding

• : The Company will utilize its capital resources and debt financing instrument to meet the financial commitment of the Company under the Transaction.

• Completion

• : The Assets shall be transferred to the Group on or before 31 December 2022, of which:

• (i) the ownership of sea area use rights shall be transferred on or before 31 December 2022 without any encumbrance of rights;

• (ii) the rest of the Assets shall be transferred to the Group within 90 days after the conditions precedent (excluding the increase of SPV’s registered capital) being completed;

• (iii) existing contracts between YKP and the Assets, including water supply business, electricity supply business, tugboat business and other business contracts, shall be transferred to the Group within 60 days after the conditions precedent being completed.

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LETTER FROM THE BOARD

Valuation

The Valuation was determined using the asset-based method. The Valuation date is 31 August 2021. The asset-based method, also known as the cost method, means determining the appraisal value of the target on the basis of the value its assets and liabilities. This method, together with the assumptions of the Valuation, have been reasonably set based on the actual conditions and future business plans of the Assets and are in line with the current and future business and operation conditions of the Assets. As such, the Board considers the methodology, basis and assumptions adopted by the independent valuer in the valuation reports are fair and reasonable.

The valuers taking charge of the Valuation are Mr. Wang Haijun and Ms. Wu Xiaoxia, both of whom have more than 15 years’ experience in domestic and international asset merger and acquisition transactions and have taken charge of asset valuation projects of domestic large and medium ports. All those projects passed the review of the relevant authorities. As such, the Board considers the qualification and experience of the independent valuer is sufficient to value the Assets.

Although there was certain incomplete or defective ownership information related to the Assets, the independent valuer has already verified the status of those ownership certificates. For Assets that have not obtained the ownership certificates, the valuer has verified the information including the approval of construction procedures, construction contracts and settlement of construction costs and confirmed that the ownership of those Assets belongs to YKP Group and there is no dispute. As of the date of the Valuation, the survey and mapping procedures of those unlicensed properties had been completed and the relevant application procedures were in progress. The management of YKP Group has undertaken to complete the handling procedures of ownership certificates as soon as possible. Therefore, the Board considers those incomplete or defective ownership information has minor impact fairness and reasonableness of the Valuation.

The Asset comprises a total of 39 properties, 33 of which have been registered, and for the remaining 6 properties, 3 of which obtained a compliance letter from the Bayuquan Branch of the Natural Resources Bureau of Yingkou City (營口市自然資源局鮁魚圈分局): “For the 3 properties owned by YKP Group, there is no obstacle to apply for the real estate right certificates after the transfer of land use rights of such properties is completed and the “unification of real estate and land ownership” is achieved. Before the real estate right certificates are issued for these properties, YKP Group or the proposed transferee of the aforesaid assets (the Group) can use the properties as they are now and there is no risk of administrative penalties.” The remaining 3 properties are located on the land owned by the Company and currently are not eligible for real estate property registration. The 6 properties without registration have a total area of 1,200.01 m[2] , accounting for 1.63% of the total area of the Assets properties. The 3 properties located on the land owned by the Company have a total area of 726.38 m[2] , accounting for 0.99% of the total area of the Assets properties, which is relatively low. As such, the Board considers the Transaction is fair and reasonable and in the interest of the Company and shareholders as a whole, having considered the incomplete registration of property rights.

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LETTER FROM THE BOARD

3. GENERAL INFORMATION OF THE PARTIES

YKP is a company with limited liability established in the PRC, with principal business in terminal and other port facility services, cargo handling, warehousing services, ship port services, port facility equipment and port machinery rental and maintenance services. YKP is ultimately non-wholly owned by CMG that is wholly owned by the PRC Government (the State Council of the PRC) and supervised by the SASAC. CMG mainly provides services in three sectors, including transportation and related infrastructure, financial investment and asset management, and industry park and property development and management. The top ten shareholders of YKP are Liaoning Port Group Co., Ltd, Dalian Port Corporation Limited, Bank of China Limited Yingkou Branch, Industrial and Commercial Bank of China Limited Liaoning Branch, China Construction Bank Corporation Yingkou Branch, Agricultural Bank Financial Assets Investment Co., Ltd., Bank of Communications Co., Ltd. Liaoning Branch, Postal Savings Bank of China Co., Ltd. Liaoning Branch, Industrial Bank Co., Ltd. Yingkou Branch and Shanghai Pudong Development Bank Co., Ltd. Yingkou Branch. Except for Liaoning Port Group Co., Ltd. and Dalian Port Corporation Limited (each of which holds 22.96% equity interest of YKP respectively), each of the remaining top ten shareholders of YKP holds less than 10% equity interest.

The Group is principally engaged in oil/liquefied chemical terminal and the related logistics services (oil segment); container terminal and related logistics services (container segment); automobile terminal and related logistics services (automobile terminal segment); bulk and general cargo terminal and related logistics services (bulk and general cargo segment); bulk grain terminal and related logistics services (bulk grain segment); passenger and roll-on, roll-off terminal and related logistics services (passenger and ro-ro segment) and value-added and ancillary port operations (value-added services segment).

4. REASONS FOR AND BENEFITS OF THE TRANSACTION

The Transaction will be conducive to fulfilling the non-competing undertakings committed by the major Shareholders on addressing inter-sector competition and connected transactions between the Company and YKP. Prior to the Transaction, the Group and YKP Group were both engaged in port handling, warehousing and related services in the Bayuquan Port Area due to historical reasons, and there are competitions between the Group and YKP Group. YKP Group has undertaken that it will make its best efforts to resolve the competition issue before the end of 2022 to improve the development of the Group and safeguard the interests of Shareholders of the Company, in particular the interests of minority Shareholders. Upon completion of the Transaction, the main port business assets of YKP Group in the Bayuquan Port Area will be transferred to the Group, and the competition between the Group and YKP Group in the Bayuquan Port Area will be largely eliminated.

– 10 –

LETTER FROM THE BOARD

The Transaction is advantageous to the market capitalization of the Company as the market will expect further high-quality assets injection by the major Shareholders to the Group, which is conducive to share price appreciation and market value management of the Company.

The Transaction will reduce the amount of connected transactions between the Group and YKP Group as most of the port-related assets in Bayuquan Port Area (including a large number of assets which are already leased by the Group) will be transferred to the Company upon completion of the Transaction. It will reduce the Company’s cost of reporting and relieve the Company from unduly burdensome approval procedures.

The Assets are profitable and of high-quality, being strictly selected from the existing assets of YKP Group. The Assets located in Bayuquan Port Area have a strong business linkage with the Company’s assets located in the neighboring area and therefore will create synergy effect within the Group. The Assets include coal business assets, berths, machinery, equipment, water and electricity supply and barge assets for port operations in the Bayuquan Port Area. Upon completion of the Transaction, the quay berth assets in the Bayuquan Port Area will largely be held by the Group, which will enable the Group to unify the control and deployment of the quay capacity and equipment use in the port area. Therefore, the Company can make more reasonable production plans, improve loading and unloading efficiency and reduce the costs of production. The acquisition of water and electricity supply and barges will also ensure that the Company’s needs enjoy the highest priority.

5. FINANCIAL EFFECT OF THE TRANSACTION

Revenue

The Assets are profitable. The revenue of the Assets for the period of January 2021 to August 2021 and the year of 2020 is RMB1.458 billion and RMB2.235 billion respectively, the total profit is RMB310 million and RMB468 million respectively and the net profit is RMB233 million and RMB351 million respectively. The Transaction is an important step for the Company to deepen the integration of ports in Liaoning Province and build a unified operating platform for the main port business. Through the acquisition of the Assets, the Group can further integrate the resources of the Bayuquan Port and strengthen the integrated control over the berths and terminals already in operation, optimize the port resource allocation capacity and enhance the operational management efficiency of the Company. At the same time, with the good credit standing of the Company, it can acquire the Assets at a lower financing cost and save the rental expenses of leased berths and land, which is conducive to the Shareholders’ interests.

– 11 –

LETTER FROM THE BOARD

Upon the completion of the Transaction, the Company will obtain the earnings from the coal business assets, water and electricity and barge assets of the Assets and save the costs of leasing certain Assets, thereby increasing the earnings of the Group. Meanwhile, the Company bears the depreciation, amortization and taxes of the Assets and additional financing finance costs as well as one-off transaction costs of the Transaction. Based on unaudited historical data of the Assets and actual situation of the Transaction, after taking into account the impact of above costs, the Transaction will still increase the profit attributable to the Company.

Assets and liabilities

Following the completion of the Transaction, the size of the Group’s total assets in the consolidated statements will be expanded. According to the unaudited pro forma financial statements as set out as Appendix V of this circular, total assets of the Group will increase from RMB53,604 million to RMB58,632 million, representing an increase of 9.38%. The total liabilities of the Group will increase from RMB14,897 million to RMB20,036 million, representing an increase of 34.5%.

6. LISTING RULES IMPLICATIONS

YKP is a subsidiary of CMG, an indirect holding company of the Company and therefore is a connected person of the Company as defined under Rule 14A.07 of the Listing Rules. As such, the Transaction constitutes a connected transaction for the Company under Chapter 14A of the Listing Rules.

As the highest applicable percentage ratio in respect of the Transaction exceeds 25% but is less than 100%, the Transaction constitutes a major transaction of the Company and is subject to the reporting, announcement and shareholders’ approval requirements under Chapter 14 of the Listing Rules.

Each of Mr. Wei Minghui, Mr. Sun Dequan, Mr. Cao Dong, Mr. Qi Yue, Mr. Yuan Yi, and Ms. Na Danhong, being a then Director also holding a management position or directorship with CMG or its associates (other than the Group), has abstained from voting on the board resolution approving the Agreements and the Transaction contemplated thereunder. Save as disclosed above, none of the Directors attending the board meeting has a material interest in or is required to abstain from voting on the Agreements and the Transaction contemplated thereunder.

Waiver from strict compliance with the requirements under Rules 14.62, 14.66(2), 14A.68(7), 14A.70(13) and paragraph 29(2) of Appendix 1B of the Listing Rules

The Company has applied and the Stock Exchange has granted a waiver from strict compliance with the requirements under Rules 14.62, 14.66(2), 14A.68(7), 14A.70(13) and paragraph 29(2) of Appendix 1B of the Listing Rules on the basis that (i) the reason for preparing the Valuation by the Company was to comply with PRC law; (ii) the Company was not involved in preparing the Valuation, except for providing an unaudited table of pro forma

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LETTER FROM THE BOARD

operating statistics of certain Assets leased by the Group and the valuer did not adopt the conclusion based on these materials; and (iii) while the consideration was based on the Valuation, the Board had also considered other factors when assessing the Transaction, including the revenue and cash flow of the Group, as well as benefits such as resolving competition issue, reducing amount of connected transactions and releasing synergy effect of the Assets.

7. DIRECTORS’ VIEWS

The Company’s principal business includes operation of integrated port logistics business. The Assets are ports and related assets in the same area as the Company, which are closely connected with the daily business of the Group. Some of the Assets have been leased and used by the Company in its daily operation.

The Directors (excluding the independent non-executive Directors) are of the view that the terms of the Agreements were determined after arm’s length negotiation, and the Transaction is conducted in the ordinary and usual course of business of the Company and are on normal commercial terms or better, fair and reasonable and in the interests of the Company and its Shareholders as a whole.

8. INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER

The Independent Board Committee (comprising Mr. Li Zhiwei, Mr. Liu Chunyan and Mr. Law Man Tat, all being independent non-executive Directors) has been established to advise the Independent Shareholders in connection with the Agreements and the Transaction contemplated thereunder. TC Capital International Limited has been appointed by the Company to make recommendations to the Independent Board Committee and the Independent Shareholders in relation to the Agreements and the Transaction contemplated thereunder.

9. EGM

The Company will convene the EGM for the Shareholders to consider and, if thought fit, to approve the Agreements and Transactions contemplated thereunder. Details of the EGM and resolutions to be considered in the meeting are set out in the Notice of EGM dated 24 November 2021.

Pursuant to Rule 14A.70 of the Listing Rules, any connected person and any shareholder and their associates with a material interest in the Agreements and the Transaction contemplated thereunder is required to abstain from voting on the resolution in respect of the Agreements and the Transaction contemplated thereunder at the EGM. Therefore, CMG, the controlling shareholder of the Company, together with its associates, collectively holding 16,586,998,459 Shares (comprising 12,293,749,764 A Shares and 4,293,248,695 H Shares) of

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LETTER FROM THE BOARD

the Company amounting to approximately 69.15% of the total issued share capital of the Company as of the Latest Practicable Date, are required to abstain from voting at the EGM in respect of resolutions to approve the Agreements and the Transaction contemplated thereunder.

Save as aforementioned, to the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, no other Shareholder has a material interest in the Agreements and the Transaction contemplated thereunder and therefore no other Shareholder is required to abstain from voting at the EGM for the relevant resolutions.

Book closure

Holders of H Shares whose names appear on the register of members of the Company at the close of business on 9 December 2021 will be entitled to attend the EGM upon completion of the necessary registration procedures. The H Shares register of members will be closed from 9 December 2021 to 14 December 2021, both days inclusive, during which period no transfer of H Shares will be effected.

Where applicable, holders of the H Shares intending to attend the EGM are therefore required to lodge their respective instrument(s) of transfer and the relevant share certificate(s) to the Company’s H share registrar, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17 Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, by 4:30 p.m. on 8 December 2021.

Proxy forms

Whether or not you intend to attend the EGM, you are requested to complete and return the relevant proxy form(s) in accordance with the instructions thereon. The proxy form should be returned as soon as possible and in any event not later than 24 hours before the time appointed for holding such meeting or any adjournment thereof. Completion and return of the proxy form will not preclude you from attending and voting at the relevant meetings should you so wish.

10. RECOMMENDATION OF THE BOARD

The Directors believe that the Transaction pursuant to the Agreements is fair and reasonable and in the interests of the Group and the Shareholders as a whole. Accordingly, the Directors recommend the Shareholders to vote in favour of the resolutions to be proposed at the EGM.

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LETTER FROM THE BOARD

11. 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 Company. 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.

12. OTHER INFORMATION

Your attention is drawn to other sections of and appendices to this circular.

By Order of the Board Liaoning Port Co., Ltd. * WANG Huiying LEE, Kin Yu Arthur Joint Company Secretaries

Dalian City, Liaoning Province, the PRC 29 November 2021

* For identification purposes only

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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(a sino-foreign joint stock limited company incorporated in the People’s Republic of China) (Stock Code: 2880)

29 November 2021

To the Independent Shareholders

Dear Sir or Madam,

MAJOR AND CONNECTED TRANSACTION IN RELATION TO ACQUISITION OF PORT ASSETS

We refer to the circular dated 29 November 2021 issued by the Company (the “ Circular ”) of which this letter forms part. Terms defined in the Circular shall have the same meanings when used herein, unless the context otherwise requires.

We have been appointed as the members of the Independent Board Committee to consider and advise the Independent Shareholders regarding the Agreements and the Transaction contemplated thereunder. The Independent Financial Adviser, TC Capital International Limited, has been appointed to advise the Independent Board Committee and the Independent Shareholders in this regard.

We wish to draw your attention to (i) the letter from the Board, as set out on pages 5 to 15 of the Circular, and (ii) the letter from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders which contains its opinion in respect of the Agreements and the Transaction contemplated thereunder as set out on pages 17 to 35 of the Circular.

After taking into consideration the advice from the Independent Financial Adviser, we consider that the Agreements was entered into on normal commercial terms in the ordinary and usual course of business of the Group, and 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 relevant resolutions to be proposed at the EGM in relation to the Agreements and the Transaction contemplated thereunder.

Yours faithfully,

For and on behalf of the Independent Board Committee

LI Zhiwei LIU Chunyan LAW Man Tat

Independent Non-executive Directors

* For identification purposes only

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Set out below is the text of a letter received from TC Capital International Limited, the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the Transaction for the purpose of inclusion in this circular.

29 November 2021

The Independent Board Committee and the Independent Shareholders Liaoning Port Co., Ltd.*

Dear Sirs,

MAJOR AND CONNECTED TRANSACTION IN RELATION TO ACQUISITION OF PORT ASSETS

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Transaction, details of which are set out in the letter from the Board (the “ Letter from the Board ”) contained in the circular of the Company dated 29 November 2021 issued to the Shareholders (the “ Circular ”). Capitalised terms used in this letter shall have the same meanings as those defined in the Circular unless the context otherwise requires.

On 28 October 2021, the Company (as the purchaser) and YKP (as the vendor) entered into the Agreements pursuant to which the Company agreed to acquire and YKP agreed to sell the Assets at a total consideration of RMB8,524,108,000.

YKP is a subsidiary of CMG, an indirect holding company of the Company, and therefore is a connected person of the Company as defined under Rule 14A.07 of the Listing Rules. As such, the Transaction constitutes a connected transaction for the Company under Chapter 14A of the Listing Rules. As the highest applicable percentage ratio in respect of the Transaction exceeds 25% but is less than 100%, the Transaction constitutes a major transaction of the Company and is subject to the reporting, announcement and shareholders’ approval requirements under Chapter 14 of the Listing Rules.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Independent Board Committee comprising Mr. Li Zhiwei, Mr. Liu Chunyan and Mr. Law Man Tat (all being independent non-executive Directors) has been established to advise the Independent Shareholders on (i) whether the terms of the Agreements are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; (ii) whether the Transaction is conducted in the ordinary and usual course of business of the Group and is in the interests of the Company and the Shareholders as a whole; and (iii) how the Independent Shareholders should vote in respect of the relevant resolution(s) to approve the Transaction at the EGM. We, TC Capital International Limited, have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this respect.

OUR INDEPENDENCE

As at the Latest Practicable Date, we did not have any relationships with or interests in the Company or any other parties that could reasonably be regarded as relevant to the independence of us. In the last two years, we have acted as an independent financial adviser to the then independent board committee and independent shareholders of the Company in relation to two occasions as detailed in the circulars of the Company dated 26 May 2021 and 13 January 2020 respectively. Given (i) our independent role in the abovementioned engagements; and (ii) our fees for the abovementioned engagements represented an insignificant percentage of our revenue, we consider that the abovementioned engagements would not affect our independence to form our opinion in respect of the Transaction.

BASIS OF OUR OPINION

In putting forth our recommendation, we have relied on the information, opinions, facts and representations supplied to us by the Directors and/or the representatives of the Company. We have reviewed, among other things, (i) the Agreements; (ii) the annual reports of the Company for the two years ended 31 December 2019 and 2020 (the “ 2019 Annual Report ” and the “ 2020 Annual Report ”, respectively); (iii) the third quarterly report of the Company for the nine months ended 30 September 2021 (the “ 2021 Third Quarterly Report ”); (iv) the valuation report on the entire issued share capital of the SPV (the “ SPV Valuation Report ”) and the valuation report on the assets (to the extent not transferred to the SPV) (the “ Asset Valuation Report ”) (together, the “ Valuation Reports ”) prepared by China Tong Cheng Assets Appraisal Co., Ltd. (the “ Valuer ”); (v) the pro forma financial statement and auditor’s report of the Assets for each of the three years ended 31 December 2020 and the eight months ended 31 August 2021; (vi) other information as set out in the Circular; and (vii) relevant market data and information available from public sources.

We have assumed that all such information, opinions, facts and representations provided to us by the Directors and/or the representatives of the Company, for which they are fully responsible, are true, accurate and complete in all respects. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Directors and/or the representatives of the Company. The Company has also confirmed to us that no material facts have been omitted from the information supplied and we have no reason to suspect that any material information has been withheld or is misleading.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We consider that we have sufficient information currently available to reach an informed view and to provide a reasonable basis for our recommendation. We have not, however, carried out any independent verification of the information provided by the Directors and/or the representatives of the Company, nor have we conducted any independent investigation into the business, affairs, operations, financial position or future prospects of each of the Group, YKP, the SPV, the Assets and any of their respective subsidiaries and associates.

We have not made any independent evaluation or appraisal of the assets and liabilities of the SPV and the Assets, and we have not been furnished with any such evaluation or appraisal, save as and except for the Valuation Reports. The Valuation Reports were prepared by the Valuer. Since we are not experts in the valuation of businesses, companies or assets, we have relied solely upon the Valuation Reports for the appraised value of the Assets as at 31 August 2021 (the “ Valuation Date ”).

PRINCIPAL FACTORS AND REASONS CONSIDERED

In formulating our opinion in respect of the Transaction, we have taken into account the following principal factors and reasons:

1. Background information of the parties to the Transaction

1.1 Information on the Group

As stated in the Letter from the Board, the Group is principally engaged in oil/liquefied chemical terminal and related logistics services (oil segment); container terminal and related logistics services (container segment); automobile terminal and related logistics services (automobile terminal segment); bulk and general cargo terminal and related logistics services (bulk and general cargo segment); bulk grain terminal and related logistics services (bulk grain segment); passenger and roll-on, roll-off terminal and related logistics services (passenger and ro-ro segment) and value-added and ancillary port operations (value-added services segment).

Set out below is certain financial information of the Group for the three years ended 31 December 2020 (“ FY2018 ”, “ FY2019 ” and “ FY2020 ”, respectively) and the nine months ended 30 September 2020 and 2021 (“ 3Q2020 ” and “ 3Q2021 ”, respectively) as extracted from the 2019 Annual Report, the 2020 Annual Report and the 2021 Third Quarterly Report:

	For the year ended	For the year ended	For the year ended	For the nine months	For the nine months
		31 December		ended 30 September
	2018	2019	2020	2020	2021
	RMB’	RMB’	RMB’	RMB’	RMB’
	million	million	million	million	million
				(Restated)
	(Audited)	(Audited)	(Audited)	(Unaudited) (Unaudited)
Revenue	6,754	6,646	6,657	8,498	8,688
Cost of sales	5,141	4,655	4,422	5,424	5,914
Gross profit	1,613	1,991	2,235	3,074	2,774
Net profit attributable
to shareholders of
the parent company	523	718	813	1,593	1,413

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

					As at
		**As at 31 **	December		30 September
	2018	2019	2020	2020	2021
	RMB’	RMB’	RMB’	RMB’	RMB’
	million	million	million	million	million
				(Restated)
	(Audited)	(Audited)	(Audited)	(Unaudited)	(Unaudited)
Total assets	35,316	35,098	34,526	55,238	53,481
Total liabilities	14,455	13,694	12,505	16,975	14,278
Net assets	20,861	21,404	22,021	38,263	39,203

Note: Because the Company’s merger with Yingkou Port Liability Co., Ltd. (“ Yingkou Port ”) by absorption through share swap was completed on 4 February 2021, the Group incorporated the assets and liabilities of Yingkou Port into the consolidated financial statements and retrospectively adjusted the comparative data for FY2020 and 3Q2020.

As shown in the above table, the revenue of the Group slightly decreased by approximately 1.6% to approximately RMB6,646 million for FY2019 as compared to that for FY2018. The gross profit of the Group amounted to approximately RMB1,991 million for FY2019, representing an increase of approximately 23.4% as compared to that for FY2018. The net profit attributable to shareholders of the parent company for FY2019 was approximately RMB718 million, representing an increase of approximately 37.3% as compared to that for FY2018. As stated in the 2019 Annual Report, in 2019, the growth of the Group’s crude oil storage business led to an increase in operating gross profit and investment income, and the acquisition of insurance claims and government subsidies raised other income, and the credit impairment losses decreased. However, the profit margin was cut down, which is attributed to, among others, reduced exchange gains resulted from the exchange settlement of the US dollar and exchange rate fluctuations and increased finance costs due to the implementation of new accounting standards on leases.

The gross profit of the Group amounted to approximately RMB2,235 million for FY2020, representing an increase of approximately 12.3% as compared to that for FY2019, while the revenue of the Group remained relatively stable and amounted to approximately RMB6,657 million for FY2020. The net profit attributable to shareholders of the parent company for FY2020 was approximately RMB813 million, representing an increase of approximately 13.2% as compared to that for FY2019. As stated in the 2020 Annual Report, in 2020, the growth of the business volume of the Group’s ore, grain and tugging drove the growth of revenue. The government policy to reduce and exempt social security and the effectiveness of cost control have reduced cost of sales. The decrease in the scale of interest-bearing debt has saved finance costs. However, due to the impact of the COVID-19 epidemic, the declined performance of the passenger and ro-ro and automobile segments and of some joint ventures and associates, the provisions for credit and asset impairment, as well as the incurrence of intermediary fees for certain capital operation projects restricted the growth of performance.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The revenue of the Group increased by approximately 2.2% to approximately RMB8,688 million for 3Q2021 as compared to that for 3Q2020. As advised by the representatives of the Company, such increase was mainly due to the growth of container cross-border train business and transportation agent business as well as growth of business volume of exported steel and mining construction materials. However, the decrease in business volume of container, ore and grain has restrained the growth of revenue. The gross profit of the Group amounted to approximately RMB2,774 million for 3Q2021, representing a decrease of approximately 9.8% as compared to that for 3Q2020. The net profit attributable to shareholders of the parent company for 3Q2021 was approximately RMB1,413 million, representing a decrease of approximately 11.3% as compared to that for 3Q2020. As advised by the representatives of the Company, such decrease was mainly due to (i) the decrease in the business volume of the Group’s container, ore and grain and other cargos; (ii) the increase in the social security charges after the termination of reductions and exemptions policy during the epidemic; (iii) the impact from the increase in depreciation expenses caused by adoption of a common policy of useful lives of fixed assets upon merger of two ports; and (iv) the impact of epidemic prevention and control on production and operation. However, the increase in the business volume of exported steel and mining construction materials, the increase in the performance of joint ventures and associates in automobile segment and the reduced financial costs due to the decrease in the amount of interest-bearing debts reduced the decline in profit.

The net assets of the Group as at 31 December 2019 were approximately RMB21,404 million, representing an increase of approximately 2.6% as compared to that as at 31 December 2018, and further increased to approximately RMB22,021 million as at 31 December 2020, representing an increase of approximately 2.9%. The net assets of the Group as at 30 September 2021 were approximately RMB39,203 million, representing an increase of approximately 2.5% as compared to the net assets (restated) of the Group as at 31 December 2020. The representatives of the Company advised us that such increase in net assets of the Group was mainly due to the profit-making position of the Group during FY2019, FY2020 and 3Q2021.

1.2 Information on YKP

As stated in the Letter from the Board, YKP is a company with limited liability established in the PRC, with principal business in terminal and other port facility services, cargo handling, warehousing services, ship port services, port facility equipment and port machinery rental and maintenance services. YKP is ultimately non-wholly owned by CMG that is wholly owned by the PRC Government (the State Council of the PRC) and supervised by the SASAC. CMG mainly provides services in three sectors, including transportation and related infrastructure, financial investment and asset management, and industry park and property development and management. The top ten shareholders of YKP are Liaoning Port Group Co., Ltd, Dalian Port Corporation Limited, Bank of China Limited Yingkou Branch, Industrial and Commercial Bank of China Limited Liaoning Branch, China Construction Bank Corporation Yingkou Branch*,

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Agricultural Bank Financial Assets Investment Co., Ltd., Bank of Communications Co., Ltd. Liaoning Branch, Postal Savings Bank of China Co., Ltd. Liaoning Branch, Industrial Bank Co., Ltd. Yingkou Branch and Shanghai Pudong Development Bank Co., Ltd. Yingkou Branch*. Except for Liaoning Port Group Co., Ltd. and Dalian Port Corporation Limited (each of which holds 22.96% equity interest of YKP respectively), each of the remaining top ten shareholders of YKP holds less than 10% equity interest.

1.3 Information on the Assets

As set out in the Letter from the Board, the Assets refer to a group of assets with a total book value of approximately RMB6,526 million (reference date: 31 August 2021) and an appraised value of approximately RMB8,524 million (reference date: 31 August 2021) according to the Valuation, comprising (i) the assets (to the extent not transferred to the SPV), including berths and yards, machinery and equipment, barge assets, hydropower assets, coal business related assets, land in the Bayuquan Port Area; and (ii) the entire issued share capital of the SPV, which owns assets (to the extent of the Assets which to be transferred to the SPV) with an appraised value of approximately RMB7,299 million according to the Valuation, including berths and yards, machinery and equipment, barge assets, hydropower assets, coal business related assets, land in the Bayuquan Port Area.

The SPV is a wholly-owned subsidiary of YKP and has no other assets or any business operation save for the part of Assets to be transferred to it.

Set out below is certain audited pro forma financial information of the Assets for each of the three years ended 31 December 2020 and the eight months ended 31 August 2021 prepared in accordance with the generally accepted accounting principles of the PRC:

				For the eight
				months ended
	**For the **	year ended 31 December		31 August
	2018	2019	2020	2021
	RMB’ million	RMB’ million	RMB’ million	RMB’ million
	(Audited)	(Audited)	(Audited)	(Audited)
Total revenue	1,994	2,022	2,235	1,458
Total cost of sales	1,660	1,673	1,772	1,150
Net profit	250	263	351	233

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

				As at 31
	**As **	at 31 December		August
	2018	2019	2020	2021
	RMB’ million	RMB’ million	RMB’ million	RMB’ million
	(Audited)	(Audited)	(Audited)	(Audited)
Total assets	7,608	7,347	7,140	6,938
Total liabilities	1,928	1,404	847	412
Net assets	5,680	5,943	6,294	6,526

As shown in the tables above, the Assets are profitable. The net profit of the Assets increased from approximately RMB250 million for FY2018 to approximately RMB263 million for FY2019, and further increased to approximately RMB351 million for FY2020. As advised by the representatives of the Company, such increase was mainly due to the increase in coal throughput for FY2019 and FY2020. The Assets recorded a net profit of approximately RMB233 million for the eight months ended 31 August 2021. The net assets of the Assets showed an increasing trend during the three years ended 31 December 2020 and the eight months ended 31 August 2021, primarily due to the profit-making position of the Assets.

2. Reasons for and benefits of the Transaction

With reference to the Letter from the Board, the Transaction will be conducive to fulfilling the non-competing undertakings committed by the major Shareholders on addressing inter-sector competition and connected transactions between the Company and YKP. Prior to the Transaction, the Group and the YKP Group were both engaged in port handling, warehousing and related services in the Bayuquan Port Area due to historical reasons, and there are competitions between the Group and the YKP Group. Upon completion of the Transaction, the main port business assets of the YKP Group in the Bayuquan Port Area will be transferred to the Group, and the competition between the Group and the YKP Group in the Bayuquan Port Area will be largely eliminated. We have obtained and reviewed the non-competing undertakings committed by YKP and noted that YKP will use its best endeavours to facilitate resolving horizontal competition in a steady manner (through measures such as asset restructuring, business adjustment and entrusted management) before the end of 2022 in accordance with the relevant regulations and the requirements of relevant securities supervision and management departments. As such, the Transaction is consistent with the non-competing undertakings committed by YKP and would help address the possible competition between the Group and the YKP Group.

As stated in the Letter from the Board, the Transaction is advantageous to the market capitalisation of the Company as the market will expect further high-quality assets injection by the major Shareholders to the Group, which is conducive to share price appreciation and market value management of the Company. As shown in the paragraphs headed “Information on the Assets” above, the Assets recorded profits for the three years ended 31 December 2020 and the eight months ended 31 August 2021. Moreover, according to the financial information

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

contained in the paragraphs headed “Information on the Group” and “Information on the Assets” above, the net profit margins of the Group and the Assets for FY2020 were approximately 12.2% and 15.7% respectively. Given that the Transaction will strengthen the Group’s profitability, the Transaction is likely to be advantageous to the market capitalisation of the Company.

As stated in the Letter from the Board, the Transaction will reduce the amount of connected transactions between the Group and the YKP Group as most of the port-related assets in Bayuquan Port Area (including a large number of assets which are already leased by the Group) will be transferred to the Company upon completion of the Transaction. It will reduce the Company’s cost of reporting and relieve the Company from unduly burdensome approval procedures.

As stated in the interim report of the Company for the six months ended 30 June 2021, the major initiatives of the Group for market development of its bulk and general cargo segment are, among other things, to strengthen the business coordination of internal ports, give full play to the advantages of integration; build a coordinated port for loading and discharging imported iron ore; improve the overall berth utilisation efficiency of the ore terminal, and ensure the supply of raw materials for steel mills. The representatives of the Company advised us that the Assets will be used for the bulk and general cargo terminal and related logistics services. After the Transaction, the Group would be able to manage the port-related assets in Bayuquan Port Area independently and improve the comprehensive utilisation of terminal resources and avoid waste of resources. As such, the Transaction would reduce the amount of connected transactions between the Group and the YKP Group, and improve the comprehensive utilisation of terminal resources upon completion of the Transaction, which is in line with the market development initiatives of the Group.

As stated in the Letter from the Board, the Assets are profitable and of high-quality, being strictly selected from the existing assets of the YKP Group. The Assets located in Bayuquan Port Area have a strong business linkage with the Company’s assets located in the neighboring area and therefore will create synergy effect within the Group. The Assets include coal business assets, berths, machinery, equipment, water and electricity supply and barge assets for port operations in the Bayuquan Port Area. Upon completion of the Transaction, the quay berth assets in the Bayuquan Port Area will largely be held by the Group, which will enable the Group to unify the control and deployment of the quay capacity and equipment use in the port area. Therefore, the Group can make more reasonable production plans, improve loading and unloading efficiency and reduce the costs of production. The acquisition of water and electricity supply and barges will also ensure that the Group’s needs enjoy the highest priority. The representatives of the Company further advised us that the port operated by the Group and the Assets are located in Bayuquan Port Area and the same coastline. The Transaction will facilitate the port ancillary services, such as the tugging service and the supply of water and electricity, to be provided directly to the Group.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Given that (i) the Group’s principal business includes operation of integrated port logistics business; (ii) the Assets are ports and related assets in the same area as the Group, which are closely connected with the daily business of the Group; and (iii) some of the Assets have been leased and used by the Group in its daily operation, we concur with the Directors that the Transaction is conducted in the ordinary and usual course of business of the Group.

Having taken into account that (i) the Transaction is consistent with the non-competing undertakings committed by YKP and would help address the possible competition between the Group and the YKP Group; (ii) the Transaction will strengthen the Group’s profitability; (iii) the Transaction would reduce the amount of connected transactions between the Group and the YKP Group and improve the comprehensive utilisation of terminal resources; and (iv) the Transaction will create strategic synergies within the Group, we are of the view that the Transaction, which is conducted in the ordinary and usual course of business of the Group, is in the interests of the Company and the Shareholders as a whole.

3. Principal terms of the Transaction

Set out below are the principal terms of the Transaction.

3.1 Date

28 October 2021

3.2 Parties to the Transaction

• (i) the Company, as the purchaser; and

• (ii) YKP, as the vendor.

3.3 Subject matter

The Company agreed to acquire and YKP agreed to sell the Assets.

3.4 Consideration and payment

As stated in the Letter from the Board, the total consideration for the Assets of RMB8,524,108,000 was determined after arm’s length negotiation between the parties and with reference to the Valuation of the Assets of RMB8,524,108,000 as at 31 August 2021 based on asset-based approach as performed by the Valuer, which is the sum of the appraised value of the entire issued share capital of the SPV and the appraised value of the assets (to the extent not transferred to the SPV). The total consideration for the Assets shall be settled by the Company in cash. The Group shall (i) transfer RMB4,524,108,000 in cash to YKP on or before 31 December 2021; and (ii) transfer the rest of the consideration in cash to YKP on or before 30 September 2022.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

3.5 Funding

The Company will utilise its capital resources and debt financing instrument to meet the financial commitment of the Company under the Transaction.

Further details of the Transaction are set out in the Letter from the Board.

4. Assessment of the consideration

The total consideration for the Assets of RMB8,524,108,000 is equivalent to the Valuation. To assess the fairness and reasonableness of the total consideration for the Assets, we have performed the following work on the Valuation:

4.1 The expertise of the Valuer

We have discussed with the Valuer regarding its qualification, experience and independence in relation to the performance of the Valuation. We noted that the execution team of the Valuer has experience in performing valuation services for numerous sizeable enterprises covering a wide range of industries in the PRC, in particular, performing asset valuation for the purpose of acquiring port-related assets with seven asset valuation reports for the last three years. The Valuer confirmed that it is an independent third party to the Group, YKP, the SPV and their respective connected persons and all relevant material information provided by the SPV and YKP had been incorporated in the Valuation Reports. In addition, by reviewing the Valuer’s engagement letter and the Valuation Reports, we also noted that the scope of work is appropriate for the opinion required to be given and we are not aware of any limitation on the scope of work which might have an adverse impact on the degree of assurance given by the Valuation Reports. Based on the above, we are of the view that the scope of work of the Valuer is appropriate and the Valuer is qualified to perform the Valuation of the Assets.

4.2 The SPV Valuation Report

4.2.1 Selection of valuation methodology in the SPV Valuation Report

We have reviewed the SPV Valuation Report. We have also discussed with the Valuer and understood that there are three different generally accepted valuation methods, namely the market approach, the asset-based approach and the income approach in arriving at the market value of the entire equity interest in the SPV.

The market approach provides an indication of value by comparing the subject asset to similar assets that have been sold in the market, with appropriate adjustments for the differences between the subject asset and the assets that are considered to be comparable to the subject asset. We were advised by the Valuer that the market approach is not applicable for the Valuation because transactions in the market have low comparability with the SPV in terms of cash flow, potential of growth, business risk and scale of operation, and there was limited disclosure on these transactions.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The income approach evaluates assets from the perspective of the present value of anticipated future economic benefits generated by the subject assets. We have discussed with the Valuer and noted that it requires detailed information on the business operation and long-term financial projections which may be affected by the future domestic and international macro markets, industry conditions and enterprise development. In respect of the domestic and international objective factors, there are major gaps in the economic development of the regions where various domestic port companies are located. In addition, the intensification of international economic and trade frictions in recent years and the stagnant development of the upstream and downstream industries of port companies have certain impact on the operation and development of domestic port companies. As the appraised entity may be affected by macro and micro factors in the industry and the entity’s own operation and management, there are uncertainties in the realisation of future earnings. Therefore, the adoption of income approach for the conclusion of the appraised value of the SPV cannot reasonably provide the market value of the SPV mainly due to the aforesaid uncertainties and differences.

The asset-based approach is based on the perspective of asset replacement, assessing the fair value of the SPV by deducting the fair value of liabilities from the fair value of the total assets. We have discussed with the Valuer and noted that such approach is used for asset dependent business where its operating income requires those assets as the main driver of sustaining its operation. As (i) the assets and liabilities structure of the appraised entity is clear, and the value of various assets and liabilities of the enterprise can also be assessed and recognised separately; and (ii) the proportion of investment in production facilities accounts for a large proportion of total assets, the Valuer advised us that it is common practice in valuation to adopt the asset-based approach for asset-heavy business. Therefore, the asset-based approach is the most appropriate valuation approach for the Valuation and was adopted for the appraisal of the net assets of the SPV.

4.2.2 The valuation approaches in the asset-based approach

According to the SPV Valuation Report, the Valuer has considered the below in the valuation of the assets and liabilities of the SPV.

Current assets and liabilities

According to the SPV Valuation Report, current assets mainly comprised cash at bank and on hand of approximately RMB7.0 million, accounts receivable of approximately RMB37.8 million and other current assets of approximately RMB367.2 million, accounting for approximately 0.1%, 0.5% and 5.0% of the total appraised value of the entire equity interest in the SPV respectively. Current liabilities mainly comprised accounts payable of approximately RMB24.3 million, receipts in advance of approximately RMB20.2 million, other payables of approximately RMB365.3 million and employee benefits payable of approximately RMB1.8 million, accounting for approximately 0.3%, 0.3%, 5.0% and 0.0% of the total appraised value of the entire equity interest in the SPV respectively. In

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

determining the valuation of current assets and liabilities, the Valuer has adopted the book values as at the Valuation Date as their fair value on the assumption that there exists no material difference between the book values and the fair values of the current assets and liabilities.

As discussed with the Valuer, the above appraisal method is a common methodology in establishing the valuation of such and complies with the relevant professional standard for valuation in the PRC.

Fixed assets

The fixed assets mainly comprised buildings of approximately RMB4,081.1 million, equipment of approximately RMB518.4 million and vehicles of approximately RMB0.9 million, accounting for approximately 55.9%, 7.1% and 0.0% of the total appraised value of the entire equity interest in the SPV respectively. As advised by the Valuer, the Valuer has adopted the cost replacement approach to ascertain the values of the buildings, equipment and vehicles. We have discussed with the Valuer and noted that the cost replacement approach assesses the fair value of the fixed assets by deducting depreciation of the assets from the cost of replacement. As the fixed assets of the SPV can be normally used or in use and can be obtained by replacement, and the cost of replacement and depreciation of the fixed assets can be reasonably estimated, the Valuer advised us that it is common practice in valuation to adopt the cost replacement approach for the fixed assets of the SPV.

The cost of replacement of the buildings is determined by the costs of constructing the same buildings as at the Valuation Date including the materials and labour costs and the residue ratio of the buildings is determined by current degree of quality and usage after the physical observation by the Valuer.

The cost of replacement of the equipment and vehicles is mainly determined by (i) the cost of purchasing the similar equipment or vehicles and other costs associated with its replacement as at the Valuation Date; and (ii) the residue ratio of the equipment and vehicles determined by its residual useful life after the physical observation by the Valuer.

The appraised value of the above fixed assets increased by approximately RMB198.2 million from the book value. As discussed with the Valuer, such increase is mainly due to the increase in appraised value of buildings, machinery, vehicles and electric equipment. For the reasons of the increase in appraised value of buildings, the Valuer advised us that (i) the constructions of the buildings were completed during the years of 1998 to 2021 and the cost of construction has increased afterward; and (ii) the appraised value of provision for impairment on the fixed assets of approximately RMB3.3 million as at the Valuation Date was zero. As

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

discussed with the Valuer, the appraised value of such assets under the cost replacement approach reflects the signs of impairment of such asset and is lower than the difference between the net book value and provision for impairment of such assets. For the reasons of the increase in appraised value of machinery, the Valuer advised us that (i) the cost of replacement of such machinery as at the Valuation Date is slightly higher than the book value; (ii) the useful life estimated and adopted by the Valuer is longer than which the book value adopted; and (iii) the book value of machinery was recorded at the contract price while the appraised value of machinery contains other costs associated with its replacement. For the reasons of the increase in appraised value of vehicles and electric equipment, the Valuer advised us that the useful life estimated and adopted by the Valuer is longer than which the book value adopted and the appraised value was partially offset by the decrease in cost of replacement of such vehicles and electric equipment as at the Valuation Date as compared with the book value.

As discussed with the Valuer, such appraisal method is a common methodology in establishing the valuation of fixed assets and complies with the relevant professional standard for valuation in the PRC.

As noted from the SPV Valuation Report, certain buildings are without real estate title certificates. As discussed with the Valuer, the Valuer did not consider the effect on the valuation of the buildings because those buildings are currently owned by YKP without any ownership dispute and the application for the real estate title certificates is in progress. According to the Letter from the Board, although there were certain incomplete or defective ownership information related to the Assets, the Valuer has already verified the status of those ownership certificates. For Assets that have not obtained the ownership certificates, the Valuer has verified the information including the approval of construction procedures, construction contracts and settlement of construction costs and confirmed that the ownership of those Assets belongs to the YKP Group and there is no dispute. As of the date of the Valuation, the survey and mapping procedures of those unlicensed properties had been completed and the relevant application procedures were in progress. The management of the YKP Group has undertaken to complete the handling procedures of ownership certificates as soon as possible. Besides, the appraised value of these buildings is insignificant and accounted for approximately 1.4% of the total appraised value of the entire equity interest in the SPV. As confirmed by the Valuer, such appraisal method is a common methodology in establishing the valuation of such buildings and complies with the relevant professional standard for valuation in the PRC. Given that (i) the Valuer has verified the information related to the construction of the assets without the ownership certificates and confirmed that the ownership of those assets belongs to the YKP Group without any ownership dispute; (ii) the application for the real estate title certificates is in progress; and (iii) the appraised value of those assets without the ownership certificates is insignificant, we concur with the Valuer that such valuation methodology is fair and reasonable by including the valuation of buildings without real estate title certificates.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Intangible assets

The intangible assets mainly comprise 27 land use rights of approximately RMB2,698.6 million, accounting for approximately 37.0% of the total appraised value of the entire equity interest in the SPV. As advised by the Valuer, the Valuer has adopted the cost approximation approach for parcels in the port area and the benchmark land price approach for grant land outside the port area.

We have discussed with the Valuer and noted that the parcels in the port area are used for port terminal and reclamation was conducted. As the parcels in the port area can be normally used or in use and can be obtained by replacement, and the cost of replacement and depreciation of such lands can be reasonably estimated and there is no active trading market for the transactions of such lands, the Valuer advised us that it is common practice in valuation to adopt the cost approximation approach for the parcels in the port area. We have discussed with the Valuer and noted that (i) the grant land outside the port area is mainly used for industrial purpose and commercial and residential purpose; (ii) the cost of replacement and depreciation of such lands cannot be reasonably estimated and there is no active trading market for the transactions of such lands; and (iii) the benchmark land price in Bayuquan district, which is published by the government of Yingkou, is available for grant land outside the port area. As such, the Valuer advised us that it is common practice in valuation to adopt the benchmark land price approach for the grant land outside the port area.

Regarding the cost approximation approach, the Valuer used (i) transaction cost; (ii) the cost of developing the land; (iii) gains from added value of land; and (iv) other related costs to calculate the unit price. As discussed with the Valuer, such appraisal method is a common methodology in establishing the valuation of lands and complies with the relevant professional standard for valuation in the PRC. Regarding the benchmark land price approach, the Valuer used the base land price adjusted by (i) land use purpose; (ii) the difference between the land price in Bayuquan district as at the Valuation Date and as at the date of base land price; and (iii) the difference in development level between the base land and the lands owned by the SPV.

The appraised value of the land use rights of the SPV increased by approximately RMB1,590.8 million as compared with the book value. As advised by the Valuer, such increase is mainly due to the increase in market value of the land in recent years.

As confirmed by the Valuer, such appraisal method is a common methodology in establishing the valuation of lands and complies with the relevant professional standard for valuation in the PRC.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Mortgage guarantees and leasing

As noted from the SPV Valuation Report, there are certain mortgage guarantees and leasing on the assets. As advised by the Valuer, the appraised value of lease of assets which are included in the scope of valuation is approximately RMB6,749.7 million, accounting for approximately 92.5% of the total appraised value of the entire equity interest in the SPV. The appraised value of charge or pledge of assets which are included in the scope of valuation is approximately RMB833.1 million, accounting for approximately 12.1% of the total appraised value of the entire equity interest in the SPV. The Valuation had not been affected by such mortgage guarantees and leasing as the guarantees provided by YKP would be released before entering into the Agreements, and the assets are leased by the Group. As confirmed by the Valuer, not considering mortgage guarantees is a common methodology and complies with the relevant professional standard for valuation in the PRC.

We were advised by the Valuer that the valuation approaches as adopted for valuing each type of assets and liabilities of the SPV as specified above are common methodologies used in establishing the valuation of assets and liabilities under asset-based approach.

4.3 The Asset Valuation Report

4.3.1 Selection of valuation methodology in the Asset Valuation Report

We have reviewed the Asset Valuation Report. We understood from the Valuer that transactions of the assets (to the extent not transferred to the SPV) in the market are limited and such assets cannot generate economic benefits alone. The Valuer considered that market approach and income approach were inappropriate in valuing such assets. Besides, the assets (to the extent not transferred to the SPV) can be normally used or in use and can be obtained by replacement, and the cost of replacement and depreciation of the assets can be reasonably estimated. Therefore, the Valuer advised us that it is common practice in valuation to adopt the asset-based approach for the assets (to the extent not transferred to the SPV).

4.3.2 The valuation approaches in the asset-based approach

According to the Asset Valuation Report, the Valuer has considered the below in the valuation of the assets (to the extent not transferred to the SPV).

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Fixed assets

The fixed assets mainly comprised buildings of approximately RMB0.8 million, equipment of approximately RMB1,217.9 million and vehicles of approximately RMB1.0 million, accounting for approximately 0.1%, 99.4% and 0.1% of the total appraised value of the assets (to the extent not transferred to the SPV) respectively. As advised by the Valuer, the Valuer has adopted the cost replacement approach to ascertain the values of the buildings, equipment and vehicles. The fixed assets in the Asset Valuation Report are similar to the fixed assets transferred to the SPV (details of which have been set out in the paragraphs headed “4.2.2 The valuation approaches in the asset-based approach” above).

The appraised value of the above fixed assets increased by approximately RMB206.0 million from the book value. As discussed with the Valuer, such increase is mainly due to the increase in appraised value of machinery and vehicles and electric equipment. For the reasons of the increase in appraised value of machinery, the Valuer advised us that (i) the cost of replacement of such machinery as at the Valuation Date is higher than the book value; and (ii) the appraised value of provision for impairment on the machinery of approximately RMB51.1 million as at the Valuation Date was zero which was due to recalculation of the machinery in evaluation. For the reasons of the increase in appraised value of vehicles and electric equipment, the Valuer advised us that the useful life estimated and adopted by the Valuer is longer than which the book value adopted and the appraised value was partially offset by the decrease in cost of replacement of such vehicles and electric equipment as at the Valuation Date as compared with the book value. The effect of the aforesaid factors was partially offset by the decrease in appraised value of buildings resulted from the decrease in the book value of buildings which contain the irrelevant expenses.

As discussed with the Valuer, such appraisal method is a common methodology in establishing the valuation of fixed assets and complies with the relevant professional standard for valuation in the PRC.

As noted from the Asset Valuation Report, certain buildings are without real estate title certificates. As noted from the Letter from the Board, for the six properties which have not been registered, three of them have obtained a compliance letter from the Bayuquan Branch of the Natural Resources Bureau of Yingkou City (營口市自然資源局鮁魚圈分局) confirming that “For the three properties owned by the YKP Group, there is no obstacle to apply for the real estate right certificates after the transfer of land use rights of such properties is completed and the “unification of real estate and land ownership” is achieved. Before the real estate right certificates are issued for these properties, the YKP Group or the proposed transferee of the aforesaid assets (the Group) can use the properties as they are now and there is no risk of administrative penalties.” The remaining three properties are located on the land owned by the Group and currently are not eligible for real estate property

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

registration. As further discussed with the Valuer, there will be no effect on the valuation of the buildings because the appraised value of these buildings is insignificant and accounted for less than 0.01% of the total appraised value of the assets (to the extent not transferred to the SPV). As confirmed by the Valuer, such appraisal method is a common methodology in establishing the valuation of such buildings and complies with the relevant professional standard for valuation in the PRC. Given that (i) the Valuer has verified the information related to the construction of the assets without the ownership certificates and confirmed that the ownership of those assets belongs to the YKP Group without any ownership dispute; (ii) the application for the real estate title certificates is in progress; (iii) three properties which have not been registered have obtained a compliance letter confirming that there is no obstacle to apply for the real estate right certificates for those properties; and (iv) the appraised value of those assets without the ownership certificates is insignificant, we concur with the Valuer that such valuation methodology is fair and reasonable by including the valuation of buildings without real estate title certificates.

Intangible assets

The intangible assets mainly comprise three sea area use rights of approximately RMB3.4 million and software of approximately RMB1.6 million, accounting for approximately 0.3% and 0.1% of the total appraised value of the assets (to the extent not transferred to the SPV) respectively. The Valuer advised us that it has considered the annual fee and one-year loan interest for the sea area use rights and the market approach for the software.

We have discussed with the Valuer and noted that the sea area use rights are being used by the Group but the annual fee is paid by YKP, and the annual fee will be paid by the Group after completion of the Transaction. As such, the Valuer used the annual fee and capital occupation interest for the sea area use rights from 2016 to 2021 to calculate the cost of YKP to pay on the sea area use rights and advised us that such appraisal method is common practice to assess the value of sea area use rights. For the software, we noted that it was purchased in August 2021 and the market price of such software is available. As confirmed by the Valuer, such appraisal method is a common methodology in establishing the valuation of software and complies with the relevant professional standard for valuation in the PRC.

The appraised value of the above intangible assets increased by approximately RMB3.4 million from the book value. As discussed with the Valuer, such increase is mainly due to the increase in appraised value of sea area use rights and software. For the reasons of the increase in appraised value of sea area use rights, the Valuer advised us that the annual fee of sea area use rights was recorded as expense in the accounts of YKP. For the reasons of the increase in appraised value of software, the Valuer advised us that the software was amortised in the month of purchase while the Valuer adopted the recent purchase price for the appraised value of the software.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We were advised by the Valuer that the valuation approaches as adopted for valuing each type of assets as specified above are common methodologies used in establishing the valuation of assets and liabilities under asset-based approach.

4.4 Conclusion

In assessing the fairness and reasonableness of the Valuation of the Assets, we noted that the Valuer has made various assumptions, including but not limited to that (i) the appraised assets are already in the process of transaction; (ii) there is an open market for the appraised assets; and (iii) the appraised assets would continue to be used in the current utility and way after the change of ownership.

During the course of discussion with the Valuer and our review on the Valuation Reports and having considered (i) the methodologies applied in the Valuation; (ii) the principal bases and assumptions used in arriving at the Valuation; and (iii) the qualification, expertise and experience of the Valuer, we consider that nothing unusual has come to our attention that would lead us not to believe that the Valuation was prepared on a reasonable basis. We are of the view that the methodologies and assumptions which had been adopted were arrived at after due and careful consideration.

Based on the above, we concur with the Directors that the total consideration for the Assets, which was determined with reference to the Valuation, is fair and reasonable so far as the Independent Shareholders are concerned.

5. Financial effects of the Transaction

5.1 Revenue

As stated in the Letter from the Board, the Assets are profitable. The revenue of the Assets for the eight months ended 31 August 2021 and FY2020 were approximately RMB1,458 million and RMB2,235 million respectively. The total profit of the Assets were approximately RMB310 million and RMB468 million respectively and the net profit of the Assets were approximately RMB233 million and RMB351 million respectively. The Transaction is an important step for the Company to deepen the integration of ports in Liaoning Province and build a unified operating platform for the main port business. Through the acquisition of the Assets, the Group can further integrate the resources of the Bayuquan Port and strengthen the integrated control over the berths and terminals already in operation, optimise the port resource allocation capacity and enhance the operational management efficiency of the Company. At the same time, with the good credit standing of the Company, it can acquire the Assets at a lower financing cost and save the rental expenses of leased berths and land, which is conducive to the Shareholders’ interests.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Upon completion of the Transaction, the Group will obtain the earnings from the coal business assets, water and electricity and barge assets of the Assets and save the costs of leasing certain Assets, thereby increasing the earnings of the Group. Meanwhile, the Group will bear the depreciation, amortisation and taxes of the Assets and additional financing costs as well as one-off transaction costs of the Transaction. Based on unaudited historical data of the Assets and actual situation of the Transaction, after taking into account of the impact of the above costs, the Transaction will still increase the profit attributable to the Company.

5.2 Assets and liabilities

As stated in the Letter from the Board, following the completion of the Transaction, the size of the Group’s total assets in the consolidated statements will be expanded. According to the unaudited pro forma financial statements as set out in appendix V to the Circular, the total assets of the Group will increase from approximately RMB53,604 million to approximately RMB58,632 million, representing an increase of approximately 9.4%. The total liabilities of the Group will increase from approximately RMB14,897 million to approximately RMB20,036 million, representing an increase of approximately 34.5%.

Shareholders should note that the aforementioned analyses are for illustrative purpose only and do not purport to represent how the financial position of the Group will be upon completion of the Transaction.

RECOMMENDATION

Having considered the above principal factors and reasons, we are of the view that the terms of the Agreements are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned, and the Transaction, which is conducted in the ordinary and usual course of business of the Group, is in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend (i) the Independent Board Committee to advise the Independent Shareholders; and (ii) the Independent Shareholders, to vote in favour of the relevant resolution(s) to be proposed at the EGM to approve the Transaction.

Yours faithfully, For and on behalf of TC Capital International Limited Edith Lee Director

Note: Ms. Edith Lee has been a responsible officer of type 6 (advising on corporate finance) regulated activities under the SFO since 2015. She has participated in and completed various advisory transactions in respect of connected transactions of listed companies in Hong Kong.

• For identification purposes only

– 35 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. FINANCIAL INFORMATION OF THE GROUP

The audited consolidated financial statements of the Group for each of the three years ended 31 December 2018, 31 December 2019 and 31 December 2020 respectively and the unaudited consolidated financial statements of the Group for the first six months of 2021, together with the relevant notes thereto are disclosed in the following documents, which were published on both the Stock Exchange’s website (http://www.hkexnews.hk) and the Company’s website (http://www.lnport.cn):

• the annual report of the Company for the year ended 31 December 2018 published on 24 April 2019 (pages 112 to 126) at the https://www1.hkexnews.hk/listedco/listconews/sehk/2019/0424/ltn20190424476.pdf;

• the annual report of the Company for the year ended 31 December 2019 published on 27 April 2020 (pages 103 to 118) at the https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0427/2020042700607.pdf;

• the annual report of the Company for the year ended 31 December 2020 published on 26 April 2021 (pages 102 to 119) at the https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0426/2021042600634.pdf; and

• the interim results announcement of the Company for the six months ended 30 June 2021 published on 28 September 2021 (pages 27 to 46) at the https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0928/2021092800320.pdf

For PRC regulatory purpose, a report has been prepared including the audited consolidated financial statements of the Group for the first six months of 2021, among other things, as published on both the Stock Exchange’s website (http://www.hkexnews.hk) and the Company’s website (http://www.dlport.cn):

• the PRC regulatory report (pages 58 to 226 at http://static.cninfo.com.cn/finalpage/2021-08-27/1210870690.PDF)

2. WORKING CAPITAL STATEMENT

The Directors, after due and careful considerations, are of the opinion that, taking into account the expected completion of the Transaction, the internal resources available and the existing available credit facilities to the Group, the Group will have sufficient working capital for its present requirement for at least twelve months from the date of publication of this circular.

– I-1 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

3. INDEBTEDNESS STATEMENT

As at the close of business on 30 September 2021, the Group had the following indebtedness:

Borrowings

The borrowings of the Group as at 30 September 2021 were as follows:

	At
	30 September
	2021
	RMB’000
Bank Loans
– Unsecured and unguaranteed	1,039,979.75
Loans from related parties
– Unsecured and unguaranteed	70
Bonds
– Unsecured and guaranteed	3,595,949.14
– Unsecured and unguaranteed	–

As at 30 September 2021, the Group had outstanding bank loans and loans from related parties all unsecured and unguaranteed. The Group has a projected liability of RMB32,760,218.42 as at September 30 2021.

Lease liabilities

The Group has adopted CAS 21 Leases (revised in 2018) (the “ New Leases Standard ”) using a modified retrospective approach on 1 January 2019 and uses the exemptions allowed by the New Leases Standard on short-term leases and leases of low-value assets. Short-term leases are leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option. Leases of assets with cost less than RMB50,000 are considered to be of low value. The Group measures the lease liability at the present value of the remaining lease payments, discounted using the Group’s incremental borrowing rate and the measures the right-of-use assets at an amount equal to the lease liability, adjusted by any prepaid or accrued lease payments. As at 30 September 2021, the Group has current and non-current lease liabilities amounted to RMB206,812,512.38 and RMB6,751,822,504.13, respectively.

As at 31 August 2021, the Assets would have current and non-current lease liabilities amounted to RMB0 and RMB3,725,786,249.98, respectively, had the Assets adopted the New Leases Standard and applied the above exemptions on short-term leases and leases of low-value assets allowed by the standard on 1 January 2019.

– I-2 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Save as disclosed above and apart from intra-group liabilities and normal trade and other payables, at the close of business on 30 September 2021, the Group did not have any debt securities issued and outstanding or authorized or otherwise created but unissued, term loans, bank overdrafts, mortgages, charges or similar indebtedness, hire purchase or finance lease commitments, liabilities under acceptances or acceptance credits, guarantees or other material contingent liabilities.

Disclaimer

Save as aforesaid or as otherwise disclosed herein, and apart from intra-group liabilities and normal trade and other payables in the ordinary course of business of the Group, as at 30 September 2021, the Group did not have any other outstanding mortgages, charges, debentures, loan capital issued or agreed to be issued, bank loans and overdrafts, debt securities issued and outstanding, and authorised or otherwise created but unissued or other similar indebtedness, finance leases or hire purchase commitments, which are either guaranteed, unguaranteed, secured or unsecured, liabilities under acceptance (other than normal trade bills) or acceptance credits, guarantees or other material contingent liabilities.

4. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, there was no material adverse change in the financial or trading position of the Group since 31 December 2020, being the date to which the latest published audited financial statements of the Group were made up pursuant to the Listing Rules.

5. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

Trading Prospects

Upon completion of the Transaction, the Group will include cargo sources formerly owned by YKP, as such, a number of business throughput indicators such as coal and crude oil will increase. The coal throughput of the Group in the Bayuquan Port Area is expected to increase more than 20% and the oil throughput by more than 16% in 2021. The Transaction will significantly enhance the business scale of the Group, and will further bring synergy effect, optimize the business structure, improve the efficiency of resource utilization, reduce competition in the same industry, and improve the core competitiveness and risk resistance of the Group.

Financial Prospects

Upon the completion of the Transaction, the net profit attributable to the Group will be increased by approximately RMB61,332,400 and the earnings per share and net assets per share of the Group will also be significantly increased. Various financial indicators will be significantly improved.

– I-3 –

ACCOUNTANT REPORT OF THE ASSETS

APPENDIX II-1

Target to Be Disposed of by Ying Kou Port Group Corporation Limited

Pro Forma Financial Statements and Auditor’s Report

For the Year Ended 31 December 2018 to 31 August 2021

– II-1-1 –

ACCOUNTANT REPORT OF THE ASSETS

APPENDIX II-1

CONTENTS	Page
Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-1-3
Pro Forma Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-1-6
Pro Forma Income Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-1-9
Pro Forma Cash Flow Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-1-10
Pro Forma Statement of Changes in Owner’s Equity . . . . . . . . . . . . . . . . . . . . . . . .	II-1-11
Notes to the Pro Forma Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-1-12

– II-1-2 –

ACCOUNTANT REPORT OF THE ASSETS

APPENDIX II-1

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信永中和會計師事務所 北京市東城區朝陽門北大街 聯繫電話： +86 (010) 6554 2288 8號富華大廈A座9層 telephone: +86 (010) 6554 2288 9/F, Block A, Fu Hua Mansion, No.8, Chaoyangmen Beidajie, ShineWing Dongcheng District, Beijing, 傳真： +86 (010) 6554 7190 certified public accountants 100027, P.R.China facsimile: +86 (010) 6554 7190

Auditor’s Report

XYZH/2021BJAA20610

To the shareholders of Ying Kou Port Group Corporation Limited:

I. AUDIT OPINION

We have audited the pro forma financial statements prepared on the basis for preparation as described in Note II to the pro forma financial statements of Ying Kou Port Group Corporation Limited (hereinafter referred to as “Yingkou Port Group”) in respect of the proposed disposal of the target (hereinafter the “Transaction Target”, which mainly includes those listed in the “Summary of the Transaction” in Note I to the accompanying pro forma financial statements) to Liaoning Port Holdings (Yingkou) Co., Ltd.* (遼港控股(營口)有限公 司) (hereinafter referred to as “Yingkou Ltd.”), comprising the pro forma balance sheet as at 31 August 2021, 31 December 2020, 31 December 2019 and 31 December 2018, the pro forma income statement, pro forma cash flow statement and pro forma statement of changes in owner’s equity for January to August 2021, the years of 2020, 2019 and 2018 as well as relevant notes to the pro forma financial statements.

In our opinion, the accompanying pro forma financial statements were prepared on the basis for preparation as described in Note II to the pro forma financial statements in all material aspects, and reflected the pro forma financial position of the Transaction Target prepared on such basis for preparation as at 31 August 2021, 31 December 2020, 31 December 2019 and 31 December 2018 and its pro forma operating results and pro forma cash flow for January to August 2021, the years of 2020, 2019 and 2018.

II. BASIS FOR OPINION

We have conducted our audit in accordance with China Standards on Auditing. Our responsibilities under those standards are further described in the section headed “Auditor’s Responsibilities for the Audit of the Pro Forma Financial Statements” of our auditor’s report. We are independent of Yingkou Port Group in accordance with the Code of Ethics for Professional Accountants of the Chinese Institute of Certified Public Accountants (“CICPA Code”), and we have fulfilled our other ethical responsibilities in accordance with the CICPA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

– II-1-3 –

ACCOUNTANT REPORT OF THE ASSETS

APPENDIX II-1

III. BASIS FOR PREPARATION AND RESTRICTION ON USE

We remind users of the pro forma financial statements to give attention to the explanation on the basis for preparation in Note II to the pro forma financial statements. This auditor’s report shall be used for the purpose of the disposal of the Transaction Target by Yingkou Port Group to Yingkou Ltd. only, and shall not be used for other purposes.

IV. RESPONSIBILITIES OF THE MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE FINANCIAL STATEMENTS

The management of Yingkou Port Group (hereinafter referred to as the “Management”) is responsible for the preparation of the pro forma financial statements according to the basis for preparation as described in Note II to the pro forma financial statements, and for such internal control as the Management determines is necessary to enable the preparation of the pro forma financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the pro forma financial statements, the Management is responsible for assessing the Transaction Target’s ability to continue as a going concern, disclosing, as applicable, the matters related to the going concern and using the going concern basis of accounting unless the Management intends to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the financial reporting process of the Transaction Target.

V. AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE PRO FORMA FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the pro forma financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are generally considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users made on the basis of these pro forma financial statements.

As part of an audit in accordance with the auditing standards, we exercise professional judgment and maintain professional scepticism throughout the audit. We also performed the following work:

• (1) Identify and assess the risks of material misstatement of the pro forma financial statements, whether due to fraud or error; design and perform audit procedures responsive to those risks; and obtain audit evidence that is sufficient and appropriate

– II-1-4 –

ACCOUNTANT REPORT OF THE ASSETS

APPENDIX II-1

to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• (2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing opinions on the effectiveness of the internal control.

• (3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Management.

• (4) Conclude on the appropriateness of the Management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Transaction Target to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the pro forma financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Transaction Target to cease to continue as a going concern.

• (5) Evaluate the overall presentation, structure and content of the pro forma financial statements, and whether the pro forma financial statements are prepared on the basis for preparation as described in Note II to the pro forma financial statements.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

ShineWing Certified Public Accountants

PRC Certified Public Accountant:

(Special General Partnership)

PRC Certified Public Accountant:

Beijing, the PRC

29 November 2021

– II-1-5 –

APPENDIX II-1

ACCOUNTANT REPORT OF THE ASSETS

PRO FORMA BALANCE SHEET

						Unit: RMB
		31 August	31 December	31 December	31 December	1 January
Item	Note	2021	2020	2019	2018	2018
Current assets
Cash at bank and on hand	VI. 1	6,988,687.27	28,730,820.89	46,064,095.72	9,613,116.31	5,295,834.74
Financial assets held for trading		–	–	–	–	–
Derivative financial assets		–	–	–	–	–
Notes receivable		–	–	–	–	–
Accounts receivable	VI. 2	37,762,006.49	26,710,849.33	33,797,955.94	100,355,551.21	48,312,798.03
Receivables financing		–	–	–	–	–
Prepayments		200,000.00	196,902.50	196,902.50	200,000.00	639,627.36
Other receivables		257,399.85	–	–	995.00	3,233.75
Including: Dividends receivable		–	–	–	–	–
Inventories		360,341.22	50,087.40	41,635.28	57,319.73	270,618.34
Including: Raw materials		360,341.22	50,087.40	41,635.28	57,319.73	270,618.34
Stock inventories
(Finished goods)		–	–	–	–	–
Contract assets		–	–	–	–	–
Assets held for sale		–	–	–	–	–
Non-current assets due within
one year		–	–	–	–	–
Other current assets	VI. 3	367,169,865.10	367,554,678.86	368,942,519.00	365,008,265.18	365,008,265.18
Total current assets		412,738,299.93	423,243,338.98	449,043,108.44	475,235,247.43	419,530,377.40
Non-current assets
Debt investments		–	–	–	–	–
Other debt investments		–	–	–	–	–
Long-term receivables		–	–	–	–	–
Long-term equity investments		–	–	–	–	–
Investments in other equity
instruments		–	–	–	–	–
Other non-current financial
assets		–	–	–	–	–
Investment properties		–	–	–	–	–
Fixed assets	VI. 4	5,416,233,783.97	5,589,471,415.81	5,741,036,922.91	5,945,942,655.70	6,187,410,650.86
Including: Original cost of fixed
assets	VI. 4	8,072,208,337.91	8,070,229,582.41	7,961,877,553.25	7,909,593,417.04	7,894,391,853.83
Accumulated
depreciation	VI. 4	2,599,967,088.38	2,424,750,701.04	2,164,833,164.78	1,907,643,295.78	1,650,973,737.41
Provisions for fixed
asset impairment	VI. 4	56,007,465.56	56,007,465.56	56,007,465.56	56,007,465.56	56,007,465.56
Construction in progress		–	–	–	–	–
Right-of-use assets		–	–	–	–	–
Intangible assets	VI. 5	1,109,424,386.73	1,127,595,957.33	1,157,218,412.78	1,186,840,868.24	1,216,463,323.70
Development expenses		–	–	–	–	–
Goodwill		–	–	–	–	–
Long-term prepaid expenses		–	–	–	–	–
Deferred income tax assets		–	–	–	–	–
Other non-current assets		–	–	–	–	–
Total non-current assets		6,525,658,170.70	6,717,067,373.13	6,898,255,335.69	7,132,783,523.94	7,403,873,974.56
Total assets		6,938,396,470.63	7,140,310,712.11	7,347,298,444.13	7,608,018,771.37	7,823,404,351.96

Note: The notes form an integral part of the pro forma financial statements

– II-1-6 –

ACCOUNTANT REPORT OF THE ASSETS

APPENDIX II-1

These financial statements are signed by following responsible persons:

Legal representative

Principal in charge of accounting

Head of accounting department

– II-1-7 –

ACCOUNTANT REPORT OF THE ASSETS

APPENDIX II-1

Unit: RMB

		31 August	31 December	31 December	31 December	1 January
Item	Note	2021	2020	2019	2018	2018
Current liabilities
Short-term borrowings		–	–	–	–	–
Financial liabilities held for
trading		–	–	–	–	–
Derivative financial liabilities		–	–	–	–	–
Notes payable		–	–	–	–	–
Accounts payable	VI. 6	24,344,883.56	177,377.32	1,443,964.36	7,118,812.17	13,359,462.60
Advances from customers		–	–	–	–	–
Contract liabilities	VI. 7	20,224,525.62	50,321,775.39	44,180,505.88	9,231,950.06	4,184,581.84
Employee benefits payable	VI. 8	1,815,798.01	3,360,608.67	3,158,346.88	1,994,059.16	1,614,934.85
Including: Salaries payable	VI. 8	1,658,263.00	3,069,049.00	2,520,628.00	1,830,466.17	1,553,996.75
Welfare payable		–	–	–	–	–
Taxes payable	VI. 9	610,644.59	102,293.93	20,414.67	1,374,408.34	72,345.14
Including: Tax payable	VI. 9	610,644.59	102,293.93	20,414.67	1,374,408.34	72,345.14
Other payables	VI. 10	365,317,274.79	792,831,589.30	1,355,558,114.67	1,908,205,353.09	2,374,150,130.79
Including: Dividends payable		–	–	–	–	–
Liabilities held for sale		–	–	–	–	–
Non-current liabilities due
within one year		–	–	–	–	–
Short-term financing payable		–	–	–	–	–
Other current liabilities		–	–	–	–	–
Total current liabilities		412,313,126.57	**846,793,644.61 **	**1,404,361,346.46 **	**1,927,924,582.82 **	2,393,381,455.22
Non-current liabilities
Long-term borrowings		–	–	–	–	–
Bonds payable		–	–	–	–	–
Including: Preferred shares		–	–	–	–	–
Perpetual bonds		–	–	–	–	–
Lease liabilities		–	–	–	–	–
Long-term payables					–	–
Long-term employee benefits
payable		–	–	–	–	–
Provisions		–	–	–	–	–
Deferred income		–	–	–	–	–
Deferred income tax liabilities		–	–	–	–	–
Other non-current liabilities		–	–	–	–	–
Total non-current liabilities		–	–	–	–	–
Total liabilities		412,313,126.57	**846,793,644.61 **	**1,404,361,346.46 **	**1,927,924,582.82 **	2,393,381,455.22
Owners’ equity:
Owners’ equity	VI. 11	6,526,083,344.06	6,293,517,067.50	5,942,937,097.67	5,680,094,188.55	5,430,022,896.74
Total owner’ equity		**6,526,083,344.06 **	**6,293,517,067.50 **	**5,942,937,097.67 **	**5,680,094,188.55 **	5,430,022,896.74
Total liabilities and owners’
equity		6,938,396,470.63	**7,140,310,712.11 **	**7,347,298,444.13 **	**7,608,018,771.37 **	7,823,404,351.96

Note: The notes form an integral part of the pro forma financial statements

– II-1-8 –

ACCOUNTANT REPORT OF THE ASSETS

APPENDIX II-1

PRO FORMA INCOME STATEMENT

Unit: RMB

			January to
Item		Note	August 2021	2020	2019	2018
**I. Total **	revenue		1,458,132,677.92	2,234,856,525.72	2,022,287,926.50	1,993,619,918.66
Including: Revenue		VI. 12	1,458,132,677.92	2,234,856,525.72	2,022,287,926.50	1,993,619,918.66
II. Total cost of sales			1,150,346,350.61	1,772,083,555.99	1,673,401,223.03	1,659,915,456.62
Including: Cost of sales		VI. 12	1,083,135,834.48	1,675,113,279.01	1,581,551,231.62	1,571,767,039.11
	Taxes and surcharges	VI. 13	31,471,524.07	46,759,261.96	44,296,361.37	43,927,820.84
	Selling and distribution
	expenses		–	–	–	–
	General and administrative
	expenses	VI. 14	35,901,524.10	50,732,771.76	47,624,667.66	44,257,552.65
	Research and development
	expenses		–	–	–	–
	Financial expenses		-162,532.04	-521,756.74	-71,037.62	-36,955.98
	Including: Interest expenses		–	–	–	–
	Interest income		162,752.04	521,956.74	71,037.62	37,175.98
	Net exchange loss
	(net gain
	represented by
	“-”)		–	–	–	–
Add:	Other income	VI. 15	2,327,929.07	3,788,030.00	3,236,408.57	–
	Investment income (loss
	represented by “-”)		–	–	–	–
	Including: Investment income
	from associates and joint
	ventures		–	–	–	–
	Gain (loss) from derecognition of
	financial assets at amortised
	cost		–	–	–	–
	Net exposure hedging gains (loss
	represented by “-”)		–	–	–	–
	Gain on changes in fair value
	(loss represented by “-”)		–	–	–	–
	Credit impairment loss (loss
	represented by “-”)		41,149.57	1,407,047.33	-2,264,252.48	-261,510.12
	Asset impairment loss (loss
	represented by “-”)		–	–	–	–
	Gains on disposals of assets (loss
	represented by “-”)		–	–	–	–
III. Operating profit (loss represented
by “-”)			310,155,405.95	467,968,047.06	349,858,859.56	333,442,951.92
Add:	Non-operating income		4,396.24	88,962.29	34,582.88	14,852.00
	Including: Government grants		–	–	–	–
Less:	Non-operating expenses		–	–	70,450.20	–
IV. Total profit (total loss represented
by “-”)			310,159,802.18	468,057,009.35	349,822,992.24	333,457,803.92
Less:	Income tax expenses	VI. 16	77,593,525.62	117,477,039.52	86,980,083.12	83,386,512.11
V. Net profit (net loss represented by
“-”)			232,566,276.56	350,579,969.83	262,842,909.12	250,071,291.81

Note: The notes form an integral part of the pro forma financial statements

– II-1-9 –

ACCOUNTANT REPORT OF THE ASSETS

APPENDIX II-1

PRO FORMA CASH FLOW STATEMENT

Unit: RMB

January to Item Note August 2021 2020 2019 2018

I. Cash flows generated from operating activities:

operating activities:
Cash from sales of goods and
provision of labour services	1,419,038,202.78	2,263,617,115.02	2,038,511,977.06	2,069,935,139.07
Sub-total of cash inflows from
operating activities	**1,419,038,202.78 **	**2,263,617,115.02 **	**2,038,511,977.06 **	2,069,935,139.07
Cash paid in the course of production
and operation	1,013,159,399.97	1,718,097,770.84	1,461,809,298.91	1,587,287,238.84
Sub-total of cash outflows from
operating activities	**1,013,159,399.97 **	**1,718,097,770.84 **	**1,461,809,298.91 **	1,587,287,238.84
Net cash flow generated from
operating activities	405,878,802.81	545,519,344.18	576,702,678.15	482,647,900.23
II. Cash flows generated from
investing activities:
Other payables – net changes in
pro forma impact numbers (Note 1)	427,620,936.43	562,852,619.01	540,251,698.74	478,330,618.66
Sub-total of cash outflows from
investing activities	427,620,936.43	562,852,619.01	540,251,698.74	478,330,618.66
Net cash flow generated from
investing activities	-427,620,936.43	-562,852,619.01	-540,251,698.74	-478,330,618.66
III. Effect of fluctuations in
exchange rate on cash and cash
equivalents	–	–	–	–
IV. Net increase in cash and cash
equivalents	-21,742,133.62	-17,333,274.83	36,450,979.41	4,317,281.57
Add: Balance of cash and cash
equivalents at the beginning of
the year	28,730,820.89	46,064,095.72	9,613,116.31	5,295,834.74
V. Balance of cash and cash
equivalent at the end of the year	6,988,687.27	28,730,820.89	46,064,095.72	9,613,116.31

Note 1: See Note II. 4. Description of Pro forma Financial Statements 1).

Note 2: The notes form an integral part of the pro forma financial statements.

– II-1-10 –

ACCOUNTANT REPORT OF THE ASSETS

APPENDIX II-1

PRO FORMA STATEMENT OF CHANGES IN OWNER’S EQUITY

Unit: RMB

Owner’s Item equity (Note 1) Balance as of 1 January 2018 5,430,022,896.74 Net profit for the year 250,071,291.81 Balance as of 31 December 2018 and 1 January 2019 5,680,094,188.55 Net profit for the year 262,842,909.12 Balance as of 31 December 2019 and 1 January 2020 5,942,937,097.67 Net profit for the year 350,579,969.83 Balance as of 31 December 2020 and 1 January 2021 6,293,517,067.50 Balance during the eight months ended 31 August 2021 232,566,276.56 Balance up to 31 August 2021 6,526,083,344.06

Note 1: See Note II. 4. Description of Pro forma Financial Statements 2).

Note 2: The notes form an integral part of the pro forma financial statements.

– II-1-11 –

ACCOUNTANT REPORT OF THE ASSETS

APPENDIX II-1

I. SUMMARY OF THE TRANSACTION

1. Profile of the Parties to the Transaction

(1) Ying Kou Port Group Corporation Limited (the seller)

Ying Kou Port Group Corporation Limited (hereinafter referred to as “Yingkou Port Group”, and formerly known as Port of Yingkou Authority) was registered with Yingkou City Administration for Industry and Commerce on 17 April 2003 in accordance with the Notice on the Implementation Opinion on the Reform of the Port Management System of Yingkou Port (Yingkou Municipal Committee Office of the CPC [2002] No. 42) and the Approval for the Allocation of Assets for Establishment of Ying Kou Port Group Corporation Limited (Yingkou Municipal State-owned Assets Management Committee Office [2003] No. 1).

The entire equity of Yingkou Port Group has been transferred to Liaoning Port Group Co., Ltd. (hereinafter “Liaoning Port Group” and formerly known as Liaoning North East Asia Gang Hang Development Co., Ltd.), and the debt for equity swap has completed in 2018. Each creditor bank of Yingkou Port Group has become shareholder of Yingkou Port Group; China Merchants Group Limited has become the controlling shareholder of Liaoning Port Group through the capital increase to the Liaoning Port Group on 30 September 2019. As such, China Merchants Group Limited has indirect control over Yingkou Port Group. In the same year, Liaoning Port Group transferred 22.965% equity of Yingkou Port Group to Dalian Port Group Co., Ltd. (hereafter referred to as PDA), a wholly-owned subsidiary of Liaoning Port Group.

On 21 October 2019, Yingkou Port Group obtained the business license of corporate legal person No. 91210800121119657C newly issued by the Administrative Examination and Approval Bureau of Yingkou City, with a registered capital of RMB20 billion. Legal representative: Deng Renjie, registered address: No. 1, Yinggang Road, Bayuquan District, and corporate residence: No. 1, Yinggang Road, Bayuquan District.

Pursuant to the stipulations of the Voting Rights Entrustment Agreement signed by Liaoning Port Group and PDA in March 2021, PDA has established control over Yingkou Port Group through arrangement of Agreement, and Liaoning Port Group has indirect control over Yingkou Port Group.

The major scope of business of Yingkou Port Group and its subsidiaries includes: port loading and unloading, warehousing and services; supply of ship materials; import of raw and auxiliary materials, mechanical equipment, instruments and parts necessary for its production and scientific research; export of self-produced seafood, talc, magnesia, woven bags, food, woodware, clothing, knitwear (except 16 kinds of export commodities jointly operated by national organisations); agency cargo packaging, consignment, water transportation, non-metallic ore, pig iron sales, plastic packaging products, vegetable oil; international passenger transport services, agency sales of ship tickets, luggage check-in; recycling of waste materials; advertising agency, production, design; ship supply (daily necessities, except for ship fuel), cement brick production, cement brick laying, metal materials, building material sales, engineering consulting; water and heating supply; emergency prevention of pollutants and pollutant receiving and disposal (operating with qualification certificate). The following businesses are operated only by branches and affiliates: distribution of liquefied petroleum gas, daily necessities, textiles, leather goods, household appliances, hardware and electrical appliances, chemical products (except dangerous articles), marine fuel (except those subject to approval); communication equipment distribution and agency services; ship waste (excluding hazardous waste) recycling and agency services; pre-packaged food; car rental; self-owned real estate business activities; property management; building cleaning services; other cleaning services; conference services; greening management; computers and communicators leasing; other machinery and equipment leasing; other water transportation auxiliary activities; real estate leasing. (Businesses that are subject to approval according to law may be operated only after being approved by relevant departments)

(2) Liaoning Port Holdings (Yingkou) Co., Ltd.* (the purchaser)

Liaoning Port Holdings (Yingkou) Co., Ltd.* (遼港控股(營口)有限公司) (hereinafter referred to as “Yingkou Ltd.”) established on 5 January 2021, whose corporate unified social credit code is 91210804MA10TQ454G, is a subsidiary of Liaoning Port Co., Ltd. (hereinafter referred to as “Liaoning Port”).

– II-1-12 –

ACCOUNTANT REPORT OF THE ASSETS

APPENDIX II-1

Liaoning Port is a joint stock limited company jointly established by PDA, Dalian Rongda Investment Co., Ltd., Dalian Haitai Holdings Co., Ltd., Dalian DETA Holdings Co., Ltd. and Dalian Bonded Zhengtong Co., Ltd. upon the approval of the People’s Government of Dalian, Liaoning Province with Dazheng [2005] No. 153 on 16 November 2005, and registered with the Dalian Administration for Industry and Commerce, Liaoning Province with the corporate unified social credit code of 91210200782451606Q. The H shares and RMB ordinary A shares issued by Liaoning Port were listed on The Stock Exchange of Hong Kong Limited and Shanghai Stock Exchange on 28 April 2006 and 6 December 2010, respectively. The headquarters of Liaoning Port is located at Xingang Commercial Building, Dayao Bay, Dalian Free Trade Zone, Dalian, Liaoning Province.

On 4 February 2021, Liaoning Port completed the share swap involved in the merger of Yingkou Port Liability Co., Ltd. (hereafter referred to as “Yingkou Port”), and newly issued 9.729 billion A shares of tradable shares with unlimited sales conditions. The entire assets and liabilities of Yingkou Port were included in the merger scope of Liaoning Port.

On 29 March 2021, Liaoning Port Group and PDA signed the Voting Rights Entrustment Agreement. Through the arrangement of the Agreement, PDA has established control over Yingkou Port Group. In light of the control over the shares of Liaoning Port by Yingkou Port Group, PDA has established indirect control over the shares of Liaoning Port Group through Yingkou Port Group.

The scope of business of Liaoning Port and its subsidiaries includes: the provision of terminal business and logistics services such as international and domestic cargo loading and discharging, transportation, transshipment, storage and etc.; providing facilities and services for passenger waiting, embarking and disembarking; tallying and tugging services for vessels sailing on international and domestic lines; port logistics and port information technology consultation services; engaged in crude oil storage in Port Area (operating with the permit); refined oil products storage (restricted to those applying for bonded qualification and those at port storage facilities); import and export of goods and technology (excluding distribution of imported goods and articles prohibited by relevant laws and regulations; import and export of articles restricted by laws and regulations may only conduct with the grant of license) (with capital contribution from foreign parties of less than 25%).

2. Overview of the Transaction

Based on the transaction agreement entered into by Yingkou Ltd. and Yingkou Port Group on 28 October 2021, Yingkou Ltd. intends to purchase part of the businesses and assets of Yingkou Port Group with cash. The businesses and assets to be disposed of by Yingkou Port Group (hereinafter referred to as the “Transaction Target”) are mainly located in the Bayuquan Port Area, including port business, hydropower business, assets related to tugging business and liabilities, etc.

The Transaction includes the following equity transactions and assets transactions:

• ① Yingkou Port Group established a wholly-owned subsidiary Yingkou Port Bulk Cargo Terminal Co., Ltd. (營口港散貨碼頭有限公司) (“Bulk Cargo Terminal”), and injected relevant port business and assets as a mean of investment into Bulk Cargo Terminal. The deductible input tax arising therefrom was approximately RMB365 million (subject to the actual amount paid by Yingkou Port Group to the competent tax authority) and Bulk Cargo Terminal incurred approximately RMB365 million valueadded tax as a result of capital increase. Yingkou Ltd. intends to purchase 100% equity interests of Bulk Cargo Terminal. As at the reporting date, Bulk Cargo Terminal has been established, and Yingkou Port Group has not injected the above port business and assets into Bulk Cargo Terminal.

• ② Yingkou Port Group intends to sell certain port-related machinery and equipment, assets related to hydropower business, and assets related to tugging business to Yingkou Ltd. directly.

As of the reporting date, the Transaction has not yet taken place.

3. Transaction Target

The Transaction Target to be disposed of by Yingkou Port Group mainly includes port assets, which mainly include berths, dumps and related use rights of lands; machinery and equipment and related liabilities; assets related to hydropower business; assets related to tugging business, etc.

– II-1-13 –

ACCOUNTANT REPORT OF THE ASSETS

APPENDIX II-1

II. BASIS FOR THE PREPARATION OF PRO FORMA FINANCIAL STATEMENTS

1. Purpose of Preparing the Pro Forma Financial Statements

In view of the proposed disposal of the Transaction Target by Yingkou Port Group to Yingkou Ltd., the pro forma financial statements have been prepared for the purpose of reflecting the overall profitability of the Transaction Target in a proper manner.

2. Going Concern

The pro forma financial statements are presented on a going concern basis.

3. Important Assumptions and Prerequisites for the Preparation of Pro Forma Financial Statements

(1) Scope of pro forma assets and liabilities

In preparing the financial statements, the management assumed that the Transaction Target was an independent reporting entity (hereinafter referred to as the “Entity”) that already existed at the beginning of the first period of the statements, and the payment receiving time of such Transaction Target is the same as that of Yingkou Port Group.

(2) Accounting policies and accounting estimates

The purchaser to the Transaction is Yingkou Ltd., the management has adopted the accounting policies and accounting estimates of Yingkou Ltd. to prepare the pro forma financial statements. For specific accounting policies, please refer to Note IV.

(3) Major pro forma assumptions

• 1) During the reporting period, in view of that part of the assets of the Transaction Target was leased by Yingkou Ltd. prior to the Transaction, when preparing the pro forma financial statements, the related revenue is calculated and measured based on its business volume and corresponding rate when operating in Yingkou Ltd.; the amount of relevant costs and expenses shall be apportioned according to the income ratio.

• 2) When preparing the pro forma financial statements and calculating the income tax expenses, the Entity is regarded as a taxpayer, and the income tax rate is 25%. The effect on the income tax from the difference of carrying value of assets and basis of tax calculation resulting from the adoption of accounting policies and estimates of Yingkou Ltd. by the Entity has not been considered.

• 3) In preparing the pro forma financial statements, the affected amount of RMB2,009 million of the net profit during the reporting period and the accumulated depreciation and amortization of fixed assets and intangible assets in the Transaction Target are reflected in the “Other Payables-Pro Forma Impact Numbers” at the beginning of the first period of the pro forma financial statement, and this amount is reduced to zero as at 31 August, 2021. Therefore, users of the pro-forma financial statements can understand the book value of all the assets and liabilities of Transaction Target confirmed and measured subject to Yingkou Ltd.’s accounting policies and estimates as at 31 August, 2021.

• 4) In preparing the pro forma financial statements, the port business and the assets are deemed to be injected to increase the capital of the Bulk Cargo Terminal by Yingkou Port Group. The deductible amount of RMB365 million of value-added tax can be confirmed, and the amount of RMB365 million payable to Yingkou Port Group can also be confirmed meanwhile. Please refer to Note I. 2 ① Introduction on the Equity Transaction of the Summary of Transaction in the financial statements.

– II-1-14 –

ACCOUNTANT REPORT OF THE ASSETS

APPENDIX II-1

4. Description of Pro forma Financial Statements

• 1) Based on the transaction agreement entered into by Yingkou Port Group and Yingkou Ltd. on 28 October 2021, the Transaction Target includes the assets leased to Yingkou Ltd. by Yingkou Port Group except the monetary funds deposited in the bank accounts of Yingkou Port Group. The assets are operated by Yingkou Ltd. in a unified manner with no separate independent bank accounts. The inventory and cash disbursement functions functions of such transaction targets are centrally administrated by Yingkou Ltd.. The net cash flows generated from such assets are deposited in the bank accounts of Yingkou Ltd.. Therefore, the funds provided to Yingkou Ltd. or the funds withdrew from Yingkou Ltd. are included in “Other Payables-Pro Forma Impact Numbers”, the changes related to the Yingkou Ltd.. The Transaction Target has no cash or cash and cash equivalent balances except the monetary funds mentioned above, and the Transaction Target does not receive/pay any cash in respect of its operating, investing and financing activities directly.

For the purpose of presenting a full set of financial information on the Transaction Target, the cash inflows/outflows of the Transaction Target and the receipt/payment made with Yingkou Ltd. prior to the restructure were presented in the pro forma cash flow statement.

• 2) The pro forma financial statements are prepared based on the assuming accounting entity, which is not an actual existing physical organization. As such, the owner’s equity will not be divided into “share capital”, “capital reserve”, “surplus reserve” or “retained earnings” in the preparation of the pro forma statement of changes in owner’s equity.

• 3) In view of the special purpose and basis for preparation of the pro forma financial statements, the pro forma financial statements only include pro forma balance sheet, pro forma income statement, pro forma cash flow statement, pro forma statement of changes in owner’s equity and related notes that are important to users of the pro forma financial statements. No “explanations on changes in accounting policies and accounting estimates and correction of errors”, “risks related to financial instruments”, “related party relationships and related party transactions”, “contingencies”, “subsequent events”, “significant commitments” and other non-relevant notes were disclosed, and the disclosure of some notes has been appropriately simplified . The owner’s equity of the pro forma financial statements is presented as the “owner’s equity”, without breakdown of “share capital”, “capital reserve”, “surplus reserve” or “retained earnings”.

III. STATEMENT ON FOLLOWING THE BASIS FOR PREPARATION DESCRIBED IN NOTE II

The pro forma financial statements are prepared in accordance with the basis for preparation as described in Note II above and the significant accounting policies and accounting estimates in Note IV, which give a true and complete view of the Entity’s pro forma financial condition as at 31 August 2021, 31 December 2020, 31 December 2019 and 31 December 2018 as well as its pro forma operating results for January to August 2021, the years of 2020, 2019 and 2018.

IV. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES

1. Accounting Year

The Entity adopts the Gregorian calendar year as its accounting year, commencing from 1 January to 31 December each year.

2. Recording Currency

The Entity adopts Renminbi as the recording currency.

3. Basis for Determination of Cash and Cash Equivalents

Cash comprises the Entity’s cash on hand and deposits that can be readily withdrawn on demand. Cash equivalents are short-term (which generally refers to expiration within three months from the date of purchase), highly liquid investments held by the Entity, that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

– II-1-15 –

ACCOUNTANT REPORT OF THE ASSETS

APPENDIX II-1

4. Financial Instruments

The Entity recognises a financial asset or a financial liability when it becomes a party to the financial instrument contract.

Where financial assets are purchased or sold in a regular way, assets to be received and liabilities to be borne therefor are recognised on the date of transaction, or sold assets are derecognised on the date of transaction.

Financial assets and financial liabilities are measured at fair value upon initial recognition. For financial assets and financial liabilities measured at fair value through current profit or loss, related transaction expenses are directly recognised in current profit or loss; for other types of financial assets and financial liabilities, related transaction expenses are included in the initial recognition amount. For accounts receivable not containing significant financing components or regardless of financing components of contracts less than one year initially recognised based on the Accounting Standards for Business Enterprises No. 14 – Revenue (the “Standard on Revenue”), they are initially measured at transaction price defined based on the Standard on Revenue.

Effective interest method is the method that is used in the calculation of the amortised cost of a financial asset or a financial liability and in the allocation and recognition of the interest income or interest expense over the accounting periods.

Effective interest rate is the rate that exactly discounts estimated future cash flows through the expected life of a financial asset or a financial liability to the carrying amount of the financial asset or to the amortised cost of the financial liability. When calculating the effective interest rate, the Entity shall estimate the expected cash flows by considering all contractual terms of the financial assets or financial liabilities (for example, early repayment, extension, call or other similar options) but shall not consider the expected credit losses.

The amortised cost of a financial asset or a financial liability is an accumulatively amortised amount arising from the initially recognised amount of the financial asset or the financial liability deducting repaid principals plus or less amortisation of balances between the initially recognised amount on initial recognition and the amount on maturity date using the effective interest method, and then deducting accumulated provisions for losses (only applicable to financial assets).

4.1 Classification, recognition and measurement of financial assets

After initial recognition, the Entity shall subsequently measure different types of financial assets at amortised cost, fair value through other comprehensive income or fair value through current profit or loss, respectively.

If the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding and the financial asset is held within a business model whose objective is achieved by collecting contractual cash flows, the Entity shall classify the financial asset into a financial asset measured at amortised cost. Such financial assets mainly include: cash at bank and on hand, notes receivable, accounts receivable, other receivables, etc.

If the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding and the financial asset is held within a business model whose objective is to collect contractual cash flows and sell such financial asset, the Entity shall classify the financial asset into a financial asset at fair value through other comprehensive income. The accounts receivable and notes receivable classified to financial assets at fair value through other comprehensive income when acquired are listed as receivables financing. If the acquisition time limit is within one year (including one year), it is listed in other current assets. If such financial assets have a maturity period of more than one year, they are listed as other debt investments, and if they mature within one year (including one year) from the balance sheet date, they are listed as non-current assets due within one year.

Financial assets at fair value through current profit or loss include financial assets classified as at fair value through current profit or loss and those designated as at fair value through current profit or loss:

A financial asset which does not satisfy the criteria for a financial asset classified as being measured at amortised cost or a financial asset at fair value through other comprehensive income shall be classified as a financial asset at fair value through current profit or loss.

– II-1-16 –

ACCOUNTANT REPORT OF THE ASSETS

APPENDIX II-1

At initial recognition, the Entity may irrevocably designate a financial asset as measured at fair value through current profit or loss if doing so eliminates or significantly reduces accounting mismatch.

Financial assets at fair value through current profit or loss are presented in financial assets held for trading. Those due over one year (or without any fixed term) and expected to be held for over one year since the balance sheet date are presented in other non-current financial assets.

On initial recognition, the Entity may, based on an individual financial asset, irrevocably designate a non-trading equity instrument investment which is contingent consideration recognised in business combination not involving entities under common control as financial asset measured at fair value through other comprehensive income. Such financial assets are presented as investments in other equity instruments.

The Entity’s purpose of holding the financial assets is for trading if one of the following conditions is satisfied:

The Entity’s purpose of acquiring the relevant financial assets is primary for recent sale.

The relevant financial assets are, on initial recognition, a part of the centrally-managed identifiable financial instrument portfolio, and objective evidence indicates that short-term profit model exists in the near future.

The relevant financial assets are derivative instruments. However, derivatives that meet the definition of financial guarantee contracts and those designated as effective hedging instruments are excluded.

4.1.1 Financial assets at amortised cost

The financial asset at amortised cost is subsequently measured at amortised cost using the effective interest method. Gain or loss arising from impairment or derecognition is recognised in current profit or loss.

The Entity recognises interest income on financial assets measured at amortised cost using the effective interest method. The Entity calculates and recognises interest income based on the carrying amount of financial assets multiplied by the effective interest rate, except for the following conditions:

For purchased or originated credit-impaired financial asset, the Entity calculates and recognises its interest income based on amortised cost of the financial asset and the effective interest rate through credit adjustment since initial recognition.

For purchased or originated financial asset without credit impairment incurred but with credit impairment incurred in subsequent periods, the Entity calculates and recognises its interest income based on amortised cost of the financial asset and the effective interest rate in subsequent periods. If the financial asset no longer has credit impairment in subsequent periods as a result of an improvement in its credit risk, and this improvement may be linked to an event that occurred after the application of the above regulations, the Entity calculates and recognises interest income based on the carrying amount of the financial asset multiplied by the effective interest rate.

4.1.2 Financial assets at fair value through other comprehensive income

The impairment loss or gain on a financial asset at fair value through other comprehensive income and interest income from the financial asset calculated using effective interest rate, and exchange gain or loss are included in current profit or loss, for other financial assets, their changes in fair value are included in other comprehensive income. The amount recorded in profit or loss of each period is equal to the amount recorded in profit or loss of such period assuming the financial asset has been measured at amortised cost. Upon derecognition of the financial asset, all accumulated gains or losses previously recorded in other comprehensive income are transferred from other comprehensive income to current profit or loss.

After designating a non-trading equity instrument investment as a financial asset at fair value through other comprehensive income, the changes in fair value of such financial asset are recognised in other comprehensive income. When the financial asset is derecognised, the cumulative gains or losses previously recognised in other comprehensive income are transferred from other comprehensive income

– II-1-17 –

ACCOUNTANT REPORT OF THE ASSETS

APPENDIX II-1

to retained earnings. During the period that the Entity holds these non-trading equity instrument investments, the Entity has established the right of collecting dividends, whose economic benefit will probably flow into the Entity, and if the amount of the dividends can be reliably measured, then the Entity will recognise dividend income in current profit or loss.

4.1.3 Financial assets at fair value through current profit or loss

Financial assets at fair value through current profit or loss shall be subsequently measured at fair value. Gains or losses from change in fair value and dividends and interest income related to such financial assets shall be recognised in current profit or loss.

4.2 Impairment of financial instruments

The Entity shall conduct an impaired accounting treatment and recognise a loss provision on financial assets at amortised cost and contract assets based on expected credit losses.

The Entity makes a loss provision equivalent to the amount of expected credit losses throughout the duration period of the contract assets or the receivables arising from transactions adopting the Standard on Revenue and not containing significant financing components or regardless of financing components of contracts less than one year.

For other financial instruments, except for purchased or originated credit-impaired financial assets, at each balance sheet date, the Entity assesses changes in credit risk of relevant financial instruments since initial recognition. If the credit risk of such financial instrument has increased significantly since initial recognition, the Entity measures its loss provision equivalent to the amount of expected credit losses throughout the duration period of the financial instrument; if the credit risk of such financial instrument has not increased significantly since initial recognition, the Entity measures its loss provision equivalent to the amount of expected credit losses over the next 12 months of the financial instrument. Increase in or reversal of credit loss provision is included in current profit or loss as loss/gain on impairment.

The Entity assesses the expected credit losses of financial instruments based on internal credit risk rating. The Entity considered the credit risk characteristics of different customers and assessed the expected credit losses of receivables based on the credit risk rating. Basis for each rating and corresponding expected credit loss rate are as follows:

		Provision
Credit		percentage
rating	Basis for determination of portfolio	%
A	Based on the past experience, customers are able to make repayment	0 – 0.1
	within the credit term, and have a good repayment record with an
	extremely low risk of default upon maturity in foreseeable future.
B	Based on the past experience, customers are able to make repayment	0.1 – 0.3
	despite overdue payment.
C	There are evidences indicating a risk of default by the customers as	0.3 – 50
	the risk of their overdue payment has significantly increased.
D	There are evidences indicating that the amounts due from customers	50 – 100
	have been impaired, and evidences indicating that the amounts are
	unrecoverable in foreseeable future due to serious financial
	difficulties of the customers.

4.2.1 Significant increase in credit risk

The Entity will evaluate whether credit risk of relevant financial instruments has increased significantly since initial recognition on each balance sheet date. When determining whether credit risk has increased significantly upon initial recognition, the Entity will consider the reasonable and supportable information available without undue costs or efforts, including qualitative and quantitative analysis on the historical data of the Entity, external credit risk ratings and forward-looking information. Based on a single financial instrument or group of financial instruments with similar credit risk characteristics, the Entity will determine the changes in default risks of financial instruments over the expected duration period, by comparing the default risk of financial instruments at the balance sheet date and that at the date of initial recognition.

– II-1-18 –

ACCOUNTANT REPORT OF THE ASSETS

APPENDIX II-1

When one or more of the following quantitative and qualitative standards is triggered, the Entity considers that the credit risk of financial instrument has increased significantly:

• (1) For quantitative standards, the probability of default over the remaining duration period at the reporting date is increased to a certain proportion as compared with that upon initial recognition;

• (2) For qualitative standards, there are significant adverse changes in operation or financial position of debtors and early-warning customer list.

4.2.2 Financial assets with credit impairment

To determine whether there is credit impairment, the defining standards adopted by the Entity are consistent with the objective of internal credit risk management for related financial instruments, by reference to the quantitative and qualitative indicators. When debtors are evaluated for credit impairment, the following major factors will be taken into account:

• (1) significant financial difficulty of the issuer or debtor;

• (2) breach of contract by the debtor, such as default or overdue payment in interest or principal repayment;

• (3) a concession granted by the creditor to the debtor due to economic or contractual considerations related to the debtor’s financial difficulty, which will not be granted under any other circumstances;

• (4) possible bankruptcy or other financial reorganisation of the debtor;

• (5) disappearance of an active market for the financial asset due to financial difficulty of the issuer or the debtor;

• (6) purchase or creation of a financial asset at significant discount reflecting the fact of credit loss.

Credit impairment of financial assets may be a joint result of multiple events, rather than a single identifiable event.

4.2.3 Recognition of expected credit losses

Impairment loss provision for different assets is measured based on 12 months or the entire duration period depending on whether there is a significant increase in credit risk and whether there is a credit impairment. Key parameters for measurement of expected credit losses include loss rate and risk exposure. The Entity will take into account qualitative analysis on historical statistical data, such as counterparty rating, way of guarantee and types of collaterals and way of repayment, etc., and forward-looking information to build loss rate and risk exposure model.

Related definitions are as follows:

• Counterparty rating is to regularly study the counterparty’s expected credit risk and assess its credit rating by giving consideration to relevant information of the counterparty’s industry influence, the nature of company, operating indicators and point-deducting indicators, which are divided into Grade A (high-quality enterprise), Grade B (common enterprise), Grade C (enterprise with bad credit) and Grade D (enterprise with significant risk) in order from good to bad;

• Loss rate is the expectation made for the degree of estimated loss suffered by the Entity. Loss rate of the Entity is adjusted based on the migration rate of historical aging model with reference to forward-looking information. The loss rate varies depending on the counterparty rating, method and priority for recourse and way of guarantee. Loss rate is the percentage of estimated loss of risk exposure, and calculated based on the next 12 months or the entire duration period;

– II-1-19 –

ACCOUNTANT REPORT OF THE ASSETS

APPENDIX II-1

• Risk exposure is the amount that the Entity should be compensated in the next 12 months or the remaining duration period upon default.

Where the Entity has made a loss provision equivalent to the amount of expected credit losses throughout the duration period of the financial instrument in the previous accounting period, but at the balance sheet date for the current period, the above financial instrument is no longer a financial instrument whose credit risk has significantly increased since initial recognition, the Entity measures the loss provision for the financial instrument equivalent to the amount of expected credit losses over the next 12 months at the balance sheet date for the current period. Relevant reversal of loss provision is included in profit or loss for the current period as gain on impairment.

4.2.4 Write-down of financial assets

When the Entity no longer reasonably expects to be able to fully or partially recover the contractual cash flows of financial assets, the Entity directly writes down the carrying amount of the financial assets. Such write-down constitutes derecognition of relevant financial assets.

4.3 Transfer of financial assets

The Entity shall derecognise a financial asset when one of the following conditions is satisfied: (1) the contractual rights to the cash flows from the financial asset expire; (2) the financial asset has been transferred and substantially all the risks and rewards of ownership of the financial asset are transferred to the transferee; (3) although the financial asset has been transferred, the Entity neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset but has not retained control of the financial asset.

If the Entity neither transfers nor retains substantially all the risks and rewards of ownership of a financial asset, and it retains control of the financial asset, the Entity will recognise the financial asset to the extent of its continuing involvement in the transferred financial asset and recognise a relevant liability accordingly. Relevant liabilities are measured by the Entity using the following methods:

If the transferred financial asset is measured at amortised cost, the carrying amount of relevant liabilities is the carrying amount of continuing involvement in the transferred financial asset less the amortised cost of the rights retained by the Entity (if the Entity retains rights for the transfer of the financial asset) plus the amortised cost of the obligations undertaken by the Entity (if the Entity undertakes relevant obligations for the transfer of the financial asset), and the relevant liabilities are not designated as financial liabilities at fair value through current profit or loss;

If the transferred financial asset is measured at fair value, the carrying amount of relevant liabilities is the carrying amount of continuing involvement in the transferred financial asset less the fair value of the rights retained by the Entity (if the Entity retains rights for the transfer of the financial asset) plus the fair value of the obligations undertaken by the Entity (if the Entity undertakes relevant obligations for the transfer of the financial asset), and the fair value of the rights and liabilities is measured on a stand-alone basis.

For transfer of a financial asset in its entirety that satisfies the derecognition criteria, as to financial assets classified as at amortised cost, the difference between the carrying amount of the financial asset transferred and the consideration received from the transfer shall be included in profit or loss for the current period. As to non-trading equity instruments designated by the Entity as at fair value through other comprehensive income, accumulated gains or losses previously included in other comprehensive income are transferred out from other comprehensive income and included in retained earnings.

For transfer of a part of financial asset that satisfies the derecognition criteria, the carrying amount of the financial asset in its entirety before the transfer is allocated between the part that is derecognised and the part that is continuously recognised, based on the respective fair values of those parts on transfer date. The difference between the sum of the consideration received for the part of the derecognition and the accumulated amount of the fair value changes originally included in other comprehensive income corresponding to the derecognised part and the carrying amount on the date of derecognition for the derecognised part shall be recognised in current profit or loss or retained earnings.

For transfer of a financial asset in its entirety that does not satisfy the derecognition criteria, the Entity will continuously recognise the transferred financial asset in its entirety. Consideration received from transfer of assets should be recognised as a liability upon receipt.

– II-1-20 –

ACCOUNTANT REPORT OF THE ASSETS

APPENDIX II-1

4.4 Classification of financial liabilities and equity instruments

Financial instruments or their constituent parts issued by the Entity are classified into financial liabilities or equity instruments on initial recognition on the basis of the substance of the contractual terms and the economic nature but not only its legal form, together with the definition of financial liabilities and equity instruments.

4.4.1 Classification and measurement of financial liabilities

On initial recognition, financial liabilities are classified into other financial liabilities.

4.4.1.1 Other financial liabilities

The Entity shall classify all financial liabilities as subsequently measured at amortised cost, except for financial liabilities that arise when transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies, and gains or losses arising from derecognition or amortisation are recognised in profit or loss for the period.

When the contractual cash flows are changed due to the modification or renegotiation of the contract made between the Entity and the counterparty and the renegotiation or modification does not result in the derecognition of the financial liability that is subsequently measured at amortised cost, the Entity shall recalculate the carrying amount of the financial liability and shall recognise related gains or losses in current profit or loss. The carrying amount of the financial liability shall be recalculated as the present value of the renegotiated or modified contractual cash flows that are discounted at the financial liability’s original effective interest rate. Any costs or fees incurred from modification or renegotiation of the contract adjust the carrying amount of the modified financial liability and are amortised over the remaining term of the modified financial liability.

• 4.4.2 Derecognition of financial liabilities

The Entity derecognises a financial liability (or part of it) when the underlying present obligation (or part of it) is discharged. An agreement between the Entity (the debtor) and the creditor to replace the original financial liability with a new financial liability with substantially different terms is accounted for as a derecognition of the original financial liability and the recognition of a new financial liability.

When the Entity derecognises a financial liability or a part of it, it recognises the difference between the carrying amount of the financial liability (or part of the financial liability) derecognised and the consideration paid (including any non-cash assets transferred or new financial liabilities assumed) in current profit or loss.

4.5 Offsetting financial assets and financial liabilities

Where the Entity has a legal right that is currently enforceable to set off the recognised financial assets and financial liabilities, and intends either to settle on a net basis, or to realise the financial asset and settle the financial liability simultaneously, a financial asset and a financial liability shall be offset and the net amount is presented in the balance sheet. Except for the above circumstances, financial assets and financial liabilities shall be presented separately in the balance sheet and shall not be offset.

5. Inventories

Inventories of the Entity mainly include raw materials, etc.. Inventories are initially measured at cost. Cost of inventories comprises costs of purchase and other expenditures incurred in bringing the inventories to their present location and condition.

The actual cost of inventories transferred out is determined by using the weighted average method.

At the balance sheet date, inventories are calculated at the lower of cost and net realisable value. If the net realisable value is lower than the cost of inventories, a provision will be made for decline in value of inventories.

– II-1-21 –

ACCOUNTANT REPORT OF THE ASSETS

APPENDIX II-1

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale and relevant taxes. The estimates of net realisable value of inventories is determined based on the most reliable evidence available, taking into consideration the purpose for holding inventories and the effects of events subsequent to the balance sheet date.

After provision for decline in value of inventories, if factors that previously resulted in the provision for decline in value of inventories no longer exist, the amount of the write-down is reversed. The reversal is limited to the amount originally provided for the provision for the decline in value of inventories, and is recognised in profit or loss for the current period.

The Entity adopts a perpetual inventory system.

6. Fixed Assets and Depreciation

	Way of		Estimated net	Annual
Category	depreciation	Useful life	residual value	depreciation rate
Buildings	Average age method	5-30 years	5%	3.17%-19.00%
Port and terminal facilities	Average age method	5-50 years	5%	1.90%-19.00%
Automobiles and ships	Average age method	5-25 years	5%	3.80%-19.00%
Machinery and equipment,	Average age method	3-25 years	5%, 15%	3.80%-31.67%,
furniture, appliances and				10.63%
other equipment

A fixed asset is depreciated over its useful life using the straight-line method since the month subsequent to the one in which it is ready for its intended use. The useful life, estimated net residual value and annual depreciation rate of each category of fixed assets are as follows:

Estimated net residual value of a fixed asset is the estimated amount that the Entity would currently obtain from disposal of the asset, after deducting the estimated costs of disposal, if the asset was already of the age and in the condition expected at the end of its useful life.

If a fixed asset is upon disposal or no future economic benefits are expected to be generated from its use or disposal, the fixed asset is derecognised. When a fixed asset is sold, transferred, retired or damaged, the amount of proceeds on disposal of the asset net of the carrying amount and related taxes is recognised in profit or loss for the current period.

The Entity reviews the useful life and estimated net residual value of a fixed asset and the depreciation method applied at least at financial year-end, and accounts for any change as a change in an accounting estimate.

7. Intangible Assets

Intangible assets include land use rights, software, etc..

Intangible assets are measured initially at cost. When an intangible asset with a limited useful life is available for use, its original cost less estimated net residual value and any accumulated impairment losses provided is amortised evenly over its estimated useful life using the straight-line method. The intangible assets with an unlimited useful life are not amortised. The useful lives of the intangible assets are as follows:

Category	Useful life
Land use rights	50 years
Software	10 years

For an intangible asset with a limited useful life, the Entity reviews its useful life and amortisation method at the end of the period and makes adjustment if necessary.

– II-1-22 –

ACCOUNTANT REPORT OF THE ASSETS

APPENDIX II-1

8. Impairment of Long-term Assets

The Entity determines the impairment of assets, other than the impairment of inventories and financial assets using the following methods:

The Entity assesses at the balance sheet date whether there is any indication that an asset may be impaired. If any indication exists that an asset may be impaired, the Entity estimates the recoverable amount of the asset and performs impairment testing. Goodwill arising from a business combination and an intangible asset with an indefinite useful life are tested for impairment at least at each year end, irrespective of whether there is any indication that the asset may be impaired. Intangible assets that have not been ready for their intended use are also tested for impairment each year.

The recoverable amount of an asset is the higher of its fair value less costs to sell and the present value of the future cash flows expected to be derived from the asset. The Entity estimates the recoverable amount on an individual basis unless it is not possible to estimate the recoverable amount of the individual asset, in which case the recoverable amount is determined for the asset group to which the asset belongs. Identification of an asset group is based on whether major cash inflows generated by the asset group are largely independent of the cash inflows from other assets or asset groups.

When the recoverable amount of an asset or asset group is less than its carrying amount, the carrying amount is reduced to the recoverable amount by the Entity. The reduction in the carrying amount is treated as an impairment loss and recognised in current profit or loss. A provision for impairment loss of the asset is recognised accordingly.

9. Contract Liabilities

A contract liability represents the Entity’s obligation to transfer goods or services to a customer for which the Entity has received consideration (or an amount of consideration is due) from the customer.

10. Employee Compensation

Employee compensation refers to all forms of considerations given by the Entity in exchange for services rendered by its employees or for the termination of employment. Employee compensation includes short-term employee compensation, post-employment benefits, termination benefits and other long-term employee benefits.

Except compensation paid to employees for termination of employment, the Entity recognises the employee compensation payable as liabilities in the accounting period in which services are rendered by the employees.

The Entity participates in employee social security systems operated by the government according to the regulations, including basic endowment insurance, medical insurance, housing provident funds and other social security systems, and the relevant expenditure is included, when incurred, in the cost of the relevant assets or profit or loss for the current period.

10.1 Accounting treatment method of short-term employee compensation

Short-term employee compensation refers to the employee compensation other than post-employment benefits and termination benefits, which is required to be fully paid by the Entity within 12 months after the end of the annual reporting period in which the employees render relevant services. In particular, short-term employee compensation includes staff salaries, bonuses, allowances and subsidies, staff welfare payments, social insurance premiums including medical insurance premiums, work-related injury insurance premiums and maternity insurance premiums, housing provident funds, labour union expenses and staff education expenses, short-term paid leaves, non-monetary welfare and other short-term compensation. During the accounting period in which the employees render services, the Entity recognises the short-term employee compensation payable as liabilities and includes the same into relevant asset costs or expenses according to the object which benefits from the services rendered by employees.

10.2 Accounting treatment method of post-employment benefits

Post-employment benefits refer to all kinds of remunerations and benefits other than short-term employee compensation and termination benefits that are provided by the Entity after the retirement of the employees or termination of employment relation with the enterprise in exchange for services rendered by employees. Post-employment benefits include endowment insurance, annuity, unemployment insurance, early retirement benefits and other post-employment benefits.

– II-1-23 –

ACCOUNTANT REPORT OF THE ASSETS

APPENDIX II-1

The Entity categorises post-employment benefit plan as defined contribution plan. Post-employment benefit plan refers to the agreement reached between the Entity and its employees on the post-employment benefits, or the rules or measures formulated by the Entity for providing post-employment benefits to its employees. Defined contribution plan refers to the post-employment benefit plan under which the Entity assumes no obligation of making further payment after depositing fixed amount to independent funds.

10.3 Accounting treatment method of termination benefits

Termination benefits are the compensation to employees when the Entity terminates the employment relationship with employees before the expiry of the employment contracts or as an offer to encourage employees to accept voluntary redundancy. If the Entity provides termination benefits to the employees, the liabilities arise from termination benefits will be recognised and included in the profit or loss for the period at the earlier of the following dates: (1) when the Entity cannot unilaterally withdraw termination benefits for the termination employment plan or the redundancy offer. (2) When the Entity recognises the costs or expenses related to the reorganisation involving in payment of termination benefits.

10.4 Accounting treatment method of other long-term employee benefits

Other long-term employee benefits refer to all employee compensation other than short-term employee compensation, post-employment benefits and termination benefits.

11. Revenue Recognition

The Entity recognises revenue based on the transaction price allocated to a performance obligation under the contract when such performance obligation is satisfied, that is, when the customer has obtained the control over the relevant goods or services. A performance obligation represents the commitment in the contract that a good and service that is distinct shall be transferred by the Entity to the customer. Transaction price refers to the amount of consideration to which the Entity expects to be entitled in exchange of transferring goods or services to a customer, excluding the amount received on behalf of third parties and the amount that the Entity expects to return to a customer.

If one of the following conditions is met, a performance obligation which is performed over a certain period of time will be recognised as revenue by the Entity based on the progress of the performance within a period of time: (I) the customer obtains and consumes economic benefits provided by the Entity’s performance as the Entity performs; (II) the customer is able to control goods in progress during the Entity’s performance; (III) goods or services generated during the Entity’s performance have no alternative use, and the Entity is entitled to charge for the accumulated part of the contract that has been performed so far during the whole contract period. Otherwise, the Entity will recognise revenue at the point in time when the customer obtains control of the relevant goods or services.

The Entity determines progress of performance using the investment method, namely, determines the progress of performance according to the Entity’s investment for fulfilling its performance obligations. When the progress of performance cannot be reasonably determined and the costs incurred are expected to be compensated, the Entity recognises revenue based on the amount of costs incurred till the progress of performance can be reasonably determined.

Contract on rendering of services

The contract on rendering of services between the Entity and the customer generally contains the obligations of port operation services. Because the customer will obtain and consume the economic benefits generated by the performance of the Entity when the Entity performs its obligations, the Entity will recognise revenue according to the performance progress by treating the rendering of services as the obligations within a certain period of time, except that the performance progress cannot be reliably determined. When the performance progress cannot be reliably determined, but the cost incurred by the Entity is expected to be compensated, the Entity will, based on the investment method, recognise revenue according to the amount of the incurred cost, until the performance progress can be reliably determined.

Contract on sales of goods

The contract on sales of goods between the Entity and the customer generally contains the obligation of transferring the relevant goods only. The Entity generally recognises the revenue when the relevant goods are delivered and confirmed as accepted by the customer, on the basis of taking full consideration of the following factors: the present right to collect the goods payment, the transfer of the key risk and return in the goods ownership, the transfer of the goods legal ownership, the transfer of the physical asset of the goods, and the acceptance of the goods by the customer.

– II-1-24 –

ACCOUNTANT REPORT OF THE ASSETS

APPENDIX II-1

If the contract contains two or more performance obligations, the Entity allocates, at the contract inception, the transaction price to each single performance obligation based on the relative proportion of stand-alone selling prices of goods or services promised in single performance obligation. However, if there is conclusive evidence indicating that the contract discount or variable consideration is only relative with one or more (not the whole) performance obligations in the contract, the Entity will allocate the contract discount or variable consideration to relative one or more performance obligations. Stand-alone selling price is a price at which the Entity would sell goods or services separately to a customer. If the stand-alone selling price cannot be observed directly, the Entity estimates the stand-alone selling price through comprehensive consideration of all relevant reasonably acquired information and maximum use of observable inputs.

12. Income Tax

At the balance sheet date, the Entity measures the current income tax liability (or asset) generated in the current period and previous periods based on the income tax amount expected to be payable (or refundable) according to the tax law.

V. TAXES

1. Major Categories of Taxes and Respective Tax Rates

Categories of taxes	Tax basis	Tax rates
Value-added tax (VAT)	Taxable income	13%; 9%; 6%; 5%; 3%
Corporate income tax	Taxable income amount	25%
City maintenance and construction tax	Turnover taxes payable	7%
Educational surcharge	Turnover taxes payable	3%
Local educational surcharge	Turnover taxes payable	2%

2. Tax Preference and Approvals

(1) VAT

According to the Notice on Policies Related to Deepening Value-Added Tax Reform issued by the Ministry of Finance, State Administration of Taxation and General Administration of Customs (No. 39 Notice of the Ministry of Finance, State Administration of Taxation and General Administration of Customs in 2019), the taxpayers whose sales of postal services, telecommunications services, modern services, and life services account for more than 50% of total sales are permitted to, from 1 April 2019 to 31 December 2021, deduct additional 10% of current deductible input tax from VAT payable.

VI. NOTES TO TIMES OF THE FINANCIAL STATEMENTS

Unless otherwise specified, among the financial statement data disclosed below, “current period” refers to the period from 1 January 2021 to 31 August 2021, and “previous period” refers to the period from 1 January 2020 to 31 December 2020.

1. Cash at Bank and on Hand

Item Cash at bank Including: RMB Total	Amount in original currency – 6,988,687.27 –	31 August 2021 Conversion rate Amount in RMB – 6,988,687.27 1.0000 6,988,687.27 – 6,988,687.27	31 December 2020 Amount in original currency Conversion rate Amount in RMB – – 28,730,820.89 28,730,820.89 1.0000 28,730,820.89 – – 28,730,820.89	31 December 2020 Amount in original currency Conversion rate Amount in RMB – – 28,730,820.89 28,730,820.89 1.0000 28,730,820.89 – – 28,730,820.89
				28,730,820.89

Note: RMB6,988,687.27 of the balance as at 31 August 2021 was deposited in China Merchants Group Finance Co., Ltd., a company within the scope of the combination of China Merchants Group, the ultimate de facto controller of Yingkou Port Group.

– II-1-25 –

ACCOUNTANT REPORT OF THE ASSETS

APPENDIX II-1

2. Accounts Receivable

• (1) Overall situation of accounts receivable

Item Accounts receivable Less: Credit loss provision Total	31 August 2021 39,082,363.52 1,320,357.03 37,762,006.49	31 December 2020 28,072,358.73 1,361,509.40
		26,710,849.33

(2) Classification of accounts receivable

Item Original value as at 31 August 2021 Aging Total Within 180 days 180 days to 1 year 1 year to 2 years 2 years to 3 years Above 3 years Normal risk portfolio 11,907,610.82 27,174,752.70 – – – 39,082,363.52 Total 11,907,610.82 27,174,752.70 – – – 39,082,363.52 Item Credit loss provision as at 31 August 2021 Net value at the year end Type of original currency Reason for provision Original value at the end of the period Aging Total Within 180 days 180 days to 1 year 1 year to 2 years 2 years to 3 years Above 3 years Normal risk portfolio 2,381.52 1,317,975.51 – – – 1,320,357.03 37,762,006.49 RMB Expected credit losses 39,082,363.52 Total 2,381.52 1,317,975.51 – – – 1,320,357.03 37,762,006.49 – – 39,082,363.52 Overall aging of accounts receivable Item 31 August 2021 31 December 2020 Book balance Proportion (%) Credit loss provision Book balance Proportion (%) Credit loss provision Within 1 year (including 1 year) 39,082,363.52 100.00 1,320,357.03 28,072,358.73 100.00 1,361,509.40 Total 39,082,363.52 100.00 1,320,357.03 28,072,358.73 100.00 1,361,509.40	Item Original value as at 31 August 2021 Aging Total Within 180 days 180 days to 1 year 1 year to 2 years 2 years to 3 years Above 3 years Normal risk portfolio 11,907,610.82 27,174,752.70 – – – 39,082,363.52 Total 11,907,610.82 27,174,752.70 – – – 39,082,363.52 Item Credit loss provision as at 31 August 2021 Net value at the year end Type of original currency Reason for provision Original value at the end of the period Aging Total Within 180 days 180 days to 1 year 1 year to 2 years 2 years to 3 years Above 3 years Normal risk portfolio 2,381.52 1,317,975.51 – – – 1,320,357.03 37,762,006.49 RMB Expected credit losses 39,082,363.52 Total 2,381.52 1,317,975.51 – – – 1,320,357.03 37,762,006.49 – – 39,082,363.52 Overall aging of accounts receivable Item 31 August 2021 31 December 2020 Book balance Proportion (%) Credit loss provision Book balance Proportion (%) Credit loss provision Within 1 year (including 1 year) 39,082,363.52 100.00 1,320,357.03 28,072,358.73 100.00 1,361,509.40 Total 39,082,363.52 100.00 1,320,357.03 28,072,358.73 100.00 1,361,509.40	Item Original value as at 31 August 2021 Aging Total Within 180 days 180 days to 1 year 1 year to 2 years 2 years to 3 years Above 3 years Normal risk portfolio 11,907,610.82 27,174,752.70 – – – 39,082,363.52 Total 11,907,610.82 27,174,752.70 – – – 39,082,363.52 Item Credit loss provision as at 31 August 2021 Net value at the year end Type of original currency Reason for provision Original value at the end of the period Aging Total Within 180 days 180 days to 1 year 1 year to 2 years 2 years to 3 years Above 3 years Normal risk portfolio 2,381.52 1,317,975.51 – – – 1,320,357.03 37,762,006.49 RMB Expected credit losses 39,082,363.52 Total 2,381.52 1,317,975.51 – – – 1,320,357.03 37,762,006.49 – – 39,082,363.52 Overall aging of accounts receivable Item 31 August 2021 31 December 2020 Book balance Proportion (%) Credit loss provision Book balance Proportion (%) Credit loss provision Within 1 year (including 1 year) 39,082,363.52 100.00 1,320,357.03 28,072,358.73 100.00 1,361,509.40 Total 39,082,363.52 100.00 1,320,357.03 28,072,358.73 100.00 1,361,509.40	Item Original value as at 31 August 2021 Aging Total Within 180 days 180 days to 1 year 1 year to 2 years 2 years to 3 years Above 3 years Normal risk portfolio 11,907,610.82 27,174,752.70 – – – 39,082,363.52 Total 11,907,610.82 27,174,752.70 – – – 39,082,363.52 Item Credit loss provision as at 31 August 2021 Net value at the year end Type of original currency Reason for provision Original value at the end of the period Aging Total Within 180 days 180 days to 1 year 1 year to 2 years 2 years to 3 years Above 3 years Normal risk portfolio 2,381.52 1,317,975.51 – – – 1,320,357.03 37,762,006.49 RMB Expected credit losses 39,082,363.52 Total 2,381.52 1,317,975.51 – – – 1,320,357.03 37,762,006.49 – – 39,082,363.52 Overall aging of accounts receivable Item 31 August 2021 31 December 2020 Book balance Proportion (%) Credit loss provision Book balance Proportion (%) Credit loss provision Within 1 year (including 1 year) 39,082,363.52 100.00 1,320,357.03 28,072,358.73 100.00 1,361,509.40 Total 39,082,363.52 100.00 1,320,357.03 28,072,358.73 100.00 1,361,509.40	Item Original value as at 31 August 2021 Aging Total Within 180 days 180 days to 1 year 1 year to 2 years 2 years to 3 years Above 3 years Normal risk portfolio 11,907,610.82 27,174,752.70 – – – 39,082,363.52 Total 11,907,610.82 27,174,752.70 – – – 39,082,363.52 Item Credit loss provision as at 31 August 2021 Net value at the year end Type of original currency Reason for provision Original value at the end of the period Aging Total Within 180 days 180 days to 1 year 1 year to 2 years 2 years to 3 years Above 3 years Normal risk portfolio 2,381.52 1,317,975.51 – – – 1,320,357.03 37,762,006.49 RMB Expected credit losses 39,082,363.52 Total 2,381.52 1,317,975.51 – – – 1,320,357.03 37,762,006.49 – – 39,082,363.52 Overall aging of accounts receivable Item 31 August 2021 31 December 2020 Book balance Proportion (%) Credit loss provision Book balance Proportion (%) Credit loss provision Within 1 year (including 1 year) 39,082,363.52 100.00 1,320,357.03 28,072,358.73 100.00 1,361,509.40 Total 39,082,363.52 100.00 1,320,357.03 28,072,358.73 100.00 1,361,509.40	Total 39,082,363.52	Total 39,082,363.52
					39,082,363.52
						Original value at the end of the period 39,082,363.52
		–		**– **		39,082,363.52
	28,072,358.73		100.00		1,361,509.40

(3) Overall aging of accounts receivable

– II-1-26 –

ACCOUNTANT REPORT OF THE ASSETS

APPENDIX II-1

(4) Information on the top five entities by the amounts of accounts receivable

Name of entity Huaneng Yingkou Port Limited Liability Company Yingkou Xinhui Logistics Co., Ltd. (營口新僡物流有限公司) Dalian Wenyu Hengxiang International Logistics Co., Ltd. (大連文宇恒祥國際物流有限公司) Zheshang Development Group Co., Ltd. Hainan Fuduoda Supply Chain Management Co., Ltd. (海南富多達供應鏈管理有限公司) Total	Amount 27,174,752.70 5,690,472.84 2,976,669.00 1,902,747.86 704,588.25	Aging Within 1 year (inclusive) Within 1 year (inclusive) Within 1 year (inclusive) Within 1 year (inclusive) Within 1 year (inclusive)	Provision for credit loss 1,317,975.51 1,138.09 595.33 380.55 140.92	Percentage of total accounts receivable (%) 69.53 14.56 7.62 4.87 1.80
	38,449,230.65	–	1,320,230.40	98.38

3. Other Current Assets

Item Pro forma input VAT to be deducted (Note) Others Total	31 August 2021 365,008,265.18 2,161,599.92 367,169,865.10	31 December 2020 365,008,265.18 2,546,413.68
		367,554,678.86

Note: See Note I. 2. Overview of the Transaction for details.

4. Fixed Assets

Item Fixed assets Total (1) Fixed assets	31 August 2021 5,416,233,783.97 5,416,233,783.97	31 December 2020 5,589,471,415.81
		5,589,471,415.81

				Machinery and
				equipment,
		Port and		furniture,
		terminal	Automobiles	appliances and
Item	Buildings	facilities	and ships	other equipment	Total
I. Original value
31 December 2020	54,594,758.73	5,810,927,264.10	1,115,741,397.98	1,088,966,161.60	8,070,229,582.41
Purchase in the period	–	1,682,457.95	58,380.53	237,917.02	1,978,755.50
31 August 2021	54,594,758.73	5,812,609,722.05	1,115,799,778.51	1,089,204,078.62	8,072,208,337.91
II. Accumulated depreciation
31 December 2020	11,903,630.95	1,501,251,946.50	496,237,637.41	415,357,486.18	2,424,750,701.04

– II-1-27 –

APPENDIX II-1

ACCOUNTANT REPORT OF THE ASSETS

					Machinery and
					equipment,
			Port and		furniture,
			terminal	Automobiles	appliances and
Item	Buildings		facilities	and ships	other equipment	Total
Provision for the period	1,578,498.97		93,709,441.38	33,579,723.92	46,348,723.07	175,216,387.34
31 August 2021	13,482,129.92		1,594,961,387.88	529,817,361.33	461,706,209.25	2,599,967,088.38
III. Provision for impairment
31 December 2020		–	6,109,791.39	31,996,084.56	17,901,589.61	56,007,465.56
31 August 2021		–	6,109,791.39	31,996,084.56	17,901,589.61	56,007,465.56
IV. Net amount
31 December 2020	42,691,127.78		4,303,565,526.21	587,507,676.01	655,707,085.81	5,589,471,415.81
31 August 2021	41,112,628.81		4,211,538,542.78	553,986,332.62	609,596,279.76	5,416,233,783.97
Intangible Assets
	Amortisation		31 December	Increase in	Decrease in
Item	period		2020	the period	the period	31 August 2021
I. Total original value	–	1,481,122,772.84		1,591,592.92	–	1,482,714,365.76
Including:
Land use rights	50	1,481,122,772.84		–	–	1,481,122,772.84
Software	10		–	1,591,592.92	–	1,591,592.92
II. Total accumulated
amortisation	–		353,526,815.51	19,763,163.52	–	373,289,979.03
Including:
Land use rights	50		353,526,815.51	19,748,303.64	–	373,275,119.15
Software	10		–	14,859.88	–	14,859.88
III. Total provision for
impairment	–		–	–	–	–
Including:
Land use rights	50		–	–	–	–
Software	10		–	–	–	–
IV. Total carrying amount	–	1,127,595,957.33		–	–	1,109,424,386.73
Including:
Land use rights	50	1,127,595,957.33		–	–	1,107,847,653.69
Software	10		–	–	–	1,576,733.04

5. Intangible Assets

6. Accounts Payable

(1) Breakdown of accounts payable

Aging Within 1 year (including 1 year) 1 to 2 years (including 2 years) Total	31 August 2021 Amount Proportion (%) 24,332,378.56 99.95 12,505.00 0.05 24,344,883.56 100.00	31 December 2020 Amount Proportion (%) 177,377.32 100.00 – – 177,377.32 100.00	31 December 2020 Amount Proportion (%) 177,377.32 100.00 – – 177,377.32 100.00
			100.00

– II-1-28 –

ACCOUNTANT REPORT OF THE ASSETS

APPENDIX II-1

7. Contract Liabilities

Presentation of contract liabilities

Item

Advances of port operation fees and advances for goods, etc.

Total

31 August 2021 20,224,525.62 20,224,525.62	31 December 2020 50,321,775.39
	50,321,775.39

8. Employee Benefits Payable

• (1) Classification of employee benefits payable

Item 31 December 2020 I. Short-term employee compensation 3,360,608.67 II. Post-employment benefits – defined contribution plan – III. Others – Total 3,360,608.67 (2) Short-term employee compensation Item 31 December 2020 I. Wages and salaries, bonus, allowances and subsidies 3,069,049.00 II. Staff welfare – III. Social insurance contributions 230,178.69 Including: Medical and maternity insurance 230,178.69 Work injury insurance – IV. Housing funds – V. Labour union funds and employee education funds 61,380.98 Total 3,360,608.67 (3) Defined contribution plans Item 31 December 2020 I. Basic pensions – II. Unemployment insurance – Total –	Increase in the period 292,813,717.98 35,523,290.06 219,252.33 328,556,260.37 Increase in the period 243,563,968.48 7,943,683.99 20,285,436.97 17,420,436.76 2,865,000.21 17,557,138.32 3,463,490.22 292,813,717.98 Increase in the period 34,445,976.63 1,077,313.43 35,523,290.06	Decrease in the period 294,358,528.64 35,523,290.06 219,252.33 330,101,071.03 Decrease in the period 244,974,754.48 7,943,683.99 20,391,245.91 17,526,245.70 2,865,000.21 17,557,138.32 3,491,705.94 294,358,528.64 Decrease in the period 34,445,976.63 1,077,313.43 35,523,290.06	31 August 2021 1,815,798.01 – –
			1,815,798.01
			31 August 2021 1,658,263.00 – 124,369.75 124,369.75 – – 33,165.26
			1,815,798.01
			31 August 2021 – –
			–

– II-1-29 –

ACCOUNTANT REPORT OF THE ASSETS

APPENDIX II-1

9. Taxes Payable

Item VAT Corporate income tax Land use tax City maintenance and construction tax Educational surcharge Local educational surcharge Property tax Individual income tax Others Total	31 December 2020 Provision in the period Tax paid in the period – 84,494,224.19 84,494,224.19 – 77,593,525.62 77,593,525.62 – 17,811,337.40 17,811,337.40 – 5,055,791.27 5,055,791.27 – 2,166,767.69 2,166,767.69 – 1,444,511.79 1,444,511.79 67,169.89 1,199,626.17 1,220,911.55 21,715.44 2,248,046.86 2,260,774.91 13,408.60 4,885,814.38 4,343,450.29 102,293.93 196,899,645.37 196,391,294.71	31 August 2021 – – – – – – 45,884.51 8,987.39 555,772.69 610,644.59

10. Other Payables

Item

Other payables

Total

31 August 2021 365,317,274.79 365,317,274.79	31 December 2020 792,831,589.31
	792,831,589.31

(1) Other payables

• 1) Other payables presented by nature

Item Pro forma input VAT (Note 1) Pro forma impact numbers (Note 2) Deposit margin Total	31 August 2021 365,008,265.18 – 309,009.61 365,317,274.79	31 December 2020 365,008,265.18 427,620,936.43 202,387.69
		792,831,589.30

Note 1: See Note I. 2. Overview of the Transaction for details.

Note 2: See item 3) under Note II. 3. (3) Major pro forma assumptions for details.

11. Owners’ Equity

			31 December	31 December	31 December	31 December	31 December
Item		31 August 2021		2020		2019	2018	1 January 2018
Owners’ equity	6,526,083,344.06		6,293,517,067.49		5,942,937,097.67		5,680,094,188.55	5,430,022,896.74
Total	6,526,083,344.06		6,293,517,067.49		5,942,937,097.67		5,680,094,188.55	5,430,022,896.74
Revenue and Cost
			**January to **	**August **	2021		2020
Item			Revenue		Cost		Revenue	Cost
Port and port-related		1,458,132,677.92		1,083,135,834.48		2,234,856,525.73		1,675,113,279.01
Total		1,458,132,677.92		1,083,135,834.48		2,234,856,525.73		1,675,113,279.01

12. Revenue and Cost

– II-1-30 –

ACCOUNTANT REPORT OF THE ASSETS

APPENDIX II-1

(Continued)

Item 2019 2018 Revenue Cost Revenue Cost Port and port-related 2,022,287,926.50 1,581,551,231.62 1,993,619,918.66 1,571,767,039.11 Total 2,022,287,926.50 1,581,551,231.62 1,993,619,918.66 1,571,767,039.11 Taxes and Surcharges Item January to August 2021 2020 2019 2018 Land use tax 17,811,337.40 26,717,006.10 26,717,006.10 26,717,006.10 City maintenance and construction tax 4,843,327.20 7,236,006.35 6,073,505.33 5,901,649.80 Environmental protection tax 3,895,145.86 5,842,718.81 5,842,718.81 5,842,718.81 Educational surcharge 2,075,711.66 3,101,145.58 2,569,180.99 2,529,278.49 Local educational surcharge 1,383,807.77 2,067,430.39 1,714,362.32 1,686,185.66 Property tax 1,199,626.17 1,440,669.35 1,049,097.53 1,038,254.13 Stamp duty 105,839.90 82,752.10 32,827.00 12,460.40 Others 156,728.11 271,533.28 297,663.29 200,267.45 Total 31,471,524.07 46,759,261.96 44,296,361.37 43,927,820.84 Administrative Expenses Item January to August 2021 2020 2019 2018 Labour cost 25,461,990.83 32,456,662.99 30,014,453.19 23,630,431.38 Information technology service fee 2,974,960.21 5,733,565.41 5,774,306.18 3,615,769.82 Property comprehensive fee 1,503,242.64 1,957,249.92 1,138,432.68 1,611,313.71 Communication fee 678,680.41 1,868,625.95 1,964,925.15 1,975,763.48 Business office expenses 671,434.36 1,153,434.15 1,498,792.14 1,698,111.02 Automobile fee 611,624.47 776,533.34 706,221.30 1,190,980.21 Travel expenses 502,510.17 843,316.75 1,434,012.01 3,468,949.67 Business entertainment 432,876.83 1,110,253.44 735,600.04 874,386.53 Heating fee 315,849.84 818,935.73 931,019.98 956,647.20 Disability deposit 1,016,310.37 1,524,465.55 1,470,446.58 1,462,628.61 Others 1,732,043.97 2,489,728.53 1,956,458.41 1,772,571.02 Total 35,901,524.10 50,732,771.76 47,624,667.66 44,257,552.65	Item 2019 2018 Revenue Cost Revenue Cost Port and port-related 2,022,287,926.50 1,581,551,231.62 1,993,619,918.66 1,571,767,039.11 Total 2,022,287,926.50 1,581,551,231.62 1,993,619,918.66 1,571,767,039.11 Taxes and Surcharges Item January to August 2021 2020 2019 2018 Land use tax 17,811,337.40 26,717,006.10 26,717,006.10 26,717,006.10 City maintenance and construction tax 4,843,327.20 7,236,006.35 6,073,505.33 5,901,649.80 Environmental protection tax 3,895,145.86 5,842,718.81 5,842,718.81 5,842,718.81 Educational surcharge 2,075,711.66 3,101,145.58 2,569,180.99 2,529,278.49 Local educational surcharge 1,383,807.77 2,067,430.39 1,714,362.32 1,686,185.66 Property tax 1,199,626.17 1,440,669.35 1,049,097.53 1,038,254.13 Stamp duty 105,839.90 82,752.10 32,827.00 12,460.40 Others 156,728.11 271,533.28 297,663.29 200,267.45 Total 31,471,524.07 46,759,261.96 44,296,361.37 43,927,820.84 Administrative Expenses Item January to August 2021 2020 2019 2018 Labour cost 25,461,990.83 32,456,662.99 30,014,453.19 23,630,431.38 Information technology service fee 2,974,960.21 5,733,565.41 5,774,306.18 3,615,769.82 Property comprehensive fee 1,503,242.64 1,957,249.92 1,138,432.68 1,611,313.71 Communication fee 678,680.41 1,868,625.95 1,964,925.15 1,975,763.48 Business office expenses 671,434.36 1,153,434.15 1,498,792.14 1,698,111.02 Automobile fee 611,624.47 776,533.34 706,221.30 1,190,980.21 Travel expenses 502,510.17 843,316.75 1,434,012.01 3,468,949.67 Business entertainment 432,876.83 1,110,253.44 735,600.04 874,386.53 Heating fee 315,849.84 818,935.73 931,019.98 956,647.20 Disability deposit 1,016,310.37 1,524,465.55 1,470,446.58 1,462,628.61 Others 1,732,043.97 2,489,728.53 1,956,458.41 1,772,571.02 Total 35,901,524.10 50,732,771.76 47,624,667.66 44,257,552.65	Item 2019 2018 Revenue Cost Revenue Cost Port and port-related 2,022,287,926.50 1,581,551,231.62 1,993,619,918.66 1,571,767,039.11 Total 2,022,287,926.50 1,581,551,231.62 1,993,619,918.66 1,571,767,039.11 Taxes and Surcharges Item January to August 2021 2020 2019 2018 Land use tax 17,811,337.40 26,717,006.10 26,717,006.10 26,717,006.10 City maintenance and construction tax 4,843,327.20 7,236,006.35 6,073,505.33 5,901,649.80 Environmental protection tax 3,895,145.86 5,842,718.81 5,842,718.81 5,842,718.81 Educational surcharge 2,075,711.66 3,101,145.58 2,569,180.99 2,529,278.49 Local educational surcharge 1,383,807.77 2,067,430.39 1,714,362.32 1,686,185.66 Property tax 1,199,626.17 1,440,669.35 1,049,097.53 1,038,254.13 Stamp duty 105,839.90 82,752.10 32,827.00 12,460.40 Others 156,728.11 271,533.28 297,663.29 200,267.45 Total 31,471,524.07 46,759,261.96 44,296,361.37 43,927,820.84 Administrative Expenses Item January to August 2021 2020 2019 2018 Labour cost 25,461,990.83 32,456,662.99 30,014,453.19 23,630,431.38 Information technology service fee 2,974,960.21 5,733,565.41 5,774,306.18 3,615,769.82 Property comprehensive fee 1,503,242.64 1,957,249.92 1,138,432.68 1,611,313.71 Communication fee 678,680.41 1,868,625.95 1,964,925.15 1,975,763.48 Business office expenses 671,434.36 1,153,434.15 1,498,792.14 1,698,111.02 Automobile fee 611,624.47 776,533.34 706,221.30 1,190,980.21 Travel expenses 502,510.17 843,316.75 1,434,012.01 3,468,949.67 Business entertainment 432,876.83 1,110,253.44 735,600.04 874,386.53 Heating fee 315,849.84 818,935.73 931,019.98 956,647.20 Disability deposit 1,016,310.37 1,524,465.55 1,470,446.58 1,462,628.61 Others 1,732,043.97 2,489,728.53 1,956,458.41 1,772,571.02 Total 35,901,524.10 50,732,771.76 47,624,667.66 44,257,552.65
	1,571,767,039.11
		2018 26,717,006.10 5,901,649.80 5,842,718.81 2,529,278.49 1,686,185.66 1,038,254.13 12,460.40 200,267.45
		43,927,820.84
		2018 23,630,431.38 3,615,769.82 1,611,313.71 1,975,763.48 1,698,111.02 1,190,980.21 3,468,949.67 874,386.53 956,647.20 1,462,628.61 1,772,571.02
		44,257,552.65

13. Taxes and Surcharges

14. Administrative Expenses

– II-1-31 –

ACCOUNTANT REPORT OF THE ASSETS

APPENDIX II-1

15. Other Income

Item Additional deduction of input VAT Refund of commission for individual income tax Total	January to August 2021 2,319,235.68 8,693.39 2,327,929.07	2020 3,780,284.88 7,745.12 3,788,030.00	2019 3,236,408.57 – 3,236,408.57	2018 – –
				–

16. Income Tax Expenses

• (1) Table of income tax expenses

Item Current income tax Total	January to August 2021 2020 77,593,525.62 117,477,039.52 77,593,525.62 117,477,039.52	2019 86,980,083.12 86,980,083.12	2018 83,386,512.11
			83,386,512.11

Note: See item 2) under Note II. 3. (3) Major pro forma assumptions for details.

VII. APPROVAL DATE OF THE PRO FORMA FINANCIAL STATEMETNS

The approval date of the pro forma financial statements is 24 November 2021.

– II-1-32 –

STATUTORY ACCOUNT OF THE SPV

APPENDIX II-2

Yingkou Port Bulk Cargo Terminal Co., Ltd.

Financial Statements and Auditor’s Report

For the Period Ended 31 August 2021

– II-2-1 –

STATUTORY ACCOUNT OF THE SPV

APPENDIX II-2

CONTENTS	Page
Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-2-3
Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-2-6
Income Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-2-9
Cash Flow Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-2-11
Statement of Changes in Owners’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-2-12
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-2-14

– II-2-2 –

STATUTORY ACCOUNT OF THE SPV

APPENDIX II-2

==> picture [88 x 52] intentionally omitted <==

信永中和會計師事務所 北京市東城區朝陽門北大街 聯繫電話： +86 (010) 6554 2288 8號富華大廈A座9層 telephone: +86 (010) 6554 2288 9/F, Block A, Fu Hua Mansion, No.8, Chaoyangmen Beidajie, ShineWing Dongcheng District, Beijing, 傳真： +86 (010) 6554 7190 certified public accountants 100027, P.R.China facsimile: +86 (010) 6554 7190

Auditor’s Report

XYZH/2021BJAA20607

To Yingkou Port Bulk Cargo Terminal Co., Ltd.:

I. AUDIT OPINION

We have audited financial statements of Yingkou Port Bulk Cargo Terminal Co., Ltd. (hereinafter referred to as “ Bulk Cargo Terminal ”), balance sheet as at 31 August 2021, income statement, cash flow statement and statement of changes in owners’ equity for January to August 2021 as well as relevant notes to financial statements.

In our opinion, the accompanying financial statements were prepared on the requirements as stipulated in the Accounting Standards for Business Enterprises in all material aspects, and fairly reflected the financial position of Bulk Cargo Terminal as at 31 August 2021, and its operating results and cash flow for January to August 2021.

II. BASIS FOR OPINION

We have conducted our audit in accordance with China Standards on Auditing. Our responsibilities under those standards are further described in the section headed “Auditor’s Responsibilities for the Audit of Financial Statements” of our auditor’s report. We are independent of Bulk Cargo Terminal in accordance with the Code of Ethics for Professional Accountants of the Chinese Institute of Certified Public Accountants (“CICPA Code”), and we have fulfilled our other ethical responsibilities in accordance with the CICPA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

III. RESPONSIBILITIES OF THE MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE FINANCIAL STATEMENTS

The management of Bulk Cargo Terminal (hereinafter referred to as the “Management”) is responsible for the preparation of financial statements according to the requirements as stipulated in the Accounting Standards for Business Enterprises to fairly reflect, and design, implement and maintain such internal control necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error.

– II-2-3 –

STATUTORY ACCOUNT OF THE SPV

APPENDIX II-2

In preparing financial statements, the Management is responsible for assessing the Bulk Cargo Terminal’s ability to continue as a going concern, disclosing, as applicable, the matters related to the going concern and using the going concern basis of accounting unless the Management intends to wind up the Bulk Cargo Terminal, cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the financial reporting process of the Bulk Cargo Terminal.

IV. RESPONSIBILITIES OF CERTIFIED PUBLIC ACCOUNTANTS FOR THE AUDIT OF FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are generally considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users made on the basis of these financial statements.

As part of an audit in accordance with the auditing standards, we exercise professional judgment and maintain professional scepticism throughout the audit. We also performed the following work:

• (1) Identify and assess the risks of material misstatement of financial statements, whether due to fraud or error; design and perform audit procedures responsive to those risks; and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• (2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing opinions on the effectiveness of the internal control.

• (3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Management.

– II-2-4 –

STATUTORY ACCOUNT OF THE SPV

APPENDIX II-2

• (4) Conclude on the appropriateness of the Management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Bulk Cargo Terminal to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Bulk Cargo Terminal to cease to continue as a going concern.

• (5) Evaluate the overall presentation, structure and content of financial statements, and whether financial statements fairly reflected the relevant transactions and matters.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

ShineWing Certified Public Accountants

PRC Certified Public Accountant:

(Special General Partnership)

PRC Certified Public Accountant:

Beijing, the PRC

29 November 2021

– II-2-5 –

STATUTORY ACCOUNT OF THE SPV

APPENDIX II-2

Balance Sheet

			Unit: RMB
		31 August	1 January
Item	Note	2021	2021
Current assets:
Cash at bank and on hand		–	–
Financial assets held for trading		–	–
Derivative financial assets		–	–
Notes receivable		–	–
Accounts receivable		–	–
Receivables financing		–	–
Prepayments		–	–
Other receivables		–	–
Inventories		–	–
Including: Raw materials		–	–
Stock inventories (Finished goods)		–	–
Assets held for sale		–	–
Non-current assets due within one year		–	–
Other current assets		–	–
Total current assets		–	–
Non-current assets:		–	–
Debt investments		–	–
Financial assets available for disposal		–	–
Other debt investments		–	–
Held-to-maturity investments
Long-term receivables		–	–
Long-term equity investments		–	–
Investments in other equity instruments		–	–
Other non-current financial assets		–	–
Investment properties		–	–
Fixed assets		–	–
Including: Original cost of fixed assets		–	–
Accumulated depreciation		–	–
Provisions for fixed asset impairment		–	–
Construction in progress		–	–
Intangible assets		–	–
Development expenses		–	–
Goodwill		–	–
Long-term prepaid expenses		–	–
Deferred income tax assets		–	–
Other non-current assets		–	–
Total non-current assets		–	–
Total assets		–	–

The notes form an integral part of financial statements

– II-2-6 –

STATUTORY ACCOUNT OF THE SPV

APPENDIX II-2

These financial statements are signed by following responsible persons:

Legal representative

Principal in charge of accounting

Head of accounting department

– II-2-7 –

STATUTORY ACCOUNT OF THE SPV

APPENDIX II-2

Unit: RMB

		31 August	1 January
Item	Note	2021	2021
Current liabilities:
Short-term borrowings		–	–
Financial liabilities held for trading		–	–
Derivative financial liabilities		–	–
Notes payable		–	–
Accounts payable		–	–
Advances from customers		–	–
Employee benefits payable		–	–
Including: Salaries payable		–	–
Welfare payable		–	–
Including: Employee bonus and welfare
fund
Taxes payable		–	–
Including: Tax payable		–	–
Other payables		–	–
Including: Dividends payable		–	–
Liabilities held for sale		–	–
Non-current liabilities due within one year		–	–
Short-term financing payable		–	–
Other current liabilities		–	–
Total current liabilities		–	–
Non-current liabilities:		–	–
Long-term borrowings		–	–
Bonds payable		–	–
Including: Preferred shares		–	–
Perpetual bonds		–	–
Long-term payables		–	–
Long-term employee benefits payable		–	–
Estimated liabilities		–	–
Deferred income		–	–
Deferred income tax liabilities		–	–
Other non-current liabilities		–	–
Total non-current liabilities		–	–
Total liabilities		–	–
Owners’ equity:		–	–
Paid-in capital (or share capital)		–	–
Including: state-own capital		–	–
State-owned legal person’s capital		–	–
Collective capital		–	–
Private capital		–	–
Foreign capital		–	–
Other equity instruments		–	–
Including: Preference shares		–	–
Perpetual bonds		–	–
Capital reserves		–	–
Less: Treasury stock		–	–
Other comprehensive income		–	–
Including: Foreign currency translation differences		–	–
Special reserve		–	–
Surplus reserves		–	–
Including: Statutory reserves		–	–
Discretionary reserve		–	–
Unallocated profits		–	–
Total owner’ equity		–	–
Total liabilities and owners’ equity		–	–

The notes form an integral part of financial statements

– II-2-8 –

STATUTORY ACCOUNT OF THE SPV

APPENDIX II-2

Income Statement

Unit: RMB

		January to
		August
Item	Note	2021	2020
I. Operating revenue
Less: Operating costs		–	–
Taxes and surcharges		–	–
Selling and distribution expenses		–	–
General and administrative expenses		–	–
Research and development expenses		–	–
Financial expenses		–	–
Including: Interest expenses		–	–
Interest income		–	–
Net exchange loss (net gain represented by “-”)		–	–
Add: Other income		–	–
Investment income (loss represented by “-”)		–	–
Including: Investment income from associates and joint
ventures		–	–
Gain from derecognition of financial assets at amortised cost		–	–
Net exposure hedging gains (loss represented by “-”)		–	–
Gain on changes in fair value (loss represented by “-”)		–	–
Credit impairment loss (loss represented by “-”)		–	–
Asset impairment loss (loss represented by “-”)		–	–
Gains on disposals of assets (loss represented by “-”)		–	–
II. Operating profit (loss represented by “-”)		–	–
Add: Non-operating income		–	–
Including: Government grants		–	–
Less: Non-operating expenses		–	–
III. Total profit (total loss represented by “-”)		–	–
Less: Income tax expenses		–	–
IV. Net profit (net loss represented by “-”)		–	–
Net profit from continuing operation (net loss represented by “-”)		–	–
Net profit from discontinued operation (net loss represented by “-”)		–	–
V. Net other comprehensive income after tax
(I) Other comprehensive income that cannot be reclassified to profit or
loss		–	–

– II-2-9 –

STATUTORY ACCOUNT OF THE SPV

APPENDIX II-2

			January to
			August
Item		Note	2021	2020
1.	Changes arising from the remeasurement of defined benefit
	plans		–	–
2.	Other comprehensive income under equity method that cannot
	be reclassified into profit or loss		–	–
3.	Changes in fair value of investments in other equity instruments		–	–
4.	Changes in fair value of the Company’s own credit risk		–	–
5.	Others		–	–
(II) Other comprehensive income that will be reclassified to profit or
loss			–	–
1.	Other comprehensive income that can be reclassified into profit
	or loss under equity method		–	–
2.	Changes in fair value of other debt investments		–	–
3.	Gains and losses from changes in fair value of available-for-sale
	financial assets		–	–
4.	Amount of financial assets reclassified into other comprehensive
	income		–	–
5.	Gains and losses from held-to-maturity investments reclassified
	as available-for-sale financial assets		–	–
6.	Credit impairment provisions for other debt investments		–	–
7.	Reserves for cash flows hedges (effective part of hedging gains
	and losses from cash flows)		–	–
8.	Exchange differences from translation of financial statements		–	–
9.	Other comprehensive income that will be reclassified to profit
	or loss		–	–

VI. Total comprehensive income

The notes form an integral part of financial statements

– II-2-10 –

STATUTORY ACCOUNT OF THE SPV

APPENDIX II-2

Cash Flow Statement

Unit: RMB

		January to
		August
Item	Note	2021	2020
I. Cash flows generated from operating activities:
Cash from sales of goods and provision of labour services		–	–
Tax refunds received		–	–
Cash from other operating activities		–	–
Sub-total of cash inflows from operating activities		–	–
Cash paid for purchase of goods and engagement of
labour services		–	–
Cash paid to and for employees		–	–
Tax payments		–	–
Cash used in other operating activities		–	–
Sub-total of cash outflows from operating activities		–	–
Net cash flow generated from operating activities		–	–
II. Cash flows generated from investing activities:
Cash received from disposal of investments		–	–
Cash from investment gains		–	–
Net cash collected from disposal of fixed assets,
intangible assets and other long-term assets		–	–
Net cash received from disposal of subsidiaries and other
operational units		–	–
Cash generated from other investing activities		–	–
Sub-total of cash inflows from investing activities		–	–
Cash paid for acquisition of fixed assets, intangible assets
and other long-term assets		–	–
Cash paid for investments		–	–
Net cash paid for acquisition of subsidiaries and other
operational units		–	–
Cash paid for other investing activities		–	–
Sub-total of cash outflows from investing activities		–	–
Net cash flow generated from investing activities		–	–
III. Cash flow generated from financing activities:
Cash received from investors		–	–
Cash received from obtaining borrowings		–	–
Cash received from other financing activities		–	–
Sub-total of cash inflows from financing activities		–	–
Cash paid for repayment of debt		–	–
Cash paid for distribution of dividends, profit or payment
of interests		–	–
Cash paid for other financing activities		–	–
Sub-total of cash outflows from financing activities		–	–
Net cash flow generated from financing activities		–	–
IV. Effect of fluctuations in exchange rate on cash and
cash equivalents		–	–
V. Net increase in cash and cash equivalents		–	–
Add: Balance of cash and cash equivalents at the
beginning of the year		–	–
VI. Balance of cash and cash equivalent at the end of the
year		–	–

The notes form an integral part of financial statements

– II-2-11 –

STATUTORY ACCOUNT OF THE SPV

APPENDIX II-2

Unit: RMB					Unallocated	profits Sub-total	– –	– –		– –		– –	– –	– –	– –	– –	– –	– –		– –		– –	– –	– –	– –		– –	– –	– –	– –	– –	– –	– –
					Surplus	reserves	–	–		–		–	–	–	–	–	–	–		–		–	–	–	–		–	–	–	–	–	–	–
					Special	reserve	–	–		–		–	–	–	–	–	–	–		–		–	–	–	–		–	–	–	–	–	–	–
		Including:	Foreign	currency	translation	differences	–	–		–		–	–	–	–	–	–	–		–		–	–	–	–		–	–	–	–	–	–	–
	Amount for this period			Less: Other	Treasury comprehensive	stock income	– –	– –		– –		– –	– –	– –	– –	– –	– –	– –		– –		– –	– –	– –	– –		– –	– –	– –	– –	– –	– –	– –
					Capital	reserves	–	–		–		–	–	–	–	–	–	–		–		–	–	–	–		–	–	–	–	–	–	–
				Other equity instruments	Preferred Perpetual	shares bonds Others	– – –	– – –		– – –		– – –	– – –	– – –	– – –	– – –	– – –	– – –		– – –		– – –	– – –	– – –	– – –		– – –	– – –	– – –	– – –	– – –	– – –	– – –
					Paid-in	capital	–	–		–		–	–	–	–	–	–	–		–		–	–	–	–		–	–	–	–	–	–	–
						Item	I. Balance at the end of last period	Increase: Changes in accounting policies		Correction of prior period errors		Others	II. Balance at the beginning of this period	III. Changes for the period (“–” for decrease)	(I) Total comprehensive income	(II) Capital invested and reduced by owners	1. Common shares invested by owners	2. Capital invested by other equity instrument holders		3. Amount of share-based payment recognised as owners’ equity		4. Others	(III) Accrual and usage of special reserves	1. Accrual of special reserves	2. Usage of special reserves		(IV) Profit distribution	1. Appropriation to surplus reserve	Including: Statutory reserve	Discretionary reserve	2. Appropriation to general risk reserve	3. Profit distribution to owners	4. Others

– II-2-12 –

STATUTORY ACCOUNT OF THE SPV

APPENDIX II-2

				Sub-total	–	–	–	–		–		–	–	–
			Unallocated	profits	–	–	–	–		–		–	–	–
			Surplus	reserves	–	–	–	–		–		–	–	–
			Special	reserve	–	–	–	–		–		–	–	–
Including:	Foreign	currency	translation	differences	–	–	–	–		–		–	–	–
		Less: Other	Treasury comprehensive	stock income	– –	– –	– –	– –		– –		– –	– –	– –
			Capital	reserves	–	–	–	–		–		–	–	–
		Other equity instruments	Preferred Perpetual	shares bonds Others	– – –	– – –	– – –	– – –		– – –		– – –	– – –	– – –
			Paid-in	capital	–	–	–	–		–		–	–	–
				Item	(V) Internal structure of owners’ equity	1. Transfer from capital reserves to capital	2. Transfer from surplus reserves to capital	3. Elimination of losses by surplus reserves	4. Retained earnings carried over from changes in defined benefit	plans	5. Retained earnings carried over from other comprehensive	income	6. Others	IV. Balance at the end of the period

– II-2-13 –

STATUTORY ACCOUNT OF THE SPV

APPENDIX II-2

I. COMPANY PROFILE

Yingkou Port Bulk Cargo Terminal Co., Ltd. (hereinafter referred to as the “ Company ”) was established on 26 August 2021 and approved by the Market Supervision Administration in Bayuquan District, Yingkou. The unified social credit code of its business licence is 91210804MA11BA744R; registered capital: RMB100,000; registered address: Room 506, 5F, Donggangbu Building (Gu’er) (東港埠辦公樓(股二)), Tianshandajie Street, Bayuquan District, Yingkou, Liaoning Province; legal representative: Gao Dianzhong. As at the date of the report, the paid-in capital is nil.

Parent company: Ying Kou Port Group Corporation Limited.

De facto controller: China Merchants Group Limited.

The major business scope: licensed items: port cargo loading, unloading and transportation activities (items subject to the approval from relevant authorities according to law, and the specific business activities are subject to the approval); general items: general cargo storage services (excluding hazardous chemicals and other items requiring approval), right-of-use of land leasing; non-residential real estate leasing; leasing of machinery and equipment; leasing of special equipment (business activities may be independently conducted according to law after obtaining business licence except for items subject to the approval according to law).

II. BASIS FOR THE PREPARATION OF FINANCIAL STATEMENTS

The Company has assessed its ability to continue as a going concern in 12 months from 31 August 2021 and identified there were no matters and situations that imposed significant doubt on the ability to continue as a going concern. Therefore, the financial statements were prepared based on the assumption of a going concern.

III. STATEMENT ON FOLLOWING THE ACCOUTNING STANDARDS FOR BUSINESS ENTERPRISES

The financial statements prepared by the Company are in line with the requirements of the Accounting Standards for Business Enterprises, which give a true and complete view of the Company’s financial condition as at 31 August 2021 as well as its operating results and cash flow for January to August 2021.

IV. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES OF THE COMPANY

1. Accounting Year

The Company adopts the Gregorian calendar year as its accounting year, commencing from 1 January to 31 December each year.

2. Recording Currency

Renminbi is used in the major economic environment in which the Company operates. The Company adopts Renminbi as the recording currency. The Company determines its recording currency based on the currency used in the major economic environment in which it operates. The Company adopts Renminbi in preparing the financial statements.

3. Book-Recording Basis and Measurement Principle

The Company adopts the accrual basis as the basis of book-keeping in accounting. Except for some financial instruments measured at fair value, these financial statements have been prepared on historical cost basis. In case of asset impairment, the corresponding impairment provision will be made in accordance with relevant requirements.

– II-2-14 –

STATUTORY ACCOUNT OF THE SPV

APPENDIX II-2

Under the historical cost method, assets were measured at the amount of cash or cash equivalents paid or the fair value of the consideration given at the time of purchase. Liabilities were measured at the amount of proceeds or assets actually received due to a present obligation assumed, or the contractual amount of the present obligation assumed, or the amount of cash or cash equivalents expected to be paid to settle the liabilities in the ordinary course of business.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Regardless of whether the fair value is observable or estimated using valuation technique, fair value measurement and disclosure in these financial statements are determined on such a basis.

The measurement of fair value is based on the observable degree of fair value inputs and the significance of these inputs to the overall measurement of fair value, which is divided into three levels:

• The first level of input is unadjusted quotation of the same assets or liabilities obtained at the date of measurement in the active market.

• The second level of input is the directly or indirectly observable inputs of relevant assets or liabilities other than the first level of input.

• The third level of input is unobservable inputs of relevant assets or liabilities.

V. CONTINGENCY

As at 31 August 2021, no material contingency occurred in the Company.

VI. NON-ADJUSTED MATTERS SUBSEQUENT TO BALANCE SHEET DATE

As at the date of the report, no significant matters subsequent to balance sheet date needs to be disclosed in the Company.

VII. OTHER IMPORTANT MATTERS

There were no other undisclosed important matters that shall be disclosed in the Company during the period.

VIII. APPROVAL FOR FINANCIAL STATEMENTS

The financial statements of the Company as at 31 August 2021 have been reported upon the approval from the Board of the Company on 24 November 2021.

– II-2-15 –

VALUATION REPORT A

APPENDIX III-1

This report is prepared based on the PRC Accepted Asset Valuation Standards

Asset Valuation Report on Project of Proposed Capital Contribution by Ying Kou Port Group Corporation Limited with Partial Assets and Liabilities to Yingkou Port Bulk Cargo Terminal Co., Ltd. (營口港散貨碼頭有限公司) Zhong Tong Ping Bao Zi [2021] No. 11332 1 of 1 Disclaimer, Summary, Text and Annexes

China Tong Cheng Assets Appraisal Co., Ltd. 21 October 2021

– III-1-1 –

VALUATION REPORT A

APPENDIX III-1

CONTENTS

Volume 1 (Disclaimer, Summary, Text and Annexes)

Disclaimer	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Summary	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Text
I.	OVERVIEW OF THE CLIENT, THE APPRAISED ENTITY AND
	OTHER USERS OF THE ASSET VALUATION REPORT AS
	AGREED IN THE ASSET VALUATION ENGAGEMENT
	CONTRACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
II.	PURPOSE OF VALUATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
III.	VALUATION TARGET AND SCOPE . . . . . . . . . . . . . . . . . . . . . . . .	15
IV.	TYPE OF VALUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	17
V.	VALUATION BENCHMARK DATE . . . . . . . . . . . . . . . . . . . . . . . . .	17
VI.	BASIS OF VALUATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	17
VII.	VALUATION METHODOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . .	21
VIII.	PROCESS AND IMPLEMENTATION OF VALUATION
	PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	31
IX.	VALUATION ASSUMPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	32
X.	VALUATION CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	33
XI.	EXPLANATIONS ON SPECIAL MATTERS . . . . . . . . . . . . . . . . . . .	34
XII.	RESTRICTIONS ON THE USE OF THE ASSET VALUATION
	REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	38
XIII.	DATE OF THE ASSET VALUATION REPORT . . . . . . . . . . . . . . . .	38
Annexes .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	39

– III-1-2 –

VALUATION REPORT A

APPENDIX III-1

DISCLAIMER

• I. This Asset Valuation Report is prepared in accordance with the Basic Asset Valuation Standards issued by the Ministry of Finance and the Practice Guidelines for Asset Valuation and the Professional Code of Ethics for Asset Valuation issued by the China Appraisal Society.

• II. The client or other users of the Asset Valuation Report shall use the Asset Valuation Report in accordance with the laws and administrative rules and regulations and within the scope of use set out in this Asset Valuation Report. We and the asset valuers take no responsibility for any non-compliance with the above-mentioned requirements for the use of the Asset Valuation Report by the client or other users of the Asset Valuation Report.

This Asset Valuation Report shall only be used by the client, other users of the Asset Valuation Report as agreed in the asset valuation engagement contract and users of the Asset Valuation Report as required by laws and administrative regulations. Save for the above, no other institution or individual shall be the user of the Asset Valuation Report.

We and the asset valuers advise that users of the Asset Valuation Report should correctly interpret and use the valuation conclusion, which is not equivalent to the realizable value of the valuation target and should not be considered as a guarantee for the realizable value of the valuation target.

• III. We and the asset valuers have abided by the principles of independence, objectivity and impartiality, complied with the laws, administrative regulations and asset valuation standards, and have assumed responsibilities for the Asset Valuation Report issued in accordance with laws.

• IV. The list of assets and liabilities and other relevant materials of the valuation target involved should be declared by the client and the appraised entity and certified by signature, seal or other means permitted by laws. The client and other relevant parties shall be responsible for the truthfulness, completeness and legality of the materials provided by them in accordance with laws.

• V. We and the asset valuers have no existing or expected relationship of interests with the valuation target set out in the Asset Valuation Report or with the relevant parties, and have no prejudice against the relevant parties.

• VI. The asset valuers have (or have not) conducted on-site inspection on the valuation target and the assets involved in the Asset Valuation Report, and given necessary consideration to the legal ownership status of the valuation target and the assets involved, conducted verification on the relevant information regarding the legal ownership of the relevant assets, and made proper disclosure in respect of the issues identified and required the client and other relevant parties to consummate the titles to meet the requirements on issuing the Asset Valuation Report.

– III-1-3 –

VALUATION REPORT A

APPENDIX III-1

• VII. The analyses, judgments, and conclusions in the Asset Valuation Report issued by us are subject to the assumptions and restrictions in the Asset Valuation Report. The users of the Asset Valuation Report shall take into full account the assumptions, restrictions and explanations on special matters specified in the Asset Valuation Report and their impact on the valuation conclusion.

– III-1-4 –

VALUATION REPORT A

APPENDIX III-1

SUMMARY

I. CORRESPONDING ECONOMIC ACTIVITY UNDER THE VALUATION

Ying Kou Port Group Corporation Limited proposed to make capital contribution to Yingkou Port Bulk Cargo Terminal Co., Ltd. with part of assets and liabilities.

The economic activity has been approved by the Approval on the Establishment of Wholly-owned Subsidiary for Revitalising the Phase II Northeast Project (Zhao Fa Zhan Lue Zi [2021] No. 457) issued by China Merchants Group.

II. PURPOSE OF VALUATION

Due to the proposed capital contribution by Ying Kou Port Group Corporation Limited to Yingkou Port Bulk Cargo Terminal Co., Ltd. with part of assets and liabilities, it is required to conduct a valuation on the value of such part of assets and liabilities declared by Ying Kou Port Group Corporation Limited involved in the said economic activity for the purpose of providing valuation reference for the capital contribution.

III. VALUATION TARGET AND SCOPE

The valuation target and the valuation scope are the same as the valuation target and the valuation scope involved in the economic activity.

The valuation target is the assets and liabilities owned and proposed to be used for capital contribution by Yingkou Port Group. The valuation scope specifically covers bank deposits, current accounts, inventories, buildings, structures, machinery and equipment, vehicles, electronic devices, land use rights and various liabilities. The details are shown in the table below.

– III-1-5 –

VALUATION REPORT A

APPENDIX III-1

Unit: RMB

No. Name of item

Carrying amount

• 1 I. Total current assets 47,730,034.75 2 Cash at bank and on hand 6,988,687.27 3 Accounts receivable 37,762,006.49 4 Advances to suppliers 200,000.00 5 Other receivables 257,399.85 6 Inventories 360,341.22 7 Other current assets 2,161,599.92 8 II. Total non-current assets 5,510,052,507.13 9 Fixed assets 4,402,204,853.44 10 Intangible assets 1,107,847,653.69 11 III. Total assets 5,557,782,541.88 12 IV. Total current liabilities 48,865,047.54 13 Accounts payable 24,344,883.56 14 Advances from customers 20,224,525.62 15 Employee benefits payable 1,815,798.01 16 Tax payable 610,644.59 17 Other payables 309,009.61 18 V. Total liabilities 47,304,861.39 19 VI. Net assets 5,510,477,680.49

Information on physical assets and land use rights that are included in the scope of valuation is as follows:

Unit: RMB

		Original	Net carrying
Name of item	Quantity	carrying amount	amount
Fixed assets
Buildings	73,238.10	110,707,480.32	75,383,613.16
Structures	145	5,164,992,084.90	3,823,735,896.54
Machinery and
equipment	735.00	950,582,770.39	502,780,178.24
Vehicles	8.00	3,834,000.00	191,700.00
Electronic devices	170.00	989,903.93	113,465.50
Intangible assets
Land use rights	4,396,185.69	1,481,122,772.84	1,107,847,653.69
Total		7,712,229,012.38	5,510,052,507.13

– III-1-6 –

VALUATION REPORT A

APPENDIX III-1

IV. TYPE OF VALUE

Market value

V. VALUATION BENCHMARK DATE

31 August 2021

VI. VALUATION METHODOLOGY

Cost approach.

VII. VALUATION CONCLUSION AND ITS VALIDITY PERIOD

The valuation conclusion is that the appraised net asset value of the part of assets and liabilities that Ying Kou Port Group Corporation Limited proposed to contribute is RMB7,299,443,700 (SEVEN THOUSAND TWO HUNDRED NINETY-NINE MILLION FOUR HUNDRED FORTY-THREE THOUSAND SEVEN HUNDRED, rounding to the nearest one hundred).

The validity period of the valuation conclusion is one year, starting from 31 August 2021 (being the valuation benchmark date) to 30 August 2022.

VIII. SPECIAL MATTERS WITH IMPACTS ON THE VALUATION CONCLUSION

(I) Significant use of expert work and relevant reports

Nil.

– III-1-7 –

VALUATION REPORT A

APPENDIX III-1

(II) Incomplete or defective ownership information

		Date of		GFA
Name of building	Structure	completion	Unit	(m2)	**Carrying **	amount
					Original
					value	Net value
Gasoline loading pump	Frame	2009/5/22	/	355.66	679,523.00	426,128.94
room
Gasoline tank farm	Frame	2009/5/22	/	313.85	447,300.00	280,501.83
shipment pump room
power distribution
room
Ethanol ship loading	Brick and	2009/5/22	/	434.33	741,807.00	465,187.27
and foam pump room	concrete
Railway unloading	Brick and	2009/5/22	/	873.77	2,631,462.00	1,650,190.04
pump room	concrete
Gateroom 1	Frame	2009/5/22	/	42.70	141,812.00	88,930.31
Gateroom 2	Frame	2009/5/22	/	29.67	121,158.00	75,978.13
Diesel unloading pump	Brick and	2009/5/22	/	489.87	4,389,418.74	2,752,605.05
room	concrete
Transformation of train	Brick and	2009/5/22	/	137.89	1,806,162.51	1,132,644.74
trestle bridge to low-	concrete
voltage substation
1# steel warehouse	Mixture	2015/12/31	/	19,235.92	22,067,284.00	18,388,335.40
2# steel warehouse	Mixture	2015/12/31	/	22,056.45	25,286,652.00	21,070,986.08
Tool warehouse	Mixture	2015/12/31	/	1,639.11	1,062,216.00	885,128.78
Machine repair	Brick and	2015/12/27	/	1,087.04	1,857,362.00	1,526,211.93
workshop	concrete
Substation (54#)	Brick and	2011/12/29	/	381.87	572,402.00	256,097.17
	concrete
1# substation (71#	Brick and	2011/12/30	/	588.77	1,621,638.41	725,533.66
change)	concrete
2# substation (72#			/
change)
A port pool 1#	Reinforced	2016/12/31	/	628.97	3,129,762.00	2,342,891.92
substation	concrete
Fire pump room	Brick and	1998/11/1	/	339.79	664,457.85	172,791.71
	concrete
General yard (2#)	Steel	2011.12.30	/	3,929.69	4,250,986.91	3,188,057.39
	structure
Comprehensive yard	Steel and	2011.12.29	/	2,291.96	4,617,500.58	3,462,927.11
(logistics mat)	concrete
Steel yard (1#)	Steel and	2011.12.29	/	11,999.69	21,245,342.86	15,933,093.48
	concrete
Water supply regulating	Frame	2020-06-21	/	248.19	477,152.30	444,774.15
station	structure,
	one floor
	above
	ground
1# courtroom	Brick and	2013-10-01	/	686.34	1,483,229.50	1,002,847.52
	concrete
	structure
2# courtroom	Brick and	2013-10-01	/	686.34	1,483,229.50	1,002,847.52
	concrete
	structure
Nitrogen generator		March 2009	/	142.70	1,023,545.00	641,865.22
room
				72,264.43

– III-1-8 –

VALUATION REPORT A

APPENDIX III-1

The area surveying and mapping of the assets above has been completed, and the real estate title certificate is in process. The valuation did not consider the various taxes and fees required to be paid in the process of applying for the certificates.

(III) Restrictions on valuation procedures

Nil

(IV) Incomplete valuation materials

Nil

(V) Pending legal and economic matters on the valuation benchmark date

Nil

(VI) The nature and amount of guarantees, leases and its contingent liabilities (contingent assets) and the relationship with the valuation target

The information on charge or pledge of assets that are included in the scope of valuation is as follows:

		Total	Balance of	Commen	Expiry
		borrowings	borrowings	cement date of	date of	Way of	Interest	Rent calculation
Lessor	Lender	(RMB0’000)	(RMB0’000)	borrowing	borrowing	guarantee	rate	method	Collateral
Industrial	Ying Kou	80,000.00	23,333.33	2017/5/18	2023/5/18	Credit	4.410%	Principal in equal	Fairy Island
Financial	Port Group							instalments	port pool 1
Leasing	Corporation								1-2# refined
Co., Ltd.	Limited								oil and liquid
									chemicals
									terminal,
									Bawu Port 65#
									steel and
									general
									cargo berth
SPDB	Ying Kou	50,000.00	12,500.00	2017/11/28	2022/11/21	Credit	3.325%	Principal in equal	Bayuquan Port
Financial	Port Group							instalments	Area 62# berth
Leasing	Corporation
Co., Ltd.*	Limited
(浦銀金融
租賃股份
有限公司)
Bank of	Ying Kou	50,000.00	17,500.00	2018/4/25	2023/4/25	Credit	5.5575%	Principal in equal	68# and 70#
Beijing	Port Group							instalments	berths
Financial	Corporation
Leasing	Limited
Company
Limited*
(北銀金融租賃
有限公司)
Jiangxi	Ying Kou	80,000.00	25,560.00	2016/12/16	2023/3/3	Credit	4.410%	Interest in equal	66# and 67#
Financial	Port Group							instalments	berths
Leasing	Corporation
Corp., Ltd.	Limited

– III-1-9 –

VALUATION REPORT A

APPENDIX III-1

The information on lease of assets that are included in the scope of valuation is as follows:

				Area
		Lease	Title Certificate	(square		Annual rent
Contract name	Lessee	target	Number	meter)	Lease term	(square meter)
Land use right	Yingkou Xingang Ore	Land use	Liao (2020) Yingkou	298,720.25	2021/1/1-	4,480,803.66
lease agreement	Terminal Co., Ltd.	right	Bayuquan Real		2021/12/31
	(營口新港礦石碼頭		Estate
	有限公司)		No. 0027263
Land use right	Yingkou Port Liability	Land use	Liao (2020) Yingkou	2,431,326.47	2021/1/1-	36,469,900.00
lease agreement	Co., Ltd.	right	Bayuquan Real		2021/12/31
			Estate No. 0029352,
			0029354, 0029361,
			0029375, 0029388,
			0029391, 0027202,
			0027222, 0027228,
			0027242, 0027266,
			0032267, 0032270,
			0035276, 0032298,
			0035276 and
			Bayuquan Guo Yong
			(2007) Zi No. 0216
			and 0217
2021 asset lease	Yingkou Port Liability	Terminal	Bayuquan Port Area		2021/1/1-	349,897,100.00
agreement	Co., Ltd.	berth	port pool 1 18# ore		2021/12/31
			berth, port area A 3#
			general berth, port
			area A 1-2# refined
			oil and liquid
			chemicals berth, port
			area 5 61#-71#
			general berths, Fairy
			Island 201-203#
			berths and its yard,
			tank farm

In particular, Fairy Island 201-203# berths and ore dump are excluded in the scope of valuation, and the relevant rent is RMB110,463,227.26.

(VII) Significant subsequent matters

Nil

• (VIII)[Deficiencies][in][the][economic][activity][corresponding][to][the][asset][valuation][that][may] have a material effect on the valuation conclusion

Nil

– III-1-10 –

VALUATION REPORT A

APPENDIX III-1

(IX) Other matters that need to be described

Nil

The above contents are extracted from the text of the Valuation Report. Please read the text of the Valuation Report to understand details of the valuation and correctly comprehend the valuation conclusion.

– III-1-11 –

VALUATION REPORT A

APPENDIX III-1

Asset Valuation Report on Project of Proposed Capital Contribution by Ying Kou Port Group Corporation Limited with Partial Assets and Liabilities to Yingkou Port Bulk Cargo Terminal Co., Ltd. (營口港散貨碼頭有限公司) Zhong Tong Ping Bao Zi [2021] No. 11332

To Ying Kou Port Group Corporation Limited,

Upon your engagement, we, China Tong Cheng Assets Appraisal Co., Ltd., have evaluated the market value as at 31 August 2021 of the assets, creditor’s rights and liabilities, which are involved in the proposed capital contribution by Ying Kou Port Group Corporation Limited with part of assets and liabilities to Yingkou Port Bulk Cargo Terminal Co., Ltd., by adopting the cost approach and carrying out necessary valuation procedures in accordance with laws, administrative regulations and asset valuation standards and adhering to the principles of independence, objectivity and fairness. We hereby report the details of the asset valuation as follows.

• I. OVERVIEW OF THE CLIENT, THE APPRAISED ENTITY AND OTHER USERS OF THE ASSET VALUATION REPORT AS AGREED IN THE ASSET VALUATION ENGAGEMENT CONTRACT

• (I) The client and the appraised entity both are Ying Kou Port Group Corporation Limited, whose profile is as follows.

Name: Ying Kou Port Group Corporation Limited (hereinafter referred to as “Yingkou Port Group”)

Legal residence: No. 1, Yinggang Road, Bayuquan District

Unified social credit code: 91210800121119657C

Legal representative: Deng Renjie

Registered capital: RMB20 billion

Major scope of business: Permitted projects: port operations (projects subject to approval according to law may only be operated after approval by relevant departments, and specific business projects are subject to the approval results) General projects: port loading and unloading, warehousing, services; ship material supply; import of raw and auxiliary materials, machinery and equipment, instruments and meters and components necessary for the production and research of the company; export of seafood, talc, magnesia, woven bags, food, wood products, clothing, knitwear (except 16 kinds of export commodities jointly operated by national organisations) produced by the company; agency packaging, consignment, water transportation, non-metallic ore, pig iron sales, plastic packaging products, vegetable oil; international passenger transport services, agency ticket sales, luggage check-in; waste

– III-1-12 –

APPENDIX III-1

VALUATION REPORT A

material recycling; advertising agency, production, design; ship supply (supply of daily necessities, except for ship fuel), production of cement tiles, cement brick laying, metal materials, building materials sales, engineering consulting; water supply and heat supply; emergency prevention and treatment of pollutants and pollutant reception and disposal (operating with qualification certificate). The following projects may only be operated by branches: distribution of petroleum liquefied gas, daily necessities, textiles, leather goods, household appliances, hardware and electrical products, and chemical products (except dangerous articles), ship materials (except those subject to approval), communication equipment distribution and agency services, ship waste (excluding hazardous waste) recycling and agency services, and pre-packaged food; car rental, self-owned real estate business activities, property management, building cleaning services, other cleaning services, conference services, greening management, computer and communication equipment rentals, other machinery and equipment rentals, and other water transportation auxiliary activities; real estate rentals. (Except for the projects that must be approved according to law, business activities are operated independently according to the law with the business license)

Ying Kou Port Group Corporation Limited (“ Yingkou Port Group ”), formerly known as Yingkou Port Authority, has registered with SAIC of Yingkou City on 17 April 2003 in accordance with the Notice on the Implementation Opinions on the Reform of the Port Management System of Yingkou Port ([2002] No. 42) issued by Yingkou Municipal Committee Office of the Communist Party of China and the Approval on Allocating Assets for Establishment of Ying Kou Port Group Corporation Limited ([2003] No. 1) issued by the office of Yingkou SASAC, with a registered capital of RMB1.7 billion.

In December 2009, upon the transfer of capital reserve amounting to RMB7.3 billion to registered capital in accordance with the Approval on Yingkou Port Group’s Transfer of Capital Reserve to Registered Capital (Ying Guo Zi Chan Quan [2009] No. 85) issued by the State-owned Assets Supervision and Administration Commission of the People’s Government of Yingkou City (“ Yingkou SASAC ”), the registered capital of Yingkou Port Group was changed to RMB9 billion.

In December 2017, Yingkou SASAC entered into an equity transfer agreement with Liaoning North East Asia Gang Hang Development Co., Ltd. (遼寧東北亞港航發展有限公司) (“ Gang Hang Development ”) at nil consideration, pursuant to which, Yingkou SASAC transferred all of its equity interests in Yingkou Port Group to Gang Hang Development at nil consideration. After the equity transfer, Yingkou Port Group became a wholly-owned subsidiary of Gang Hang Development.

On 28 November 2018, Gang Hang Development and creditor banks of Yingkou Port Group entered into a loan capitalisation agreement with Yingkou Port Group, which agreed that Yingkou Port Group would increase its registered capital by RMB11 billion, in particular, Gang Hang Development would contribute to RMB185,803,800 of Yingkou Port Group’s additional registered capital with cash and equity interests amounting to RMB21,929,277,300, and the creditor banks would contribute to RMB10,814,196,200 of Yingkou Port Group’s additional

– III-1-13 –

VALUATION REPORT A

APPENDIX III-1

registered capital with creditor’s rights amounting to RMB37 billion. Yingkou Port Group has completed the business registration change on 28 November 2018, and its registered capital after the change was RMB20 billion.

Gang Hang Development, the controlling shareholder of Yingkou Port Group, was renamed as Liaoning Port Group Limited (遼寧港口集團有限公司) (hereinafter referred to as “ Liaoning Port Group ”) on 29 November 2018.

Pursuant to the Equity Transfer Agreement of Ying Kou Port Group Corporation Limited entered into by Liaoning Port Group and Dalian Port Corporation Limited (“ PDA ”) on 14 May 2019, Liaoning Port Group transferred the 22.965% equity interests it held in Yingkou Port Group to PDA, its wholly-owned subsidiary.

Pursuant to the Agreement on the Gratuitous Transfer of the Equity Interests in Liaoning Port Group Limited entered into between the State-owned Assets Supervision and Administration Commission of the People’s Government of Liaoning Province (hereinafter referred to as the “ Liaoning SASAC ”) and China Merchants (Liaoning) Port Development Company Limited (hereinafter referred to as “ China Merchants Liaoning ”) on 31 May 2019, the equity change in respect of the transfer by Liaoning SASAC of the 1.1% equity interests it held in Liaoning Port Group to China Merchants Liaoning at nil consideration has been completed on 30 September 2019. Upon the completion of such change in equity, China Merchants Liaoning held 51.00% equity interests of Liaoning Port Group, and the ultimate de facto controller of Liaoning Port Group was changed from Liaoning SASAC to China Merchants Group Limited (“ China Merchants Group ”). The ultimate de facto controller of Yingkou Port Group was also changed from Liaoning SASAC to China Merchants Group.

On 7 April 2020, Yingkou Port Group resolved at its shareholders’ general meeting that Agricultural Bank of China Limited Yingkou Economic and Technological Development Zone Sub-branch, a shareholder of Yingkou Port Group, was permitted to transfer the 6.28% equity interests (capital contribution amount of RMB1,256,184,900) of the Company it held to ABC Financial Assets Investment Co., Ltd.. Yingkou Port Group completed the business registration change in respect of such equity transfer on 8 May 2020.

Pursuant to the stipulations in the Voting Rights Entrustment Agreement entered into by Liaoning Port Group and PDA on 29 March 2021, Liaoning Port Group entrusted PDA to exercise all shareholder’s rights of the 22.965% equity interests it held in Yingkou Port Group except for income rights, disposal rights (including share pledge), rights of subscription, capital increase/right of first refusal. After the agreement came into effect, PDA held the voting rights corresponding to an aggregate of 45.93% equity interests of Yingkou Port Group. On 29 March 2019, Liaoning Port Group entered into an entrustment agreement with PDA (《遼寧港 口集團有限公司與大連港集團有限公司關於營口港務集團有限公司表決權委託相關事宜的聯 合聲明》), pursuant to which, PDA would exercise shareholder’s rights as stipulated in the Voting Rights Entrustment Agreement and re-elect members of the board of directors of Yingkou Port Group, while PDA would appoint new directors for Yingkou Port Group. From the signing date of the Voting Rights Entrustment Agreement and prior to the completion of the

– III-1-14 –

VALUATION REPORT A

APPENDIX III-1

re-election, being the transition period, within Liaoning Port Group and PDA, Liaoning Port Group will delegate the management power of Yingkou Port Group to the level of PDA. PDA will directly manage Yingkou Port Group. During the transition period, Liaoning Port Group will not in any way exert influence on the directors appointed by it currently serving in Yingkou Port Group that is contrary to the wishes of PDA, or engage in other behaviors that may cause the control of Yingkou Port Group to be unstable. Under the above arrangement, PDA formed control over Yingkou Port Group, and Liaoning Port Group controlled Yingkou Port Group indirectly through its wholly-owned subsidiary, PDA.

(II) Overview of Other Users of the Valuation Report

This Report is only for the use by the users as agreed in the asset valuation engagement contract and as stipulated by laws and administrative regulations. Other institution and individual shall not be the user of this Asset Valuation Report.

II. PURPOSE OF VALUATION

Due to the proposed capital contribution by Ying Kou Port Group Corporation Limited to Yingkou Port Bulk Cargo Terminal Co., Ltd. with part of assets and liabilities, it is required to conduct a valuation on the value of such part of assets and liabilities declared by Ying Kou Port Group Corporation Limited involved in the said economic activity for the purpose of providing valuation reference for the capital contribution.

The economic activity has been approved by the Approval on the Establishment of Wholly-owned Subsidiary for Revitalising the Phase II Northeast Project (Zhao Fa Zhan Lue Zi [2021] No. 457) issued by China Merchants Group.

III. VALUATION TARGET AND SCOPE

(I) Valuation Target and Scope

The valuation target and the valuation scope are the same as the valuation target and the valuation scope involved in the economic activity.

– III-1-15 –

VALUATION REPORT A

APPENDIX III-1

The valuation target is the assets and liabilities owned and proposed to be used for capital contribution by Yingkou Port Group. The valuation scope specifically covers bank deposits, current accounts, inventories, buildings, structures, machinery and equipment, vehicles, electronic devices, land use rights and various liabilities. The details are shown in the table below.

Unit: RMB

No.		Name of item	Carrying amount
1	I.	Total current assets	47,730,034.75
2		Cash at bank and on hand	6,988,687.27
3		Accounts receivable	37,762,006.49
4		Advances to suppliers	200,000.00
5		Other receivables	257,399.85
6		Inventories	360,341.22
7		Other current assets	2,161,599.92
8	II.	Total non-current assets	5,510,052,507.13
9		Fixed assets	4,402,204,853.44
10		Intangible assets	1,107,847,653.69
11	III.	Total assets	5,557,782,541.88
12	IV.	Total current liabilities	47,304,861.39
13		Accounts payable	24,344,883.56
14		Advances from customers	20,224,525.62
15		Employee benefits payable	1,815,798.01
16		Tax payable	610,644.59
17		Other payables	309,009.61
18	V.	Total liabilities	47,304,861.39
19	VI.	Net assets	5,510,477,680.49

Information on physical assets and land use rights that are included in the scope of valuation is as follows:

Unit: RMB

		Original carrying	Net carrying
Name of item	Quantity	amount	amount
Fixed assets
Buildings	73,238.10	110,707,480.32	75,383,613.16
Structures	145	5,164,992,084.90	3,823,735,896.54
Machinery and equipment	735.00	950,582,770.39	502,780,178.24
Vehicles	8.00	3,834,000.00	191,700.00
Electronic devices	170.00	989,903.93	113,465.50
Intangible assets
Land use rights	4,396,185.69	1,481,122,772.84	1,107,847,653.69
Total		7,712,229,012.38	5,510,052,507.13

– III-1-16 –

VALUATION REPORT A

APPENDIX III-1

IV. TYPE OF VALUE

The types of valuation value include market value and other types of value except for market value. Other types of value except for market value generally include (but are not limited to) investment value, value in use, liquidation value and residual value. The purpose of this valuation is to provide a value reference for normal transactions, and there are no special restrictions and requirements on market conditions and the use of valuation target, etc. Therefore, market value is selected as the type of value of this valuation according to industry practices.

Market value refers to the estimated value of the valuation target in an arm’s length transaction made in the ordinary course of business on the valuation benchmark date between a willing buyer and a willing seller who has each acted rationally and without compulsion.

V. VALUATION BENCHMARK DATE

The valuation benchmark date for this valuation is 31 August 2021.

Major factors considered in determining the valuation benchmark date include the time requirement on the implementation of the economic activity. The end of the accounting period was adopted to facilitate the defining of the scope of valuation and the accurate and efficient stocktaking of assets.

VI. BASIS OF VALUATION

(I) Basis of Economic Activity

The relevant economic activity has been approved by the Approval on Establishment of Wholly-owned Subsidiary for Revitalising the Phase II Northeast Project (Zhao Fa Zhan Lue Zi [2021] No. 457) issued by China Merchants Group.

(II) Legal Basis Provided by Laws and Regulations

1. The Asset Appraisal Law of the People’s Republic of China;

2. The Law of the People’s Republic of China on the State-owned Assets in Enterprises;

3. The Civil Code of the People’s Republic of China;

4. The Securities Law of the People’s Republic of China;

5. The Corporate Income Tax Law of the People’s Republic of China;

– III-1-17 –

VALUATION REPORT A

APPENDIX III-1

1. The Implementation Rules for the Enterprise Income Tax Law of the People’s Republic of China (Issued under Order No. 512 of the State Council and recently amended under Order No. 714 of the State Council);

2. The Measures for the Administration of State-owned Assets Appraisal (Order No. 91 of the State Council and recently amended under Order No. 732 of the State Council);

3. The Detailed Rules for the Implementation of the Administrative Measures for State-owned Assets Valuation (Guo Zi Ban Fa [1992] No. 36);

4. The Provisional Regulations on the Supervision and Administration of State-owned Assets of Enterprises (Order No. 378 of the State Council and recently amended under Order No. 709 of the State Council);

5. The Opinions on Reforming the Administration of State-owned Assets Appraisal and Strengthening Supervision and Administration of Assets Appraisal (Guo Ban Fa [2001] No. 102);

6. The Interim Measures for the Administration of Valuation of State-owned Assets of Enterprises (Order No. 12 of the SASAC of the State Council);

7. The Regulations on Certain Issues Concerning Management of State-owned Assets Appraisal (Order No. 14 of the Ministry of Finance);

8. The Measures for the Supervision and Administration of the Trading of State-owned Assets of Enterprises (Order No. 32 of the SASAC of the State Council and the Ministry of Finance);

9. The Notice on the Guidelines on the Publication and Distribution of the Filing of State-owned Assets Appraisal Projects for Enterprises (Guo Zi Fa Chan Quan [2013] No. 64);

10. The Financial Supervision and Administration Measures on the Assets Evaluation Industry (Order No. 97 of the Ministry of Finance);

11. The Notice on Strengthening the Matters Relating to Administration of State-owned Assets Appraisal of Enterprises (Guo Zi Wei Chan Quan [2006] No. 274);

12. The Notice on Relevant Issues Concerning the Agreement-based Transfer of State-owned Property Rights of Central Enterprises (Guo Zi Fa Chan Quan [2010] No. 11);

13. The Notice on Relevant Matters Concerning the Examination of Appraisal Reports on State-owned Assets of Enterprises (Guo Zi Chan Quan [2009] No. 941);

– III-1-18 –

VALUATION REPORT A

APPENDIX III-1

1. The Interim Regulations for the Value-added Tax of the People’s Republic of China (Issued under Order No. 134 of the State Council and recently amended under Order No. 691 of the State Council);

2. The Implementation Rules to the Interim Regulations for the Value-added Tax of the People’s Republic of China (Issued under Order No. 50 of the Ministry of Finance and the State Taxation Administration and recently amended under Order No. 65 of the Ministry of Finance and the State Taxation Administration);

3. The Notice on the Comprehensive Rollout of the Business Tax to Value Added Tax Transformation Pilot Program (Cai Shui [2016] No. 36);

4. The Circular Relating to Furthering Relevant Policies on Reform of Value-added Tax (Circular [2019] No. 39 jointly issued by the Ministry of Finance, the State Taxation Administration and the General Administration of Customs).

(III) Basis of Valuation Standards

1. Basic Asset Valuation Standards (Cai Zi [2017] No. 43);

2. Professional Code of Ethics for Asset Valuation (Zhong Ping Xie [2017] No. 30);

3. Practice Guidelines for Asset Valuation – Asset Valuation Procedures (Zhong Ping Xie [2018] No. 36);

4. Practice Guidelines for Asset Valuation – Asset Valuation Report (Zhong Ping Xie [2018] No. 35);

5. Practice Guidelines for Asset Valuation – Asset Valuation Methodology (Zhong Ping Xie [2019] No. 35);

6. Practice Guidelines for Asset Valuation – Asset Valuation Engagement Contract (Zhong Ping Xie [2017] No. 33);

7. Practice Guidelines for Asset Valuation – Asset Valuation Files (Zhong Ping Xie [2018] No. 37);

8. Quality Control Guidance on the Business of Asset Valuation Agency (Zhong Ping Xie [2017] No. 46);

9. Guiding Opinions on Types of Value under Asset Valuation (Zhong Ping Xie [2017] No. 47);

10. Guiding Opinions on Legal Ownership of the Asset Valuation Target (Zhong Ping Xie [2017] No. 48);

– III-1-19 –

VALUATION REPORT A

APPENDIX III-1

1. Practice Guidelines for Asset Valuation – Real Estate (Zhong Ping Xie [2017] No. 38);

2. Practice Guidelines for Asset Valuation – Machinery and Equipment (Zhong Ping Xie [2017] No. 39);

3. Guidance on Valuation Report of State-owned Assets of Enterprises (Zhong Ping Xie [2017] No. 42).

(IV) Ownership Basis

State-owned land use certificates (or land use right grant contracts);

Building ownership certificates;

Motor vehicle driving permit.

(V) Pricing Basis

1. Housing Construction and Decoration Engineering Quota in Liaoning Province (2017);

2. Liaoning Province General Installation Project Quota (2017);

3. Notice of the Department of Housing and Urban-Rural Development of Liaoning Province on Adjusting the Value-added Tax Rate for the Pricing Basis of Construction Projects (Liao Zhu Jian Guan (2018) No. 8);

4. Construction Information on Building Material Price of Yingkou City in August 2021 issued by Liaoning Construction Engineering Cost Station (遼寧建設工程造價 總站);

5. Project Quota for Coastal Port Hydraulic Construction (2019);

6. Reference Quota for Coastal Port Engineering (2019);

7. Dredging Project Budget Quota (2019);

8. Budget Quota Valuation Table on Electric Power Construction Projects (2013);

9. Estimated Budget Valuation Table on Electric Power Construction Projects (2014);

10. Online Publication Price of Hydraulic Materials (August 2021);

– III-1-20 –

VALUATION REPORT A

APPENDIX III-1

1. Regulations on the Preparation of Budgetary Estimates for Water Transport Construction Projects (JTS/T116-2019);

2. Notice of the General Office of the Ministry of Housing and Urban-Rural Development on Re-adjusting the Value-Added Tax Rate for the Pricing Basis of Construction Projects (Jian Ban Biao Han [2019] No. 193);

3. Project completion data or project budget and final accounts data provided by the appraised entity.

VII. VALUATION METHODOLOGY

(I) Selection of Valuation Methods and Reasons therefor

The specific valuation methods applied in this valuation are as follows.

1. Current assets (except for inventories)

The appraised value of cash at bank and on hand under current assets is determined by checking and verifying the carrying amount on the list of items provided by the company; the appraised value of accounts receivable, advances to suppliers and other receivables is determined based on the recoverable amount of each item by adopting the method of economic content and aging analysis on the basis of the carrying amount reported by the company on the list of items provided by the company.

2. Inventories

All inventories are revolving materials in stock. For revolving materials in stock, after consulting with the company and conducting inventory surveys by appraisal personnel, inventory turnover is relatively fast without overstock. After inquiry with the supplier, the inventory is evaluated by multiplying the verified quantity by the quoted unit price.

3. There are three valuation methods mainly adopted for fixed assets under the buildings category, namely cost replacement approach, market approach and income approach. The adoption of market approach is conditional on the existence of an active trading market where accurate traded market prices are available; the adoption of income approach is on the condition that future returns and risks can be accurately predicted and quantified; and the cost replacement approach is adopted when traded market prices are not available and future returns and risks cannot be accurately predicted and quantified. Based on the specific purpose of the valuation and the characteristics of the buildings (structures) to be evaluated, the cost of the buildings independently built by the company was adopted in the valuation.

– III-1-21 –

VALUATION REPORT A

APPENDIX III-1

Based on the characteristics of the buildings, the type of value to be assessed, the data collection and other relevant conditions, the cost approach is used for the valuation, and the calculation formula is as follows:

The appraised value = Full replacement cost × Integrated residue ratio

(1) Determination of full replacement cost

The full replacement cost of buildings is generally composed of construction and installation costs, preliminary and other expenses and capital costs.

The calculation formula for full replacement cost of buildings is as follows:

Full replacement cost = Integrated construction and installation costs + Preliminary and other expenses + Capital costs – Deductible value-added tax

1) Integrated construction and installation costs

The full replacement cost of the representative buildings of the appraised buildings in this valuation is determined by using budgets (final accounts) adjustment method. The unit full replacement cost of other buildings is determined by using analogy method.

The ideology of the budgets (final accounts) adjustment method used in determining the full replacement cost is to calculate the estimated base price for direct fee and the construction and installation project costs of each project based on the budgets and final accounts related information on the buildings and the quota standard of the place where the buildings are located as provided by the company, and the quantity of work stipulated in the budgets and final accounts of the buildings. Then, based on the market survey and the standards for preliminary expenses and other expenses of construction work as provided by the client, the preliminary expenses and other expenses of the buildings will be derived, and plus the capital costs to derive the full replacement cost of the appraised buildings.

The analogy method takes a representative building as a reference and makes comparison with similar buildings in terms of eave height, storey height, span, materials used, fixtures, and etc., to identify differences as adjustment factors, and adjustments are made to calculate the unit full replacement cost of the analogical buildings.

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VALUATION REPORT A

APPENDIX III-1

(2) Preliminary and other expenses

Preliminary and other expenses are calculated according to the project construction investment amount of the appraised entity and based on the charging standards set by the industry, the state or the local government.

(3) Capital costs

Capital costs are estimated based on the reasonable construction period of the appraised entity, with reference to the LPR published by the National Interbank Funding Center under the authorisation of the People’s Bank of China on the valuation benchmark date, and calculated according to the evenly invested funds based on the sum of the integrated construction and installation costs, preliminary and other expenses, etc.. The reasonable construction period of the appraised entity is 2.5 years. The formula for calculating the capital costs is as follows:

Capital costs = (Integrated construction and installation costs + Preliminary and other expenses) × Reasonable construction period × Benchmark loan rate × 1/2

(4) Deductible value-added tax

In accordance with the Notice of the Ministry of Finance and the State Administration of Taxation on the Comprehensive Rollout of the Business Tax to Value Added Tax Transformation Pilot Program (Cai Shui [2016] No. 36), the input value-added tax amount included in the integrated construction and installation costs and the preliminary and other expenses may be deducted in calculating the full replacement cost of a building structure.

(5) Determination of residue ratio

The useful life method and observation method are mainly used to determine the residue ratio of the buildings in this valuation.

① Useful life method

Useful life method is adopted to determine the residue ratio based on the ratio of the expected remaining useful life of the building to its total useful life, which is calculated as follows:

Residue ratio under the useful life method =	Remaining useful life × 100% Used life + Remaining useful life

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VALUATION REPORT A

APPENDIX III-1

② Observation method

The observation method is applied to assess each major part of the buildings from a technical perspective, and to analyse factors such as design, manufacturing, usage, wear and tear, maintenance, improvement and physical life of the asset on a consolidated basis. Impacts of wear and tear and natural deterioration on the functionality and efficiency of the asset will be assessed by comparing the valuation target with itself in new condition. As such, the residual ratio of the buildings would be determined and the substantial depreciation would be estimated.

③ Integrated residue ratio

Integrated residue ratio = Residue ratio under the useful life method × 40% + Residue ratio under the observation method × 60%

• ④ Residue ratio would be determined by adopting a reasonable method in the following circumstances:

If the residue ratios calculated under the on-site observation method and the useful life method respectively differ significantly, after analysing the various factors by the valuers, the relatively reasonable ratio would prevail based on their previous experience.

For the project which cannot be observed due to certain constraints, the useful life method would be normally applied in determining the residue ratio.

4. Machinery and equipment

According to the purpose of this valuation and the characteristics of the appraised assets, and assuming the asset is continued to be used according to its current usage, the cost replacement approach would be adopted in this valuation on the basis of on-site investigation.

Basic formula: Appraised value = Full replacement costs × Residue ratio

(1) Determination of full replacement costs

• 1) Determination of full replacement costs of machinery and equipment

Full replacement costs = Equipment purchase cost + Transportation and miscellaneous fees + Installation and commissioning fees + Equipment foundation fee + Preliminary and other expenses + Capital costs – Deductible input value-added tax amount

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VALUATION REPORT A

APPENDIX III-1

① Purchase cost

The purchase cost is mainly determined by quotation from equipment manufacturers or sellers, or with reference to price materials such as the 2021 Mechanical and Electrical Products Quotation Manual and recent contract prices of similar equipment. For a small number of equipment for which the purchase cost cannot be found, the price change rate of the equipment of the same age and category is adopted to calculate the purchase cost.

② Transportation and miscellaneous fees

Transportation and miscellaneous fees refer to the transportation fee, purchase fee, storage fee, unloading fee and other related miscellaneous expenses during the transportation of the equipment, which are calculated as follows:

Transportation and miscellaneous fees for domestic equipment = Purchase cost of the equipment (tax inclusive) × Transportation and miscellaneous fee rates for the equipment

Transportation and miscellaneous fee rates are calculated based on the rates specified in the relevant industry cost indicators and with reference to the “Manual of Methods and Parameters Commonly Used in Asset Appraisal” (資產評估常用方法與參數手冊).

Transportation and miscellaneous fees are not charged if the purchase cost includes transportation fees.

③ Foundation fee

If the equipment foundation is independent or inseparable from the building, the equipment foundation fee shall be considered in the assessment of fixed assets under buildings category, and the equipment foundation fee rate in other circumstances shall be calculated based on the rate specified in the relevant industry budget indexes or with reference to the “Manual of Methods and Parameters Commonly Used in Asset Appraisal” (資產評估常用方法與參數手冊).

Equipment foundation fee = Purchase cost of equipment (tax inclusive) × Equipment foundation fee rate

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VALUATION REPORT A

APPENDIX III-1

④ Installation and commissioning fees

Installation and commissioning fees are determined based on the auxiliary materials consumption, the installation foundation and the difficulty of installation of the assessed equipment and with reference to the relevant installation rates as stipulated under the “Manual of Data and Parameters Commonly Used in Asset Appraisal” (資產評估常用數據與參 數手冊). For small equipment that does not need installation, installation engineering costs are not considered.

Installation and commissioning fees of equipment = Purchase cost of equipment (tax inclusive) × Installation and commissioning fee rates

⑤ Construction and other expenses

Construction and other expenses are calculated at different rates according to the characteristics of the equipment and based on the purchase cost (tax-inclusive) of the equipment, which include construction unit management fee, engineering survey and design fee, engineering supervision fee, environmental impact assessment fee, bidding agency fee, feasibility study fee, etc..

⑥ Capital costs

Capital costs are estimated based on the reasonable construction period of the appraised entity, with reference to the LPR published by the National Interbank Funding Center under the authorisation of the People’s Bank of China on the valuation benchmark date, and calculated according to the evenly invested funds based on the sum of the equipment purchase cost, transportation and miscellaneous fees, installation costs, preliminary and other expenses, etc.. The formula for calculating the capital costs is as follows:

Capital costs = (Equipment purchase cost + Transportation and miscellaneous fees + Foundation fee + Installation costs + Preliminary and other expenses) × Reasonable construction period × Benchmark loan rate × 1/2.

⑦ Deductible tax amount

In accordance with the Notice on Several Issues Concerning the Implementation of the VAT Reform in the Whole Country (Cai Shui [2008] No. 170), the Notice of the Ministry of Finance and the State Administration of Taxation on the Comprehensive Rollout of the Business Tax to Value Added Tax Transformation Pilot Program (Cai Shui

– III-1-26 –

APPENDIX III-1

VALUATION REPORT A

[2016] No. 36), Cai Shui [2008] No. 32 Document and the Announcement [2019] No. 39 of the Ministry of Finance, the State Administration of Taxation and the General Administration of Customs, the replacement cost of machinery and equipment that meets the conditions for deduction of value-added tax should be deducted from the corresponding valueadded tax. In this valuation, the deductible input tax amount is calculated according to the respective value-added tax rate for the equipment purchase cost, transportation and miscellaneous fees, installation costs, foundation fee, and preliminary expenses:

Deductible tax amount of domestic equipment = Equipment purchase cost/(1+13%)×13% + Transportation and miscellaneous fees/(1+9%)×9% + (Installation costs + Foundation fee)/(1+9%)×9% + (Preliminary expenses – Construction unit management fee)/(1+6%)×6%

2) Determination of full replacement cost of vehicles

The current tax-included purchase price of transport vehicles is determined according to recent vehicle market price data such as local vehicle sales market information. On this basis, according to the Provisional Regulations of the People’s Republic of China on Vehicle Purchase Tax, the vehicle purchase tax, new car registration fee, etc. are included in determining the full replacement cost. In accordance with the requirements of the Notice of the Ministry of Finance and the State Administration of Taxation on Incorporating Railway Transportation and Postal Services into the Pilot Program of Changing Business Tax to Value-added Tax (Cai Shui [2013] No. 106) and the Announcement [2019] No. 39 of the the Ministry of Finance, the State Administration of Taxation and the General Administration of Customs, the value-added tax deduction policy for the purchase of vehicles is as follows:

Full replacement cost = Current purchase price + Vehicle purchase tax + New car registration fee – Deductible value-added tax

• ① Purchase price: Based on the vehicle market information and recent information on market price of vehicles such as Pacific Auto Network Automobile Quotation Database (《太平洋汽車網汽車報價庫》) and yiche.com, the purchase price of the assessed vehicle is determined with reference to the latest trading price of similar models in the place where the vehicle is located. For vehicles that have been purchased for a long time and whose original model specifications cannot be found at present, the price of similar vehicles with the same displacement is used as the reference for the purchase price of the assessed vehicle.

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VALUATION REPORT A

APPENDIX III-1

• ② Purchase tax: It is determined based on the Vehicle Purchase Tax Law of the People’s Republic of China passed at the seventh meeting of the 13th Standing Committee of the National People’s Congress held on 29 December 2018. Taxable amount of vehicle purchase tax = Taxable value × 10%. The “taxable value of self-use vehicles purchased by taxpayers shall not include value-added tax amount”.

Vehicle purchase tax = Purchase price ÷ (1 + Value-added tax rate) × Vehicle purchase tax rate

Vehicle purchase tax rate: 10%

• ③ Production cost of new car license, including cost of license, examination fee and procedural cost, is fixed at RMB300.00 per unit according to charging standards published by local automobile administration department.

• ④ Determination of the input tax amount incurred on the purchase of vehicles

The input tax incurred when purchasing the vehicles = Vehicle purchase price × Value-added tax rate ÷ (1 + Value-added tax rate)

The vehicle purchase value-added tax rate: 13%

• 3) Determination of full replacement cost of electronic devices

The price of electronic devices as at the valuation benchmark date is determined based on the local market information and recent market price information published by Zol.com.cn and PConline.com.cn. Generally, manufacturers or agents will provide free delivery, installation and commissioning services. The full replacement cost is then determined as follows:

Full replacement cost = Purchase price – Deductible tax amount

Deductible value-added tax amount = Purchase price/1.13×13%

In addition, for any electronic device which was purchased long time ago, its full replacement cost is determined by reference to prices in the second-hand market.

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VALUATION REPORT A

APPENDIX III-1

(2) Determination of residue ratio

1) Integrated residual ratio of machinery and equipment

Residue ratio of machinery and equipment is comprehensively determined with reference to the economic service life of the equipment, through conducting survey on components of the equipment by on-site survey on present condition of the equipment and reviewing the information on operation, repair and management records of the equipment. Residue ratio, N, is calculated on such basis, i.e.:

N = Remaining service life/(Practical serviced life + Remaining service life) × 100%

2) Integrated residual ratio of vehicles

In accordance with the Standards for Compulsory Scrapping of Motor Vehicles (No. 12 Order in 2012) jointly released by the Ministry of Commerce, the National Development and Reform Commission, the Ministry of Public Security, and the Ministry of Ecology and Environment, the smaller of the residue ratios as determined below is taken as the final residue ratio of vehicles, i.e.:

Residue ratio of service life = (1 – Serviced life/Specified or economic service life) × 100%

Residue ratio of mileage = (1 – Travelled mileage/Specified mileage) × 100%

Residue ratio = Min (Residue ratio of service life, Residue ratio of mileage)

Meanwhile, necessary survey and evaluation are conducted for the vehicles to be assessed. Where survey and evaluation result shows great difference from the residue ratio determined above, appropriate adjustment should be made; where the two are equivalent to each other, no adjustment is required. Namely:

Residue ratio = Min (Residue ratio of service life, Residue ratio of mileage) + a

• a: Adjustment factors for special vehicle conditions.

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VALUATION REPORT A

APPENDIX III-1

• (3) Residue ratio of electronic devices

Remaining useful life method is adopted to determine the residue ratio.

Residue ratio = [Remaining useful life ÷ (Used life + Remaining useful life)] × 100%

Furthermore, it is not necessary to determine the residue ratio of electronic devices that were evaluated directly based on the prices in the second-hand market.

(3) Determination of appraised value

Appraised value = Full replacement cost × Residue ratio

5. Land use rights

(1) Selection of valuation approach

Pursuant to the Regulations on Valuation of Urban Lands (《城鎮土地估價規 程》) (the “Regulations”), the current prevailing land valuation approaches mainly include assumed development approach, market comparison approach, income capitalisation approach, cost approximation approach, and benchmark land price coefficient revision approach. The appropriate valuation approach shall be selected based on the technical Regulations for valuation of land price after considering the local real estate market development and characteristics of the valuation target and the valuation purpose.

The parcels to be evaluated include land used for port terminal, commercial and residential land, and land for industrial use. According to different land uses, different methods are used for valuation. As the valuation involves many types of parcels and land uses, the valuation approaches are briefly described as follows: for parcels in the port area, due to the monopoly of the land, the cost approximation approach is used for the valuation; for grant land outside the port area, the benchmark land price approach is used for the valuation.

(2) Cost approximation approach

By cost approximation approach, the subject land is valued by using the sum of various expenses consumed for the acquisition and development of the subject land plus a certain amount of profit, interest, taxes payable and land appreciation gains and taking into account the regional factor and land useful life to determine the adjustment coefficient.

Its basic calculation formula is as follows:

Land price = (Land acquisition cost + Land development cost + Taxes + Investment interest + Investment profit + Land appreciation gains + Revision for individual factors) × Term revision coefficient

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VALUATION REPORT A

APPENDIX III-1

(3) Benchmark land price coefficient revision approach

Basic formula of the benchmark land price coefficient revision approach:

Pi = [P×Py×Pq + Differences in the degree of infrastructure development] × (1+K) × IIS

Wherein: Pi – Land price of the parcel to be evaluated

• P – Benchmark land price of the parcel to be evaluated

Py – Land use revision coefficient

Pq – Due day revision coefficient

• K – Total revision for regional factor of the parcel to be evaluated

IIS – Product of individual factor revision coefficient of the parcel to be evaluated

6. Liabilities

Based on the verification, the appraised value of liabilities is the amount of liabilities required to be assumed by the appraised entity as at the valuation benchmark date.

VIII. PROCESS AND IMPLEMENTATION OF VALUATION PROCEDURES

(I) Acceptance of Engagement

Understand the general conditions of the appraised assets and specify the valuation purpose, valuation target and valuation scope, the valuation benchmark date and other basic matters in valuation after discussions and communications with the client, accept the engagement after comprehensive analysis on the professional capability, independence and risks of valuation, and enter into the asset valuation engagement contract. Determine the type of the appraised value, formulate the valuation plan and establish the working group on valuation based on specific conditions.

(II) On-site Inspection and Collection of Materials

Guide the appraised entity to conduct asset stocktaking and prepare valuation materials, and carry out on-site inspection on the valuation target on such basis to collect required information for asset valuation, understand relevant factors affecting the value of the assets and pay attention to the legal ownership of the valuation target. Verify and validate the materials used in asset valuation in accordance with laws.

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VALUATION REPORT A

APPENDIX III-1

(III) Valuation and Estimation

Analyse, summarise and sort out the materials on valuation based on the specific conditions of the asset valuation and form the basis for the valuation and estimation and the preparation of the valuation report. Select the valuation methodology based on the valuation purpose, the valuation target, the type of value, the collection of materials and relevant conditions as well as the Practice Guidelines for Asset Valuation. Select the corresponding formula and parameters in analysis, calculation and judgment based on the valuation methodology adopted, and analyse and judge valuation assumptions and restrictions which may affect the valuation and the valuation conclusion and arrive at the estimation results.

(IV) Issuance of Report

The responsible persons of the project prepare the preliminary asset valuation report based on the valuation conclusion after valuation and estimation. The firm carries out internal review on the preliminary asset valuation report in accordance with laws, administrative regulations, asset valuation standards and the internal quality control system, and issues the formal asset valuation report after conducting necessary communications on relevant contents of the valuation report with the client and other relevant parties.

IX. VALUATION ASSUMPTIONS

Major asset valuation assumptions used in this Valuation Report include:

1. Transaction assumption. Under the transaction assumption, it is assumed that all assets to be appraised are in the process of transaction, and the valuers will make estimation in a simulated market according to the transaction conditions (among others) of assets to be appraised.

2. Open market assumption. The open market assumption represents that assets may be traded freely in a highly competitive market, the price of which is determined based on the judgment of both independent trading parties over the value of assets under certain supply and demand conditions. An open market refers to a market which is highly competitive with various buyers and sellers, who are on equal footing and have opportunity and time to access adequate market information, and a market where transactions between buyers and sellers are conducted under voluntary, rational, non-compelled or unrestricted conditions.

3. In-use and continue-to-use assumption. Under the in-use and continue-to-use assumption, it is assumed that the assets in use and to be appraised would continue to be used in the current utility and way after the change of ownership or the occurrence of asset business.

According to the requirements of the asset valuation, these assumptions are deemed to be established on the valuation benchmark date. We will not accept any responsibility for any different valuation conclusions resulting from any changes in these assumptions when the economic environment changes significantly in the future.

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VALUATION REPORT A

APPENDIX III-1

X. VALUATION CONCLUSION

On the valuation benchmark date, being 31 August 2021, the appraised value of the part of assets and liabilities that Ying Kou Port Group Corporation Limited proposed to use for capital contribution is RMB7,299,443,700. The valuation of the assets represents an increase of RMB1,788,966,000 and an appreciation rate of 32.46% as compared to the carrying amount of RMB5,510,477,700. The details are as follows:

Unit: RMB0’000

			Carrying	Appraised	Appreciation or	Appreciation
No.		Name of item	amount	value	depreciation	rate
1	I.	Total current assets	4,773.00	4,773.00	0.00	0.00%
2		Cash at bank and on hand	698.87	698.87	0.00	0.00%
3		Accounts receivable	3,776.20	3,776.20	0.00	0.00%
4		Advances to suppliers	20.00	20.00	0.00	0.00%
5		Other receivables	25.74	25.74	0.00	0.00%
6		Inventories	36.03	36.03	0.00	0.00%
7		Other current assets	216.16	216.16	0.00	0.00%
8	II.	Total non-current assets	551,005.25	729,901.85	178,896.60	32.47%
9		Fixed assets	440,220.49	460,039.98	19,819.50	4.50%
10		Intangible assets	110,784.77	269,861.87	159,077.10	143.59%
11	III.	Total assets	555,778.25	734,674.85	178,896.60	32.19%
12	IV.	Total current liabilities	4,730.49	4,730.49	0.00	0.00%
13		Accounts payable	2,434.49	2,434.49	0.00	0.00%
14		Advances from customers	2,022.45	2,022.45	0.00	0.00%
15		Employee benefits payable	181.58	181.58	0.00	0.00%
16		Tax payable	61.06	61.06	0.00	0.00%
17		Other payables	30.90	30.90	0.00	0.00%
18	V.	Total liabilities	4,730.49	4,730.49	0.00	0.00%
19	VI.	Net assets	551,047.77	729,944.37	178,896.60	32.46%

The valuation conclusion is that the appraised asset value of the physical assets that Ying Kou Port Group Corporation Limited proposed to make capital contribution is RMB7,299,443,700 (SEVEN THOUSAND TWO HUNDRED NINETY-NINE MILLION FOUR HUNDRED FORTY-THREE THOUSAND SEVEN HUNDRED, rounding to the nearest one hundred).

The validity period of the valuation conclusion is one year, starting from 31 August 2021 (being the valuation benchmark date) to 30 August 2022.

The establishment of the valuation conclusion depends on the valuation assumptions as mentioned above.

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VALUATION REPORT A

APPENDIX III-1

XI. EXPLANATIONS ON SPECIAL MATTERS

(I) Significant use of expert work and relevant reports

Nil.

(II) Incomplete or defective ownership information

		Date of		GFA
Name of building	Structure	**completion **	Unit	(m2)	**Carrying **	amount
					Original
					value	Net value
Gasoline loading pump	Frame	2009/5/22	/	355.66	679,523.00	426,128.94
room
Gasoline tank farm	Frame	2009/5/22	/	313.85	447,300.00	280,501.83
shipment pump room
power distribution room
Ethanol ship loading and	Brick and	2009/5/22	/	434.33	741,807.00	465,187.27
foam pump room	concrete
Railway unloading pump	Brick and	2009/5/22	/	873.77	2,631,462.00	1,650,190.04
room	concrete
Gateroom 1	Frame	2009/5/22	/	42.70	141,812.00	88,930.31
Gateroom 2	Frame	2009/5/22	/	29.67	121,158.00	75,978.13
Diesel unloading pump	Brick and	2009/5/22	/	489.87	4,389,418.74	2,752,605.05
room	concrete
Transformation of train	Brick and	2009/5/22	/	137.89	1,806,162.51	1,132,644.74
trestle bridge to low-	concrete
voltage substation
1# steel warehouse	Mixture	2015/12/31	/	19,235.92	22,067,284.00	18,388,335.40
2# steel warehouse	Mixture	2015/12/31	/	22,056.45	25,286,652.00	21,070,986.08
Tool warehouse	Mixture	2015/12/31	/	1,639.11	1,062,216.00	885,128.78
Machine repair workshop	Brick and	2015/12/27	/	1,087.04	1,857,362.00	1,526,211.93
	concrete
Substation (54#)	Brick and	2011/12/29	/	381.87	572,402.00	256,097.17
	concrete
1# substation (71# change)	Brick and	2011/12/30	/	588.77	1,621,638.41	725,533.66
2# substation (72# change)	concrete		/
Port pool A 1# substation	Reinforced	2016/12/31	/	628.97	3,129,762.00	2,342,891.92
	concrete
Fire pump room	Brick and	1998/11/1	/	339.79	664,457.85	172,791.71
	concrete
General yard (2#)	Steel	2011.12.30	/	3,929.69	4,250,986.91	3,188,057.39
	structure

– III-1-34 –

APPENDIX III-1

VALUATION REPORT A

		Date of		GFA
Name of building	Structure	**completion **	Unit	(m2)	**Carrying **	amount
					Original
					value	Net value
Comprehensive yard	Steel and	2011.12.29	/	2,291.96	4,617,500.58	3,462,927.11
(logistics mat)	concrete
Steel yard (1#)	Steel and	2011.12.29	/	11,999.69	21,245,342.86	15,933,093.48
	concrete
Water supply regulating	Frame	2020-	/	248.19	477,152.30	444,774.15
station	structure,	06-21
	one floor
	above
	ground
1# courtroom	Brick and	2013-	/	686.34	1,483,229.50	1,002,847.52
	concrete	10-01
	structure
2# courtroom	Brick and	2013-	/	686.34	1,483,229.50	1,002,847.52
	concrete	10-01
	structure
Nitrogen generator room		March	/	142.70	1,023,545.00	641,865.22
		2009
				72,264.43

The area surveying and mapping of the assets above has been completed, and the real estate title certificate is in process. The valuation did not consider the various taxes and fees required to be paid in the process of applying for the certificates.

(III) Restrictions on valuation procedures

Nil

(IV) Incomplete valuation materials

Nil

• (V) Pending legal and economic matters on the valuation benchmark date

Nil

– III-1-35 –

VALUATION REPORT A

APPENDIX III-1

(VI) The nature and amount of guarantees, leases and its contingent liabilities (contingent assets) and the relationship with the valuation target

The information on charge or pledge of assets that are included in the scope of valuation is as follows:

				Commen
		Total	Balance of	cement	Expiry			Rent
		borrowings	borrowings	date of	date of	Way of	Interest	calculation
Lessor	Lender	(RMB0’000)	(RMB0’000)	borrowing	borrowing	guarantee	rate	method	Collateral
Industrial	Ying Kou Port	80,000.00	23,333.33	2017/5/18	2023/5/18	Credit	4.410%	Principal in	Fairy Island
Financial	Group							equal	port pool 1
Leasing	Corporation							instalments	1-2# refined
Co., Ltd.	Limited								oil and liquid
									chemicals
									terminal,
									Bawu Port
									65# steel and
									general cargo
									berth
SPDB	Ying Kou Port	50,000.00	12,500.00	2017/11/28	2022/11/21	Credit	3.325%	Principal in	Bayuquan Port
Financial	Group							equal	Area 62#
Leasing	Corporation							instalments	berth
Co., Ltd.*	Limited
(浦銀金融租
賃股份有限
公司)
Bank of	Ying Kou Port	50,000.00	17,500.00	2018/4/25	2023/4/25	Credit	5.5575%	Principal in	68# and 70#
Beijing	Group							equal	berths
Financial	Corporation							instalments
Leasing	Limited
Company
Limited*
(北銀金融租
賃有限公司)
Jiangxi	Ying Kou Port	80,000.00	25,560.00	2016/12/16	2023/3/3	Credit	4.410%	Interest in	66# and 67#
Financial	Group							equal	berths
Leasing	Corporation							instalments
Corp., Ltd.	Limited

– III-1-36 –

VALUATION REPORT A

APPENDIX III-1

The information on lease of assets that are included in the scope of valuation is as follows:

						Annual rent
		Lease	Title Certificate	Area	Lease	(RMB, tax
Contract name	Lessee	target	Number	(sq.m.)	period	inclusive)
Land use right	Yingkou Xingang Ore	Land use	Liao (2020) Yingkou	298,720.25	2021/1/1-	4,480,803.66
lease agreement	Terminal Co., Ltd.	right	Bayuquan Real		2021/12/31
	(營口新港礦石碼頭		Estate No. 0027263
	有限公司)
Land use right	Yingkou Port Liability	Land use	Liao (2020) Yingkou	2,431,326.47	2021/1/1-	36,469,900.00
lease agreement	Co., Ltd.	right	Bayuquan Real		2021/12/31
			Estate No. 0029352,
			0029354, 0029361,
			0029375, 0029388,
			0029391, 0027202,
			0027222, 0027228,
			0027242, 0027266,
			0032267, 0032270,
			0035276, 0032298,
			0035276 and
			Bayuquan Guo Yong
			(2007) Zi No. 0216
			and 0217
2021 asset lease	Yingkou Port Liability	Terminal	Bayuquan Port Area		2021/1/1-	349,897,100.00
agreement	Co., Ltd.	berth	port pool 1 18# ore		2021/12/31
			berth, port area A 3#
			general berth, port
			area A 1-2# refined
			oil and liquid
			chemicals berth, port
			area 5 61#-71#
			general berths, Fairy
			Island 201-203#
			berths and its yard,
			tank farm

In particular, Fairy Island 201-203# berths and ore dump are excluded in the scope of valuation, and the relevant rent is RMB110,463,227.26.

– III-1-37 –

VALUATION REPORT A

APPENDIX III-1

(VII) Significant subsequent matters

Nil

• (VIII) Deficiencies in the economic activity corresponding to the asset valuation that may have a material effect on the valuation conclusion

Nil

• (IX) Other matters that need to be described

Nil

XII. RESTRICTIONS ON THE USE OF THE ASSET VALUATION REPORT

(I) The scope of the use of this Valuation Report;

This Valuation Report shall be used for the valuation purpose and use set out herein. For the excerpt, reference and disclosure of all or part of the contents of the Valuation Report, relevant contents shall be reviewed by the valuation agency unless it is otherwise provided by laws and regulations and agreed by relevant parties;

• (II) The valuation agency and its asset valuers take no responsibility if the client or other users of the Asset Valuation Report fail to use this Asset Valuation Report in accordance with the provisions of laws and administrative regulations and the scope of use set out in this Asset Valuation Report;

• (III) Except for the client, the other users of the Asset Valuation Report as agreed in the asset valuation engagement contract and the users of the Asset Valuation Report as stipulated in the laws and administrative regulations, no other institution or individual shall be the user of the Asset Valuation Report;

• (IV) Users of the Asset Valuation Report should correctly interpret the valuation conclusion, which is not equivalent to the realizable value of the valuation target and should not be considered as a guarantee for the realizable value of the valuation target.

XIII. DATE OF THE ASSET VALUATION REPORT

The date of the Asset Valuation Report is 21 October 2021.

Asset valuer:

Asset valuer:

21 October 2021

– III-1-38 –

VALUATION REPORT A

APPENDIX III-1

ANNEXES

• I. Corresponding Economic Activity Document on the Valuation Purpose

• II. Business Licenses of the Client and the Appraised Entity

• III. Real Estate Ownership Proof of the Client and the Appraised Entity

• IV. Major Ownership Proof Materials of the Valuation Target Involved

• V. Letters of Undertaking of the Client and Other Relevant Parties

• VI. Letters of Undertaking of the Signatory Asset Valuers

• VII. Announcement on the Registration and Filing of the Valuation Agency

• VIII. Photocopy of the Business License of the Valuation Agency

• IX. Qualification Certificates of the Asset Valuers Responsible for the Valuation Business

• X. Asset Valuation Engagement Contract

– III-1-39 –

VALUATION REPORT A

APPENDIX III-1

Letters of Undertaking of the Asset Valuers

To Ying Kou Port Group Corporation Limited,

Upon your engagement, we have conducted a valuation on the market value of part of assets and liabilities on 31 August 2021 as the benchmark date which are involved in your proposed capital contribution to Yingkou Bulk Cargo Terminal Co., Ltd. (營口散貨碼頭有限公 司), and have formed an asset valuation report. On the premises that the assumptions disclosed in this report are established, we hereby make the following undertakings:

• I. We have the relevant professional qualification;

• II. The valuation target and the valuation scope are consistent with those specified in the asset valuation engagement contract;

• III. We have made necessary verification of the valuation target and the assets involved;

• IV. We have adopted the valuation methodology in accordance with the asset valuation standards;

• V. We have fully considered the factors which may affect the appraised value;

• VI. The valuation conclusion is reasonable;

• VII. The valuation was carried out independently without any interference.

Signatures by the asset valuers:

21 October 2021

– III-1-40 –

VALUATION REPORT A

APPENDIX III-1

This Report is prepared in accordance with PRC Asset Valuation Standards

Explanations on the Asset Valuation

on

the Proposed Capital Increase in Yingkou Bulk Cargo Terminal Co., Ltd. (營口散貨碼頭有限公司) by Ying Kou Port Group Corporation Limited with Part of Assets and Liabilities

Zhong Tong Ping Bao Zi [2021] No. 11332 1 of 1

China Tong Cheng Assets Appraisal Co., Ltd. 21 October 2021

– III-1-41 –

VALUATION REPORT A

APPENDIX III-1

CONTENTS

Disclaimer on the Scope of the Use of the Explanations on the Valuation . . . . . . . .

Disclaimer on the Scope of the Use of the Explanations on the Valuation . . . . . . . .		43
Explanations	of the Enterprise on Relevant Matters in Conducting the
Asset Valuation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		44
Explanations	on the Asset Valuation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	52
I.	Explanations on the Valuation Target and Scope . . . . . . . . . . . . . . . .	52
II.	Overall Explanations on Assets Verification . . . . . . . . . . . . . . . . . . .	60
III.	Explanations on Valuation Technology . . . . . . . . . . . . . . . . . . . . . . .	62
(I)	Current Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	62
(II)	Fixed assets – Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	64
(III)	Fixed assets – Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	102
(IV)	Intangible Assets – Land Use Rights . . . . . . . . . . . . . . . . . . . . . . . . .	122
(V)	Current Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	142
IV.	Valuation Conclusion and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . .	143

– III-1-42 –

VALUATION REPORT A

APPENDIX III-1

Disclaimer on the Scope of the Use of the Explanations on the Valuation

The Explanations on the Valuation are for the use by the state-owned assets supervision and administration authorities (including the state-funded enterprises), relevant supervision and administration authorities and departments. Unless provided by laws and regulations, all or part of the contents of the materials shall not be provided to any other units and individuals, nor shall be published in the media.

– III-1-43 –

VALUATION REPORT A

APPENDIX III-1

Explanations of the Enterprise on Relevant Matters in Conducting the Asset Valuation

This part is issued and provided by the client and the appraised entity with the original text attached.

– III-1-44 –

VALUATION REPORT A

APPENDIX III-1

Explanations of the Enterprise on Relevant Matters in Conducting the Asset Valuation

I. OVERVIEW OF THE CLIENT AND THE APPRAISED ENTITY

Both the client and the appraised entity of the valuation are Ying Kou Port Group Corporation Limited, the overview of which is as follows.

Name: Ying Kou Port Group Corporation Limited (hereinafter referred to as Yingkou Port Group)

Legal domicile: No. 1, Yinggang Road, Bayuquan District

Unified social credit code: 91210800121119657C

Authorized representative: Deng Renjie

Registered capital: RMB20 billion

Major scope of business: licensed businesses: port operation (businesses that are subject to approval according to law may be operated only after being approved by relevant departments, and specific businesses shall be subject to the results of approval); general businesses: port loading and unloading, warehousing and services; supply of ship materials; import of raw and auxiliary materials, mechanical equipment, instruments and parts necessary for its production and scientific research; export of self-produced seafood, talc, magnesia, woven bags, food, woodware, clothing, knitwear (except 16 kinds of export commodities jointly operated by national organisations); agency cargo packaging, consignment, water transportation, non-metallic ore, pig iron sales, plastic packaging products, vegetable oil; international passenger transport services, agency sales of ship tickets, luggage check-in; recycling of waste materials; advertising agency, production, design; ship supply (daily necessities, except for ship fuel), cement brick production, cement brick laying, metal materials, building material sales, engineering consulting; water and heating supply; emergency prevention of pollutants and pollutant receiving and disposal (operating with qualification certificate). The following businesses are operated only by branches and affiliates: distribution of liquefied petroleum gas, daily necessities, textiles, leather goods, household appliances, hardware and electrical appliances, chemical products (except dangerous articles), shipbuilding material (except those subject to approval); communication equipment distribution and agency services; ship waste (excluding hazardous waste) recycling and agency services; pre-packaged food; car rental; self-owned real estate business activities; property management; building cleaning services; other cleaning services; conference services; greening management; computers and communicators leasing; other machinery and equipment leasing; other water transportation auxiliary activities; real estate leasing. (Except those that are subject to approval according to law, businesses may be operated independently with the business licence(s))

– III-1-45 –

APPENDIX III-1

VALUATION REPORT A

Ying Kou Port Group Corporation Limited (hereinafter referred to as “Yingkou Port Group”, and formerly known as Port of Yingkou Authority) was registered with Yingkou City Administration for Industry and Commerce on 17 April 2003 in accordance with the Notice on the Implementation Opinion on the Reform of the Port Management System of Yingkou Port (Yingkou Municipal Committee Office of the CPC [2002] No. 42) and the Approval for the Allocation of Assets for Establishment of Ying Kou Port Group Corporation Limited (Yingkou Municipal State-owned Assets Management Committee Office [2003] No. 1), with a registered capital of RMB1.7 billion.

In December 2009, the capital reserve was transferred to registered capital of RMB7.3 billion under the Approval for Yingkou Port Group’s Transfer of Capital Reserve to Registered Capital (Ying Guo Zi Chan Quan [2009] No. 85) issued by State-owned Assets Supervision and Administration Commission of Yingkou Municipal People’s Government (hereinafter referred to as “Yingkou SASAC”), and the registered capital of Yingkou Port Group was changed to RMB9.0 billion.

In December 2017, Yingkou SASAC entered into an equity transfer agreement at nil consideration with Liaoning North East Asia Gang Hang Development Co., Ltd. (“Gang Hang Development Company”), pursuant to which, Yingkou SASAC has agreed to transfer its 100% equity interests held in Yingkou Port Group to Gang Hang Development Company at nil consideration. Upon the share transfer, Yingkou Port Group became a wholly-owned subsidiary of Gang Hang Development Company.

On 28 November 2018, Gang Hang Development Company, each of creditor banks of Yingkou Port Group and Yingkou Port Group entered into a loan capitalisation agreement. It is agreed that Yingkou Port Group would increase its registered capital of RMB11 billion, of which RMB185,803,800 would be contributed by Gang Hang Development Company with cash and equity interests amounting to RMB21,929,277,300, and RMB10,814,196,200 would be contributed by each of creditor banks of Yingkou Port Group with creditors’ rights amounting to RMB37 billion. Yingkou Port Group completed the business registration change on 28 November 2018, and the registered capital after the change was RMB20 billion.

Gang Hang Development Company, the controlling shareholder of Yingkou Port Group, was renamed as Liaoning Port Group Limited (“Liaoning Port Group”) on 29 November 2018.

Pursuant to the Equity Transfer Agreement of Ying Kou Port Group Corporation Limited signed by Liaoning Port Group and Dalian Port Corporation Limited (“PDA”) on 14 May 2019, Liaoning Port Group transferred the 22.965% equity interests it held in Yingkou Port Group to its wholly-owned subsidiary, being PDA.

Pursuant to the Agreement on the Gratuitous Transfer of the Equity Interests in Liaoning Port Group Limited signed by the State-owned Assets Supervision and Administration Commission of the People’s Government of Liaoning Province (hereinafter referred to as the “Liaoning SASAC”) and China Merchants (Liaoning) Port Development Company Limited (hereinafter referred to as “China Merchants Liaoning”) on 31 May 2019, the nil consideration

– III-1-46 –

APPENDIX III-1

VALUATION REPORT A

transfer of the 1.1% equity interests held by Liaoning SASAC in Liaoning Port Group to China Merchants Liaoning was completed on 30 September 2019. Upon completion of the equity transfer, China Merchants Liaoning held 51.00% equity interests in Liaoning Port Group, whose ultimate de facto controller was changed from Liaoning SASAC to China Merchants Group Limited (“China Merchants Group”). The ultimate de facto controller of Yingkou Port Group was also changed from Liaoning SASAC to China Merchants Group.

On 7 April 2020, a shareholders’ general meeting of Yingkou Port Group resolved to approve the transfer of the 6.28% equity interests of the Company (corresponding to the subscribed capital contribution of RMB1,256,184,900) held by a shareholder of Yingkou Port Group, being Agricultural Bank of China Limited Yingkou Economic and Technological Development Zone Sub-branch, to ABC Financial Assets Investment Co., Ltd. (農銀金融資產 投資有限公司). Yingkou Port Group completed the business registration change in respect of such equity transfer on 8 May 2020.

Pursuant to the stipulations of the Voting Rights Entrustment Agreement signed by Liaoning Port Group and PDA on 29 March 2021, Liaoning Port Group entrusted PDA to exercise all shareholders rights of the 22.965% equity interests it held in Yingkou Port Group except for income rights, disposal rights (including share pledge), rights of subscription, capital increase/right of first refusal. After the agreement came into effect, PDA enjoyed the voting rights corresponding to an aggregate of 45.93% equity interests of Yingkou Port Group. On 29 March 2019, Liaoning Port Group and PDA entered into the Joint Statement Between Liaoning Port Group Limited and Dalian Port Corporation Limited on the Matters Relating to the Entrustment of Voting Rights of Ying Kou Port Group Corporation Limited, pursuant to which, PDA would exercise shareholders’ rights as stipulated in the Voting Rights Entrustment Agreement and re-elect the members of the board of directors of Yingkou Port Group, while PDA would appoint new directors for Yingkou Port Group. From the signing date of the Voting Rights Entrustment Agreement and prior to the completion of the re-election, being the transition period, within Liaoning Port Group and PDA, Liaoning Port Group will delegate the management power of Yingkou Port Group to the level of PDA. PDA will directly manage Yingkou Port Group. During the transition period, Liaoning Port Group will not, in any way, exert influence on the current directors of Yingkou Port Group appointed by it that is contrary to the wishes of PDA, or engage in other behaviors that may cause the control of Yingkou Port Group to be unstable. Under the above arrangement, PDA has established control over Yingkou Port Group, and Liaoning Port Group has established indirect control over Yingkou Port Group through its wholly-owned subsidiary, being PDA.

II. EXPLANATIONS ON THE ECONOMIC ACTIVITY

Ying Kou Port Group Corporation Limited intended to increase the capital in Yingkou Bulk Cargo Terminal Co., Ltd. (營口散貨碼頭有限公司) with part of assets and liabilities.

Such economic activity has been approved by China Merchants Group’s Approval on the New Establishment of a Wholly-owned Subsidiary for the Revitalization of the Northeast Phase II Project (《關於新設全資子公司用於振興東北二期項目的批覆》) (Zhao Fa Zhan Lue Zi [2021] No. 457).

– III-1-47 –

VALUATION REPORT A

APPENDIX III-1

III. EXPLANATIONS ON THE VALUATION TARGET AND SCOPE

(I) Valuation Target and Scope

The appraised valuation target and scope are consistent with the valuation target and scope involved in the economic activity.

The valuation target is the assets and liabilities owned and proposed to be used for capital contribution its capital by Yingkou Port Group. The specific scope of valuation includes cash at bank, current accounts, inventories, buildings, structures, machinery and equipment, vehicles, electronic equipment, land use rights and various liabilities. See the table below for details.

Unit: RMB

No.	Name of item	Name of item	Carrying amount
1	I.	Total current assets	47,730,034.75
2		Cash at bank and on hand	6,988,687.27
3		Accounts receivable	37,762,006.49
4		Prepayments	200,000.00
5		Other receivables	257,399.85
6		Inventories	360,341.22
7		Other current assets	2,161,599.92
8	II.	Total non-current assets	5,510,052,507.13
9		Fixed assets	4,402,204,853.44
10		Intangible assets	1,107,847,653.69
11	**III. **	Total assets	5,557,782,541.88
12	IV.	Total current liabilities	47,304,861.39
13		Accounts payable	24,344,883.56
14		Advances from customers	20,224,525.62
15		Employee benefits payable	1,815,798.01
16		Taxes payable	610,644.59
17		Other payables	309,009.61
18	V.	Total liabilities	47,304,861.39
19	VI.	Net assets	5,510,477,680.49

– III-1-48 –

VALUATION REPORT A

APPENDIX III-1

The physical assets and land use rights included in the scope of valuation are as follows:

Unit: RMB

		Original	Net carrying
Name of item	Quantity	carrying amount	amount
Fixed assets
Buildings	73,238.10	110,707,480.32	75,383,613.16
Structures	145	5,164,992,084.90	3,823,735,896.54
Machinery and
equipment	735.00	950,582,770.39	502,780,178.24
Vehicles	8.00	3,834,000.00	191,700.00
Electronic equipment	170.00	989,903.93	113,465.50
Intangible assets
Land use rights	4,396,185.69	1,481,122,772.84	1,107,847,653.69
Total		7,712,229,012.38	5,510,052,507.13

IV. EXPLANATIONS ON THE VALUATION BENCHMARK DATE

The valuation benchmark date is 31 August 2021.

Major factors considered in determining the valuation benchmark date include the time requirement on the implementation of the economic activity. The end of the accounting period was adopted to facilitate the defining of the scope of valuation and the accurate and efficient stocktaking of assets.

V. EXPLANATIONS ON MAJOR EVENTS WHICH MAY AFFECT THE VALUATION

The information on pledge or mortgage of assets that are included in the scope of valuation is as follows:

				Commencement	Ending		Contract	Rental
		Total	Balance of	date of	date of	Guarantee	interest	calculation
Leasing company	Borrower	borrowings	borrowings	borrowings	borrowings	method	rate	method	Collateral
		_(RMB0’000) _	(RMB0’000)
Industrial Financial	Ying Kou	80,000.00	23,333.33	2017/5/18	2023/5/18	Credit	4.410%	Principal in equal	Fairy Island Port
Leasing Co., Ltd.	Port Group							instalments	Pool 1 1-2#
	Corporation								refined oil and
	Limited								liquid
									chemicals
									terminals, Port
									Pool 5 65#
									steel and
									general cargo
									berth

– III-1-49 –

APPENDIX III-1

VALUATION REPORT A

				Commencement	Ending		Contract	Rental
		Total	Balance of	date of	date of	Guarantee	interest	calculation
Leasing company	Borrower	borrowings	borrowings	borrowings	borrowings	method	rate	method	Collateral
		_(RMB0’000) _	(RMB0’000)
SPDB Financial	Ying Kou	50,000.00	12,500.00	2017/11/28	2022/11/21	Credit	3.325%	Principal in equal	Berth 62# in
Leasing Co., Ltd.	Port Group							instalments	Bayuquan Port
	Corporation								Area
	Limited
Bank of Beijing	Ying Kou	50,000.00	17,500.00	2018/4/25	2023/4/25	Credit	5.5575%	Principal in equal	Berths 68# and
Financial	Port Group							instalments	70#
Leasing Co.,	Corporation
Ltd.* (北銀金融	Limited
租賃有限公司)
Jiangxi Financial	Ying Kou	80,000.00	25,560.00	2016/12/16	2023/3/3	Credit	4.410%	Interest in equal	Berths 66# and
Leasing Corp.,	Port Group							instalments	67#
Ltd.	Corporation
	Limited

The assets included in the scope of valuation have been leased out as follows:

Name of the						Annual
contract	Leasee	Leased Assets	Title certificate number	**Area **	Lease term	rental
						(RMB, tax
				(sq.m.)		inclusive)
Land Use Rights	Yingkou Xingang	Land use rights	Liao (2020) Yingkou	298,720.25	2021/1/1-	4,480,803.66
Lease Agreement	Ore Terminal		Bayuquan Real Estate No.		2021/12/31
	Co., Ltd. (營口		0027263
	新港礦石碼頭有
	限公司)
Land Use Rights	Yingkou Port	Land use rights	Liao (2020) Yingkou	2,431,326.47	2021/1/1-	36,469,900.00
Lease Agreement	Liability Co.,		Bayuquan Real Estate No.		2021/12/31
	Ltd.		0029352, 0029354, 0029361,
			0029375, 0029388, 0029391,
			0027202, 0027222, 0027228,
			0027242, 0027266, 0032267,
			0032270, 0035276, 0032298,
			0035276 and Bayuquan Guo
			Yong (2007) No. 0216 and
			0217
2021 Asset Lease	Yingkou Port	Wharf berth	Bayuquan Port Area 1 Port		2021/1/1-	349,897,100.00
Agreement	Liability Co.,		Pool 18# ore berth, Port		2021/12/31
	Ltd.		Pool A 3# general berth,
			Port Pool A 1-2# refined oil
			and liquid chemical berths,
			Port Pool 5 61#-71# general
			berths, Fairy Island 201-
			203# berths and yards and
			tank farms

– III-1-50 –

VALUATION REPORT A

APPENDIX III-1

Including: Fairy Island 201-203# berths and ore dump were not within the scope of this valuation, and the corresponding rental was RMB110,463,227.26.

VI. EXPLANATIONS ON ASSETS AND LIABILITIES STOCKTAKING

The scope of assets and liabilities stocktaking is consistent with the scope of valuation. As of the valuation benchmark date, the carrying amount of total assets, liabilities and net assets was RMB5,557,782,500, RMB48,865,000 and RMB5,508,917,500, respectively.

To cooperate in the assets valuation, Ying Kou Port Group Corporation Limited had detailed planning for the stocktaking, and arranged relevant departments and employees of the company to establish a special working group on assets stocktaking to conduct stocktaking on the assets and liabilities included in the scope of valuation. Appraisers provided centralized guidance on the working group, explained the standards on filling in the breakdown of stocktaking and notes in the process of stocktaking, issued the list of materials to be collected and prepared and emphasized the implementation of the ownership of property rights, specified the layout of physical items and improved accounting vouchers. The property ownership certificate documents of the relevant assets have been provided as required. During the on-site survey, the appraisers cooperated in carrying out a physical site visit to implement the layout of the physical assets, and provided materials regarding use, maintenance and inspection records.

The stocktaking was carried out separately according to different types of assets.

VII. LIST OF MATERIALS

Major materials provided by the client are as follows:

1. Business licenses;

2. The corresponding economic activity documents on the valuation.

Major materials provided by the appraised entity are as follows:

1. Declaration forms for assets appraisal (pattern issued by the valuation agency);

2. Business licenses;

3. Asset ownership certifications and property right certifications;

4. Material contracts and agreements;

5. Project budget and financial accounts materials;

6. Other materials.

– III-1-51 –

VALUATION REPORT A

APPENDIX III-1

Explanations on the Asset Valuation

I. EXPLANATIONS ON THE VALUATION TARGET AND SCOPE

(I) The Valuation Target and the Contents of the Scope of Valuation

The appraised valuation target and scope are consistent with the valuation target and scope involved in the economic activity.

The valuation target is the assets and liabilities owned and proposed to be used to increase its capital by Yingkou Port Group. The specific scope of valuation includes cash at bank, current accounts, inventories, buildings, structures, machinery and equipment, vehicles, electronic equipment, land use rights and various liabilities. See the table below for details.

Unit: RMB

No.	Name of item	Name of item	Carrying amount
1	I.	Total current assets	47,730,034.75
2		Cash at bank and on hand	6,988,687.27
3		Accounts receivable	37,762,006.49
4		Prepayments	200,000.00
5		Other receivables	257,399.85
6		Inventories	360,341.22
7		Other current assets	2,161,599.92
8	II.	Total non-current assets	5,510,052,507.13
9		Fixed assets	4,402,204,853.44
10		Intangible assets	1,107,847,653.69
11	**III. **	Total assets	5,557,782,541.88
12	IV.	Total current liabilities	47,304,861.39
13		Accounts payable	24,344,883.56
14		Advances from customers	20,224,525.62
15		Employee benefits payable	1,815,798.01
16		Taxes payable	610,644.59
17		Other payables	309,009.61
18	V.	Total liabilities	47,304,861.39
19	VI.	Net assets	5,510,477,680.49

– III-1-52 –

VALUATION REPORT A

APPENDIX III-1

The physical assets and land use rights included in the scope of valuation are as follows:

Unit: RMB

		Original	Net carrying
Name of item	Quantity	carrying amount	amount
Fixed assets
Buildings	73,238.10	110,707,480.32	75,383,613.16
Structures	145	5,164,992,084.90	3,823,735,896.54
Machinery and
equipment	735.00	950,582,770.39	502,780,178.24
Vehicles	8.00	3,834,000.00	191,700.00
Electronic equipment	170.00	989,903.93	113,465.50
Intangible assets
Land use rights	4,396,185.69	1,481,122,772.84	1,107,847,653.69
Total		7,712,229,012.38	5,510,052,507.13

(II) Breakdown and Characteristics of Physical Assets

The details of the assets included in the scope of this valuation are as follows:

1. Inventories – revolving materials in stock

Inventories included in the scope of valuation are the revolving materials in stock, with a total carrying amount of RMB360,341.22, the provision for decline in value of RMB0.00, and the net value of RMB360,341.22. It mainly includes lubricating oil, labour protection appliance and spare parts, which are mainly stored in the material warehouse and other areas of the enterprise.

2. Buildings (structures)

Those included in the scope of valuation are buildings (structures) owned by Ying Kou Port Group Corporation Limited and are mainly distributed in Yingkou Port and Bayuquan District, Yingkou City, Liaoning Province, including an aggregate of 40 buildings, with a total floor area of 73,238.10 sq.m.; and an aggregate of 145 structures. The main buildings include the Group’s substations, No. 1 and No. 2 steel warehouse, general yard and machine repair workshop, which are mainly production and auxiliary buildings of the enterprise.

– III-1-53 –

VALUATION REPORT A

APPENDIX III-1

Buildings (structures) are mainly self-built by enterprise. The structure types are mainly frame structure, steel structure and brick-concrete structure. The main structure features of buildings (structures) are as follows:

(1) Frame structure

The foundation of the frame structure building applies reinforced concrete independent foundation and reinforced concrete bar foundation. The upper structure applies cast-in-place reinforced concrete columns, beams and slabs, forming the skeleton of the entire building, and enclosure with a 370mm solid brick. It applies cast-in-place reinforced concrete roof, cement mortar leveling, perlite thermal insulation layer and modified asphalt felts for waterproofing. Most of which applies cement flooring or terrazzo flooring, cement mortar screeding and paint brushing for outer wall and interior wall. It also applies doors made of steel and wood material, plastic steel windows or aluminum alloy windows.

Supporting projects: power circuit, general lighting and fire fighting system

(2) Brick-concrete structure

The foundation of the brick-concrete structure applies a concrete bar foundation, cast-in-place reinforced concrete structural columns, and 370mm or 240mm solid brick for interior and outer walls. It applies cast-in-place reinforced concrete slab, cement mortar leveling for roofing, perlite insulation layer, modified asphalt waterproof membrane or rigid waterproofing. The ground is mostly made of cement or terrazzo. The exterior walls were smoothed and brushed with cement mortar and the interior dry were brushed with great white or cement mortar. It also applies wooden doors, plastic steel windows or aluminum alloy windows.

Supporting projects: general lighting, fire fighting system and water supply and drainage

(3) Steel structure

Most of the foundations of steel structure buildings apply cast-in-place reinforced concrete independent foundations. The upper structure of the independent foundation is equipped with reinforced concrete ground beams. The main structure of upper structure consists of steel structural columns, column bracing, roof trusses, roof truss horizontal bracing, purlins and crane beams. The part of the wall body below 1.2 meters is grey sand solid brick wall wiped with grey brush paint. The upper part of the wall body is made of double-layer thermal insulation color steel profiled panels, the roofing is made of double-layer color steel thermal insulation panels, and the wall is equipped with plastic steel windows or windowless, and finished blockboard sliding doors. The ground is 250mm-thick concrete ground.

Supporting works: power circuit, general lighting and fire fighting system

– III-1-54 –

VALUATION REPORT A

APPENDIX III-1

• (4) Outdoor supporting projects

Outdoor supporting projects of the plant area are mainly divided into two types, namely supporting public facilities and supporting projects required for process. Supporting public facilities include roads, enclosures, domestic water supply, heating pipelines, fire fighting water supply, rainwater pipes, power distribution, communications, networks and monitoring, etc.. The supporting projects required for process mainly include various fire-fighting pools, pipe corridor extensions, connecting corridors, sewage treatment stations of coal storage yards in port pools, process pipelines of oil transportation systems, special railway lines, etc..

• (5) The basic information of the terminal assets included in the scope of the valuation is as follows:

A total of 18 berths are included in the scope of the valuation, with a total length of 4,954.00 meters. The assets were self-built between 2008 and 2015.

		Structure and	Berthing		Front water
No.	Berth name	form	capacity	Length	depth	Quantity Main usage
			(ton)	(m)	(m)
1	Port pool A 3#	Gravity caisson	7	260	-18	1 General bulk
	general berth					cargo
2	Port pool A 4#	Gravity caisson	7	255	-18	1 General bulk
	general berth					cargo
3	Port pool A 5#	Gravity caisson	7	278	-18	1 General bulk
	general berth					cargo
4	Port pool A 6#	Gravity caisson	7	255	-18	1 General bulk
	general berth					cargo
5	1-2# refined oil and	High pile	5	470	-14.4	2 Refined oil
	liquid chemicals
	terminals
6	18# terminal berth	High pile beam	30	452	-24.5	1 Ore
7	61# general berth	Gravity block	7	260	-15.5	1 General bulk
						cargo
8	62# general berth	Gravity block	7	260	-15.5	1 General bulk
						cargo
9	63# general berth	Gravity block	7	260	-15.5	1 General bulk
						cargo
10	64# general berth	Gravity block	7	310	-15.5	1 Steel and general
						cargo
11	65# general berth	Gravity block	7	253	-15.5	1 Steel and general
						cargo
12	66# general berth	Gravity block	7	260.1	-15.5	1 Steel and general
						cargo

– III-1-55 –

APPENDIX III-1

VALUATION REPORT A

		Structure and	Berthing		Front water
No.	Berth name	form	capacity	Length	depth	**Quantity **	Main usage
			(ton)	(m)	(m)
13	67# general berth	Gravity block	7	240.9	-15.5	1	Steel and general
							cargo
14	68#-71## general	Gravity block	7	1,069	-15.5	4	Steel and general
	berth						cargo
	Total			4,883		18

3. Equipment under fixed assets

The equipment under fixed assets in the scope of valuation include machinery and equipment, vehicles and electronic device. The details of major assets on the valuation benchmark date are as follows:

• (1) There are a total of 735 pieces of machinery and equipment, mainly include crane, container reach stacker, forklift, portal crane and container reach stackers. As of the valuation benchmark date, most of the equipment was well maintained and can be used normally.

• (2) The vehicles for valuation are mainly 8 office vehicles, all of which are sprinklers. As of the valuation benchmark date, most of the equipment was well maintained and can be used normally.

• (3) Electronic device mainly includes a total of 170 in-vehicle digital walkietalkies, operating terminal equipment, fax machines, computers, printers and servers. As of the valuation benchmark date, most of the equipment was well maintained and can be used normally. Part of the equipment purchased a relatively long time ago with poor performance is to be scrapped.

(III) Intangible Assets Accounted for or Not Accounted for as Declared by the Enterprise

Ying Kou Port Group Corporation Limited has a total of 27 intangible assets – land use rights in the scope of this valuation, all of which have obtained the land title certificates. The recorded area of the parcel use rights is an aggregate of 6,855,933.68 sq.m., and the area of land use rights included in the scope of this valuation is 4,396,185.69 sq.m.. The original carrying amount is RMB1,481,122,772.84, and the carrying amount on the valuation benchmark date was RMB1,107,847,653.69.

– III-1-56 –

VALUATION REPORT A

APPENDIX III-1

The specific ownership registration for the land occupied by the assets appraised is shown in the table below:

									Transfer area
									included in the
				Date of	Nature of		Termination		scope of
No.	Title certificate no.	Parcel name	Location	acquisition	land	Land usage	date	Area recorded	valuation
1	Bayuquan Guo Yong	Port Pool A 2#	In the Port	2009/12/16	Transfer	Land for	2059/12/15	486,764.80	126,764.80
	[2009] No. 268	Land	Area			transportation
2	Liao (2020) Yingkou	Port Pool A 1#	In the Port	2020/11/11	Transfer	Land for	2059/6/9	384,618.90	384,538.25
	Bayuquan Real	Land	Area			transportation
	Estate No. 0032395
3	Liao (2020) Yingkou	Phase IV	In the Port	2020/11/10	Transfer	Land for	2059/12/15	535,388.00	484,941.15
	Bayuquan Real	Project 7#	Area			transportation
	Estate No. 0032260	Land
4	Liao (2018) Yingkou	Phase IV 4#	In the Port	2018/1/24	Transfer	Port terminal	2059/12/15	965,263.59	231,288.84
	Bayuquan Real	Plot	Area
	Estate No. 0029366
5	Liao (2020) Yingkou	Logistics	In the Port	2020/9/23	Transfer	Port terminal	2052/10/8	22,452.32	4,222.96
	Bayuquan Real	Parcel 1	Area
	Estate No. 0027169
6	Liao (2020) Yingkou	Logistics	In the Port	2020/9/23	Transfer	Port terminal	2052/10/8	413,338.24	14,697.35
	Bayuquan Real	Parcel 2	Area
	Estate No. 0027266
7	Bayuquan Guo Yong	Administrative	Outside the	2009/6/5	Transfer	Commercial and	2049/6/3	42,987.66	245.00
	[2009] No. 0127	Zone 1	Port			residential
			Area
8	Liao (2020) Yingkou	Administrative	Outside the	2020/9/23	Transfer	Commercial and	2079/6/3	29,016.61	100.00
	Bayuquan Real	Zone 2	Port			residential
	Estate No. 0027176		Area
9	Bayuquan Guo Yong	Port Pool A 4#	In the Port	2009/12/16	Transfer	Land for	2059/12/15	396,995.30	396,179.07
	[2009] No. 267	Land	Area			transportation
10	Liao (2020) Yingkou	Parcel 01#	In the Port	2007/12/18	Transfer	Port terminal	2049/12/25	43,979.50	43,979.50
	Bayuquan Real		Area
	Estate No. 0029352
11	Liao (2020) Yingkou	Parcel 02#	In the Port	2007/12/18	Transfer	Port terminal	2049/12/25	38,455.14	38,455.14
	Bayuquan Real		Area
	Estate No. 0027222
12	Bayuquan Guo Yong	Parcel 04#	In the Port	2007/12/18	Transfer	Port terminal	2049/12/25	20,049.55	20,049.55
	[2007] No. 0216		Area
13	Liao (2020) Yingkou	Parcel 03#	In the Port	2007/12/18	Transfer	Port terminal	2049/12/25	199,427.59	199,427.59
	Bayuquan Real		Area
	Estate No. 0029375

– III-1-57 –

APPENDIX III-1

VALUATION REPORT A

									Transfer area
									included in the
				Date of	Nature of		Termination		scope of
No.	Title certificate no.	Parcel name	Location	acquisition	land	Land usage	date	Area recorded	valuation
14	Liao (2020) Yingkou	Parcel 07#	In the Port	2020/9/23	Transfer	Port terminal	2049/12/25	298,720.25	294,174.75
	Bayuquan Real		Area
	Estate No. 0027263
15	Bayuquan Guo Yong	Parcel 05#	In the Port	2007/12/18	Transfer	Port terminal	2049/12/25	17,452.00	17,452.00
	[2007] No. 0217		Area
16	Liao (2020) Yingkou	Parcel 06#-1	Haixingban	2010/12/21	Transfer	Industrial	2049/12/25	189,206.47	189,206.47
	Bayuquan Real
	Estate No. 0029388
17	Liao (2020) Yingkou	Parcel 06#-2	Haixingban	2005/9/27	Transfer	Industrial	2052/6/17	141,174.75	141,174.75
	Bayuquan Real
	Estate No. 0032270
18	Liao (2020) Yingkou	Parcel 08#	Haixingban	2010/12/21	Transfer	Industrial	2052/6/17	90,787.67	90,787.67
	Bayuquan Real
	Estate No. 0029354
19	Liao (2020) Yingkou	Parcel 09#-1	Haixingban	2010/12/21	Transfer	Industrial	2052/6/17	63,085.71	63,085.71
	Bayuquan Real
	Estate No. 0029361
20	Liao (2020) Yingkou	Parcel 09#-2	Haixingban	2006/7/18	Transfer	Port terminal	2052/6/17	87,327.49	87,327.49
	Bayuquan Real
	Estate No. 0027242
21	Liao (2020) Yingkou	Parcel 10#	Haixingban	2020/10/12	Transfer	Port terminal	2052/6/17	382,688.05	336,238.11
	Bayuquan Real
	Estate No. 0029391
22	Liao (2020) Yingkou	Parcel 11#	In the Port	2020/11/10	Transfer	Port terminal	2052/6/17	294,463.16	235,562.67
	Bayuquan Real		Area
	Estate No. 0032298
23	Liao (2020) Yingkou	Parcel 13#	Haixingban	2010/12/21	Transfer	Industrial	2052/6/17	112,879.91	112,879.91
	Bayuquan Real
	Estate No. 0027228
24	Liao (2020) Yingkou	East of	Outside the	2005/9/27	Transfer	Warehousing	2046/11/27	29,923.93	29,923.93
	Bayuquan Real	Tianshan	Port
	Estate No. 0032267	Street,	Area
		Bayuquan
		District
25	Liao (2020) Yingkou	Administrative	Outside the	2020/9/23	Transfer	Industrial	2059/6/9	256,523.19	44,350.38
	Bayuquan Real	Zone 11	Port
	Estate No. 0027202		Area

– III-1-58 –

VALUATION REPORT A

APPENDIX III-1

									Transfer area
									included in the
				Date of	Nature of		Termination		scope of
No.	Title certificate no.	Parcel name	Location	acquisition	land	Land usage	date	Area recorded	valuation
26	Liao (2020) Yingkou	Phase III	In the Port	2020/12/7	Transfer	Port terminal	2052/7/17	1,153,176.60	797,872.65
	Bayuquan Real	project – 47	Area
	Estate No. 0035276
27	Yingkou Guo Yong	Yanchang	In the Port	2009/7/8	Transfer	Industrial	2054/5/19	159,787.30	11,260.00
	[2015] No. 5066	Village	Area
		Parcel
	Total							6,855,933.68	4,396,185.69

(IV) Type and Quantity of Off-balance-sheet Assets Declared by the Enterprise

Nil.

• (V) Type, Quantity and Carrying Amount (or Appraised Value) of Assets Involved in Making Reference to the Conclusions of Reports Issued by Other Institutions

Nil.

– III-1-59 –

VALUATION REPORT A

APPENDIX III-1

II. OVERALL EXPLANATIONS ON ASSETS VERIFICATION

(I) Arrangement of Assets Verifiers, Execution Time and Procedures

In accordance with relevant standards and regulations on assets appraisal and based on the accounting statements on the valuation benchmark date and the declaration forms for assets appraisal provided by the appraised entity, during the period from 25 August 2021 to 6 September 2021, four professional teams (financial team, real estate team, equipment team and land team) verified the assets and related liabilities within the scope of valuation.

Details of the verification procedures are as follows:

Guiding the appraised entity in assets and liabilities stocktaking and filling in the breakdown of assets and liabilities, collecting and summarizing various valuation materials provided by the appraised entity.

Adopting different methods by types to verify if the accounting statements are consistent with the actual accounts based on the accounting statements on the valuation benchmark date and the declaration forms for assets appraisal provided by the appraised entity under the cooperation of relevant employees of the appraised entity. Requiring the appraised entity to supplement, modify and improve the declaration forms for assets appraisal based on the verification results.

Verifying the valuation materials provided by the appraised entity, conducting necessary inspections on the materials about the legal ownership of relevant assets and sources of materials and paying due attention to the legal ownership of relevant assets.

Conducting investigations to understand significant events which may affect the assets valuation.

The conclusions on verification of assets are formed based on the above work after the communications with relevant parties.

(II) Matters Affecting the Verification of Assets and the Handling Methods

Nil

– III-1-60 –

VALUATION REPORT A

APPENDIX III-1

(III) Verification Conclusion

1. The information on pledge or mortgage of assets that are included in the scope of valuation is as follows:

		Total	Balance of	Commencement	Ending		Contract	Rental
		borrowings	borrowings	date of	date of	Guarantee	interest	calculation
Leasing company	Borrower	(RMB0’000)	(RMB0’000)	borrowings	borrowings	method	rate	method	Collateral
Industrial Bank	Ying Kou	80,000.00	23,333.33	2017/5/18	2023/5/18	Credit	4.410%	Principal in	Fairy Island Port
Financial	Port Group							equal	Pool 1 1-2#
Leasing Co., Ltd.	Corporation							instalments	refined oil and
	Limited								liquid
									chemicals
									terminals, Port
									Pool 5 65#
									steel and
									general cargo
									berth
Shanghai Pudong	Ying Kou	50,000.00	12,500.00	2017/11/28	2022/11/21	Credit	3.325%	Principal in	Berth 62# in
Development	Port Group							equal	Bayuquan Port
Bank Financial	Corporation							instalments	Area
Leasing Co., Ltd.	Limited
Bank of Beijing	Ying Kou	50,000.00	17,500.00	2018/4/25	2023/4/25	Credit	5.5575%	Principal in	Berths 68# and
Financial Leasing Co., Ltd.*(北銀金 融租賃有限公司)	Port Group Corporation Limited							equal instalments	70#
Jiangxi Financial	Ying Kou	80,000.00	25,560.00	2016/12/16	2023/3/3	Credit	4.410%	Interest in	Berths 66# and
Leasing Co., Ltd.	Port Group							equal	67#
	Corporation							instalments
	Limited

2. The assets included in the scope of valuation have been leased out as follows:

						Annual
Name of the contract	Leasee	Leased assets	Title certificate number	**Area **	Lease term	rental
						(RMB, tax
				(sq.m.)		inclusive)
Land Use Rights Lease	Yingkou Xingang	Land use rights	Liao (2020) Yingkou Bayuquan	298,720.25	2021/1/1-	4,480,803.66
Agreement	Ore Terminal Co., Ltd. (營口新		Real Estate No. 0027263		2021/12/31
	港礦石碼頭有限
	公司)
Land Use Rights Lease	Yingkou Port	Land use rights	Liao (2020) Yingkou Bayuquan	2,431,326.47	2021/1/1-	36,469,900.00
Agreement	Liability		Real Estate No. 0029352,		2021/12/31
	Co., Ltd.		0029354, 0029361, 0029375,
			0029388, 0029391, 0027202,
			0027222, 0027228, 0027242,
			0027266, 0032267, 0032270,
			0035276, 0032298, 0035276
			and Bayuquan Guo Yong
			(2007) No. 0216 and 0217
2021 Asset Lease	Yingkou Port	Wharf berth	Bayuquan Port Area 1 Port Pool	2021/1/1-	349,897,100.00
Agreement	Liability Co.,		18# ore berth, Port Pool A 3#	2021/12/31
	Ltd.		general berth, Port Pool A 1-2#
			refined oil and liquid chemical
			berths, Port Pool 5 61#-71#
			general berths, Fairy Island
			201-203# berths and yards and
			tank farms

– III-1-61 –

VALUATION REPORT A

APPENDIX III-1

Including: Fairy Island 201-203# berths and ore dump were not within the scope of this valuation, and the corresponding rental was RMB110,463,227.26.

3. The assets appraised are in normal use or under normal conditions, there is no major difference with the book records, and the ownership is complete and clear.

4. Part of real estates have not obtained the real estate certificates, but surveying reports have been completed, and the area determined after surveying is confirmed under this valuation. The enterprise has issued a statement of ownership, confirming that the real estates without ownership certificate are not in dispute.

III. EXPLANATIONS ON VALUATION TECHNOLOGY

(I) Current Assets

1. Cash at bank and on hand – cash at bank

The carrying amount of cash at bank is RMB6,988,687.27. There are a total of 2 bank accounts, of which, the balance with the Bank of China Yingkou Economic and Technological Development Zone Sub-branch is zero, and all cash at bank is deposited in the Dalian Branch of China Merchants Group Finance Co., Ltd.* (招商局集團財務有限公 司). Based on the reconciliation statements and related information provided by the enterprise, the appraisers check against the balance of the bank reconciliation statements on the valuation benchmark date firstly, in case of any difference, find out the reason for the difference by using the outstanding items in the balance reconciliation statements, and check whether it affects net assets one by one. Upon checking item by item, no outstanding items are found. The appraisers confirmed the bank account by letter, and the reply was consistent. Therefore, the verified carrying amount is determined as the appraised value of cash at bank.

It is finally confirmed that the appraised value of cash at bank is RMB6,988,687.27.

2. Accounts receivable, prepayments, other receivables and other current assets

The book balance of accounts receivable, bad debt provision and net carrying amount is RMB39,082,363.52, RMB1,320,357.03 and RMB37,762,006.49, respectively. The accounting contents mainly include port fees receivable and provisional storage fee. Upon checking that the general ledger, subsidiary ledger and statements are consistent, the appraisers verified the time and contents of the accounts receivable, inquired about the reason why the receivable was not recovered, and confirmed large amounts by letter, so as to confirm that the carrying amount on the benchmark date was true and accurate. The amount that can be recovered and the amount that has been recently recovered and off-set shall be confirmed at the carrying amount. Upon the above valuation procedures, the appraised value of accounts receivable is RMB37,762,006.49.

– III-1-62 –

APPENDIX III-1

VALUATION REPORT A

The book balance of prepayments and bad debt provision is RMB200,000.00 and RMB0, respectively. The accounting contents include prepaid railway freight. Upon checking that the general ledger, subsidiary ledger and statements are consistent, the appraisers verified the time and contents of the prepayments, inquired about the reason why the receivable was not recovered, and confirmed large amounts by letter, so as to confirm that the carrying amount on the benchmark date was true and accurate. Upon the above valuation procedures, the appraised value of prepayments is RMB200,000.00.

The book balance of other receivables, bad debt provision and net carrying amount is RMB257,402.65, RMB2.80 and RMB257,399.85, respectively. The accounting contents include medical waste cleaning deposit. Upon checking that the general ledger, subsidiary ledger and statements are consistent, the appraisers verified the time and contents of other receivables, inquired about the reason why the receivable was not recovered, and confirmed large amounts by letter, so as to confirm that the carrying amount on the benchmark date was true and accurate. Upon the above valuation procedures, the appraised value of other receivables is RMB257,399.85.

The book balance of other current assets is RMB3,721,786.07, and the accounting content include the value-added tax on Australian coal. According to the valuation procedure, it has checked the accounting vouchers of original amount of such other non-current assets, and the verified carrying amount of RMB3,721,786.07 is finally determined as the appraisal value.

3. Inventories

As of the valuation benchmark date, the inventories of enterprise were the revolving materials in stock, with a total carrying amount of RMB360,341.22, the provision for decline in value of RMB0.00, and the net value of RMB360,341.22. It mainly includes lubricating oil, labour protection appliance and spare parts, which are mainly stored in the material warehouse and other areas of the enterprise.

According to the valuation procedure and taking into account of declaration forms for appraisal of the enterprise on the valuation benchmark date, appraisers have conducted sample checks and verification on the revolving materials in stock. The appraisers reviewed the quantity, unit price and amount in the inventory valuation schedule of the revolving materials in stock provided by them firstly, and then organized appraisers to conduct sample checks at the finished product storage site, and plus or minus the quantity of shipments and receipts from the benchmark date to the checking date based on the checking results, reverse the book amount on the benchmark date, and check against the book amount on the benchmark date to verify the book amount on the benchmark date. Upon investigation by the appraisers, the revolving materials in stock are stored in the warehouse of the enterprise and kept in good condition.

– III-1-63 –

VALUATION REPORT A

APPENDIX III-1

Upon learning from the enterprise and the checking and surveying by the appraisers, The inventories recycle is relatively fast, and there is no backlog. After inquiring with the supplier, the verified quantity multiplied by the inquiry unit price shall be taken as the appraised value of inventories. Finally, the appraised value of inventories was RMB360,341.22, with no increase or decrease.

4. Other current assets

The carrying amount of other current assets is RMB2,161,599.92. The accounting contents include the VAT input to be deducted.

According to the appraisal procedure and based on the valuation declaration schedule provided by the appraised entity, the appraisers have checked the consistency between accounts and account statements, understood the tax rates and preferential policies implemented by the enterprise, verified the authenticity and rationality, and understood the reasons for the formation of other current assets, and judged the amount to be recovered according to the specific circumstance.

Finally, the appraised value of other current assets was determined as RMB2,161,599.92.

(II) Fixed assets – buildings

1. Scope of valuation

The buildings included in the scope of valuation are as follows:

Summary of Buildings under Fixed assets

				Unit: RMB
			**Carrying **	amount
No.	Name of item	Quantity	Original value	Net value
1	Buildings	40	110,707,480.32	75,383,613.16
2	Structures and others	145	5,164,992,084.90	3,823,735,896.54
	Total		5,275,699,565.22	3,899,119,509.70
	Less: provision for impairment
	Total		5,275,699,565.22	3,899,119,509.70

2. Overview of Assets

Those included in the scope of valuation are buildings under fixed assets owned by Ying Kou Port Group Corporation Limited and are mainly distributed in Yingkou Port and Bayuquan District, Yingkou City, Liaoning Province, including an aggregate of 40 buildings and 145 structures. The assets were self-built between 1998 and 2021.

– III-1-64 –

VALUATION REPORT A

APPENDIX III-1

Buildings (structures) are mainly self-built by enterprise. The structure types are mainly frame structure, steel structure and brick-concrete structure. The main structure features of buildings (structures) are as follows:

(1) Frame Structure

The foundation of the frame structure building applies reinforced concrete independent foundation and reinforced concrete bar foundation. The upper structure applies cast-in-place reinforced concrete columns, beams and slabs, forming the skeleton of the entire building, and enclosure with 370mm or 240mm solid brick for interior and outer walls. It applies cast-in-place reinforced concrete slab, cement mortar leveling for roofing, perlite insulation layer, modified asphalt waterproof membrane. The ground is mostly made of cement or terrazzo. The exterior walls were smoothed and brushed with cement mortar and the interior dry walls were brushed with great white or cement mortar. It also applies doors made of steel and wood material, plastic steel windows or aluminum alloy windows.

Supporting projects: power circuit, general lighting and fire fighting system

(2) Brick-concrete Structure

The foundation of the brick-concrete structure applies a concrete bar foundation, cast-in-place reinforced concrete structural columns, and a 370mm or 240mm solid brick for interior and outer walls. It applies cast-in-place reinforced concrete slab, cement mortar leveling for roofing, perlite insulation layer, modified asphalt waterproof membrane or rigid waterproofing. The ground is mostly made of cement or terrazzo. The exterior walls were smoothed and brushed with cement mortar and the interior dry walls were brushed with great white or cement mortar. It also applies wooden doors, plastic steel windows or aluminum alloy windows.

Supporting projects: general lighting, fire fighting system and water supply and drainage

(3) Steel Structure

Most of the foundations of steel structure buildings apply cast-in-place reinforced concrete independent foundations. The upper structure of the independent foundation is equipped with reinforced concrete ground beams. The main structure of upper structure consists of steel structural columns, column bracing, roof trusses, roof truss horizontal bracing, purlins and crane beams. The part of the wall body below 1.2 meters is grey sand solid brick wall wiped with grey brush paint.The upper part of the wall body is made of double-layer thermal insulation color steel profiled panels, the roofing is made of double-layer color steel thermal insulation panels, and the wall is equipped with plastic steel windows or windowless, and finished blockboard sliding doors. The ground is 250mm-thick concrete ground.

Supporting works: power circuit, general lighting and fire fighting system

– III-1-65 –

VALUATION REPORT A

APPENDIX III-1

(4) Outdoor Supporting Projects

Outdoor supporting projects of the plant area are mainly divided into two types, namely supporting public facilities and supporting projects required for process. Supporting public facilities include roads, enclosures, domestic water supply, heating pipelines, fire water supply, rainwater pipes, power distribution, communications, networks and monitoring. The supporting projects required for process mainly include various fire-fighting pools, pipe corridor extensions, corridors, sewage treatment stations of coal yards in port pools, process pipelines of oil transportation systems and special railway lines.

Overview of main buildings:

No. 1 steel warehouse applies a steel-concrete structure, with a horizontal span of 66 meters, a vertical length of 288.98 meters, a column distance of 6 meters, and a total of 3 expansion joints; with the height of the eaves of the warehouse of 15 meters, and the height of the ridge of 16.21 meters. The warehouse is a terraced independent cup-shaped foundation with slurry wall drilled-in pile, the main structure is a rigid bent frame structure, including the door-shaped steel frame (H-shaped steel column, H-shaped steel beam), the steel support between the columns and the roofing, and the steel crane beam, and steel brake truss, of which, the door-shaped steel frame is 66 meters long and the steel column is 15 meters high. The warehouse has an elevation of 1.2 meters and the workshop gable below 1.2 meters is 240 thick shale bricks, masonry with M5 mixed mortar. The non-loadbearing structure of outer wall is that the wall body above 1.2 meters adopts colored metal profiled steel plate wall; the ground is ordinary concrete ground; the ventilation wall, gable wall, living room wall are sprayed with white paint twice; there are two anti-rust primers for steel components and gray-green magnetic finish; the chlorosulfonated bottom, chlorosulfonated middle and chlorosulfonated surface of building steel structure are painted twice, once and twice, respectively. The gate is a class A steel fire door that closes automatically, the interior doors are class A and B fire doors and side-swing doors, and the windows are ordinary steel windows and fire windows. The fire resistance grade is two, the seismic fortification intensity is 8 degrees, and the design service life of the building is 50 years. For category E warehouse, there are a total of six 35t bridge cranes in the warehouse, three for each span. The warehouse is equipped with complete supporting facilities such as fire fighting, lighting and ventilation.

Gasoline shipping and loading pump room: It applies single-layer slope roof, brick-concrete structure, independent concrete foundation, concrete column beam, steel roof truss, color steel roof, brick masonry of enclosure wall, 370mm outer wall with ceramic tiles pasted, lightning protection device, PVC raindrops, concrete scattered water, pedestrian steps, roof with gutters, steel security doors, double-row plastic steel sliding windows, water supply and drainage, electric lighting and fire-fighting facilities.

– III-1-66 –

VALUATION REPORT A

APPENDIX III-1

Gasoline tank area shipping pump room power distribution room: It applies single-story flat roof, bar foundation, brick-concrete structure, brick masonry of load-bearing wall, 370mm outer wall with ceramic tiles pasted, roof parapet, steel security door and plastic steel sliding window.

Gateroom 1: It applies single-layer flat roof, bar foundation, brick-concrete structure, brick masonry of curved load-bearing wall, 370mm painted exterior wall, concrete eaves roof parapet, column-supported concrete canopy, concrete pedestrian steps, steel security doors, plastic steel sliding windows, water supply and drainage, lighting and monitoring equipment.

(2) Structures

Structures mainly include berths, yards and other port supporting of public facilities and process facilities. Supporting projects of public facilities include roads, enclosures, domestic water supply, heating pipeline, fire water supply, rainwater pipes, power distribution, communications, networks and monitoring. The supporting projects required for process mainly include various fire-fighting pools, pipe corridor extensions, corridors, sewage treatment stations of coal yards in port pools, process pipelines of oil transportation systems and special railway lines.

① Berth assets

A total of 18 berths are included in the scope of this valuation, with a total length of 4,954.00 meters. The assets were self-built between 2008 and 2015.

		Structure and	Berthing		Front water
No.	Berth name	form	capacity	Length	**depth **	Quantity Main usage
			(ton)	(m)	(m)
1	Port Pool A 3#	Gravity	7	260	-18	1 General bulk
	general berth	caisson				cargo
2	Port Pool A 4#	Gravity	7	255	-18	1 General bulk
	general berth	caisson				cargo
3	Port Pool A 5#	Gravity	7	278	-18	1 General bulk
	general berth	caisson				cargo
4	Port Pool A 6#	Gravity	7	255	-18	1 General bulk
	general berth	caisson				cargo
5	1-2# reined oil and	High pile pier	5	470	-14.4	2 Refined oil
	liquid chemicals
	terminals
6	18# berth terminal	High pile	30	452	-24.5	1 Ore
7	61# general berth	Gravity block	7	260	-15.5	1 General bulk
						cargo

– III-1-67 –

APPENDIX III-1

VALUATION REPORT A

		Structure and	Berthing		Front water
No.	Berth name	form	capacity	Length	**depth **	**Quantity **	Main usage
			(ton)	(m)	(m)
8	62# general berth	Gravity block	7	260	-15.5	1	General bulk
							cargo
9	63# general berth	Gravity block	7	260	-15.5	1	General bulk
							cargo
10	64# general berth	Gravity block	7	310	-15.5	1	Steel and
							general
							cargo
11	65# general berth	Gravity block	7	253	-15.5	1	Steel and
							general
							cargo
12	66# general berth	Gravity block	7	260.1	-15.5	1	Steel and
							general
							cargo
13	67# general berth	Gravity block	7	240.9	-15.5	1	Steel and
							general
							cargo
14	68#-71# general berth	Gravity block	7	1,069	-15.5	4	Steel and
							general
							cargo
	Total			4,883		18

In particular, 1#-2# refined oil and liquid chemicals berths are high piled beam slab structure with a total length of 470 meters, and comprises a workbench, six cleats and two approach bridges. The top elevation of the terminal, the top elevation of the cleat and the bottom elevation of the mud surface at the front of the terminal is +7.3 m, +6.8 meters and -14.5 meters, respectively. The foundation applies steel pipe piles, workbench and piers are cast-in-place reinforced structure, and the approach bridge is a steel bridge.

18# berth terminal is a 300,000t ore terminal which is arranged in the shape of “one” in the southern part of Port Pool 1 and the west side of the existing 200,000t ore terminal. The front of the terminal is 85 meters away from the baseline of the north breakwater, and the length of the terminal is 452 meters. The designed water depth of the front of the terminal is -24.5 meters, and the top elevation of the terminal is 5.93 meters. The size of the 300,000-ton berth workbench is 37.3*406 meters, which applies high pile beam slab structure, and the pile foundation applies steel pipe piles with diameters of 1,200, 1,000 and 800. There are a total of 60 bents, with a spacing of 6.5 meters. The vertical beam is 2 meters high, and the panel applies prefabricated cover slab. The project was started on 13 May 2009, completed on 30 September 2010, and put into use on 13 October 2010.

– III-1-68 –

APPENDIX III-1

VALUATION REPORT A

61#-63# berths: They are located in the southern operation area of Bayuquan Port Area of Yingkou Port, with a total of four 70,000-ton steel and general cargo berths. They apply an along-shore solid block structure, with a wall body structure of four-layer block, a layer of unloading plates and a breast wall, and the top elevation of the terminal is +5.5 meters, and the bottom elevation of front of the terminal is -15.5 meters. The bottom elevation and the thickness of the foundation bed is -19.0 meters and 3.5 meters, respectively. The rear of the terminal is a riprap prism, outside of which is rubble and a mixed filter layer, and the outside of the mixed filter layer is filled with sand and vibrated compactly. The surface applies reinforced concrete slab, and a reinforced concrete cast-in-place pile is under the track beam. The project was started on 20 March 2004 and completed on 24 September 2008.

Berths 64#-66#: They are located in the southern operating area of Bayuquan Port Area of Yingkou Port, the terminal runs east-west and apply an along-shore heavy duty solid block structure. They are composed of 4 steel and general cargo terminals, of which, 57.7 meters on the west side of berth #67 can be used as a ro-ro ship terminal. The terminal consists of four layers of blocks, one unloading plate and a breast wall in stratigraphically descending order. The top elevation of the terminal is +5.5 meters, and the bottom elevation of the terminal is -15.5 meters, with the bottom elevation of the foundation bed of -19.0 meters, and the thickness of the foundation bed of 3.5 meters.

Berths 68#-71#: They are located in the southern operation area of Bayuquan Port Area of Yingkou Port, southwest of Port Pool 5, northwest side of berth 67#, and the coastline is arranged in the N-S direction. They are composed of 4 steel and general cargo terminals with a berthing grade of 70,000-tons, a total coastline length of 1,069 meters and a land depth of 244.3 meters. The designed bottom elevation of mud surface at the front of the terminal is -15.50 meters, and the designed bottom elevation of the waterway of the port pool is -15.50 meters, forming a 1,100-meter wide of port pool together with the project phase IV, and the top elevation of the terminal is +5.5 meters. The terminal structure applies a heavy duty block structure with unloading plates. There are a total of four layers of blocks, the top layer of block is placed with a reinforced concrete unloading plate, the parapet wall and the block under the unloading plate are connected as a whole. Riprap prism is arranged at the rear of the block and sands are filled at the rear of the terminal. Rubble, mixed filter layer and geotextile filter layer structure are applied between the riprap prism and the backfilled sand. The foundation of the terminal applies 10-100KG riprap bed, with a thickness of the bed of 4-6 meters. A 400-thick concrete slab was applied between the two rails of the terminal, two drums and one plate cone fenders, D-shaped fenders and 2500KN bollards are equipped at the front of the terminal. The project was started on 30 May 2011 and completed and put into use on 31 May 2014.

– III-1-69 –

VALUATION REPORT A

APPENDIX III-1

• ② Yard

For the yard, most structure type of which apply concrete slab and interlocking block structure, and the base course is cement stabilized crushed stone layer and gravel cushion.

Overview of main assets:

Berths 62-63 – The yard applies an interlocking block structure, with an area of 77,943.20 sq.m., and was completed in December 2008. The foundation treatment of the yard applies a vibro stone pile (valuated under the foundation treatment). The specific practices of the work: mechanical site leveling, rolling of original soil by roller, 200 thickness of gravel cushion, 3 layers of 200 thickness of 6% cement stabilized layer, and laying interlocking blocks on the surface layer.

(3) Ownership Status

• ① Except for simple structure, all other assets have been surveyed, and the applications for real estate title certificates are under way.

• ② The information on pledge or mortgage of assets that are included in the scope of valuation is as follows:

				Commencement	Ending		Contract	Rental
		Total	Balance of	date of	date of	Guarantee	interest	calculation
Leasing company	Borrower	borrowings	borrowings	borrowings	borrowings	method	rate	method	Collateral
		_(RMB0’000) _	(RMB0’000)
Industrial Bank	Ying Kou Port	80,000.00	23,333.33	2017/5/18	2023/5/18	Credit	4.410%	Principal in equal	Fairy Island Port
Financial	Group							instalments	Pool 1 1-2#
Leasing Co., Ltd.	Corporation								refined oil and
	Limited								liquid
									chemicals
									terminals, Port
									Pool 5 65#
									steel and
									general cargo
									berth
Shanghai Pudong	Ying Kou Port	50,000.00	12,500.00	2017/11/28	2022/11/21	Credit	3.325%	Principal in equal	Bayuquan Port
Development	Group							instalments	Area berth 62#
Bank Financial	Corporation
Leasing Co., Ltd.	Limited
Bank of Beijing	Ying Kou Port	50,000.00	17,500.00	2018/4/25	2023/4/25	Credit	5.5575%	Principal in equal	Berths 68# and
Financial	Group							instalments	70#
Leasing Co.,	Corporation
Ltd.*(北銀金融租	Limited
賃有限公司)

– III-1-70 –

VALUATION REPORT A

APPENDIX III-1

								Commencement Ending	Commencement Ending	Contract	Rental	Rental
					Total		Balance of	date of date of Guarantee		interest	calculation
Leasing company	Borrower			borrowings			borrowings	borrowings borrowings method		rate	method		Collateral
				_(RMB0’000) _			(RMB0’000)
Jiangxi Financial	Ying Kou Port			80,000.00			25,560.00	2016/12/16 2023/3/3 Credit		4.410%	Interest in equal		Berths	66# and
Leasing Co., Ltd.		Group										instalments	67#
		Corporation
		Limited
		③	The		assets included in the scope of valuation have been leased									out as
			follows:
Name of the														Annual
contract		Leasee				Leased Assets			Title certificate number	**Area **		Lease term		rental
														(RMB, tax
										(sq.m.)				inclusive)
Land Use Rights		Yingkou	Xingang			Land use rights			Liao (2020) Yingkou	298,720.25		2021/1/1-	4,480,803.66
Lease Agreement		Ore Terminal							Bayuquan Real Estate No.			2021/12/31
		Co., Ltd. (營口							0027263
		新港礦石碼頭有
		限公司)
Land Use Rights		Yingkou	Port			Land use rights			Liao (2020) Yingkou	2,431,326.47		2021/1/1-	36,469,900.00
Lease Agreement		Liability		Co.,					Bayuquan Real Estate No.			2021/12/31
		Ltd.							0029352, 0029354, 0029361,
									0029375, 0029388, 0029391,
									0027202, 0027222, 0027228,
									0027242, 0027266, 0032267,
									0032270, 0035276, 0032298,
									0035276 and Bayuquan Guo
									Yong (2007) No. 0216 and
									0217
2021 Asset Lease		Yingkou	Port			Wharf berth			Bayuquan Port Area Port Pool	2021/1/1-		349,897,100.00
Agreement		Liability		Co.,					1 ore berth 18# Port Pool A	2021/12/31
		Ltd.							3# general berth, Port Pool
									A 1-2#, refined oil and
									liquid chemicals berths, Port
									Pool 5 61#-71# general
									berths, Fairy Island 201-
									203# berths and yards and
									tank farms

Including: Fairy Island 201-203# berths and ore dump were not within the scope of this valuation, and the corresponding rental was RMB110,463,227.26.

– III-1-71 –

VALUATION REPORT A

APPENDIX III-1

In addition to the above matters, as of the valuation benchmark date, there were no other matters such as mortgage and guarantees for the appraised buildings (structures). In addition, there are no litigation and other matters for the building under fixed assets included in the scope of this valuation.

(4) Accounting Depreciation Policy

The depreciation of buildings under fixed assets adopts the straight-line method and is accrued at the carrying amount after deducting the estimated net residual value within the expected useful life. For fixed assets that have been provided for impairment, the depreciation amount will be determined at the carrying amount after deducting the impairment provision and the remaining useful life in the future period. The estimated useful life and the annual depreciation rates of buildings under fixed assets are listed as follows:

Estimated useful life (years), estimated residual value rate (%) and annual depreciation rate (%) for category of fixed assets

		Estimated	Annual
	Estimated	residual	depreciation
Category of fixed assets	useful life	value rate	rate
	(years)	(%)	(%)
Port facilities	20-40	5	4.75-2.38
Stacking area facilities	20-40	5	4.75-2.38
Buildings	8-35	5	11.88-2.71

3. The Approaches and Results of Assets Stocktaking and Verification

• (1) Approaches of Assets Stocktaking and Verification

The approach for assets stocktaking and verification under this valuation is on a one by one basis, and the specific practices are:

• ① the checking of the accounts table according to the contents of the breakdown of asset valuation provided by the appraised entity;

• ② the verification of the property right status, structure type, date of completion, building area and other basic parameters of each asset;

• ③ the carrying out of on-site survey according to the verified breakdown of asset valuation, recording of the location, surrounding environment, supporting facilities and other regional factors of various assets, at the same time, investigation of the floor, orientation, structure, decoration and ancillary equipment of the valuation target.

– III-1-72 –

VALUATION REPORT A

APPENDIX III-1

• (2) Results of Assets Stocktaking and Verification

• ① The ownership of the appraised assets is clear and without dispute.

• ② Based on the on-site investigation by the appraisers, the appraised assets are in good maintenance and in good use.

• ③ As of the valuation benchmark date, there are still part of buildings for which the real estate ownership certificates have not been obtained. For such buildings without building ownership certificate, the relevant taxes for certificate application were not considered in this valuation.

• ④ The original carrying amount of buildings (structures) includes construction and installation costs, preliminary and other expenses, capitalized interest and other work-related expenses. Net carrying amount is the net value after depreciation.

• ⑤ The mortgage and pledge matters of the appraised assets have been stated in the ownership status.

4. Valuation Approach

(1) Selection of Valuation Approach

There are three valuation approaches mainly adopted for buildings under fixed assets, namely replacement cost approach, market approach and income approach. The adoption of market approach is conditional on the existence of an active trading market where traded market prices can be obtained with relative accuracy; the adoption of income approach is on the condition that future returns and risks can be more accurately predicted and quantified; and the replacement cost approach is adopted when traded market prices are not available and future returns and risks cannot be accurately predicted and quantified. Based on the specific purpose of this valuation while combining the characteristics of the buildings (structures) to be assessed, this valuation adopts the cost approach to evaluate the buildings built by the enterprise.

According to relevant conditions such as the characteristics of the buildings, types of appraised value and the conditions of information gathering, cost approach is adopted for the valuation, and the formula is as follows:

Appraised value = full replacement cost × integrated residue ratio

– III-1-73 –

VALUATION REPORT A

APPENDIX III-1

• (1) Determination of full replacement cost

The full replacement cost of buildings general include construction and installation cost, preliminary and other expenses of construction projects and capital cost.

The formula of the full replacement cost of buildings is as follows:

Full replacement cost = Integrated construction and installation cost + Preliminary and other expenses + capital cost – deductible VAT

1) Integrated construction and installation cost

The full replacement cost of the representative buildings of the appraised buildings in this valuation is determined by using budgets and final accounts adjustment method. The per unit full replacement cost of other buildings is determined by using analogy method.

The ideology of the budgets and final accounts adjustment method used in determining the full replacement cost is to calculate the estimated base price for direct fee and the construction and installation project cost of each project based on the budgets and final accounts related information on the buildings and the quota standard of the place where the buildings are located as provided by the enterprise, and the quantity of projects stipulated in the budgets and final accounts of the buildings. Then, based on the market survey and the standards for preliminary expenses and other expenses of construction projects as provided by the client, the preliminary expenses and other expenses of the buildings can be calculated, and added with the capital costs, the full replacement cost of the appraised buildings could be figured out.

The analogy method takes a representative building as a reference and makes comparison with similar buildings in terms of eaves height, storey height, span, materials used, fixtures, and etc., to identify differences as adjustment factors, and adjustments are made to calculate the per unit full replacement cost of the analogical buildings.

Major basis of pricing:

• I Quota for Property Construction and Decoration Project in Liaoning Province (2017) (《遼寧省房屋建築與裝飾工程定 額》(2017年));

• II Quota for General Installation Project in Liaoning Province (2017) (《遼寧省通用安裝工程定額》(2017));

– III-1-74 –

VALUATION REPORT A

APPENDIX III-1

• III Notice of the Department of Housing and Urban-Rural Development of Liaoning Province on the Adjustment to the Value-Added Tax Rates for the Pricing Basis of Construction Projects (Liao Zhu Jian Guan (2018) No. 8) (《遼寧省住房和 城鄉建設廳關於調整建設工程計價依據增值稅稅率的通知》 遼住建管(2018)8號);

• IV Yingkou City Building Material Price Project Information in August 2021 (《2021年8月營口市建築材料價格工程信息》) issued by Liaoning Construction Engineering Cost Station (遼 寧建設工程造價總站);

• V Quota for Maritime Works in Seaport (2019) (沿海港口水工構 築工程定額(2019));

• VI Reference Quota for Coastal Port Engineering (2019) (沿海港 口工程參考定額(2019));

• VII Dredging Project Budget Quota (2019) (疏浚工程預算定額 (2019));

• VIII Budget Quota Pricing Schedule for Electric Power Construction Project (2013) (電力建設工程預算定額估價表 (2013));

• IX Estimate Quota Pricing Schedule for Electric Power Construction Project (2014) (電力建設工程概算定額估價表 (2014));

• X Online Publication Price of Hydraulic Materials (August 2021);

• XI Stipulations on Compiling Estimate and Budget for Water Transportation Construction Project (JTS/T116-2019) (《水運 建設工程概算預算編製規定》(JTS/T116-2019));

• XII Notice of the General Office of the Ministry of Housing and Urban-Rural Development on the Re-adjustment to the ValueAdded Tax Rates for the Pricing Basis of Construction Projects (Jian Ban Biao Han [2019] No. 193) (《住房和城鄉建設部辦 公廳關於重新調整建設工程計價依據增值稅稅率的通知》建 辦標函[2019]193號).

– III-1-75 –

VALUATION REPORT A

APPENDIX III-1

(2) Preliminary and other expenses

The preliminary and other expenses of construction projects were calculated according to construction investment amount of the appraised entity, and the charging standard required by the industry, the State or local government. The name, charging basis, charging standards and charging reference of preliminary and other expenses are set out in the table below:

			Tax-
			exclusive
No.	Item	Rate	**rate **	Charging basis	Reference
1	Construction unit	0.68%	0.68%	Construction cost (tax	Ministry of Transport
	administrative fees			inclusive) × rate	2019 No. 57
2	Engineering	1.40%	1.32%	Construction cost (tax	Ministry of Transport
	supervision fees			inclusive) × rate	2019 No. 57
3	Environmental impact	0.03%	0.02%	Construction cost (tax	Ji Wei Huan Bao Zong
	assessment fees			inclusive) × rate	Ju Ji Jia Ge (2002)
					No. 125
4	Project proposal fees	0.10%	0.09%	Construction cost (tax	Ji Wei Ji Jia Ge (1999)
	and feasibility study			inclusive) × rate	No. 1283
	fees
5	Survey and design fees	2.76%	2.61%	Construction cost (tax	Ministry of Transport
				inclusive) × rate	2019 No. 57
6	Bidding agent fees	0.02%	0.02%	Construction cost (tax	Ministry of Transport
				inclusive) × rate	2019 No. 57
7	Safety pre-assessment	0.03%	0.02%	Construction cost (tax	Guiding Opinions on
	fees			inclusive) × rate	Safety Assessment
					Fees in Liaoning
					Province (2005)
9	Safety production fees	1.90%	1.79%	Construction cost (tax	Ministry of Emergency
				inclusive) × rate	Management 2019
					Letter No. 428
	Total	6.92%	6.56%

(3) Capital cost

The capital cost was calculated based on the sum of the integrated construction and installation cost, preliminary and other expenses in accordance with the even input of capital within the reasonable construction period of the appraised enterprise, with reference to the loan prime rate (LPR) published by the National Interbank Funding Centre with authorization granted

– III-1-76 –

VALUATION REPORT A

APPENDIX III-1

by the People’s Bank of China as at the valuation benchmark date. The reasonable construction period of the appraised enterprise is 2.5 years. The formula of the capital cost is as follows:

Capital cost = (construction and installation project cost + preliminary and other expenses) × (1 + loan interest rate) ^ (reasonable construction period/2-1)

(4) Deductible VAT

According to the Notice of the Ministry of Finance and the State Taxation Administration on the Comprehensive Rollout of the Business Tax to Value Added Tax Transformation Pilot Program (《財政部國家稅務總局關於全面推 開營業稅改徵增值稅試點的通知》) (Cai Shui [2016] No. 36) issued by the Ministry of Finance and the State Taxation Administration, in calculating the full replacement price of buildings and structures, the integrated construction and installation cost and the VAT input tax inclusive in the preliminary and other expenses can be deducted.

(2) Determination of residue ratio

The life method and observation method are mainly used to determine the residue ratio for the buildings in this valuation.

① Useful life method

Useful life method is the residue ratio determined based on the ratio of estimated remaining useful life of buildings to its aggregate useful life. The formula is as follows:

Residue ratio under the useful life method =	Remaining useful life × 100% Used life + Remaining useful life

② Observation method

The observation method is applied to assess each major part of the buildings from a technical perspective, and to analyze factors such as design, manufacturing, usage, wear and tear, maintenance, improvement and physical life of the asset on a consolidated basis. Impacts of wear and tear and natural deterioration on the functionality and efficiency of the asset will be assessed by comparing the valuation target with itself in new condition. As such, the residue ratio of the buildings would be determined and the substantial depreciation would be estimated.

– III-1-77 –

VALUATION REPORT A

APPENDIX III-1

• ③ Integrated residue ratio

Integrated residue ratio = residue ratio under the useful life method × 40% + residue ratio under the observation method × 60%

• ④ Residue ratio would be determined by adopting a reasonable method where:

If the residue ratios calculated under the on-site investigation method and the useful life method respectively differ significantly, after analysing the factors by the appraisers, the relatively reasonable ratio would prevail based on their previous experience.

For the project which cannot be observed due to certain constraints, the useful life method would be normally applied in determining the residue ratio.

(3) Calculation of appraised value

Appraised value = Replacement cost (tax exclusive) × integrated residue ratio

5. Valuation Conclusion and Analysis

① Valuation results:

As at the valuation benchmark date (i.e. 31 August 2021), the valuation results of buildings (structures) that Ying Kou Port Group Corporation Limited intends to use for capital increase are shown as follows:

Table of Summary of Building Valuation Results

						Unit: RMB
	**Carrying **	amount	Appraised value		Appreciation	Appreciation
Name of item	Original value	Net value	Original value	Net value	amount	rate
Total buildings	5,275,699,565.22	3,899,119,509.70	5,724,582,000.00	4,081,136,992.00	182,017,482.30	4.67%
Buildings	110,707,480.32	75,383,613.16	137,952,900.00	104,249,100.00	28,865,486.84	38.29%
Structures and
other auxiliary
facilities	5,164,992,084.90	3,823,735,896.54	5,586,629,100.00	3,976,887,892.00	153,151,995.46	4.01%

• ② Analysis on the reasons for changes in valuation

The appreciation in valuation of overall buildings was RMB182,017,482.30, with an appreciation rate of 4.01%. The main reasons are as follows:

• A. Material and labor costs have increased slightly in recent years;

• B. In this valuation, the impairment provision was valuated as zero, as such, there was an appreciation in net value of the valuation.

– III-1-78 –

VALUATION REPORT A

APPENDIX III-1

6. Valuation Case

Case 1: Treasury room 1# – No. 31 in the Building Valuation Schedule

(1) Basic Overview

Treasury room 1# is a 3-storey flat-roofed brick-concrete structure built in October 2013 with a gross floor area of 701.37 sq.m.. It is founded with concrete bar. The wall body is composed of concrete beams, slabs, structural columns and bricks, with ceramic bricks decorated on the surface and, polystyrene particles for outer wall insulation, modified asphalt membrane waterproof roofing, finished wooden doors, thermal insulation aluminum alloy windows, large white latex paint for indoor wall sheds, tiled floor. Supporting facilities include water supply and drainage, lighting, etc.

The building is equipped with water supply and drainage, ventilation, fire fighting and electricity and other supporting facilities.

On-site investigation status: The building has a solid structure, no uneven cracks, good appearance as a whole, and the indoor facilities are in normal use.

The real estate title certificate has not been applied for the building, but the declared floor area has been surveyed by Liaoning Ruizhi Surveying and Mapping Technology Co., Ltd. (遼寧睿智測繪科技有限公司), and the application for real estate title certificate is under way.

(2) Full replacement cost

According to the Notice of the Ministry of Finance and the State Taxation Administration on the Comprehensive Rollout of the Business Tax to Value Added Tax Transformation Pilot Program (《財政部國家稅務總局關於全面推開營業稅改 徵增值稅試點的通知》) (Cai Shui [2016] No. 36), enterprises that satisfy the conditions for VAT deduction, VAT input tax shall be deducted. If the impact of the policy on the appraised value has been taken into account in this valuation, then:

Full replacement cost = Construction and installation project cost (tax exclusive) + preliminary expense and other expenses (tax exclusive) + capital cost

A. Construction and installation project cost

The construction and installation project cost include the total costs of civil engineering (decoration) project and installation projects, and are calculated by application of budgets (final accounts) adjustment method. The appraisers determined the workload of the buildings based on the information on construction projects and completion settlement and calculated the total costs of the projects in

– III-1-79 –

VALUATION REPORT A

APPENDIX III-1

accordance with prevailing Quota for Property Construction and Decoration Project in Liaoning Province (2017) (《遼寧省房屋建築與裝飾工程定額》(2017年)), Quota for General Installation Project in Liaoning Province (2017) (《遼寧省通用安裝工 程定額》(2017)), Notice of the Department of Housing and Urban-Rural Development of Liaoning Province on the Adjustment to the Value-Added Tax Rates for the Pricing Basis of Construction Projects (Liao Zhu Jian Jian Guan (2018) No. 8) (《遼寧省住房和城鄉建設廳關於調整建設工程計價依據增值稅稅率的通知》遼住 建建管(2018)8號) and Yingkou City Building Material Price Project Information in August 2021 (《2021年8月營口市建築材料價格工程信息》) issued by Liaoning Construction Engineering Cost Station (遼寧建設工程造價總站).

Breakdown of Construction and Installation Project Costs

Project Name: Treasury room 1#

Line	Serial			Rate
No.	No.	Item	Charging description	(%)	Amount
		Construction project			1,535,962.72
1	A	Total project quota sub-	Labor cost + material		1,360,179.8
		project fee and technical	expenses + machinery
		measure fee	cost budget price + labor
			price variance on board +
			other price variance on
			board + fuel power price
			variance+ main material
			expenses + equipment
			cost + including:
			enterprise management
			fees + including: profit
2	A1	Including: labor cost budget	labor cost budget price +		357,228.88
		price + machinery cost	machinery cost budget
		budget price	price
3	B	General measure fee	Civilized construction and		4,643.98
		(excluding safety	environmental protection
		construction measure fee)	fees + rainy season
			construction fee
4	B1	Civilized construction and	Including: labor cost budget	0.65	2,321.99
		environmental protection	price + machinery cost
		fees	budget price
5	B2	Rainy season construction	Including: labor cost budget	0.65	2,321.99
		fee	price + machinery cost
			budget price

– III-1-80 –

VALUATION REPORT A

APPENDIX III-1

Line	Serial			Rate
No.	No.	Item	Charging description	(%)	Amount
6	C	Other measure fees	Additional costs for night		13,038.85
			construction and lighting
			fees for daytime
			construction + second
			handling fee + winter
			construction fee +
			completed projects and
			equipment protection fees
			+ municipal engineering
			(including landscaping
			engineering) construction
			disturbance fee + others
7	C1	Additional costs for night
		construction and lighting
		fees for daytime
		construction
8	C2	Second handling fee
9	C3	Winter construction fee	Including: labor cost budget	3.65	13,038.85
			price + machinery cost
			budget price
10	C4	Completed projects and
		equipment protection fees
11	C5	Municipal engineering		4
		(including landscaping
		engineering) construction
		disturbance fee
12	C6	Others
13	D	Other project fees
14	E	Total project quota sub-	Total project quota sub-		1,377,862.63
		project fee, measure fee	project fee and technical
		(excluding safety	measure fee + general
		construction measure fee)	measure fee (excluding
		and other project fees	safety construction
			measure fee) + other
			measure fees + other
			project fees
15	E1	Including: enterprise	Including: labor cost budget	8.5	30,364.45
		management fees	price + machinery cost
			budget price
16	E2	Including: profit	Including: labor cost budget	7.5	26,792.17
			price + machinery cost
			budget price

– III-1-81 –

VALUATION REPORT A

APPENDIX III-1

Line	Serial			Rate
No.	No.	Item	Charging description	(%)	Amount
17	F	Levies	Social insurance cost +
			housing provident funds +
			engineering sewage fee+
			others + work-related
			injury insurance
18	F1	Social insurance cost	Including: labor cost budget	0
			price + machinery cost
			budget price
19	F2	Housing provident funds	Including: labor cost budget	0
			price + machinery cost
			budget price
20	F3	Engineering sewage fee
21	F4	Others
22	F5	Work-related injury
		insurance
23	G	Safety construction measure	Total project quota sub-	2.27	31,277.48
		fee	project fee, measure fee
			(excluding safety
			construction measure fee)
			and other project fees +
			levies
24	H	Total pre-tax construction	Total project quota sub-		1,409,140.11
		cost	project fee, measure fee
			(excluding safety
			construction measure fee)
			and other project fees +
			levies + safety
			construction measure fee
25	I	Taxes	Total pre-tax construction	9	126,822.61
			cost
26	J	Construction cost	Total pre-tax construction		1,535,962.72
			cost + taxes
		Building earthwork and			21,908.56
		demolition engineering

– III-1-82 –

VALUATION REPORT A

APPENDIX III-1

Line	Serial			Rate
No.	No.	Item	Charging description	(%)	Amount
27	A	Total project quota sub-	labor cost + material		19,418.78
		project fee and technical	expenses + machinery
		measure fee	cost budget price + labor
			price variance on board +
			other price variance on
			board + fuel power price
			variance + main material
			expenses+ equipment cost
			+ including: enterprise
			management fees +
			including: profit
28	A1	Including: labor cost budget	labor cost budget		13,546.31
		price + machinery cost	price+machinery cost
		budget price	budget price
29	B	General measure fee	Civilized construction and		61.64
		(excluding safety	environmental protection
		construction measure fee)	fees + rainy season
			construction fee
30	B1	Civilized construction and	(labor cost budget price +	0.65	30.82
		environmental protection	machinery cost budget
		fees	price)*0.35
31	B2	Rainy season construction	(labor cost budget price +	0.65	30.82
		fee	machinery cost budget
			price)*0.35
32	C	Other measure fees	Additional costs for night		173.05
			construction and lighting
			fees for daytime
			construction + second
			handling fee + winter
			construction fee +
			completed projects and
			equipment protection
			fees+ municipal
			engineering (including
			landscaping engineering)
			construction disturbance
			fee + others
33	C1	Additional costs for night
		construction and lighting
		fees for daytime
		construction
34	C2	Second handling fee
35	C3	Winter construction fee	(labor cost budget price +	3.65	173.05
			machinery cost budget
			price)*0.35

– III-1-83 –

APPENDIX III-1

VALUATION REPORT A

Line	Serial			Rate
No.	No.	Item	Charging description	(%)	Amount
36	C4	Completed projects and
		equipment protection fees
37	C5	Municipal engineering		4
		(including landscaping
		engineering) construction
		disturbance fee
38	C6	Others
39	D	Other project fees
40	E	Total project quota sub-	Total project quota sub-		19,653.47
		project fee, measure fee	project fee and technical
		(excluding safety	measure fee + general
		construction measure fee)	measure fee (excluding
		and other project fees	safety construction
			measure fee) + other
			measure fees + other
			project fees
41	E1	Including: enterprise	(labor cost budget price +	8.5	403
		management fees	machinery cost budget
			price)*0.35
42	E2	Including: profit	(labor cost budget price +	7.5	355.59
			machinery cost budget
			price)*0.35
43	F	levies	Social insurance cost +
			housing provident funds +
			engineering sewage fee +
			others + work-related
			injury insurance
44	F1	Social insurance cost	Including: labor cost budget	0
			price + machinery cost
			budget price
45	F2	Housing provident funds	Including: labor cost budget	0
			price + machinery cost
			budget price
46	F3	Engineering sewage fee
47	F4	Others
48	F5	Work-related injury
		insurance
49	G	Safety construction measure	Total project quota sub-	2.27	446.13
		fee	project fee, measure fee
			(excluding safety
			construction measure fee)
			and other project fees +
			levies

– III-1-84 –

VALUATION REPORT A

APPENDIX III-1

Line	Serial			Rate
No.	No.	Item	Charging description	(%)	Amount
50	H	Total pre-tax construction	Total project quota sub-		20,099.6
		cost	project fee, measure fee
			(excluding safety
			construction measure fee)
			and other project fees +
			levies + safety
			construction measure fee
51	I	Taxes	Total pre-tax construction	9	1,808.96
			cost
52	J	Construction cost	Total pre-tax construction		21,908.56
			cost + taxes
		Installation project			81,740.52
53	A	Total project quota sub-	labor cost + material		71,988.81
		project fee and technical	expenses + machinery
		measure fee	cost budget price + labor
			price variance on board +
			other price variance on
			board + fuel power price
			variance + main material
			expenses + equipment
			cost + including:
			enterprise management
			fees + including: profit
54	A1	Including: labor cost budget	labor cost budget price +		35,185.85
		price + machinery cost	machinery cost budget
		budget price	price
55	B	General measure fee	Civilized construction and		457.42
		(excluding safety	environmental protection
		construction measure fee)	fees + rainy season
			construction fee
56	B1	Civilized construction and	Including: labor cost budget	0.65	228.71
		environmental protection	price + machinery cost
		fees	budget price
57	B2	Rainy season construction	Including: labor cost budget	0.65	228.71
		fee	price + machinery cost
			budget price

– III-1-85 –

VALUATION REPORT A

APPENDIX III-1

Line	Serial			Rate
No.	No.	Item	Charging description	(%)	Amount
58	C	Other measure fees	Additional costs for night		1,284.28
			construction and lighting
			fees for daytime
			construction + second
			handling fee+ winter
			construction fee +
			completed projects and
			equipment protection fees
			+ municipal engineering
			(including landscaping
			engineering) construction
			disturbance fee + others
59	C1	Additional costs for night
		construction and lighting
		fees for daytime
		construction
60	C2	Second handling fee
61	C3	Winter construction fee	Including: labor cost budget	3.65	1,284.28
			price + machinery cost
			budget price
62	C4	Completed projects and
		equipment protection fees
63	C5	Municipal engineering		4
		(including landscaping
		engineering) construction
		disturbance fee
64	C6	Others
65	D	Other project fees
66	E	Total project quota sub-	Total project quota sub-		73,730.51
		project fee, measure fee	project fee and technical
		(excluding safety	measure fee + general
		construction measure fee)	measure fee (excluding
		and other project fees	safety construction
			measure fee) + other
			measure fees+ other
			project fees
67	E1	Including: enterprise	Including: labor cost budget	8.5	2,990.8
		management fees	price + machinery cost
			budget price
68	E2	Including: profit	Including: labor cost budget	7.5	2,638.94
			price + machinery cost
			budget price

– III-1-86 –

VALUATION REPORT A

APPENDIX III-1

Line	Serial			Rate
No.	No.	Item	Charging description	(%)	Amount
69	F	levies	Social insurance cost +
			housing provident funds +
			engineering sewage fee +
			others+ work-related
			injury insurance
70	F1	Social insurance cost	Including: labor cost budget	0
			price + machinery cost
			budget price
71	F2	Housing provident funds	Including: labor cost budget	0
			price + machinery cost
			budget price
72	F3	Engineering sewage fee
73	F4	Others
74	F5	Work-related injury
		insurance
75	G	Safety construction measure	Total project quota sub-	1.71	1,260.79
		fee	project fee, measure fee
			(excluding safety
			construction measure fee)
			and other project fees +
			levies
76	H	Total pre-tax construction	Total project quota sub-		74,991.3
		cost	project fee, measure fee
			(excluding safety
			construction measure fee)
			and other project fees +
			levies + safety
			construction measure fee
77	I	Taxes	Total pre-tax construction	9	6,749.22
			cost
78	J	Construction cost	Total pre-tax construction		81,740.52
			cost + taxes
		Construction cost			1,639,611.8

Total construction cost (tax inclusive): Renminbi one million six hundred and thirty-nine thousand six hundred and eleven and eighty cents

– III-1-87 –

VALUATION REPORT A

APPENDIX III-1

Table: Summary of Construction and Installation Costs

Unit and professional project name: No.1 Inventory Room

		Subject of	Fee Rate	Amount of
No.	Item	Charging	(%)	Fees
1	Construction	Construction		1,535,962.72
2	Building	Building		21,908.56
	earthwork and	earthwork and
	demolition	demolition
3	Installation work	Installation work		81,740.52
4	Estimated project	Total estimated		1,639,611.80
	costs	costs (before
		tax)
	Estimated project	Total estimated
	costs	costs (after tax)
5	Unit price of		701.37	2,337.73
	project

• B. Preliminary and other fees and expenses

Preliminary and other fees and expenses include construction unit management fee, project supervision fee, bidding agency service fee, etc.

According to Order No. 31 of the National Development and Reform Commission of the People’s Republic of China, the state has revoked the original standards for consulting fee for environmental impact, project construction supervision fee, survey and design fees, and bidding agency service fee. For the purpose of this valuation, when estimating the preliminary fees and expenses and other expenses from the perspective of reconstruction, comprehensive consideration is given to previous preliminary fee rate, and reference is made to the standards for the preliminary fees and other fees of similar projects. The coefficient is determined based on the scale of fixed assets as at the valuation benchmark date as declared by the enterprise.

			Tax-
			exclusive
No.	Item	Rate	rate	Charging basis	Reference
1	Construction	0.68%	0.68%	Construction cost	Ministry of Transport
	unit			(tax inclusive)	2019 No. 57
	administrative			× rate
	fees
2	Engineering	1.40%	1.32%	Construction cost	Ministry of Transport
	supervision			(tax inclusive)	2019 No. 57
	fees			× rate
3	Environmental	0.03%	0.02%	Construction cost	Ji Wei Huan Bao Zong
	impact			(tax inclusive)	Ju Ji Jia Ge (2002)
	assessment			× rate	No. 125
	fees

– III-1-88 –

VALUATION REPORT A

APPENDIX III-1

			Tax-
			exclusive
No.	Item	Rate	rate	Charging basis	Reference
4	Project	0.10%	0.09%	Construction cost	Ji Wei Ji Jia Ge (1999)
	proposal fees			(tax inclusive)	No. 1283
	and			× rate
	feasibility
	study fees
5	Survey and	2.76%	2.61%	Construction cost	Ministry of Transport
	design fees			(tax inclusive)	2019 No. 57
				× rate
6	Bidding agent	0.02%	0.02%	Construction cost	Ministry of Transport
	fees			(tax inclusive)	2019 No. 57
				× rate
7	Safety pre-	0.03%	0.02%	Construction cost	Guiding Opinions on
	assessment			(tax inclusive)	Safety Assessment
	fees			× rate	Fees in Liaoning
					Province (2005)
9	Safety	1.90%	1.79%	Construction cost	Ministry of Emergency
	production			(tax inclusive)	Management 2019
	fees			× rate	Letter No. 428
	Total	6.92%	6.56%

• C. Capital costs

According to the requirements under the “National Benchmark for the Time for Completion of Construction and Installation Projects”, the overall reasonable timeline for completion of projects is approximately 2.5 years. The construction funds are assumed to be evenly invested during the construction period. With regard to the loan interest rate, the capital costs are calculated based on the LRP rate of 4.25%, which is the LRP rate in August 2021 as announced by the People’s Bank of China for loans with a term of 2.5 years.

Capital costs = (Estimated construction and installation project costs + Preliminary and other fees and expenses) × (1 + Loan interest rate) ^ (Reasonable time for completion/2-1)

• D. full replacement cost

Full replacement cost = Estimated construction and installation project costs + Preliminary and other fees and expenses + Capital costs – Deductible value-added tax

– III-1-89 –

VALUATION REPORT A

APPENDIX III-1

Details of the calculation are shown in the table below:

Table: Calculation of full replacement cost

Unit: RMB

		Fee	Formula of	Result of
No.	Item	Rate	Calculation	Calculation
1	Estimated	0%	1 = (2 + 3 + 4 + 5)	1,639,612
	construction		× (1 + correction
	and installation		coefficient)
	project costs
2	Construction		Calculated according	1,535,963
			to budget
			benchmark and
			expense
			benchmark
3	Building		Calculated according	21,909
	earthwork and		to budget
	demolition		benchmark and
			expense
			benchmark
4	Installation		Calculated according	81,741
			to budget
			benchmark and
			expense
			benchmark
6	Preliminary fees		6 = 7 + 8	113,400
	and other fees
7	Determination of	6.92%	6 = 1 × rate	113,400
	price based on
	fee rate
8	Determination of		7 = Floor area ×	0
	price based on		rate
	the floor area
9	Capital costs	4.25%	9 = (1 + 6) × [(1 +	93,618
			Loan interest
			rate)^reasonable
			time for
			completion/2-1]
10	Replacement	Rounded	10 = 1 + 6 + 9	1,846,662
	costs

– III-1-90 –

VALUATION REPORT A

APPENDIX III-1

		Fee	Formula of	Result of
No.	Item	Rate	Calculation	Calculation
11	Deductible value-		11 = Construction	141,165
	added tax		and installation
			fee/1.09*9% +
			(preliminary fees
			and expenses –
			construction and
			installation
			fee*Construction
			management
			fees)/1.06*6%
12	Replacement		12 = Replacement	1,705,500
	costs (after tax)		cost – Deductible
			value-added tax
13	Replacement unit	701.37	13 = Replacement	2,431.67
	price (after tax)		cost (after
			tax)/floor area

That is, the full replacement cost of 1# inventory room project (after tax) is = RMB1,705,500 (rounded).

(3) Determination of integrated residue ratio

• ① Residue ratio based on serviced years

• The economic service life of the building is 40 years, and it has been used for

• 7.52 years as at the benchmark date, then:

Residue ratio based on serviced years = (1 – serviced years/economic service years) × 100% = Residue ratio based on serviced years of the 1# inventory room = 80% (rounded)

• ② Surveyed residue ratio

The score of residue is calculated through on-site surveys and based on its building correction coefficients.

– III-1-91 –

APPENDIX III-1

VALUATION REPORT A

	1# Inventory		Building Brick- Type of
Name of Building	Room		Structure Concrete Project			Building
Property Certificate		/	Floor Area 701.37 Date of			2013/10/1
No.			Completion
Land Certificate No.		/	Number of 3 Expected			40
			Floors Service Life
Original Book Value	1483229.50		Valuation 2021/8/31 Remaining			32.08
			Benchmark Useful Life
			Date
					Valuation of
	Building Structure and Current Conditions			Standard	Current	Evaluated
				Score	Conditions	Score
	1 Foundation		(1) Artificial foundation; (2) Natural foundation (1) Strip foundation; (2) Independent foundation; (3) Raft foundation; (4) Box foundation; (5) Pile foundation	25	Artificial foundation: uneven settlement	20
	2 Bearing components		(1) Beam: wooden beam, steel beam, reinforced concrete beam (2) Plate: wood plate, steel plate, reinforced concrete slab (3) Column: wooden column, brick column, stone column, steel column, concrete column, reinforced concrete column	25	Steel concrete beam: sufficient bearing capacity; Steel concrete column: cracks and spalling found in the	20
Structure (G)			(4) Bearing wall: brick wall; stone wall, reinforced concrete wall		column body;
	3. Non-		Brick wall; empty bucket wall; plate wall	15	Masonry wall: a	12
	bearing		(trough, hollow); block wall; other		few cracks and
	wall				swollen parts;
	4. Roof		Rigid roof, flexible roof, tile roof		Rigid roof: some
				20	cracks and source	14
					leakage;
	5. Floor		Cement mortar; concrete; terrazzo; crushed	15	Ceramic tile floor:	11
			stone; asphalt concrete; plain soil		slight abrasion
			Lime soil; ceramic tiles; quartz tiles; wood floors; marble; granite		and peeling, some abrasion and fracture
	Sub-total:		(1 + 2 + 3 + 4 + 5)*Weight = 65.45	100	0.85	77

– III-1-92 –

VALUATION REPORT A

APPENDIX III-1

						Valuation of
	Building Structure and Current Conditions				Standard	Current	Evaluated
					Score	Conditions	Score
	6. Doors and	Doors: wood doors; steel doors; aluminum			25	Aluminum alloy	18
	windows	doors; plastic-steel doors (2) Windows: wood				windows:
		windows; steel windows; aluminum windows;				cracked, loose,
		plastic-steel windows				decayed, and lack
						of flexibility of
						the opening and
						closing parts
	7. Outer wall	Fair-faced wall; brushed stone; mosaic; ceramic			25	Tile wall: hollow,	20
		tile; aluminum-plastic panel; glass curtain				crack, peeling,
		wall; plastered wall; veneer wall; painted				wall seepage
		wall; marble; granite;
Decorations (S)	8. Inner wall	Fair-faced wall; large white; lime mortar; cement slurry; plastered wall; painting type;			25	White power painted wall,	19
		paper pasting type; marble;				paint slurry inner
		(1) Complete and firm, without damage, hollowing and cracks (except wind cracks);				wall: hollow, mildew, peeling;
		(2) Slight hollowing, cracks, and peeling;	(3)
		Partial hollowing, cracking, and peeling; (4)
		Severe hollowing, cracks, peeling.
	9. Ceiling	(1) Plastering ceiling; (2) Plate ceiling; (3)			25	Plastering ceiling:	20
		Suspended ceiling;				deformed,
						sagging, and
						slightly loose
	Sub-total: (6 +	7 + 8 + 9)*Weight =	3.85		100	0.10	77
	10. Water	(1) The pipelines are unblocked and all			25	Pipelines are	20
	supply and	appliances are in good conditions; (2)				unblocked; some
	drainage	Basically in good conditions, with slight				parts damaged
		leakage; (3) Insufficient flow, some rust and
		leakage; (4) Severely blocked and rusted,	and
		the parts are incomplete and damaged;
	11. Electrical	(1) The line equipment is complete and in good			25	Basically in good	20
	lighting	conditions, with good insulation; (2)				conditions; some
		Basically in good conditions, with individual				parts damaged
		parts damaged; (3) Partially old and aging,
		with poor insulation; (4) Generally aging	and
		incomplete, poor insulation
	12.	(1) In good conditions; (2) Basically in good			25	Basically in good	18
	Monitoring	conditions and in normal use; (3) Not able		to		conditions and in
		use normally; (4) Damaged severely;				normal use
Equipment (B)	13. Heating	(1) In good conditions; (2) Basically in good conditions and in normal use; (3) Can not be			25	Basically in good conditions and in	19
		used normally; (4) Damaged severely;				normal use
	14. Power	(1) The equipment pipeline is in good
		conditions, without plugging; (2) Basically		in
		good conditions, slightly old and usable; (3)
		Obviously rusted to be repaired, and the gas
		supply is abnormal; (4) Basically unusable;
	15. Fire	(1) In good conditions; (2) Basically in good
	prevention	conditions and in normal use; (3) Can not	be
		used normally; (5) Damaged severely;
	18. Other	(1) In good conditions; (2) Basically in good
		conditions and in normal use; (3) Can not	be
		used normally; (8) Damaged severely;
	Sub-total: (10 + 11 + 12 + 13 + 14 +...)*Weight			7.7	100	0.05	77
		=
	Evaluated	Score (P): P = G + S + B =			77

– III-1-93 –

VALUATION REPORT A

APPENDIX III-1

• ③ Integrated residue ratio

Integrated residue ratio = Residue ratio based on serviced years × 40% + Surveyed residue ratio × 60% = 80% × 40%+77% × 60% = 78%

• (4) Determination of appraised value

Appraised value = Full replacement cost × Integrated residue ratio

Appraised value = Full replacement cost × Integrated residue ratio

• = 1,705,500.00 × 78% = RMB1,330,300.00 (rounded)

Case 2: Port Pool A 1# Oil Wharf (Company Transferring Equity Interests – Structure and Other Auxiliary Facilities Valuation List No. 131)

(1) Overview

Port Pool A 1# oil wharf: 1# oil wharf is a prefabricated pre-stressed high-piled terminal, completed and put into use in June 2009, with a length of 235m, a bottom elevation of -15m. It is built with steel pipe pile foundation and concrete beam column platform. The content of the wharf includes: the main berth project, the construction of steel pipe piles and cathodic protection lamp pile, and the widening of the breakwater.

(2) Determination of full replacement cost

According to the “Notice of the Ministry of Finance and the State Administration of Taxation on the Comprehensive Rollout of the Business Tax to Value Added Tax Transformation Pilot Program” Caishui [2016] No. 36 (《財務部國家稅務總局關於全面推開營業稅改徵增值稅試點的通知》財稅 [2016]36號), for enterprises that meet the requirements for VAT deduction, the VAT input tax can be deducted. In this valuation, after taking into account the effect of this policy on the appraised value, then:

Full replacement cost = Estimated construction and installation project costs (after tax) + Preliminary and other fees and expenses (before tax) + Capital costs

A. Estimated construction and installation project costs

The estimated costs of construction and installation project include the total costs of civil engineering (decoration) and installation works. The estimated costs of construction and installation project are calculated using the budget (final account) adjustment method. The total costs of the

– III-1-94 –

VALUATION REPORT A

APPENDIX III-1

project is calculated by determining the workload of building based on relevant information of construction and information on completion settlement, and by making reference to the parameters as set out in the latest version of the Benchmark for Hydraulic Construction Projects (2019), Reference Benchmark for Coastal Port Projects (2019), Benchmark for Dredging Project Budget (2019), and the “Information on Building Material Price and Projects in Yingkou City (August 2021)” issued on the main portal of the Estimated Construction Project Costs in Liaoning Province.

• ① Estimated costs of hydraulic construction at the terminal

Calculation of Fees for Port Pool A 1# Oil Wharf Hydraulic Constructions

Name of project: Port Pool A 1# Oil Wharf

Type of Project: 1 General Hydraulic Project: Type II

	I.	Direct fees determined based on base price (base of	Direct fees determined based on base price (base of	Direct fees determined based on base price (base of	121,428,574.29	121,428,574.29
		charging) benchmark
	II.	Direct fees determined based on market		benchmark
	III. Price difference		of materials		37,289,792.37
				Bases of	Fee	Sub-total
No.	Code	Item	Formula of Calculation	Calculation	Rate %	(RMB)
1	A	Direct fees based	Direct fees determined based	159,809,662.37		159,809,662.37
		on benchmark	on market benchmark +
			Increased fee for small-scale
			project
1_2	A2	Direct fees	(Manpower fee + Material fee	159,809,662.37		159,809,662.37
		determined based	+ Construction vessel and
		on market	machinery usage fee + Fee
		benchmark	for main materials)
			*Estimated amplified
			coefficient
1_2_1	A2_1	Manpower fee	Manpower fee	12,826,284.08		12,826,284.08
1_2_2	A2_2	Material fee	Material fee	91,683,976.39		91,683,976.39
1_2_3	A2_3	Construction vessel	Machinery fee	24,114,761.90		24,114,761.90
		and machinery
		usage fee
1_2_4	A2_4	Fee for main	Fee for main materials	31,184,640.00		31,184,640.00
		materials
1_2_5	A2_5	Equipment fee	Equipment fee

– III-1-95 –

VALUATION REPORT A

APPENDIX III-1

				Bases of		Fee	Sub-total
No.	Code	Item	Formula of Calculation	Calculation	Rate %		(RMB)
1_3	A3	Increased fee for	Increased fee for small-scale
		small-scale	project
		project
2	B	Other direct fees	Safe construction practice fee	8,208,571.62			8,208,571.62
			+ Temporary facility fee +
			Increased fee for
			construction during winter,
			rainy season and at night +
			Material reverse
			transportation fee +
			Construction assistance fee
			+ Construction workers team
			enter and exit fee + Tugboat
			fee for offshore project
2_1	B1	Safe construction	Direct fees determined based	121,428,574.29	1.5		1,821,428.61
		practice fee	on base price benchmark
			amount
2_2	B2	Temporary facility	Direct fees determined based	121,428,574.29	1.2		1,457,142.89
		fee	on base price benchmark
			amount
2_3	B3	Increased fee for	Direct fees determined based	121,428,574.29	1.27		1,542,142.89
		construction	on base price benchmark
		during winter,	amount
		rainy season and
		at night
2_4	B4	Material reverse	Direct fees determined based	121,428,574.29	0.22		267,142.86
		transportation	on base price benchmark
		fee	amount
2_5	B5	Construction	Direct fees determined based	121,428,574.29	1.03		1,250,714.32
		assistance fee	on base price benchmark
			amount
2_6	B6	Construction	Direct fees determined based	121,428,574.29	0.52		631,428.59
		workers team	on base price benchmark
		enter and exit	amount
		fee
2_7	B7	Tugboat fee for	Direct fees determined based	121,428,574.29	1.02		1,238,571.46
		offshore project	on base price benchmark
			amount
3	C	Enterprise	Direct fees determined based	129,637,145.91	6.57		8,517,160.49
		administration	on base price benchmark
		fees	amount + Other direct fees

– III-1-96 –

VALUATION REPORT A

APPENDIX III-1

				Bases of		Fee	Sub-total
No.	Code	Item	Formula of Calculation	Calculation		Rate %	(RMB)
4	D	Profit	Direct fees determined based	138,154,306.40	7		9,670,801.45
			on base price benchmark
			amount + Other direct fees
			+ Enterprise administration
			fees
5	E	Duties	Direct fees determined based	121,428,574.29	1.6		1,942,857.19
			on base price benchmark
			amount
6	F	Total fees before	Direct fees based on	188,149,053.12			188,149,053.12
		tax	benchmark + Other direct
			fees + Enterprise
			administration fees + Profit
			+ Levies
7	G	Value-added tax	Total fees before tax	188,149,053.12	9		16,933,414.78
8	H	Special tax and
		duties
9	I	Construction and	Direct fees based on	205,082,467.90			205,082,467.90
		installation	benchmark + Other direct
		project fee	fees + Enterprise
			administration fees + Profits
			+ Levies + Value-added tax
			+ Special tax and duties
		Unit price for		470.00	m		436,345.68
		construction and
		installation
		project
		Estimated terminal					102,541,233.95
		project costs

② Preliminary and other fees and expenses

			Tax-
			exclusive	Charging
No.	Item	Rate	rate	basis	Reference
1	Construction	0.68%	0.68%	Construction	Ministry of Transport
	unit			cost (tax	2019 No. 57
	administrative			inclusive) ×
	fees			rate

– III-1-97 –

VALUATION REPORT A

APPENDIX III-1

Tax-

			Tax-
			exclusive	Charging
No.	Item	Rate	rate	basis	Reference
2	Engineering	1.40%	1.32%	Construction	Ministry of Transport
	supervision			cost (tax	2019 No. 57
	fees			inclusive) ×
				rate
3	Environmental	0.03%	0.02%	Construction	Ji Wei Huan Bao Zong
	impact			cost (tax	Ju Ji Jia Ge (2002) No.
	assessment			inclusive) ×	125
	fees			rate
4	Project	0.10%	0.09%	Construction	Ji Wei Ji Jia Ge (1999)
	proposal fees			cost (tax	No. 1283
	and feasibility			inclusive) ×
	study fees			rate
5	Survey and	2.76%	2.61%	Construction	Ministry of Transport
	design fees			cost (tax	2019 No. 57
				inclusive) ×
				rate
6	Bidding agent	0.02%	0.02%	Construction	Ministry of Transport
	fees			cost (tax	2019 No. 57
				inclusive) ×
				rate
7	Safety pre-	0.03%	0.02%	Construction	Guiding Opinions on
	assessment			cost (tax	Safety Assessment Fees
	fees			inclusive) ×	in Liaoning Province
				rate	(2005)
9	Safety	1.90%	1.79%	Construction	Ministry of Emergency
	production			cost (tax	Management 2019 Letter
	fees			inclusive) ×	No. 428
				rate
	Total	6.92%	6.56%

C Capital costs

According to the requirements under the “National Benchmark for the Time for Completion of Construction and Installation Projects”, the overall reasonable time for completion of projects is approximately 2.5 years. The construction funds are assumed to be evenly invested during the construction period. With regard to the loan interest rate, the capital costs are calculated based on the LRP rate of 4.25%, which is the LRP rate in August 2021 as announced by the People’s Bank of China for loans with a term of 2.5 years.

– III-1-98 –

VALUATION REPORT A

APPENDIX III-1

Capital costs = (Estimated construction and installation project costs + preliminary and other fees and expenses) × (1 + Loan interest rate) ^ (Reasonable time for completion/2-1)

• D Full replacement cost

Full replacement cost = Estimated construction and installation project costs + Preliminary and other fees and expenses + Capital costs – Deductible value-added tax

Details of the calculation are shown in the table below:

Table: Calculation of full replacement cost

Unit: RMB

							Result of	Result of
	**No. **	Item	**Fee Rate Formula **		of Calculation		Calculation
	1	Estimated	0% 1 = (2 +		3 + 4	+ 5) × (1 +	102,541,233.95
		construction and		correction coefficient)
		installation project
		costs
	2			Calculated based on the			102,541,233.95
				benchmark budget and
				fees amount
	3			Calculated based on the
				benchmark budget and
		Estimated terminal		fees amount
	4	project costs		Calculated based on the
				benchmark budget and
				fees amount
	5			Calculated based on the
				benchmark budget and
				fees amount
	6	Preliminary	and	6 = 7 + 8			7,343,969.73
		other fees	and
		expenses
	7	Based on fee rate 6.92% 6 = 1 × Fee rate					7,092,046.69
	8	Based on floor area 0 7 = Floor area				× Fee rate		0
	9	Capital costs 4.25% 9 = (1 +			6) × [(1 + Loan		5,854,886.68
				interest rate)^Reasonable
				time for completion/2-1]
	10	Replacement costs Rounded 10 = 1 +			6 + 9		115,488,167.32

– III-1-99 –

VALUATION REPORT A

APPENDIX III-1

==> picture [558 x 229] intentionally omitted <==

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

Result of
No. Item Fee Rate Formula of Calculation Calculation
11 Deductible value- 11 = Construction and 8,828,675.29
added tax installation fee/1.099%
+ (Preliminary fees –
Construction and
installation fee
Construction
management
fee)/1.066%
12 Replacement costs 12 = Replacement costs – 106,659,700.00
(after tax) Deductible value-added
tax
13 Replacement unit 235 13 = Replacement costs 453,871.09
price (after tax) (after tax)/Floor area
----- End of picture text -----*

That is, the full replacement cost of Port Pool A 1# Oil wharf (after tax) is RMB106,659,700.00 (rounded).

3. Determination of integrated residue ratio

• (1) Residue ratio based on serviced years

The economic service life of the structure is 50.00 years. As of the benchmark date, the berth has been used for 12.21 years, then:

Residue ratio based on serviced years = (1 – serviced years/economic service years) × 100% = 76%

• (2) Surveyed residue ratio

The score of residue is calculated through on-site survey and by taking into account the correction coefficient of the structure.

	Port pool A	Structure of		Type of
Name of structure	1# oil wharf	construction	High pile	project	Hydraulic berth
Property		/ Building	235 Date of		2009/6/17
Certificate No		parameters		completion
Land certificate		/ Floors		/ Useful life	50
No.
Original book	98,191,154.05 valuation		2021/8/31 Remaining		37.79
value		benchmark		useful life
		date

– III-1-100 –

VALUATION REPORT A

APPENDIX III-1

	Structure and	current conditions	Standard	Valuation of current	Appraised
			score	conditions	score
	1. Foundation	Sand and gravel bedding, drainage slab;	20	Conditions of settlement,	16
		filter layer		basically stable, with load-
				bearing capacity
	2. Base	Concrete caisson; concrete cover; block	20	Prefabricated components,	15
		stone; infill pile; track beam		displacement, basically
				stable, with load-bearing
				capacity
Main part of quay wall G	3. Quay wall	Masonry, concrete parapet wall; compression roof; concrete block	20	Cast steel concrete: corrosion, sinking deformation	14
	4. Accessory	Ship pillars; Ship sides; Ship piers;	20	Breakage, deformation	14
	components	Other ship-supporting elements		displacement
	5. Structural	Track slab; concrete beam slab	20	Tear and wear; cracks	14
	surface
	layer
	Sub-total: (1 +	2 + 3 + 4 + 5)*Weight = 37	100	0.50	73
	6. Soft	Grating; geotextile; drainage board;	25	Stable and can be used	19
	foundation	sand filler		normally
	7. Dredging	Self-propelled rake suction; winch	25	Cutter suction vessel dredging:	18
		suction type; chain bucket type; grab		small-scale back silting in
		bucket type; bucket dredging; reef		the harbor basin
		blowing and reef clearing
Soft foundation groove part S	8. Mud cleaning	800, 1000, 1250, 1450m 3/h mud blowing; silt removal; dumping	25	Hydraulic filling: 1450m 3/hydraulic filling,	18
				small-scale back silting in
				the harbor basin
	9. Cofferdam	Sand and gravel filling; masonry;	25	The cofferdam tube well is	18
		inspection wells; pipelines; drains		deformed and sagging; in
				normal use
	Sub-total: (6 +	7 + 8 + 9)*Weight = 22	100	0.30	73
	10.	(1) Foundation stone; (2) Concrete	30	The block stone concrete is	22
	Foundation	cushion; (3) Water stability; (4) Filter		basically in good conditions
		layer; (5) Concrete foundation		and firm
	11. Tear and	(1) Chain block; (2) Concrete panel; (3)	30	Cracks in the concrete block	22
	wear layer	Asphalt concrete; (4) Curb; (5)		concrete slab are found; in
		Runway beam		normal use
Berth land part F	12. Pipes and	(1) Water supply and drainage pipeline;	30	Subsidence of the tube well is	22
	networks	(2) Inspection well; (3) Rain sewage		found; in normal use
		tank; (4) Electrical equipment
	18. Others	(1) In good conditions; (2) Basically in	10	Can be used normally	7
		good conditions and in normal use;
		(3) can not be used normally; (4)
		Damaged severely;
	Sub-total: (10 + 11 + 12 + 13 + 14 15		100	0.20	73
	+...)*Weight	=
Appraised score(P): P = G + S + B =				73
Valuation by service years (N)%: Remaining useful				76
life/(Serviced years + remaining useful life) =
Integrated residue ratio %: Residue ratio P*Weight + Residue				74
ratio N*Weight =

– III-1-101 –

VALUATION REPORT A

APPENDIX III-1

• (3) Integrated residue ratio (%)

Integrated residue ratio = Residue ratio based on serviced years × 40%+ Surveyed residue ratio × 60% = 76 × 40%+73 × 60% = 74%

4. Determination of the appraised value

Appraised value = Full replacement cost × Integrated residue ratio

= 106,659,700.00 × 74% = RMB78,928,178.00 (rounded)

(III) Fixed assets – equipment

1. Scope of valuation

The quantity and book value of equipment under fixed assets the on the valuation benchmark date are set out in the table below:

Table: Summary of Equipment Under the Fixed Assets

Unit: RMB

	Declared
Items	Amount	Book Value
	(Number of
Name	Items)	Original Value	Net Value
Total	913	955,406,674.32	503,085,343.74
Machinery and
equipment	735.00	950,582,770.39	502,780,178.24
Vehicle	8.00	3,834,000.00	191,700.00
Electronic
equipment	170.00	989,903.93	113,465.50

2. Overview of assets

• (1) Machinery and equipment

The machinery and equipment included in the capital increase in the valuation are mainly distributed in the plant area where it is located, including: ore loading machines, belt conveyors, various types of pumps, power transformation and distribution systems, storage tanks, oil transmission system process pipelines, loaders, forklifts and monitoring system, etc. As of the valuation benchmark date, all machinery and equipment are in good conditions and are in normal use.

– III-1-102 –

VALUATION REPORT A

APPENDIX III-1

(2) Vehicles

The Company has a total of 8 vehicles, mainly including trucks, vacuum cleaners, etc. As of the valuation benchmark date, all vehicles are in normal use.

(3) Electronic equipment

The Company’s electronic equipment mainly includes: various models of computers, printers, air conditioners, copiers, servers, cameras, monitoring equipment, etc. As of the valuation benchmark date, all electronic equipment is in normal use.

3. Methods and results of asset verification

(1) Methods of asset verification

On the basis of the matching of the accounts, the appraiser, with the cooperation of the relevant personnel of the assessed enterprise, conducts on-site verification of the fixed assets under the equipment category, surveys their operating conditions under appropriate conditions, and uses on-site and case-by-case survey (for equipment directly used in production) and sampling survey (for other equipment) to check the current condition of assets and collect relevant technical information to verify relevant information on ownership.

(2) Results of asset verification

The result of on-site verification shows that the ownership of fixed assets of all commissioned equipment is clear, and all equipment can be used normally.

4. Method of valuation

Based on the purpose of the valuation and the characteristics of the subject asset, assuming that it will continue to be used for the purpose which is identical to that of the current use, and on the basis of on-site surveys, the replacement costs method is adopted for valuation.

Basic formula: Appraised value = Full replacement cost × Residue ratio

– III-1-103 –

VALUATION REPORT A

APPENDIX III-1

• (1) Determination of full replacement cost

1) Determining the full replacement costs of machinery and equipment

Full replacement cost = Equipment fee + Transportation and miscellaneous fees + Installation and commissioning fee + Equipment foundation fee + Preliminary and other expenses + Capital costs – Deductible input VAT

① Purchase price

It is mainly determined by inquiring equipment manufacturers or sales companies, or referring to price materials such as the “Mechanical and Electrical Products Quotation Manual 2021”, and by referring to recent contract prices of similar equipment. For a small amount of equipment for which the purchase prices are not available, the price change rate of the equipment of the same age and category is used to calculate the purchase price.

② Transportation and miscellaneous fees

Transportation and miscellaneous fees refer to the transportation fees, purchase fees, storage fees, unloading fees and other related miscellaneous fees incurred during the transportation of the equipment. The formula of calculation is as follows:

Transportation and miscellaneous fees for domestic equipment= Purchase price of the equipment (tax inclusive) × Transportation and miscellaneous fee rate for the equipment

The Transportation and miscellaneous fee rates are calculated based on the rates specified in the relevant industry costs indicators with reference to the rate standard as stipulated by the “Manual of Data and Parameters Commonly Used in Assets Valuation”.

Transportation and miscellaneous fees will not be charged if the purchase price includes transportation expenses.

③ Foundation fee

If the foundation of the equipment is independent or inseparable from the building, the equipment foundation fee shall be considered in the valuation of fixed assets under building category, the equipment

– III-1-104 –

VALUATION REPORT A

APPENDIX III-1

foundation fee rate shall be calculated based on the rate specified in the relevant industry budget index or by referring to the “Manual of Methods and Parameters Commonly Used in Assets Valuation”.

Equipment foundation fee = Purchase cost of equipment (tax inclusive) × Equipment foundation fee rate

④ Installation and commissioning fee

The fee is determined based on the consumption of auxiliary materials, the installation foundation, and the difficulty of installation of the assessed equipment with reference to the “Manual of Data and Parameters Commonly Used in Assets Valuation”. For small equipment that does not need to be installed, installation costs are not taken into account.

Equipment installation and commissioning fee = Equipment purchase price (tax inclusive) × Installation and commissioning fee rate

⑤ Construction and other expenses

Construction and other expenses are calculated based on the characteristics of the equipment and the equipment purchase price (tax inclusive). It includes construction unit management fee, engineering survey and design fee, engineering supervision fee, environmental impact assessment fee, bidding agency fee, feasibility study fee, etc. The fee rates are detailed in the table below:

			Tax-
			exclusive	Charging
No.	Item	Rate	rate	basis	Reference
1	Construction	0.68%	0.68%	Construction	Ministry of
	unit			cost (tax	Transport
	administrative			inclusive) ×	2019 No. 57
	fees			rate
2	Engineering	1.40%	1.32%	Construction	Ministry of
	supervision			cost (tax	Transport
	fees			inclusive) ×	2019 No. 57
				rate
3	Environmental	0.03%	0.02%	Construction	Ji Wei Huan
	impact			cost (tax	Bao Zong Ju
	assessment			inclusive) ×	Ji Jia Ge
	fees			rate	(2002) No.
					125

– III-1-105 –

APPENDIX III-1

VALUATION REPORT A

			Tax-
			exclusive	Charging
No.	Item	Rate	rate	basis	Reference
4	Project	0.10%	0.09%	Construction	Ji Wei Ji Jia
	proposal			cost (tax	Ge (1999)
	fees and			inclusive) ×	No. 1283
	feasibility			rate
	study fees
5	Survey and	2.76%	2.61%	Construction	Ministry of
	design fees			cost (tax	Transport
				inclusive) ×	2019 No. 57
				rate
6	Bidding agent	0.02%	0.02%	Construction	Ministry of
	fees			cost (tax	Transport
				inclusive) ×	2019 No. 57
				rate
7	Safety pre-	0.03%	0.02%	Construction	Guiding
	assessment			cost (tax	Opinions on
	fees			inclusive) ×	Safety
				rate	Assessment
					Fees in
					Liaoning
					Province
					(2005)
9	Safety	1.90%	1.79%	Construction	Ministry of
	production			cost (tax	Emergency
	fees			inclusive) ×	Management
				rate	2019 Letter
					No. 428
	Total	6.92%	6.56%

⑥ Capital costs

The capital cost was calculated based on the sum of the purchase price, transportation and miscellaneous fees, installation fees, the preliminary and other fees and expenses in accordance with the even input of capital within the reasonable construction period of the appraised enterprise, with reference to the loan prime rate (LPR) published by the National Interbank Funding Centre with authorization granted by the People’s Bank of China as at the valuation benchmark date. The formula of the capital cost is as follows:

Capital costs = (Equipment purchase costs + Transportation and miscellaneous fees + Installation and commissioning fees + Foundation costs + Preliminary and other fees and expenses) × Reasonable time for completion × Loan interest rate × 1/2

– III-1-106 –

VALUATION REPORT A

APPENDIX III-1

⑦ Deductible tax

According to “Notice on Several Issues Concerning the Implementation of VAT Reform in the Whole Country” (Cai Shui [2008] No. 170), “Notice on the Comprehensive Rollout of the Business Tax to Value Added Tax Transformation Pilot Program” (Caishui [2016] No. 36), Caishui (2018) No. 32 promulgated by the Ministry of Finance and State Administration of Taxation, and Announcement No. 39 of 2019 issued by the Ministry of Finance, State Administration of Taxation and General Administration of Customs, when calculating the replacement costs of machinery and equipment that meets the requirements for value-added tax deduction, the corresponding value-added tax should be deducted. In this valuation, the deductible input tax is calculated according to the corresponding value-added tax rate for the equipment purchase price, transportation and miscellaneous fees, installation fee, foundation fee, and preliminary fees and expenses:

Tax deductible for domestic equipment = Equipment purchase price/(1 + 13%) × 13% + Transportation and miscellaneous fees/(1 + 9%) × 9% + (Installation fee + Foundation fee)/(1 + 9%) × 9% + (Preliminary fees and expenses – Construction unit management fee)/(1 + 6%) × 6%

2) Determination of the full replacement cost of transportation vehicles

To derive the formula of calculation, firstly, we determine the current purchase price (before tax) of transportation vehicles based on recent vehicle market price data, such as information on sales in the local car market, and secondly, on this basis, we include vehicle purchase tax and new vehicle registration duties and fees. We also take into account relevant policies, which stipulate that the value-added tax on the purchase of vehicles can be deducted, such as the requirements under the “Interim Regulations on Vehicle Purchase Tax of the People’s Republic of China” issued by the Ministry of Finance and the State Administration of Taxation, the “Notice on Incorporating Railway Transportation and Postal Services into the Pilot Program of Changing Business Tax to Value-added Tax” (Caishui [2013] No. 106) and the Announcement No. 39 of 2019 issued by the State Administration of Taxation and the General Administration of Customs. The formula of calculation is as follows:

Full replacement cost = Current purchase price + Vehicle purchase tax + New vehicle registration fee – Deductible value-added tax

– III-1-107 –

VALUATION REPORT A

APPENDIX III-1

• ① Purchase price: The vehicle purchase price for this valuation is determined according to the vehicle market information and recent vehicle market price data from relevant sources, such as “Automobile Quotation Database by pcauto.com”, yiche.com, and by referring to the latest market price of similar models in the same location. For vehicles purchased a long time ago, when the purchase price of the original model and specification cannot be found, the price of a similar vehicle with the same displacement can be used as the reference price for evaluating the purchase price of the vehicle.

• ② Purchase tax: Calculated in accordance with the “Law of the People’s Republic of China on Vehicle Purchase Tax” (《中華人民共和國車輛購 置稅法》) (adopted at the Seventh Session of the Standing Committee of the Thirteenth National People’s Congress on December 29, 2018); Vehicle purchase tax payable = Taxable price × 10%. The “taxable price for the purchase of a vehicle by a taxpayer for his own use shall not include value-added tax.”

Vehicle purchase tax = Purchase price ÷ (1 + Value-added tax rate) × Vehicle purchase tax rate

Vehicle purchase tax rate: 10%

• ③ Production cost of new car license, including cost of license, examination fee and procedural cost, is fixed at RMB300.00 per unit according to charging standards published by local automobile administration department.

• ④ Determination of the input tax amount incurred on the purchase of vehicles

The input tax incurred when purchasing the vehicles = Vehicle purchase price × Value-added tax rate ÷ (1 + Value-added tax rate)

The vehicle purchase value-added tax rate: 13%

• 3) Determination of full replacement cost of electronic devices

The price of electronic devices as at the valuation benchmark date is determined based on the local market information and recent market price information published by Zol.com.cn and PConline.com.cn. Generally, manufacturers or agents will provide free delivery, installation and commissioning services. The full replacement cost is then determined as follows:

Full replacement cost = Purchase price – Deductible tax amount

Deductible value-added tax amount = Purchase price/1.13×13%

– III-1-108 –

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APPENDIX III-1

In addition, for any electronic device which was purchased long time ago, its full replacement cost is determined by reference to prices in the secondhand market.

(2) Determination of residue ratio

• 1) Integrated residual ratio of machinery and equipment

Residue ratio of machinery and equipment is comprehensively determined with reference to the economic service life of the equipment, through conducting survey on components of the equipment by on-site survey on present condition of the equipment and reviewing the information on operation, repair and management records of the equipment. Residue ratio, N, is calculated on such basis, i.e.:

N = Remaining service life/(Practical serviced life + Remaining service life) × 100%

• 2) Integrated residual ratio of vehicles

In accordance with the Standards for Compulsory Scrapping of Motor Vehicles (No. 12 Order in 2012) jointly released by the Ministry of Commerce, the National Development and Reform Commission, the Ministry of Public Security, and the Ministry of Ecology and Environment, the smaller of the residue ratios as determined below is taken as the final residue ratio of vehicles, i.e.:

Residue ratio of service life = (1 – Serviced life/Specified or economic service life) × 100%

Residue ratio of mileage = (1 – Travelled mileage/Specified mileage) × 100%

Residue ratio = Min (Residue ratio of service life, Residue ratio of mileage)

Meanwhile, necessary survey and evaluation are conducted for the vehicles to be assessed. Where survey and evaluation result shows great difference from the residue ratio determined above, appropriate adjustment should be made; where the two are equivalent to each other, no adjustment is required. Namely:

Residue ratio = Min (Residue ratio of service life, Residue ratio of mileage) + a

• a: Adjustment factors for special vehicle conditions.

– III-1-109 –

VALUATION REPORT A

APPENDIX III-1

• 3) Residue ratio of electronic devices

Remaining useful life method is adopted to determine the residue ratio.

Residue ratio = [Remaining useful life ÷ (Used life + Remaining useful life)] × 100%

Furthermore, it is not necessary to determine the residue ratio of electronic devices that were evaluated directly based on the prices in the second-hand market.

• (3) Determination of appraised value

Appraised value = Full replacement cost × Residue ratio

5. Result of valuation

After the valuation, the valuation results of the fixed assets under the equipment category included in the scope of valuation as at 31 August 2021, being the valuation benchmark date is shown in the table below:

Unit: RMB

	**Book **	Value	**Appraised **	Value	Amount of	Appreciation
Name of Item	Original Value	Net Value	Original Value	Net Value	Appreciation	Rate
Total –
Equipment	955,406,674.32	503,085,343.74	1,051,243,880.00	519,262,839.00	16,177,495.26	3.22%
Fixed assets –
machinery
and equipment	950,582,770.39	502,780,178.24	1,048,247,800.00	518,265,849.00	15,485,670.76	3.08%
Fixed assets –
Vehicles	3,834,000.00	191,700.00	2,542,100.00	852,708.00	661,008.00	344.81%
Fixed assets –
Electronic
device	989,903.93	113,465.50	453,980.00	144,282.00	30,816.50	27.16%

Generally speaking, the difference in the comparison between the appraised value and book value of the Company’s fixed assets under the equipment category are mainly reflected in the following aspects:

• 1) With regard to machinery and equipment, on the one hand, the reasons for the appreciation of the original appraised value are: firstly, the purchase price of the equipment on the benchmark date increased slightly, and secondly, the machinery and equipment within the valuation scope are accounted for at the contract price, while the preliminary fees and capital costs are calculated in accordance with the relevant policies for the purpose of the valuation, and

– III-1-110 –

VALUATION REPORT A

APPENDIX III-1

these factors led to the increase in the original appraised value. This leads to an increase in the original appraised value. On the other hand, the reasons for the increase in the net appraised value are: firstly, the increase on original value, and secondly, the depreciation life of the enterprise’s machinery and equipment is shorter than the economic service life used in the valuation.

• 2) With regard to vehicles, the original appraised value is decreased as the price of vehicles is reduced year due to the fierce competition in the auto market and the fast rate of upgrading; the net appraised value is increased as the depreciation period of the Company’s vehicles is shorter than the economic period used in the valuation.

• 3) With regard to electronic device, the original appraised value is decreased for the following reasons: firstly, the market price of electronic device changes rapidly due to the rapid upgrading of products on the electronic device market, and secondly, some of the electronic device was purchased a long time ago, while they are assessed using the market method; the net appraised value of device is increased as the depreciation period of the enterprise’s electronic device is shorter than the economic service life used in the valuation.

6. Valuation case

Case 1 : Ore Loading Machine – Machinery and Equipment Inventory and Valuation List No. 116

• (1) Overview of the equipment

Name of equipment: Ore loading machine

Model of equipment: 3500t/h

Manufacturer: Shenyang Shengjia Machinery Manufacturing Co., Ltd.

Date of purchase: December 2012

Date of being commissioned for operation: December 2012

Original book value: RMB11,430,000.00

Net book value: RMB3,280,640.93

Quantity: 1 set

Main technical specifications:

Rated production capacity: 3500t/h

– III-1-111 –

VALUATION REPORT A

APPENDIX III-1

Maximum production capacity: 4375t/h

Telescopic speed: 6m/min

Retractable belt width: 1600mm

Telescopic belt groove angle: 35[o]

Roller diameter of telescopic belt conveyor: � = 159mm

Speed of telescopic belt: V = 2.5m/s

Material types: iron ore, including fine ore, lump ore, pellets

Total length of the loading line: approximately 705m.

• (2) Determination of full replacement cost

• 1) Equipment purchase price

After consulting with the manufacturer on the quotation, the appraiser determines that the unit sale price of this model of equipment (before tax) on the valuation benchmark date was RMB12,600,000.00.

• 2) Transportation and miscellaneous fees

After consulting with the manufacturer and inquiring on the contract price, and referring to the asset valuation manual, it is determined that the equipment installation fee rate is 2% of the purchase price, then:

Transportation and miscellaneous fees = Purchase price × Transportation and miscellaneous fee rate = 12,600,000.00 × 2% = RMB252,000.00.

• 3) Installation and commissioning fee

After consulting with the manufacturer and inquiring on the contract price, and referring to the asset valuation manual, it is determined that the equipment installation fee rate is 8% of the purchase price, then:

Installation and commissioning fee = Purchase price × Installation fee rate

• = 12,600,000.00 × 8%

• = RMB1,008,000.00

– III-1-112 –

VALUATION REPORT A

APPENDIX III-1

4) Foundation fee

As the foundation fee of the equipment are included in the civil construction work, the foundation rate is 0%.

5) Preliminary and other fees and expenses

The preliminary and other fees and expenses are estimated based on the overall project, and the preliminary fee (before and after tax) rate is 6.92% and 6.56%, respectively.

Preliminary fees (before tax) = (Equipment purchase fee + Transportation and miscellaneous fees + Installation fee + Foundation fee) × 6.92% = RMB958,597.47

Preliminary fees (after tax) = (Equipment purchase fee + Transportation and miscellaneous fees + Installation fee + Foundation fee) × 6.56% = RMB909,700.87

6) Capital costs

The capital costs are calculated based on the reasonable time for completion of 2.5 years for the subject company under valuation. On the valuation benchmark date, the loan prime rate (LPR) announced by the National Interbank Funding Center as authorized by the People’s Bank of China is 3.85% for 1-year and 4.65% for 5-year loans, respectively. The interest rate (LPR) of a loan with a term of 2.5 years (i.e., time for completion) is determined to be 4.25%, the average of the LPR on the benchmark date for 1-year and 5-year loans. The formula of calculation of the capital costs is as follows:

Capital costs = (equipment purchase costs + Transportation and miscellaneous costs + Installation and commissioning costs + Foundation costs + Preliminary and other fees and expenses) × Reasonable time for completion × loan interest rate × 1/2

= RMB787,237.99

7) Deductible value-added tax

Deductible value-added tax = Equipment purchase price/1.13 × 13% + (Transportation and miscellaneous fees + Installation and commissioning fee + Equipment foundation fee)/1.09 × 9% + preliminary and other fees and expenses (before tax) – Preliminary and other fees and expenses (after tax)

= RMB1,602,490.82

– III-1-113 –

VALUATION REPORT A

APPENDIX III-1

• 8) Calculation of full replacement cost

Full replacement cost = (Equipment purchase price + Transportation and miscellaneous fees + Installation and commissioning fee + Equipment basic fee + Preliminary and other fees and expenses + Capital costs) – Deductible value-added tax

• = 14,003,300.00 (RMB/unit, rounded)

• (3) Integrated residue ratio

The economic life of the equipment was determined to be 18 years with reference to the characteristics of the industry. The equipment was put into use in December 2012 and has been in use for 8.72 years as of the valuation benchmark date. Through on-site surveys, the equipment is currently in normal operation thanks to the good maintenance. According to the judgement of relevant technical personnel after taking into account various factors, the remaining service life of the equipment is 9 years, then:

Residue ratio = Remaining service life/(Remaining service life + Serviced life) × 100% = 9/(9 + 8.72) × 100% = 51%

• (4) Determination of appraised value

Appraised value = Full replacement cost × Integrated residue ratio

= 14,003,300.00 × 51% = 7,141,683.00 (RMB/unit, rounded)

Case 2: Stacker – Machinery and equipment Inventory and Evaluation List No. 3

• (1) Overview of the equipment

Equipment name: Stacker

Equipment model: DB6000t/h

Manufacturer: Dalian Huarui Heavy Industry Group Co., Ltd.

Purchase Date: January 2015

Date of being commissioned for operation: January 2015

Original book value: RMB19,980,000.00

Net book value: RMB9,244,510.76

Quantity: 1 set

– III-1-114 –

VALUATION REPORT A

APPENDIX III-1

Main technical specifications:

Rated stacking capacity: 6000t/h

Maximum stacking capacity: 7500t/h

Shape (length * width * height): 1081223.75m

Total installed capacity: 550KW

Power supply: AC10000V/50HZ

Total weight: 750t

• (2) Determination of full replacement cost

• 1) Equipment purchase price

After consulting with the manufacturer on the quotation, the appraiser determines that the unit sale price of this model of equipment (before tax) on the valuation benchmark date was RMB22,000,000.00 per set.

• 2) Transportation and miscellaneous fees

As the quotation includes transportation fee, the transportation and miscellaneous fees rate is determined to be 0%.

• 3) Installation and commissioning fee

After consulting with the manufacturer and inquiring on the contract price, and referring to the asset valuation manual, it is determined that the equipment installation fee rate is 7% of the purchase price, then:

Installation and commissioning fee = Purchase price × Installation fee

rate

• = 22,000,000.00 × 7% = RMB1,540,000.00

• 4) Foundation fee

As the foundation fee of the equipment are included in the civil construction work, the foundation rate is 0%.

– III-1-115 –

VALUATION REPORT A

APPENDIX III-1

• 5) Preliminary and other fees and expenses

The preliminary and other fees and expenses are estimated based on the overall project, and the preliminary fee (before and after tax) rate is 6.92% and 6.56%, respectively.

Preliminary fees (before tax) = (Equipment purchase fee + Transportation and miscellaneous fees + Installation fee + Foundation fee) × 6.92% = RMB1,628,094.11

Preliminary fees (after tax) = (Equipment purchase fee + Transportation and miscellaneous fees + Installation fee + Foundation fee) × 6.56% = RMB1,545,047.51

6) Capital costs

The capital costs are calculated based on the reasonable time for completion of 2.5 years for the subject company under valuation. On the valuation benchmark date, the loan prime rate (LPR) announced by the National Interbank Funding Center as authorized by the People’s Bank of China is 3.85% for 1-year and 4.65% for 5-year loans, respectively. The interest rate (LPR) of a loan with a term of 2.5 years (i.e., time for completion) is determined to be 4.25%, the average of the LPR on the benchmark date for 1-year and 5-year loans. The formula of calculation of the capital costs is as follows:

Capital costs = (Equipment purchase costs + Transportation and miscellaneous costs + Installation and commissioning costs + Foundation costs + Preliminary and other fees and expenses) × Reasonable time for completion × loan interest rate × 1/2

= RMB1,337,055.00

7) Deductible value-added tax

Deductible value-added tax = Equipment purchase price/1.13 × 13% + (Transportation and miscellaneous fees + Installation and commissioning fee + Equipment foundation fee)/1.09 × 9% + Preliminary and other fees and expenses (before tax) – Preliminary and other fees and expenses (after tax)

= RMB2,741,176.02

– III-1-116 –

VALUATION REPORT A

APPENDIX III-1

• 8) Calculation of full replacement cost

Full replacement cost = (Equipment purchase price + Transportation and miscellaneous fees + Installation and commissioning fee + Equipment foundation fee + Preliminary and other fees and expenses + Capital costs) – Deductible value-added tax

• = 23,764,000.00 (RMB/unit, rounded)

• (3) Integrated residue ratio

The economic life of the equipment is determined to be 18 years with reference to the characteristics of the industry. The equipment was put into use in January 2015 and has been in use for 6.61 years as of the valuation benchmark date. Through on-site surveys, the equipment is currently in normal operation thanks to the good maintenance. According to the judgement of relevant technical personnel after taking into account various factors, the remaining service life of the equipment is 11 years, then:

Residue ratio = Remaining service life/(Remaining service life + Serviced life) × 100% = 11/(11 + 6.61) × 100% = 62%

• (4) Determination of appraised value

Appraised value = Full replacement cost × Integrated residue ratio

= 23,764,000.00 × 62% = 14,733,680.00 (RMB/unit, rounded)

Case 3: Sinotruk Howo Truck (Vehicle Evaluation List No. 2)

• (1) Overview of vehicle

Vehicle name: Sinotruk Howo truck

Model: ZZ1317M4667C

Manufacturer: Shandong Jinan Truck Co., Ltd.

License plate number: Liao A-H7108

Driving mileage: 63,258 kilometers

Date of purchase: July 2011

Date of being commissioned for operation: July 2011

Original book value: RMB366,000.00

Net book value: RMB18,300.00

– III-1-117 –

VALUATION REPORT A

APPENDIX III-1

Main technical specifications:

Type of steering:	Steering wheel	Chassis Type:	Type II
Name of product:	Truck chassis	Product	Sinotruk Howo
		trademark:
Specification:	Length 11,700	Engine power	247
	Width 2,496	(ML)
	Height 3,025
Fuel type:	Diesel fuel	Standard:	GB17691-2001
			(Phase II),
			GB3847-2005
Type of steering:	Steering wheel	Approach	16/19
		departure
		angles:
Number of axes:	4	Maximum	90102
		speed:
Engine capacity	9726	Number of tires:	12
(ML)
Tire	11.00-20	Wheel distance:	Front track:
specifications:			2022 Rear track:
			1830
Total weight:	31000	Front	1500/2450,2425
		suspension and
		rear suspension:
Gross weight:	11110	Number of	2
		passengers at
		front seats:

• (2) Determination of full replacement cost

• 1) Vehicle purchase price

The vehicle was purchased in July 2011. After inquiring about vehicle market information and recent vehicle market price data from relevant sources, such as auto.qq.com, the price of this type of vehicle on the valuation benchmark date is RMB270,000.00 (before deducting value-added tax).

2) Vehicle purchase tax

Since the vehicle is running within the port and bears a license plate for operating within the port factory, the vehicle purchase tax is not included.

– III-1-118 –

VALUATION REPORT A

APPENDIX III-1

• 3) Cost of new vehicle license plate

The cost of a new vehicle license issuance fee is RMB300.00 per vehicle.

• 4) Deductible value-added tax

Deductible tax amount = Vehicle purchase price/(1 + Value-added tax rate) × Value-added tax rate

• = 270,000.00/(1+13%) × 13% = RMB31,061.95

• 5) Full replacement cost

Full replacement cost = Vehicle purchase price + New vehicle license issuance fee – Deductible tax

• = 239,200.00 (RMB/vehicle, rounded)

• (3) Determination of residue ratio

With reference to the requirements under the “Regulations on Standards for Compulsory Retirement of Motor Vehicles” (Order No. 12 of 2012 issued the Ministry of Commerce, Development and Reform Commission, Ministry of Public Security, and Ministry of Environmental Protection), the service life of the vehicle is determined to be 15 years, and the prescribed mileage is 600,000 kilometers. Then:

• 1) Residue ratio based on serviced years

Residue ratio based on service life = (1-serviced life/economic service life) × 100%

The vehicle was put into use in July 2011. It has a service life of 10.12 years, and an economic service life of 15 years. Then:

Residue ratio based on service life = (1–10.12/15) × 100% = 33%

– III-1-119 –

VALUATION REPORT A

APPENDIX III-1

• 2) Residue ratio based on mileage

Residue ratio based on mileage = (1- Mileage driven/Prescribed mileage) × 100%

The vehicle has a mileage of 63,258 kilometers, and the prescribed mileage is 600,000 kilometers, then:

Residue ratio of driving mileage = (1–63258/600,000) × 100% = 89%

The vehicle is in normal use and maintenance and is not subject to extraordinary conditions. Based on the actual conditions of the vehicle, the adjustment coefficient a = 0

Residue ratio = Min (Residue ratio based on serviced years, Residue ratio based on mileage) + 0

= Min (33%, 89%) + 0

= 33%

• (4) Determination of appraised value

Appraised value = Full replacement cost × Residue ratio

= 239,200.00 × 33% = 78,936.00 (RMB/vehicle, rounded)

Case 4: Camera – Electronic Device Valuation List No.146

• (1) Overview of the asset

Equipment name: Camera

Specification and model: HXR-NX5R

Manufacturer: Sony Corporation

Date of purchase: December 2018

Date of being commissioned for operation: December 2018

Original book value: RMB16,120.69

Net book value: RMB8,163.14

– III-1-120 –

VALUATION REPORT A

APPENDIX III-1

Quantity: 1 set

Main technical specifications:

Product type Camera all-in-one Product Positioning Professional Camera Sensor type Exmor 3CMOS Sensor size (1/2.8) inch Effective pixels 2.07 megapixels Optical zoom 20 times Digital zoom 40 times Actual focal length f = 4.1-82mm LCD screen size 3.5 inches LCD screen pixels 1.56 megapixels

• (2) Determination of full replacement cost

• 1) Equipment purchase price

Based on information available online, the appraiser determines that the unit sale price of the equipment (before tax) on the valuation benchmark date is RMB16,999.00 per set.

• 2) Deductible value-added tax

Deductible value-added tax = Equipment purchase fee ÷ (1 + Value-added tax rate) × Value-added tax rate

• = 16,999.00÷1.13 × 13% = RMB1,955.64

• 3) Full replacement cost

Full replacement cost = Equipment purchase fee – Deductible valueadded tax

– III-1-121 –

VALUATION REPORT A

APPENDIX III-1

• = 16,999.00-1,955.64

• = 15,040.00 (RMB/set, rounded)

• (3) Determination of residue ratio

After on-site survey, the appraiser is of the opinion that the equipment is in normal use. The economic service life of the equipment is 6 years, and it has been used for 2.73 years as of the valuation benchmark date. It is determined that its remaining service life is 3 years, then:

Residue ratio = Remaining service life/(serviced life + Remaining service life) × 100% = 3/(3 + 2.73) × 100% = 52%

• (4) Determination of appraised value

Appraised value = Full replacement cost × Residue ratio

• = 15,040.00 × 52% = 7,821.00 (RMB, rounded)

(IV) Intangible Assets – Land Use Right

1. Overview of the Subject of Evaluation

(1) Land registration

The land involved in this valuation is 27 plots of land. The subject land is located in Bayuquan Port District, Yingkou City. The total area of the valuation target is 4,396,185.69 square meters. The original book value of land use right is RMB1,481,122,772.84, and the net book value is RMB1,104,467,003.97. The details of land registration are shown in the table below:

Table: Details of Land Registration

Unit: m[2]

									Transfer area
				Date of	Termination	Nature		Area	included in the scope
**No. **	Title certificate no.	Parcel name	Location	acquisition	date	of land	Land usage	recorded	of valuation
1	Bayuquan Guo Yong	Port Pool A 2#	In the Port	2009/12/16	2059/12/15	Transfer	Land for	486,764.80	126,764.80
	[2009] No. 268	Land	Area				transportation

– III-1-122 –

APPENDIX III-1

VALUATION REPORT A

2	Liao (2020) Yingkou	Port Pool A 1#	In the Port	2020/11/11	2059/6/9 Transfer	Land for	384,618.90	384,538.25
	Bayuquan Real Estate	Land	Area			transportation
	No. 0032395
3	Liao (2020) Yingkou	Phase IV Project	In the Port	2020/11/10	2059/12/15 Transfer	Land for	535,388.00	484,941.15
	Bayuquan Real Estate	7# Land	Area			transportation
	No. 0032260
4	Liao (2018) Yingkou	Phase IV 4# Plot	In the Port	2018/1/24	2056/10/15 Transfer	Port terminal	965,263.59	231,288.84
	Bayuquan Real Estate		Area
	No. 0029366
5	Liao (2020) Yingkou	Logistics Parcel 1	In the Port	2020/9/23	2052/10/8 Transfer	Port terminal	22,452.32	4,222.96
	Bayuquan Real Estate		Area
	No. 0027169
6	Liao (2020) Yingkou	Logistics Parcel 2	In the Port	2020/9/23	2052/10/8 Transfer	Port terminal	413,338.24	14,697.35
	Bayuquan Real Estate		Area
	No. 0027266
7	Bayuquan Guo Yong	Administrative	Outside	2009/6/5	2059/6/3 Transfer	Commercial	42,987.66	245.00
	[2009] No. 0127	Zone 1	the Port			and residential
			Area
8	Liao (2020) Yingkou	Administrative	Outside	2020/9/23	2059/6/3 Transfer	Commercial and	29,016.61	100.00
	Bayuquan Real Estate	Zone 2	the Port			residential
	No. 0027176		Area
9	Bayuquan Guo Yong	Port Pool A 4#	In the Port	2009/12/16	2059/12/15 Transfer	Land for	396,995.30	396,179.07
	[2009] No. 267	Land	Area			transportation
10	Liao (2020) Yingkou	Parcel 01#	In the Port	2007/12/18	2049/12/25 Transfer	Port terminal	43,979.50	43,979.50
	Bayuquan Real Estate		Area
	No. 0029352
11	Liao (2020) Yingkou	Parcel 02#	In the Port	2007/12/18	2049/12/25 Transfer	Port terminal	38,455.14	38,455.14
	Bayuquan Real Estate		Area
	No. 0027222
12	Bayuquan Guo Yong	Parcel 04#	In the Port	2007/12/18	2049/12/25 Transfer	Port terminal	20,049.55	20,049.55
	[2007] No. 0216		Area
13	Liao (2020) Yingkou	Parcel 03#	In the Port	2007/12/18	2049/12/25 Transfer	Port terminal	199,427.59	199,427.59
	Bayuquan Real Estate		Area
	No. 0029375
14	Liao (2020) Yingkou	Parcel 07#	In the Port	2020/9/23	2049/12/25 Transfer	Port terminal	298,720.25	294,174.75
	Bayuquan Real Estate		Area
	No. 0027263
15	Bayuquan Guo Yong	Parcel 05#	In the Port	2007/12/18	2049/12/25 Transfer	Port terminal	17,452.00	17,452.00
	[2007] No. 0217		Area
16	Liao (2020) Yingkou	Parcel 06#-1	Haixingban	2010/12/21	2052/6/17 Transfer	Industrial	189,206.47	189,206.47
	Bayuquan Real Estate
	No. 0029388
17	Liao (2020) Yingkou	Parcel 06#-2	Haixingban	2005/9/27	2052/6/17 Transfer	Industrial	141,174.75	141,174.75
	Bayuquan Real Estate
	No. 0032270

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VALUATION REPORT A

18	Liao (2020) Yingkou	Parcel 08#	Haixingban	2010/12/21	2052/6/17 Transfer	Industrial	90,787.67	90,787.67
	Bayuquan Real Estate
	No. 0029354
19	Liao (2020) Yingkou	Parcel 09#-1	Haixingban	2010/12/21	2052/6/17 Transfer	Industrial	63,085.71	63,085.71
	Bayuquan Real Estate
	No. 0029361
20	Liao (2020) Yingkou	Parcel 09#-2	Haixingban	2006/7/18	2052/6/17 Transfer	Port terminal	87,327.49	87,327.49
	Bayuquan Real Estate
	No. 0027242
21	Liao (2020) Yingkou	Parcel 10#	Haixingban	2020/10/12	2052/6/17 Transfer	Port terminal	382,688.05	336,238.11
	Bayuquan Real Estate
	No. 0029391
22	Liao (2020) Yingkou	Parcel 11#	In the Port	2020/11/10	2052/6/17 Transfer	Port terminal	294,463.16	235,562.67
	Bayuquan Real Estate		Area
	No. 0032298
23	Liao (2020) Yingkou	Parcel 13#	Haixingban	2010/12/21	2052/6/17 Transfer	Industrial	112,879.91	112,879.91
	Bayuquan Real Estate
	No. 0027228
24	Liao (2020) Yingkou	East of Tianshan	Outside	2005/9/27	2046/11/27 Transfer	Warehousing	29,923.93	29,923.93
	Bayuquan Real Estate	Street,	the Port
	No. 0032267	Bayuquan	Area
		District
25	Liao (2020) Yingkou	Administrative	Outside	2020/9/23	2059/6/9 Transfer	Industrial	256,523.19	44,350.38
	Bayuquan Real Estate	Zone 11	the Port
	No. 0027202		Area
26	Liao (2020) Yingkou	Phase III project	In the Port	2020/12/7	2052/7/17 Transfer	Port terminal	1,153,176.60	797,872.65
	Bayuquan Real Estate	– 47	Area
	No. 0035276
27	Yingkou Guo Yong [2015]	Yanchang Village	In the Port	2009/7/8	2054/5/19 Transfer	Industrial	159,787.30	11,260.00
	No. 5066	Parcel	Area
	Total						6,855,933.68	4,396,185.69

2. Definition of land price

The appraised value is categorized as market value. Based on the valuation purpose and the actual circumstance of the subject parcels of land, the land price set out in the Report refers to the value of land use rights of the subject parcels of land for designated use and to the extent of development in the remaining use life cycle under normal property market on 31 August 2021.

3. Valuation principle

Pursuant to the principle of the most effective use, the principle of supply and demand, the principle of substitution and the principle of contribution of land valuation, a fair, objective, reasonable and scientific valuation of the target shall be carried out.

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① Principle of most effective use

Due to the diversity of land use, different ways of use can generate different amounts of income for the title holders, and the title holders expect to gain more benefits from the land they own, and the determination of ways of land use is based on the purpose. Therefore, the price of land is conditional on the most effective use of the land.

② Principle of supply and demand

In a completely free market, the price of general commodities depends on the equilibrium point of the relationship between demand and supply. When demand exceeds supply, the price increases accordingly; otherwise, the price decreases. The dynamics is conditional on:

• A. Suppliers and demanders compete for homogeneous commodities;

• B. The supply of homogeneous commodities could be freely adjusted as per the changes in price. It is the same case with the land, whereas the price is also determined by the interrelationship between demand and supply.

③ Principle of substitution

The land price follows the law of substitution. The price of a parcel of land is controlled by the price of other parcels of land with the same use value, that is, the same class of land with possibility of substitution. In other words, the parcels of land with the same use value and possibility of substitution will mutually affect and compete with each other, and the prices will be aligned with each other.

④ Principle of contribution

The total income derived from land is the outcome of joint effects between land and other factors of production. The value of land is determined by the contribution of land to the total income of such land.

(4) Analysis of factors of land price

• (1) General factors

• ① Geographical location and administrative division

Bayuquan District (Yingkou Economic and Technological Development Zone), a district under the jurisdiction of Yingkou City, Liaoning Province, is located in the south of Yingkou City, about 60 kilometers away from the old downtown of Yingkou, and is the new downtown of Yingkou City; the total

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APPENDIX III-1

area is 268 square kilometers. As of June 2020, the district consists of 3 streets and 3 towns. According to the seventh census data, as of 0:00 on 1 November 2020, the settled population of Bayuquan District is 541,113.

Yingkou Port is seated within Bayuquan District, and it’s the second largest port in Northeast China and one of the top ten ports in the country. The district is very rich in resources including minerals, timber, grain, fruit, and aquatic products. The district also enjoys convenient traffic facilities, as it connects the Harbin-Dalian Railway, Harbin-Dalian Highway, major arterial roads such as the Shenyang-Dalian Expressway, and the Harbin-Dalian High-speed Railway Passenger Line, which was completed and opened to traffic in 2012; having a 25-kilometer-long coastline, Bayuquan District boasts a wealth of landscapes, including the Asian Herbarium, Wanger Mountain, underground hot springs, seaside ancient beacon towers, Xianren Island, the Qinglong Mountain Forest Park, making it a seaside tourist resort with mountains, sea, forests and springs.

Bayuquan District (Yingkou Economic and Technological Development Zone) is located in the south-central part of Liaoning Province, in the center of the Liaodong Peninsula and the east coast of Liaodong Bay. It is one of the four districts under the administration of Yingkou City. It’s 52 kilometers away to the south of downtown area of Yingkou. Its geographical coordinates are 40°15’-40°20’ north latitude and 121°8’-122°15’ east longitude. The total area is 268 square kilometers.

② The economic and social development status

In 2019, the total investment in fixed assets in Bayuquan District was RMB6.75 billion, a decrease of 6.8% over the previous year. Among them, investment in infrastructure was RMB1.31 billion, an increase of 2.8% over the previous year. Among the investment in construction projects throughout the year, the ratio of state-owned economic investment to non-state-owned economic investment was 49.7:50.3. Completed investment in industrial projects amounted to RMB1.26 billion, accounting for 37.5%; investment in the tertiary industry accounted for 79.8%. There was a total of 75 construction projects throughout the year. Among them, 4 new projects commenced construction with a total investment of RMB310 million.

In 2020, Bayuquan District actually recorded a GDP of RMB37 billion, an increase of 1.2% year-on-year, completing 93.9% of the annual planed target; the total investment in fixed asset across the district was RMB6.9 billion, an increase of 2.3% year-on-year, completing 95.2% of the annual planed target; the general public budget revenue was RMB3.56 billion, a decrease of 2.4% year-on-year, completing 91.3% of annual planed target; it completed 94.7% of the annual budget. The overall tax revenue of the district

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VALUATION REPORT A

was RMB3.02 billion, a decrease of 4.3% year-on-year, completing 89.7% of the annual planed target; it completed 85.8% of the annual budget. The per capita disposable income of residents in the district was RMB43,926, an increase of 0.9% year-on-year. By industry, the primary industry delivered an added value of RMB1.14 billion, an increase of 0.6%; the secondary industry delivered an added value of RMB13.21 billion, a decrease of 1.1%; the tertiary industry delivered an added value of RMB22.65 billion, an increase of 2.8%. The weightings of the added value of the three types of industries as a proportion of the GDP were 3.1:35.7:61.2.

Primary industry

In 2019, the total output value of agriculture, forestry, animal husbandry and fishery in Bayuquan District was RMB2.04 billion. The agriculture, forestry, animal husbandry and fishery delivered an added value of RMB1.1 billion, an increase of 1.5% over the previous year at comparable prices. Among them, the agriculture delivered an added value of RMB250 million, the forestry delivered RMB45 million, the animal husbandry delivered RMB180 million, the fishery delivered RMB615 million, and the added value of agriculture, forestry, animal husbandry and fishery services was RMB10 million. The total output of grain for the year was 13,125 tons, a decrease of 4.7% over the previous year; the output of vegetables was 32,523 tons, an increase of 7.0% over the previous year; the output of fruits was 121,213 tons, an increase of 3.4% over the previous year; the total output of meat was 4,598 tons, a decrease of 29.2% from the previous year; the output of poultry and eggs was 5,027 tons, a decrease of 12.4% over the previous year; the total sown area of crops for the year was 3,054 hectares, a decrease of 0.1% over the previous year. At the end of the year, the total mechanical power used in agriculture was 120,000 kilowatts, flat compared to the previous year. The total fertilizer amount used in agriculture was 4,978 tons, a decrease of 0.6% over the previous year.

Secondary industry

In 2019, the added value of industries above designated size in Bayuquan District increased by 5.2% over the previous year. Among them, the added value of joint-stock enterprises increased by 6.2%, and the added value of foreign, Hong Kong, Macao and Taiwan-invested enterprises declined by 12.5%. By industry, the added value of metallurgical industries above designated size for the year increased by 2.0% over the previous year, accounting for 59.0% of the total added value of industries above designated size; the added value of equipment manufacturing industry increased by 36.3% over the previous year, accounting for 13.9%; the added value of the food industry decreased by

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VALUATION REPORT A

25.9% over the previous year, accounting for 6.9%; the added value of the new building materials industry decreased by 1.2% over the previous year, accounting for 6.32%. Among the output of major product of industrial enterprises above designated size for the year, pig iron was 5.896 million tons, an increase of 14.6%; crude steel was 6.262 million tons, an increase of 14.6%; steel was 6.469 million tons, an increase of 3.8%; refractory products were 346,000 tons, a decrease of 6.5%; cement was 914,000 tons, a decrease of 4.7%; refined edible vegetable oil was 479,000 tons, an increase of 4.7%; coke was 2.577 million tons, an increase of 9.5%. The electricity power generated for industrial purpose above designated size was 9.84 billion kWh, an increase of 5.9%. The annual product sales rate of industrial enterprises above designated size was 100%. Among them, the product sales rate of joint-stock enterprises was 100.3%, and the product sales rate of foreign, Hong Kong, Macao and Taiwan-invested enterprises was 99%. The total output value of industries above designated size for the year was RMB45.77 billion, a decrease of 2.5% over the previous year; the annual added value of industries above designated size was RMB10.44 billion, an increase of 5.2% over the previous year at comparable prices. The sales output value is RMB45.76 billion, and the product sales rate of industrial enterprises is 100%. The operating revenue was RMB48.47 billion, an increase of 1.0% over the previous year; total profits and taxes was RMB2.52 billion, a decrease of 48.5% over the previous year; the profit was RMB1.41 billion, a decrease of 53.9% over the previous year.

In 2019, the total output value delivered by the construction industry in Bayuquan District was RMB3.84 billion, a decrease of 16.9% over the previous year at comparable prices. The total contract value of general contractors and professional contracting construction enterprises which have obtained qualifications of the construction industry was RMB4.68 billion, a decrease of 18.0%; the floor area of buildings under actual construction was 1.765 million square meters, a decrease of 23.9%; the tax paid amounted to RMB120 million, a decrease of 33.3%; the profit delivered was RMB50 million, a decrease of 68.8%; the per capita productivity measured by the total output value of the construction industry was RMB422,000 per person, down 9.4%.

In 2020, the added value of industries above designated size in Bayuquan District was actually RMB10.46 billion, an increase of 1.6% year-on-year. The number of projects which commenced construction with an investment of above RMB10 million in the district was 110, completing 131% of the annual planed target; among them, the projects with an investment of above RMB100 million was 61, completing 100% of the annual planed target.

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VALUATION REPORT A

In 2020, Bayuquan District spared no effort to accelerate the construction of a logistics hub, and was granted the state special funds for logistics hub construction in the amount of RMB34 million for the year. Yingkou Port delivered a throughput of 228 million tons and a container transport volume of 5.649 million TEUs, of which 5.617 million TEUs were transported by containers for domestic trade. 66.39 million tons of cargo was transported via the Shaba Railway. The construction of the railway project from the free trade zone to Bayuquan port officially kicked off. More than 400 material trade enterprises were newly attracted for the year, delivering the transportation of commodities of RMB120 billion in value and tax revenue at the amount of RMB1.27 billion. The sea-and-rail joint freight capacity exceeded 1 million TEUs.

In 2020, Bayuquan District was successfully approved as a pilot for the integrated development of national advanced manufacturing industries and modern service industries. The enterprise strived to enhance intelligent manufacturing level, of which 20 companies have vigorously implemented technological transformation, one company was rated as a national eco-friendly factory, and one company was awarded as a pilot exemplary entity for intelligent manufacturing factories. One company was awarded the provincial-level “Gazelle” (瞪羚) enterprise, and 6 companies were awarded the provincial-level “Young Eagle” (雛鷹) enterprise. Two companies have been awarded as provincial-level “specialized, sophisticated and new” small and medium-sized enterprises. In the year, there were a total of 17 new national high-tech enterprises, delivering an output value of high-tech products of RMB13.3 billion. Two new provincial-level professional technology centers were established. A total of 9 scientific and technological results were applied into use, and 76 authorized patents were granted. The output value of advanced manufacturing industries reached RMB39.28 billion.

Tertiary Industry

In 2019, the investment in property development in Bayuquan District reached RMB3.4 billion, a decrease of 11.9% over the previous year. New fixed assets reached RMB2.21 billion, an increase of 54.5% over the previous year. The floor area of buildings under construction was 5.717 million square meters, an increase of 0.6% over the previous year. Among them, the floor area of residential buildings was 4.359 million square meters, an increase of 4.4% over the previous year. The floor area of completed buildings was 648,000 square meters, an increase of 32.8% over the previous year. Among them, the floor area of completed residential houses were 484,000 square meters, an increase of 36.7% over the previous year.

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VALUATION REPORT A

In 2019, the total retail sales of consumer goods in Bayuquan District reached RMB16.51 billion, an increase of 9.6% over the previous year. Among the retail value of wholesale and retail commodities above designated size, the annual retail sales of grain, oil and food were RMB10 million, a decrease of 35.4% over the previous year; the retail sales of beverages were RMB2 million, a decrease of 31.9% over the previous year; the retail sales of tobacco and alcohol was RMB3 million, a decrease of 66.9% over the previous year; the retail sales of books, newspapers and magazines were RMB7 million, a decrease of 18.9% over the previous year; the retail sales of electronic publications and audiovisual products were RMB500,000, a decrease of 36.4% over the previous year; the retail sales of traditional Chinese medicine and western medicine was RMB80 million, an increase of 155.7% over the previous year; the retail sales of cultural and office supplies were RMB300,000, a decrease of 19.7% over the previous year; the retail sales of petroleum and related products were RMB1.14 billion, a decrease of 4.9% over the previous year; the retail sales of automobiles was RMB520 million, an increase of 14.1% over the previous year; retail sales of other categories of goods was RMB260 million, an increase of 10.9% over the previous year. The sales of wholesale and retail trade industries above designated size totaled RMB17.81 billion, an increase of 44.8% over the previous year. The revenue of the lodging and catering industries above designated size was RMB410 million, an increase of 7.1% over the previous year.

In 2019, Bayuquan District delivered a foreign trade export of RMB3,835.3 million, a decrease of 22.6% over the previous year. The actual foreign investment was USD57.47 million, a decrease of 26.6% over the previous year. The actual investment made in the province from internal and external resources was RMB6.63 billion. The consumer price of urban residents rose by 2.3% over the previous year. By category, price of food, tobacco and alcohol rose by 5.2%, among them price of clothing up by 2.8%, price of housing up by 0.6%, price of daily necessities and services up by 1.8%, price of education, culture, and entertainment up by 0.8%, price of health care up by 1.9%, price of other supplies and services up by 5.6%, and price of transportation and communications down by 1.7%. The ex-factory price of industrial producers for the year declined by 2.7% over the previous year; the purchasing price of industrial producers dropped by 0.2% over the previous year.

In 2019, the overall fiscal revenue of Bayuquan District was RMB6.02 billion, a decrease of 11.9% over the previous year. Public budget revenue was RMB3.65 billion, a decrease of 9.0% over the previous year. The overall tax revenue was RMB5.54 billion, a decrease of 15.5% over the previous year. Among various taxes, the district delivered a value-added tax of RMB700 million, business tax of RMB1

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APPENDIX III-1

million, corporate income tax of RMB690 million, urban land use tax of RMB550 million, land value-added tax of RMB100 million, and deed tax of RMB200 million. The public budget expenditure for the whole year was RMB3.64 billion, a decrease of 3.4% over the previous year. Among them, expenditure on agriculture, forestry and water supply was RMB90 million, science and technology expenditure was RMB40 million, medical and health expenditure was RMB200 million, general public service expenditure was RMB360 million, education expenditure was RMB400 million, social security and employment expenditure was RMB480 million, and expenditure for urban and rural community affairs was RMB480 million, and housing security expenditure was RMB200 million. The balance of various loans outstanding of financial institutions for the year was RMB97.6 billion, an increase of 18% over the previous year; the balance of various deposits was RMB84.27 billion, a decrease of 17.1% over the previous year; the balance of household deposits was RMB46.75 billion, an increase of 17.9% over the previous year.

In 2020, the total retail sales of consumer goods in Bayuquan District declined by 4.2% year-on-year. The floor area of commercial housing sold in the district was 866,000 square meters, an increase of 4.4% over the year, and completing 99.2% of the annual planed target. The sales of commercial housing amounted to RMB4.28 billion, an increase of 10.1% over the previous year. The actual foreign investment in the district was USD5.5 million (upon adjustment to task metrics), completing 100% of the annual planed target. The total foreign trade import and export of the district is expected to reach RMB20 billion, an increase of 6.3% over the previous year. The electricity power consumption for industrial purpose of the whole district was 4.21 billion kWh, an increase of 0.88% year-on-year, and completing 96% of the annual planed target.

In 2020, the competitiveness of financial service of Bayuquan District continued to increase, and the Jinzhou Bank Bayuquan Branch was officially opened for business. There was a total of 119 financial and quasi-financial institutions in the district. A bank-enterprise connectivity platform was built up which has raised RMB5.746 billion for enterprises. Financial platforms such as Liangdawang (糧達網) and Dongbeiliangwang (東北糧網) have been well running, serving more than 150 companies. The financial risk management and control solutions were formulated and improved, to prevent and resolve the financial risks through multiple measures. The overall deposit balance of the district was RMB145.6 billion, and the overall loan balance was RMB104.8 billion. The financial industry delivered tax revenue of RMB840 million.

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APPENDIX III-1

In 2020, the establishment of the Bayuquan National Tourism Exemplary Zone and the building-up of the key provincial-level tourism zone were carried out in an orderly manner. New tourism projects such as Magic Hot Spring and Wanda Yihua Hotel were opened for business. A series of activities were successfully launched, such as the Wangershan Mother’s Love Cultural Festival, the International Seaside Hot Spring Tourism Festival, and the Ice and Snow Hot Spring Carnival. In the year, 9.24 million visits of tourists were recorded, with the total tourism income amounting to RMB9.65 billion. Wangershan Village has been awarded as a provincial-level leisure agricultural and rural tourism village.

(2) Regional factors

① Overview of the region

Bayuquan Port and Yingkou conventional port are collectively referred to as Yingkou Port, and they are collectively managed by YKP Group and are independent of the local administration. Bayuquan and Yingkou maintain the administrative jurisdiction relationship between district and city. From the perspective of long-term development, Bayuquan Port has a more promising future, and it is also the most developed district in Yingkou. Bayuquan Port is an important integrated hub port in the country. It is the nearest port to the Northeast China and eastern Inner Mongolia, the largest cargo transportation port in the Northeast China, and the core port of the Liaodong Bay Economic Zone. Bayuquan Port area has deep water and small waves, free of silt or freezing, and is open to navigation in all seasons. It is a deep-water port in northern China; meanwhile, having a geographical advantage, Bayuquan Port area is connected to Shenyang-Dalian Expressway, Harbin-Dalian Highway and Changchun – Dalian Railway. Located 210 kilometers from Shenyang to the north and 180 kilometers from Dalian to the south, it enjoys convenient traffic facilities and has a strong capacity of collecting and distributing cargo.

Yingkou Port has 9 types of specific cargo terminals including containers, automobiles, coal, grain, ore, steel, large equipment, refined oil and liquefied chemicals, and crude oil. Among them, both the ore terminal and the crude oil terminal have a capability of 300,000 tons and the container terminal is able to accommodate the fifth-generation container vessels. The cargo types mainly include iron ore, steel, coal, grain, non-minerals, refined oil and chemical products, fertilizers, crude oil, domestic commodities, automobiles, containers, etc.

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② Traffic conditions

As the Harbin-Dalian High-speed Railway, Shenyang-Haikou Expressway, Harbin-Dalian Highway and Binhai Highway run through Bayuquan District, the traffic facility is very convenient. In 2019, the cargo throughput of the port was 238.17 million tons, a decrease of 35.6% over the previous year; the container throughput was 5.478 million TEUs, a decrease of 15.6% over the previous year. The passenger capacity of the passenger terminal was 4.29 million persons, the passenger capacity of buses was 7.05 million persons, and the passenger capacity of taxis was 34.41 million persons. The general road freight capacity was 8.82 million tons.

Railway

Bayuquan Station

The Harbin-Dalian High-speed Railway, Changchun-Dalian Railway and Shaba Railway have set Bayuquan Station (High-speed Rail), Xiongyuecheng Station and Lujiatun Station.

The Bayuquan Station, located in Datie Village, Xiongyue Town, is the stop of 23 high-speed trains every day, which connects Yingkou East, Shenyang, Dalian, Changchun West, Harbin West Station, etc.

Xiongyuecheng Station, located in Xiongyue Town, is the stop of 50 ordinary trains every day, which connects various places across the country.

Highway

Shenyang – Haikou Highway (G15), Heilongjiang-Dalian Highway (G202), Binhai Avenue, etc.

The passenger station (Bayuquan Passenger Station) is located on Changjiang Road, Qinglongshan Street, and the passenger lines starting from the station reach places in and out of the city, including Beijing, Tianjin, Liaoyuan, Tongliao, Xifeng, Tieling, Kaiyuan, Jinzhou, Fushun, Jianchang, Chaoyang, Dalian, Shenyang, Fuxin, Anshan, Liaoyang, Wafangdian, Zhuanghe, Fengcheng, Xiuyan, Xingcheng and Gaizhou, Dashiqiao, Wanfu, Xiongyue, Xinglongtai, Haicheng, Laobian.

Air transport

Yingkou Airport, Bayuquan is 30 kilometers away from Yingkou Airport

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APPENDIX III-1

Marine transport

Yingkou Port International Passenger Terminal is located at Huanghe Road, Liaodong Bay Avenue. On every Monday and Thursday, there runs an international passenger liner “Lilac” (紫丁香號) bound for Incheon Port in South Korea.

5. Valuation approach

(1) Selection of valuation approach

Pursuant to the Regulations on Valuation of Urban Land (《城鎮土地估價規 程》) (“Regulations”), the current prevailing valuation approaches for land mainly include hypothetical development method, market comparison method, income capitalization method, cost approximation method, and benchmark land premium coefficient correction approach. The valuation approach shall be selected based on the valuation techniques of land price set out in the “Regulations” after considering the local real estate market development and characteristics of the target assets and the valuation purpose.

The subject parcels of land include port terminal land, commercial and residential land, and industrial land. Different valuation method will be adopted based on different type of land use. Since this valuation involves many types and uses of subject parcels of land, the valuation method is briefly described as follows: for parcels of land within the port area, due to the monopoly of land, the costs approximation method is adopted for the valuation; for transferred land outside the port area, the benchmark land price method is adopted for the valuation.

(2) Cost approximation method

By cost approximation approach, the subject land is valued by using the sum of various expenses consumed for the acquisition and development of the subject land plus a certain amount of profit, interest, taxes payable and land appreciation earnings taking into account the district factor and land useful life.

The basic formula of calculation is:

Land price=(land acquisition fee + land development fee + tax + interest + profit + land appreciation + individual factor revision) × Due day revision coefficient

(3) Benchmark land premium coefficient revision approach

Basic formula of the benchmark land premium coefficient revision approach:

Pi= [P × Py × Pq+ Differences in the degree of infrastructure development] ×(1+K) × IIS

Where: Pi-the land price of the subject parcel of land

P – the benchmark land premium corresponding to the subject parcel of land

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APPENDIX III-1

Py – land use revision coefficient

Pq – due day revision coefficient

• K – district factor revision coefficient

IIS – the product of individual factor revision coefficient of the subject parcel of land

6. Valuation case:

Case 1: 10# Land (see Intangible Assets – Land Use Right Valuation List No. 21)

The 10# parcel is located in Haixing Office, which is used for port terminal purpose. The land use right certificate number is Liao (2020) Yingkou Bayuquan Real Estate No. 0029391. The area set out in the certificate is 382,688.05 square meters. The area proposed for the purpose of capital increase is 336,238.11 square meters. The type of use right is transfer, and the use right will expire on 17 June 2052, and the remaining useful life as of the benchmark date of valuation is 30.80 years. According to the status of subject land, the costs method is adopted for valuation.

The costs approximation method is the method mainly based on the sum of various expenses in acquiring and developing the land, plus profits, interests, taxes payable, and gains from land appreciation, and by taking into account the location of the land, the useful life, etc. to fix the adjustment coefficient to determine the land price.

The basic formula of calculation is:

Land price = (Land acquisition cost + Land development cost + Taxes + Investment interest + Investment profit + Gain on appreciation of land + Correction of individual factors) × Correction coefficient of useful life

• (1) The land acquisition cost refers to the average cost paid for acquisition of similar land in the area where the subject parcel of land is located. As required by the “Regulations on Urban Land Valuation”, investigation will be carried out in respect of the use of land surrounding the subject parcel of land, as per the relevant fee and charge requirements set out in relevant land reclamation documents issued by the government of Bayuquan District, Liaoning Province. The acquisition cost will be determined after the abovementioned analysis. See the valuation estimate table for details.

• (2) Land development cost

The development cost of infrastructure in the land refers to the costs required to develop the land into the expected conditions in the valuation. The land development cost shall be determined with reference to the benchmark land price including the cost incurred by the electricity supply, road access, water supply, communication, drainage, gas supply and land levelling in Bayuquan District, and the market surveys. See the valuation estimate table for details.

– III-1-135 –

VALUATION REPORT A

APPENDIX III-1

(3) Interest expense

According to the status and scale of development of the subject land and the entire terminal project, the fees and charges will be calculated over a span of 2 years. The interest is calculated based on the one-year loan interest rate of 4.25% published by the People’s Bank of China on the valuation benchmark date. The land acquisition cost is paid on a lump sum basis once at the time of land acquisition, and the development cost is incurred evenly during the development period, calculated at compound interest. See the valuation estimate table for details.

(4) Profit

Profit is the return deriving from investment in land, namely the economic return of the land acquisition cost and development cost at a reasonable rate of return on investment (yield). The profit rate is determined based on the nature of the development, with reference to the general profit level of the industry, in combination with local actual circumstances after comprehensive consideration. Please refer to the valuation estimate table for details.

(5) Gain on appreciation of land

The value-added income is calculated based on the increased value of the land in the area due to the change of purpose or land development to enable the subject land under construction to satisfy the certain condition.

(6) Correction of useful life

If the remaining specified useful life of the subject parcel of land is 30.80 years, the correction coefficient of the incurred price of land use right with a fixed useful life shall be determined by the following formula:

K= 1-1/(1+r) ^n=0.8338

Where: n – the remaining useful life of the land

r – land capitalization rate (based on the issued local benchmark land price, the land capitalization rate is determined to be 6.00%)

(7) Correction coefficient of individual factors

Based on the location of the subject land, the conditions, the alignment of the land with the surrounding market and other factors, the correction shall be made to the individual factors as per the merits of the subject parcel of land. Please refer to the valuation estimate table for details.

– III-1-136 –

VALUATION REPORT A

APPENDIX III-1

• (8) Unit price of subject parcel of land

Adopting the formula of calculation of the cost approximation method, the unit price of the subject land shall be determined after analysis, calculation, and correction. For details of the valuation calculation process, please refer to the valuation estimate table.

			Calculated
			Value
Items of Calculation		Basis and Formula of Calculation	(RMB/㎡)
1. Land acquisition	Sandblast	The reclamation cost involved in the land
cost	reclamation	acquisition cost has been reflected in the
	project cost	corresponding project accounts. In this land
		valuation, the land acquisition cost is 0
	Ownership	Actual local fee level	1.36
	investigation and
	survey fee
	Sea area utilization	“Notice on Strengthening the Collection and	190
	fee	Management of Sea Area Utilization Fee”
		(Caizong [2007] No. 10) RMB105/m2 for the use
		of sea area through reclamation for construction
		purpose in Bayuquan District
	Ecological	Local actual ecological compensation standard	5.85
	compensation fee
	Agricultural	Notice the on Issuing the “Administrative	7.05
2. Relevant fees and duties	development fund	Measures for Transfer Funds in Respect of Land for Agricultural Land Development” issued by the Ministry of Finance and Ministry of Land
		and Resources (Ministry of Land and Resources
		Caizong [2004] No. 49)
	Farmland water	According to the “Notice on Matters Concerning	24.67
	conservancy fund	the Provision for Farmland Water Conservancy
	Education fund	Construction Funds from Land Transfer
		Proceeds” issued by the Ministry of Finance and
		the Ministry of Water Resources (Cai Zong
		[2011] No. 48), and taking into account local
		actual standards for such fees
	Planning and graphic	Local actual fee level	1.25
	design fee
	Total		230.18

– III-1-137 –

VALUATION REPORT A

APPENDIX III-1

Calculated

				Value
Items of Calculation		**Basis **	and Formula of Calculation	(RMB/㎡)
3. Land	Infrastructure and	Water supply		18
development fee	auxiliary facilities	Drainage		30
	fees	Electricity		24
		Road access		24
		Communication		12
		Heating
	Land levelling fee	Land levelling
	Total			108
4. Investment interest	income	Land acquisition cost + Relevant fees and duties)		24.57
		× [(1 + 4.25%)2-1]+Land development fee × [(1
		+ 4.25%)2/2-1]
5. Investment profit		Land acquisition cost + Relevant fees and duties +		67.64
		Land development fee) *20%
6. Gain on appreciation of land		30% of the amount in Items 1 to 5		129.12
	Total		1 + 2 + 3 + 4 + 5	559.50
			+ 6
7. Correction for	Factors	Appraisal	Correction rate
individual factors	Monopoly rent		30.00%	727.35
	correction
8. Correction of		30.80	[1-1/(1 +	0.8338
useful life			6.00%)n]
7. Appraised unit			Total × (1 + Correction of individual	606
price (RMB/㎡)			factors) × Correction for years

• (9) Value of the subject parcel of land

Value of the subject parcel of land = unit price × floor area + deed tax

= 606 × 336,238.11 × 1.04

= RMB211,910,706

Case 2: Plot 06#-1 (See Intangible Assets – Land Use Rights Valuation Schedule No. 16)

Located in the port area of Xingang Community, Haixing Office, plot 06#-1 is an industrial land with a land use right number of Liao (2020) Yingkou Bayuquan Real Estate No. 0029388 and an area of 189,206.47 square meters. The type of use right is grant. The deadline for the use rights is 17 June 2052 and the remaining useful life as at the valuation benchmark date is 30.8. Based on the land condition in valuation, the benchmark land price coefficient correction approach was adopted for the valuation.

– III-1-138 –

VALUATION REPORT A

APPENDIX III-1

• (1) Calculation process

① Land benchmark price.

The lot in valuation is a piece of land for industrial use and located in the port area of Xingang Community, Haixing Office. In accordance with the provisions as stipulated under the Notice on Adjusting the Unit Price for Land Grant in Bayuquan Area (Ba Zheng Fa [2018] No. 31) issued by People’s Government of Bayuquan District, Yingkou City:

The base price of land for industrial use in Bayuquan shall not be less than RMB450/m[2] . The definition of the base price covers the usage with a benchmark date of 1 January 2016 and a grant term of 50 years, and the infrastructures should include road access, water supply, electricity supply, communication, drainage, as well as land levelling.

② Date related correction

The valuation benchmark date of the valuation is 31 August 2021, while the base date of the benchmark land price is 1 January 2016. Based on the survey calculation, there is no increase in industrial land in Yingkou City. Hence the date related correction coefficient for industrial land is 1 at the valuation benchmark date.

③ Correction of the degree of land development

The infrastructure of the land in valuation includes road access, electricity supply, communication, water supply and drainage outside of the red line of the plot, as well as land levelling within the red line of the plot. In accordance with Yingkou Urban Land Grading and Benchmark Land Price Valuation Results Report (2016), the infrastructure of the industrial land within the connotation of the benchmark land price includes road access, electricity supply, communication, water supply and drainage outside of the red line of the plot, as well as land levelling within the red line of the plot, which has reached the connotation of the benchmark land price. No adjustment was made to the extent of the development of the land.

– III-1-139 –

VALUATION REPORT A

APPENDIX III-1

④ Regional factor correction

Based on the regional status of the plot in valuation and the correction systems under Yingkou Urban Land Grading and Benchmark Land Price Valuation Results Report (2016), the regional factors and individual factors were corrected as follows:

Table: Regional Factors Correction for Industrial Land of the Plot to be Valued

			Correction
Factor	Element	Valuation	score (%)
Regional factor	Road type	Excellent	4.95
	Distance to railway station (m)	Better	0.89
	Distance to the port (m)	Excellent	1.39
	Distance to the expressway (km)	Normal	0
	Infrastructure completeness	Better	0.89
	Environmental quality status	Better	0.79
	(atmosphere, noise)
	Industrial agglomeration status	Better	1.09
Individual factors	Distance from the main road (m)	Better	0.99
	Parcel shape	Excellent	1.58
	Parcel topography	Excellent	1.39
	Total		13.96

Other factors correction

A. Use life correction

The remaining use life of the plot to be valued is 30.80 years. Based on the correction systems under Yingkou Urban Land Grading and Benchmark Land Price Valuation Results Report (2016), the industrial land restoration rate is 6% and the legal maximum useful life is 50 years, therefore

Use life correction coefficient = [1-1/(1+6.0%)^30.80]/[1-1/(1+6.0%)^50] = 0.8816

– III-1-140 –

VALUATION REPORT A

APPENDIX III-1

B. Plot ratio correction

The plot to be valued is a piece of land for industrial use. Based on the correction systems under Yingkou Urban Land Grading and Benchmark Land Price Valuation Results Report (2016), the plot ratio correction coefficient of the land for industrial use was determined as 1.

⑥ Calculation of the land unit price

Unit price of land use rights = 450 × (1+13.96%) × 1 × 0.8816 × 1 = RMB452.10/m[2]

(2) Determination of land price

In accordance with Regulations on Valuation of Land Price and the specific condition of the plot to be valued, the appraisers conducted a diligent investigation based on the purpose of the valuation and under the valuation principles and valuation procedures by adopting scientific and reasonable valuation approach on basis of conducting careful analysis on the information available. Based on valuation experience and with reference to value factors of industrial land, the unit price for granting state-owned land use right of the plot to be valued was arrived by adopting the benchmark land price coefficient correction method. After investigating the market condition, land use condition and land price condition of surrounding similar land and analysis, the appraisers believe that the results of the method are close to the market level.

Total price = Unit price × Land use right area + Deed tax

= RMB452.10/m[2] ×189,206.47×1.04

= RMB88,962,270

7. Conclusion and analysis of valuation

The valuation is implemented on the basis of complete survey, knowledge and analysis, and in accordance with the rational valuation procedure. The valuation determines the value of the land use right is RMB2,702,002,995 in the remaining useful life on the benchmark date of 31 August 2021 under the anticipated land price of the subject land. The appraised value has a premium of RMB1,594,155,341.06 over the book value, and the appreciation rate is 143.90%.

The appreciation is mainly due to: the increase in the market price of the subject land has led to appreciation in the appraised value to certain extent.

– III-1-141 –

VALUATION REPORT A

APPENDIX III-1

(V) Current liabilities

1. Accounts payable, receipts in advance and other payables

The book value of accounts payable is RMB24,344,883.56, which is mainly payable for materials; the book value of receipts in advance is RMB20,224,525.62, which is mainly payable for port service fees collected in advance; the book value of other payables is RMB309,009.61, which is mainly payable for deposits payable and value-added tax payable to headquarters. Following the valuation procedure, we implement external confirmation in respect of the current payments at relatively large amounts. After verifying the authenticity and completeness of each payment, the appraised value of other payables that are not subject to payment is determined to be nil. After the valuation, the appraised value shall be determined after taking into consideration of accounts payable, receipts in advance, and other payables of RMB24,344,883.56, RMB20,224,525.62 and RMB309,009.61 respectively.

2. Employee benefits payable

The book value of employee benefits payable is RMB1,815,798.01, which is mainly the provision of wages, funds allocated to labor union and employee benefits. The appraiser inspected and verified the provision of employee benefits payable in accordance with the valuation procedure. In case of no error identified, the appraised value shall be determined by the verified book value. The appraised value of employee benefits payable is RMB1,815,798.01.

3. Taxes payable

The book value of the tax payable is RMB610,644.59, which is mainly the payable for property tax, environmental protection tax, stamp tax and withholding and payment of individual income tax. The appraiser follows the established valuation procedure to learn about the applicable tax collection regulations, including applicable tax types, tax bases, tax rates and the scope and timeframe of tax collection, exemption, and deduction. The appraiser also inspects and verifies relevant accounts, tax returns and accounting vouchers, etc. Therefore, the appraised value shall be determined based on the verified book value of RMB610,644.59.

– III-1-142 –

VALUATION REPORT A

APPENDIX III-1

IV. CONCLUSION AND ANALYSIS OF VALUATION

(I) Conclusion of valuation

As at the valuation benchmark date of 31 August 2021, the appraised value of the declared assets corresponding to the proportion of assets and liabilities proposed by the YKP Group for capital increase is RMB7,299,443,700 has a premium of RMB1,788,966,000 over the book value of RMB5,510,477,700. The appreciation rate is 32.46%. The specific details are as follows:

Unit: RMB0’000

					Amount of
			Book	Appraised	Increase/	Appreciation
No.		Name of Item	Value	Value	Decrease	Rate
1	I.	Total current	4,773.00	4,773.00	0.00	0.00%
		assets
2		Cash at bank	698.87	698.87	0.00	0.00%
		and on hand
3		Accounts	3,776.20	3,776.20	0.00	0.00%
		receivable
4		Prepayments	20.00	20.00	0.00	0.00%
5		Other	25.74	25.74	0.00	0.00%
		receivables
6		Inventories	36.03	36.03	0.00	0.00%
7		Other current	216.16	216.16	0.00	0.00%
		assets
8	II.	Total non-	551,005.25	729,901.85	178,896.60	32.47%
		current assets
9		Fixed assets	440,220.49	460,039.98	19,819.50	4.50%
10		Intangible	110,784.77	269,861.87	159,077.10	143.59%
		assets
11	III.	Total assets	555,778.25	734,674.85	178,896.60	32.19%
12	IV.	Total current	4,730.49	4,730.49	0.00	0.00%
		liabilities
13		Accounts	2,434.49	2,434.49	0.00	0.00%
		payable
14		Advances from	2,022.45	2,022.45	0.00	0.00%
		customers
15		Employee	181.58	181.58	0.00	0.00%
		benefits
		payable
16		Taxes payable	61.06	61.06	0.00	0.00%
17		Other payables	30.90	30.90	0.00	0.00%
18	V.	Total	4,730.49	4,730.49	0.00	0.00%
		liabilities
19	VI.	Net assets	551,047.77	729,944.37	178,896.60	32.46%

– III-1-143 –

VALUATION REPORT A

APPENDIX III-1

The valuation concludes that the appraised value of the declared assets corresponding to the proposed real assets for the purpose of capital increase by Ying Kou Port Group Corporation Limited is RMB7,299,443,700 (RMB SEVEN BILLION TWO HUNDRED NINETY-NINE MILLION FOUR HUNDRED FORTY-THREE THOUSAND AND SEVEN HUNDRED, rounding to the nearest one hundred).

The validity period of the valuation conclusion is one year, starting from 31 August 2021 (valuation benchmark date) to 30 August 2022.

The establishment of the valuation conclusion depends on the valuation assumptions as mentioned above.

(II) Difference between the concluded appraised value and book value and the reasons

1. Difference between the concluded appraised value and book value

Unit: RMB

		Net Appraised	Amount of	Appreciation
Name of Item	Net Book Value	Value	Appreciation	Rate
Buildings	75,383,613.16	104,249,100.00	28,865,486.84	38.29%
Construction and
other auxiliary
Facilities	3,823,735,896.54	3,976,887,892.00	153,151,995.46	4.01%
Fixed assets –
Machinery and
equipment	502,780,178.24	518,265,849.00	15,485,670.76	3.08%
Fixed assets –
Vehicle	191,700.00	852,708.00	661,008.00	344.81%
Fixed assets –
Electronic device	113,465.50	144,282.00	30,816.50	27.16%
Land use right	1,107,847,653.69	2,698,618,671.87	1,590,771,018.19	143.59%
Total amount of
appreciation			1,788,965,995.75

2. The analysis of the reasons for the increase or decrease in value of buildings is as follows:

• (1) The appreciation of buildings subject to valuation is mainly due to:

• 1) Slight increase in material and labor costs in recent years;

• 2) As the valuation determines the impairment provision as nil, the net value increases.

– III-1-144 –

VALUATION REPORT A

APPENDIX III-1

• (2) The difference in the comparison between the appraised value and book value of fixed assets under the equipment category are mainly reflected in the following aspects:

• 1) With regard to machinery and equipment, on the one hand, the reasons for the appreciation of the original appraised value are: firstly, the purchase price of the equipment on the benchmark date increased slightly, and secondly, the machinery and equipment within the valuation scope are accounted for at the contract price, while the preliminary fees and capital costs are calculated in accordance with the relevant policies for the purpose of the valuation, and these factors led to the increase in the original appraised value. This leads to an increase in the original appraised value. On the other hand, the reasons for the increase in the net appraised value are: firstly, the increase on original value, and secondly, the depreciation life of the enterprise’s machinery and equipment is shorter than the economic service life used in the valuation.

• 2) With regard to vehicles, the original appraised value is decreased as the price of vehicles is reduced year due to the fierce competition in the auto market and the fast rate of upgrading; the net appraised value is increased as the depreciation period of the Company’s vehicles is shorter than the economic period used in the valuation.

• 3) With regard to electronic device, the original appraised value is decreased for the following reasons: firstly, the market price of electronic device changes rapidly due to the rapid upgrading of products on the electronic device market, and secondly, some of the electronic device was purchased a long time ago, while they are assessed using the market method; the net appraised value of device is increased as the depreciation period of the enterprise’s electronic device is shorter than the economic service life used in the valuation.

• (3) The appreciation of land use rights is mainly due to: the increase in the market price of subject land leads to the proportional appreciation of the appraised value.

– III-1-145 –

VALUATION REPORT B

APPENDIX III-2

This report is prepared based on the PRC Accepted Asset Valuation Standards

Asset Valuation Report on

the Project of Proposed Transfer of Assets by Ying Kou Port Group Corporation Limited to Liaoning Port Holdings (Yingkou) Co., Ltd. (遼港控股(營口)有限公司) Zhong Tong Ping Bao Zi [2021] No. 12330 1 of 1

Disclaimer, Summary, Text and Annexes

China Tong Cheng Assets Appraisal Co., Ltd. 27 October 2021

– III-2-1 –

VALUATION REPORT B

APPENDIX III-2

CONTENTS

Volume 1 (Disclaimer, Summary, Text and Annexes)

Disclaimer	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Summary	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Text
I.	OVERVIEW OF THE CLIENTS, THE APPRAISED ENTITY AND
	OTHER USERS OF THE ASSET VALUATION REPORT AS
	AGREED IN THE ASSET VALUATION ENGAGEMENT
	CONTRACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
II.	PURPOSE OF VALUATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
III.	VALUATION TARGET AND SCOPE . . . . . . . . . . . . . . . . . . . . . . . .	12
IV.	TYPE OF VALUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
V.	VALUATION BENCHMARK DATE . . . . . . . . . . . . . . . . . . . . . . . . .	13
VI.	BASIS OF VALUATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
VII.	VALUATION METHODOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . .	17
VIII.	PROCESS AND IMPLEMENTATION OF VALUATION
	PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	26
IX.	VALUATION ASSUMPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	27
X.	VALUATION CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	27
XI.	EXPLANATIONS ON SPECIAL MATTERS . . . . . . . . . . . . . . . . . . .	28
XII.	RESTRICTIONS ON THE USE OF THE ASSET VALUATION
	REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	29
XIII.	DATE OF THE ASSSET VALUATION REPORT . . . . . . . . . . . . . . .	29
Annexes .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	30

– III-2-2 –

VALUATION REPORT B

APPENDIX III-2

DISCLAIMER

• I. This Asset Valuation Report is prepared in accordance with the Basic Asset Valuation Standards issued by the Ministry of Finance and the Practice Guidelines for Asset Valuation and the Professional Code of Ethics for Asset Valuation issued by the China Appraisal Society.

• II. The clients or other users of the Asset Valuation Report shall use the Asset Valuation Report in accordance with the laws and administrative rules and regulations and within the scope of use set out in this Asset Valuation Report. We and the asset valuers take no responsibility for any non-compliance with the above-mentioned requirements for the use of the Asset Valuation Report by the clients or other users of the Asset Valuation Report.

This Asset Valuation Report shall only be used by the clients, other users of the Asset Valuation Report as agreed in the asset valuation engagement contract and users of the Asset Valuation Report as required by laws and administrative regulations. Save for the above, no other institution or individual shall be the user of the Asset Valuation Report.

We and the asset valuers advise that users of the Asset Valuation Report should correctly interpret and use the valuation conclusion, which is not equivalent to the realizable value of the valuation target and should not be considered as a guarantee for the realizable value of the valuation target.

• III. We and the asset valuers have abided by the principles of independence, objectivity and impartiality, complied with the laws, administrative regulations and asset valuation standards, and have assumed responsibilities for the Asset Valuation Report issued in accordance with laws.

• IV. The list of assets and liabilities and other relevant materials of the valuation target involved should be declared by the clients and the appraised entity and certified by signature, seal or other means permitted by laws. The clients and other relevant parties shall be responsible for the truthfulness, completeness and legality of the materials provided by them in accordance with laws.

• V. We and the asset valuers have no existing or expected relationship of interests with the valuation target set out in the Asset Valuation Report or with the relevant parties, and have no prejudice against the relevant parties.

– III-2-3 –

VALUATION REPORT B

APPENDIX III-2

• VI. The asset valuers have (or have not) conducted on-site inspection on the valuation target and the assets involved in the Asset Valuation Report, and given necessary consideration to the legal ownership status of the valuation target and the assets involved, conducted verification on the relevant information regarding the legal ownership of the relevant assets, and made proper disclosure in respect of the issues identified and required the clients and other relevant parties to consummate the titles to meet the requirements on issuing the Asset Valuation Report.

• VII. The analyses, judgments, and conclusions in the Asset Valuation Report issued by us are subject to the assumptions and restrictions in the Asset Valuation Report. The users of the Asset Valuation Report shall take into full account the assumptions, restrictions and explanations on special matters specified in the Asset Valuation Report and their impact on the valuation conclusion.

– III-2-4 –

VALUATION REPORT B

APPENDIX III-2

SUMMARY

I. CORRESPONDING ECONOMIC ACTIVITY UNDER THE VALUATION

The Asset Valuation Report on the project of the proposed transfer of assets by Ying Kou Port Group Corporation Limited to Liaoning Port Holdings (Yingkou) Co., Ltd. (遼港控股(營 口)有限公司).

The economic activity has been approved by the Approval on the Plan for Revitalising the Phase II Northeast Project (Zhao Fa Zhan Lue Zi [2021] No. 475) issued by China Merchants Group.

II. PURPOSE OF VALUATION

Due to the proposed transfer of the assets by Ying Kou Port Group Corporation Limited to Liaoning Port Holdings (Yingkou) Co., Ltd. (遼港控股(營口)有限公司), it is required to conduct a valuation on the fixed assets and intangible assets declared by Ying Kou Port Group Corporation Limited involved in the said economic activity for the purpose of providing valuation reference for the transfer of assets.

III. VALUATION TARGET AND SCOPE

The valuation target and the valuation scope are the same as the valuation target and the valuation scope involved in the economic activity.

The valuation target is the assets owned and proposed to be transferred by Ying Kou Port Group Corporation Limited. The valuation scope specifically covers buildings, machinery and equipment, vehicles, electronic devices and other intangible assets. The details are shown in the table below.

			Unit: RMB
		Original carrying	Net carrying
Name of item	Quantity	amount	amount
Fixed assets
Buildings	641.72	2,256,454.56	1,134,078.87
Machinery and
equipment	1,285	1,833,724,063.75	1,011,809,767.19
Vehicles	8	2,822,826.83	472,538.96
Electronic devices	216	2,298,753.23	612,545.51
Intangible assets
Other intangible
assets	5	1,591,592.92	1,576,733.04
Total		1,842,693,691.29	1,015,605,663.58

– III-2-5 –

VALUATION REPORT B

APPENDIX III-2

IV. TYPE OF VALUE

Market value

V. VALUATION BENCHMARK DATE

31 August 2021

VI. VALUATION METHODOLOGY

Cost approach.

VII. VALUATION CONCLUSION AND ITS VALIDITY PERIOD

The valuation conclusion is that the appraised value of the assets proposed to be transferred by Ying Kou Port Group Corporation Limited is RMB1,224,664,300 (ONE THOUSAND TWO HUNDRED TWENTY-FOUR MILLION SIX HUNDRED SIXTY-FOUR THOUSAND THREE HUNDRED, rounding to the nearest one hundred).

The validity period of the valuation conclusion is one year, starting from 31 August 2021 (being the valuation benchmark date) to 30 August 2022.

VIII. SPECIAL MATTERS WITH IMPACTS ON THE VALUATION CONCLUSION

(I) Significant use of expert work and relevant reports

Nil

(II) Incomplete or defective ownership information

Except for simple houses, the certificates on the ownership title of the remaining real estate are being processed. The valuation did not consider the various taxes and fees required to be paid in the process of applying for the certificates.

(III) Restrictions on valuation procedures

Nil

• (IV) Incomplete valuation materials

Nil

• (V) Pending legal and economic matters on the valuation benchmark date

Nil

– III-2-6 –

VALUATION REPORT B

APPENDIX III-2

• (VI) The nature and amount of guarantees, leases and its contingent liabilities (contingent assets) and the relationship with the valuation target

Nil

(VII) Significant subsequent matters

Nil

• (VIII) Deficiencies in the economic activity corresponding to the asset valuation that may have a material effect on the valuation conclusion

Nil

(IX) Other matters that need to be described

1. The appraised value of this valuation excludes the value-added tax.

2. This valuation has excluded the impact of relevant taxes in the process of property rights transactions on the appraised value.

The above contents are extracted from the text of the Valuation Report. Please read the text of the Valuation Report to understand details of the valuation and correctly comprehend the valuation conclusion.

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APPENDIX III-2

Asset Valuation Report on the Project of Proposed Transfer of Assets by Ying Kou Port Group Corporation Limited to Liaoning Port Holdings (Yingkou) Co., Ltd. (遼港控股(營口)有限公司) Zhong Tong Ping Bao Zi [2021] No. 12330

To Ying Kou Port Group Corporation Limited,

Upon your engagement, we, China Tong Cheng Assets Appraisal Co., Ltd., have evaluated the market value as at 31 August 2021 of the fixed assets and intangible assets, which are involved in the proposed transfer of the assets by Ying Kou Port Group Corporation Limited to Liaoning Port Holdings (Yingkou) Co., Ltd. (遼港控股(營口)有限公司), by adopting the cost approach and carrying out necessary valuation procedures in accordance with laws, administrative regulations and asset valuation standards and adhering to the principles of independence, objectivity and fairness. We hereby report the details of the asset valuation as follows.

I. OVERVIEW OF THE CLIENTS, THE APPRAISED ENTITY AND OTHER USERS OF THE ASSET VALUATION REPORT AS AGREED IN THE ASSET VALUATION ENGAGEMENT CONTRACT

(I) Overview of the Client 1 and the Appraised Entity

Name: Ying Kou Port Group Corporation Limited (hereinafter referred to as “Yingkou Port Group”)

Legal residence: No. 1, Yinggang Road, Bayuquan District

Unified social credit code: 91210800121119657C

Legal representative: Deng Renjie

Registered capital: RMB20 billion

Major scope of business: Permitted projects: port operations (projects subject to approval according to law may only be operated after approval by relevant departments, and specific business projects are subject to the approval results) General projects: port loading and unloading, warehousing, services; ship material supply; import of raw and auxiliary materials, machinery and equipment, instruments and meters and components necessary for the production and research of the company; export of seafood, talc, magnesia, woven bags, food, wood products, clothing, knitwear (except 16 kinds of export commodities jointly operated by national organisations) produced by the company; agency packaging, consignment, water transportation, non-metallic ore, pig iron sales, plastic packaging products, vegetable oil; international passenger transport services, agency ticket sales, luggage check-in; waste material recycling; advertising agency, production, design; ship supply (supply of daily necessities, except for ship fuel), production of cement tiles, cement brick laying, metal

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APPENDIX III-2

VALUATION REPORT B

materials, building materials sales, engineering consulting; water supply and heat supply; emergency prevention and treatment of pollutants and pollutant reception and disposal (operating with qualification certificate). The following projects may only be operated by branches: distribution of petroleum liquefied gas, daily necessities, textiles, leather goods, household appliances, hardware and electrical products, and chemical products (except dangerous articles), ship materials (except those subject to approval), communication equipment distribution and agency services, ship waste (excluding hazardous waste) recycling and agency services, and pre-packaged food; car rental, self-owned real estate business activities, property management, building cleaning services, other cleaning services, conference services, greening management, computer and communication equipment rentals, other machinery and equipment rentals, and other water transportation auxiliary activities; real estate rentals. (Except for the projects that must be approved according to law, business activities are operated independently according to the law with the business license).

Ying Kou Port Group Corporation Limited (“Yingkou Port Group”), formerly known as Yingkou Port Authority, has registered with SAIC of Yingkou City on 17 April 2003 in accordance with the Notice on the Implementation Opinions on the Reform of the Port Management System of Yingkou Port ([2002] No. 42) issued by Yingkou Municipal Committee Office of the Communist Party of China and the Approval on Allocating Assets for Establishment of Ying Kou Port Group Corporation Limited ([2003] No. 1) issued by the office of Yingkou SASAC, with a registered capital of RMB1.7 billion.

In December 2009, upon the transfer of capital reserve amounting to RMB7.3 billion to registered capital in accordance with the Approval on Yingkou Port Group’s Transfer of Capital Reserve to Registered Capital (Ying Guo Zi Chan Quan [2009] No. 85) issued by the State-owned Assets Supervision and Administration Commission of the People’s Government of Yingkou City (“Yingkou SASAC”), the registered capital of Yingkou Port Group was changed to RMB9 billion.

In December 2017, Yingkou SASAC entered into an equity transfer agreement with Liaoning North East Asia Gang Hang Development Co., Ltd. (遼寧東北亞港航發展有限公司) (“Gang Hang Development”) at nil consideration, pursuant to which, Yingkou SASAC transferred all of its equity interests in Yingkou Port Group to Gang Hang Development at nil consideration. After the equity transfer, Yingkou Port Group became a wholly-owned subsidiary of Gang Hang Development.

On 28 November 2018, Gang Hang Development and creditor banks of Yingkou Port Group entered into a loan capitalisation agreement with Yingkou Port Group, which agreed that Yingkou Port Group would increase its registered capital by RMB11 billion, in particular, Gang Hang Development would contribute to RMB185,803,800 of Yingkou Port Group’s additional registered capital with cash and equity interests amounting to RMB21,929,277,300, and the creditor banks would contribute to RMB10,814,196,200 of Yingkou Port Group’s additional registered capital with creditor’s rights amounting to RMB37 billion. Yingkou Port Group has completed the business registration change on 28 November 2018, and its registered capital after the change was RMB20 billion.

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APPENDIX III-2

Gang Hang Development, the controlling shareholder of Yingkou Port Group, was renamed as Liaoning Port Group Limited (遼寧港口集團有限公司) (hereinafter referred to as “Liaoning Port Group”) on 29 November 2018.

Pursuant to the Equity Transfer Agreement of Ying Kou Port Group Corporation Limited entered into by Liaoning Port Group and Dalian Port Corporation Limited (“PDA”) on 14 May 2019, Liaoning Port Group transferred the 22.965% equity interests it held in Yingkou Port Group to PDA, its wholly-owned subsidiary.

Pursuant to the Agreement on the Gratuitous Transfer of the Equity Interests in Liaoning Port Group Limited entered into between the State-owned Assets Supervision and Administration Commission of the People’s Government of Liaoning Province (hereinafter referred to as the “Liaoning SASAC”) and China Merchants (Liaoning) Port Development Company Limited (hereinafter referred to as “China Merchants Liaoning”) on 31 May 2019, the equity change in respect of the transfer by Liaoning SASAC of the 1.1% equity interests it held in Liaoning Port Group to China Merchants Liaoning at nil consideration has been completed on 30 September 2019. Upon the completion of such change in equity, China Merchants Liaoning held 51.00% equity interests of Liaoning Port Group, and the ultimate de facto controller of Liaoning Port Group was changed from Liaoning SASAC to China Merchants Group Limited (“China Merchants Group”). The ultimate de facto controller of Yingkou Port Group was also changed from Liaoning SASAC to China Merchants Group.

On 7 April 2020, Yingkou Port Group resolved at its shareholders’ general meeting that Agricultural Bank of China Limited Yingkou Economic and Technological Development Zone Sub-branch, a shareholder of Yingkou Port Group, was permitted to transfer the 6.28% equity interests (capital contribution amount of RMB1,256,184,900) of the Company it held to ABC Financial Assets Investment Co., Ltd.. Yingkou Port Group completed the business registration change in respect of such equity transfer on 8 May 2020.

Pursuant to the stipulations in the Voting Rights Entrustment Agreement entered into by Liaoning Port Group and PDA on 29 March 2021, Liaoning Port Group entrusted PDA to exercise all shareholder’s rights of the 22.965% equity interests it held in Yingkou Port Group except for income rights, disposal rights (including share pledge), rights of subscription, capital increase/right of first refusal. After the agreement came into effect, PDA held the voting rights corresponding to an aggregate of 45.93% equity interests of Yingkou Port Group. On 29 March 2019, Liaoning Port Group entered into an entrustment agreement with PDA (《遼寧港 口集團有限公司與大連港集團有限公司關於營口港務集團有限公司表決權委託相關事宜的聯 合聲明》), pursuant to which, PDA would exercise shareholder’s rights as stipulated in the Voting Rights Entrustment Agreement and re-elect members of the board of directors of Yingkou Port Group, while PDA would appoint new directors for Yingkou Port Group. From the signing date of the Voting Rights Entrustment Agreement and prior to the completion of the re-election, being the transition period, within Liaoning Port Group and PDA, Liaoning Port Group will delegate the management power of Yingkou Port Group to the level of PDA. PDA will directly manage Yingkou Port Group. During the transition period, Liaoning Port Group will not in any way exert influence on the directors appointed by it currently serving in Yingkou Port Group that is contrary to the wishes of PDA, or engage in other behaviors that may cause the control of Yingkou Port Group to be unstable. Under the above arrangement, PDA formed control over Yingkou Port Group, and Liaoning Port Group controlled Yingkou Port Group indirectly through its wholly-owned subsidiary, PDA.

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APPENDIX III-2

(II) Client 2 – Liaoning Port Holdings (Yingkou) Co., Ltd. (遼港控股(營口)有限公司)

Name: Liaoning Port Holdings (Yingkou) Co., Ltd. (遼港控股(營口)有限公司) (“Liaoning Port Holdings”)

Type: Limited liability company (wholly owned by a legal person)

Legal residence: Room 722, 05 Yigang Business Building, No. 1 Yinggang Road, Bayuquan District, Yingkou City, Liaoning Province (production premise: Bayuquan District 18-Industrial Company Auto Repair Factory Workshop)

Unified social credit code: 91210804MA10TQ454G

Legal representative: Cao Yingfeng

Registered capital: RMB10 billion

Major scope of business: Permitted projects: port operation, construction engineering design, special equipment installation, transformation and repair, special equipment manufacturing, road cargo transportation (excluding dangerous goods), accommodation services, catering services, bathing services, printed matter binding services, food operations; residential interior decoration, various engineering construction activities, urban domestic waste business services, import and export of goods, import and export of technologies, construction professional operations, domestic ship management business (projects that are subject to approval according to law may only be operated after approval by relevant departments; specific business projects are subject to the approval results).

General projects: auto parts wholesale, construction steel products sales, special equipment sales, handling equipment manufacturing, handling equipment sales, construction materials sales, industrial textile products sales, motor vehicle repair and maintenance, rubber products sales, labour protection supplies production, labour protection products sales, heat supply services, property management, hardware products wholesale, building decoration, plumbing pipe parts and other construction metal products manufacturing, daily necessities sales, office supplies sales, daily wood products sales, chemical products sales (excluding licensed chemical products), car rental, housing rental, non-residential real estate rental, domestic cargo transportation agency, conference and exhibition services, professional cleaning, cleaning, disinfection services, sewage treatment and recycling, landscaping engineering construction, loading and unloading, general cargo warehousing services (excluding hazardous chemicals and other projects requiring approval), domestic shipping agency, storage and packing maintenance, urban greening management, machinery and equipment leasing, special equipment leasing, renewable resources sales, environmental protection monitoring, international shipping management business, production of industrial textile products, manufacturing of wooden containers, and sales of wooden containers (except for the projects that shall be approved according to law, business activities are operated independently with business license).

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APPENDIX III-2

(III) Overview of Other Users of the Valuation Report

This Report is only for the use by the users as agreed in the asset valuation engagement contract and as stipulated by laws and administrative regulations. Other institution and individual shall not be the user of this Asset Valuation Report.

II. PURPOSE OF VALUATION

Due to the proposed transfer of the assets by Ying Kou Port Group Corporation Limited to Liaoning Port Holdings (Yingkou) Co., Ltd. (遼港控股(營口)有限公司), it is required to conduct a valuation on the fixed assets and intangible assets declared by Ying Kou Port Group Corporation Limited involved in the said economic activity for the purpose of providing valuation reference for the transfer of assets.

The relevant economic activity has been approved by the Approval on the Plan for Revitalising the Phase II Northeast Project (Zhao Fa Zhan Lue Zi [2021] No. 475) issued by China Merchants Group.

III. VALUATION TARGET AND SCOPE

(I) Valuation Target and Scope

The appraised valuation target and scope are consistent with the valuation target and scope involved in the economic activity.

The valuation target is the assets owned and proposed to be transferred by Ying Kou Port Group Corporation Limited. The valuation scope specifically covers buildings, machinery and equipment, vehicles, electronic devices and other intangible assets. The details are shown in the table below.

			Unit: RMB
		Original carrying	Net carrying
Name of item	Quantity	amount	amount
Fixed assets
Buildings	641.72	2,256,454.56	1,134,078.87
Machinery and
equipment	1,285	1,833,724,063.75	1,011,809,767.19
Vehicles	8	2,822,826.83	472,538.96
Electronic devices	216	2,298,753.23	612,545.51
Intangible assets
Other intangible
assets	5	1,591,592.92	1,576,733.04
Total		1,842,693,691.29	1,015,605,663.58

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APPENDIX III-2

IV. TYPE OF VALUE

The types of appraised value include market value and other types of value except for market value. Other types of value except for market value generally include (but are not limited to) investment value, value in use, liquidation value and residual value. The purpose of this valuation is to provide a value reference for normal transactions, and there are no special restrictions and requirements on market conditions and the use of valuation target, etc. Therefore, market value is selected as the type of value of this valuation according to industry practices.

Market value refers to the estimated value of the valuation target in an arm’s length transaction made in the ordinary course of business on the valuation benchmark date between a willing buyer and a willing seller who has each acted rationally and without compulsion.

V. VALUATION BENCHMARK DATE

The valuation benchmark date is 31 August 2021.

Major factors considered by the clients in determining the valuation benchmark date include the time requirement on the implementation of the economic activity. The end of the accounting period was adopted to facilitate the defining of the scope of valuation and the accurate and efficient stocktaking of assets.

VI. BASIS OF VALUATION

(I) Basis of Economic Activity

The relevant economic activity has been approved by the Approval on the Plan for Revitalising the Phase II Northeast Project (Zhao Fa Zhan Lue Zi [2021] No. 475) issued by China Merchants Group.

(II) Legal Basis Provided by Laws and Regulations

1. The Asset Appraisal Law of the People’s Republic of China;

2. The Law of the People’s Republic of China on the State-owned Assets in Enterprises;

3. The Civil Code of the People’s Republic of China;

4. The Securities Law of the People’s Republic of China;

5. The Corporate Income Tax Law of the People’s Republic of China;

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APPENDIX III-2

1. The Implementation Rules for the Enterprise Income Tax Law of the People’s Republic of China (Issued under Order No. 512 of the State Council and recently amended under Order No. 714 of the State Council);

2. The Measures for the Administration of State-owned Assets Appraisal (Order No. 91 of the State Council and recently amended under Order No. 732 of the State Council);

3. The Detailed Rules for the Implementation of the Administrative Measures for State-owned Assets Valuation (Guo Zi Ban Fa [1992] No. 36);

4. The Provisional Regulations on the Supervision and Administration of State-owned Assets of Enterprises (Order No. 378 of the State Council and recently amended under Order No. 709 of the State Council);

5. The Opinions on Reforming the Administration of State-owned Assets Appraisal and Strengthening Supervision and Administration of Assets Appraisal (Guo Ban Fa [2001] No. 102);

6. The Interim Measures for the Administration of Valuation of State-owned Assets of Enterprises (Order No. 12 of the SASAC of the State Council);

7. The Regulations on Certain Issues Concerning Management of State-owned Assets Appraisal (Order No. 14 of the Ministry of Finance);

8. The Measures for the Supervision and Administration of the Trading of State-owned Assets of Enterprises (Order No. 32 of the SASAC of the State Council and the Ministry of Finance);

9. The Notice on the Guidelines on the Publication and Distribution of the Filing of State-owned Assets Appraisal Projects for Enterprises (Guo Zi Fa Chan Quan [2013] No. 64);

10. The Financial Supervision and Administration Measures on the Assets Evaluation Industry (Order No. 97 of the Ministry of Finance);

11. The Notice on Matters Relating to Strengthening the Administration of State-owned Assets Appraisal of Enterprises (Guo Zi Wei Chan Quan [2006] No. 274);

12. The Notice on Relevant Issues Concerning the Agreement-based Transfer of State-owned Property Rights of Central Enterprises (Guo Zi Fa Chan Quan [2010] No. 11);

13. The Notice on Relevant Matters Concerning the Examination of Appraisal Reports on State-owned Assets of Enterprises (Guo Zi Chan Quan [2009] No. 941);

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APPENDIX III-2

1. The Interim Regulations for the Value-added Tax of the People’s Republic of China (Issued under Order No. 134 of the State Council and recently amended under Order No. 691 of the State Council);

2. The Implementation Rules to the Interim Regulations for the Value-added Tax of the People’s Republic of China (Issued under Order No. 50 of the Ministry of Finance and the State Taxation Administration and recently amended under Order No. 65 of the Ministry of Finance and the State Taxation Administration);

3. The Notice on the Comprehensive Rollout of the Business Tax to Value Added Tax Transformation Pilot Program (Cai Shui [2016] No. 36);

4. The Circular Relating to Furthering Relevant Policies on Reform of Value-added Tax (Circular [2019] No. 39 jointly issued by the Ministry of Finance, the State Taxation Administration and the General Administration of Customs).

(III) Basis of Valuation Standards

1. Basic Asset Valuation Standards (Cai Zi [2017] No. 43);

2. Professional Code of Ethics for Asset Valuation (Zhong Ping Xie [2017] No. 30);

3. Practice Guidelines for Asset Valuation – Asset Valuation Procedures (Zhong Ping Xie [2018] No. 36);

4. Practice Guidelines for Asset Valuation – Asset Valuation Report (Zhong Ping Xie [2018] No. 35);

5. Practice Guidelines for Asset Valuation – Asset Valuation Methodology (Zhong Ping Xie [2019] No. 35);

6. Practice Guidelines for Asset Valuation – Asset Valuation Engagement Contract (Zhong Ping Xie [2017] No. 33);

7. Practice Guidelines for Asset Valuation – Asset Valuation Files (Zhong Ping Xie [2018] No. 37);

8. Quality Control Guidance on the Business of Asset Valuation Agency (Zhong Ping Xie [2017] No. 46);

9. Guiding Opinions on Types of Value under Asset Valuation (Zhong Ping Xie [2017] No. 47);

10. Guiding Opinions on Legal Ownership of the Asset Valuation Target (Zhong Ping Xie [2017] No. 48);

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APPENDIX III-2

1. Practice Guidelines for Asset Valuation – Intangible Assets (Zhong Ping Xie [2017] No. 37);

2. Practice Guidelines for Asset Valuation – Real Estate (Zhong Ping Xie [2017] No. 38);

3. Practice Guidelines for Asset Valuation – Machinery and Equipment (Zhong Ping Xie [2017] No. 39);

4. Guidance on Valuation Report of State-owned Assets of Enterprises (Zhong Ping Xie [2017] No. 42).

(IV) Ownership Basis

Building ownership certificates;

Motor vehicle driving permits.

(V) Pricing Basis

1. Housing Construction and Decoration Engineering Quota in Liaoning Province (2017);

2. Liaoning Province General Installation Project Quota (2017);

3. Notice of the Department of Housing and Urban-Rural Development of Liaoning Province on Adjusting the Value-added Tax Rates for the Pricing Basis of Construction Projects (Liao Zhu Jian Guan (2018) No. 8);

4. Construction Information on Building Material Price of Yingkou City in August 2021 issued by Liaoning Construction Engineering Cost Station (遼寧建設工程造價 總站);

5. Dredging Project Budget Quota (2019);

6. Budget Quota Valuation Table on Electric Power Construction Projects (2013);

7. Project completion data or project budget and final accounts data provided by the appraised entity.

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APPENDIX III-2

VII. VALUATION METHODOLOGY

(I) Selection of Valuation Methods and Reasons therefor

The specific valuation methods applied in this valuation are as follows.

1. There are three valuation methods mainly adopted for fixed assets under the buildings category, namely cost replacement approach, market approach and income approach. The adoption of market approach is conditional on the existence of an active trading market where accurate traded market prices are available; the adoption of income approach is on the condition that future returns and risks can be accurately predicted and quantified; and the cost replacement approach is adopted when traded market prices are not available and future returns and risks cannot be accurately predicted and quantified. Based on the specific purpose of the valuation and the characteristics of the buildings (structures) to be evaluated, the cost of the buildings independently built by the company was adopted in the valuation.

Based on the characteristics of the buildings, the type of value to be assessed, the data collection and other relevant conditions, the cost approach is used for the valuation, and the calculation formula is as follows:

The appraised value = Full replacement cost × Integrated residue ratio

(1) Determination of full replacement cost

The full replacement cost of buildings is generally composed of construction and installation costs, preliminary and other expenses and capital costs.

The calculation formula for full replacement cost of buildings is as follows:

Full replacement cost = Integrated construction and installation costs + Preliminary and other expenses + Capital costs – Deductible value-added tax

• (1) Integrated construction and installation costs

The full replacement cost of the representative buildings of the appraised buildings in this valuation is determined by using budgets (final accounts) adjustment method. The unit full replacement cost of other buildings is determined by using analogy method.

The ideology of the budgets (final accounts) adjustment method used in determining the full replacement cost is to calculate the estimated base price for direct fee and the construction and installation project costs of each project based on the budgets and final accounts related information on the buildings and the quota standard of the place where the buildings are located as provided

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APPENDIX III-2

by the company, and the quantity of work stipulated in the budgets and final accounts of the buildings. Then, based on the market survey and the standards for preliminary expenses and other expenses of construction work as provided by the clients, the preliminary expenses and other expenses of the buildings will be derived, and plus the capital costs to derive the full replacement cost of the appraised buildings.

The analogy method takes a representative building as a reference and makes comparison with similar buildings in terms of eave height, storey height, span, materials used, fixtures, and etc., to identify differences as adjustment factors, and adjustments are made to calculate the unit full replacement cost of the analogical buildings.

(2) Preliminary and other expenses

Preliminary and other expenses are calculated according to the project construction investment amount of the appraised entity and based on the charging standards set by the industry, the state or the local government.

(3) Capital costs

Capital costs are estimated based on the reasonable construction period of the appraised entity, with reference to the LPR published by the National Interbank Funding Center under the authorisation of the People’s Bank of China on the valuation benchmark date, and calculated according to the evenly invested funds based on the sum of the integrated construction and installation costs, preliminary and other expenses, etc.. The reasonable construction period of the assessed unit is 2.5 years. The formula for calculating the capital costs is as follows:

Capital costs = (Integrated construction and installation costs + Preliminary and other expenses) × Reasonable construction period × Benchmark loan rate × 1/2

(4) Deductible value-added tax

In accordance with the Notice of the Ministry of Finance and the State Administration of Taxation on Comprehensively Promoting the Pilot Program of the Collection of Value-added Tax in Lieu of Business Tax (Cai Shui [2016] No. 36), the input value-added tax amount included in the integrated construction and installation costs and the preliminary and other expenses may be deducted in calculating the full replacement cost of a building structure.

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APPENDIX III-2

• (2) Determination of residue ratio

The useful life method and observation method are mainly used to determine the residue ratio of the buildings in this valuation.

• ① Useful life method

Useful life method is adopted to determine the residue ratio based on the ratio of the expected remaining useful life of the building to its total useful life, which is calculated as follows:

Residue ratio under Remaining useful life = × 100% the useful life method Used life + Remaining useful life

② Observation method

The observation method is applied to assess each major part of the buildings from a technical perspective, and to analyse factors such as design, manufacturing, usage, wear and tear, maintenance, improvement and physical life of the asset on a consolidated basis. Impacts of wear and tear and natural deterioration on the functionality and efficiency of the asset will be assessed by comparing the valuation target with itself in new condition. As such, the residual ratio of the buildings would be determined and the substantial depreciation would be estimated.

• ③ Integrated residue ratio

Integrated residue ratio = Residue ratio under the useful life method × 40% + Residue ratio under the observation method × 60%

• ④ Residue ratio would be determined by adopting a reasonable method in the following circumstances:

If the residue ratios calculated under the on-site observation method and the useful life method respectively differ significantly, after analysing the various factors by the valuers, the relatively reasonable ratio would prevail based on their previous experience.

For the project which cannot be observed due to certain constraints, the useful life method would be normally applied in determining the residue ratio.

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APPENDIX III-2

2. Machinery and equipment

According to the purpose of this valuation and the characteristics of the appraised assets, and assuming the asset is continued to be used according to its current usage, the cost replacement approach would be adopted in this valuation on the basis of on-site investigation.

Basic formula: Appraised value = Full replacement costs × Residue ratio

(1) Determination of full replacement costs

• (1) Determination of full replacement costs of machinery and equipment

Full replacement costs = Equipment purchase cost + Transportation and miscellaneous fees + Installation and commissioning fees + Equipment foundation fee + Preliminary and other expenses + Capital costs – Deductible input value-added tax amount

① Purchase cost

The purchase cost is mainly determined by quotation from equipment manufacturers or sellers, or with reference to price materials such as the 2021 Mechanical and Electrical Products Quotation Manual and recent contract prices of similar equipment. For a small number of equipment for which the purchase cost cannot be found, the price change rate of the equipment of the same age and category is adopted to calculate the purchase cost.

• ② Transportation and miscellaneous fees

Transportation and miscellaneous fees refer to the transportation fee, purchase fee, storage fee, unloading fee and other related miscellaneous expenses during the transportation of the equipment, which are calculated as follows:

Transportation and miscellaneous fees for domestic equipment = Purchase cost of the equipment (tax inclusive) × Transportation and miscellaneous fee rates for the equipment

Transportation and miscellaneous fee rates are calculated based on the rates specified in the relevant industry cost indicators and with reference to the “Manual of Methods and Parameters Commonly Used in Asset Appraisal” (資產評估常用方法與參數手冊).

Transportation and miscellaneous fees are not charged if the purchase cost includes transportation fees.

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APPENDIX III-2

③ Foundation fee

If the equipment foundation is independent or inseparable from the building, the equipment foundation fee shall be considered in the assessment of fixed assets under buildings category, and the equipment foundation fee rate in other circumstances shall be calculated based on the rate specified in the relevant industry budget indexes or with reference to the “Manual of Methods and Parameters Commonly Used in Asset Appraisal” (資產評估常用方法與參數手冊).

Equipment foundation fee = Purchase cost of equipment (tax inclusive) × Equipment foundation fee rate

④ Installation and commissioning fees

Installation and commissioning fees are determined based on the auxiliary materials consumption, the installation foundation and the difficulty of installation of the assessed equipment and with reference to the relevant installation fee rates as stipulated under the “Manual of Data and Parameters Commonly Used in Asset Appraisal” (資產評估常用數據 與參數手冊). For small equipment that does not need installation, installation engineering costs are not considered.

Installation and commissioning fees of equipment = Purchase cost of equipment (tax inclusive) × Installation and commissioning fee rates

⑤ Construction and other expenses

Construction and other expenses are calculated at different rates according to the characteristics of the equipment and based on the purchase cost (tax-inclusive) of the equipment, which include construction unit management fee, engineering survey and design fee, engineering supervision fee, environmental impact assessment fee, bidding agency fee, feasibility study fee, etc..

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APPENDIX III-2

⑥ Capital costs

Capital costs are estimated based on the reasonable construction period of the appraised entity, with reference to the LPR published by the National Interbank Funding Center under the authorisation of the People’s Bank of China on the valuation benchmark date, and calculated according to the evenly invested funds based on the sum of the equipment purchase cost, transportation and miscellaneous fees, installation costs, preliminary and other expenses, etc.. The formula for calculating the capital costs is as follows:

Capital costs = (Equipment purchase cost + Transportation and miscellaneous fees + Foundation fee + Installation costs + Preliminary and other expenses) × Reasonable construction period × Benchmark loan rate × 1/2.

⑦ Deductible tax amount

In accordance with the Notice on Several Issues Concerning the Implementation of the VAT Reform in the Whole Country (Cai Shui [2008] No. 170), the Notice of the Ministry of Finance and the State Administration of Taxation on the Comprehensive Rollout of the Business Tax to Value Added Tax Transformation Pilot Program (Cai Shui [2016] No. 36), Cai Shui [2008] No. 32 Document and the Announcement [2019] No. 39 of the Ministry of Finance, the State Administration of Taxation and the General Administration of Customs, the replacement cost of machinery and equipment that meets the conditions for deduction of value-added tax should be deducted from the corresponding valueadded tax. In this valuation, the deductible input tax amount is calculated according to the respective value-added tax rate for the equipment purchase cost, transportation and miscellaneous fees, installation costs, foundation fee, and preliminary expenses:

Deductible tax amount of domestic equipment = Equipment purchase cost/(1+13%)×13% + Transportation and miscellaneous fees/(1+9%)×9% + (Installation costs + Foundation fee)/(1+9%)×9% + (Preliminary expenses – Construction unit management fee)/(1+6%)×6%

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APPENDIX III-2

• (2) Determination of full replacement cost of vehicles

The current tax-included purchase price of transport vehicles is determined according to recent vehicle market price data such as local vehicle sales market information. On this basis, according to the Provisional Regulations of the People’s Republic of China on Vehicle Purchase Tax, the vehicle purchase tax, new car registration fee, etc. are included in determining the full replacement cost. In accordance with the requirements of the Notice of the Ministry of Finance and the State Administration of Taxation on Incorporating Railway Transportation and Postal Services into the Pilot Program of Changing Business Tax to Value-added Tax ([2013] No. 106) and the Announcement [2019] No. 39 of the Ministry of Finance, the State Administration of Taxation and the General Administration of Customs, the value-added tax deduction policy for the purchase of vehicles is as follows:

Full replacement cost = Current purchase price + Vehicle purchase tax + New car registration fee – Deductible value-added tax

• ① Purchase price: Based on the vehicle market information and recent information on market price of vehicles such as Pacific Auto Network Automobile Quotation Database (《太平洋汽車網汽車報 價庫》) and yiche.com, the purchase price of the assessed vehicle is determined with reference to the latest trading price of similar models in the place where the vehicle is located. For vehicles that have been purchased for a long time and whose original model specifications cannot be found at present, the price of similar vehicles with the same displacement is used as the reference for the purchase price of the vehicle.

• ② Purchase tax: It is determined based on the Vehicle Purchase Tax Law of the People’s Republic of China passed at the seventh meeting of the 13th Standing Committee of the National People’s Congress held on 29 December 2018. Taxable amount of vehicle purchase tax = Taxable value × 10%. The “taxable value of self-use vehicles purchased by taxpayers shall not include value-added tax amount”.

Vehicle purchase tax = Purchase price ÷ (1 + Value-added tax rate) × Vehicle purchase tax rate

Vehicle purchase tax rate: 10%

– III-2-23 –

VALUATION REPORT B

APPENDIX III-2

• ③ Production cost of new car license, including cost of license, examination fee and procedural cost, is fixed at RMB300.00 per unit according to charging standards published by local automobile administration department.

• ④ Determination of the input tax amount incurred on the purchase of vehicles

The input tax incurred when purchasing the vehicles = Vehicle purchase price × Value-added tax rate ÷ (1 + Value-added tax rate)

Vehicle purchase value-added tax rate: 13%

• 3) Determination of full replacement cost of electronic devices

The price of electronic devices as at the valuation benchmark date is determined based on the local market information and recent market price data published by Zol.com.cn and PConline.com.cn. Generally, manufacturers or agents will provide free delivery, installation and commissioning services. The full replacement cost is then determined as follows:

Full replacement cost = Purchase price – Deductible tax amount

Deductible value-added tax amount = Purchase price/1.13 × 13%

In addition, for any electronic device which was purchased long time ago, its full replacement cost is determined by reference to prices in the secondhand market.

• (2) Determination of residue ratio

• 1) Integrated residual ratio of machinery and equipment

Residue ratio of machinery and equipment is comprehensively determined with reference to the economic service life of the equipment, through conducting survey on components of the equipment by on-site survey on present condition of the equipment and reviewing the information on operation, repair and management records of the equipment. Residue ratio, N, is calculated on such basis, i.e.:

N = Remaining service life/(Practical serviced life + Remaining service life) × 100%

– III-2-24 –

VALUATION REPORT B

APPENDIX III-2

• 2) Integrated residual ratio of vehicles

In accordance with the Standards for Compulsory Scrapping of Motor Vehicles (No. 12 Order in 2012) jointly released by the Ministry of Commerce, the National Development and Reform Commission, the Ministry of Public Security, and the Ministry of Ecology and Environment, the smaller of the residue ratios as determined below is taken as the final residue ratio of vehicles, i.e.:

Residue ratio of service life = 1 – Serviced life/Specified or economic service life) × 100%

Residue ratio of mileage = (1 – Travelled mileage/Specified mileage) × 100%

Residue ratio = Min (Residue ratio of service life, Residue ratio of mileage)

Meanwhile, necessary survey and evaluation are conducted for the vehicles to be assessed. Where survey and evaluation result shows great difference from the residue ratio determined above, appropriate adjustment should be made; where the two are equivalent to each other, no adjustment is required. Namely:

Residue ratio = Min (Residue ratio of service life, Residue ratio of mileage) + a

a: Adjustment factors for special vehicle conditions

• 3) Residue ratio of electronic devices

Remaining useful life method is adopted to determine the residue ratio.

Residue ratio = [Remaining useful life ÷ (Used life + Remaining useful life)] × 100%

Furthermore, it is not necessary to determine the residue ratio of electronic devices that were evaluated directly based on the prices in the second-hand market.

• (3) Determination of appraised value

Appraised value = Full replacement cost × Residue ratio

– III-2-25 –

VALUATION REPORT B

APPENDIX III-2

3. Other intangible assets

Based on the operating norms for valuation of intangible assets, intangible assets can be valuated by cost replacement approach, income approach or market approach according to the specific conditions of their use preconditions and purposes.

For software with strong versatility under intangible assets, such as genuine software, anti-virus software, etc., their appraised value is determined by comparing their specifications, models, quantities and upgrade factors after deducting relevant taxes and fees based on market quotation.

VIII. PROCESS AND IMPLEMENTATION OF VALUATION PROCEDURES

(I) Acceptance of Engagement

Understand the general conditions of the appraised assets and specify the valuation purpose, the valuation target and valuation scope, the valuation benchmark date and other basic matters in valuation after discussions and communications with the clients, accept the engagement after comprehensive analysis on the professional capability, independence and risks of valuation, and enter into the asset valuation engagement contract. Determine the type of the appraised value, formulate the valuation plan and establish the working group on valuation based on specific conditions.

(II) On-site Inspection and Collection of Materials

Guide the appraised entity to conduct asset stocktaking and prepare valuation materials, and carry out on-site inspection on the valuation target on such basis to collect required information for asset valuation, understand relevant factors affecting the value of the assets and pay attention to the legal ownership of the valuation target. Verify and validate the materials used in asset valuation in accordance with laws.

(III) Valuation and Estimation

Analyse, summarise and sort out the materials on valuation based on the specific conditions of the asset valuation and form the basis for the valuation and estimation and the preparation of the valuation report. Select the valuation methodology based on the valuation purpose, the valuation target, the type of value, the collection of materials and relevant conditions as well as the Practice Guidelines for Asset Valuation. Select the corresponding formula and parameters in analysis, calculation and judgment based on the valuation methodology adopted and analyse and judge valuation assumptions and restrictions which may affect the valuation and the valuation conclusion and arrive at the estimation results.

– III-2-26 –

VALUATION REPORT B

APPENDIX III-2

(IV) Issuance of Report

The responsible persons of the project prepare the preliminary asset valuation report based on the valuation conclusion after valuation and estimation. The firm carries out internal review on the preliminary asset valuation report in accordance with laws, administrative regulations, asset valuation standards and the internal quality control system, and issues the formal asset valuation report after conducting necessary communications on relevant contents of the valuation report with the clients and other relevant parties.

IX. VALUATION ASSUMPTIONS

Major asset valuation assumptions used in this Valuation Report include:

1. Transaction assumption. Under the transaction assumption, it is assumed that all assets to be appraised are in the process of transaction, and the valuers will make estimation in a simulated market according to the transaction conditions (among others) of assets to be appraised.

2. Open market assumption. The open market assumption represents that assets may be traded freely in a highly competitive market, the price of which is determined based on the judgment of both independent trading parties over the value of assets under certain supply and demand conditions. An open market refers to a market which is highly competitive with various buyers and sellers, who are on equal footing and have opportunity and time to access adequate market information, and a market where transactions between buyers and sellers are conducted under voluntary, rational, non-compelled or unrestricted conditions.

3. In-use and continue-to-use assumption. Under the in-use and continue-to-use assumption, it is assumed that the assets in use and to be appraised would continue to be used in the current utility and way after the change of ownership or the occurrence of asset business.

According to the requirements of the asset valuation, these assumptions are deemed to be established on the valuation benchmark date. We will not accept any responsibility for any different valuation conclusions resulting from any changes in these assumptions when the economic environment changes significantly in the future.

X. VALUATION CONCLUSION

On the valuation benchmark date, being 31 August 2021, the appraised value of the assets proposed to be transferred by Ying Kou Port Group Corporation Limited is RMB1,224,664,300. The appraised value of the assets represents an increase of RMB209,058,700 and an appreciation rate of 20.58% as compared to the carrying amount of RMB1,015,605,700.

– III-2-27 –

VALUATION REPORT B

APPENDIX III-2

The valuation conclusion is that the appraised value of the assets proposed to be transferred by Ying Kou Port Group Corporation Limited is RMB1,224,664,300 (ONE THOUSAND TWO HUNDRED TWENTY-FOUR MILLION SIX HUNDRED SIXTY-FOUR THOUSAND THREE HUNDRED, rounding to the nearest one hundred).

The validity period of the valuation conclusion is one year, starting from 31 August 2021 (being valuation benchmark date) to 30 August 2022.

The establishment of the valuation conclusion depends on the valuation assumptions as mentioned above.

XI. EXPLANATIONS ON SPECIAL MATTERS

(I) Significant use of expert work and relevant reports

Nil

(II) Incomplete or defective ownership information

Except for simple houses, the certificates on the ownership title of the remaining real estate are being processed. The valuation did not consider the various taxes and fees required to be paid in the process of applying for the certificates.

(III) Restrictions on valuation procedures

Nil

(IV) Incomplete valuation materials

Nil

• (V) Pending legal and economic matters on the valuation benchmark date

Nil

• (VI) The nature and amount of guarantees, leases and its contingent liabilities (contingent assets) and the relationship with the valuation target

Nil

(VII) Significant subsequent matters

Nil

– III-2-28 –

VALUATION REPORT B

APPENDIX III-2

• (VIII)Deficiencies in the economic activity corresponding to the asset valuation that may have a material effect on the valuation conclusion

Nil

(IX) Other matters that need to be described

1. The appraised value of this valuation excludes the value-added tax.

2. This valuation has excluded the impact of relevant taxes in the process of property rights transactions on the appraised value.

XII. RESTRICTIONS ON THE USE OF THE ASSET VALUATION REPORT

• (I) The scope of the use of this Valuation Report;

This Valuation Report shall be used for the valuation purpose and use set out herein. For the excerpt, reference and disclosure of all or part of the contents of the Valuation Report, relevant contents shall be reviewed by the valuation agency unless it is otherwise provided by laws and regulations and agreed by relevant parties;

• (II) The valuation agency and its asset valuers take no responsibility if the clients or other users of the Asset Valuation Report fail to use this Asset Valuation Report in accordance with the provisions of laws and administrative regulations and the scope of use set out in this Asset Valuation Report;

• (III) Except for the clients, the other users of the Asset Valuation Report as agreed in the asset valuation engagement contract and the users of the Asset Valuation Report as stipulated in the laws and administrative regulations, no other institution or individual shall be the user of the Asset Valuation Report;

• (IV) Users of the Asset Valuation Report should correctly interpret the valuation conclusion, which is not equivalent to the realizable value of the valuation target and should not be considered as a guarantee for the realizable value of the valuation target.

XIII. DATE OF THE ASSET VALUATION REPORT

The date of the Asset Valuation Report is 27 October 2021.

Asset valuer:

Asset valuer:

27 October 2021

– III-2-29 –

VALUATION REPORT B

APPENDIX III-2

ANNEXES

• I. Corresponding Economic Activity Document on the Valuation Purpose

• II. Business Licenses of the Clients and the Appraised Entity

• III. Real Estate Ownership Proof of the Clients and the Appraised Entity

• IV. Major Ownership Proof Materials of the Valuation Target Involved

• V. Letters of Undertaking of the Clients and Other Relevant Parties

• VI. Letters of Undertaking of the Signatory Asset Valuers

• VII. Announcement on the Registration and Filing of the Valuation Agency

• VIII. Photocopy of the Business License of the Valuation Agency

• IX. Qualification Certificates of the Asset Valuers Responsible for the Valuation Business

• X. Asset Valuation Engagement Contract

– III-2-30 –

VALUATION REPORT B

APPENDIX III-2

Letters of Undertaking of the Asset Valuation Agency and Asset Valuers

To Ying Kou Port Group Corporation Limited and Liaoning Port Holdings (Yingkou) Co., Ltd. (遼港控股(營口)有限公司),

Upon your engagement, we have conducted a valuation on the market value of the fixed assets and intangible assets on 31 August 2021 as the benchmark date, which are involved in your proposed transfer of the assets to Liaoning Port Holdings (Yingkou) Co., Ltd. (遼港控股 (營口)有限公司), and have formed an asset valuation report. On the premises that the assumptions disclosed in this report are established, we hereby make the following undertakings:

• I. We have the relevant professional qualification;

• II. The valuation target and the valuation scope are consistent with those specified in the asset valuation engagement contract;

• III. We have made necessary verification of the valuation target and the assets involved;

• IV. We have adopted the valuation methodology in accordance with the asset valuation standards;

• V. We have fully considered the factors which may affect the appraised value;

• VI. The valuation conclusion is reasonable;

VII. The valuation was carried out independently without any interference.

Signatures by the asset valuers:

Asset Valuation Agency: China Tong Cheng Assets Appraisal Co., Ltd.

27 October 2021

– III-2-31 –

VALUATION REPORT B

APPENDIX III-2

This Report is prepared in accordance with PRC Asset Valuation Standards

Explanations on the Asset Valuation

on

the Project of Ying Kou Port Group Corporation Limited’s Proposed Transfer of Assets to Liaoning Port Holdings (Yingkou) Co., Ltd. (遼港控股(營口)有限公司)

Zhong Tong Ping Bao Zi [2021] No. 12330 1 of 1

China Tong Cheng Assets Appraisal Co., Ltd. 27 October 2021

– III-2-32 –

VALUATION REPORT B

APPENDIX III-2

CONTENTS

Disclaimer on the Scope of the Use of the Explanations on the Valuation . . . . . . . .	Disclaimer on the Scope of the Use of the Explanations on the Valuation . . . . . . . .	34
Explanations of the Enterprise on Relevant Matters in Conducting the Asset
Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		35
Explanations on the Asset Valuation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		42
I.	Explanations on the Valuation Target and Scope . . . . . . . . . . . . . . . . . . . .	42
II.	Overall Explanations on Assets Verification . . . . . . . . . . . . . . . . . . . . . . .	44
III.	Explanations on Valuation Technology . . . . . . . . . . . . . . . . . . . . . . . . . . .	45
(I)	Fixed assets – Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	45
(II)	Fixed assets – Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	66
(III)	Intangible Assets – Other Intangible Assets . . . . . . . . . . . . . . . . . . . . . . .	87
IV.	Valuation Conclusion and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	88

– III-2-33 –

VALUATION REPORT B

APPENDIX III-2

DISCLAIMER ON THE SCOPE OF THE USE OF THE EXPLANATIONS ON THE VALUATION

The Explanations on the Valuation is for the use by the state-owned assets supervision and administration authorities (including the state-funded enterprises), relevant supervision and administration authorities and departments. Unless provided by laws and regulations, all or part of the contents of the materials shall not be provided to any other units and individuals, nor shall be published in the media.

– III-2-34 –

VALUATION REPORT B

APPENDIX III-2

EXPLANATIONS OF THE ENTERPRISE ON RELEVANT MATTERS IN CONDUCTING THE ASSET VALUATION

This part is issued and provided by the client and the appraised entity with the original text attached.

– III-2-35 –

VALUATION REPORT B

APPENDIX III-2

EXPLANATIONS OF THE ENTERPRISE ON RELEVANT MATTERS IN CONDUCTING THE ASSET VALUATION

I. OVERVIEW OF THE CLIENT AND THE APPRAISED ENTITY

(I) Overview of the Client 1 and the Appraised Entity

Name: Ying Kou Port Group Corporation Limited (hereinafter referred to as “Yingkou Port Group”)

Legal residence: No. 1, Yinggang Road, Bayuquan District

Unified social credit code: 91210800121119657C

Authorized representative: Deng Renjie (鄧仁傑)

Registered capital: RMB20 billion

Major scope of business: licensed businesses: Port operations (projects subject to approval according to law may only be operated after approval by relevant departments, and specific business projects are subject to the approval results) General projects: port loading and unloading, warehousing, services; ship material supply; import of raw and auxiliary materials, mechanical equipment, instruments and meters and components required by the production and research of this company; export of seafood, talc, magnesia, woven bags, food, wood products, clothing, knitwear (except 16 kinds of export commodities jointly operated by national organizations) produced by the company; agent packaging, consignment, water transportation, non-metallic ore, pig iron sales, plastic packaging products, vegetable oil; international passenger transport services, agency ticket sales, luggage check-in; waste material recycling; advertising agency, production, design; ship supply (supply of daily necessities, except for ship fuel), production of cement tiles, cement brick laying, metal materials, building materials sales, engineering consulting. water supply and heating; emergency prevention and treatment of pollutants and pollutant reception and disposal (operating with qualification certificate); the following projects may only be operated by branches: distribution of petroleum liquefied gas, daily necessities, textiles, leather goods, household appliances, hardware and electrical products, and chemical products (except dangerous goods), ship materials (except those subject to approval), communication equipment distribution and agency services, ship waste (excluding hazardous waste) recycling and agency services, and pre-packaged food; car rental, self-owned real estate business activities, property management, building cleaning services, other cleaning services, conference services, greening management, computer and communication equipment rentals, other machinery and equipment rentals, and other water transportation auxiliary activities; real estate rentals. (Except for the projects that must be approved according to law, business activities are operated independently according to the law with the business license)

– III-2-36 –

APPENDIX III-2

VALUATION REPORT B

Ying Kou Port Group Corporation Limited (“Yingkou Port Group”), formerly known as Yingkou Port Authority, has registered with SAIC of Yingkou City on 17 April 2003 in accordance with the Notice on the Implementation Opinions on the Reform of the Port Management System of Yingkou Port ([2002] No. 42) issued by Yingkou Municipal Committee Office of the Communist Party of China and the Approval on Allocating Assets for Establishment of Ying Kou Port Group Corporation Limited ([2003] No. 1) by the office of Yingkou SASAC, with registered capital of RMB1.7 billion.

In December 2009, capital reserve of RMB7.3 billion was carry forwarded to registered capital in accordance with the Approval of Yingkou Port Group’s Transfer of Capital Reserve to Registered Capital (Ying Huo Zi Chan Quan [2009] No.85) issued by the State-owned Assets Supervision and Administration Commission of the People’s Government of Yingkou (“Yingkou SASAC”), and the registered capital of Yingkou Port Group was changed to RMB9 billion.

In December 2017, Yingkou SASAC entered into a transfer agreement with Liaoning North East Asia Gang Hang Development Co., Ltd. (“Gang Hang Development”) (遼寧東北亞 港航發展有限公司) at nil consideration, pursuant to which, Yingkou SASAC transferred all the equity interest of Yingkou Port Group to Gang Hang Development at nil consideration. After the equity transfer, Yingkou Port Group became a wholly-owned subsidiary of Gang Hang Development.

On 28 November 2018, Gang Hang Development and creditor banks of Yingkou Port Group entered into a loan capitalisation agreement with Yingkou Port Group, which agreed that Yingkou Port Group will increase its registered capital by RMB11 billion, in particular, Gang Hang Development will subscribe for RMB185,803,800 of Yingkou Port Group’s additional registered capital in cash and equity consideration of RMB21,929,277,300, and the creditor banks will subscribe for RMB10,814,196,200 of Yingkou Port Group’s additional registered capital with RMB37 billion in creditor’s rights. Yingkou Port Group has completed the registration with industrial and commercial bureau for the change on 28 November 2018, and the registered capital after the change was RMB20 billion.

Gang Hang Development, the controlling shareholder of Yingkou Port Group, was renamed as Liaoning Port Group Limited (遼寧港口集團有限公司) (hereinafter referred to as “Liaoning Port Group”) on 29 November 2018.

Pursuant to the equity transfer agreement of Ying Kou Port Group Corporation Limited entered into by Liaoning Port Group and PDA Limited (“PDA”) on 14 May 2019, Liaoning Port Group transferred 22.965% equity interest it held in Yingkou Port Group to PDA, its wholly-owned subsidiary.

– III-2-37 –

APPENDIX III-2

VALUATION REPORT B

Pursuant to the Agreement on the Gratuitous Transfer of the Equity Interests in Liaoning Port Group Limited (《關於遼寧港口集團有限公司之股權無償劃轉協議》) entered into between the State-owned Assets Supervision and Administration Commission of the People’s Government of Liaoning Province (hereinafter referred to as the “Liaoning SASAC”) and China Merchants(Liaoning) Port Development Company Limited (hereinafter referred to as “China Merchants Liaoning”) on 31 May 2019, the equity change activity that Liaoning SASAC transfers the 1.1% equity interest it held in Liaoning Port Group to China Merchants Liaoning at nil consideration was completed on 30 September 2019. Upon the completion of such change in equity, China Merchants Liaoning held 51.00% equity interests of Liaoning Port Group, and the ultimate de facto controller of Liaoning Port Group was changed to China Merchants Group Limited (“China Merchants Group”). The ultimate de facto controller of Yingkou Port Group was also changed from Liaoning SASAC to China Merchants Group.

On 7 April 2020, Yingkou Port Group resolved at shareholders’ general meeting that Agricultural Bank of China Limited Yingkou Economic and Technological Development Zone Sub-branch, a shareholder of Yingkou Port Group was permitted to transfer 6.28% equity interest (capital contribution amount of RMB1,256,184,900) of the Company it held to ABC Financial Assets Investment Co., Ltd.. Yingkou Port Group completed the registration with industrial and commercial bureau for the equity transfer on 8 May 2020.

Pursuant to a voting rights entrust agreement entered into by Liaoning Port Group and PDA on 29 March 2021, Liaoning Port Group entrusted PDA to exercise all shareholders rights of the 22.965% equity interests it held in Yingkou Port Group except for income rights, disposal rights (including share pledge), rights of subscription, capital increase/right of first refusal. After the agreement comes into effect, PDA held the voting rights corresponding to an aggregate of 45.93% equity interest of Yingkou Port Group. On 29 March 2019, Liaoning Port Group entered into an entrustment agreement with PDA (《遼寧港口集團有限公司與大連港集 團有限公司關於營口港務集團有限公司表決權委託相關事宜的聯合聲明》), pursuant to which, PDA will exercise shareholders’ rights as stipulated in the agreement and re-elect members of the board of directors of Yingkou Port Group, while PDA will appoint new directors for Yingkou Port Group. From the date of the agreement and prior to the completion of the re-election, being the transition period, within Liaoning Port Group and PDA, Liaoning Port Group will delegate the management power of Yingkou Port Group to the level of PDA. PDA will directly manage Yingkou Port Group. During the transition period, Liaoning Port Group will not in any way exert influence on the directors appointed by it currently serving in Yingkou Port Group that is contrary to the wishes of PDA, or engage in other behaviors that may cause the control of Yingkou Port Group to be unstable. Under the above arrangement, PDA formed control over Yingkou Port Group, and Liaoning Port Group controls Yingkou Port Group indirectly through its wholly-owned subsidiary PDA.

– III-2-38 –

VALUATION REPORT B

APPENDIX III-2

(II) Client 2 – Liaoning Port Holdings (Yingkou) Co., Ltd. (遼港控股(營口)有限公司)

Name: Ying Kou Port Group Corporation Limited (“Yingkou Port Group”)

Type: Limited liability company (legal person sole investment by foreign investment company)

Legal residence: Room 722, 05 Yigang Business Building, No.1 Yinggang Road, Bayuquan District, Yingkou, Liaoning Province (production premise: Bayuquan District 18-Industrial Company Auto Repair Factory Workshop)

Unified social credit code: 91210804MA10TQ454G

Authorized representative: Cao Yingfeng (曹應峰)

Registered capital: RMB10 billion

Major scope of business: licensed businesses: port operation, construction engineering design, special equipment installation, transformation and repair, special equipment manufacturing, road cargo transportation (excluding dangerous goods), accommodation services, catering services, bathing services, printed matter binding services, food operations; residential interior decoration, various engineering construction activities, urban domestic waste business services, goods import and export, technology import and export, construction professional operations, domestic ship management business (projects that are subject to approval according to law may only be operated after approval by relevant departments; specific business projects are subject to the approval results)

General projects: auto parts wholesale, construction steel products sales, special equipment sales, handling equipment manufacturing, handling equipment sales, construction materials sales, industrial textile products sales, motor vehicle repair and maintenance, rubber products sales, labor protection supplies production, labor protection products sales, heating services, property management, hardware product wholesale, building decoration, plumbing pipe parts and other construction metal products manufacturing, daily necessities sales, office supplies sales, daily wood products sales, chemical products sales (excluding licensed chemical products), car rental, housing rental, non-residential real estate rental, domestic cargo transportation agency, conference and exhibition services, professional cleaning, cleaning, disinfection services, sewage treatment and recycling, landscaping engineering construction, loading and unloading, general cargo warehousing services (excluding hazardous chemicals and other projects requiring approval), domestic shipping agency, storage and packing maintenance, urban greening management, machinery and equipment leasing, special equipment leasing, renewable resource sales, environmental protection monitoring, international shipping management business, production of industrial textile products, manufacturing of wooden containers, and sales of wooden containers (except for the projects that shall be approved according to law, business activities are operated independently with business license).

– III-2-39 –

VALUATION REPORT B

APPENDIX III-2

II. EXPLANATIONS ON THE ECONOMIC ACTIVITY

Ying Kou Port Group Corporation Limited proposed to transfer part of assets to Liaoning Port Holdings (Yingkou) Co., Ltd. (遼港控股(營口)有限公司).

Such economic activity has been approved by China Merchants Group’s Approval on the New Establishment of a Wholly-owned Subsidiary for the Revitalization of the Northeast Phase II Project (《關於新設全資子公司用於振興東北二期項目的批覆》) (Zhao Fa Zhan Lue Zi [2021] No. 457).

III. EXPLANATIONS ON THE VALUATION TARGET AND SCOPE

(I) Valuation Target and Scope

The appraised valuation target and scope are consistent with the valuation target and scope involved in the economic activity.

The valuation target is the assets owned and proposed to be transferred by Yingkou Port Group. The specific scope of valuation includes buildings, machinery and equipment, vehicles, electronic device and other intangible assets. See the table below for details.

Unit: RMB

		Original carrying	Net carrying
Name of item	Quantity	amount	amount
Fixed assets
Buildings	641.72	2,256,454.56	1,134,078.87
Machinery and equipment	1285	1,833,724,063.75	1,011,809,767.19
Vehicles	8	2,822,826.83	472,538.96
Electronic devices	216	2,298,753.23	612,545.51
Intangible assets
Other intangible assets	5	1,591,592.92	1,576,733.04
Total		1,842,693,691.29	1,015,605,663.58

IV. EXPLANATIONS ON THE VALUATION BENCHMARK DATE

The valuation benchmark date is 31 August 2021.

Major factors considered in determining the valuation benchmark date include the time requirement on the implementation of the economic activity. The end of the accounting period was adopted to facilitate the defining of the scope of valuation and the accurate and efficient stocktaking of assets.

– III-2-40 –

VALUATION REPORT B

APPENDIX III-2

V. EXPLANATIONS ON MAJOR EVENTS WHICH MAY AFFECT THE VALUATION

Nil.

VI. EXPLANATIONS ON ASSETS STOCKTAKING

The scope of assets stocktaking is consistent with the scope of valuation. As of the valuation benchmark date, the original carrying amount and net carrying amount of the assets is RMB1,842,693,700 and RMB1,015,605,700, respectively.

To cooperate in the assets valuation, Ying Kou Port Group Corporation Limited had detailed planning for the stocktaking, and arranged relevant departments and employees of the company to establish a special working group on assets stocktaking to conduct stocktaking on the assets included in the scope of valuation. Appraisers provided centralized guidance on the working group, explained the standards on filling in the breakdown of stocktaking and notes in the process of stocktaking, issued the list of materials to be collected and prepared and emphasized the implementation of the ownership of property rights, specified the layout of physical items and improved accounting vouchers. The property ownership certificate documents of the relevant assets have been provided as required. During the on-site survey, the appraisers cooperated in carrying out a physical site visit to implement the layout of the physical assets, and provided materials regarding use, maintenance and inspection records.

The stocktaking was carried out separately according to different types of assets.

VII. LIST OF MATERIALS

Major materials provided by the client are as follows:

1. Business licenses;

2. The corresponding economic activity documents on the valuation.

Major materials provided by the appraised entity are as follows:

1. Declaration forms for assets appraisal (pattern issued by the valuation agency);

2. Business licenses;

3. Asset ownership certifications and property right certifications;

4. Material contracts and agreements;

5. Other materials.

– III-2-41 –

VALUATION REPORT B

APPENDIX III-2

EXPLANATIONS ON THE ASSET VALUATION

I. EXPLANATIONS ON THE VALUATION TARGET AND SCOPE

(I) The Valuation Target and the Contents of the Scope of Valuation

The appraised valuation target and scope are consistent with the valuation target and scope involved in the economic activity.

The valuation target is the assets owned and proposed to be transferred by Ying Kou Port Group Corporation Limited. The specific scope of valuation includes buildings, machinery and equipment, vehicles, electronic device and other intangible assets. See the table below for details.

Unit: RMB

		Original carrying	Net carrying
Name of item	Quantity	amount	amount
Fixed assets
Buildings	641.72	2,256,454.56	1,134,078.87
Machinery and equipment	1285	1,833,724,063.75	1,011,809,767.19
Vehicles	8	2,822,826.83	472,538.96
Electronic devices	216	2,298,753.23	612,545.51
Intangible assets
Other intangible assets	5	1,591,592.92	1,576,733.04
Total		1,842,693,691.29	1,015,605,663.58

(II) Breakdown and Characteristics of Physical Assets

The details of the assets included in the scope of this valuation are as follows:

1. Fixed assets under buildings

The aggregate of 6 buildings with a total gross floor area of 641.72 square meters that are included in the scope of valuation are owned by Ying Kou Port Group Corporation Limited and are mainly distributed in Bayuquan District, Yingkou City, Liaoning Province. The main buildings include the guard house, the frontier inspection police station of the Bayuquan port area of Yingkou Port, the inspection platform, the brick building, the No. 6 substation in the port, and two color-steel simple houses, which are mainly auxiliary supporting buildings for the enterprise.

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VALUATION REPORT B

APPENDIX III-2

Buildings (structures) are mainly self-built by enterprise. The structure types are mainly brick-concrete structure and simple structure. The main structure features of buildings (structures) are as follows:

The foundation of the brick-concrete structure applies a concrete bar foundation, cast-in-place reinforced concrete structural columns, and a 370mm or 240mm of solid brick for interior and outer walls. It applies cast-in-place reinforced concrete slab, cement mortar leveling for roofing, perlite insulation layer, modified asphalt waterproof membrane or rigid waterproofing. The ground is mostly made of cement or terrazzo. The exterior walls were smoothed and brushed with cement mortar and the interior dry walls were brushed with great white or cement mortar. It also applies wooden doors, plastic steel windows or aluminum alloy windows.

Supporting projects: general lighting, fire fighting system and water supply and drainage

2. Equipment under fixed assets

The equipment under fixed assets in the scope of valuation include machinery and equipment, vehicles and electronic device. The details of major assets on the valuation benchmark date are as follows:

• (1) There are a total of 1,285 pieces of machinery and equipment, mainly include ships, cranes, containers, stackers, reclaimers, coal grabbers, 100-meter environmental protection fog cannons, coal mining prototypes, train loading and unloading equipment, oil delivery system process pipelines, loaders and monitoring systems, etc.. As of the valuation benchmark date, most of the equipment was well maintained and can be used normally.

• (2) The vehicles for valuation are mainly 8 office vehicles, including tractors, trucks and operating vehicles. As of the valuation benchmark date, most of the equipment was well maintained and can be used normally.

• (3) Electronic device mainly includes various models of computers, printers, air conditioners, televisions, cameras, walkie-talkies, etc.. As of the valuation benchmark date, most of the equipment was well maintained and can be used normally. Part of the equipment purchased a relatively long time ago with poor performance is to be scrapped.

(III) Intangible Assets Accounted for or Not Accounted for as Declared by the Enterprise

The intangible assets (other intangible assets) of Ying Kou Port Group Corporation Limited in the scope of this valuation are two recently purchased systems and software and three sea area use rights paid annually.

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VALUATION REPORT B

APPENDIX III-2

(IV) Type and Quantity of Off-balance-sheet Assets Declared by the Enterprise

The off-balance sheet assets declared by the entity are the use rights of the three sea areas, and the details are as follows:

		Year of
Asset name	Certificate no.	acquisition	Area	Type
Port pool A 3# of	Guo Hai Zheng	2016	42.54	Sea for transportation/
Bayuquan port area	No. 082100167		hectares	sea for port
Port pool A 2# of	Guo Hai Zheng	2016	43.02	Sea for port pool
Bayuquan port area	No. 082100166		hectares	purpose
West sea area 2# of phase	Guo Hai Zheng	2016	28.0596	Sea for transportation/
4 of Bayuquan port	No. 2015C21080419266		hectares	sea for port
pool 5

• (V) Type, Quantity and Carrying Amount (or Appraised Value) of Assets Involved in Making Reference to the Conclusions of Reports Issued by Other Institutions

Nil.

II. OVERALL EXPLANATIONS ON ASSETS VERIFICATION

(I) Arrangement of Assets Verifiers, Execution Time and Procedures

In accordance with relevant standards and regulations on assets appraisal and based on the accounting statements on the valuation benchmark date and the declaration forms for assets appraisal provided by the appraised entity, during the period from 25 August 2021 to 6 September 2021, three professional teams (real estate team, equipment team and comprehensive team) verified the assets within the scope of valuation.

Details of the verification procedures are as follows:

Guiding the appraised entity in assets stocktaking and filling in the breakdown of assets, collecting and summarizing various valuation materials provided by the appraised entity.

Adopting different methods by types to verify if the accounting statements are consistent with the actual accounts based on the accounting statements on the valuation benchmark date and the declaration forms for assets appraisal provided by the appraised entity under the cooperation of relevant employees of the appraised entity. Requiring the appraised entity to supplement, modify and improve the declaration forms for assets appraisal based on the verification results.

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VALUATION REPORT B

APPENDIX III-2

Verifying the valuation materials provided by the appraised entity, conducting necessary inspections on the materials about the legal ownership of relevant assets and sources of materials and paying due attention to the legal ownership of relevant assets.

Conducting investigations to understand significant events which may affect the assets valuation.

The conclusions on verification of assets are formed based on the above work after the communications with relevant parties.

(II) Matters Affecting the Verification of Assets and the Handling Methods

Nil.

(III) Verification Conclusion

The assets in valuation are in normal use or in a normal state, there is no major difference with the book records, and the ownership is complete and clear.

Except for simple houses, the rest of the properties are in the process of applying for real estate title certificates. For the unlicensed real estate, this valuation did not consider the taxes and fees required to apply for the permit.

III. EXPLANATIONS ON VALUATION TECHNOLOGY

(I) Fixed assets – buildings

1. Scope of valuation

The buildings included in the scope of valuation are as follows:

Table: Summary on Buildings under Fixed Assets

Unit: RMB

			**Carrying **	amount
No.	Name of item	Quantity	Original value	Net value
1	Buildings	6	2,256,454.56	1,134,078.87
	Total		2,256,454.56	1,134,078.87
	Less: Impairment provision
	Total		2,256,454.56	1,134,078.87

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VALUATION REPORT B

APPENDIX III-2

2. Overview of Assets

Those included in the scope of valuation are buildings and fixed assets owned by Ying Kou Port Group Corporation Limited and are mainly distributed in Yingkou Port and Bayuquan District, Yingkou City, Liaoning Province, including an aggregate of 6 buildings. The assets were self-built between 2000 and 2020.

Buildings (structures) are mainly self-built by enterprise. The structure types are mainly brick-concrete structure and simple structure. The main structure features of buildings (structures) are as follows:

The foundation of the brick-concrete structure applies a concrete bar foundation, cast-in-place reinforced concrete structural columns, and a 370mm or 240mm of solid brick for interior and outer walls. It applies cast-in-place reinforced concrete slab, cement mortar leveling for roofing, perlite insulation layer, modified asphalt waterproof membrane or rigid waterproofing. The ground is mostly made of cement or terrazzo. The exterior walls were smoothed and brushed with cement mortar and the interior dry walls were brushed with great white or cement mortar. It also applies wooden doors, plastic steel windows or aluminum alloy windows.

Supporting projects: general lighting, fire fighting system and water supply and drainage

Overview of major buildings:

Gateroom: single-layer flat roof, strip foundation, brick-concrete structure, gross floor area of 10.40 square meters, brick masonry curved load-bearing wall, 370mm exterior wall with paint, concrete eaves roof parapet, column-supported concrete canopy, concrete pedestrian steps, steel anti-theft door, plastic steel sliding window, water supply and drainage, electric lighting and monitoring equipment.

(3) Ownership Status

• ① The substation #6 in the port has been surveyed, and the applications for real estate title certificates are under way.

• ② Simple houses and real estates located on permeable structures are not eligible for real estate title certificates.

As of the valuation benchmark date, there are no other matters such as collateral or guarantees for the buildings under valuation. In addition, there are no litigation and other matters for structures under fixed assets that are included in the scope of the valuation.

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VALUATION REPORT B

APPENDIX III-2

(4) Accounting Depreciation Policy

The depreciation of buildings under fixed assets adopts the straight-line method and is accrued at the carrying amount after deducting the estimated net residual value within the expected useful life. For fixed assets that have been provided for impairment, the depreciation amount will be determined at the carrying amount after deducting the impairment provision and the remaining useful life in the future period. The estimated useful life and the annual depreciation rates of buildings under fixed assets are listed as follows:

					Estimated	Annual
				Estimated	residual	depreciation
**Category **	**of **	**fixed **	assets	useful life	value rate	rate
				(years)	(%)	(%)
Buildings				8-35	5	11.88-2.71

3. The Approaches and Results of Assets Stocktaking and Verification

• (1) Approaches of Assets Stocktaking and Verification

The approach for assets stocktaking and verification under this valuation is on a one by one basis, and the specific practices are:

• ① the checking of the accounts table according to the contents of the asset valuation schedule provided by the appraised entity;

• ② the verification of the property right status, structure type, date of completion, building area and other basic parameters of each asset;

• ③ the carrying out of on-site survey according to the verified breakdown of asset valuation, recording of the location, surrounding environment, supporting facilities and other regional factors of various assets, at the same time, investigation of the floor, orientation, structure, decoration and ancillary equipment of the valuation target.

• (2) Results of Assets Stocktaking and Verification

• ① The ownership of the appraised assets is clear and without dispute.

• ② Based on the on-site investigation by the appraisers, the appraised assets are in good maintenance and in good use.

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VALUATION REPORT B

APPENDIX III-2

• ③ As of the valuation benchmark date, there are still part of buildings that have not obtained the real estate ownership certificate. For the buildings not obtaining the building ownership certificate, the relevant taxes for certificate application were excluded from this valuation.

• ④ The original carrying amount of buildings (structures) includes construction and installation costs, preliminary and other expenses, capitalized interest and other work-related expenses. Net carrying amount is the net value after depreciation.

4. Valuation Approach

(1) Selection of Valuation Approach

There are three valuation approaches mainly adopted for buildings under fixed assets, namely replacement cost approach, market approach and income approach. The adoption of market approach is conditional on the existence of an active trading market where traded market prices can be obtained with relative accuracy; the adoption of income approach is on the condition that future returns and risks can be more accurately predicted and quantified; and the replacement cost approach is adopted when traded market prices are not available and future returns and risks cannot be accurately predicted and quantified. Based on the specific purpose of this valuation while combining the characteristics of the buildings (structures) to be assessed, this valuation adopts the cost approach to evaluate the buildings built by the enterprise.

According to relevant conditions such as the characteristics of the buildings, types of appraised value and the conditions of information gathering, cost approach is adopted for the valuation, and the formula is as follows:

Appraised value = full replacement cost × integrated residue ratio

• (1) Determination of full replacement cost

The full replacement cost of buildings general includes construction and installation cost, preliminary and other expenses of construction projects and capital cost.

The formula of the full replacement cost of buildings is as follows:

Full replacement cost = Integrated construction and installation cost + Preliminary and other expenses + capital cost – deductible VAT

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VALUATION REPORT B

APPENDIX III-2

1) Integrated construction and installation cost

The full replacement cost of the representative buildings of the appraised buildings in this valuation is determined by using budgets and final accounts adjustment method. The per unit full replacement cost of other buildings is determined by using analogy method.

The ideology of the budgets and final accounts adjustment method used in determining the full replacement cost is to calculate the estimated base price for direct fee and the Construction and installation project cost of each project based on the budgets and final accounts related information on the buildings and the quota standard of the place where the buildings are located as provided by the enterprise, and the quantity of projects stipulated in the budgets and final accounts of the buildings. Then, based on the market survey and the standards for preliminary expenses and other expenses of construction projects as provided by the client, the preliminary expenses and other expenses of the buildings can be calculated, and added with the capital costs, the full replacement cost of the appraised buildings could be figured out.

The analogy method takes a representative building as a reference and makes comparison with similar buildings in terms of eaves height, storey height, span, materials used, fixtures, and etc., to identify differences as adjustment factors, and adjustments are made to calculate the per unit full replacement cost of the analogical buildings.

Major basis of pricing:

• I Quota for Property Construction and Decoration Project in Liaoning Province (2017) (《遼寧省房屋建築與裝飾工程定額》(2017年));

• II Quota for General Installation Project in Liaoning Province (2017) (《遼寧省通用安裝工程定額》(2017));

• III Notice of the Department of Housing and Urban-Rural Development of Liaoning Province on the Adjustment to the Value-Added Tax Rates for the Pricing Basis of Construction Projects (Liao Zhu Jian Guan (2018) No. 8) (《遼寧省住房和城鄉建設廳關於調整建設工程 計價依據增值稅稅率的通知》遼住建管(2018)8號);

• IV Yingkou City Building Material Price Project Information in August 2021 (《2021年8月營口市建築材料價格工程信息》) issued by Liaoning Construction Engineering Cost Station (遼寧建設工程造價 總站);

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VALUATION REPORT B

APPENDIX III-2

• V Notice of the General Office of the Ministry of Housing and Urban-Rural Development on the Re-adjustment to the Value-Added Tax Rates for the Pricing Basis of Construction Projects (Jian Ban Biao Han [2019] No. 193) (《住房和城鄉建設部辦公廳關於重新調 整建設工程計價依據增值稅稅率的通知》建辦標函[2019]193號).

• 2) Preliminary and other expenses

The preliminary and other expenses of construction projects were calculated according to construction investment amount of the appraised entity, and the charging standard required by the industry, the State or local government. The name, charging basis, charging standards and charging reference of preliminary and other expenses are set out in the table below:

			Tax-
			exclusive
No.	Item	Rate	rate	Charging basis	Reference
1	Construction unit	0.68%	0.68%	Construction	Ministry of
	administrative fees			cost (tax	Transport 2019
				inclusive)	No. 57
2	Engineering	1.40%	1.32%	Construction	Ministry of
	supervision fees			cost (tax	Transport 2019
				inclusive)	No. 57
3	Environmental impact	0.03%	0.02%	Construction	Ji Wei Huan Bao
	assessment fees			cost (tax	Zong Ju Ji Jia
				inclusive)	Ge (2002)
					No. 125
4	Project proposal fees	0.10%	0.09%	Construction	Ji Wei Ji Jia Ge
	and feasibility			cost (tax	(1999)
	study fees			inclusive)	No. 1283
5	Survey and design	2.76%	2.61%	Construction	Ministry of
	fees			cost (tax	Transport 2019
				inclusive)	No. 57
6	Bidding agent fees	0.02%	0.02%	Construction	Ministry of
				cost (tax	Transport 2019
				inclusive)	No. 57
7	Safety pre-assessment	0.03%	0.02%	Construction	Guiding Opinions
	fees			cost (tax	on Safety
				inclusive)	Assessment
					Fees in
					Liaoning
					Province (2005)
9	Safety production	1.90%	1.79%	Construction	Ministry of
	fees			cost (tax	Emergency
				inclusive)	Management
					2019 Letter
					No. 428
	Total	6.92%	6.56%

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VALUATION REPORT B

APPENDIX III-2

3) Capital cost

The capital cost was calculated based on the sum of the integrated construction and installation cost, preliminary and other expenses in accordance with the even input of capital within the reasonable construction period of the appraised enterprise, with reference to the loan prime rate (LPR) published by the National Interbank Funding Centre with authorization granted by the People’s Bank of China as at the valuation benchmark date. The reasonable construction period of the appraised enterprise is 2.5 years. The formula of the capital cost is as follows:

Capital cost = (construction and installation project cost + preliminary and other expenses) × reasonable construction period × Loan prime rate × 1/2

4) Deductible VAT

According to the Notice of the Ministry of Finance and the State Taxation Administration on the Comprehensive Rollout of the Business Tax to Value Added Tax Transformation Pilot Program (《財政部國家稅務總局關於全面推 開營業稅改徵增值稅試點的通知》) (Caishui [2016] No. 36) issued by the Ministry of Finance and the State Taxation Administration, in calculating the full replacement price of buildings and structures, the integrated construction and installation cost and the VAT input tax inclusive in the preliminary and other expenses can be deducted.

(2) Determination of residue ratio

The life method and observation method are mainly used to determine the residue ratio for the buildings in this valuation.

① Useful life method

Useful life method is the residue ratio determined based on the ratio of estimated remaining useful life of buildings to its aggregate useful life. The formula is as follows:

Residue ratio under the Remaining useful life = ×100% useful life method Used life + Remaining useful life

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VALUATION REPORT B

APPENDIX III-2

• ② Observation method

The observation method is applied to assess each major part of the buildings from a technical perspective, and to analyze factors such as design, manufacturing, usage, wear and tear, maintenance, improvement and physical life of the asset on a consolidated basis. Impacts of wear and tear and natural deterioration on the functionality and efficiency of the asset will be assessed by comparing the valuation target with itself in new condition. As such, the residue ratio of the buildings would be determined and the substantial depreciation would be estimated.

• ③ Integrated residue ratio

Integrated residue ratio = residue ratio under the useful life method × 40% + residue ratio under the observation method × 60%

• ④ Residue ratio would be determined by adopting a reasonable method where:

If the residue ratios calculated under the on-site investigation method and the useful life method respectively differ significantly, after analysing the factors by the appraisers, the relatively reasonable ratio would prevail based on their previous experience.

For the project which cannot be observed due to certain constraints, the useful life method would be normally applied in determining the residue ratio.

• (3) Calculation of appraised value

Appraised value = Replacement cost (tax exclusive) × integrated residue ratio

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VALUATION REPORT B

APPENDIX III-2

5. Valuation Conclusion and Analysis

• ① Valuation results:

As at the valuation benchmark date (i.e. 31 August 2021), the valuation results of buildings (structures) that Ying Kou Port Group Corporation Limited intends to transfer are shown as follows:

Table of Summary of Building Valuation Results

Unit: RMB

Name of item	**Carrying **	amount	**Appraised **	value	Appreciation	Appreciation
	Original value	Net value	Original value	Net value	amount	rate
Total buildings	2,256,454.56	1,134,078.87	1,150,200.00	779,220.00	-354,858.87	-31.29%
Buildings	2,256,454.56	1,134,078.87	1,150,200.00	779,220.00	-354,858.87	-31.29%

• ② Analysis on the reasons for changes in valuation

The depreciation in valuation of overall buildings was RMB354,858.87, with a depreciation rate of 31.29%. The main reason is that the accounting of the maintenance platform and brick house includes expenses irrelevant to the composition of the asset.

6. Valuation Case

Case 1: Overhaul Platform and Brick House – No.3 in the Building Valuation Schedule

1 Basic Overview

The overhaul platform and brick house were built in June 2015. The brick house is a single-story brick house with a brick-concrete structure, about 33m in length, 7m in width, 4m in eaves height, strip foundation, brick masonry loadbearing walls and pedestrian steps, insulation color steel sloping roof and canopy, concrete dispersing slope, iron sheet door, plastic steel casement window, acrylic paint on the outer wall, equipped with electric lighting and monitoring device.

2 Determination of full replacement cost

Full replacement cost = Construction and installation project cost+ preliminary expense and other expenses + capital cost–deductible value-added tax

– III-2-53 –

VALUATION REPORT B

APPENDIX III-2

• (1) Construction and installation project costs

The construction period of the building is 2.5 years. Based on available data and the on-site survey, it is calculated as follows using the re-budget approach:

Breakdown of Construction and Installation Project Costs

Project Name: Overhaul platform and brick house

Line	Serial
No.	No.	Item	Charging description	Rate	Amount
				(%)
		Construction project			411,991.94
1	A	Total project quota	Labor cost + material		363,708.57
		sub-project fee and	expenses + machinery cost
		technical measure fee	budget price + labor price
			variance on board + other
			price variance on board +
			fuel power price variance+
			main material expenses +
			equipment cost + including:
			enterprise management fees
			+ including: profit
2	A1	Including: labor cost	labor cost budget price +		118,709.61
		budget price +	machinery cost budget
		machinery cost	price
		budget price
3	B	General measure fee	Civilized construction and		1,543.22
		(excluding safety	environmental protection
		construction measure	fees + rainy season
		fee)	construction fee
4	B1	Civilized construction	Including: labor cost budget	0.65	771.61
		and environmental	price + machinery cost
		protection fees	budget price
5	B2	Rainy season	Including: labor cost budget	0.65	771.61
		construction fee	price + machinery cost
			budget price

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VALUATION REPORT B

APPENDIX III-2

Line	Serial
No.	No.	Item	Charging description	Rate	Amount
				(%)
6	C	Other measure fees	Additional costs for night		4,332.90
			construction and lighting
			fees for daytime
			construction + second
			handling fee + winter
			construction fee +
			completed projects and
			equipment protection fees +
			municipal engineering
			(including landscaping
			engineering) construction
			disturbance fee + others
7	C1	Additional costs for
		night construction
		and lighting fees for
		daytime construction
8	C2	Second handling fee
9	C3	Winter construction fee	Including: labor cost budget	3.65	4,332.90
			price + machinery cost
			budget price
10	C4	Completed projects and
		equipment protection
		fees
11	C5	Municipal engineering		4
		(including
		landscaping
		engineering)
		construction
		disturbance fee
12	C6	Others
13	D	Other project fees
14	E	Total project quota sub-	Total project quota sub-		369,584.69
		project fee, measure	project fee and technical
		fee (excluding safety	measure fee + general
		construction measure	measure fee (excluding
		fee) and other project	safety construction measure
		fees	fee) + other measure fees +
			other project fees

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VALUATION REPORT B

APPENDIX III-2

Line	Serial
No.	No.	Item	Charging description	Rate	Amount
				(%)
15	E1	Including: enterprise	Including: labor cost budget	8.5	10,090.32
		management fees	price + machinery cost
			budget price
16	E2	Including: profit	Including: labor cost budget	7.5	8,903.22
			price + machinery cost
			budget price
17	F	Levies	Social insurance cost +
			housing provident funds +
			engineering sewage fee +
			others + work-related
			injury insurance
18	F1	Social insurance cost	Including: labor cost budget	0
			price + machinery cost
			budget price
19	F2	Housing provident	Including: labor cost budget	0
		funds	price + machinery cost
			budget price
20	F3	Engineering sewage fee
21	F4	Others
22	F5	Work-related injury
		insurance
23	G	Safety construction	Total project quota sub-	2.27	8,389.57
		measure fee	project fee, measure fee
			(excluding safety
			construction measure fee)
			and other project fees +
			levies
24	H	Total pre-tax	Total project quota sub-		377,974.26
		construction cost	project fee, measure fee
			(excluding safety
			construction measure fee)
			and other project fees +
			levies + safety construction
			measure fee
25	I	Taxes	Total pre-tax construction	9	34,017.68
			cost
26	J	Construction cost	Total pre-tax construction		411,991.94
			cost + taxes
		Building earthwork			12,915.81
		and demolition
		engineering

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VALUATION REPORT B

APPENDIX III-2

Line	Serial
No.	No.	Item	Charging description	Rate	Amount
				(%)
27	A	Total project quota	labor cost + material		11,399.34
		sub-project fee and	expenses + machinery cost
		technical measure fee	budget price + labor price
			variance on board + other
			price variance on board +
			fuel power price variance +
			main material expenses +
			equipment cost + including:
			enterprise management fees
			+ including: profit
28	A1	Including: labor cost	labor cost budget price +		10,794.83
		budget price +	machinery cost budget
		machinery cost	price
		budget price
29	B	General measure fee	Civilized construction and		49.12
		(excluding safety	environmental protection
		construction measure	fees + rainy season
		fee)	construction fee
30	B1	Civilized construction	(labor cost budget price +	0.65	24.56
		and environmental	machinery cost budget
		protection fees	price)*0.35
31	B2	Rainy season	(labor cost budget price +	0.65	24.56
		construction fee	machinery cost budget
			price)*0.35
32	C	Other measure fees	Additional costs for night		137.9
			construction and lighting
			fees for daytime
			construction + second
			handling fee + winter
			construction fee +
			completed projects and
			equipment protection fees +
			municipal engineering
			(including landscaping
			engineering) construction
			disturbance fee + others
33	C1	Additional costs for
		night construction
		and lighting fees for
		daytime construction

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VALUATION REPORT B

APPENDIX III-2

Line	Serial
No.	No.	Item	Charging description	Rate	Amount
				(%)
34	C2	Second handling fee
35	C3	Winter construction fee	(labor cost budget	3.65	137.9
			price+machinery cost
			budget price)*0.35
36	C4	Completed projects and
		equipment protection
		fees
37	C5	Municipal engineering		4
		(including
		landscaping
		engineering)
		construction
		disturbance fee
38	C6	Others
39	D	Other project fees
40	E	Total project quota sub-	Total project quota sub-		11,586.36
		project fee, measure	project fee and technical
		fee (excluding safety	measure fee + general
		construction measure	measure fee (excluding
		fee) and other project	safety construction measure
		fees	fee) + other measure fees +
			other project fees
41	E1	Including: enterprise	(labor cost budget price +	8.5	321.15
		management fees	machinery cost budget
			price)*0.35
42	E2	Including: profit	(labor cost budget price +	7.5	283.36
			machinery cost budget
			price)*0.35
43	F	levies	Social insurance cost +
			housing provident funds +
			engineering sewage fee +
			others + work-related
			injury insurance
44	F1	Social insurance cost	Including: labor cost budget	0
			price + machinery cost
			budget price
45	F2	Housing provident	Including: labor cost budget	0
		funds	price + machinery cost
			budget price
46	F3	Engineering sewage fee
47	F4	Others

– III-2-58 –

VALUATION REPORT B

APPENDIX III-2

Line	Serial
No.	No.	Item	Charging description	Rate	Amount
				(%)
48	F5	Work-related injury
		insurance
49	G	Safety construction	Total project quota sub-	2.27	263.01
		measure fee	project fee, measure fee
			(excluding safety
			construction measure fee)
			and other project fees +
			levies
50	H	Total pre-tax	Total project quota sub-		11,849.37
		construction cost	project fee, measure fee
			(excluding safety
			construction measure fee)
			and other project fees +
			levies + safety construction
			measure fee
51	I	Taxes	Total pre-tax construction	9	1,066.44
			cost
52	J	Construction cost	Total pre-tax construction		12,915.81
			cost + taxes
		Construction cost			424,907.75

Total construction cost (tax inclusive): Renminbi four hundred and twenty-four thousand nine hundred and seven and seventy-five cents

Table: Summary of Construction and Installation Costs

Unit and professional project name: Overhaul platform and brick house

				Amount
No.	Item	Subject of Charging	Fee Rate	of Fees
			(%)
1	Construction	Construction		411,991.94
2	Building earthwork and	Building earthwork and		12,915.81
	demolition	demolition
3	Estimated project costs	Total estimated costs		424,907.75
5	Unit price of project		235.17	1,806.81

– III-2-59 –

VALUATION REPORT B

APPENDIX III-2

• (2) Preliminary and other fees and expenses

Table of Preliminary and Other Expenses Charged on Major Construction Project

			Tax-
			exclusive
No.	Item	Rate	rate	Charging basis	Reference
1	Construction unit	0.68%	0.68%	Construction	Ministry of
	administrative fees			cost (tax	Transport 2019
				inclusive)	No. 57
2	Engineering	1.40%	1.32%	Construction	Ministry of
	supervision fees			cost (tax	Transport 2019
				inclusive)	No. 57
3	Environmental impact	0.03%	0.02%	Construction	Ji Wei Huan Bao
	assessment fees			cost (tax	Zong Ju Ji Jia
				inclusive)	Ge (2002)
					No. 125
4	Project proposal fees	0.10%	0.09%	Construction	Ji Wei Ji Jia
	and feasibility			cost (tax	Ge (1999)
	study fees			inclusive)	No. 1283
5	Survey and design	2.76%	2.61%	Construction	Ministry of
	fees			cost (tax	Transport 2019
				inclusive)	No. 57
6	Bidding agent fees	0.02%	0.02%	Construction	Ministry of
				cost (tax	Transport 2019
				inclusive)	No. 57
7	Safety pre-assessment	0.03%	0.02%	Construction	Guiding Opinions
	fees			cost (tax	on Safety
				inclusive)	Assessment
					Fees in
					Liaoning
					Province (2005)
9	Safety production	1.90%	1.79%	Construction	Ministry of
	fees			cost (tax	Emergency
				inclusive)	Management
					2019 Letter
					No. 428
	Total	6.92%	6.56%

– III-2-60 –

VALUATION REPORT B

APPENDIX III-2

(3) Capital costs

According to the requirements under the “National Benchmark for the Time for Completion of Construction and Installation Projects”, the overall reasonable timeline for completion of projects is approximately 2.5 years. The construction funds are assumed to be evenly invested during the construction period. With regard to the loan interest rate, the capital costs are calculated based on the LRP rate of 4.25%, which is the rate for RMB loans with a term of 2.5 years.

Capital costs = (Estimated construction and installation project costs + Preliminary and other fees and expenses) × (1 + Loan interest rate) ^ (2.5/2-1)

Please see the calculation sheet for full replacement cost for the process of calculating the capital costs and the calculation results.

(4) Full replacement cost

Full replacement cost = Estimated construction and installation project costs + Preliminary and other fees and expenses + Capital costs – Deductible value-added tax

Details of the calculation are shown in the table below:

			Result of
No.	Item	Fee Rate Formula of Calculation	Calculation
1	Estimated construction	1 = (2 + 3 + 4 + 5) ×	424,907.75
	and installation	(1 + correction coefficient)
	project costs
2	Construction	Calculated according to	411,991.94
		budget benchmark and
		expense benchmark
3	Building earthwork and	Calculated according to	12,915.81
	demolition	budget benchmark and
		expense benchmark
6	Preliminary fees and	6 = 7 + 8	29,757.65
	other fees
7	Determination of price	6.92% 6 = 1 × rate	29,403.62
	based on fee rate
8	Determination of price	0 7 = Floor area × rate
	based on the floor
	area

– III-2-61 –

VALUATION REPORT B

APPENDIX III-2

			Result of
No.	Item	Fee Rate Formula of Calculation	Calculation
9	Capital costs	4.25% 9 = (1 + 6) × [(1 + Loan	24,281.08
		interest rate)^reasonable
		time for completion / 2 – 1]
10	Replacement costs	10 = 1 + 6 + 9	478,946.48
11	Deductible value-added	11 = Construction and	36,584.93
	tax	installation fee / 1.09*9% +
		(preliminary fees and
		expenses – construction and
		installation
		fee*Construction
		management fees) /
		1.06*6%
12	Replacement costs	12 = Replacement cost –	442,000.00
	(after tax)	Deductible value-added tax
13	Replacement unit price	235.17 13 = Replacement cost (after	1,879.49
	(after tax)	tax) / floor area

That is, the full replacement cost of overhaul platform and brick house (after tax) is = RMB442,000.00 (rounded).

1. Determination of integrated residue ratio

2. (1) Residue ratio based on serviced years

The economic service life of the building is 30 years, and it has been used for 6.18 years as at the benchmark date, then:

Residue ratio based on serviced years = (1 – serviced years/economic service years) × 100% Residue ratio based on serviced years of the overhaul platform and brick house = 79% (rounded)

– III-2-62 –

VALUATION REPORT B

APPENDIX III-2

• (2) Surveyed residue ratio

The score of residue is calculated through on-site surveys and based on its building correction coefficients.

	Overhaul	Overhaul
Name of	platform and		Building Brick- Type of
Building	brick house		Structure concrete Project			Building
Property	/		Floor Area 235.17 Date of			2015/6/30
Certificate No.				Completion
Land Certificate	/		Number of 3 Expected			30
No.				Floors Service
				Life
Original Book	1,211,630		Valuation 2021/8/31 Remaining			23.82
Value				Benchmark Useful
				Date Life
					Standard	Valuation of	Evaluated
Building Structure	and Current Conditions				Score	Current Conditions	Score
Structure (G)		1 Foundation		(1) Artificial foundation; (2) Natural	25	Artificial	21
				foundation		foundation:
				(1) Strip foundation; (2) Independent		sufficient bearing
				foundation; (3) Raft foundation; (4)		capacity, no
				Box foundation; (5) Pile foundation		uneven settlement
						exceeding the
						permitted range
		2 Bearing		(1) Beam: wooden beam, steel beam,	25	Brick wall:	20
		components		reinforced concrete beam		sufficient bearing
				(2) Plate: wood plate, steel plate,		capacity; minor
				reinforced concrete slab		cracks found in
				(3) Column: wooden column, brick		the wall body;
				column, stone column, steel column,
				concrete column, reinforced concrete
				column
				(4) Bearing wall: brick wall; stone wall,
				reinforced concrete wall
		3. Non-bearing		Brick wall; empty bucket wall; plate wall	15	Masonry wall: a	12
		wall		(trough, hollow); block wall; other		few cracks and
						swollen parts;

– III-2-63 –

APPENDIX III-2

VALUATION REPORT B

			Standard	Valuation of	Evaluated
Building Structure	and Current Conditions		Score	Current Conditions	Score
	4. Roof	Rigid roof, flexible roof, tile roof	20	Color steel roof:	17
				local cracking
				and local source
				leakage, thermal
				insulation layer is
				intact
	5. Floor	Cement mortar; concrete; terrazzo;	15	Ceramic tile floor:	12
		crushed stone; asphalt concrete; plain		slight abrasion
		soil		and peeling, some
				abrasion and
		Lime soil; ceramic tiles; quartz tiles;		fracture
		wood floors; marble; granite
		Subtotal: (1 + 2 + 3 + 4 + 5)*Weight =	100	0.85	82
		69.7
Decorations (S)	6. Doors and	(1) Door: wooden door; steel wooden	25	Plastic steel	21
	windows	door; aluminum alloy door; plastic steel		window:
		door		complete and
		(2) Window: wooden window; steel		nondestructive,
		window; aluminum alloy window;		complete
		plastic steel window		hardware,
				inoperable switch
	7. Outer wall	Fair-faced wall; brushed stone; mosaic;	25	Painted wall: a little	21
		ceramic tile; aluminum-plastic panel;		hollow, cracks,
		glass curtain wall; plastered wall;		weathering,
		veneer wall; painted wall; marble;		peeling, slightly
		granite;		loose and loose
				jointed mortar
	8. Inner wall	Fair-faced wall; white power painted wall;	25	White power	20
		lime mortar; cement slurry; plastered		painted wall,
		wall; painted wall; pasting type; marble		paint slurry inner
		(1) Complete and firm, without damage,		wall: hollow,
		hollowing and cracks (except wind		mildew, peeling;
		cracks); (2) Slight hollowing, cracks,
		and peeling; (3) Partial hollowing,
		cracking, and peeling; (4) Severe
		hollowing, cracks, peeling.

– III-2-64 –

APPENDIX III-2

VALUATION REPORT B

			Standard	Valuation of	Evaluated
Building Structure	and Current Conditions		Score	Current Conditions	Score
	9. Ceiling	(1) Plastering ceiling; (2) Plate ceiling;	25	Plate ceiling:	20
		(3) Suspended ceiling;		deformed,
				sagging, and
				slightly loose
	Sub-total: (6 + 7 + 8 + 9)*Weight = 4.1		100	0.05	82
Equipment (B)	10. Electrical	(1) The line equipment is complete and in	25	Basically in good	21
	lighting	good conditions, with good insulation;		conditions; some
		(2) Basically in good conditions, with		parts damaged
		individual parts damaged; (3) Partially
		old and aging, with poor insulation; (4)
		Generally aging and incomplete, poor
		insulation
	11. Monitoring	(1) In good conditions; (2) Basically in	25	Basically in good	21
		good conditions and in normal use; (3)		conditions and in
		Can not be used normally; (4) Damaged		normal use
		severely;
	12. Power	(1) In good conditions; (2) Basically in	20	Basically in good	20
		good conditions and in normal use; (3)		conditions and in
		Can not be used normally; (4) Damaged		normal use
		severely;
	13. Heating	(1) The equipment pipeline is intact	10	Basically in good	10
		without plugging; (2) Basically intact		conditions and in
		and slightly old and usable; (3)		normal use
		Obviously corroded to be repaired, and
		the gas supply is abnormal; (4)
		Basically unusable;
	14. Fire	(1) In good conditions; (2) Basically in	5	Basically in good	5
	prevention	good conditions and in normal use; (3)		conditions and in
		Can not be used normally; (5) Damaged		normal use
		severely;
	15. Other	(1) In good conditions; (2) Basically in	5	Basically in good	5
		good conditions and in normal use; (3)		conditions and in
		Can not be used normally; (8) Damaged		normal use
		severely;
	Sub-total: (10 + 11 + 12 + 13 + 14 +...)*Weight = 8.1		100	0.1	80
	Evaluated Score (P): P = G + S + B =			82

– III-2-65 –

VALUATION REPORT B

APPENDIX III-2

• (3) Integrated residue ratio

Integrated residue ratio = Residue ratio based on serviced years × 40% + surveyed residue ratio × 60%

• = 79% × 40% + 82% × 60%

• = 81%

• (4) Determination of appraised value

Appraised value = Full replacement cost × Integrated residue ratio

• = 442,000.00 ×81%

• = RMB358,000.00 (rounded)

(II) Fixed assets – equipment

1. Scope of valuation

The quantity and book value of fixed assets under the equipment category on the valuation benchmark date are set out in the table below:

Table: Summary of Equipment Under the Fixed Assets

Unit: RMB

	Declared Amount	**Book **	Value
Name of Item	(Number of Items)	Original Value	Net Value
Total	1509	1,838,845,643.81	1,012,894,851.66
Machinery and
equipment	1285	1,833,724,063.75	1,011,809,767.19
Vehicle	8	2,822,826.83	472,538.96
Electronic
device	216	2,298,753.23	612,545.51

2. Overview of assets

• (1) There are a total of 1,285 items of machinery and equipment, mainly ships, cranes, containers, stackers, reclaimers, coal grabbers, 100-meter environmental protection fog cannons, coal sampling machines, train loading and unloading equipment, and process pipelines for oil transportation systems, loaders and monitoring systems, etc. As of the valuation benchmark date, most of the equipment is well maintained and can be used normally.

– III-2-66 –

VALUATION REPORT B

APPENDIX III-2

• (2) The vehicles in valuation are mainly 8 vehicles for office use, which are tractors, trucks and operating vehicles. As of the valuation benchmark date, most of the vehicles are well maintained and can be used normally.

• (3) Electronic device mainly includes various models of computers, printers, air conditioners, televisions, cameras, walkie-talkies, etc. As of the valuation benchmark date, most of the equipment is well maintained and can be used normally; some equipment that has been purchased for a long time and is outdated in performance is in a scrapped state.

3. Methods and results of asset verification

(1) Methods of asset verification

On the basis of the matching of the accounts, the appraiser, with the cooperation of the relevant personnel of the assessed enterprise, conducts on-site verification of the fixed assets under the equipment category, surveys their operating conditions under appropriate conditions, and uses on-site and case-by-case survey (for equipment directly used in production) and sampling survey (for other equipment) to check the current condition of assets and collect relevant technical information to verify relevant information on ownership.

(2) Results of asset verification

The result of on-site verification shows that the ownership of fixed assets of all commissioned equipment is clear, and all equipment can be used normally.

4. Method of valuation

Based on the purpose of the valuation and the characteristics of the subject asset, assuming that it will continue to be used for the purpose which is identical to that of the current use, and on the basis of on-site surveys, the replacement costs method is adopted for valuation.

Basic formula: Appraised value = Full replacement cost × Residue ratio

(1) Determination of full replacement cost

• 1) Determining the full replacement costs of machinery and equipment

Full replacement cost = Equipment fee + Transportation and miscellaneous fees + Installation and commissioning fee + Equipment foundation fee + Preliminary and other expenses + Capital costs – Deductible input VAT

– III-2-67 –

VALUATION REPORT B

APPENDIX III-2

① Purchase price

It is mainly determined by inquiring equipment manufacturers or sales companies, or referring to price materials such as the “Mechanical and Electrical Products Quotation Manual 2021”, and by referring to recent contract prices of similar equipment. For a small amount of equipment for which the purchase prices are not available, the price change rate of the equipment of the same age and category is used to calculate the purchase price.

② Transportation and miscellaneous fees

Transportation and miscellaneous fees refer to the transportation fees, purchase fees, storage fees, unloading fees and other related miscellaneous fees incurred during the transportation of the equipment. The formula of calculation is as follows:

Transportation and miscellaneous fees for domestic equipment= Purchase price of the equipment (tax inclusive) × Transportation and miscellaneous fee rate for the equipment

The Transportation and miscellaneous fee rates are calculated based on the rates specified in the relevant industry costs indicators with reference to the rate standard as stipulated by the “Manual of Data and Parameters Commonly Used in Assets Valuation”.

Transportation and miscellaneous fees will not be charged if the purchase price includes transportation expenses.

③ Foundation fee

If the foundation of the equipment is independent or inseparable from the building, the equipment foundation fee shall be considered in the valuation of fixed assets under building category, the equipment foundation fee rate shall be calculated based on the rate specified in the relevant industry budget index or by referring to the “Manual of Methods and Parameters Commonly Used in Assets Valuation”.

Equipment foundation fee = Purchase cost of equipment (tax inclusive) × Equipment foundation fee rate

– III-2-68 –

VALUATION REPORT B

APPENDIX III-2

④ Installation and commissioning fee

The fee is determined based on the consumption of auxiliary materials, the installation foundation, and the difficulty of installation of the assessed equipment with reference to the “Manual of Data and Parameters Commonly Used in Assets Valuation”. For small equipment that does not need to be installed, installation costs are not considered.

Equipment installation and commissioning fee = Equipment purchase price (tax inclusive) × Installation and commissioning fee rate

⑤ Construction and other expenses

Construction and other expenses are calculated based on the characteristics of the equipment and the equipment purchase price (tax inclusive). It includes construction unit management fee, engineering survey and design fee, engineering supervision fee, environmental impact assessment fee, bidding agency fee, feasibility study fee, etc. The fee rates are detailed in the table below:

			Tax-
			exclusive
No.	Item	Rate	**rate **	Charging basis	Reference
1	Construction unit	0.68%	0.68%	Construction cost	Ministry of Transport
	administrative fees			(tax inclusive)	2019 No. 57
2	Engineering	1.40%	1.32%	Construction cost	Ministry of Transport
	supervision fees			(tax inclusive)	2019 No. 57
3	Environmental	0.03%	0.02%	Construction cost	Ji Wei Huan Bao Zong
	impact assessment			(tax inclusive)	Ju Ji Jia Ge (2002)
	fees				No. 125
4	Project proposal fees	0.10%	0.09%	Construction cost	Ji Wei Ji Jia Ge (1999)
	and feasibility			(tax inclusive)	No. 1283
	study fees
5	Survey and design	2.76%	2.61%	Construction cost	Ministry of Transport
	fees			(tax inclusive)	2019 No. 57
6	Bidding agent fees	0.02%	0.02%	Construction cost	Ministry of Transport
				(tax inclusive)	2019 No. 57
7	Safety	0.03%	0.02%	Construction cost	Guiding Opinions on
	pre-assessment			(tax inclusive)	Safety Assessment
	fees				Fees in Liaoning
					Province (2005)
9	Safety production	1.90%	1.79%	Construction cost	Ministry of Emergency
	fees			(tax inclusive)	Management 2019
					Letter No. 428
	Total	6.92%	6.56%

– III-2-69 –

VALUATION REPORT B

APPENDIX III-2

⑥ Capital costs

The capital cost was calculated based on the sum of the purchase price, transportation and miscellaneous fees, installation fees, the preliminary and other fees and expenses in accordance with the even input of capital within the reasonable construction period of the appraised enterprise, with reference to the loan prime rate (LPR) published by the National Interbank Funding Centre with authorization granted by the People’s Bank of China as at the valuation benchmark date. The formula of the capital cost is as follows:

Capital costs = (Equipment purchase costs + Transportation and miscellaneous fees + Foundation costs+ Installation fees + Preliminary and other fees and expenses) × Reasonable time for completion × Loan prime rate × 1/2.

⑦ Deductible tax

According to “Notice on Several Issues Concerning the Implementation of VAT Reform” (Caishui [2008] No. 170), “Notice on the Comprehensive Rollout of the Business Tax to Value Added Tax Transformation Pilot Program” (Caishui [2016] No. 36)), Caishui (2018) No. 32 promulgated by the Ministry of Finance and State Administration of Taxation, and Announcement No. 39 of 2019 issued by the Ministry of Finance, State Administration of Taxation and General Administration of Customs, when calculating the replacement costs of machinery and equipment that meets the requirements for value-added tax deduction, the corresponding value-added tax should be deducted. In this valuation, the deductible input tax is calculated according to the corresponding valueadded tax rate for the equipment purchase price, transportation and miscellaneous fees, installation fee, basic fee, and preliminary fees and expenses:

Tax deductible for domestic equipment = Equipment purchase price/(1 + 13%) × 13% + Transportation and miscellaneous fees/(1 + 9%) × 9% + (Installation fee + Basic fee)/(1 + 9%) × 9% + (Preliminary fees and expenses – Construction unit management fee)/(1 + 6%) × 6%

2) Determination of the full replacement cost of transportation vehicles

To derive the formula of calculation, firstly, we determine the current purchase price (before tax) of transportation vehicles based on recent vehicle market price data, such as information on sales in the local car market, and secondly, on this basis, we include vehicle purchase tax and new vehicle registration duties and fees. We also take into account relevant policies, which stipulate that the value-added tax on the purchase of vehicles can be deducted,

– III-2-70 –

APPENDIX III-2

VALUATION REPORT B

such as the requirements under the “Interim Regulations on Vehicle Purchase Tax of the People’s Republic of China” issued by the Ministry of Finance and the State Administration of Taxation, the “Notice on Incorporating Railway Transportation and Postal Services into the Pilot Program of Changing Business Tax to Value-added Tax” (Caishui [2013] No. 106) and the Announcement No. 39 of 2019 issued by the State Administration of Taxation and the General Administration of Customs. The formula of calculation is as follows:

Full replacement cost = Current purchase price + Vehicle purchase tax + New vehicle registration fee – Deductible value-added tax

• ① Purchase price: The vehicle purchase price for this valuation is determined according to the vehicle market information and recent vehicle market price data from relevant sources, such as “Automobile Quotation Database by pcauto.com”, yiche.com, and by referring to the latest market price of similar models in the same location. For vehicles purchased a long time ago, when the purchase price of the original model and specification cannot be found, the price of a similar vehicle with the same displacement can be used as the reference price for evaluating the purchase price of the vehicle.

• ② Purchase tax: Calculated in accordance with the “Law of the People’s Republic of China on Vehicle Purchase Tax” (《中華人民 共和國車輛購置稅法》) (adopted at the Seventh Session of the Standing Committee of the Thirteenth National People’s Congress on 29 December 2018); Vehicle purchase tax payable = Taxable price × 10%. The “taxable price for the purchase of a vehicle by a taxpayer for his own use shall not include value-added tax.”

• Vehicle purchase tax = Purchase price ÷ (1 + Value-added tax rate)

• × Vehicle purchase tax rate

Vehicle purchase tax rate: 10%

• ③ Production cost of new car license, including cost of license, examination fee and procedural cost, is fixed at RMB300.00 per unit according to charging standards published by local automobile administration department.

• ④ Determination of the input tax amount incurred on the purchase of vehicles

The input tax incurred when purchasing the vehicles = Vehicle purchase price × Value-added tax rate ÷ (1 + Value-added tax rate)

The vehicle purchase value-added tax rate: 13%

– III-2-71 –

VALUATION REPORT B

APPENDIX III-2

• 3) Determination of full replacement cost of electronic devices

The price of electronic devices as at the valuation benchmark date is determined based on the local market information and recent market price information published by Zol.com.cn and PConline.com.cn. Generally, manufacturers or agents will provide free delivery, installation and commissioning services. The full replacement cost is then determined as follows:

Full replacement cost = Purchase price – Deductible tax amount

Deductible value-added tax amount = Purchase price/1.13×13%

In addition, for any electronic device which was purchased long time ago, its full replacement cost is determined by reference to prices in the secondhand market.

(2) Determination of residue ratio

• 1) Integrated residual ratio of machinery and equipment

Residue ratio of machinery and equipment is comprehensively determined with reference to the economic service life of the equipment, through conducting survey on components of the equipment by on-site survey on present condition of the equipment and reviewing the information on operation, repair and management records of the equipment. Residue ratio, N, is calculated on such basis, i.e.:

N = Remaining service life/(Practical serviced life + Remaining service life) × 100%

• 2) Integrated residual ratio of vehicles

In accordance with the Standards for Compulsory Scrapping of Motor Vehicles (No. 12 Order in 2012) jointly released by the Ministry of Commerce, the National Development and Reform Commission, the Ministry of Public Security, and the Ministry of Ecology and Environment, the smaller of the residue ratios as determined below is taken as the final residue ratio of vehicles, i.e.:

Residue ratio of service life = (1 – Serviced life/Specified or economic service life) × 100%

Residue ratio of mileage = (1 – Travelled mileage/Specified mileage) ×

100%

– III-2-72 –

VALUATION REPORT B

APPENDIX III-2

Residue ratio = Min (Residue ratio of service life, Residue ratio of mileage)

Meanwhile, necessary survey and evaluation are conducted for the vehicles to be assessed. Where survey and evaluation result shows great difference from the residue ratio determined above, appropriate adjustment should be made; where the two are equivalent to each other, no adjustment is required. Namely:

Residue ratio = Min (Residue ratio of service life, Residue ratio of mileage) + a

a: Adjustment factors for special vehicle conditions.

• (3) Residue ratio of electronic devices

Remaining useful life method is adopted to determine the residue ratio.

Residue ratio = [Remaining useful life ÷ (Used life + Remaining useful life)] × 100%

Furthermore, it is not necessary to determine the residue ratio of electronic devices that were evaluated directly based on the prices in the second-hand market.

(3) Determination of appraised value

Appraised value = Full replacement cost × Residue ratio

5. Result of valuation

After the valuation, the valuation results of the fixed assets under the equipment category included in the scope of valuation as at 31 August 2021, being the valuation benchmark date is shown in the table below:

Unit: RMB

					Net amount	Net
Name of Item	Book	Value	Appraised Value		appreciation	appreciation
	Original Value	Net Value	Original Value	Net Value	or depreciation	Rate
Total – Equipment	1,838,845,643.81	1,012,894,851.50	1,949,714,990.00	1,218,909,208.00	206,014,356.50	20.34%
Fixed assets –
machinery and
equipment	1,833,724,063.75	1,011,809,767.19	1,945,928,830.00	1,217,026,030.00	205,216,262.81	20.28%
Fixed assets –
Vehicles	2,822,826.83	472,538.80	2,161,100.00	993,102.00	520,563.20	110.16%
Fixed assets –
Electronic
equipment	2,298,753.23	612,545.51	1,625,060.00	890,076.00	277,530.49	45.31%

– III-2-73 –

VALUATION REPORT B

APPENDIX III-2

Generally speaking, the difference in the comparison between the appraised value and book value of the Company’s fixed assets under the equipment category are mainly reflected in the following aspects:

• 1) With regard to machinery and equipment, the reasons for the appreciation are as follows:

• ① The equipment with greater appreciation included in the scope of the valuation is cranes. The reason for the appreciation is mainly because steel price has increased recently, and crane manufacturers have greatly increased the price of cranes;

• ② The entity made provision for impairment on machinery and equipment of RMB51,118,300. In valuation, the provision for impairment was appraised as zero as the recalculation of individual equipment.

• 2) With regard to vehicles, the original appraised value is decreased as the price of vehicles is reduced year due to the fierce competition in the auto market and the fast rate of upgrading; the net appraised value is increased as the depreciation period of the Company’s vehicles is shorter than the economic period used in the valuation.

• 3) With regard to electronic device, the original appraised value is decreased for the following reasons: firstly, the market price of electronic device changes rapidly due to the rapid upgrading of products on the electronic device market, and secondly, some of the electronic device was purchased a long time ago, while they are assessed using the market method; the net appraised value of device is increased as the depreciation period of the enterprise’s electronic device is shorter than the economic service life used in the valuation.

7. Valuation case

Case 1: Portal Crane– Machinery and Equipment Inventory and Valuation List No. 98

• (1) Overview of the equipment

Name of equipment: Portal crane

Model of equipment: CMQ 600T

Manufacturer: 上海振華重工(集團)股份有限公司(Shanghai Zhenhua Heavy Industries Co., Ltd.)

Date of purchase: April 2015

Date of being commissioned for operation: April 2015

Original book value: RMB35,726,495.72

Net book value: RMB21,396,201.33

– III-2-74 –

VALUATION REPORT B

APPENDIX III-2

Quantity: 1 set

Main technical specifications:

Structure type	Four link/single	Single	Headroom	Gauge	16m
	boom/other	boom	parameter
**Rated load **	lifting weight	600t		Base distance	16m
Working	Maximum	40m		Mast	9m
amplitude	amplitude			clearance
				height
	Minimum	21m		Maximum tail	18m
	amplitude			radius
Speed of work	Lifting	2m/min		Overall width	36600mm
	mechanism			of buffer
	Luffing	3m/min		Dimensions	36600×
	mechanism			(mm)	12000×
					89000
	Slewing	0.1885r/min	Power (KW)		1013
	mechanism
	Operating	26/min	**Maximum **	working wheel	85t
	mechanism		pressure
Lifting height	On track	55m	Power supply		10kv
	Under the track	10m	Working level of the whole		A5
			machine

• (2) Determination of full replacement cost

• 1) Equipment purchase price

After consulting with the manufacturer on the quotation, the appraiser determines that the unit sale price of this model of equipment (before tax) on the valuation benchmark date was RMB54,000,000.00, which is a turnkey project (including transportation and miscellaneous fees, installation and commissioning fees, etc.).

• 2) Preliminary and other fees and expenses

The preliminary and other fees and expenses are estimated based on the overall project, and the preliminary fee (before and after tax) rate is 6.92% and 6.65%, respectively.

Preliminary fees (before tax) = (Equipment purchase fee + Transportation and miscellaneous fees + Installation fee + Foundation fee) × 6.92%

• = RMB3,734,795.33

Preliminary fees (after tax) = (Equipment purchase fee + Transportation and miscellaneous fees + Installation fee + Foundation fee) × 6.65%

• = RMB3,544,289.10

– III-2-75 –

VALUATION REPORT B

APPENDIX III-2

3) Capital costs

The capital costs are calculated based on the reasonable time for completion of 2.5 years for the subject company under valuation. On the valuation benchmark date, the loan prime rate (LPR) announced by the National Interbank Funding Center as authorized by the People’s Bank of China is 3.85% for 1-year and 4.65% for 5-year loans, respectively. The interest rate (LPR) of a loan with a term of 2.5-years (i.e., time for completion) is determined to be 4.25%, the average of the LPR on the benchmark date for 1-year and 5-year loans. The formula of calculation of the capital costs is as follows:

Capital costs = (equipment purchase costs + Transportation and miscellaneous costs + Installation and commissioning costs + Foundation costs + Preliminary and other fees and expenses) × Reasonable time for completion × loan interest rate × 1/2

= RMB3,067,161.00

4) Deductible value-added tax

Deductible value-added tax = Equipment purchase price / 1.13 × 13% + (Transportation and miscellaneous fees + Installation and commissioning fee + Equipment foundation fee) / 1.09 × 9% + preliminary and other fees and expenses (before tax) – Preliminary and other fees and expenses (after tax)

= RMB6,402,895.61

5) Calculation of full replacement cost

Full replacement cost = (equipment purchase price + Transportation and miscellaneous fees + Installation and commissioning fee + Equipment foundation fee + Preliminary and other fees and expenses + Capital costs) – Deductible value-added tax

• = RMB54,399,100.00 (RMB/unit, rounded)

– III-2-76 –

VALUATION REPORT B

APPENDIX III-2

• (3) Integrated residue ratio

The economic life of the equipment was determined to be 20 years with reference to the characteristics of the industry. The equipment was put into use in April 2015 and has been in use for 6.39 years as of the valuation benchmark date. Through on-site surveys, the equipment is currently in normal operation thanks to the good maintenance. According to the judgement of relevant technical personnel after taking into account various factors, the remaining service life of the equipment is 14 years, then:

Residue ratio = Remaining service life / (Remaining service life + Serviced life) × 100%

= 14/(14 + 6.39) × 100%

• = 69%

• (4) Determination of appraised value

Appraised value = Full replacement cost × Integrated residue ratio

= 54,399,100.00 × 69%

= 37,535,379.00 (RMB/unit, rounded)

Case 2: “Northern No. 5” ordinary tug – Machinery and equipment Inventory and Evaluation List No.832

1. Overview of the equipment

“Northern No. 5” is an ordinary tug. It was constructed by 江蘇省鎮江船廠有 限責任公司(Jiangsu Zhenjiang Shipyard Co., Ltd.) in May 2010 and was put into use in December 2010. The hull is made of all-steel materials and has a horizontal frame structure. The hull is 40 meters long, 10.4 meters wide, 4.8 meters deep, 4.022 meters full-load draft, 577.415 tons full-load displacement and one deck. The main engine group is 2 sets of 1765kW rated power 6DKM-28 diesel engines, and the seaworthy area is A1+A2. At present, the ship is in normal use, and its repair and maintenance are in good condition. There is no record of major sea damage and machine damage accidents.

– III-2-77 –

VALUATION REPORT B

APPENDIX III-2

1. Determination of full replacement cost

(1) Material cost

Fees for major materials and auxiliary materials: The major materials include steel (plates, profiles, pipes), wood, solder, paint, cables, non-ferrous metals, castings and forgings, decoration materials, insulation materials, building materials, etc. The quantity of materials is calculated and determined with reference to the empirical formulas in the Concise Ship Valuation Measures (《簡明船舶估價辦 法》) and Modern Ship Management Practical Manual (《現代船舶經營實用手 冊》). The price of materials is determined based on prevailing market price. The costs of various materials may be arrived after the consumption and unit price are available.

(2) Equipment cost

According to the ship equipment list, the appraisers inquired the price from relevant equipment agents and manufacturers, of which:

Marine equipment RMB14,068,000.00 Outfitting equipment RMB7,540,000.00 Electrical equipment RMB820,000.00

The replacement cost of the equipment was finally determined to be RMB22,428,000.00.

• (3) Cost for attachment and spare parts

Based on the list of attachments and spare parts, the replacement cost was finally determined to be RMB157,550.85 through market inquiry.

• (4) Total working hours and labor costs

Based on the relevant information obtained by consulting ship valuation materials and conducting related surveys on relevant shipyards, the appraisers determined that this type of ship would require 57,310 hours of man-hours. Besides, the average unit price of labor costs for medium-scale shipyards was RMB40 per hour according to the ship type. The labor cost for building the ship is 57,310 × 40 = RMB2,292,400.

• (5) Special production fee

According to the general procedure of ship valuation, the special production fee is 8% of the sum of material cost, equipment cost, cost for attachment and spare parts, and labor cost, which was calculated to be RMB2,305,337.77.

The shipbuilding cost is the sum of the above costs, being RMB31,122,059.93.

– III-2-78 –

VALUATION REPORT B

APPENDIX III-2

• (6) Profit

If the profit is 5% of the shipbuilding cost, then:

Profit = Shipbuilding cost × 5%

= 31,122,059.93 × 5%

= RMB1,556,103.00

• (7) Tax

Tax is determined based on the tariff rates set by the state with reference to statistical data on the proportion of shipbuilder’s sales taxes to shipbuilding cost.

• (8) Adjusted value: as the ship was made in China, no adjustment was made.

• (9) Ship construction cost (tax inclusive): The ship construction cost is the sum of shipbuilding cost, profits and tax.

Ship construction cost (tax inclusive) = shipbuilding cost + profit + tax

• = 31,122,059.93 + 1,556,103.00 + 158,722.51

• = RMB32,836,885.44

Ship construction cost (after tax) is calculated in accordance with the state’s relevant regulations on the deduction of value-added tax on fixed assets purchased by enterprises.

Ship construction cost (after tax)) = Ship construction cost (tax inclusive) / 1.13

= 32,836,885.44 / 1.13

• = RMB29,059,190.65

• (10) Capital cost: According to the average of the shipbuilding industry, the reasonable construction period for this type of ship is determined to be one year. The 1-year LRP interest rate announced by the People’s Bank of China on the valuation benchmark date is 3.85%. Assuming that the funds are evenly invested, then the capital cost of building the ship is:

Capital cost = [Ship construction cost (tax inclusive)] × 3.85% × 1 × 1/2

= RMB632,110.04

– III-2-79 –

VALUATION REPORT B

APPENDIX III-2

Full replacement cost = Ship construction cost + Capital cost

  - = 29,059,190.65+632,110.04

  - = RMB29,691,300.00.

1. Determination of residue ratio

2. (1) Residue ratio under the observation method.

The appraisers conducted on-site surveys and scored based on the ship’s maintenance, repair, and transformation conditions and operating records. The hull part is mainly scored based on the hull inspection report, whether there is collision deformation, and the hull corrosion. The parts of the engine, electrical, outfitting and other parts are mainly scored according to the wear and tear of the equipment, whether there is update, the operating time and the physical condition of the equipment. After integrating the scores of the hull, engine, electrical and outfitting parts, it was determined that the residue ratio by observation method is 57%. The determination of the residue ratio is detailed in the table below:

		Standard
System	Technical condition	score	Score
Hull	The appearance of the hull is general, there are	30	17
	many collision marks on the port sides, the
	outer shell is moderately rusted, and the
	local is heavily rusted, and the bottom of the
	cabin is partially deformed by collision.
	There is no obvious deformation, moderate
	rust, and local light rust on the surrounding
	wall of the upper room.
Marine	The generator set is running normally, the	30	17
equipment	power is relatively normal, the grab machine
	and the rotating device are not obviously
	damaged. There is no obvious damage in
	other equipment in the engine room, the
	operation is basically normal, and the
	various systems are running normally.
Electrical	The main switchboard has a good appearance	10	6
Equipment	and works normally. The dredge operating
	device has no obvious faults and is in
	normal use. The cables of the whole ship are
	not damaged. There are no obvious faults in
	other electrical equipment. The
	communication and navigation equipment
	configuration meets the specifications and is
	in normal use.

– III-2-80 –

VALUATION REPORT B

APPENDIX III-2

		Standard
System	Technical condition	score	Score
Outfitting	The windlass and the anchor system are	30	17
equipment	normal in appearance, rusty but in normal
	use; no obvious deformation of the grab arm
	and grab, no obvious damage to other deck
	machinery, normal operation, no damage to
	the room decoration; relatively old crew
	living facilities are in normal use; fire-
	fighting, life-saving, and mooring
	equipment comply with regulations and are
	in normal use.
Total		100	57

• (2) Theoretical residue ratio

The ship has been in service for 11.30 years. After reviewing the relevant information of the ship and comprehensively considering the conditions of the site survey, the appraisers believes that the ship can still be used for 14.7 years, which is:

Theoretical residue ratio = Remaining useful life / (Used life + Remaining useful life) × 100%

= 14.70/(11.30+14.70) × 100%

• = 57%

• (3) Integrated residue ratio

Integrated residue ratio = Residue ratio under the useful life method × 40% + residue ratio under the observation method × 60%

• = 57% × 40% + 57% × 60%

• = 57%

• Determination of appraised value

Appraised value = 29,691,300.00 × 57%

• = RMB16,924,041.00 (rounded)

– III-2-81 –

VALUATION REPORT B

APPENDIX III-2

Case 3: Small non-cargo special operation vehicle (Vehicle Valuation List No.7)

• (1) Overview of vehicle

Vehicle name: Small non-cargo special operation vehicle

Model: IVECO NJ5045XDWF3E

Manufacturer: Nanjing Automobile (Group) Corporation

License plate number: 遼HGM803

Driving mileage: 5,921 kilometers

Date of purchase: November 2020

Date of being commissioned for operation: November 2020

Original book value: RMB240,088.50

Net book value: RMB205,875.90

Main technical specifications:

			Mobile Service
Brand	IVECO	Type	Vehicle
Displacement	2998	General	4000
		quality
Curb quality	26502780	Fuel type	Diesel fuel
Emission standard	GB17691-2005	Number of	2
	國V,GB3847-	axes
	2005
Wheelbase	3300	Axle load	1500/2500
Power	107	Number of	6
		tires
Rear track	1538	Approach	16.5/15
		departure
		angle
Front suspension	1002/1368	Front track	1742
and back
suspension
Vehicle captain	5670	Vehicle width	2011
Vehicle height	2726	Maximum	140
		speed

– III-2-82 –

VALUATION REPORT B

APPENDIX III-2

• (2) Determination of full replacement cost

• 1) Vehicle purchase price

The vehicle was purchased in November 2020. After inquiring about vehicle market information and recent vehicle market price data from relevant sources, such as auto.qq.com, the price of this type of vehicle on the valuation benchmark date is RMB218,000.00 (before deducting value-added tax).

• 2) Vehicle purchase tax

Vehicle purchase tax = Vehicle purchase price / (1 + value-added tax rate) × Purchase tax rate

= 218,000.00 / (1 + 13%) × 10%

• = RMB19,292.04

• 3) Cost of new vehicle license plate

The cost of a new vehicle license issuance fee is RMB300.00 per vehicle.

• 4) Deductible value-added tax

Deductible tax amount = Vehicle purchase price / (1 + Value-added tax rate) × Value-added tax rate

• = 218,000.00 / (1+13%) × 13%

• = RMB25,079.65

• 5) Full replacement cost

Full replacement cost = Vehicle purchase price + Vehicle purchase tax + New vehicle license issuance fee – Deductible tax

• = 212,500.00 (RMB/vehicle, rounded)

– III-2-83 –

VALUATION REPORT B

APPENDIX III-2

• (3) Determination of residue ratio

With reference to the requirements under the “Regulations on Standards for Compulsory Retirement of Motor Vehicles” (Order No. 12 of 2012 issued the Ministry of Commerce, Development and Reform Commission, Ministry of Public Security, and Ministry of Environmental Protection), the service life of the vehicle is determined to be 15 years, and the prescribed mileage is 600,000 kilometers. Then:

• 1) Residue ratio based on serviced years

Residue ratio based on service life = (1-serviced life / economic service life) × 100%

The vehicle was put into use in November 2020. It has a service life of 0.78 years, and an economic service life of 15 years. Then:

Residue ratio based on service life = (1 – 0.78/15) × 100%

= 95%

• 2) Residue ratio based on mileage

Residue ratio based on mileage = (1-Mileage driven / Prescribed mileage) × 100%

The vehicle has a mileage of 5,921 kilometers, and the prescribed mileage is 600,000 kilometers, then:

Residue ratio of driving mileage = (1 – 5,921 / 600,000) × 100%

= 99%

The vehicle is in normal use and maintenance and is not subject to extraordinary conditions. Based on the actual conditions of the vehicle, the adjustment coefficient a = 0

Residue ratio = Min (Residue ratio based on serviced years, Residue ratio based on mileage) + 0

• = Min (95%, 99%) + 0

= 95%

– III-2-84 –

VALUATION REPORT B

APPENDIX III-2

• (4) Determination of appraised value

Appraised value = Full replacement cost × Residue ratio

• = 212,500.00 × 95%

• = 201,875.00 (RMB/vehicle, rounded)

Case 4: HD digital video camera- Electronic Equipment Valuation List No.20

• (1) Overview of the asset

Equipment name: HD digital video camera

Specification and model: SONY AX700

Manufacturer: Sony Corporation

Date of purchase: November 2018

Date of being commissioned for operation: November 2018

Original book value: RMB14,689.66

Net book value: RMB7,223.64

Quantity: 1 set

Main technical specifications:

Product type: 4K Camera

Sensor type: Exmor RS CMOS

Sensor size: 1 inch

Focus method: auto focus

Lens features: Vario Tessar lens

Storage medium: Dual SD card

– III-2-85 –

VALUATION REPORT B

APPENDIX III-2

• (2) Determination of full replacement cost

• 1) Equipment purchase price

Based on information available online, the appraiser determines that the unit sale price of the equipment (before tax) on the valuation benchmark date is RMB11,790.00 per set.

• 2) Deductible value-added tax

Deductible value-added tax = Equipment purchase fee ÷ (1 + Value-added tax rate) × Value-added tax rate

= 11,790.00 ÷ 1.13 × 13%

= RMB1,356.37

• 3) Full replacement cost

Full replacement cost = Equipment purchase fee – Deductible valueadded tax

= 11,790.00 – 1,356.37

= 10,430.00 (RMB/unit, rounded)

• (3) Determination of residue ratio

After on-site survey, the appraiser is of the opinion that the equipment is in normal use. The economic service life of the equipment is 6 years, and it has been used for 2.76 years as of the valuation benchmark date. It is determined that its remaining service life is 3 years, then:

Residue ratio = Remaining service life / (serviced life + Remaining service life) × 100%

= 3 / (3 + 2.76) × 100%

= 52%

• (4) Determination of appraised value

Appraised value = Full replacement cost × Residue ratio

• = 10,430.00 × 52%

• = 5,424.00 (RMB, rounded)

– III-2-86 –

VALUATION REPORT B

APPENDIX III-2

(III) Intangible Assets – Other Intangible Assets

1. Overview of the Assets

Intangible assets (other intangible assets) included in the scope of the valuation are mainly the insulation on-line monitoring back-office system and software and the production business and safety management system platform of a hydropower company, which involves 2 items in total. The original value of other intangible assets is RMB1,591,592.92, and the carrying amount is RMB1,576,733.04. Both intangible assets were purchased in August 2021. The other three items are sea area use rights paid annually. The use right to the sea areas is as follows:

		Year of
Asset name	Certificate no.	acquisition	Area	Type
Port pool A 3# of Bayuquan	Guo Hai Zheng	2016	42.54	Sea for
port area	No. 082100167		hectares	transportation/
				sea for port
Port pool A 2# of Bayuquan	Guo Hai Zheng	2016	43.02	Sea for port pool
port area	No. 082100166		hectares	purpose
West sea area 2# of phase 4	Guo Hai Zheng	2016	28.0596	Sea for
of Bayuquan port pool 5	No. 2015C21080419266		hectares	transportation/
				sea for port

2. Valuation approach

Based on the operating norms for valuation of intangible assets, intangible assets can be valuated by cost replacement approach, income approach or market approach according to the specific conditions of their use preconditions and purposes.

For software with strong versatility under intangible assets, such as genuine software, anti-virus software, etc., their appraised value is determined by comparing their specifications, models, quantities and upgrade factors after deducting relevant taxes and fees based on market quotation.

For sea area use rights, the appraised value is determined by the paid amount for plus one-year loan interest.

3. Results and analysis of valuation

After valuation, the appraised value of intangible assets (other intangible assets) was RMB4,975,915.79, which represents an appreciation of RMB3,399,182.76 and an appreciation rate of 215.58%. The reasons for the appreciation are that 1) the entity amortises intangible assets in the month that they are purchased and the intangible assets were recognised at the recent purchase price in valuation; and 2) the use of sea areas is included in the cost in current period and has no book value.

– III-2-87 –

VALUATION REPORT B

APPENDIX III-2

IV. CONCLUSION AND ANALYSIS OF VALUATION

(I) Conclusion of valuation

As at the valuation benchmark date of 31 August 2021, the appraised value of the declared assets corresponding to the assets proposed to be transferred by Ying Kou Port Group Corporation Limited is RMB1,224,664,300, which represents an increase of RMB209,058,700 and an appreciation rate of 20.58% over the book value of RMB1,015,605,700.

The valuation concludes that the appraised value of the declared assets corresponding to the assets proposed to be transferred by Ying Kou Port Group Corporation Limited is RMB1,224,664,300 (RMB one thousand and two hundred twenty-four million and six hundred and sixty-four thousand and three hundred, rounding to the nearest one hundred).

The validity period of the valuation conclusion is one year, starting from 31 August 2021 (valuation benchmark date) to 30 August 2022.

The establishment of the valuation conclusion depends on the valuation assumptions as mentioned above.

(II) Difference between the concluded appraised value and book value and the reasons

1. Difference between the concluded appraised value and book value

Unit: RMB

	Net Book	Net Appraised	Amount of	Appreciation
Name of Item	Value	Value	Appreciation	Rate
Buildings	1,134,078.87	779,220.00	-354,858.87	-31.29%
Fixed assets – Machinery and
equipment	1,011,809,767.19	1,217,026,030.00	205,216,262.81	20.28%
Fixed assets – Vehicles	472,538.96	993,102.00	520,563.04	110.16%
Fixed assets – Electronic
equipment	612,545.51	890,076.00	277,530.49	45.31%
Other intangible assets	1,576,733.04	4,975,915.79	3,399,182.75	215.58%
Total amount of appreciation			209,058,680.22

2. The analysis of the reasons for the increase or decrease in value of assets is as follows:

• (1) The main reason for depreciation is that the carrying amount of the overhaul platform and the brick house includes expenses that have nothing to do with the composition of the asset.

– III-2-88 –

VALUATION REPORT B

APPENDIX III-2

• (2) the difference in the comparison between the appraised value and book value of the Company’s fixed assets under the equipment category are mainly reflected in the following aspects:

• 1) With regard to machinery and equipment, the reasons for the appreciation are as follows:

  • ① The equipment with greater appreciation included in the scope of the valuation is cranes. The reason for the appreciation is mainly because steel price has increased recently, and crane manufacturers have greatly increased the price of cranes;

  • ② The machinery and equipment within the scope of the valuation are accounted for at the contract price, and the preliminary cost and capital cost are calculated in accordance with the relevant policies during valuation, which leads to the appreciation of the original value;

  • ③ The entity made provision for impairment on machinery and equipment of RMB51,118,300. In valuation, the provision for impairment was appraised as zero as the recalculation of individual equipment.

• 2) With regard to vehicles, the original appraised value is decreased as the price of vehicles is reduced year due to the fierce competition in the auto market and the fast rate of upgrading; the net appraised value is increased as the depreciation period of the Company’s vehicles is shorter than the economic period used in the valuation.

• 3) With regard to electronic equipment, the original appraised value is decreased for the following reasons: firstly, the market price of electronic equipment changes rapidly due to the rapid upgrading of products on the electronic equipment market, and secondly, some of the electronic equipment was purchased a long time ago, while they are assessed using the market method; the net appraised value of equipment is increased as the depreciation period of the enterprise’s electronic equipment is shorter than the economic service life used in the valuation.

• (3) The reasons for the appreciation of other intangible assets are are that 1) the entity amortises intangible assets in the month that they are purchased and the intangible assets were recognised at the recent purchase price in valuation; and 2) the use of sea areas is included in the cost in current period and has no book value.

– III-2-89 –

VALUATION REPORT C

APPENDIX III-3

This report is prepared based on the PRC Accepted Asset Valuation Standards

Asset Valuation Report on

the Project of Proposed Transfer of the Equity Interests in Yingkou Port Bulk Cargo Terminal Co., Ltd.

(營口港散貨碼頭有限公司)

Held by Ying Kou Port Group Corporation Limited to Liaoning Port Holdings (Yingkou) Co., Ltd. (遼港控股(營口)有限公司) Zhong Tong Ping Bao Zi [2021] No. 12331 1 of 1 Disclaimer, Summary, Text and Annexes

China Tong Cheng Assets Appraisal Co., Ltd. 27 October 2021

– III-3-1 –

VALUATION REPORT C

APPENDIX III-3

CONTENTS

Volume 1 (Disclaimer, Summary, Text and Annexes)

Disclaimer	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Summary	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Text
I.	OVERVIEW OF THE CLIENTS, THE APPRAISED ENTITY AND
	OTHER USERS OF THE ASSET VALUATION REPORT AS
	AGREED IN THE ASSET VALUATION ENGAGEMENT
	CONTRACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
II.	PURPOSE OF VALUATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18
III.	VALUATION TARGET AND SCOPE . . . . . . . . . . . . . . . . . . . . . . . .	18
IV.	TYPE OF VALUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	25
V.	VALUATION BENCHMARK DATE . . . . . . . . . . . . . . . . . . . . . . . . .	26
VI.	BASIS OF VALUATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	26
VII.	VALUATION METHODOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . .	30
VIII.	PROCESS AND IMPLEMENTATION OF VALUATION
	PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	42
IX.	VALUATION ASSUMPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	43
X.	VALUATION CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	44
XI.	EXPLANATIONS ON SPECIAL MATTERS . . . . . . . . . . . . . . . . . . .	47
XII.	RESTRICTIONS ON THE USE OF THE ASSET VALUATION
	REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	51
XIII.	DATE OF THE ASSET VALUATION REPORT . . . . . . . . . . . . . . . .	52
Annexes .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	53

– III-3-2 –

VALUATION REPORT C

APPENDIX III-3

DISCLAIMER

• I. This Asset Valuation Report is prepared in accordance with the Basic Asset Valuation Standards issued by the Ministry of Finance and the Practice Guidelines for Asset Valuation and the Professional Code of Ethics for Asset Valuation issued by the China Appraisal Society.

• II. The clients or other users of the Asset Valuation Report shall use the Asset Valuation Report in accordance with the laws and administrative rules and regulations and within the scope of use set out in this Asset Valuation Report. We and the asset valuers take no responsibility for any non-compliance with the above-mentioned requirements for the use of the Asset Valuation Report by the clients or other users of the Asset Valuation Report.

This Asset Valuation Report shall only be used by the clients, other users of the Asset Valuation Report as agreed in the asset valuation engagement contract and users of the Asset Valuation Report as required by laws and administrative regulations. Save for the above, no other institution or individual shall be the user of the Asset Valuation Report.

We and the asset valuers advise that users of the Asset Valuation Report should correctly interpret and use the valuation conclusion, which is not equivalent to the realizable value of the valuation target and should not be considered as a guarantee for the realizable value of the valuation target.

• III. We and the asset valuers have abided by the principles of independence, objectivity and impartiality, complied with the laws, administrative regulations and asset valuation standards, and have assumed responsibilities for the Asset Valuation Report issued in accordance with laws.

• IV. The list of assets and liabilities and other relevant materials of the valuation target involved should be declared by the clients and the appraised entity and certified by signature, seal or other means permitted by laws. The clients and other relevant parties shall be responsible for the truthfulness, completeness and legality of the materials provided by them in accordance with laws.

• V. We and the asset valuers have no existing or expected relationship of interests with the valuation target set out in the Asset Valuation Report or with the relevant parties, and have no prejudice against the relevant parties.

• VI. The asset valuers have (or have not) conducted on-site inspection on the valuation target and the assets involved in the Asset Valuation Report, and given necessary consideration to the legal ownership status of the valuation target and the assets involved, conducted verification on the relevant information regarding the legal ownership of the relevant assets, and made proper disclosure in respect of the issues identified and required the clients and other relevant parties to consummate the titles to meet the requirements on issuing the Asset Valuation Report.

– III-3-3 –

VALUATION REPORT C

APPENDIX III-3

• VII. The analyses, judgments, and conclusions in the Asset Valuation Report issued by us are subject to the assumptions and restrictions in the Asset Valuation Report. The users of the Asset Valuation Report shall take into full account the assumptions, restrictions and explanations on special matters specified in the Asset Valuation Report and their impact on the valuation conclusion.

– III-3-4 –

VALUATION REPORT C

APPENDIX III-3

SUMMARY

I. CORRESPONDING ECONOMIC ACTIVITY UNDER THE VALUATION

Ying Kou Port Group Corporation Limited intended to transfer the equity interests it held in Yingkou Port Bulk Cargo Terminal Co., Ltd. (營口港散貨碼頭有限公司) to Liaoning Port Holdings (Yingkou) Co., Ltd. (遼港控股(營口)有限公司).

The economic activity has been approved by the Approval on the Plan for Revitalising the Phase II Northeast Project (Zhao Fa Zhan Lue Zi [2021] No. 475) issued by China Merchants Group.

II. PURPOSE OF VALUATION

Due to the proposed transfer by Ying Kou Port Group Corporation Limited of the equity interests it held in Yingkou Port Bulk Cargo Terminal Co., Ltd. (營口港散貨碼頭有限公司) to Liaoning Port Holdings (Yingkou) Co., Ltd. (遼港控股(營口)有限公司), it is required to conduct a valuation on the value of all shareholders’ equity declared by Yingkou Port Bulk Cargo Terminal Co., Ltd. involved in the said economic activity for the purpose of providing valuation reference basis.

III. VALUATION TARGET AND SCOPE

The valuation target and the valuation scope are the same as the valuation target and the valuation scope involved in the economic activity.

The valuation target is the value of all shareholders’ equity of Yingkou Port Bulk Cargo Terminal Co., Ltd. (營口港散貨碼頭有限公司).

The scope of valuation covers the assets and liabilities as at the valuation benchmark date declared by Yingkou Port Bulk Cargo Terminal Co., Ltd. and audited by professional institutions. The accounting statements corresponding to the assets and liabilities declared by the company have been audited by ShineWing Certified Public Accountants (Special General Partnership), which has issued the audit report No. XYZH/2021BJAA20606 on 27 October 2021. The audit opinion is that the attached pro forma financial statements were prepared in accordance with the basis for preparation as described in Note III to the pro forma financial statements in all material aspects, reflecting the pro forma financial conditions of the bulk cargo as at 31 August 2021, 31 December 2020 and 31 December 2019 and its pro forma operating results from January to August 2021, in 2020 and 2019 based on the basis for preparation.

– III-3-5 –

VALUATION REPORT C

APPENDIX III-3

The details are shown in the table below.

Unit: RMB

No. Name of item

Carrying amount

• 1 I. Total current assets 412,738,299.93 2 Cash at bank and on hand 6,988,687.27 3 Accounts receivable 37,762,006.49 4 Advances to suppliers 200,000.00 5 Other receivables 257,399.85 6 Inventories 360,341.22 7 Other current assets 367,169,865.10 8 II. Total non-current assets 5,510,052,507.13 9 Fixed assets 4,402,204,853.44 10 Intangible assets 1,107,847,653.69 11 III. Total assets 5,922,790,807.06 12 IV. Total current liabilities 412,313,126.57 13 Accounts payable 24,344,883.56 14 Advances from customers 20,224,525.62 15 Employee benefits payable 1,815,798.01 16 Tax payable 610,644.59 17 Other payables 365,317,274.79 18 V. Total liabilities 412,313,126.57 19 VI. Net assets 5,510,477,680.49

Information on physical assets and land use rights that are included in the scope of valuation is as follows:

Unit: RMB

		Original	Net carrying
Name of item	Quantity	carrying amount	amount
Fixed assets
Buildings	73,238.10	110,707,480.32	75,383,613.16
Structures	145	5,164,992,084.90	3,823,735,896.54
Machinery and
equipment	735.00	950,582,770.39	502,780,178.24
Vehicles	8.00	3,834,000.00	191,700.00
Electronic devices	170.00	989,903.93	113,465.50
Intangible assets
Land use rights	4,396,185.69	1,481,122,772.84	1,107,847,653.69
Total		7,712,229,012.38	5,510,052,507.13

– III-3-6 –

VALUATION REPORT C

APPENDIX III-3

IV. TYPE OF VALUE

Market value

V. VALUATION BENCHMARK DATE

31 August 2021

VI. VALUATION METHODOLOGY

Asset-based approach and income approach were adopted in the valuation. The conclusion arrived by the asset-based approach is deemed as the valuation conclusion.

VII. VALUATION CONCLUSION AND ITS VALIDITY PERIOD

The valuation conclusion is that the appraised value of all shareholders’ equity of Yingkou Port Bulk Cargo Terminal Co., Ltd. as at the valuation benchmark date is RMB7,299,443,700 (SEVEN THOUSAND TWO HUNDRED NINETY-NINE MILLION FOUR HUNDRED FORTY-THREE THOUSAND SEVEN HUNDRED, rounding to the nearest one hundred).

The validity period of the valuation conclusion is one year, starting from 31 August 2021 (being the valuation benchmark date) to 30 August 2022.

VIII. SPECIAL MATTERS WITH IMPACTS ON THE VALUATION CONCLUSION

(I) Significant use of expert work and relevant reports

The audit report No. XYZH/2021BJAA20606 issued by ShineWing Certified Public Accountants (Special General Partnership) on 27 October 2021 was used in this valuation and the audited book values were adopted as the book values for the valuation.

– III-3-7 –

VALUATION REPORT C

APPENDIX III-3

(II) Incomplete or defective ownership information

			Date of		**Carrying **	amount
No.	Name of building	Structure	completion	GFA	Original value	Net value
				(m2)
1	Gasoline loading	Brick and concrete	2009/5/22	355.66	679,523.00	358,901.40
	pump room
2	Gasoline tank farm	Brick and concrete	2009/5/22	313.85	447,300.00	236,248.95
	shipment pump
	room power
	distribution room
3	Ethanol ship loading	Brick and concrete	2009/5/22	434.33	741,807.00	391,797.73
	and foam pump
	room
4	Railway unloading	Brick and concrete	2009/5/22	873.77	2,631,462.00	1,389,850.51
	pump room
5	Gateroom 1	Brick and concrete	2009/5/22	42.70	141,812.00	74,900.37
6	Gateroom 2	Brick and concrete	2009/5/22	29.67	121,158.00	63,991.62
7	Diesel unloading	Brick and concrete	2009/5/22	489.87	4,389,418.74	2,318,344.66
	pump room
8	Transformation of	Brick and concrete	2009/5/22	137.89	1,806,162.51	953,954.83
	train trestle bridge
	to low-voltage
	substation
9	1# steel warehouse	Mixture	2015/12/31	22,056.45	22,067,284.00	17,315,462.18
10	2# steel warehouse	Mixture	2015/12/31	19,235.92	25,286,652.00	19,841,592.94
11	Tool warehouse	Mixture	2015/12/31	1,639.11	1,062,216.00	833,485.49
12	Machine repair	Brick and concrete	2015/12/27	1,087.04	1,857,362.00	1,457,410.05
	workshop
13	Substation (54#)	Brick and concrete	2011/12/29	381.87	572,402.00	333,467.53
14	1#2# substation (71#	Brick and concrete	2011/12/30	588.77	1,621,638.41	944,727.23
	and 72# change)
15	Port pool A 1#	Reinforced	2016/12/31	628.97	3,129,762.00	2,499,067.54
	substation	concrete
16	Fire pump room	Brick and concrete	1998/11/1	339.79	664,457.85	90,034.04
17	General yard (2#)	Steel and concrete	2011.12.30	3,929.69	4,250,986.91	2,949,712.58
18	Comprehensive yard	Steel and concrete	2011.12.29	2,291.96	4,617,500.58	3,204,032.35
	(logistics mat)
19	Steel yard (1#)	Steel and concrete	2011.12.29	11,999.69	21,245,342.86	14,741,907.35
20	Water supply	Frame structure,	2020-06-21	213.07	477,152.30	446,932.65
	regulating station	one floor above
		ground
21	Port pool A sewage	Reinforced-	2009-11-04	508.70	948,770.03	525,144.21
	treatment plant	concrete
		structure

– III-3-8 –

APPENDIX III-3

VALUATION REPORT C

			Date of		**Carrying **	amount
No.	Name of building	Structure	completion	GFA	Original value	Net value
				(m2)
22	1# courtroom	Brick and concrete	2013-10-01	701.37	1,483,229.50	931,344.52
		structure
23	2# courtroom	Brick and concrete	2013-10-01	701.37	1,483,229.50	931,344.52
		structure
24	Dry powder room	Brick and concrete	2015-12-15	4.92	28,373.00	22,327.66
25	Dry powder room	Brick and concrete	2015-12-15	4.92	28,373.00	22,391.97
26	Dry powder room	Brick and concrete	2015-12-15	4.92	28,373.00	22,456.28
27	Control building	Frame	2015-12-15	622.00	989,981.00	785,780.92
28	Gateroom	Brick and concrete	2015-12-15	16.29	85,991.00	68,448.84
		structure
29	Oil delivery arm	Brick and concrete	2015-12-15	52.19	70,231.00	56,063.07
	control room	structure
30	Oil delivery arm	Brick and concrete	2015-12-15	52.19	70,231.00	56,222.26
	control room	structure
31	Nitrogen generator		March 2009	142.70	1,023,545.00	540,602.35
	room
32	Color board	Color board	2008	12.00	33,503.50	1,675.18
	insulation room
	for parking lot
33	Color board	Color board	2008	12.00	33,503.50	1,675.18
	insulation room
	for parking lot
	Total			69,905.64	104,118,734.19	74,411,298.95

The area surveying and mapping of the assets above has been completed, and the real estate title certificate is in process. The valuation did not consider the various taxes and fees required to be paid in the process of applying for the certificates.

(III) Restrictions on valuation procedures

Nil

(IV) Incomplete valuation materials

Nil

• (V) Pending legal and economic matters on the valuation benchmark date

Nil

– III-3-9 –

VALUATION REPORT C

APPENDIX III-3

• (VI) The nature and amount of guarantees, leases and its contingent liabilities (contingent assets) and the relationship with the valuation target

The information on charge or pledge of assets that are included in the scope of valuation is as follows:

				Commencement	Expiry
		Total	Balance of	date of	date of	Way of	Interest	Rent calculation
Lessor	Lender	borrowings	borrowings	borrowing	borrowing	guarantee	rate	method	Collateral
		**(RMB0’000) **	(RMB0’000)
Industrial Financial	Ying Kou Port	80,000.00	23,333.33	2017/5/18	2023/5/18	Credit	4.410%	Principal in equal	Fairy Island port
Leasing Co., Ltd.	Group							instalments	pool 1 1-2#
	Corporation								refined oil and
	Limited								liquid
									chemicals
									terminal, Port
									Pool 5 65#
									steel and
									general cargo
									berth
SPDB Financial	Ying Kou Port	50,000.00	12,500.00	2017/11/28	2022/11/21	Credit	3.325%	Principal in equal	Bayuquan Port
Leasing Co., Ltd.*	Group							instalments	Area 62# berth
(浦銀金融租賃股	Corporation
份有限公司)	Limited
Bank of Beijing	Ying Kou Port	50,000.00	17,500.00	2018/4/25	2023/4/25	Credit	5.5575%	Principal in equal	68# and 70#
Financial Leasing	Group							instalments	berths
Company	Corporation
Limited* (北銀金	Limited
融租賃有限公司)
Jiangxi Financial	Ying Kou Port	80,000.00	25,560.00	2016/12/16	2023/3/3	Credit	4.410%	Interest in equal	66# and 67#
Leasing Corp.,	Group							instalments	berths
Ltd.	Corporation
	Limited

– III-3-10 –

VALUATION REPORT C

APPENDIX III-3

The information on lease of assets that are included in the scope of valuation is as follows:

Contract name	Lessee	Lease target	Title Certificate Number	**Area **	Lease term	Annual rent
						(RMB, tax
				(sq.m.)		inclusive)
Land use right	Yingkou Xingang	Land use right	Liao (2020) Yingkou	298,720.25	2021/1/1-	4,480,803.66
lease agreement	Ore Terminal		Bayuquan Real Estate No.		2021/12/31
	Co., Ltd. (營口		0027263
	新港礦石碼頭有
	限公司)
Land use right	Yingkou Port	Land use right	Liao (2020) Yingkou	2,431,326.47	2021/1/1-	36,469,900.00
lease agreement	Liability Co.,		Bayuquan Real Estate No.		2021/12/31
	Ltd.		0029352, 0029354, 0029361,
			0029375, 0029388, 0029391,
			0027202, 0027222, 0027228,
			0027242, 0027266, 0032267,
			0032270, 0035276, 0032298,
			0035276 and Bayuquan Guo
			Yong (2007) Zi No. 0216
			and 0217
2021 asset lease	Yingkou Port	Terminal berth	Bayuquan Port Area port pool		2021/1/1-	349,897,100.00
agreement	Liability Co.,		1 18# ore berth, port pool A		2021/12/31
	Ltd.		3# general berth, port pool
			A 1-2# refined oil and liquid
			chemicals berth, port pool 5
			61#-71# general berths,
			Fairy Island 201-203# berths
			and its yard, tank farm

In particular, Fairy Island 201-203# berths and ore dump are excluded in the scope of valuation, and the relevant rent is RMB110,463,227.26.

– III-3-11 –

VALUATION REPORT C

APPENDIX III-3

(VII) Significant subsequent matters

Yingkou Port Bulk Cargo Terminal Co., Ltd. is a wholly-own subsidiary established by Ying Kou Port Group Corporation Limited, intending to inject business relating to port and assets and liabilities into Bulk Cargo Terminal Co., Ltd.. There are approximately RMB365 million creditable input tax resulting from the capital increase (subject to the actual premium received from the competent tax authority by Yingkou Port Group). The Bulk Cargo Terminal shall take the value-added tax of approximately RMB365 million resulting from the capital increase. As at the date of Valuation Report, the procedure of capital increase is still in processing. Therefore, the ownership of capital increase assets has not been transferred and the business has not been transferred to the Bulk Cargo Terminal Co., Ltd.. The valuation is based on the statistics in the special auditor’s report upon the completion of the simulated capital increase to assess the entire equity value of shareholders after the capital increase in Bulk Cargo Terminal Co., Ltd.. Users of the report are advised to pay attention to it.

(VIII) Deficiencies in the economic activity corresponding to the asset valuation that may have a material effect on the valuation conclusion

Nil

(IX) Other matters that need to be described

Nil

The above contents are extracted from the text of the Valuation Report. Please read the text of the Valuation Report to understand details of the valuation and correctly comprehend the valuation conclusion.

– III-3-12 –

VALUATION REPORT C

APPENDIX III-3

Asset Valuation Report on the Project of Proposed Transfer of the Equity Interests in Yingkou Port Bulk Cargo Terminal Co., Ltd.

(營口港散貨碼頭有限公司)

Held by Ying Kou Port Group Corporation Limited to Liaoning Port Holdings (Yingkou) Co., Ltd. (遼港控股(營口)有限公司) Zhong Tong Ping Bao Zi [2021] No. 12331

To Ying Kou Port Group Corporation Limited,

Upon your engagement, we, China Tong Cheng Assets Appraisal Co., Ltd., have evaluated the market value as at 31 August 2021 of all shareholders’ equity interests, which are involved in the proposed transfer by Ying Kou Port Group Corporation Limited of the equity interests it held in Yingkou Port Bulk Cargo Terminal Co., Ltd. to Liaoning Port Holdings (Yingkou) Co., Ltd., by adopting the asset-based approach and income approach and carrying out necessary valuation procedures in accordance with laws, administrative regulations and asset valuation standards and adhering to the principles of independence, objectivity and fairness. We hereby report the details of the asset valuation as follows.

• I. OVERVIEW OF THE CLIENTS, THE APPRAISED ENTITY AND OTHER USERS OF THE ASSET VALUATION REPORT AS AGREED IN THE ASSET VALUATION ENGAGEMENT CONTRACT

(I) Overview of the Client 1

Name: Ying Kou Port Group Corporation Limited (hereinafter referred to as “Yingkou Port Group”)

Legal residence: No. 1, Yinggang Road, Bayuquan District

Unified social credit code: 91210800121119657C

Legal representative: Deng Renjie

Registered capital: RMB20 billion

Major scope of business: Permitted projects: port operations (projects subject to approval according to law may only be operated after approval by relevant departments, and specific business projects are subject to the approval results) General projects: port loading and unloading, warehousing, services; ship material supply; import of raw and auxiliary materials, machinery and equipment, instruments and meters and components necessary for the production and research of the company; export of seafood, talc, magnesia, woven bags, food, wood products, clothing, knitwear (except 16 kinds of export commodities jointly operated by national organisations) produced by the company; agency packaging, consignment, water

– III-3-13 –

APPENDIX III-3

VALUATION REPORT C

transportation, non-metallic ore, pig iron sales, plastic packaging products, vegetable oil; international passenger transport services, agency ticket sales, luggage check-in; waste material recycling; advertising agency, production, design; ship supply (supply of daily necessities, except for ship fuel), production of cement tiles, cement brick laying, metal materials, building materials sales, engineering consulting; water supply and heat supply; emergency prevention and treatment of pollutants and pollutant reception and disposal (operating with qualification certificate). The following projects may only be operated by branches: distribution of petroleum liquefied gas, daily necessities, textiles, leather goods, household appliances, hardware and electrical products, and chemical products (except dangerous articles), ship materials (except those subject to approval), communication equipment distribution and agency services, ship waste (excluding hazardous waste) recycling and agency services, and pre-packaged food; car rental, self-owned real estate business activities, property management, building cleaning services, other cleaning services, conference services, greening management, computer and communication equipment rentals, other machinery and equipment rentals, and other water transportation auxiliary activities; real estate rentals. (Except for the projects that must be approved according to law, business activities are operated independently according to the law with the business license).

Ying Kou Port Group Corporation Limited (“Yingkou Port Group”), formerly known as Yingkou Port Authority, has registered with SAIC of Yingkou City on 17 April 2003 in accordance with the Notice on the Implementation Opinions on the Reform of the Port Management System of Yingkou Port ([2002] No. 42) issued by Yingkou Municipal Committee Office of the Communist Party of China and the Approval on Allocating Assets for Establishment of Ying Kou Port Group Corporation Limited ([2003] No. 1) issued by the office of Yingkou SASAC, with a registered capital of RMB1.7 billion.

In December 2009, upon the transfer of capital reserve amounting to RMB7.3 billion to registered capital in accordance with the Approval on Yingkou Port Group’s Transfer of Capital Reserve to Registered Capital (Ying Guo Zi Chan Quan [2009] No. 85) issued by the State-owned Assets Supervision and Administration Commission of the People’s Government of Yingkou City (“Yingkou SASAC”), the registered capital of Yingkou Port Group was changed to RMB9 billion.

In December 2017, Yingkou SASAC entered into an equity transfer agreement with Liaoning North East Asia Gang Hang Development Co., Ltd. (遼寧東北亞港航發展有限公司) (“Gang Hang Development”) at nil consideration, pursuant to which, Yingkou SASAC transferred all of its equity interests in Yingkou Port Group to Gang Hang Development at nil consideration. After the equity transfer, Yingkou Port Group became a wholly-owned subsidiary of Gang Hang Development.

On 28 November 2018, Gang Hang Development and creditor banks of Yingkou Port Group entered into a loan capitalisation agreement with Yingkou Port Group, which agreed that Yingkou Port Group would increase its registered capital by RMB11 billion, in particular, Gang Hang Development would contribute to RMB185,803,800 of Yingkou Port Group’s additional registered capital with cash and equity interests amounting to RMB21,929,277,300, and the

– III-3-14 –

VALUATION REPORT C

APPENDIX III-3

creditor banks would contribute to RMB10,814,196,200 of Yingkou Port Group’s additional registered capital with creditor’s rights amounting to RMB37 billion. Yingkou Port Group has completed the business registration change on 28 November 2018, and its registered capital after the change was RMB20 billion.

Gang Hang Development, the controlling shareholder of Yingkou Port Group, was renamed as Liaoning Port Group Limited (遼寧港口集團有限公司) (hereinafter referred to as “Liaoning Port Group”) on 29 November 2018.

Pursuant to the Equity Transfer Agreement of Ying Kou Port Group Corporation Limited entered into by Liaoning Port Group and Dalian Port Corporation Limited (“PDA”) on 14 May 2019, Liaoning Port Group transferred the 22.965% equity interests it held in Yingkou Port Group to PDA, its wholly-owned subsidiary.

Pursuant to the Agreement on the Gratuitous Transfer of the Equity Interests in Liaoning Port Group Limited entered into between the State-owned Assets Supervision and Administration Commission of the People’s Government of Liaoning Province (hereinafter referred to as the “Liaoning SASAC”) and China Merchants (Liaoning) Port Development Company Limited (hereinafter referred to as “China Merchants Liaoning”) on 31 May 2019, the equity change in respect of the transfer by Liaoning SASAC of the 1.1% equity interests it held in Liaoning Port Group to China Merchants Liaoning at nil consideration has been completed on 30 September 2019. Upon the completion of such change in equity, China Merchants Liaoning held 51.00% equity interests of Liaoning Port Group, and the ultimate de facto controller of Liaoning Port Group was changed from Liaoning SASAC to China Merchants Group Limited (“China Merchants Group”). The ultimate de facto controller of Yingkou Port Group was also changed from Liaoning SASAC to China Merchants Group.

On 7 April 2020, Yingkou Port Group resolved at its shareholders’ general meeting that Agricultural Bank of China Limited Yingkou Economic and Technological Development Zone Sub-branch, a shareholder of Yingkou Port Group, was permitted to transfer the 6.28% equity interests (capital contribution amount of RMB1,256,184,900) of the Company it held to ABC Financial Assets Investment Co., Ltd.. Yingkou Port Group completed the business registration change in respect of such equity transfer on 8 May 2020.

Pursuant to the stipulations in the Voting Rights Entrustment Agreement entered into by Liaoning Port Group and PDA on 29 March 2021, Liaoning Port Group entrusted PDA to exercise all shareholder’s rights of the 22.965% equity interests it held in Yingkou Port Group except for income rights, disposal rights (including share pledge), rights of subscription, capital increase/right of first refusal. After the agreement came into effect, PDA held the voting rights corresponding to an aggregate of 45.93% equity interests of Yingkou Port Group. On 29 March 2019, Liaoning Port Group entered into an entrustment agreement with PDA (《遼寧港 口集團有限公司與大連港集團有限公司關於營口港務集團有限公司表決權委託相關事宜的聯 合聲明》), pursuant to which, PDA would exercise shareholder’s rights as stipulated in the Voting Rights Entrustment Agreement and re-elect members of the board of directors of Yingkou Port Group, while PDA would appoint new directors for Yingkou Port Group. From

– III-3-15 –

VALUATION REPORT C

APPENDIX III-3

the signing date of the Voting Rights Entrustment Agreement and prior to the completion of the re-election, being the transition period, within Liaoning Port Group and PDA, Liaoning Port Group will delegate the management power of Yingkou Port Group to the level of PDA. PDA will directly manage Yingkou Port Group. During the transition period, Liaoning Port Group will not in any way exert influence on the directors appointed by it currently serving in Yingkou Port Group that is contrary to the wishes of PDA, or engage in other behaviors that may cause the control of Yingkou Port Group to be unstable. Under the above arrangement, PDA formed control over Yingkou Port Group, and Liaoning Port Group controlled Yingkou Port Group indirectly through its wholly-owned subsidiary, PDA.

(II) Overview of the Client 2

Name: Liaoning Port Holdings (Yingkou) Co., Ltd. (遼港控股(營口)有限公司)

Type: Limited liability company (wholly owned by a legal person)

Legal residence: Room 722, 05 Yigang Business Building, No. 1 Yinggang Road, Bayuquan District, Yingkou City, Liaoning Province (production premise: Bayuquan District 18 – Industrial Company Auto Repair Factory Workshop)

Unified social credit code: 91210804MA10TQ454G

Legal representative: Cao Yingfeng

Registered capital: RMB10 billion

Major scope of business: Permitted projects: port operation, construction engineering design, special equipment installation, transformation and repair, special equipment manufacturing, road cargo transportation (excluding dangerous goods), accommodation services, catering services, bathing services, printed matter binding services, food operations; residential interior decoration, various engineering construction activities, urban domestic waste business services, import and export of goods, import and export technologies, construction professional operations, domestic ship management business (projects that are subject to approval according to law may only be operated after approval by relevant departments; specific business projects are subject to the approval results).

General projects: auto parts wholesale, construction steel products sales, special equipment sales, handling equipment manufacturing, handling equipment sales, construction materials sales, industrial textile products sales, motor vehicle repair and maintenance, rubber products sales, labour protection supplies production, labour protection products sales, heat supply services, property management, hardware products wholesale, building decoration, plumbing pipe parts and other construction metal products manufacturing, daily necessities sales, office supplies sales, daily wood products sales, chemical products sales (excluding licensed chemical products), car rental, housing rental, non-residential real estate rental, domestic cargo transportation agency, conference and exhibition services, professional

– III-3-16 –

VALUATION REPORT C

APPENDIX III-3

cleaning, cleaning, disinfection services, sewage treatment and recycling, landscaping engineering construction, loading and unloading, general cargo warehousing services (excluding hazardous chemicals and other projects requiring approval), domestic shipping agency, storage and packing maintenance, urban greening management, machinery and equipment leasing, special equipment leasing, renewable resources sales, environmental protection monitoring, international shipping management business, production of industrial textile products, manufacturing of wooden containers, and sales of wooden containers (except for the projects that shall be approved according to law, business activities are operated independently with business license).

(III) Overview of the Appraised Entity

Name: Yingkou Port Bulk Cargo Terminal Co., Ltd. (營口港散貨碼頭有限公司)

Legal residence: Room 506, 5/F, Donggangbu Office Building (Second Unit), Tianshan Street, Bayuquan District, Yingkou City, Liaoning Province

Unified social credit code: 91210804MA11BA744R

Legal representative: Gao Dianzhong

Registered capital: RMB100,000

Major scope of business: Permitted projects: port cargo loading, unloading, handling and freight (projects subject to approval according to law may only be carried out after approval by relevant departments, and specific business projects are subject to the approval results). General projects: general cargo storage services (excluding hazardous chemicals and other projects that require approval), land use rights leasing, non-residential real estate leasing, machinery and equipment leasing, special equipment leasing (except for projects that are subject to approval according to law, business activities are carried out independently according to law).

Yingkou Port Bulk Cargo Terminal Co., Ltd. was established on 26 August 2021, and its shareholders is Ying Kou Port Group Corporation Limited.

(IV) Overview of Other Users of the Valuation Report

This Report is only for the use by the users as agreed in the asset valuation engagement contract and as stipulated by laws and administrative regulations. Other institution and individual shall not be the user of this Asset Valuation Report.

– III-3-17 –

VALUATION REPORT C

APPENDIX III-3

II. PURPOSE OF VALUATION

Due to the proposed transfer by Ying Kou Port Group Corporation Limited of the equity interests it held in Yingkou Port Bulk Cargo Terminal Co., Ltd. (營口港散貨碼頭有限公司) to Liaoning Port Holdings (Yingkou) Co., Ltd. (遼港控股(營口)有限公司), it is required to conduct a valuation on the value of all shareholders’ equity declared by Yingkou Port Bulk Cargo Terminal Co., Ltd. involved in the said economic activity for the purpose of providing valuation reference basis.

The economic activity has been approved by the Approval on the Plan for Revitalising the Phase II Northeast Project (Zhao Fa Zhan Lue Zi [2021] No. 475) issued by China Merchants Group.

III. VALUATION TARGET AND SCOPE

(I) Valuation Target and Scope

The appraised valuation target and scope are consistent with the valuation target and scope involved in the economic activity.

The valuation target is the value of all shareholders’ equity of Yingkou Port Bulk Cargo Terminal Co., Ltd. (營口港散貨碼頭有限公司).

The scope of valuation covers the assets and liabilities as at the valuation benchmark date declared by Yingkou Port Bulk Cargo Terminal Co., Ltd. and audited by professional institutions. The accounting statements corresponding to the assets and liabilities declared by the company have been audited by ShineWing Certified Public Accountants (Special General Partnership), which has issued the audit report No. XYZH/2021BJAA20606 on 27 October 2021. The audit opinion is that the attached pro forma financial statements were prepared in accordance with the basis for preparation as described in Note III to the pro forma financial statements in all material aspects, reflecting the pro forma financial conditions of the bulk cargo terminal as at 31 August 2021, 31 December 2020 and 31 December 2019 and its pro forma operating results from January to August 2021, in 2020 and 2019 based on the basis for preparation.

– III-3-18 –

VALUATION REPORT C

APPENDIX III-3

The details are shown in the table below.

Unit: RMB

No. Name of item

Carrying amount

1	I.	Total current assets	412,738,299.93
2		Cash at bank and on hand	6,988,687.27
3		Accounts receivable	37,762,006.49
4		Advances to suppliers	200,000.00
5		Other receivables	257,399.85
6		Inventories	360,341.22
7		Other current assets	367,169,865.10
8	II.	Total non-current assets	5,510,052,507.13
9		Fixed assets	4,402,204,853.44
10		Intangible assets	1,107,847,653.69
11	III.	Total assets	5,922,790,807.06
12	IV.	Total current liabilities	412,313,126.57
13		Accounts payable	24,344,883.56
14		Advances from customers	20,224,525.62
15		Employee benefits payable	1,815,798.01
16		Tax payable	610,644.59
17		Other payables	365,317,274.79
18	V.	Total liabilities	412,313,126.57
19	VI.	Net assets	5,510,477,680.49

Information on physical assets and land use rights that are included in the scope of valuation is as follows:

			Unit: RMB
		Original	Net carrying
Name of item	Quantity	carrying amount	amount
Fixed assets
Buildings	73,238.10 sq.m.	110,707,480.32	75,383,613.16
Structures	145	5,164,992,084.90	3,823,735,896.54
Machinery and
equipment	735.00	950,582,770.39	502,780,178.24
Vehicles	8.00	3,834,000.00	191,700.00
Electronic devices	170.00	989,903.93	113,465.50
Intangible assets
Land use rights	4,396,185.69 sq.m.	1,481,122,772.84	1,107,847,653.69
Total		7,712,229,012.38	5,510,052,507.13

– III-3-19 –

VALUATION REPORT C

APPENDIX III-3

(II) Breakdown and Characteristics of Physical Assets

The assets that are included in the scope of valuation are detailed below:

1. Those included in the valuation scope are the buildings (structures) owned by Ying Kou Port Group Corporation Limited and are mainly distributed in Yingkou Port and Bayuquan District, Yingkou City, Liaoning Province. In particular, there are a total of 40 buildings with a total gross floor area of 73,718.91 square meters; there are a total of 137 structures. The major buildings include the group’s substation, 1# and 2# steel warehouses, general yard, machine repair workshop, etc., which are mainly production and auxiliary supporting buildings of the company.

Buildings (structures) are mainly self-built by the company. The structure types are mainly frame structure, bent structure, steel structure, brick and concrete structure, etc. The features of major building (structural) structure are as follows:

(1) Frame structure

The foundation of the frame structure house adopts reinforced concrete independent foundation and reinforced concrete strip foundation. The upper part is cast-in-place reinforced concrete columns, beams and slabs. Form the frame skeleton of the entire house, 370mm solid brick enclosure. Cast-in-place reinforced concrete roof, cement mortar leveling, perlite insulation layer, and modified asphalt membrane for waterproofing. Most of them are cement floors or terrazzo floors, external walls with cement mortar flattening paint, and internal walls with cement mortar flattening paint. Steel-wood doors, plastic-steel windows or aluminum alloy windows.

Supporting works: power line, general lighting, fire fighting system

(2) Brick and concrete structure

The brick and concrete structure is a concrete strip foundation, with cast-inplace reinforced concrete structural columns, 370mm or 240mm solid brick internal and external walls. Cast-in-place reinforced concrete slab, roof cement mortar leveling, perlite insulation layer, modified asphalt waterproofing membrane or rigid waterproofing. Most of them are cement floors or terrazzo floors, external walls with cement mortar smoothing paint, and interior walls with clear water wall brushing white or cement mortar smoothing paint. Wooden doors, plastic steel windows or aluminum alloy windows.

Supporting works: general lighting, fire fighting system, water supply

– III-3-20 –

VALUATION REPORT C

APPENDIX III-3

(3) Steel structure

Steel structure houses mostly use cast-in-place reinforced concrete independent foundations. The upper part of the independent foundation is equipped with reinforced concrete ground beams. The upper part is composed of steel structural columns, inter-column supports, roof trusses, roof truss horizontal supports, purlins, and crane beams to form the main structure. The part of wall body below 1.2 meters is plastered and painted for solid brick walls with grey sand. The upper wall is made of double-layer thermal insulation color steel profiled panels, the roof is made of double-layer color steel thermal insulation panels, and the wall is equipped with plastic steel windows or windowless, finished sandwich panel sliding doors. The ground is 250mm thick concrete ground.

Supporting works: power line, general lighting, fire fighting system

(4) Outdoor supporting project

Outdoor supporting projects in the plant area are mainly divided into two types: supporting public facilities and supporting projects for process requirements. Public facilities supporting projects include roads, walls, domestic water supply, heating and heating pipes, fire fighting water supply, rainwater pipes, power distribution, communications, networks, monitoring, etc. The supporting projects for process requirements mainly include various fire-fighting pools, pipe corridor extensions, connecting corridors, sewage treatment stations of coal yards in harbor pools, process pipelines of oil transportation systems, special railway lines, etc.

(5) The basic conditions of the terminal assets included in the scope of the valuation are as follows:

A total of 18 berths are included in the scope of the valuation, with a total length of 4,954.00 meters. The assets were self-built between 2008 and 2015.

			Berthing		Front water
No.	Berth name	Structure type	capacity	Length	**depth **	Quantity Major use
			(tonne)	(m)	(m)
1	Port pool A 3#	Gravity caisson	7	260	-18	1 General bulk cargo
	general berth
2	Port pool A 4#	Gravity caisson	7	255	-18	1 General bulk cargo
	general berth
3	Port pool A 5#	Gravity caisson	7	278	-18	1 General bulk cargo
	general berth
4	Port pool A 6#	Gravity caisson	7	255	-18	1 General bulk cargo
	general berth

– III-3-21 –

APPENDIX III-3

VALUATION REPORT C

			Berthing		Front water
No.	Berth name	Structure type	capacity	Length	**depth **	Quantity Major use
			(tonne)	(m)	(m)
5	1#-2# refined	High pile	5	470	-14.4	2 Refined oil
	oil and liquid
	chemicals
	terminals
6	18# terminal	High pile beam	30	452	-24.5	1 Ore
	berth
7	61# general	Gravity block	7	260	-15.5	1 General bulk cargo
	berth
8	62# general	Gravity block	7	260	-15.5	1 General bulk cargo
	berth
9	63# general	Gravity block	7	260	-15.5	1 General bulk cargo
	berth
10	64# general	Gravity block	7	310	-15.5	1 Steel and general
	berth					cargo
11	65# general	Gravity block	7	253	-15.5	1 Steel and general
	berth					cargo
12	66# general	Gravity block	7	260.1	-15.5	1 Steel and general
	berth					cargo
13	67# general	Gravity block	7	240.9	-15.5	1 Steel and general
	berth					cargo
14	68#-71# general	Gravity block	7	1069	-15.5	4 Steel and general
	berths					cargo
	Total			4,883	18

1. Equipment under fixed assets

The equipment under fixed assets included in the scope of valuation include machinery and equipment, vehicles and electronic devices. The details of major assets on the valuation benchmark date are as follows:

• (1) There are 735 items of machinery and equipment, mainly ships, cranes, container reach stackers, forklifts, portal cranes and container reach stackers. As of the valuation benchmark date, most of the equipment is well maintained for normal use.

• (2) The vehicles to be assessed are mainly 8 office vehicles, all of which are sprinklers. As of the valuation benchmark date, most of the equipment is well maintained for normal use.

– III-3-22 –

VALUATION REPORT C

APPENDIX III-3

• (3) Electronic devices mainly include vehicle-mounted digital walkie-talkies, operating terminal equipment, fax machines, computers, printers, servers, etc., with a total of 170 items. As of the valuation benchmark date, most of the equipment is well maintained for normal use; some equipment that has been purchased for a long time and has poor performance is to be scrapped.

(III) Intangible Assets Accounted for or Not Accounted for as Declared by the Company

Ying Kou Port Group Corporation Limited has a total of 27 intangible assets – land use rights within the scope of the valuation, all of which have obtained land title certificates. The area set out in the parcel land use right certificate is 6,855,933.68 square meters in total, and the area of land use right included in the scope of valuation is 4,396,185.69 square meters. The original carrying amount was RMB1,481,122,772.841, and the carrying amount on the valuation benchmark date was RMB104,467,003.97.

The specific ownership registration for lands occupied by the appraised assets is shown in the table below:

									Transfer area
				Date of	Nature of		Termination	Area set out in	included in the
No.	Title certificate no.	Parcel name	Location	acquisition	land use	Land use	date	the certificate	valuation scope
1	Bayuquan Guo Yong	Port pool A 2#	Inside the	2009/12/16	Grant	Land for	2059/12/15	486,764.80	126,764.80
	[2009] No. 268	land	port			transportation
2	Liao (2020) Yingkou	Port pool A 1#	Inside the	2020/11/11	Grant	Land for	2059/6/9	384,618.90	384,538.25
	Bayuquan Real	land	port			transportation
	Estate No. 0032395
3	Liao (2020) Yingkou	Phase IV 7#	Inside the	2020/11/10	Grant	Land for	2059/12/15	535,388.00	484,941.15
	Bayuquan Real	land	port			transportation
	Estate No. 0032260
4	Liao (2018) Yingkou	Phase IV 4#	Inside the	2018/1/24	Grant	Port terminal	2059/12/15	965,263.59	231,288.84
	Bayuquan Real	parcel	port
	Estate No. 0029366
5	Liao (2020) Yingkou	Logistics	Inside the	2020/9/23	Grant	Port terminal	2052/10/8	22,452.32	4,222.96
	Bayuquan Real	parcel 1	port
	Estate No. 0027169
6	Liao (2020) Yingkou	Logistics	Inside the	2020/9/23	Grant	Port terminal	2052/10/8	413,338.24	14,697.35
	Bayuquan Real	parcel 2	port
	Estate No. 0027266
7	Bayuquan Guo Yong	Administrative	Outside the	2009/6/5	Grant	Commercial and	2049/6/3	42,987.66	245.00
	[2009] No. 0127	district 1	port			residential
8	Liao (2020) Yingkou	Administrative	Outside the	2020/9/23	Grant	Commercial and	2079/6/3	29,016.61	100.00
	Bayuquan Real	district 2	port			residential
	Estate No. 0027176

– III-3-23 –

APPENDIX III-3

VALUATION REPORT C

									Transfer area
				Date of	Nature of		Termination	Area set out in	included in the
No.	Title certificate no.	Parcel name	Location	acquisition	land use	Land use	date	the certificate	valuation scope
9	Bayuquan Guo Yong	Port pool A 4#	Inside the	2009/12/16	Grant	Land for	2059/12/15	396,995.30	396,179.07
	[2009] No. 267	land	port			transportation
10	Liao (2020) Yingkou	01# parcel	Inside the	2007/12/18	Grant	Port terminal	2049/12/25	43,979.50	43,979.50
	Bayuquan Real		port
	Estate No. 0029352
11	Liao (2020) Yingkou	02# parcel	Inside the	2007/12/18	Grant	Port terminal	2049/12/25	38,455.14	38,455.14
	Bayuquan Real		port
	Estate No. 0027222
12	Bayuquan Guo Yong	04# parcel	Inside the	2007/12/18	Grant	Port terminal	2049/12/25	20,049.55	20,049.55
	[2007] No. 0216		port
13	Liao (2020) Yingkou	03# parcel	Inside the	2007/12/18	Grant	Port terminal	2049/12/25	199,427.59	199,427.59
	Bayuquan Real		port
	Estate No. 0029375
14	Liao (2020) Yingkou	07# parcel	Inside the	2020/9/23	Grant	Port terminal	2049/12/25	298,720.25	294,174.75
	Bayuquan Real		port
	Estate No. 0027263
15	Bayuquan Guo Yong	05# parcel	Inside the	2007/12/18	Grant	Port terminal	2049/12/25	17,452.00	17,452.00
	[2007] No. 0217		port
16	Liao (2020) Yingkou	06#-1 parcel	Haixing	2010/12/21	Grant	Industrial	2049/12/25	189,206.47	189,206.47
	Bayuquan Real		office
	Estate No. 0029388
17	Liao (2020) Yingkou	06#-2 parcel	Haixing	2005/9/27	Grant	Industrial	2052/6/17	141,174.75	141,174.75
	Bayuquan Real		office
	Estate No. 0032270
18	Liao (2020) Yingkou	08# parcel	Haixing	2010/12/21	Grant	Industrial	2052/6/17	90,787.67	90,787.67
	Bayuquan Real		office
	Estate No. 0029354
19	Liao (2020) Yingkou	09#-1 parcel	Haixing	2010/12/21	Grant	Industrial	2052/6/17	63,085.71	63,085.71
	Bayuquan Real		office
	Estate No. 0029361
20	Liao (2020) Yingkou	09#-2 parcel	Haixing	2006/7/18	Grant	Port terminal	2052/6/17	87,327.49	87,327.49
	Bayuquan Real		office
	Estate No. 0027242
21	Liao (2020) Yingkou	10# parcel	Haixing	2020/10/12	Grant	Port terminal	2052/6/17	382,688.05	336,238.11
	Bayuquan Real		office
	Estate No. 0029391
22	Liao (2020) Yingkou	11# parcel	Inside the	2020/11/10	Grant	Port terminal	2052/6/17	294,463.16	235,562.67
	Bayuquan Real		port
	Estate No. 0032298

– III-3-24 –

APPENDIX III-3

VALUATION REPORT C

									Transfer area
				Date of	Nature of		Termination	Area set out in	included in the
No.	Title certificate no.	Parcel name	Location	acquisition	land use	Land use	date	the certificate	valuation scope
23	Liao (2020) Yingkou	13# parcel	Haixing	2010/12/21	Grant	Industrial	2052/6/17	112,879.91	112,879.91
	Bayuquan Real		office
	Estate No. 0027228
24	Liao (2020) Yingkou	East of	Outside the	2005/9/27	Grant	Warehousing	2046/11/27	29,923.93	29,923.93
	Bayuquan Real	Tianshan	port
	Estate No. 0032267	Street,
		Bayuquan
		District
25	Liao (2020) Yingkou	Administrative	Outside the	2020/9/23	Grant	Industrial	2059/6/9	256,523.19	44,350.38
	Bayuquan Real	district 11	port
	Estate No. 0027202
26	Liao (2020) Yingkou	Phase III	Inside the	2020/12/7	Grant	Port terminal	2052/7/17	1,153,176.60	797,872.65
	Bayuquan Real	Project–47	port
	Estate No. 0035276
27	Yingkou Guo Yong	Parcel in	Inside the	2009/7/8	Grant	Industrial	2054/5/19	159,787.30	11,260.00
	[2015] No. 5066	Yanchang	port
		Village
		Total						6,855,933.68	4,396,185.69

(IV) Type and Quantity of Off-balance Sheet Assets Declared by the Company

Nil.

• (V) Type, Quantity and Carrying Amount (or Appraised Value) of the Assets Involved in the Conclusions of the Reports Issued by Other Agencies as Reference

Nil.

IV. TYPE OF VALUE

The types of appraised value include market value and other types of value except for market value. Other types of value except for market value generally include (but are not limited to) investment value, value in use, liquidation value and residual value. The purpose of this valuation is to provide a value reference for normal transactions, and there are no special restrictions and requirements on market conditions and the use of valuation target, etc. Therefore, market value is selected as the type of value of this valuation according to industry practices.

Market value refers to the estimated value of the valuation target in an arm’s length transaction made in the ordinary course of business on the valuation benchmark date between a willing buyer and a willing seller who has each acted rationally and without compulsion.

– III-3-25 –

VALUATION REPORT C

APPENDIX III-3

V. VALUATION BENCHMARK DATE

The valuation benchmark date is 31 August 2021.

Major factors considered by the clients in determining the valuation benchmark date include the time requirement on the implementation of the economic activity. The end of the accounting period was adopted to facilitate the defining of the scope of valuation and the accurate and efficient stocktaking of assets.

VI. BASIS OF VALUATION

(I) Basis of Economic Activity

The relevant economic activity has been approved by the Approval on the Plan for Revitalising the Phase II Northeast Project (Zhao Fa Zhan Lue Zi [2021] No. 475) issued by China Merchants Group.

(II) Legal Basis Provided by Laws and Regulations

1. The Asset Appraisal Law of the People’s Republic of China;

2. The Law of the People’s Republic of China on the State-owned Assets in Enterprises;

3. The Civil Code of the People’s Republic of China;

4. The Securities Law of the People’s Republic of China;

5. The Corporate Income Tax Law of the People’s Republic of China;

6. The Implementation Rules for the Enterprise Income Tax Law of the People’s Republic of China (Issued under Order No. 512 of the State Council and recently amended under Order No. 714 of the State Council);

7. The Measures for the Administration of State-owned Assets Appraisal (Order No. 91 of the State Council and recently amended under Order No. 732 of the State Council);

8. The Detailed Rules for the Implementation of the Administrative Measures for State-owned Assets Valuation (Guo Zi Ban Fa [1992] No. 36);

9. The Provisional Regulations on the Supervision and Administration of State-owned Assets of Enterprises (Order No. 378 of the State Council and recently amended under Order No. 709 of the State Council);

– III-3-26 –

VALUATION REPORT C

APPENDIX III-3

1. The Opinions on Reforming the Administration of State-owned Assets Appraisal and Strengthening Supervision and Administration of Assets Appraisal (Guo Ban Fa [2001] No. 102);

2. The Interim Measures for the Administration of Valuation of State-owned Assets of Enterprises (Order No. 12 of the SASAC of the State Council);

3. The Regulations on Certain Issues Concerning Management of State-owned Assets Appraisal (Order No. 14 of the Ministry of Finance);

4. The Measures for the Supervision and Administration of the Trading of State-owned Assets of Enterprises (Order No. 32 of the SASAC of the State Council and the Ministry of Finance);

5. The Notice on the Guidelines on the Publication and Distribution of the Filing of State-owned Assets Appraisal Projects for Enterprises (Guo Zi Fa Chan Quan [2013] No. 64);

6. The Financial Supervision and Administration Measures on the Assets Evaluation Industry (Order No. 97 of the Ministry of Finance);

7. The Notice on Matters Relating to Strengthening the Administration of State-owned Assets Appraisal of Enterprises (Guo Zi Wei Chan Quan [2006] No. 274);

8. The Notice on Relevant Issues Concerning the Agreement-based Transfer of State-owned Property Rights of Central Enterprises (Guo Zi Fa Chan Quan [2010] No. 11);

9. The Notice on Relevant Matters Concerning the Examination of Appraisal Reports on State-owned Assets of Enterprises (Guo Zi Chan Quan [2009] No. 941);

10. The Interim Regulations for the Value-added Tax of the People’s Republic of China (Issued under Order No. 134 of the State Council and recently amended under Order No. 691 of the State Council);

11. The Implementation Rules to the Interim Regulations for the Value-added Tax of the People’s Republic of China (Issued under Order No. 50 of the Ministry of Finance and the State Taxation Administration and recently amended under Order No. 65 of the Ministry of Finance and the State Taxation Administration);

12. The Notice on the Comprehensive Rollout of the Business Tax to Value Added Tax Transformation Pilot Program (Cai Shui [2016] No. 36);

13. The Circular Relating to Furthering Relevant Policies on Reform of Value-added Tax (Circular [2019] No. 39 jointly issued by the Ministry of Finance, the State Taxation Administration and the General Administration of Customs).

– III-3-27 –

VALUATION REPORT C

APPENDIX III-3

(III) Basis of Valuation Standards

1. Basic Asset Valuation Standards (Cai Zi [2017] No. 43);

2. Professional Code of Ethics for Asset Valuation (Zhong Ping Xie [2017] No. 30);

3. Practice Guidelines for Asset Valuation – Asset Valuation Procedures (Zhong Ping Xie [2018] No. 36);

4. Practice Guidelines for Asset Valuation – Asset Valuation Report (Zhong Ping Xie [2018] No. 35);

5. Practice Guidelines for Asset Valuation – Asset Valuation Methodology (Zhong Ping Xie [2019] No. 35);

6. Practice Guidelines for Asset Valuation – Asset Valuation Engagement Contract (Zhong Ping Xie [2017] No. 33);

7. Practice Guidelines for Asset Valuation – Asset Valuation Files (Zhong Ping Xie [2018] No. 37);

8. Quality Control Guidance on the Business of Asset Valuation Agency (Zhong Ping Xie [2017] No. 46);

9. Guiding Opinions on Types of Value under Asset Valuation (Zhong Ping Xie [2017] No. 47);

10. Guiding Opinions on Legal Ownership of the Asset Valuation Target (Zhong Ping Xie [2017] No. 48);

11. Practice Guidelines for Asset Valuation – Real Estate (Zhong Ping Xie [2017] No. 38);

12. Practice Guidelines for Asset Valuation – Machinery and Equipment (Zhong Ping Xie [2017] No. 39);

13. Guidance on Valuation Report of State-owned Assets of Enterprises (Zhong Ping Xie [2017] No. 42).

– III-3-28 –

VALUATION REPORT C

APPENDIX III-3

(IV) Ownership Basis

State-owned land use certificates (or Land use right grant contracts);

Building ownership certificates;

Motor vehicle driving permits.

(V) Pricing Basis

1. Housing Construction and Decoration Engineering Quota in Liaoning Province (2017);

2. Liaoning Province General Installation Project Quota (2017);

3. Notice of the Department of Housing and Urban-Rural Development of Liaoning Province on Adjusting the Value-added Tax Rates for the Pricing Basis of Construction Projects (Liao Zhu Jian Guan (2018) No. 8);

4. Construction Information on Building Material Price of Yingkou City in August 2021 issued by Liaoning Construction Engineering Cost Station (遼寧建設工程造價 總站);

5. Project Quota for Coastal Port Hydraulic Construction (2019);

6. Reference Quota for Coastal Port Engineering (2019);

7. Dredging Project Budget Quota (2019);

8. Budget Quota Valuation Table on Electric Power Construction Projects (2013);

9. Estimated Budget Valuation Table on Electric Power Construction Projects (2014);

10. Online Publication Price of Hydraulic Materials (2021.8);

11. Regulations on the Preparation of Budgetary Estimates for Water Transport Construction Projects (JTS/T116-2019);

12. Notice of the General Office of the Ministry of Housing and Urban-Rural Development on Re-adjusting the Value-Added Tax Rates for the Pricing Basis of Construction Projects (Jian Ban Biao Han [2019] No. 193);

13. Project completion data or project budget and final accounts data provided by the appraised entity.

– III-3-29 –

VALUATION REPORT C

APPENDIX III-3

VII. VALUATION METHODOLOGY

(I) Selection of Valuation Method and Reasons therefor

In accordance with the “Practice Guidelines for Asset Valuation – Enterprise Value, when performing the appraisal of enterprise value, the valuers shall analyse the applicability of the three basic approaches, namely income approach, market approach and cost approach (asset-based approach), and select the valuation method based on the valuation purpose, the valuation target, the type of value, the information collected and other relevant conditions.

Due to the restrictions on the domestic circulation market conditions, we cannot obtain sufficient, referable, and case data of transactions similar to the appraised entity in terms of cash flow, growth potential, risk, technology and operation. The value of all shareholders’ equity does not meet the comparative conditions for valuation under market approach, so the valuation does not meet the applicable conditions for market approach.

The income approach assesses the value of an asset by its expected profitability, which is the essential basis for determining the prevailing fair market value of the asset. As such, the income approach conforms to the basic definition of an asset. The methodology adopted in the income approach is to determine the market value by capitalising or discounting the expected revenue of the valuation target in the future. It is understood after investigation that due to the relatively stable relationship between the appraised entity’s income, costs and expenses, future revenues can be predicted and quantified. The risks corresponding to the income obtained can also be predicted and quantified, so the valuation meets the applicable conditions for adopting the income approach.

The asset-based approach refers to the idea of determining the value of the valuation subject on the basis of a reasonable appraisal of the value of the assets and liabilities of the enterprise. Since the assets and liabilities structure of the appraised entity is clear, and the value of various assets and liabilities of the enterprise can also be assessed and recognised separately, the valuation meets the applicable conditions for adopting the asset-based approach.

Therefore, the asset-based approach and the income approach were adopted for valuation. After the analysis, the valuation conclusion is determined by using asset-based approach.

(II) Asset-based Approach

The asset-based approach adopted to appraise the value of an enterprise refers to the valuation method that uses the balance sheet of the appraised enterprise as at the valuation benchmark date as basis and uses the value of all on-balance-sheet and identifiable off-balance-sheet assets and liabilities of the appraised enterprise to determine the value of the valuation target. In the valuation of an enterprise using the asset-based approach, the value of each asset is determined with an appropriate specific method according to the specific conditions of such asset.

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The specific valuation methods applied in this valuation are as follows.

1. Current assets (except for inventories)

The appraised value of cash at bank and on hand under current assets is determined by checking and verifying the carrying amount on the list of items provided by the company; the appraised value of accounts receivable and other receivables is determined based on the recoverable amount of each item by adopting the method of economic content and aging analysis on the basis of the audited carrying amount on the list of items provided by the company.

1. Inventories

All inventories are raw materials. For raw materials, after consulting with the company and conducting inventory surveys by appraisal personnel, inventory turnover is relatively fast without overstock. After inquiry with the supplier, the inventory is evaluated by multiplying the verified quantity by the quoted unit price.

1. There are three valuation methods mainly adopted for fixed assets under the buildings category, namely cost replacement approach, market approach and income approach. The adoption of market approach is conditional on the existence of an active trading market where accurate traded market prices are available; the adoption of income approach is on the condition that future returns and risks can be accurately predicted and quantified; and the cost replacement approach is adopted when traded market prices are not available and future returns and risks cannot be accurately predicted and quantified. Based on the specific purpose of the valuation and the characteristics of the buildings (structures) to be evaluated, the cost of the buildings independently built by the company was adopted in the valuation.

Based on the characteristics of the buildings, the type of value to be assessed, the data collection and other relevant conditions, the cost approach is used for the valuation, and the calculation formula is as follows:

The appraised value = Full replacement cost × Integrated residue ratio

(1) Determination of full replacement cost

The full replacement cost of buildings is generally composed of construction and installation costs, preliminary and other expenses and capital costs.

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The calculation formula for full replacement cost of buildings is as follows:

Full replacement cost = Integrated construction and installation costs + Preliminary and other expenses + Capital costs – Deductible value-added tax

(1) Integrated construction and installation costs

The full replacement cost of the representative buildings of the appraised buildings in this valuation is determined by using budgets (final accounts) adjustment method. The unit full replacement cost of other buildings is determined by using analogy method.

The ideology of the budgets (final accounts) adjustment method used in determining the full replacement cost is to calculate the estimated base price for direct fee and the construction and installation project costs of each project based on the budgets and final accounts related information on the buildings and the quota standard of the place where the buildings are located as provided by the company, and the quantity of work stipulated in the budgets and final accounts of the buildings. Then, based on the market survey and the standards for preliminary expenses and other expenses of construction work as provided by the clients, the preliminary expenses and other expenses of the buildings will be derived, and plus the capital costs to derive the full replacement cost of the appraised buildings.

The analogy method takes a representative building as a reference and makes comparison with similar buildings in terms of eave height, storey height, span, materials used, fixtures, and etc., to identify differences as adjustment factors, and adjustments are made to calculate the unit full replacement cost of the analogical buildings.

(2) Preliminary and other expenses

Preliminary and other expenses are calculated according to the project construction investment amount of the appraised entity and based on the charging standards set by the industry, the state or the local government.

(3) Capital costs

Capital costs are estimated based on the reasonable construction period of the appraised entity, with reference to the LPR published by the National Interbank Funding Center under the authorisation of the People’s Bank of China on the valuation benchmark date, and calculated according to the evenly

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invested funds based on the sum of the integrated construction and installation costs, preliminary and other expenses, etc.. The reasonable construction period of the appraised entity is 2.5 years. The formula for calculating the capital costs is as follows:

Capital costs = (Integrated construction and installation costs + Preliminary and other expenses) × Reasonable construction period × Benchmark loan rate × 1/2

(4) Deductible value-added tax

In accordance with the Notice of the Ministry of Finance and the State Administration of Taxation on the Comprehensive Rollout of the Business Tax to Value Added Tax Transformation Pilot Program (Cai Shui [2016] No. 36), the input value-added tax amount included in the integrated construction and installation costs and the preliminary and other expenses may be deducted in calculating the full replacement cost of a building structure.

(2) Determination of residue ratio

The useful life method and observation method are mainly used to determine the residue ratio of the buildings in this valuation.

① Useful life method

Useful life method is adopted to determine the residue ratio based on the ratio of the expected remaining useful life of the building to its total useful life, which is calculated as follows:

Residue ratio under Remaining useful life = x 100% the useful life method Used life + Remaining useful life

② Observation method

The observation method is applied to assess each major part of the buildings from a technical perspective, and to analyse factors such as design, manufacturing, usage, wear and tear, maintenance, improvement and physical life of the asset on a consolidated basis. Impacts of wear and tear and natural deterioration on the functionality and efficiency of the asset will be assessed by comparing the valuation target with itself in new condition. As such, the residual ratio of the buildings would be determined and the substantial depreciation would be estimated.

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• ③ Integrated residue ratio

Integrated residue ratio = Residue ratio under the useful life method × 40% + Residue ratio under the observation method × 60%

• ④ Residue ratio would be determined by adopting a reasonable method in the following circumstances:

If the residue ratios calculated under the on-site observation method and the useful life method respectively differ significantly, after analysing the various factors by the valuers, the relatively reasonable ratio would prevail based on their previous experience.

For the project which cannot be observed due to certain constraints, the useful life method would be normally applied in determining the residue ratio.

4. Machinery and equipment

According to the purpose of this valuation and the characteristics of the appraised assets, and assuming the asset is continued to be used according to its current usage, the cost replacement approach would be adopted in this valuation on the basis of on-site investigation.

Basic formula: Appraised value = Full replacement costs × Residue ratio

(1) Determination of full replacement costs

• (1) Determination of full replacement costs of machinery and equipment

Full replacement costs = Equipment purchase cost + Transportation and miscellaneous fees + Installation and commissioning fees + Equipment foundation fee + Preliminary and other expenses + Capital costs – Deductible input value-added tax amount

• ① Purchase cost

The purchase cost is mainly determined by quotation from equipment manufacturers or sellers, or with reference to price materials such as the 2021 Mechanical and Electrical Products Quotation Manual and recent contract prices of similar equipment. For a small number of equipment for which the purchase cost cannot be found, the price change rate of the equipment of the same age and category is adopted to calculate the purchase cost.

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② Transportation and miscellaneous fees

Transportation and miscellaneous fees refer to the transportation fee, purchase fee, storage fee, unloading fee and other related miscellaneous expenses during the transportation of the equipment, which are calculated as follows:

Transportation and miscellaneous fees for domestic equipment = Purchase cost of the equipment (tax inclusive) × Transportation and miscellaneous fee rates for the equipment

Transportation and miscellaneous fee rates are calculated based on the rates specified in the relevant industry cost indicators and with reference to the “Manual of Methods and Parameters Commonly Used in Asset Appraisal” (資產評估常用方法與參數手冊).

Transportation and miscellaneous fees are not charged if the purchase cost includes transportation fees.

③ Foundation fee

If the equipment foundation is independent or inseparable from the building, the equipment foundation fee shall be considered in the assessment of fixed assets under buildings category, and the equipment foundation fee rate in other circumstances shall be calculated based on the rate specified in the relevant industry budget indexes or with reference to the “Manual of Methods and Parameters Commonly Used in Asset Appraisal” (資產評估常用方法與參數手冊).

Equipment foundation fee = Purchase cost of equipment (tax inclusive) × Equipment foundation fee rate

④ Installation and commissioning fees

Installation and commissioning fees are determined based on the auxiliary materials consumption, the installation foundation and the difficulty of installation of the assessed equipment and with reference to the relevant installation fee rates as stipulated under the “Manual of Data and Parameters Commonly Used in Asset Appraisal” (資產評估常用數據 與參數手冊). For small equipment that does not need installation, installation engineering costs are not considered.

Installation and commissioning fees of equipment = Purchase cost of equipment (tax inclusive) × Installation and commissioning fee rates

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⑤ Construction and other expenses

Construction and other expenses are calculated at different rates according to the characteristics of the equipment and based on the purchase cost (tax-inclusive) of the equipment, which include construction unit management fee, engineering survey and design fee, engineering supervision fee, environmental impact assessment fee, bidding agency fee, feasibility study fee, etc..

⑥ Capital costs

Capital costs are estimated based on the reasonable construction period of the appraised entity, with reference to the LPR published by the National Interbank Funding Center under the authorisation of the People’s Bank of China on the valuation benchmark date, and calculated according to the evenly invested funds based on the sum of the equipment purchase cost, transportation and miscellaneous fees, installation costs, preliminary and other expenses, etc.. The formula for calculating the capital costs is as follows:

Capital costs = (Equipment purchase cost + Transportation and miscellaneous fees + Foundation fee + Installation costs + Preliminary and other expenses) × Reasonable construction period × Benchmark loan rate × 1/2.

⑦ Deductible tax amount

In accordance with the Notice on Several Issues Concerning the Implementation of the VAT Reform in the Whole Country (Cai Shui [2008] No. 170), the Notice of the Ministry of Finance and the State Administration of Taxation on the Comprehensive Rollout of the Business Tax to Value Added Tax Transformation Pilot Program (Cai Shui [2016] No. 36), Cai Shui [2018] No. 32 Document and the Announcement [2019] No. 39 of the Ministry of Finance, the State Administration of Taxation and the General Administration of Customs, the replacement cost of machinery and equipment that meets the conditions for deduction of value-added tax should be deducted from the corresponding valueadded tax. In this valuation, the deductible input tax amount is calculated according to the respective value-added tax rate for the equipment purchase cost, transportation and miscellaneous fees, installation costs, foundation fee, and preliminary expenses:

Deductible tax amount of domestic equipment = Equipment purchase cost/(1+13%) × 13% + Transportation and miscellaneous fees/(1+9%) × 9% + (Installation costs + Foundation fee)/(1+9%) × 9% + (Preliminary expenses – Construction unit management fee)/(1+6%) × 6%

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• (2) Determination of full replacement cost of vehicles

The current tax-included purchase price of transport vehicles is determined according to recent vehicle market price data such as local vehicle sales market information. On this basis, according to the Provisional Regulations of the People’s Republic of China on Vehicle Purchase Tax, the vehicle purchase tax, new car registration fee, etc. are included in determining the full replacement cost. In accordance with the requirements of the Notice of the Ministry of Finance and the State Administration of Taxation on Incorporating Railway Transportation and Postal Services into the Pilot Program of Changing Business Tax to Value-added Tax ([2013] No. 106) and the Announcement [2019] No. 39 of the Ministry of Finance, the State Administration of Taxation and the General Administration of Customs, the value-added tax deduction policy for the purchase of vehicles is as follows:

Full replacement cost = Current purchase price + Vehicle purchase tax + New car registration fee – Deductible value-added tax

• ① Purchase price: Based on the vehicle market information and recent information on market price of vehicles such as Pacific Auto Network Automobile Quotation Database (《太平洋汽車網汽車報 價庫》) and yiche.com, the purchase price of the assessed vehicle is determined with reference to the latest trading price of similar models in the place where the vehicle is located. For vehicles that have been purchased for a long time and whose original model specifications cannot be found at present, the price of similar vehicles with the same displacement is used as the reference for the purchase price of the assessed vehicle.

• ② Purchase tax: It is determined based on the Vehicle Purchase Tax Law of the People’s Republic of China passed at the seventh meeting of the 13th Standing Committee of the National People’s Congress held on 29 December 2018. Taxable amount of vehicle purchase tax = Taxable value × 10%. The “taxable value of self-use vehicles purchased by taxpayers shall not include value-added tax amount”.

Vehicle purchase tax = Purchase price ÷ (1 + Value-added tax rate) × Vehicle purchase tax rate

Vehicle purchase tax rate: 10%

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• ③ Production cost of new car license, including cost of license, examination fee and procedural cost, is fixed at RMB300.00 per unit according to charging standards published by local automobile administration department.

• ④ Determination of the input tax amount incurred on the purchase of vehicles

The input tax incurred when purchasing the vehicles = Vehicle purchase price × Value-added tax rate ÷ (1 + Value-added tax rate)

Vehicle purchase value-added tax rate: 13%

(3) Determination of full replacement cost of electronic devices

The price of electronic devices as at the valuation benchmark date is determined based on the local market information and recent market price data published by Zol.com.cn and PConline.com.cn. Generally, manufacturers or agents will provide free delivery, installation and commissioning services. The full replacement cost is then determined as follows:

Full replacement cost = Purchase price – Deductible tax amount

Deductible value-added tax amount = Purchase price/1.13 × 13%

In addition, for any electronic device which was purchased long time ago, its full replacement cost is determined by reference to prices in the secondhand market.

(2) Determination of residue ratio

(1) Integrated residual ratio of machinery and equipment

Residue ratio of machinery and equipment is comprehensively determined with reference to the economic service life of the equipment, through conducting survey on components of the equipment by on-site survey on present condition of the equipment and reviewing the information on operation, repair and management records of the equipment. Residue ratio, N, is calculated on such basis, i.e.:

N = Remaining service life/(Practical serviced life + Remaining service life) × 100%

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• (2) Integrated residual ratio of vehicles

In accordance with the Standards for Compulsory Scrapping of Motor Vehicles (No. 12 Order in 2012) jointly released by the Ministry of Commerce, the National Development and Reform Commission, the Ministry of Public Security, and the Ministry of Ecology and Environment, the smaller of the residue ratios as determined below is taken as the final residue ratio of vehicles, i.e.:

Residue ratio of service life = (1 – Serviced life/Specified or economic service life) × 100%

Residue ratio of mileage = (1 – Travelled mileage/Specified mileage) × 100%

Residue ratio = Min (Residue ratio of service life, Residue ratio of mileage)

Meanwhile, necessary survey and evaluation are conducted for the vehicles to be assessed. Where survey and evaluation result shows great difference from the residue ratio determined above, appropriate adjustment should be made; where the two are equivalent to each other, no adjustment is required. Namely:

Residue ratio = Min (Residue ratio of service life, Residue ratio of mileage) + a

• a: Adjustment factors for special vehicle conditions

• (3) Residue ratio of electronic devices

Remaining useful life method is adopted to determine the residue ratio.

Residue ratio = [Remaining useful life ÷ (Used life + Remaining useful life)] × 100%

Furthermore, it is not necessary to determine the residue ratio of electronic devices that were evaluated directly based on the prices in the second-hand market.

(3) Determination of appraised value

Appraised value = Full replacement cost × Residue ratio

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5. Land use rights

(1) Selection of valuation approach

Pursuant to the Regulations on Valuation of Urban Land (《城鎮土地估價規 程》) (the “Regulations”), the current prevailing land valuation approaches mainly include assumed development approach, market comparison approach, income capitalisation approach, cost approximation approach, and benchmark land price coefficient revision approach. The appropriate valuation approach shall be selected based on the technical Regulations for valuation of land price after considering the local real estate market development and characteristics of the valuation target and the valuation purpose.

The parcels to be evaluated include land used for port terminal, commercial and residential land, and land for industrial use. According to different land uses, different methods are used for valuation. As the valuation involves many types of parcels and land uses, the valuation approaches are briefly described as follows: for parcels in the port area, due to the monopoly of the land, the cost approximation approach is used for the valuation; for grant land outside the port area, the benchmark land price approach is used for the valuation.

(2) Cost approximation approach

By cost approximation approach, the subject land is valued by using the sum of various expenses consumed for the acquisition and development of the subject land plus a certain amount of profit, interest, taxes payable and land appreciation gains and taking into account the regional factor and land useful life to determine the adjustment coefficient.

Its basic calculation formula is as follows:

Land price = (Land acquisition cost + Land development cost + Taxes + Investment interest + Investment profit + Land appreciation gains + Revision for individual factors) × Term revision coefficient

(3) Benchmark land price coefficient revision approach

Basic formula of the benchmark land price coefficient revision approach:

Pi = [P×Py×Pq + Differences in the degree of infrastructure development] × (1+K) × IIS

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Wherein: Pi – Land price of the parcel to be evaluated P – Benchmark land price of the parcel to be evaluated Py – Land use revision coefficient Pq – Due day revision coefficient K – Total revision for regional factor of the parcel to be evaluated IIS – Product of individual factor revision coefficient of the parcel to be evaluated

6. Liabilities

Based on the verification, the appraised value of liabilities is the amount of liabilities required to be assumed by the appraised entity as at the valuation benchmark date.

(III) Income Approach

The income approach in the valuation of enterprise value is a valuation method that capitalises or discounts the expected income to determine the value of the valuation target. The specific methods frequently used by the income approach include the dividend discount method and the discounted cash flow method.

This valuation adopts the FCFF discount model in the discounted cash flow method. The specific steps are to take the Weighted Average Cost of Capital (WACC) as the discount rate to discount and aggregate the expected Free Cash Flow of Firm (FCFF) for each year in the future periods to derive the value of operating assets, and plus the value of surplus assets and non-operating assets to derive the value of total assets of the enterprise, and then deduct the value of interest-bearing debts to derive the value of all shareholders’ equity. The basic formula is as follows:

Value of all shareholders’ equity = Value of operating assets + Value of nonoperating assets – Value of non-operating liabilities + Value of surplus assets – Value of interest-bearing debts

Due to the inability to obtain sufficient and abundant relevant market transaction statistics and lack of analysis and judgment basis on the degree of influence of liquidity on the value of the valuation target, liquidity discount has not been considered in the valuation.

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VIII. PROCESS AND IMPLEMENTATION OF VALUATION PROCEDURES

(I) Acceptance of Engagement

Understand the general conditions of the appraised assets and specify the valuation purpose, the valuation target and valuation scope, the valuation benchmark date and other basic matters in valuation after discussions and communications with the clients, accept the engagement after comprehensive analysis on the professional capability, independence and risks of valuation, and enter into the asset valuation engagement contract. Determine the type of the appraised value, formulate the valuation plan and establish the working group on valuation based on specific conditions.

(II) On-site Inspection and Collection of Materials

Guide the appraised entity to conduct asset stocktaking and prepare valuation materials, and carry out on-site inspection on the valuation target on such basis to collect required information for asset valuation, understand relevant factors affecting the value of the assets and pay attention to the legal ownership of the valuation target. Verify and validate the materials used in asset valuation in accordance with laws.

(III) Valuation and Estimation

Analyse, summarise and sort out the materials on valuation based on the specific conditions of the asset valuation and form the basis for the valuation and estimation and the preparation of the valuation report. Select the valuation methodology based on the valuation purpose, the valuation target, the type of value, the collection of materials and relevant conditions as well as the Practice Guidelines for Asset Valuation. Select the corresponding formula and parameters in analysis, calculation and judgment based on the valuation methodology adopted, and analyse and judge valuation assumptions and restrictions which may affect the valuation and the valuation conclusion and arrive at the estimation results.

(IV) Issuance of Report

The responsible persons of the project prepare the preliminary asset valuation report based on the valuation conclusion after valuation and estimation. The firm carries out internal review on the preliminary asset valuation report in accordance with laws, administrative regulations, asset valuation standards and the internal quality control system, and issues the formal asset valuation report after conducting necessary communications on relevant contents of the valuation report with the clients and other relevant parties.

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IX. VALUATION ASSUMPTIONS

Major asset valuation assumptions used in this Valuation Report include:

(I) Basic Assumptions

1. Transaction assumption. Under the transaction assumption, it is assumed that all assets to be appraised are in the process of transaction, and the valuers will make estimation in a simulated market according to the transaction conditions (among others) of assets to be appraised.

2. Open market assumption. The open market assumption represents that assets may be traded freely in a highly competitive market, the price of which is determined based on the judgment of both independent trading parties over the value of assets under certain supply and demand conditions. An open market refers to a market which is highly competitive with various buyers and sellers, who are on equal footing and have opportunity and time to access adequate market information, and a market where transactions between buyers and sellers are conducted under voluntary, rational, non-compelled or unrestricted conditions.

3. In-use and continue-to-use assumption. Under the in-use and continue-to-use assumption, it is assumed that the assets in use and to be appraised would continue to be used in the current utility and way after the change of ownership or the occurrence of asset business.

(II) Special Assumptions

1. There will be no significant changes in the relevant prevailing national laws, regulations and policies as well as macro-economic situation of the country and no significant changes in the political, economic or social environments in the regions in which the parties to the transaction are located, or material adverse effects arising from other unforeseeable factors and force majeure.

2. It is assumed that the company will operate on a going concern in view of its actual conditions as at the valuation benchmark date.

3. It is assumed that the operator of the company will be responsible and the management of the company will have the capacity to perform its duties.

4. Unless otherwise stated, it is assumed that the company is in full compliance with all relevant laws and regulations.

5. It is assumed that the accounting policies to be adopted by the company in the future are basically consistent with those adopted in the preparation of this report in material aspects.

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1. It is assumed that, based on its current management approaches and standards, the company’s scope and model of business will remain consistent with the current orientation.

2. It is assumed that there will be no significant changes in interest rates, exchange rates, taxation bases and tax rates and policy-based levies.

3. It is assumed that no other force majeure and unforeseeable factors will have a material adverse effect on the company.

4. The cash flow of the company is assumed to be in balance.

According to the requirements of the asset valuation, these assumptions are deemed to be valid on the valuation benchmark date. We will not accept any responsibility for any different valuation conclusions resulting from any changes in these assumptions when the economic environment changes significantly in the future.

X. VALUATION CONCLUSION

(I) Valuation Conclusion by Asset-based Approach

As at the valuation benchmark date, being 31 August 2021, the carrying amount of assets, liabilities and shareholders’ equity of Yingkou Port Bulk Cargo Terminal Co., Ltd. (營口港散 貨碼頭有限公司) is RMB5,922,790,800, RMB412,313,100 and RMB5,510,477,700, respectively. The appraised value of total assets, liabilities and shareholders’ equity is RMB7,711,756,800, RMB412,313,100 and RMB7,299,443,700, respectively. The appraised value of the total assets represents an increase of RMB1,788,966,000 and an appreciation rate of 30.20% as compared to the carrying amount; the appraised value of the shareholders’ equity represents an increase of RMB1,788,966,000 and an appreciation rate of 32.46% as compared to the carrying amount. Details of the valuation results are set out in the below table:

Asset Valuation Results Summary Table

			Valuation benchmark	date: 31 August 2021	date: 31 August 2021
Appraised entity:		Yingkou	Port Bulk Cargo Terminal Co., Ltd.
		(營口港散貨碼頭有限公司)				Unit: RMB0’000
			Carrying	Appraised	Appreciation or	Appreciation
Item			amount	value	depreciation	rate
			A	B	C=B-A	D=C/A×100%
1	Current assets		41,273.83	41,273.83	0.00	0.00%
2	Non-current	assets	551,005.25	729,901.85	178,896.60	32.47%
3	Fixed assets		440,220.49	460,039.98	19,819.50	4.50%
4	Intangible assets		110,784.77	269,861.87	159,077.10	143.59%
5	Total assets		592,279.08	771,175.68	178,896.60	30.20%

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		Carrying	Appraised	Appreciation or	Appreciation
Item		amount	value	depreciation	rate
		A	B	C=B-A	D=C/A×100%
6	Current liabilities	41,231.31	41,231.31	0.00	0.00%
7	Total liabilities	41,231.31	41,231.31	0.00	0.00%
8	Net assets (owners’ equity)	551,047.77	729,944.37	178,896.60	32.46%

(III) Valuation Conclusion by Income Approach

As at the valuation benchmark date, being 31 August 2021, the appraised value of all equity interests of shareholders of Yingkou Port Bulk Cargo Terminal Co., Ltd. (營口港散貨 碼頭有限公司) is RMB5,948,106,000, which represents an increase of RMB437,628,400 and an appreciation rate of 7.94% as compared to the carrying amount of RMB5,510,477,700 of all shareholders’ equity.

(IV) Differences between the two valuation results on all shareholders’ equity interests are set out in the table below:

Unit: RMB0’000

	All	All
Valuation Approach	shareholders’ equity Carrying	shareholders’ equity Appraised	Appreciation	Appreciation Rate
	amount	Value
Asset-based approach Income approach	551,047.77	729,944.37 594,810.60	178,896.60 43,762.84	32.46% 7.94%
Differences between the
approaches		135,133.77

The main reason for the difference is that the asset-based approach considers all the identifiable assets of the company, which is the embodiment of the market value of all the identifiable assets of the company as at the valuation benchmark date; the key indicators for the valuation of the income approach are the future income and the discount rate. When the indicators are forecasted, various factors such as domestic and foreign macroeconomic conditions, industry conditions, enterprise development plans, and operating capabilities have been comprehensively considered, resulting in differences in the appraised values under the two valuation approaches.

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(V) Selection of Valuation Conclusion

The asset-based approach is to appraise the asset value through appraising value of each single asset taking into consideration the relevant liabilities from the perspective of asset replacement. The income approach is to appraise the asset value through capitalisation or discount of the expected revenue of the appraised assets from the perspective of making judgment on the profitability of assets.

The income approach reflects the profitability of a company’s assets, and the profitability is affected by many factors. There are uncertainties in the future domestic and international macro markets, industry conditions, and enterprise development. (1) Affected by domestic and international objective factors, there are major gaps in the economic development of the regions where various domestic port companies are located. In addition, the intensification of international economic and trade frictions in recent years and the stagnant development of the upstream and downstream industries of port companies had certain impact on the operation and development of domestic port companies. (2) As companies appraised are affected by micro and macro aspects of the industry and their own operation and management there will be uncertainties in their future return.

Considering that the investment in production facilities of enterprises accounts for a large proportion of total assets, the adoption of the asset-based approach can more steadily reflect the value of the enterprise. Therefore, the valuation conclusion of the asset-based approach is the final valuation conclusion.

The valuation conclusion is that the appraised value of all shareholders’ equity of Yingkou Port Bulk Cargo Terminal Co., Ltd. (營口港散貨碼頭有限公司) as at the valuation benchmark date is RMB7,299,443,700 (SEVEN THOUSAND TWO HUNDRED NINETYNINE MILLION FOUR HUNDRED FORTY-THREE THOUSAND SEVEN HUNDRED, rounding to the nearest one hundred).

The validity period of the valuation conclusion is one year, starting from 31 August 2021 (being valuation benchmark date) to 30 August 2022.

The establishment of the valuation conclusion depends on the valuation assumptions as mentioned above.

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XI. EXPLANATIONS ON SPECIAL MATTERS

(I) Significant use of expert work and relevant reports

The audit report No. XYZH/2021BJAA20606 issued by ShineWing Certified Public Accountants (Special General Partnership) on 27 October 2021 was used in this valuation and the audited book values were adopted as the book values for the valuation.

(II) Incomplete or defective ownership information

Name of		Date of			**Carrying **	amount
building	Structure	completion	Unit	GFA	Original value	Net value
				(m2)
Gasoline loading	Frame	2009/5/22	/	355.66	679,523.00	426,128.94
pump room
Gasoline tank	Frame	2009/5/22	/	313.85	447,300.00	280,501.83
farm shipment
pump room
power
distribution
room
Ethanol ship	Brick and	2009/5/22	/	434.33	741,807.00	465,187.27
loading and	concrete
foam pump
room
Railway	Brick and	2009/5/22	/	873.77	2,631,462.00	1,650,190.04
unloading	concrete
pump room
Gateroom 1	Frame	2009/5/22	/	42.70	141,812.00	88,930.31
Gateroom 2	Frame	2009/5/22	/	29.67	121,158.00	75,978.13
Diesel unloading	Brick and	2009/5/22	/	489.87	4,389,418.74	2,752,605.05
pump room	concrete
Transformation	Brick and	2009/5/22	/	137.89	1,806,162.51	1,132,644.74
of train trestle	concrete
bridge to
low-voltage
substation
1# steel	Mixture	2015/12/31	/	19,235.92	22,067,284.00	18,388,335.40
warehouse
2# steel	Mixture	2015/12/31	/	22,056.45	25,286,652.00	21,070,986.08
warehouse
Tool warehouse	Mixture	2015/12/31	/	1,639.11	1,062,216.00	885,128.78

– III-3-47 –

APPENDIX III-3

VALUATION REPORT C

Name of		Date of			**Carrying **	amount
building	Structure	completion	Unit	GFA	Original value	Net value
				(m2)
Machine repair	Brick and	2015/12/27	/	1,087.04	1,857,362.00	1,526,211.93
workshop	concrete
Substation (54#)	Brick and	2011/12/29	/	381.87	572,402.00	256,097.17
	concrete
1# substation
(71# change) 2# substation	Brick and concrete	2011/12/30	/	588.77	1,621,638.41	725,533.66
			/
(72# change)
Port pool A 1#	Reinforced	2016/12/31	/	628.97	3,129,762.00	2,342,891.92
substation	concrete
Fire pump room	Brick and	1998/11/1	/	339.79	664,457.85	172,791.71
	concrete
General yard (2#)	Steel	2011.12.30	/	3,929.69	4,250,986.91	3,188,057.39
	structure
Comprehensive	Steel and	2011.12.29	/	2,291.96	4,617,500.58	3,462,927.11
yard (logistics	concrete
mat)
Steel yard (1#)	Steel and	2011.12.29	/	11,999.69	21,245,342.86	15,933,093.48
	concrete
Water supply	Frame	2020-06-21	/	248.19	477,152.30	444,774.15
regulating	structure,
station	one floor
	above
	ground
1# courtroom	Brick and	2013-10-01	/	686.34	1,483,229.50	1,002,847.52
	concrete
	structure
2# courtroom	Brick and	2013-10-01	/	686.34	1,483,229.50	1,002,847.52
	concrete
	structure
Nitrogen		March 2009	/	142.70	1,023,545.00	641,865.22
generator room
				72,264.43

The area surveying and mapping of the assets above has been completed, and the real estate title certificate is in process. The valuation did not consider the various taxes and fees required to be paid in the process of applying for the certificates.

– III-3-48 –

VALUATION REPORT C

APPENDIX III-3

(III) Restrictions on valuation procedures

Nil

(IV) Incomplete valuation materials

Nil

• (V) Pending legal and economic matters on the valuation benchmark date

Nil

• (VI) The nature and amount of guarantees, leases and its contingent liabilities (contingent assets) and the relationship with the valuation target

The information on charge or pledge of assets that are included in the scope of valuation is as follows:

					Expiry			Rent
		Total	Balance of	Commencement	date of	Way of	Interest	calculation
Lessor	Lender	borrowings	borrowings	date of borrowing	borrowing	guarantee	rate	method	Collateral
		**(RMB0’000) **	(RMB0’000)
Industrial Financial	Ying Kou Port	80,000.00	23,333.33	2017/5/18	2023/5/18	Credit	4.410%	Principal in	Fairy Island port
Leasing Co., Ltd.	Group							equal	pool 1 1-2#
	Corporation							instalments	refined oil and
	Limited								liquid chemicals
									terminal, Port
									pool 5 65# steel
									and general
									cargo berth
SPDB Financial Leasing	Ying Kou Port	50,000.00	12,500.00	2017/11/28	2022/11/21	Credit	3.325%	Principal in	Bayuquan Port
Co., Ltd.*	Group							equal	Area 62# berth
(浦銀金融租賃股份有	Corporation							instalments
限公司)	Limited
Bank of Beijing	Ying Kou Port	50,000.00	17,500.00	2018/4/25	2023/4/25	Credit	5.5575%	Principal in	68# and 70# berths
Financial Leasing	Group							equal
Company Limited*	Corporation							instalments
(北銀金融租賃有限公	Limited
司)
Jiangxi Financial	Ying Kou Port	80,000.00	25,560.00	2016/12/16	2023/3/3	Credit	4.410%	Interest in	66# and 67# berths
Leasing Corp., Ltd.	Group							equal
	Corporation							instalments
	Limited

– III-3-49 –

VALUATION REPORT C

APPENDIX III-3

The information on lease of assets that are included in the scope of valuation is as follows:

Contract			Title Certificate
name	Lessee	Lease target	Number	**Area **	Lease term	Annual rent
						(RMB, tax
				(sq.m.)		inclusive)
Land use	Yingkou	Land use right	Liao (2020) Yingkou	298,720.25	2021/1/1-	4,480,803.66
right lease	Xingang Ore		Bayuquan Real		2021/12/31
agreement	Terminal		Estate No. 0027263
	Co., Ltd.
	(營口新港礦
	石碼頭有限
	公司)
Land use	Yingkou Port	Land use right	Liao (2020) Yingkou	2,431,326.47	2021/1/1-	36,469,900.00
right lease	Liability Co.,		Bayuquan Real		2021/12/31
agreement	Ltd.		Estate No. 0029352,
			0029354, 0029361,
			0029375, 0029388,
			0029391, 0027202,
			0027222, 0027228,
			0027242, 0027266,
			0032267, 0032270,
			0035276, 0032298,
			0035276 and
			Bayuquan Guo Yong
			(2007) Zi No. 0216
			and 0217
2021 asset	Yingkou Port	Terminal berth	Bayuquan Port Area		2021/1/1-	349,897,100.00
lease	Liability Co.,		port pool 1 18# ore		2021/12/31
agreement	Ltd.		berth, port area A 3#
			general berth, port
			pool A 1-2# refined
			oil and liquid
			chemicals berth, port
			pool 5 61#-71#
			general berths, Fairy
			Island 201-203#
			berths and its yard,
			tank farm

In particular, Fairy Island 201-203# berths and ore dumps are excluded in the scope of valuation, and the relevant rent is RMB110,463,227.26.

– III-3-50 –

VALUATION REPORT C

APPENDIX III-3

(VII) Significant subsequent matters

Yingkou Port Bulk Cargo Co., Ltd. is a wholly-own subsidiary established by Ying Kou Port Group Corporation Limited, intending to inject business relating to port and assets and liabilities into Bulk Cargo Co., Ltd.. There are approximately RMB365 million creditable input tax resulting from the capital increase (subject to the actual premium received from the competent tax authority by Yingkou Port Group). The bulk cargo shall take the value-added tax of approximately RMB365 million resulting form the capital increase. As at the date of Valuation Report, the procedure of capital increase is still in processing. Therefore, the ownership of capital increase assets has not been transferred and the business has not been transferred to the Bulk Cargo Co., Ltd.. The valuation is based on the statistics in the auditor’s report upon the completion of the stimulated capital increase to assess the entire equity value of shareholders after the capital increase in Bulk Cargo .Co,. Ltd.. Users of the report are advised to pay attention to it.

(VIII) Deficiencies in the economic activity corresponding to the asset valuation that may have a material effect on the valuation conclusion

Nil.

(IX) Other matters that need to be described

Nil.

XII. RESTRICTIONS ON THE USE OF THE ASSET VALUATION REPORT

• (I) The scope of the use of this Valuation Report;

This Valuation Report shall be used for the valuation purpose and use set out herein. For the excerpt, reference and disclosure of all or part of the contents of the Valuation Report, relevant contents shall be reviewed by the valuation agency unless it is otherwise provided by laws and regulations and agreed by relevant parties;

• (II) The valuation agency and its asset valuers take no responsibility if the clients or other users of the Asset Valuation Report fail to use this Asset Valuation Report in accordance with the provisions of laws and administrative regulations and the scope of use set out in this Asset Valuation Report;

• (III) Except for the clients, the other users of the Asset Valuation Report as agreed in the asset valuation engagement contract and the users of the Asset Valuation Report as stipulated in the laws and administrative regulations, no other institution or individual shall be the user of the Asset Valuation Report;

– III-3-51 –

VALUATION REPORT C

APPENDIX III-3

• (IV) Users of the Asset Valuation Report should correctly interpret the valuation conclusion, which is not equivalent to the realizable value of the valuation target and should not be considered as a guarantee for the realizable value of the valuation target.

XIII. DATE OF THE ASSET VALUATION REPORT

The date of the Asset Valuation Report is 27 October 2021.

Asset valuer: Asset valuer: 27 October 2021

– III-3-52 –

VALUATION REPORT C

APPENDIX III-3

ANNEXES

• I. Corresponding Economic Activity Document on the Valuation Purpose

• II. Pro Forma Audit Report

• III. Business Licenses of the Clients and the Appraised Entity

• IV. Real Estate Ownership Proof of the Clients and the Appraised Entity

• V. Major Ownership Proof Materials of the Valuation Target Involved

• VI. Letters of Undertaking of the Clients and Other Relevant Parties

• VII. Letters of Undertaking of the Signatory Asset Valuers

• VIII. Announcement on the Registration and Filing of the Valuation Agency

• IX. Photocopy of the Business License of the Valuation Agency

• X. Qualification Certificates of the Asset Valuers Responsible for the Valuation Business

• XI. Asset Valuation Engagement Contract

– III-3-53 –

VALUATION REPORT C

APPENDIX III-3

Letters of Undertaking of the Asset Valuation Agency and Asset Valuers

To Ying Kou Port Group Corporation Limited and Liaoning Port Holdings (Yingkou) Co., Ltd. (遼港控股(營口有限公司),

Upon your engagement, we have conducted a valuation on the market value of all the assets and liabilities on 31 August 2021 as the benchmark date, which are involved in your proposed transfer of the equity interests held in Yingkou Port Bulk Cargo Terminal Co., Ltd. (營口港散貨碼頭有限公司) to Liaoning Port Holdings (Yingkou) Co., Ltd. (遼港控股(營口)有 限公司), and have formed an asset valuation report. On the premises that the assumptions disclosed in this report are established, we hereby make the following undertakings:

• I. We have the relevant professional qualification;

• II. The valuation target and the valuation scope are consistent with those specified in the asset valuation engagement contract;

• III. We have made necessary verification of the valuation target and the assets involved;

• IV. We have adopted the valuation methodology in accordance with the asset valuation standards;

• V. We have fully considered the factors which may affect the appraised value;

• VI. The valuation conclusion is reasonable;

VII. The valuation was carried out independently without any interference.

Signatures by the asset valuers:

Asset Valuation Agency: China Tong Cheng Assets Appraisal Co., Ltd.

27 October 2021

– III-3-54 –

VALUATION REPORT C

APPENDIX III-3

This Report is prepared in accordance with PRC Asset Valuation Standards

Explanations on Asset Valuation on

the Project of Ying Kou Port Group Corporation Limited’s Proposed Transfer of the Equity Interests Held in Yingkou Port Bulk Cargo Terminal Co., Ltd.

(營口港散貨碼頭有限公司)

to Liaoning Port Holdings (Yingkou) Co., Ltd.

(遼港控股(營口)有限公司) Zhong Tong Ping Bao Zi [2021] No. 12331 1 of 1

China Tong Cheng Assets Appraisal Co., Ltd. 27 October 2021

– III-3-55 –

VALUATION REPORT C

APPENDIX III-3

CONTENTS

Disclaimer on the Scope of the Use of the Explanations on the Valuation . . . . . . .	Disclaimer on the Scope of the Use of the Explanations on the Valuation . . . . . . .	57
Explanations	of the Enterprise on Relevant Matters in Conducting the
Asset Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		58
Explanations	on the Asset Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	72
I.	Explanations on the Valuation Target and Scope . . . . . . . . . . . . . . . .	72
II.	Overall Explanations on Assets Verification . . . . . . . . . . . . . . . . . . .	80
III.	Explanations on Valuation Technology – Cost Approach . . . . . . . . . .	83
	(I) Current Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	83
	(II) Fixed assets – Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . .	85
	(III) Fixed assets – Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . .	123
	(IV) Intangible Assets – Land Use Rights . . . . . . . . . . . . . . . . . . .	142
	(V) Current Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	164
IV.	Explanations on Valuation Technique – Income Approach . . . . . . . . .	165
V.	Valuation Conclusion and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . .	231

– III-3-56 –

VALUATION REPORT C

APPENDIX III-3

DISCLAIMER ON THE SCOPE OF THE USE OF THE EXPLANATIONS ON THE VALUATION

The Explanations on the Valuation is for the use by the state-owned assets supervision and administration authorities (including the state-funded enterprises), relevant supervision and administration authorities and departments. Unless provided by laws and regulations, all or part of the contents of the materials shall not be provided to any other units and individuals, nor shall be published in the media.

– III-3-57 –

VALUATION REPORT C

APPENDIX III-3

EXPLANATIONS OF THE ENTERPRISE ON RELEVANT MATTERS IN CONDUCTING THE ASSET VALUATION

This part is issued and provided by the client and the appraised entity with the original text attached.

– III-3-58 –

VALUATION REPORT C

APPENDIX III-3

EXPLANATIONS OF THE ENTERPRISE ON RELEVANT MATTERS IN CONDUCTING THE ASSET VALUATION

I. OVERVIEW OF THE CLIENT AND THE APPRAISED ENTITY

(I) Overview of Client 1

Name: Ying Kou Port Group Corporation Limited (hereinafter referred to as Yingkou Port Group)

Legal domicile: No. 1, Yinggang Road, Bayuquan District

Unified social credit code: 91210800121119657C

Authorized representative: Deng Renjie

Registered capital: RMB20 billion

Major scope of business: licensed businesses: port operation (businesses that are subject to approval according to law may be operated only after being approved by relevant departments, and specific businesses shall be subject to the results of approval); general businesses: port loading and unloading, warehousing and services; supply of ship materials; import of raw and auxiliary materials, mechanical equipment, instruments and parts necessary for its production and scientific research; export of self-produced seafood, talc, magnesia, woven bags, food, woodware, clothing, knitwear (except 16 kinds of export commodities jointly operated by national organisations); agency cargo packaging, consignment, water transportation, non-metallic ore, pig iron sales, plastic packaging products, vegetable oil; international passenger transport services, agency sales of ship tickets, luggage check-in; recycling of waste materials; advertising agency, production, design; ship supply (daily necessities, except for ship fuel), cement brick production, cement brick laying, metal materials, building material sales, engineering consulting; water and heating supply; emergency prevention of pollutants and pollutant receiving and disposal (operating with qualification certificate). The following businesses are operated only by branches and affiliates: distribution of liquefied petroleum gas, daily necessities, textiles, leather goods, household appliances, hardware and electrical appliances, chemical products (except dangerous articles), shipbuilding material (except those subject to approval); communication equipment distribution and agency services; ship waste (excluding hazardous waste) recycling and agency services; pre-packaged food; car rental; self-owned real estate business activities; property management; building cleaning services; other cleaning services; conference services; greening management; computers and communicators leasing; other machinery and equipment leasing; other water transportation auxiliary activities; real estate leasing. (Except those that are subject to approval according to law, businesses may be operated independently with the business licence(s)).

– III-3-59 –

APPENDIX III-3

VALUATION REPORT C

Ying Kou Port Group Corporation Limited (hereinafter referred to as “Yingkou Port Group”, and formerly known as Port of Yingkou Authority) was registered with Yingkou City Administration for Industry and Commerce on 17 April 2003 in accordance with the Notice on the Implementation Opinion on the Reform of the Port Management System of Yingkou Port (Yingkou Municipal Committee Office of the CPC [2002] No. 42) and the Approval for the Allocation of Assets for Establishment of Ying Kou Port Group Corporation Limited (Yingkou Municipal State-owned Assets Management Committee Office [2003] No. 1), with a registered capital of RMB1.7 billion.

In December 2009, the capital reserve was transferred to registered capital of RMB7.3 billion under the Approval for Yingkou Port Group’s Transfer of Capital Reserve to Registered Capital (Ying Guo Zi Chan Quan [2009] No. 85) issued by State-owned Assets Supervision and Administration Commission of Yingkou Municipal People’s Government (hereinafter referred to as “Yingkou SASAC”), and the registered capital of Yingkou Port Group was changed to RMB9.0 billion.

In December 2017, Yingkou SASAC entered into a share transfer agreement at nil consideration with Liaoning North East Asia Gang Hang Development Co., Ltd. (“Gang Hang Development Company”), pursuant to which, Yingkou SASAC has agreed to transfer its 100% equity interests held in Yingkou Port Group to Gang Hang Development Company at nil consideration. Upon the share transfer, Yingkou Port Group became a wholly-owned subsidiary of Gang Hang Development Company.

On 28 November 2018, Gang Hang Development Company, each of creditor banks of Yingkou Port Group and Yingkou Port Group entered into a loan capitalisation agreement. It is agreed that Yingkou Port Group would increase its registered capital of RMB11 billion, of which RMB185,803,800 would be contributed by Gang Hang Development Company with cash and equity interests amounting to RMB21,929,277,300, and RMB10,814,196,200 would be contributed by each of creditor banks of Yingkou Port Group with creditors’ rights amounting to RMB37 billion. Yingkou Port Group completed the business registration change on 28 November 2018, and the registered capital after the change was RMB20 billion.

Gang Hang Development Company, the controlling shareholder of Yingkou Port Group, was renamed as Liaoning Port Group Limited (“Liaoning Port Group”) on 29 November 2018.

Pursuant to the Equity Transfer Agreement of Ying Kou Port Group Corporation Limited signed by Liaoning Port Group and Dalian Port Corporation Limited (“PDA”) on 14 May 2019, Liaoning Port Group transferred the 22.965% equity interests it held in Yingkou Port Group to its wholly-owned subsidiary, being PDA.

– III-3-60 –

APPENDIX III-3

VALUATION REPORT C

Pursuant to the Agreement on the Gratuitous Transfer of the Equity Interests in Liaoning Port Group Limited signed by the State-owned Assets Supervision and Administration Commission of the People’s Government of Liaoning Province (hereinafter referred to as the “Liaoning SASAC”) and China Merchants (Liaoning) Port Development Company Limited (hereinafter referred to as “China Merchants Liaoning”) on 31 May 2019, the nil consideration transfer of the 1.1% equity interests held by Liaoning SASAC in Liaoning Port Group to China Merchants Liaoning was completed on 30 September 2019. Upon completion of the equity transfer, China Merchants Liaoning held 51.00% equity interests in Liaoning Port Group, whose ultimate de facto controller was changed from Liaoning SASAC to China Merchants Group Limited (“China Merchants Group”). The ultimate de facto controller of Yingkou Port Group was also changed from Liaoning SASAC to China Merchants Group.

On 7 April 2020, a shareholders’ general meeting of Yingkou Port Group resolved to approve the transfer of the 6.28% equity interests of the Company (corresponding to the subscribed capital contribution of RMB1,256,184,900) held by a shareholder of Yingkou Port Group, being Agricultural Bank of China Co., Ltd. Yingkou Development Zone Branch, to ABC Financial Assets Investment Co., Ltd. (農銀金融資產投資有限公司). Yingkou Port Group completed the business registration change in respect of such equity transfer on 8 May 2020.

Pursuant to the stipulations of the Voting Rights Entrustment Agreement signed by Liaoning Port Group and PDA on 29 March 2021, Liaoning Port Group entrusted PDA to exercise all shareholders rights of the 22.965% equity interests it held in Yingkou Port Group except for income rights, disposal rights (including share pledge), rights of subscription, capital increase/right of first refusal. After the agreement came into effect, PDA enjoyed the voting rights corresponding to an aggregate of 45.93% equity interests of Yingkou Port Group. On 29 March 2019, Liaoning Port Group and PDA entered into the Joint Statement Between Liaoning Port Group Limited and Dalian Port Corporation Limited on the Matters Relating to the Entrustment of Voting Rights of Ying Kou Port Group Corporation Limited, pursuant to which, PDA would exercise shareholders’ rights as stipulated in the Voting Rights Entrustment Agreement and re-elect the members of the board of directors of Yingkou Port Group, while PDA would appoint new directors for Yingkou Port Group. From the signing date of the Voting Rights Entrustment Agreement and prior to the completion of the re-election, being the transition period, within Liaoning Port Group and PDA, Liaoning Port Group will delegate the management power of Yingkou Port Group to the level of PDA. PDA will directly manage Yingkou Port Group. During the transition period, Liaoning Port Group will not, in any way, exert influence on the current directors of Yingkou Port Group appointed by it that is contrary to the wishes of PDA, or engage in other behaviors that may cause the control of Yingkou Port Group to be unstable. Under the above arrangement, PDA has established control over Yingkou Port Group, and Liaoning Port Group has established indirect control over Yingkou Port Group through its wholly-owned subsidiary, being PDA.

– III-3-61 –

VALUATION REPORT C

APPENDIX III-3

(II) Overview of Client 2

Name: Liaoning Port Holdings (Yingkou) Co., Ltd. (遼港控股(營口)有限公司)

Type: Limited liability company (legal person sole investment by foreign investment company)

Legal residence: Room 722, 05 Yigang Business Building, No.1 Yinggang Road, Bayuquan District, Yingkou, Liaoning Province (production premise: Bayuquan District 18-Industrial Company Auto Repair Factory Workshop)

Unified social credit code: 91210804MA10TQ454G

Authorized representative: Cao Yingfeng (曹應峰)

Registered capital: RMB10 billion

Major scope of business: licensed businesses: port operation, construction engineering design, special equipment installation, transformation and repair, special equipment manufacturing, road cargo transportation (excluding dangerous goods), accommodation services, catering services, bathing services, printed matter binding services, food operations; residential interior decoration, various engineering construction activities, urban domestic waste business services, goods import and export, technology import and export, construction professional operations, domestic ship management business (projects that are subject to approval according to law may only be operated after approval by relevant departments; specific business projects are subject to the approval results)

General projects: auto parts wholesale, construction steel products sales, special equipment sales, handling equipment manufacturing, handling equipment sales, construction materials sales, industrial textile products sales, motor vehicle repair and maintenance, rubber products sales, labor protection supplies production, labor protection products sales, heating services, property management, hardware product wholesale, building decoration, plumbing pipe parts and other construction metal products manufacturing, daily necessities sales, office supplies sales, daily wood products sales, chemical products sales (excluding licensed chemical products), car rental, housing rental, non-residential real estate rental, domestic cargo transportation agency, conference and exhibition services, professional cleaning, cleaning, disinfection services, sewage treatment and recycling, landscaping engineering construction, loading and unloading, general cargo warehousing services (excluding hazardous chemicals and other projects requiring approval), domestic shipping agency, storage and packing maintenance, urban greening management, machinery and equipment leasing, special equipment leasing, renewable resource sales, environmental protection monitoring, international shipping management business, production of industrial textile products, manufacturing of wooden containers, and sales of wooden containers (except for the projects that shall be approved according to law, business activities are operated independently with business license).

– III-3-62 –

VALUATION REPORT C

APPENDIX III-3

(III) Overview of the appraised entity

Name: Yingkou Port Bulk Cargo Terminal Co., Ltd. (營口港散貨碼頭有限公司)

Legal residence: Room 506, 5/F, Donggangbu Port Office Building (Second Unit), Tianshan Street, Bayuquan District, Yingkou City, Liaoning Province

Unified social credit code: 91210804MA11BA744R

Authorized representative: Gao Dianzhong (高殿忠)

Registered capital: RMB100,000

Major scope of business: licensed businesses: Port cargo loading, unloading, handling and freight (projects subject to approval according to law may only be carried out after approval by relevant departments, and specific business projects are subject to the approval results); general projects: general cargo storage services (excluding hazardous chemicals and other projects that require approval), land use rights leasing, non-residential real estate leasing, machinery equipment leasing, special equipment leasing (except for projects that are subject to approval according to law, business activities are carried out independently according to law)

Yingkou Port Bulk Cargo Terminal Co., Ltd. was established on 26 August 2021, its shareholders is Ying Kou Port Group Corporation Limited.

II. EXPLANATIONS ON THE ECONOMIC ACTIVITY

Ying Kou Port Group Corporation Limited intended to transfer the equity interests held in Yingkou Port Bulk Cargo Terminal Co., Ltd. (營口港散貨碼頭有限公司) to Liaoning Port Holdings (Yingkou) Co., Ltd. (遼港控股(營口)有限公司).

The economic activity has been approved by China Merchants Group’s Approval of the Plan for the Revitalization of the Northeast Phase II Project (Zhao Fa Zhan Lue Zi [2021] No. 475).

III. EXPLANATIONS ON THE VALUATION TARGET AND SCOPE

(I) Valuation Target and Scope

The valuation target and the valuation scope are the same as the valuation target and the valuation scope involved in the economic activity.

The valuation target is the value of all shareholders’ equity of Yingkou Port Bulk Cargo Terminal Co., Ltd. (營口港散貨碼頭有限公司).

– III-3-63 –

APPENDIX III-3

VALUATION REPORT C

The scope of valuation covers the assets and liabilities as at the valuation benchmark date declared by Yingkou Port Bulk Cargo Terminal Co., Ltd. and audited by professional institutions. The accounting statements corresponding to the assets and liabilities declared by the enterprise have been audited by ShineWing Certified Public Accountants (Special General Partnership), which has issued the audit report No. XYZH/2021BJAA20606 on 27 October 2021. The audit opinion is that the attached pro forma financial statements were prepared in accordance with the basis of preparation as described in Note 3 of the pro forma financial statements in all material aspects, reflecting the pro forma financial conditions of the bulk cargo terminal as at 31 August 2021, 31 December 2020 and 31 December 2019 and its pro forma operating results in January to August 2021, in 2020 and in 2019 based on the basis of preparation.

The details are shown in the table below.

Unit: RMB

No.	Name of item	Name of item	Carrying amount
1	I.	Total current assets	412,738,299.93
2		Cash at bank and on hand	6,988,687.27
3		Accounts receivable	37,762,006.49
4		Prepayments	200,000.00
5		Other receivables	257,399.85
6		Inventories	360,341.22
7		Other current assets	367,169,865.10
8	II.	Total non-current assets	5,510,052,507.13
9		Fixed assets	4,402,204,853.44
10		Intangible assets	1,107,847,653.69
11	**III. **	Total assets	5,922,790,807.06
12	IV.	Total current liabilities	412,313,126.57
13		Accounts payable	24,344,883.56
14		Advances from customers	20,224,525.62
15		Employee benefits payable	1,815,798.01
16		Taxes payable	610,644.59
17		Other payables	365,317,274.79
18	V.	Total liabilities	412,313,126.57
19	VI.	Net assets	5,510,477,680.49

– III-3-64 –

VALUATION REPORT C

APPENDIX III-3

(II) Breakdown and Characteristics of Physical Assets

The physical assets and land use rights included in the scope of valuation are as follows:

Unit: RMB

		Original	Net carrying
Name of item	Quantity	carrying amount	amount
Fixed assets
Buildings	73,238.10 sq.m.	110,707,480.32	75,383,613.16
Structures	145	5,164,992,084.90	3,823,735,896.54
Machinery and
equipment	735.00	950,582,770.39	502,780,178.24
Vehicles	8.00	3,834,000.00	191,700.00
Electronic equipment	170.00	989,903.93	113,465.50
Intangible assets
Land use rights	4,396,185.69 sq.m.	1,481,122,772.84	1,107,847,653.69
Total		7,712,229,012.38	5,510,052,507.13

IV. EXPLANATIONS ON THE VALUATION BENCHMARK DATE

The valuation benchmark date is 31 August 2021.

Major factors considered in determining the valuation benchmark date include the time requirement on the implementation of the economic activity. The end of the accounting period was adopted to facilitate the defining of the scope of valuation and the accurate and efficient stocktaking of assets.

– III-3-65 –

VALUATION REPORT C

APPENDIX III-3

• V. EXPLANATIONS ON MAJOR EVENTS WHICH MAY AFFECT THE VALUATION

1. The information on pledge or mortgage of assets that are included in the scope of valuation is as follows:

				Commencement	Ending		Contract	Rental
		Total	Balance of	date of	date of	Guarantee	interest	calculation
Leasing company	Borrower	borrowings	borrowings	borrowings	borrowings	method	rate	method	Collateral
		_(RMB0’000) _	(RMB0’000)
Industrial Bank	Ying Kou Port	80,000.00	23,333.33	2017/5/18	2023/5/18	Credit	4.410%	Principal in equal	Fairy Island Port
Financial Leasing	Group							instalments	Pool 1 1-2#
Co., Ltd.	Corporation								refined oil and
	Limited								liquid
									chemicals
									terminals, Port
									Pool 5 65#
									steel and
									general cargo
									berth
Shanghai Pudong	Ying Kou Port	50,000.00	12,500.00	2017/11/28	2022/11/21	Credit	3.325%	Principal in equal	Berth 62# in
Development	Group							instalments	Bayuquan Port
Bank Financial	Corporation								Area
Leasing Co., Ltd.	Limited
Bank of Beijing	Ying Kou Port	50,000.00	17,500.00	2018/4/25	2023/4/25	Credit	5.5575%	Principal in equal	Berths 68# and
Financial Leasing	Group							instalments	70#
Co., Ltd.*(北銀金	Corporation
融租賃有限公司)	Limited
Jiangxi Financial	Ying Kou Port	80,000.00	25,560.00	2016/12/16	2023/3/3	Credit	4.410%	Interest in equal	Berths 66# and
Leasing Co., Ltd.	Group							instalments	67#
	Corporation
	Limited

– III-3-66 –

VALUATION REPORT C

APPENDIX III-3

2. The assets included in the scope of valuation have been leased out as follows:

Name of						Annual
the contract	Leasee	Leased assets	Title certificate number	**Area **	Lease term	rental
						(RMB, tax
				(sq.m.)		inclusive)
Land Use Rights	Yingkou Xingang	Land use rights	Liao (2020) Yingkou	298,720.25	2021/1/1-	4,480,803.66
Lease	Ore Terminal		Bayuquan Real Estate No.		2021/12/31
Agreement	Co., Ltd. (營口		0027263
	新港礦石碼頭有
	限公司)
Land Use Rights	Yingkou Port	Land use rights	Liao (2020) Yingkou	2,431,326.47	2021/1/1-	36,469,900.00
Lease	Liability Co.,		Bayuquan Real Estate No.		2021/12/31
Agreement	Ltd.		0029352, 0029354, 0029361,
			0029375, 0029388, 0029391,
			0027202, 0027222, 0027228,
			0027242, 0027266, 0032267,
			0032270, 0035276, 0032298,
			0035276 and Bayuquan Guo
			Yong (2007) No. 0216 and
			0217
2021 Asset Lease	Yingkou Port	Wharf berth	Bayuquan Port Area 1 Port	2021/1/1-	349,897,100.00
Agreement	Liability Co.,		Pool 18# ore berth, Port	2021/12/31
	Ltd.		Pool A 3# general berth,
			Port Pool A 1-2# refined oil
			and liquid chemical berths,
			Port Pool 5 61#-71# general
			berths, Fairy Island 201-
			203# berths and yards and
			tank farms

Including: Fairy Island 201-203# berths and ore dump were not within the scope of this valuation, and the corresponding rental was RMB110,463,227.26.

– III-3-67 –

VALUATION REPORT C

APPENDIX III-3

1. Part of the buildings included in the scope of valuation are in process, with details as follows:

			Date of		**Carrying **	amount
No.	Name of building	Structure	completion	GFA	Original value	Net value
				(m2)
1	Gasoline loading	Brick and concrete	2009/5/22	355.66	679,523.00	358,901.40
	pump room
2	Gasoline tank farm	Brick and concrete	2009/5/22	313.85	447,300.00	236,248.95
	shipment pump
	room power
	distribution room
3	Ethanol ship loading	Brick and concrete	2009/5/22	434.33	741,807.00	391,797.73
	and foam pump
	room
4	Railway unloading	Brick and concrete	2009/5/22	873.77	2,631,462.00	1,389,850.51
	pump room
5	Gateroom 1	Brick and concrete	2009/5/22	42.70	141,812.00	74,900.37
6	Gateroom 2	Brick and concrete	2009/5/22	29.67	121,158.00	63,991.62
7	Diesel unloading	Brick and concrete	2009/5/22	489.87	4,389,418.74	2,318,344.66
	pump room
8	Transformation of	Brick and concrete	2009/5/22	137.89	1,806,162.51	953,954.83
	train trestle bridge
	to low-voltage
	substation
9	1#Steel library	Complex	2015/12/31	22,056.45	22,067,284.00	17,315,462.18
10	2#Steel library	Complex	2015/12/31	19,235.92	25,286,652.00	19,841,592.94
11	Tool library	Complex	2015/12/31	1,639.11	1,062,216.00	833,485.49
12	Machine repair	Brick and concrete	2015/12/27	1,087.04	1,857,362.00	1,457,410.05
	workshop
13	Substation (54#)	Brick and concrete	2011/12/29	381.87	572,402.00	333,467.53
14	1#2#Substation	Brick and concrete	2011/12/30	588.77	1,621,638.41	944,727.23
	(71#、72#change)
15	Port pool A	Reinforced	2016/12/31	628.97	3,129,762.00	2,499,067.54
	1#Substation	concrete
16	Fire pump room	Brick and concrete	1998/11/1	339.79	664,457.85	90,034.04
17	General yard (2#)	Steel and concrete	2011.12.30	3,929.69	4,250,986.91	2,949,712.58
18	Comprehensive	Steel and concrete	2011.12.29	2,291.96	4,617,500.58	3,204,032.35
	storage yard
	(logistics mat)
19	Steel yard (1#)	Steel and concrete	2011.12.29	11,999.69	21,245,342.86	14,741,907.35
20	Water supply	Frame structure,	2020-06-21	213.07	477,152.30	446,932.65
	regulating station	one floor above
		ground

– III-3-68 –

VALUATION REPORT C

APPENDIX III-3

			Date of		**Carrying **	amount
No.	Name of building	Structure	completion	GFA	Original value	Net value
				(m2)
21	Port pool A sewage	Reinforced-	2009-11-04	508.70	948,770.03	525,144.21
	treatment plant	concrete
		structure
22	1#Courtroom	Brick and concrete	2013-10-01	701.37	1,483,229.50	931,344.52
		structure
23	2#Courtroom	Brick and concrete	2013-10-01	701.37	1,483,229.50	931,344.52
		structure
24	Dry powder room	Brick and concrete	2015-12-15	4.92	28,373.00	22,327.66
25	Dry powder room	Brick and concrete	2015-12-15	4.92	28,373.00	22,391.97
26	Dry powder room	Brick and concrete	2015-12-15	4.92	28,373.00	22,456.28
27	Control building	Frame	2015-12-15	622.00	989,981.00	785,780.92
28	Gateroom	Brick and concrete	2015-12-15	16.29	85,991.00	68,448.84
		structure
29	Oil delivery arm	Brick and concrete	2015-12-15	52.19	70,231.00	56,063.07
	control room	structure
30	Oil delivery arm	Brick and concrete	2015-12-15	52.19	70,231.00	56,222.26
	control room	structure
31	Nitrogen Generator		March 2009	142.70	1,023,545.00	540,602.35
	Room
32	Color board	Color board	2008	12.00	33,503.50	1,675.18
	insulation room
	for parking lot
33	Color board	Color board	2008	12.00	33,503.50	1,675.18
	insulation room
	for parking lot
	Total			69,905.64	104,118,734.19	74,411,298.95

The ownership certificates for the properties are in process. Ying Kou Port Group Corporation Limited has issued a statement of ownership stating that the property rights belong to Ying Kou Port Group Corporation Limited and there are no disputes on ownership. After completion of the capital increase, the property ownership certificates will be registered in the name of Yingkou Bulk Cargo Terminal Co., Ltd..

– III-3-69 –

VALUATION REPORT C

APPENDIX III-3

VI. EXPLANATIONS ON ASSETS AND LIABILITIES STOCKTAKING

The scope of assets and liabilities stocktaking is consistent with the scope of valuation. As of the valuation benchmark date, the carrying amount of total assets, liabilities and net assets was RMB5,922,790,800, RMB412,313,100 and RMB5,510,477,700, respectively.

To cooperate in the assets valuation, Yingkou Port Bulk Cargo Terminal Co., Ltd. (營口 港散貨碼頭有限公司) had detailed planning for the stocktaking, and arranged relevant departments and employees of the company to establish a special working group on assets stocktaking to conduct stocktaking on the assets and liabilities included in the scope of valuation. Appraisers provided centralized guidance on the working group, explained the standards on filling in the breakdown of stocktaking and notes in the process of stocktaking, issued the list of materials to be collected and prepared and emphasized the implementation of the ownership of property rights, specified the layout of physical items and improved accounting vouchers. The property ownership certificate documents of the relevant assets have been provided as required. During the on-site survey, the appraisers cooperated in carrying out a physical site visit to implement the layout of the physical assets, and provided materials regarding use, maintenance and inspection records.

The stocktaking was carried out separately according to different types of assets.

(I) Forecast on Future Operations and Earnings

The forecast figures of the valuation was provided by Yingkou Port Bulk Cargo Terminal Co., Ltd.. The appraisers conducted an independent and objective analysis of the forecast it provided. The analysis work includes a full understanding of the basis and explanation of the preparation of the forecast, analysis of the supporting evidence of the forecast, the basic assumptions of the forecast, the accounting policy selected for the forecast, and the calculation method of the forecast figures, etc. The forecast figures for the future years are as follows:

Unit: RMB0’000

		September to
		December
Items		2021	2022	2023	2024	2025	2026
I.	Total operating income	81,403.24	208,811.53	213,451.92	216,154.07	220,436.49	223,801.66
	Less: Operating costs	63,328.47	151,428.06	155,142.86	156,023.78	159,977.87	162,427.87
	Taxes and surcharges	1,358.54	3,694.37	3,655.28	3,686.06	3,712.27	3,733.10
	General and
	administrative
	expenses	2,416.99	4,956.84	5,047.99	5,066.23	5,136.06	5,308.23
II.	Operating profit	14,299.24	48,732.27	49,605.78	51,378.01	51,610.28	52,332.46
III.	Total profit	14,299.24	48,732.27	49,605.78	51,378.01	51,610.28	52,332.46
	Less: Income tax
	expenses	3,571.52	12,183.07	12,401.44	12,844.50	12,902.57	13,083.11
IV.	Net profit	10,727.72	36,549.20	37,204.33	38,533.50	38,707.71	39,249.34

– III-3-70 –

VALUATION REPORT C

APPENDIX III-3

VII. LIST OF MATERIALS

Major materials provided by the client are as follows:

1. Business licenses;

2. The corresponding economic activity documents on the valuation.

Major materials provided by the appraised entity are as follows:

1. Declaration forms for assets appraisal (pattern issued by the valuation agency);

2. Business licenses;

3. Asset ownership certifications and property right certifications;

4. Material contracts and agreements;

5. Project budget and financial accounts materials;

6. Other materials.

– III-3-71 –

VALUATION REPORT C

APPENDIX III-3

EXPLANATIONS ON THE ASSET VALUATION

I. EXPLANATIONS ON THE VALUATION TARGET AND SCOPE

(I) The Valuation Target and the Contents of the Scope of Valuation

The valuation target and the valuation scope are the same as the valuation target and the valuation scope involved in the economic activity.

The valuation target is the value of all shareholders’ equity of Yingkou Port Bulk Cargo Terminal Co., Ltd. (營口港散貨碼頭有限公司).

The scope of valuation covers the assets and liabilities as at the valuation benchmark date declared by Yingkou Port Bulk Cargo Terminal Co., Ltd. and audited by professional institutions. The accounting statements corresponding to the assets and liabilities declared by the enterprise have been audited by ShineWing Certified Public Accountants (Special General Partnership), which has issued the audit report No. XYZH/2021BJAA20606 on 27 October 2021. The audit opinion is that the attached pro forma financial statements were prepared in accordance with the basis of preparation as described in Note 3 of the pro forma financial statements in all material aspects, reflecting the pro forma financial conditions of the bulk cargo terminal as at 31 August 2021, 31 December 2020 and in 31 December 2019 and its pro forma operating results in January to August 2021, in 2020 and in 2019 based on the basis of preparation.

The details are shown in the table below.

Unit: RMB

No.	Name of item	Name of item	Carrying amount
1	I.	Total current assets	412,738,299.93
2		Cash at bank and on hand	6,988,687.27
3		Accounts receivable	37,762,006.49
4		Prepayments	200,000.00
5		Other receivables	257,399.85
6		Inventories	360,341.22
7		Other current assets	367,169,865.10
8	II.	Total non-current assets	5,510,052,507.13
9		Fixed assets	4,402,204,853.44
10		Intangible assets	1,107,847,653.69
11	**III. **	Total assets	5,922,790,807.06
12	IV.	Total current liabilities	412,313,126.57
13		Accounts payable	24,344,883.56
14		Advances from customers	20,224,525.62
15		Employee benefits payable	1,815,798.01
16		Taxes payable	610,644.59
17		Other payable	365,317,274.79
18	V.	Total liabilities	412,313,126.57
19	VI.	Net assets	5,510,477,680.49

– III-3-72 –

VALUATION REPORT C

APPENDIX III-3

The physical assets and land use rights included in the scope of valuation are as follows:

Unit: RMB

		Original	Net carrying
Name of item	Quantity	carrying amount	amount
Fixed assets
Buildings	73,238.10	110,707,480.32	75,383,613.16
Structures	145	5,164,992,084.90	3,823,735,896.54
machinery and
equipment	735.00	950,582,770.39	502,780,178.24
Vehicles	8.00	3,834,000.00	191,700.00
Electronic equipment	170.00	989,903.93	113,465.50
Intangible assets
Land use rights	4,396,185.69	1,481,122,772.84	1,107,847,653.69
Total		7,712,229,012.38	5,510,052,507.13

(II) Breakdown and Characteristics of Physical Assets

The details of the assets included in the scope of this valuation are as follows:

1. Inventories – revolving materials in stock

Inventories included in the scope of valuation are the revolving materials in stock, with a total carrying amount of RMB360,341.22, the provision for decline in value of RMB0.00, and the net value of RMB360,341.22. It mainly includes lubricating oil, labour protection appliance and spare parts, which are mainly stored in the material warehouse and other areas of the enterprise.

2. Buildings (structures)

Those included in the scope of valuation are buildings (structures) owned by Ying Kou Port Group Corporation Limited and are mainly distributed in Yingkou Port and Bayuquan District, Yingkou City, Liaoning Province, including an aggregate of 40 buildings, with a total floor area of 73,238.10 sq.m.; and an aggregate of 145 structures. The main buildings include the Group’s substations, No. 1 and No. 2 steel warehouse, general yard and machine repair workshop, which are mainly production and auxiliary buildings of the enterprise.

– III-3-73 –

VALUATION REPORT C

APPENDIX III-3

Buildings (structures) are mainly self-built by enterprise. The structure types are mainly frame structure, steel structure and brick-concrete structure. The main structure features of buildings (structures) are as follows:

(1) Frame structure

The foundation of the frame structure building applies reinforced concrete independent foundation and reinforced concrete bar foundation. The upper structure applies cast-in-place reinforced concrete columns, beams and slabs, forming the skeleton of the entire building, and enclosure with a 370mm of solid brick. It applies cast-in-place reinforced concrete roof, cement mortar leveling, perlite thermal insulation layer and modified asphalt felts for waterproofing. Most of which applies cement flooring or terrazzo flooring, cement mortar screeding and paint brushing for outer wall and interior wall. It also applies doors made of steel and wood material, plastic steel windows or aluminum alloy windows.

Supporting projects: power circuit, general lighting and fire fighting system

(2) Brick-concrete structure

The foundation of the brick-concrete structure applies a concrete bar foundation, cast-in-place reinforced concrete structural columns, and 370mm or 240mm solid brick for interior and outer walls. It applies cast-in-place reinforced concrete slab, cement mortar leveling for roofing, perlite insulation layer, modified asphalt waterproof membrane or rigid waterproofing. The ground is mostly made of cement or terrazzo. The exterior walls were smoothed and brushed with cement mortar and the interior dry were brushed with great white or cement mortar. It also applies wooden doors, plastic steel windows or aluminum alloy windows.

Supporting projects: general lighting, fire fighting system and water supply and drainage

(3) Steel structure

Most of the foundations of steel structure buildings apply cast-in-place reinforced concrete independent foundations. The upper structure of the independent foundation is equipped with reinforced concrete ground beams. The main structure of upper structure consists of steel structural columns, column bracing, roof trusses, roof truss horizontal bracing, purlins and crane beams. The part of the wall body below 1.2 meters is grey sand solid brick wall wiped with grey brush paint. The upper wall is made of double-layer thermal insulation color steel profiled panels, the roofing is made of double-layer color steel thermal insulation panels, and the wall is equipped with plastic steel windows or windowless, and finished blockboard sliding doors. The ground is 250mm-thick concrete ground.

Supporting works: power circuit, general lighting and fire fighting system

– III-3-74 –

VALUATION REPORT C

APPENDIX III-3

(4) Outdoor supporting projects

Outdoor supporting projects of the plant area are mainly divided into two types, namely supporting public facilities and supporting projects required for process. Supporting public facilities include roads, enclosures, domestic water supply, heating pipelines, fire fighting water supply, rainwater pipes, power distribution, communications, networks and monitoring, etc.. The supporting projects required for process mainly include various fire fighting pools, pipe corridor extensions, connecting corridors, sewage treatment stations of coal storage yards in port pools, process pipelines of oil transportation systems, special railway lines, etc..

(5) The basic information of the terminal assets included in the scope of the valuation is as follows:

A total of 18 berths are included in the scope of the valuation, with a total length of 4,954.00 meters. The assets were self-built between 2008 and 2015.

		Structure and	Berthing		Front water
No.	Berth name	form	capacity	Length	**depth **	Quantity Main usage
			(ton)	(m)	(m)
1	Port pool A 3#	Gravity caisson	7	260	-18	1 General bulk cargo
	general berth
2	Port pool A 4#	Gravity caisson	7	255	-18	1 General bulk cargo
	general berth
3	Port pool A 5#	Gravity caisson	7	278	-18	1 General bulk cargo
	general berth
4	Port pool A 6#	Gravity caisson	7	255	-18	1 General bulk cargo
	general berth
5	1-2# refined oil	High pile	5	470	-14.4	2 Refined oil
	and liquid
	chemicals
	terminals
6	18# terminal	High pile beam	30	452	-24.5	1 Ore
	berth
7	61# general	Gravity block	7	260	-15.5	1 General bulk cargo
	berth
8	62# general	Gravity block	7	260	-15.5	1 General bulk cargo
	berth
9	63# general	Gravity block	7	260	-15.5	1 General bulk cargo
	berth
10	64# general	Gravity block	7	310	-15.5	1 Steel and general
	berth					cargo

– III-3-75 –

APPENDIX III-3

VALUATION REPORT C

		Structure and	Berthing		Front water
No.	Berth name	form	capacity	Length	**depth **	**Quantity **	Main usage
			(ton)	(m)	(m)
11	65# general	Gravity block	7	253	-15.5	1	Steel and general
	berth						cargo
12	66# general	Gravity block	7	260.1	-15.5	1	Steel and general
	berth						cargo
13	67# general	Gravity block	7	240.9	-15.5	1	Steel and general
	berth						cargo
14	68#-71# general	Gravity block	7	1,069	-15.5	4	Steel and general
	berths						cargo
	Total			4,883		18

3. Equipment under fixed assets

The equipment under fixed assets in the scope of valuation include machinery and equipment, vehicles and electronic device. The details of major assets on the valuation benchmark date are as follows:

• (1) There are a total of 735 pieces of machinery and equipment, mainly include crane, container reach stacker, forklift, portal crane and container reach stackers. As of the valuation benchmark date, most of the equipment was well maintained and can be used normally.

• (2) The vehicles for valuation are mainly 8 office vehicles, all of which are sprinklers. As of the valuation benchmark date, most of the equipment was well maintained and can be used normally.

• (3) Electronic device mainly includes a total of 170 in-vehicle digital walkietalkies, operating terminal equipment, fax machines, computers, printers and servers. As of the valuation benchmark date, most of the equipment was well maintained and can be used normally. Part of the equipment purchased a relatively long time ago with poor performance is to be scrapped.

(III) Intangible Assets Accounted for or Not Accounted for as Declared by the Enterprise

Ying Kou Port Group Corporation Limited has a total of 27 intangible assets – land use rights in the scope of this valuation, all of which have obtained the land title certificates. The recorded area of the parcel use rights is an aggregate of 6,855,933.68 sq.m., and the area of land use rights included in the scope of this valuation is 4,396,185.69 sq.m.. The original carrying amount is RMB1,481,122,772.84, and the carrying amount on the valuation benchmark date was RMB1,107,847,653.69.

– III-3-76 –

VALUATION REPORT C

APPENDIX III-3

The specific ownership registration for the land occupied by the assets appraised is shown in the table below:

									Transfer area
									included in the
				Date of	Nature of		Termination		scope of
No.	Title certificate no.	Parcel name	Location	acquisition	land	Land usage	date	Area recorded	valuation
1	Bayuquan Guo Yong	Port Pool A 2#	In the Port	2009/12/16	Transfer	Land for	2059/12/15	486,764.80	126,764.80
	[2009] No. 268	Land	Area			transportation
2	Liao (2020) Yingkou	Port Pool A 1#	In the Port	2020/11/11	Transfer	Land for	2059/6/9	384,618.90	384,538.25
	Bayuquan Real	Land	Area			transportation
	Estate No. 0032395
3	Liao (2020) Yingkou	Phase IV	In the Port	2020/11/10	Transfer	Land for	2059/12/15	535,388.00	484,941.15
	Bayuquan Real	Project 7#	Area			transportation
	Estate No. 0032260	Land
4	Liao (2018) Yingkou	Phase IV 4#	In the Port	2018/1/24	Transfer	Port terminal	2059/12/15	965,263.59	231,288.84
	Bayuquan Real	Plot	Area
	Estate No. 0029366
5	Liao (2020) Yingkou	Logistics	In the Port	2020/9/23	Transfer	Port terminal	2052/10/8	22,452.32	4,222.96
	Bayuquan Real	Parcel 1	Area
	Estate No. 0027169
6	Liao (2020) Yingkou	Logistics	In the Port	2020/9/23	Transfer	Port terminal	2052/10/8	413,338.24	14,697.35
	Bayuquan Real	Parcel 2	Area
	Estate No. 0027266
7	Bayuquan Guo Yong	Administrative	Outside the	2009/6/5	Transfer	Commercial and	2049/6/3	42,987.66	245.00
	[2009] No. 0127	Zone 1	Port			residential
			Area

– III-3-77 –

APPENDIX III-3

VALUATION REPORT C

									Transfer area
									included in the
				Date of	Nature of		Termination		scope of
No.	Title certificate no.	Parcel name	Location	acquisition	land	Land usage	date	Area recorded	valuation
8	Liao (2020) Yingkou	Administrative	Outside the	2020/9/23	Transfer	Commercial and	2079/6/3	29,016.61	100.00
	Bayuquan Real	Zone 2	Port			residential
	Estate No. 0027176		Area
9	Bayuquan Guo Yong	Port Pool A 4#	In the Port	2009/12/16	Transfer	Land for	2059/12/15	396,995.30	396,179.07
	[2009] No. 267	Land	Area			transportation
10	Liao (2020) Yingkou	Parcel 01#	In the Port	2007/12/18	Transfer	Port terminal	2049/12/25	43,979.50	43,979.50
	Bayuquan Real		Area
	Estate No. 0029352
11	Liao (2020) Yingkou	Parcel 02#	In the Port	2007/12/18	Transfer	Port terminal	2049/12/25	38,455.14	38,455.14
	Bayuquan Real		Area
	Estate No. 0027222
12	Bayuquan Guo Yong	Parcel 04#	In the Port	2007/12/18	Transfer	Port terminal	2049/12/25	20,049.55	20,049.55
	[2007] No. 0216		Area
13	Liao (2020) Yingkou	Parcel 03#	In the Port	2007/12/18	Transfer	Port terminal	2049/12/25	199,427.59	199,427.59
	Bayuquan Real		Area
	Estate No. 0029375
14	Liao (2020) Yingkou	Parcel 07#	In the Port	2020/9/23	Transfer	Port terminal	2049/12/25	298,720.25	294,174.75
	Bayuquan Real		Area
	Estate No. 0027263
15	Bayuquan Guo Yong	Parcel 05#	In the Port	2007/12/18	Transfer	Port terminal	2049/12/25	17,452.00	17,452.00
	[2007] No. 0217		Area
16	Liao (2020) Yingkou	Parcel 06#-1	Haixingban	2010/12/21	Transfer	Industrial	2049/12/25	189,206.47	189,206.47
	Bayuquan Real
	Estate No. 0029388
17	Liao (2020) Yingkou	Parcel 06#-2	Haixingban	2005/9/27	Transfer	Industrial	2052/6/17	141,174.75	141,174.75
	Bayuquan Real
	Estate No. 0032270
18	Liao (2020) Yingkou	Parcel 08#	Haixingban	2010/12/21	Transfer	Industrial	2052/6/17	90,787.67	90,787.67
	Bayuquan Real
	Estate No. 0029354

– III-3-78 –

APPENDIX III-3

VALUATION REPORT C

									Transfer area
									included in the
				Date of	Nature of		Termination		scope of
No.	Title certificate no.	Parcel name	Location	acquisition	land	Land usage	date	Area recorded	valuation
19	Liao (2020) Yingkou	Parcel 09#-1	Haixingban	2010/12/21	Transfer	Industrial	2052/6/17	63,085.71	63,085.71
	Bayuquan Real
	Estate No. 0029361
20	Liao (2020) Yingkou	Parcel 09#-2	Haixingban	2006/7/18	Transfer	Port terminal	2052/6/17	87,327.49	87,327.49
	Bayuquan Real
	Estate No. 0027242
21	Liao (2020) Yingkou	Parcel 10#	Haixingban	2020/10/12	Transfer	Port terminal	2052/6/17	382,688.05	336,238.11
	Bayuquan Real
	Estate No. 0029391
22	Liao (2020) Yingkou	Parcel 11#	In the Port	2020/11/10	Transfer	Port terminal	2052/6/17	294,463.16	235,562.67
	Bayuquan Real		Area
	Estate No. 0032298
23	Liao (2020) Yingkou	Parcel 13#	Haixingban	2010/12/21	Transfer	Industrial	2052/6/17	112,879.91	112,879.91
	Bayuquan Real
	Estate No. 0027228
24	Liao (2020) Yingkou	East of	Outside the	2005/9/27	Transfer	Warehousing	2046/11/27	29,923.93	29,923.93
	Bayuquan Real	Tianshan	Port
	Estate No. 0032267	Street,	Area
		Bayuquan
		District
25	Liao (2020) Yingkou	Administrative	Outside the	2020/9/23	Transfer	Industrial	2059/6/9	256,523.19	44,350.38
	Bayuquan Real	Zone 11	Port
	Estate No. 0027202		Area
26	Liao (2020) Yingkou	Phase III	In the Port	2020/12/7	Transfer	Port terminal	2052/7/17	1,153,176.60	797,872.65
	Bayuquan Real	project – 47	Area
	Estate No. 0035276
27	Yingkou Guo Yong	Yanchang	In the Port	2009/7/8	Transfer	Industrial	2054/5/19	159,787.30	11,260.00
	[2015] No. 5066	Village	Area
		Parcel
	Total							6,855,933.68	4,396,185.69

– III-3-79 –

VALUATION REPORT C

APPENDIX III-3

(IV) Type and Quantity of Off-balance-sheet Assets Declared by the Enterprise

Nil.

• (V) Type, Quantity and Carrying Amount (or Appraised Value) of Assets Involved in Making Reference to the Conclusions of Reports Issued by Other Institutions

Nil.

II. OVERALL EXPLANATIONS ON ASSETS VERIFICATION

(I) Arrangement of Assets Verifiers, Execution Time and Procedures

In accordance with relevant standards and regulations on assets appraisal and based on the accounting statements on the valuation benchmark date and the declaration forms for assets appraisal provided by the appraised entity, during the period from 25 August 2021 to 6 September 2021, four professional teams (financial team, real estate team, equipment team and land team) verified the assets and related liabilities within the scope of valuation.

Details of the verification procedures are as follows:

Guiding the appraised entity in assets and liabilities stocktaking and filling in the breakdown of assets and liabilities, collecting and summarizing various valuation materials provided by the appraised entity.

Adopting different methods by types to verify if the accounting statements are consistent with the actual accounts based on the accounting statements on the valuation benchmark date and the declaration forms for assets appraisal provided by the appraised entity under the cooperation of relevant employees of the appraised entity. Requiring the appraised entity to supplement, modify and improve the declaration forms for assets appraisal based on the verification results.

Verifying the valuation materials provided by the appraised entity, conducting necessary inspections on the materials about the legal ownership of relevant assets and sources of materials and paying due attention to the legal ownership of relevant assets.

Conducting investigations to understand significant events which may affect the assets valuation.

The conclusions on verification of assets are formed based on the above work after the communications with relevant parties.

– III-3-80 –

VALUATION REPORT C

APPENDIX III-3

• (II) Matters Affecting the Verification of Assets and the Handling Methods

1. The information on pledge or mortgage of assets that are included in the scope of valuation is as follows:

				Commencement	Ending		Contract	Rental
		Total	Balance of	date of	date of	Guarantee	interest	calculation
Leasing company	Borrower	borrowings	borrowings	borrowings	borrowings	method	rate	method	Collateral
		_(RMB0’000) _	(RMB0’000)
Industrial Bank	Ying Kou Port	80,000.00	23,333.33	2017/5/18	2023/5/18	Credit	4.410%	Principal in equal	Fairy Island Port
Financial Leasing	Group							instalments	Pool 1 1-2#
Co., Ltd.	Corporation								refined oil and
	Limited								liquid
									chemicals
									terminals, Port
									Pool 5 65#
									steel and
									general cargo
									berth
Shanghai Pudong	Ying Kou Port	50,000.00	12,500.00	2017/11/28	2022/11/21	Credit	3.325%	Principal in equal	Berth 62# in
Development	Group							instalments	Bayuquan Port
Bank Financial	Corporation								Area
Leasing Co., Ltd.	Limited
Bank of Beijing	Ying Kou Port	50,000.00	17,500.00	2018/4/25	2023/4/25	Credit	5.5575%	Principal in equal	Berths 68# and
Financial Leasing	Group							instalments	70#
Co., Ltd.* (北銀金	Corporation
融租賃有限公司)	Limited
Jiangxi Financial	Ying Kou Port	80,000.00	25,560.00	2016/12/16	2023/3/3	Credit	4.410%	Interest in equal	Berths 66# and
Leasing Co., Ltd.	Group							instalments	67#
	Corporation
	Limited

– III-3-81 –

VALUATION REPORT C

APPENDIX III-3

2. The assets included in the scope of valuation have been leased out as follows:

Name of the						Annual
contract	Leasee	Leased assets	Title certificate number	**Area **	Lease term	rental
						(RMB, tax
				(sq.m.)		inclusive)
Land Use Rights	Yingkou Xingang	Land use rights	Liao (2020) Yingkou	298,720.25	2021/1/1-	4,480,803.66
Lease	Ore Terminal		Bayuquan Real Estate No.		2021/12/31
Agreement	Co., Ltd. (營口		0027263
	新港礦石碼頭有
	限公司)
Land Use Rights	Yingkou Port	Land use rights	Liao (2020) Yingkou	2,431,326.47	2021/1/1-	36,469,900.00
Lease	Liability Co.,		Bayuquan Real Estate No.		2021/12/31
Agreement	Ltd.		0029352, 0029354, 0029361,
			0029375, 0029388, 0029391,
			0027202, 0027222, 0027228,
			0027242, 0027266, 0032267,
			0032270, 0035276, 0032298,
			0035276 and Bayuquan Guo
			Yong (2007) No. 0216 and
			0217
2021 Asset Lease	Yingkou Port	Wharf berth	Bayuquan Port Area 1 Port	2021/1/1-	349,897,100.00
Agreement	Liability Co.,		Pool 18# ore berth, Port	2021/12/31
	Ltd.		Pool A 3# general berth,
			Port Pool A 1-2# refined oil
			and liquid chemical berths,
			Port Pool 5 61#-71# general
			berths, Fairy Island 201-
			203# berths and yards and
			tank farms

Including: Fairy Island 201-203# berths and ore dump were not within the scope of this valuation, and the corresponding rental was RMB110,463,227.26.

(III) Verification Conclusion

The assets appraised are in normal use or under normal conditions, there is no major difference with the book records, and the ownership is complete and clear.

Part of real estates have not obtained the real estate certificates, but surveying reports have been completed, and the area determined after surveying is confirmed under this valuation.

– III-3-82 –

VALUATION REPORT C

APPENDIX III-3

III. EXPLANATIONS ON VALUATION TECHNOLOGY – COST APPROACH

(I) Current Assets

1. Cash at bank and on hand – cash at bank

The carrying amount of cash at bank is RMB6,988,687.27. There are a total of 2 bank accounts, of which, the balance with the Bank of China Yingkou Economic and Technological Development Zone Sub-branch is zero, and all cash at bank is deposited in the Dalian Branch of China Merchants Group Finance Co., Ltd.* (招商局集團財務有限公 司). Based on the reconciliation statements and related information provided by the enterprise, the appraisers check against the balance of the bank reconciliation statements on the valuation benchmark date firstly, in case of any difference, find out the reason for the difference by using the outstanding items in the balance reconciliation statements, and check whether it affects net assets one by one. Upon checking item by item, no outstanding items are found. The appraisers confirmed the bank account by letter, and the reply was consistent. Therefore, the verified carrying amount is determined as the appraised value of cash at bank.

It is finally confirmed that the appraised value of cash at bank is RMB6,988,687.27.

2. Accounts receivable, prepayments and other receivables

The book balance of accounts receivable, bad debt provision and net carrying amount is RMB39,082,363.52, RMB1,320,357.03 and RMB37,762,006.49, respectively. The accounting contents mainly include port fees receivable and provisional storage fee. Upon checking that the general ledger, subsidiary ledger and statements are consistent, the appraisers verified the time and contents of the accounts receivable, inquired about the reason why the receivable was not recovered, and confirmed large amounts by letter, so as to confirm that the carrying amount on the benchmark date was true and accurate. The amount that can be recovered and the amount that has been recently recovered and off-set shall be confirmed at the carrying amount. Upon the above valuation procedures, the appraised value of accounts receivable is RMB37,762,006.49.

The book balance of prepayments and bad debt provision is RMB200,000.00 and RMB0, respectively. The accounting contents include prepaid railway freight. Upon checking that the general ledger, subsidiary ledger and statements are consistent, the appraisers verified the time and contents of the prepayments, inquired about the reason why the receivable was not recovered, and confirmed large amounts by letter, so as to confirm that the carrying amount on the benchmark date was true and accurate. Upon the above valuation procedures, the appraised value of prepayments is RMB200,000.00.

– III-3-83 –

VALUATION REPORT C

APPENDIX III-3

The book balance of other receivables, bad debt provision and net carrying amount is RMB257,402.65, RMB2.80 and RMB257,399.85, respectively. The accounting contents include medical waste cleaning deposit and current accounts. Upon checking that the general ledger, subsidiary ledger and statements are consistent, the appraisers verified the time and contents of other receivables, inquired about the reason why the receivable was not recovered, and confirmed large amounts by letter, so as to confirm that the carrying amount on the benchmark date was true and accurate. Upon the above valuation procedures, the appraised value of other receivables is RMB257,399.85.

3. Inventories

As of the valuation benchmark date, the inventories of enterprise were the revolving materials in stock, with a total carrying amount of RMB360,341.22, the provision for decline in value of RMB0.00, and the net value of RMB360,341.22. It mainly includes lubricating oil, labour protection appliance and spare parts, which are mainly stored in the material warehouse and other areas of the enterprise.

According to the valuation procedure and taking into account of declaration forms for appraisal of the enterprise on the valuation benchmark date, appraisers have conducted sample checks and verification on the revolving materials in stock. The appraisers reviewed the quantity, unit price and amount in the inventory valuation schedule of the raw materials provided by them firstly, and then organized appraisers to conduct sample checks at the finished product storage site, and plus or minus the quantity of shipments and receipts from the benchmark date to the checking date based on the checking results, reverse the book amount on the benchmark date, and check against the book amount on the benchmark date to verify the book amount on the benchmark date. Upon investigation by the appraisers, the raw materials are stored in the warehouse of the enterprise and kept in good condition.

Upon learning from the enterprise and the checking and surveying by the appraisers, The inventories recycle is relatively fast, and there is no backlog. After inquiring with the supplier, the verified quantity multiplied by the inquiry unit price shall be taken as the appraised value of inventories. Finally, the appraised value of inventories was RMB360,341.22, with no increase or decrease.

4. Other current assets

The carrying amount of other current assets is RMB367,169,865.10. The accounting contents include the VAT input to be deducted.

According to the appraisal procedure and based on the valuation declaration schedule provided by the appraised entity, the appraisers have checked the consistency between accounts and account statements, understood the tax rates and preferential

– III-3-84 –

VALUATION REPORT C

APPENDIX III-3

policies implemented by the enterprise, verified the authenticity and rationality, and understood the reasons for the formation of other current assets, and judged the amount to be recovered according to the specific circumstance.

Finally, the appraised value of other current assets was determined as RMB367,169,865.10.

(II) Fixed assets – buildings

1. Scope of valuation

The buildings included in the scope of valuation are as follows:

Summary of Buildings under Fixed assets

Unit: RMB

			**Carrying **	amount
No.	Name of item	Quantity	Original value	Net value
1	Buildings	40	110,707,480.32	75,383,613.16
2	Structures and others	145	5,164,992,084.90	3,823,735,896.54
	Total		5,275,699,565.22	3,899,119,509.70
	Less: provision
	for impairment
	Total		5,275,699,565.22	3,899,119,509.70

2. Overview of Assets

Those included in the scope of valuation are buildings and fixed assets owned by Yingkou Port Bulk Cargo Terminal Co., Ltd. (營口港散貨碼頭有限公司) and are mainly distributed in Yingkou Port and Bayuquan District, Yingkou City, Liaoning Province, including an aggregate of 40 buildings and 145 structures. The assets were self-built between 1928 and 2018.

Buildings (structures) are mainly self-built by enterprise. The structure types are mainly frame structure, steel structure and brick-concrete structure. The main structure features of buildings (structures) are as follows:

(1) Frame Structure

The foundation of the frame structure building applies reinforced concrete independent foundation and reinforced concrete bar foundation. The upper structure applies cast-in-place reinforced concrete columns, beams and slabs, forming the skeleton of the entire building, and enclosure with 370mm or 240mm solid brick for

– III-3-85 –

VALUATION REPORT C

APPENDIX III-3

interior and outer walls. It applies cast-in-place reinforced concrete slab, cement mortar leveling for roofing, perlite insulation layer, modified asphalt waterproof membrane. The ground is mostly made of cement or terrazzo. The exterior walls were smoothed and brushed with cement mortar and the interior dry walls were brushed with great white or cement mortar. It also applies doors made of steel and wood material, plastic steel windows or aluminum alloy windows.

Supporting projects: power circuit, general lighting and fire-fighting system

(2) Brick-concrete Structure

The foundation of the brick-concrete structure applies a concrete bar foundation, cast-in-place reinforced concrete structural columns, and 370mm or 240mm solid brick for interior and outer walls. It applies cast-in-place reinforced concrete slab, cement mortar leveling for roofing, perlite insulation layer, modified asphalt waterproof membrane or rigid waterproofing. The ground is mostly made of cement or terrazzo. The exterior walls were smoothed and brushed with cement mortar and the interior dry walls were brushed with great white or cement mortar. It also applies wooden doors, plastic steel windows or aluminum alloy windows.

Supporting projects: general lighting, fire-fighting system and water supply and drainage

(3) Steel Structure

Most of the foundations of steel structure buildings apply cast-in-place reinforced concrete independent foundations. The upper structure of the independent foundation is equipped with reinforced concrete ground beams. The main structure of upper structure consists of steel structural columns, column bracing, roof trusses, roof truss horizontal bracing, purlins and crane beams. The part of the wall body below 1.2 meters is grey sand solid brick wall wiped with grey brush paint. The upper wall is made of double-layer thermal insulation color steel profiled panels, the roofing is made of double-layer color steel thermal insulation panels, and the wall is equipped with plastic steel windows or windowless, and finished blockboard sliding doors. The ground is 250mm-thick concrete ground.

Supporting works: power circuit, general lighting and fire-fighting system

(4) Outdoor Supporting Projects

Outdoor supporting projects of the plant area are mainly divided into two types, namely supporting public facilities and supporting projects for process requirements. Supporting public facilities include roads, enclosures, domestic water supply, heating pipelines, fire water supply, rainwater pipes, power distribution, communications, networks and monitoring. The supporting projects for process

– III-3-86 –

VALUATION REPORT C

APPENDIX III-3

requirements mainly include various fire fighting pools, pipe corridor extensions, corridors, sewage treatment stations of coal yards in port pools, process pipelines of oil transportation systems and special railway lines.

Overview of main buildings:

No. 1 steel warehouse applies a steel-concrete structure, with gross floor area of 22,056.45 square meters, a horizontal span of 66 meters, a vertical length of 288.98 meters, a column distance of 6 meters, and a total of 3 expansion joints; with the height of the eaves of the warehouse of 15 meters, and the height of the ridge of 16.21 meters. The warehouse is a terraced independent cup-shaped foundation with slurry wall drilled-in pile, the main structure is a rigid bent frame structure, including the door-shaped steel frame (H-shaped steel column, H-shaped steel beam), the steel support between the columns and the roofing, and the steel crane beam, and steel brake truss, of which, the door-shaped steel frame is 66 meters long and the steel column is 15 meters high. The warehouse has an elevation of 1.2 meters and the workshop gable below 1.2 meters is 240 thick shale bricks, masonry with M5 mixed mortar. The non-load-bearing structure of outer wall is that the wall body above 1.2 meters adopts colored metal profiled steel plate wall; the ground is ordinary concrete ground; the ventilation wall, gable wall, living room wall are sprayed with white paint twice; there are two anti-rust primers for steel components and gray-green magnetic finish; the chlorosulfonated bottom, chlorosulfonated middle and chlorosulfonated surface of building steel structure are painted twice, once and twice, respectively. The gate is a class A steel fire door that closes automatically, the interior doors are class A and B fire doors and side-swing doors, and the windows are ordinary steel windows and fire windows. The fire resistance grade is two, the seismic fortification intensity is 8 degrees, and the design service life of the building is 50 years. For category E warehouse, there are a total of six 35t bridge cranes in the warehouse, three for each span. The warehouse is equipped with complete supporting facilities such as fire fighting, lighting and ventilation.

Gasoline shipping and loading pump room with gross floor area of 355.66 square meters. It applies single-layer slope roof, brick-concrete structure, independent concrete foundation, concrete column beam, steel roof truss, color steel roof, brick masonry of enclosure wall, 370mm of outer wall pasted with ceramic tiles, lightning protection device, PVC raindrops, concrete scattered water, pedestrian steps, roof with gutters, steel security doors, double-row plastic steel sliding windows, water supply and drainage, electric lighting and fire fighting facilities.

Gasoline tank area shipping pump room power distribution room with gross floor area of 313.85 square meters: It applies single-story flat roof, bar foundation, brick-concrete structure, brick masonry of load-bearing wall, 370mm of outer wall, roof parapet, outer wall pasted with ceramic tiles, steel security door and plastic steel sliding window.

– III-3-87 –

VALUATION REPORT C

APPENDIX III-3

Gateroom 1: It applies single-layer flat roof, bar foundation, brick-concrete structure, brick masonry of curved load-bearing wall, 370mm exterior wall, concrete eaves roof parapet, painted exterior wall, column-supported concrete canopy, concrete pedestrian steps, steel security doors, plastic steel sliding windows, water supply and drainage, electric lighting and monitoring equipment.

Structures

Structures mainly include berths, yards and other port supporting of public facilities and process facilities. Supporting projects of public facilities include roads, enclosures, domestic water supply, heating pipeline, fire water supply, rainwater pipes, power distribution, communications, networks and monitoring. The supporting projects of process requirements mainly include various fire fighting pools, pipe corridor extensions, corridors, sewage treatment stations of coal yards in port pools, process pipelines of oil transportation systems and special railway lines.

① Berth assets

A total of 18 berths are included in the scope of this valuation, with a total length of 4,954.00 meters. The assets were self-built between 2008 and 2015.

		Structure and	Berthing		Front water
**No. **	Berth name	form	capacity	Length	**depth **	Quantity Main usage
			(ton)	(m)	(m)
1	Port pool A 3#	Gravity caisson	7	260	-18	1 General bulk
	general berth					cargo
2	Port pool A 4#	Gravity caisson	7	255	-18	1 General bulk
	general berth					cargo
3	Port pool A 5#	Gravity caisson	7	278	-18	1 General bulk
	general berth					cargo
4	Port pool A 6#	Gravity caisson	7	255	-18	1 General bulk
	general berth					cargo
5	1-2# refined oil and	High pile pier	5	470	-14.4	2 Refined oil
	liquid chemicals
	terminals
6	18# terminal berth	High pile	30	452	-24.5	1 Ore
7	61# general berth	Gravity block	7	260	-15.5	1 General bulk
						cargo
8	62# general berth	Gravity block	7	260	-15.5	1 General bulk
						cargo
9	63# general berth	Gravity block	7	260	-15.5	1 General bulk
						cargo
10	64# general berth	Gravity block	7	310	-15.5	1 Steel and
						general cargo

– III-3-88 –

APPENDIX III-3

VALUATION REPORT C

		Structure and	Berthing		Front water
**No. **	Berth name	form	capacity	Length	**depth **	**Quantity **	Main usage
			(ton)	(m)	(m)
11	65# general berth	Gravity block	7	253	-15.5	1	Steel and
							general cargo
12	66# general berth	Gravity block	7	260.1	-15.5	1	Steel and
							general cargo
13	67# general berth	Gravity block	7	240.9	-15.5	1	Steel and
							general cargo
14	68#-71## general	Gravity block	7	1,069	-15.5	4	Steel and
	berth						general cargo
	Total			4,883		18

In particular, 1#-2# refined oil and liquid chemicals berths are high piled beam slab structures, with a total length of 470 meters, and comprises a workbench, six cleats and two approach bridges. The top elevation of the terminal, the top elevation of the cleat and the bottom elevation of the mud surface at the front of the terminal is +7.3 m, +6.8 meters and -14.5 meters, respectively. The foundation applies steel pipe piles, workbench and piers are cast-in-place reinforced structure, and the approach bridge is a steel bridge.

18# berth terminal is a 300,000t ore terminal which is arranged in the shape of “one” in the southern part of Port Pool 1 and the west side of the existing 200,000t ore terminal. The front of the terminal is 85 meters away from the baseline of the north breakwater, and the length of the terminal is 452 meters. The designed water depth of the front of the terminal is -24.5 meters, and the top elevation of the terminal is 5.93 meters. The size of the 300,000-ton berth workbench is 37.3*406 meters, which applies high pile beam slab structure, and the pile foundation applies steel pipe piles with diameters of 1,200, 1,000 and 800. There are a total of 60 bents, with a spacing of 6.5 meters. The vertical beam is 2 meters high, and the panel applies prefabricated cover slab. The project was started on 13 May 2009, completed on 30 September 2010, and put into use on 13 October 2010.

Berths 61#-63#: They are located in the southern operation area of Bayuquan Port Area of Yingkou Port, with a total of four 70,000-ton steel and general cargo berths. They apply an along-shore solid block structure, with a wall body structure of four-layer block, a layer of unloading plates and a breast wall, and the top elevation of the terminal is +5.5 meters, and the bottom elevation of front of the terminal is -15.5 meters. The bottom elevation and the thickness of the foundation bed is -19.0 meters and 3.5 meters, respectively. The rear of the terminal is a riprap prism, outside of which is rubble and a mixed filter layer, and the outside of the mixed filter layer is filled with sand

– III-3-89 –

VALUATION REPORT C

APPENDIX III-3

and vibrated compactly. The surface applies reinforced concrete slab, and a reinforced concrete cast-in-place pile is under the track beam. The project was started on 20 March 2004 and completed on 24 September 2008.

Berths 64#-66#: They are located in the southern operating area of Bayuquan Port Area of Yingkou Port, the terminal runs east-west and apply an along-shore heavy duty solid block structure. They are composed of 4 steel and general cargo terminals, of which, 57.7 meters on the west side of berth #67 can be used as a ro-ro ship terminal. The terminal consists of four layers of blocks, one unloading plate and a breast wall in stratigraphically descending order. The top elevation of the terminal is +5.5 meters, and the bottom elevation of the terminal is -15.5 meters, with the bottom elevation of the foundation bed of -19.0 meters, and the thickness of the foundation bed of 3.5 meters.

Berths 68#-71#: They are located in the southern operation area of Bayuquan Port Area of Yingkou Port, southwest of Port Pool 5, northwest side of berth 67#, and the coastline is arranged in the N-S direction. They are composed of 4 steel and general cargo terminals with a berthing grade of 70,000-tons, a total length of coastline of 1,069 meters and a land depth of 244.3 meters. The designed bottom elevation of mud surface at the front of the terminal is -15.50 meters, and the designed bottom elevation of the waterway of the port pool is -15.50 meters, forming a 1,100-meter wide of port pool together with the project phase IV, and the top elevation of the terminal is +5.5 meters. The terminal structure applies a heavy duty block structure with unloading plates. There are a total of four layers of blocks, the top layer of block is placed with a reinforced concrete unloading plate, the parapet wall and the block under the unloading plate are connected as a whole. Riprap prism is arranged at the rear of the block and sands are filled at the rear of the terminal. Rubble, mixed filter layer and geotextile filter layer structure are applied between the riprap prism and the backfilled sand. The foundation of the terminal applies 10-100KG riprap bed, with a thickness of the bed of 4-6 meters. A 400-thick concrete slab was applied between the two rails of the terminal, two drums and one plate cone fenders, D-shaped fenders and 2500KN bollards are equipped at the front of the terminal. The project was started on 30 May 2011 and completed and put into use on 31 May 2014.

– III-3-90 –

VALUATION REPORT C

APPENDIX III-3

• ② Yard

For the yard, most structure type of which apply concrete slab and interlocking block structure, and the base course is cement stabilized crushed stone layer and gravel cushion.

Overview of main assets:

Berths 62-63 – The yard applies an interlocking block structure, with an area of 77,943.20 sq.m., and was completed in December 2008. The foundation treatment of the yard applies a vibro stone pile (valuated under the foundation treatment). The specific practices of the work: mechanical site leveling, rolling of original soil by roller, 200 thickness of gravel cushion, 3 layers of 200 thickness of 6% cement stabilized layer, and laying interlocking blocks on the surface layer.

3. Ownership Status

• ① Except for simple structure, all other assets have been surveyed, and the applications for real estate title certificates are under way.

• ② The information on pledge or mortgage of assets that are included in the scope of valuation is as follows:

		Total	Balance of	Commencement	Ending		Contract	Rental
		borrowings	borrowings	date of	date of	Guarantee	interest	calculation
Leasing company	Borrower	(RMB0’000)	(RMB0’000)	borrowings	borrowings	method	rate	method	Collateral
Industrial Bank	Ying Kou Port	80,000.00	23,333.33	2017/5/18	2023/5/18	Credit	4.410%	Principal in equal	Fairy Island Port
Financial Leasing	Group							instalments	Pool 1 1-2#
Co., Ltd.	Corporation								refined oil and
	Limited								liquid
									chemicals
									terminals, Port
									Pool 5 65#
									steel and
									general cargo
									berth

– III-3-91 –

APPENDIX III-3

VALUATION REPORT C

		Total	Balance of	Commencement	Ending		Contract	Rental
		borrowings	borrowings	date of	date of	Guarantee	interest	calculation
Leasing company	Borrower	(RMB0’000)	(RMB0’000)	borrowings	borrowings	method	rate	method	Collateral
Shanghai Pudong	Ying Kou Port	50,000.00	12,500.00	2017/11/28	2022/11/21	Credit	3.325%	Principal in equal	Berth 62# in
Development	Group							instalments	Bayuquan Port
Bank Financial	Corporation								Area
Leasing Co., Ltd.	Limited
Bank of Beijing	Ying Kou Port	50,000.00	17,500.00	2018/4/25	2023/4/25	Credit	5.5575%	Principal in equal	Berths 68# and
Financial Leasing	Group							instalments	70#
Co., Ltd.*(北銀金	Corporation
融租賃有限公司)	Limited
Jiangxi Financial	Ying Kou Port	80,000.00	25,560.00	2016/12/16	2023/3/3	Credit	4.410%	Interest in equal	Berths 66#
Leasing Co., Ltd.	Group							instalments	and 67#
	Corporation
	Limited

③ The assets included in the scope of valuation have been leased out as follows:

						Annual
						rental
Name of the				Area		(RMB, tax
contract	Leasee	Leased Assets	Title certificate number	(sq.m.)	Lease term	inclusive)
Land Use Rights	Yingkou Xingang	Land use rights	Liao (2020) Yingkou	298,720.25	2021/1/1-	4,480,803.66
Lease	Ore Terminal		Bayuquan Real Estate No.		2021/12/31
Agreement	Co., Ltd. (營口		0027263
	新港礦石碼頭有
	限公司)
Land Use Rights	Yingkou Port	Land use rights	Liao (2020) Yingkou	2,431,326.47	2021/1/1-	36,469,900.00
Lease	Liability Co.,		Bayuquan Real Estate No.		2021/12/31
Agreement	Ltd.		0029352, 0029354, 0029361,
			0029375, 0029388, 0029391,
			0027202, 0027222, 0027228,
			0027242, 0027266, 0032267,
			0032270, 0035276, 0032298,
			0035276 and Bayuquan Guo
			Yong (2007) No. 0216 and
			0217

– III-3-92 –

VALUATION REPORT C

APPENDIX III-3

						Annual
						rental
Name of the				Area		(RMB, tax
contract	Leasee	Leased Assets	Title certificate number	(sq.m.)	Lease term	inclusive)
2021 Asset Lease	Yingkou Port	Wharf berth	Bayuquan Port Area 1 Port	2021/1/1-	349,897,100.00
Agreement	Liability Co.,		Pool 18# ore berth, Port	2021/12/31
	Ltd.		Pool A 3# general berth,
			Port Pool A 1-2# refined oil
			and liquid chemical berths,
			Port Pool 5 61#-71# general
			berths, Fairy Island 201-
			203# berths and yards and
			tank farms

Including: Fairy Island 201-203# berths and ore dump were not within the scope of this valuation, and the corresponding rental was RMB110,463,227.26.

In addition to the above matters, as of the valuation benchmark date, there were no other matters such as mortgage and guarantees for the appraised buildings (structures). In addition, there are no litigation and other matters for the building under fixed assets included in the scope of this valuation.

4. Accounting Depreciation Policy

The depreciation of buildings under fixed assets adopts the straight-line method and is accrued at the carrying amount after deducting the estimated net residual value within the expected useful life. For fixed assets that have been provided for impairment, the depreciation amount will be determined at the carrying amount after deducting the impairment provision and the remaining useful life in the future period. The estimated useful life and the annual depreciation rates of buildings under fixed assets are listed as follows:

		Estimated
	Estimated	residual	Annual
	useful life	value rate	depreciation
Category of fixed assets	(years)	(%)	rate (%)
Port facilities	20-40	5	4.75-2.38
Stacking area facilities	20-40	5	4.75-2.38
Buildings	8-35	5	11.88-2.71

– III-3-93 –

VALUATION REPORT C

APPENDIX III-3

5. The Approaches and Results of Assets Stocktaking and Verification

• (1) Approaches of Assets Stocktaking and Verification

The approach for assets stocktaking and verification under this valuation is on a one by one basis, and the specific practices are:

• ① the checking of the accounts table according to the contents of the breakdown of asset valuation provided by the appraised entity;

• ② the verification of the property right status, structure type, date of completion, building area and other basic parameters of each asset;

• ③ the carrying out of on-site survey according to the verified breakdown of asset valuation, recording of the location, surrounding environment, supporting facilities and other regional factors of various assets, at the same time, investigation of the floor, orientation, structure, decoration and ancillary equipment of the valuation target.

• (2) Results of Assets Stocktaking and Verification

• ① The ownership of the appraised assets is clear and without dispute.

• ② Based on the on-site investigation by the appraisers, the appraised assets are in good maintenance and in good use.

• ③ As of the valuation benchmark date, there are still part of buildings that have not obtained the real estate ownership certificate. For the buildings not obtaining the building ownership certificate, the relevant taxes for certificate application were included in this valuation.

• ④ The original carrying amount of buildings (structures) includes construction and installation costs, preliminary and other expenses, capitalized interest and other work-related expenses. Net carrying amount is the net value after depreciation.

• ⑤ The mortgage and pledge matters of the appraised assets have been stated in the ownership status.

– III-3-94 –

VALUATION REPORT C

APPENDIX III-3

4. Valuation Approach

(1) Election of Valuation Approach

There are three valuation approaches mainly adopted for buildings under fixed assets, namely replacement cost approach, market approach and income approach. The adoption of market approach is conditional on the existence of an active trading market where traded market prices can be obtained with relative accuracy; the adoption of income approach is on the condition that future returns and risks can be more accurately predicted and quantified; and the replacement cost approach is adopted when traded market prices are not available and future returns and risks cannot be accurately predicted and quantified. Based on the specific purpose of this valuation while combining the characteristics of the buildings (structures) to be assessed, this valuation adopts the cost approach to evaluate the buildings built by the enterprise.

According to relevant conditions such as the characteristics of the buildings, types of appraised value and the conditions of information gathering, cost approach is adopted for the valuation, and the formula is as follows:

Appraised value = full replacement cost × integrated residue ratio

(1) Determination of full replacement cost

The full replacement cost of buildings general includes construction and installation cost, preliminary and other expenses of construction projects and capital cost.

The formula of the full replacement cost of buildings is as follows:

Full replacement cost = Integrated construction and installation cost + Preliminary and other expenses + capital cost – deductible VAT

1) Integrated construction and installation cost

The full replacement cost of the representative buildings of the appraised buildings in this valuation is determined by using budgets and final accounts adjustment method. The per unit full replacement cost of other buildings is determined by using analogy method.

The ideology of the budgets and final accounts adjustment method used in determining the full replacement cost is to calculate the estimated base price for direct fee and the Construction and installation project cost of each project based on the budgets and final accounts related information on the buildings and the quota standard of the place where the buildings are located as provided

– III-3-95 –

APPENDIX III-3

VALUATION REPORT C

by the enterprise, and the quantity of projects stipulated in the budgets and final accounts of the buildings. Then, based on the market survey and the standards for preliminary expenses and other expenses of construction projects as provided by the client, the preliminary expenses and other expenses of the buildings can be calculated, and added with the capital costs, the full replacement cost of the appraised buildings could be figured out.

The analogy method takes a representative building as a reference and makes comparison with similar buildings in terms of eaves height, storey height, span, materials used, fixtures, and etc., to identify differences as adjustment factors, and adjustments are made to calculate the per unit full replacement cost of the analogical buildings.

Major basis of pricing:

• I Quota for Property Construction and Decoration Project in Liaoning Province (2017) (《遼寧省房屋建築與裝飾工程定額》(2017年));

• II Quota for General Installation Project in Liaoning Province (2017) (《遼寧省通用安裝工程定額》(2017));

• III Notice of the Department of Housing and Urban-Rural Development of Liaoning Province on the Adjustment to the Value-Added Tax Rates for the Pricing Basis of Construction Projects (Liao Zhu Jian Guan (2018) No. 8) (《遼寧省住房和城鄉建設廳關於調整建設工程 計價依據增值稅稅率的通知》遼住建管(2018)8號);

• IV Yingkou City Building Material Price Project Information in August 2021 (《2021年8月營口市建築材料價格工程信息》) issued by Liaoning Construction Engineering Cost Station (遼寧建設工程造價 總站);

• V Quota for Maritime Works in Seaport (2019) (沿海港口水工構築工 程定額(2019));

• VI Reference Quota for Coastal Port Engineering (2019) (沿海港口工 程參考定額(2019));

• VII Dredging Project Budget Quota (2019) (疏浚工程預算定額(2019));

• VIII Budget Quota Pricing Schedule for Electric Power Construction Project (2013) (電力建設工程預算定額估價表(2013));

• IX Estimate Quota Pricing Schedule for Electric Power Construction Project (2014) (電力建設工程概算定額估價表(2014));

– III-3-96 –

VALUATION REPORT C

APPENDIX III-3

• X Online Publication Price of Hydraulic Materials (August 2021);

• XI Stipulations on Compiling Estimate and Budget for Water Transportation Construction Project (JTS/T116-2019) (《水運建設 工程概算預算編製規定》(JTS/T116-2019));

• XII Notice of the General Office of the Ministry of Housing and Urban-Rural Development on the Re-adjustment to the Value-Added Tax Rates for the Pricing Basis of Construction Projects (Jian Ban Biao Han [2019] No. 193) (《住房和城鄉建設部辦公廳關於重新調 整建設工程計價依據增值稅稅率的通知》建辦標函[2019]193號).

• 2) Preliminary and other expenses

The preliminary and other expenses of construction projects were calculated according to construction investment amount of the appraised entity, and the charging standard required by the industry, the State or local government. The name, charging basis, charging standards and charging reference of preliminary and other expenses are set out in the table below:

			Tax-
			exclusive
No.	Item	Rate	rate	Charging basis	Reference
1	Construction unit	0.68%	0.68%	Construction cost (tax	Ministry of Transport
	administrative fees			inclusive)	2019 No. 57
2	Engineering	1.40%	1.32%	Construction cost (tax	Ministry of Transport
	supervision fees			inclusive)	2019 No. 57
3	Environmental impact	0.03%	0.02%	Construction cost (tax	Ji Wei Huan Bao Zong
	assessment fees			inclusive)	Ju Ji Jia Ge (2002)
					No. 125
4	Project proposal fees	0.10%	0.09%	Construction cost (tax	Ji Wei Ji Jia Ge (1999)
	and feasibility study			inclusive)	No. 1283
	fees
5	Survey and design fees	2.76%	2.61%	Construction cost (tax	Ministry of Transport
				inclusive)	2019 No. 57
6	Bidding agent fees	0.02%	0.02%	Construction cost (tax	Ministry of Transport
				inclusive)	2019 No. 57
7	Safety pre-assessment	0.03%	0.02%	Construction cost (tax	Guiding Opinions on
	fees			inclusive)	Safety Assessment
					Fees in Liaoning
					Province (2005)
9	Safety production fees	1.90%	1.79%	Construction cost (tax	Ministry of Emergency
				inclusive)	Management 2019
					Letter No. 428
	Total	6.92%	6.56%

– III-3-97 –

VALUATION REPORT C

APPENDIX III-3

3) Capital cost

The capital cost was calculated based on the sum of the integrated construction and installation cost, preliminary and other expenses in accordance with the even input of capital within the reasonable construction period of the appraised enterprise, with reference to the loan prime rate (LPR) published by the National Interbank Funding Centre with authorization granted by the People’s Bank of China as at the valuation benchmark date. The reasonable construction period of the appraised enterprise is 2.5 years. The formula of the capital cost is as follows:

Capital cost = (construction and installation project cost + preliminary and other expenses) × (1 + loan interest rate) ^ (reasonable construction period/2-1)

4) Deductible VAT

According to the Notice of the Ministry of Finance and the State Taxation Administration on the Comprehensive Rollout of the Business Tax to Value Added Tax Transformation Pilot Program (《財政部國家稅務總局關於全面推 開營業稅改徵增值稅試點的通知》) (Cai Shui [2016] No. 36) issued by the Ministry of Finance and the State Taxation Administration, in calculating the full replacement price of buildings and structures, the integrated construction and installation cost and the VAT input tax inclusive in the preliminary and other expenses can be deducted.

(2) Determination of residue ratio

The life method and observation method are mainly used to determine the residue ratio for the buildings in this valuation.

① Useful life method

Useful life method is the residue ratio determined based on the ratio of estimated remaining useful life of buildings to its aggregate useful life. The formula is as follows:

Residue ratio under Remaining useful life = × 100% the useful life method Used life + Remaining useful life

– III-3-98 –

VALUATION REPORT C

APPENDIX III-3

② Observation method

The observation method is applied to assess each major part of the buildings from a technical perspective, and to analyze factors such as design, manufacturing, usage, wear and tear, maintenance, improvement and physical life of the asset on a consolidated basis. Impacts of wear and tear and natural deterioration on the functionality and efficiency of the asset will be assessed by comparing the valuation target with itself in new condition. As such, the residue ratio of the buildings would be determined and the substantial depreciation would be estimated.

③ Integrated residue ratio

Integrated residue ratio = residue ratio under the useful life method × 40% + residue ratio under the observation method × 60%

• ④ Residue ratio would be determined by adopting a reasonable method where:

If the residue ratios calculated under the on-site investigation method and the useful life method respectively differ significantly, after analysing the factors by the appraisers, the relatively reasonable ratio would prevail based on their previous experience.

For the project which cannot be observed due to certain constraints, the useful life method would be normally applied in determining the residue ratio.

• (3) Calculation of appraised value

Appraised value = Replacement cost (tax exclusive) × integrated residue ratio

– III-3-99 –

VALUATION REPORT C

APPENDIX III-3

5. Valuation Conclusion and Analysis

• ① Valuation results:

As at the valuation benchmark date (i.e. 31 August 2021), the valuation results of buildings (structures) that Yingkou Port Bulk Cargo Terminal Co., Ltd. (營口港 散貨碼頭有限公司) intends to use for capital increase are shown as follows:

Table of Summary of Building Valuation Results

Unit: RMB

	**Carrying **	amount	**Appraised **	value	Appreciation	Appreciation
Name of item	Original value	Net value	Original value	Net value	amount	rate
Total buildings	5,275,699,565.22	3,899,119,509.70	5,724,582,000.00	4,081,136,992.00	182,017,482.30	4.67%
Buildings	110,707,480.32	75,383,613.16	137,952,900.00	104,249,100.00	28,865,486.84	38.29%
Structures and other
auxiliary facilities	5,164,992,084.90	3,823,735,896.54	5,586,629,100.00	3,976,887,892.00	153,151,995.46	4.01%

• ② Analysis on the reasons for changes in valuation

The appreciation in valuation of overall buildings was RMB182,017,482.30, with an appreciation rate of 4.67%. The main reasons are as follows:

• A. Material and labor costs have increased slightly in recent years;

• B. In this valuation, the impairment provision was valuated as zero, as such, there was an appreciation in net value of the valuation.

6. Valuation Case

Case 1: Treasury room 1# – No.31in the Building Valuation Schedule

(1) Basic Overview

Treasury room 1# is a 3-storey flat-roofed brick-concrete structure built in October 2013 with a gross floor area of 701.37 sq.m.. It is founded with concrete bar, The wall body is composed of concrete beams, slabs, structural columns and bricks, the wall surface is decorated with ceramic brick walls, polystyrene particles for outer wall insulation, modified asphalt membrane waterproof roofing, finished wooden doors, thermal insulation broken bridge aluminum alloy windows, large white latex paint for indoor wall sheds, floor tiles. Supporting facilities include water supply and drainage, lighting, etc.

– III-3-100 –

VALUATION REPORT C

APPENDIX III-3

The building has complete supporting facilities such as water supply and drainage, ventilation, fire fighting and electric.

On-site investigation status: The building has a solid structure, no uneven cracks, better overall appearance, and the indoor facilities are in normal use.

The building has not applied for the real estate title certificate, but the declared floor area has been surveyed by Liaoning Ruizhi Surveying and Mapping Technology Co., Ltd. (遼寧睿智測繪科技有限公司), the application for real estate title certificate is under way.

(2) Full replacement cost

According to the Notice of the Ministry of Finance and the State Taxation Administration on the Comprehensive Rollout of the Business Tax to Value Added Tax Transformation Pilot Program (《財政部國家稅務總局關於全面推開營業稅改徵增值稅 試點的通知》) (Cai Shui [2016] No. 36), enterprises that satisfy the conditions for VAT deduction, VAT input tax shall be deducted. If the impact of the policy on the appraised value has been taken into account in this valuation, then:

Full replacement cost = Construction and installation project cost (tax exclusive) + preliminary expense and other expenses (tax exclusive) + capital cost

A. Construction and installation project cost

The construction and installation project cost include the total costs of civil engineering (decoration) project and installation projects, and are calculated by application of budgets (final accounts) adjustment method. The appraisers determined the workload of the buildings based on the information on construction projects and completion settlement and calculated the total costs of the projects in accordance with prevailing Quota for Property Construction and Decoration Project in Liaoning Province (2017) (《遼寧省房屋建築與裝飾工程定額》(2017年)), Quota for General Installation Project in Liaoning Province (2017) (《遼寧省通用安裝工 程定額》(2017)), Notice of the Department of Housing and Urban-Rural Development of Liaoning Province on the Adjustment to the Value-Added Tax Rates for the Pricing Basis of Construction Projects (Liao Zhu Jian Jian Guan (2018) No. 8) (《遼寧省住房和城鄉建設廳關於調整建設工程計價依據增值稅稅率的通知》遼住 建建管(2018)8號) and Yingkou City Building Material Price Project Information in August 2021 (《2021年8月營口市建築材料價格工程信息》) issued by Liaoning Construction Engineering Cost Station (遼寧建設工程造價總站).

– III-3-101 –

VALUATION REPORT C

APPENDIX III-3

Breakdown of Construction and Installation Project Costs

Project Name: Treasury room 1#

		Serial
**Line **	No.	No.	Item	Charging description	Rate	Amount
					(%)
			Construction project			1,535,962.72
1		A	Total project quota sub-project fee	Labor cost + material expenses +		1,360,179.8
			and technical measure fee	machinery cost budget price + labor
				price variance on board + other price
				variance on board + fuel power price
				variance+ main material expenses +
				equipment cost + including: enterprise
				management fees + including: profit
2		A1	Including: labor cost budget price	labor cost budget price + machinery		357,228.88
			+ machinery cost budget price	cost budget price
3		B	General measure fee (excluding	Civilized construction and		4,643.98
			safety construction measure fee)	environmental protection fees + rainy
				season construction fee
4		B1	Civilized construction and	Including: labor cost budget price +	0.65	2,321.99
			environmental protection fees	machinery cost budget price
5		B2	Rainy season construction fee	Including: labor cost budget price +	0.65	2,321.99
				machinery cost budget price
6		C	Other measure fees	Additional costs for night construction		13,038.85
				and lighting fees for daytime
				construction + second handling fee +
				winter construction fee + completed
				projects and equipment protection
				fees + municipal engineering
				(including landscaping engineering)
				construction disturbance fee + others
7		C1	Additional costs for night
			construction and lighting fees
			for daytime construction
8		C2	Second handling fee
9		C3	Winter construction fee	Including: labor cost budget price +	3.65	13,038.85
				machinery cost budget price
10		C4	Completed projects and equipment
			protection fees
11		C5	Municipal engineering (including		4
			landscaping engineering)
			construction disturbance fee
12		C6	Others

– III-3-102 –

VALUATION REPORT C

APPENDIX III-3

		Serial
**Line **	No.	No.	Item	Charging description	Rate	Amount
					(%)
13		D	Other project fees
14		E	Total project quota sub-project fee,	Total project quota sub-project fee and		1,377,862.63
			measure fee (excluding safety	technical measure fee + general
			construction measure fee) and	measure fee (excluding safety
			other project fees	construction measure fee) + other
				measure fees + other project fees
15		E1	Including: enterprise management	Including: labor cost budget price +	8.5	30,364.45
			fees	machinery cost budget price
16		E2	Including: profit	Including: labor cost budget price +	7.5	26,792.17
				machinery cost budget price
17		F	Levies	Social insurance cost + housing
				provident funds + engineering sewage
				fee+ others + work-related injury
				insurance
18		F1	Social insurance cost	Including: labor cost budget price +	0
				machinery cost budget price
19		F2	Housing provident funds	Including: labor cost budget price +	0
				machinery cost budget price
20		F3	Engineering sewage fee
21		F4	Others
22		F5	Work-related injury insurance
23		G	Safety construction measure fee	Total project quota sub-project fee,	2.27	31,277.48
				measure fee (excluding safety
				construction measure fee) and other
				project fees + levies
24		H	Total pre-tax construction cost	Total project quota sub-project fee,		1,409,140.11
				measure fee (excluding safety
				construction measure fee) and other
				project fees + levies + safety
				construction measure fee
25		I	Taxes	Total pre-tax construction cost	9	126,822.61
26		J	Construction cost	Total pre-tax construction cost + taxes		1,535,962.72
			Building earthwork and demolition			21,908.56
			engineering
27		A	Total project quota sub-project fee	labor cost + material expenses +		19,418.78
			and technical measure fee	machinery cost budget price + labor
				price variance on board + other price
				variance on board + fuel power price
				variance + main material expenses+
				equipment cost + including: enterprise
				management fees + including: profit

– III-3-103 –

VALUATION REPORT C

APPENDIX III-3

		Serial
**Line **	No.	No.	Item	Charging description	Rate	Amount
					(%)
28		A1	Including: labor cost budget price	labor cost budget price+machinery cost		13,546.31
			+ machinery cost budget price	budget price
29		B	General measure fee (excluding	Civilized construction and		61.64
			safety construction measure fee)	environmental protection fees + rainy
				season construction fee
30		B1	Civilized construction and	(labor cost budget price + machinery	0.65	30.82
			environmental protection fees	cost budget price)*0.35
31		B2	Rainy season construction fee	(labor cost budget price + machinery	0.65	30.82
				cost budget price)*0.35
32		C	Other measure fees	Additional costs for night construction		173.05
				and lighting fees for daytime
				construction + second handling fee +
				winter construction fee + completed
				projects and equipment protection
				fees+ municipal engineering
				(including landscaping engineering)
				construction disturbance fee + others
33		C1	Additional costs for night
			construction and lighting fees
			for daytime construction
34		C2	Second handling fee
35		C3	Winter construction fee	(labor cost budget price + machinery	3.65	173.05
				cost budget price)*0.35
36		C4	Completed projects and equipment
			protection fees
37		C5	Municipal engineering (including		4
			landscaping engineering)
			construction disturbance fee
38		C6	Others
39		D	Other project fees
40		E	Total project quota sub-project fee,	Total project quota sub-project fee and		19,653.47
			measure fee (excluding safety	technical measure fee + general
			construction measure fee) and	measure fee (excluding safety
			other project fees	construction measure fee) + other
				measure fees + other project fees
41		E1	Including: enterprise management	(labor cost budget price + machinery	8.5	403
			fees	cost budget price)*0.35
42		E2	Including: profit	(labor cost budget price + machinery	7.5	355.59
				cost budget price)*0.35

– III-3-104 –

VALUATION REPORT C

APPENDIX III-3

		Serial
**Line **	No.	No.	Item	Charging description	Rate	Amount
					(%)
43		F	levies	Social insurance cost + housing
				provident funds + engineering sewage
				fee + others + work-related injury
				insurance
44		F1	Social insurance cost	Including: labor cost budget price +	0
				machinery cost budget price
45		F2	Housing provident funds	Including: labor cost budget price +	0
				machinery cost budget price
46		F3	Engineering sewage fee
47		F4	Others
48		F5	Work-related injury insurance
49		G	Safety construction measure fee	Total project quota sub-project fee,	2.27	446.13
				measure fee (excluding safety
				construction measure fee) and other
				project fees + levies
50		H	Total pre-tax construction cost	Total project quota sub-project fee,		20,099.6
				measure fee (excluding safety
				construction measure fee) and other
				project fees + levies + safety
				construction measure fee
51		I	Taxes	Total pre-tax construction cost	9	1,808.96
52		J	Construction cost	Total pre-tax construction cost + taxes		21,908.56
			Installation project			81,740.52
53		A	Total project quota sub-project fee	labor cost + material expenses +		71,988.81
			and technical measure fee	machinery cost budget price + labor
				price variance on board + other price
				variance on board + fuel power price
				variance + main material expenses +
				equipment cost + including: enterprise
				management fees + including: profit
54		A1	Including: labor cost budget price	labor cost budget price + machinery		35,185.85
			+ machinery cost budget price	cost budget price
55		B	General measure fee (excluding	Civilized construction and		457.42
			safety construction measure fee)	environmental protection fees + rainy
				season construction fee
56		B1	Civilized construction and	Including: labor cost budget price +	0.65	228.71
			environmental protection fees	machinery cost budget price
57		B2	Rainy season construction fee	Including: labor cost budget price +	0.65	228.71
				machinery cost budget price

– III-3-105 –

VALUATION REPORT C

APPENDIX III-3

		Serial
**Line **	No.	No.	Item	Charging description	Rate	Amount
					(%)
58		C	Other measure fees	Additional costs for night construction		1,284.28
				and lighting fees for daytime
				construction + second handling fee+
				winter construction fee + completed
				projects and equipment protection
				fees + municipal engineering
				(including landscaping engineering)
				construction disturbance fee + others
59		C1	Additional costs for night
			construction and lighting fees
			for daytime construction
60		C2	Second handling fee
61		C3	Winter construction fee	Including: labor cost budget price +	3.65	1,284.28
				machinery cost budget price
62		C4	Completed projects and equipment
			protection fees
63		C5	Municipal engineering (including		4
			landscaping engineering)
			construction disturbance fee
64		C6	Others
65		D	Other project fees
66		E	Total project quota sub-project fee,	Total project quota sub-project fee and		73,730.51
			measure fee (excluding safety	technical measure fee + general
			construction measure fee) and	measure fee (excluding safety
			other project fees	construction measure fee) + other
				measure fees+ other project fees
67		E1	Including: enterprise management	Including: labor cost budget price +	8.5	2,990.8
			fees	machinery cost budget price
68		E2	Including: profit	Including: labor cost budget price +	7.5	2,638.94
				machinery cost budget price
69		F	levies	Social insurance cost + housing
				provident funds + engineering sewage
				fee + others+ work-related injury
				insurance
70		F1	Social insurance cost	Including: labor cost budget price +	0
				machinery cost budget price
71		F2	Housing provident funds	Including: labor cost budget price +	0
				machinery cost budget price
72		F3	Engineering sewage fee
73		F4	Others
74		F5	Work-related injury insurance

– III-3-106 –

VALUATION REPORT C

APPENDIX III-3

		Serial
**Line **	No.	No.	Item		Charging description	Rate	Amount
						(%)
75		G	Safety	construction measure fee	Total project quota sub-project fee,	1.71	1260.79
					measure fee (excluding safety
					construction measure fee) and other
					project fees + levies
76		H	Total pre-tax construction cost		Total project quota sub-project fee,		74,991.3
					measure fee (excluding safety
					construction measure fee) and other
					project fees + levies + safety
					construction measure fee
77		I	Taxes		Total pre-tax construction cost	9	6,749.22
78		J	Construction cost		Total pre-tax construction cost + taxes		81,740.52
			Construction cost				1,639,611.8
			Total construction cost (tax inclusive): Renminbi one million six hundred and
				thirty-nine thousand six	hundred and eleven and eighty cents

– III-3-107 –

VALUATION REPORT C

APPENDIX III-3

Table: Summary of Construction and Installation Costs

Unit and professional project name: No. 1 Inventory Room

				Amount of
No.	Item	Subject of Charging	Fee Rate	Fees
			(%)
1	Construction	Construction		1,535,962.72
2	Building earthwork and	Building earthwork and		21,908.56
	demolition	demolition
3	Installation work	Installation work		81,740.52
4	Estimated project costs	Total estimated costs		1,639,611.80
		(before tax)
	Estimated project costs	Total estimated costs
		(after tax)
5	Unit price of project		701.37	2,337.73

– III-3-108 –

VALUATION REPORT C

APPENDIX III-3

B. Preliminary and other fees and expenses

Preliminary and other fees and expenses include construction unit management fee, project supervision fee, bidding agency service fee, etc.

According to Order No. 31 of the National Development and Reform Commission of the People’s Republic of China, the state has revoked the original standards for consulting fee for environmental impact, project construction supervision fee, survey and design fees, and bidding agency service fee. For the purpose of this valuation, when estimating the preliminary fees and expenses and other expenses from the perspective of reconstruction, comprehensive consideration is given to previous preliminary fee rate, and reference is made to the standards for the preliminary fees and other fees of similar projects. The coefficient is determined based on the scale of fixed assets as at the valuation benchmark date as declared by the enterprise.

			Tax-
			exclusive
No.	Item	Rate	**rate **	Charging basis	Reference
1	Construction unit	0.68%	0.68%	Construction cost (tax	Ministry of Transport
	administrative fees			inclusive)	2019 No. 57
2	Engineering supervision	1.40%	1.32%	Construction cost (tax	Ministry of Transport
	fees			inclusive)	2019 No. 57
3	Environmental impact	0.03%	0.02%	Construction cost (tax	Ji Wei Huan Bao Zong Ju
	assessment fees			inclusive)	Ji Jia Ge (2002) No.
					125
4	Project proposal fees and	0.10%	0.09%	Construction cost (tax	Ji Wei Ji Jia Ge (1999)
	feasibility study fees			inclusive)	No. 1283
5	Survey and design fees	2.76%	2.61%	Construction cost (tax	Ministry of Transport
				inclusive)	2019 No. 57
6	Bidding agent fees	0.02%	0.02%	Construction cost (tax	Ministry of Transport
				inclusive)	2019 No. 57
7	Safety pre-assessment	0.03%	0.02%	Construction cost (tax	Guiding Opinions on
	fees			inclusive)	Safety Assessment Fees
					in Liaoning Province
					(2005)
9	Safety production fees	1.90%	1.79%	Construction cost (tax	Ministry of Emergency
				inclusive)	Management 2019
					Letter No. 428
	Total	6.92%	6.56%

– III-3-109 –

VALUATION REPORT C

APPENDIX III-3

C Capital costs

According to the requirements under the “National Benchmark for the Time for Completion of Construction and Installation Projects”, the overall reasonable timeline for completion of projects is approximately 2.5 years. The construction funds are assumed to be evenly invested during the construction period. With regard to the loan interest rate, the capital costs are calculated based on the LRP rate of 4.25%, which is the LRP rate in August 2021 as announced by the People’s Bank of China for loans with a term of 2.5 years.

Capital costs = (Estimated construction and installation project costs + Preliminary and other fees and expenses) × (1 + Loan interest rate) ^ (Reasonable time for completion/2-1)

D Full replacement cost

Full replacement cost = Estimated construction and installation project costs + Preliminary and other fees and expenses + Capital costs – Deductible value-added tax

Details of the calculation are shown in the table below:

Table: Calculation of full replacement cost

				Unit: RMB
				Result of
No.	Item	Fee Rate	Formula of Calculation	Calculation
1	Estimated construction and	0%	1 = (2 + 3 + 4 + 5) × (1 + correction	1,639,612
	installation project costs		coefficient)
2	Construction		Calculated according to budget	1,535,963
			benchmark and expense benchmark
3	Building earthwork and		Calculated according to budget	21,909
	demolition		benchmark and expense benchmark
4	Installation		Calculated according to budget	81,741
			benchmark and expense benchmark
6	Preliminary fees and other fees		6 = 7 + 8	113,400
7	Determination of price based on	6.92%	6 = 1 × rate	113,400
	fee rate
8	Determination of price based on		7 = Floor area × rate	0
	the floor area
9	Capital costs	4.25%	9 = (1 + 6) × [(1 + Loan interest	93,618
			rate)^reasonable time for
			completion/2-1]
10	Replacement costs	Rounded	10 = 1 + 6 + 9	1,846,662

– III-3-110 –

VALUATION REPORT C

APPENDIX III-3

				Result of
No.	Item	Fee Rate	Formula of Calculation	Calculation
11	Deductible value-added tax		11 = Construction and installation	141,165
			fee/1.09*9% + (preliminary fees and
			expenses – construction and
			installation fee*Construction
			management fees)/1.06*6%
12	Replacement costs (after tax)		12 = Replacement cost – Deductible	1,705,500
			value-added tax
13	Replacement unit price (after	701.37	13 = Replacement cost (after tax)/floor	2,431.67
	tax)		area

That is, the full replacement cost of 1#Inventory room project (after tax) is = RMB1,705,500 (rounded).

• (3) Determination of Integrated residue ratio

• ① Residue ratio based on serviced years

The economic service life of the building is 40 years, and it has been used for 7.52 years as at the benchmark date, then:

Residue ratio based on serviced years = (1 – serviced years/economic service years) × 100% = 1# Residue ratio based on serviced years of the inventory room = 80% (rounded)

– III-3-111 –

VALUATION REPORT C

APPENDIX III-3

② Surveyed residue ratio

The score of residue is calculated through on-site surveys and based on its building correction coefficients.

1# Inventory Building Brick- Name of Building Room Structure Concrete Type of Project Building Property Certificate / Floor Area 701.37 Date of 2013/10/1 No. Completion Land Certificate No. / Number of Floors 3 Expected Service 40 Life Original Book Value 1,483,229.50 Valuation 2021/8/31 Remaining Useful 32.08 Benchmark Date Life

				Standard	Valuation of Current	Evaluated
**Building **	**Structure **	and Current Conditions		Score	Conditions	Score
Structure	(G)	1. Foundation	(1) Artificial foundation; (2) Natural foundation	25	Artificial foundation: uneven	20
			(1) Strip foundation; (2) Independent foundation; (3)		settlement
			Raft foundation; (4) Box foundation; (5) Pile
			foundation
		2. Bearing	(1) Beam: wooden beam, steel beam, reinforced	25	Steel concrete beam:	20
		components	concrete beam		sufficient bearing capacity;
			(2) Plate: wood plate, steel plate, reinforced concrete		Steel concrete column:
			slab		cracks and spalling found in
			(3) Column: wooden column, brick column, stone		the column body;
			column, steel column, concrete column, reinforced
			concrete column
			(4) Bearing wall: brick wall; stone wall, reinforced
			concrete wall
		3. Non-	Brick wall; empty bucket wall; plate wall (trough,	15	Masonry wall: a few cracks	12
		bearing wall	hollow); block wall; other		and swollen parts;
		4. Roof	Rigid roof, flexible roof, tile roof	20	Rigid roof: some cracks and	14
					source leakage;
		5. Floor	Cement mortar; concrete; terrazzo; crushed stone;	15	Ceramic tile floor: slight	11
			asphalt concrete; plain soil		abrasion and peeling, some
			Lime soil; ceramic tiles; quartz tiles; wood floors;		abrasion and fracture
			marble; granite
		Sub-total: (1 +	2 + 3 + 4 + 5)*Weight = 65.45	100	0.85	77

– III-3-112 –

VALUATION REPORT C

APPENDIX III-3

			Standard	Valuation of Current	Evaluated
**Building Structure **	and Current Conditions		Score	Conditions	Score
Decorations (S)	6. Doors and	(1) Doors: wood doors; steel doors; aluminum doors;	25	Aluminum alloy windows:	18
	windows	plastic-steel doors (2) Windows: wood windows; steel		cracked, loose, decayed, and
		windows; aluminum windows; plastic-steel windows		lack of flexibility of the
				opening and closing parts
	7. Outer wall	Fair-faced wall; brushed stone; mosaic; ceramic tile;	25	Tile wall: hollow, crack,	20
		aluminum-plastic panel; glass curtain wall; plastered		peeling, wall seepage
		wall; veneer wall; painted wall; marble; granite;
	8. Inner wall	Fair-faced wall; large white; lime mortar; cement	25	White power painted wall,	19
		slurry; plastered wall; painting type; paper pasting		paint slurry inner wall:
		type; marble; (1) Complete and firm, without damage,		hollow, mildew, peeling;
		hollowing and cracks (except wind cracks); (2) Slight
		hollowing, cracks, and peeling; (3) Partial hollowing,
		cracking, and peeling; (4) Severe hollowing, cracks,
		peeling.
	9. Ceiling	(1) Plastering ceiling; (2) Plate ceiling; (3) Suspended	25	Plastering ceiling: deformed,	20
		ceiling;		sagging, and slightly loose
	Sub-total: (6 + 7 + 8 + 9)*Weight = 3.85		100	0.10	77
Equipment (B)	10.Water	(1) The pipelines are unblocked and all appliances are	25	Pipelines are unblocked;	20
	supply and	in good conditions; (2) Basically in good conditions,		some parts damaged
	drainage	with slight leakage; (3) Insufficient flow, some rust
		and leakage; (4) Severely blocked and rusted, and the
		parts are incomplete and damaged
	11. Electrical	(1) The line equipment is complete and in good	25	Basically in good conditions;	20
	lighting	conditions, with good insulation; (2) Basically in good		some parts damaged
		conditions, with individual parts damaged; (3) Partially
		old and aging, with poor insulation; (4) Generally
		aging and incomplete, poor insulation
	12.	(1) In good conditions; (2) Basically in good	25	Basically in good conditions	18
	Monitoring	conditions and in normal use; (3) Can not be used		and in normal use
		normally; (4) Damaged severely;
	13. Heating	(1) In good conditions; (2) Basically in good	25	Basically in good conditions	19
		conditions and in normal use; (3) Can not be used		and in normal use
		normally; (4) Damaged severely;
	14. Power	(1) The equipment pipeline is in good conditions,
		without plugging; (2) Basically in good conditions,
		slightly old and usable; (3) Obviously rusted to be
		repaired, and the gas supply is abnormal; (4) Basically
		unusable;
	15. Fire	(1) In good conditions; (2) Basically in good
	prevention	conditions and in normal use; (3) Can not be used
		normally; (5) Damaged severely;
	18. Other	(1) In good conditions; (2) Basically in good
		conditions and in normal use; (3) Can not be used
		normally; (8) Damaged severely;
	Sub-total: (10 + 11 + 12 + 13 + 14 +...)*Weight = 7.7		100	0.05	77
	Evaluated Score (P): P = G + S + B =			77

– III-3-113 –

VALUATION REPORT C

APPENDIX III-3

• ③ Integrated residue ratio

Integrated residue ratio = Residue ratio based on serviced years × 40% + surveyed residue ratio × 60%

• = 80% × 40%+77% × 60%

• = 78%

• (4) Determination of appraised value

Appraised value = Full replacement cost × Integrated residue ratio

Appraised value = Full replacement cost × Integrated residue ratio

• = 1,705,500.00 × 78%

• = RMB1,330,300.00 (rounded)

Case 2: Port Pool A 1# Oil Wharf (Company Transferring Equity Interests – Structure and Other Auxiliary Facilities Valuation List No. 131)

(1) Overview

Port Pool A 1# oil wharf: 1# oil wharf is a prefabricated pre-stressed high-piled terminal, completed and put into use in June 2009, with a length of 235m, a bottom elevation of -15m. It is built with steel pipe pile foundation and concrete beam column platform. The content of the wharf includes: the main berth project, the construction of steel pipe piles and cathodic protection lamp pile, and the widening of the breakwater.

(2) Determination of full replacement cost

According to the “Notice of the Ministry of Finance and the State Administration of Taxation on the Comprehensive Rollout of the Business Tax to Value Added Tax Transformation Pilot Program” Caishui [2016] No. 36 (《財政部國家稅務總局關於全面 推開營業稅改徵增值稅試點的通知》財稅[2016]36號), for enterprises that meet the requirements for VAT deduction, the VAT input tax can be deducted. In this valuation, after taking into account the effect of this policy on the appraised value, then:

Full replacement cost = Estimated construction and installation project costs (after tax) + Preliminary and other fees and expenses (before tax) + Capital costs

– III-3-114 –

VALUATION REPORT C

APPENDIX III-3

A. Estimated construction and installation project costs

The estimated costs of construction and installation project include the total costs of civil engineering (decoration) and installation works. The estimated costs of construction and installation project are calculated using the budget (final account) adjustment method. The total costs of the project is calculated by determining the workload of building based on relevant information of construction and information on completion settlement, and by making reference to the parameters as set out in the latest version of the Benchmark for Hydraulic Construction Projects (2019), Reference Benchmark for Coastal Port Projects (2019), Benchmark for Dredging Project Budget (2019), and the “Information on Building Material Price and Projects in Yingkou City (August 2021)” issued on the main portal of the Estimated Construction Project Costs in Liaoning Province.

① Estimated costs of hydraulic construction at the terminal

Calculation of Fees for Port Pool A 1# Oil Wharf Hydraulic Constructions

Name of project: Port Pool A 1# Oil Wharf

Type of Project: 1 General Hydraulic Project: Type II

• I. Direct fees determined based on base price (base of charging) 121,428,574.29 benchmark

II.	**Direct fees **	**determined based **	on market benchmark	on market benchmark
**III. **	Price difference of materials					37,289,792.37
			Formula of	Bases of	Fee
No.	Code	Item	Calculation	Calculation	Rate	Sub-total
					%	(RMB)
1	A	Direct fees based on	Direct fees determined	159,809,662.37		159,809,662.37
		benchmark	based on market
			benchmark +
			Increased fee for
			small-scale project
1_2	A2	Direct fees	(Manpower fee +	159,809,662.37		159,809,662.37
		determined based	Material fee +
		on market	Construction vessel
		benchmark	and machinery usage
			fee + Fee for main
			materials) *Estimated
			amplified coefficient
1_2_1	A2_1	Manpower fee	Manpower fee	12,826,284.08		12,826,284.08
1_2_2	A2_2	Material fee	Material fee	91,683,976.39		91,683,976.39

– III-3-115 –

VALUATION REPORT C

APPENDIX III-3

			Formula of	Bases of	Fee
No.	Code	Item	Calculation	Calculation	Rate	Sub-total
					%	(RMB)
1_2_3	A2_3	Construction vessel	Machinery fee	24,114,761.90		24,114,761.90
		and machinery
		usage fee
1_2_4	A2_4	Fee for main	Fee for main materials	31,184,640.00		31,184,640.00
		materials
1_2_5	A2_5	Equipment fee	Equipment fee
1_3	A3	Increased fee for	Increased fee for small-
		small-scale	scale project
		project
2	B	Other direct fees	Safe construction	8,208,571.62		8,208,571.62
			practice fee +
			Temporary facility
			fee + Increased fee
			for construction
			during winter, rainy
			season and at night +
			Material reverse
			transportation fee +
			Construction
			assistance fee +
			Construction workers
			team enter and exit
			fee + Tugboat fee for
			offshore project
2_1	B1	Safe construction	Direct fees determined	121,428,574.29	1.5	1,821,428.61
		practice fee	based on base price
			benchmark amount
2_2	B2	Temporary facility	Direct fees determined	121,428,574.29	1.2	1,457,142.89
		fee	based on base price
			benchmark amount
2_3	B3	Increased fee for	Direct fees determined	121,428,574.29	1.27	1,542,142.89
		construction	based on base price
		during winter,	benchmark amount
		rainy season and
		at night
2_4	B4	Material reverse	Direct fees determined	121,428,574.29	0.22	267,142.86
		transportation fee	based on base price
			benchmark amount
2_5	B5	Construction	Direct fees determined	121,428,574.29	1.03	1,250,714.32
		assistance fee	based on base price
			benchmark amount

– III-3-116 –

APPENDIX III-3

VALUATION REPORT C

			Formula of	Bases of	Fee
No.	Code	Item	Calculation	Calculation	Rate	Sub-total
					%	(RMB)
2_6	B6	Construction	Direct fees determined	121,428,574.29	0.52	631,428.59
		workers team	based on base price
		enter and exit fee	benchmark amount
2_7	B7	Tugboat fee for	Direct fees determined	121,428,574.29	1.02	1,238,571.46
		offshore project	based on base price
			benchmark amount
3	C	Enterprise	Direct fees determined	129,637,145.91	6.57	8,517,160.49
		administration	based on base price
		fees	benchmark amount +
			Other direct fees
4	D	Profit	Direct fees determined	138,154,306.40	7	9,670,801.45
			based on base price
			benchmark amount +
			Other direct fees +
			Enterprise
			administration fees
5	E	Duties	Direct fees determined	121,428,574.29	1.6	1,942,857.19
			based on base price
			benchmark amount
6	F	Total fees before	Direct fees based on	188,149,053.12		188,149,053.12
		tax	benchmark + Other
			direct fees +
			Enterprise
			administration fees +
			Profit + Duties
7	G	Value-added tax	Total fees before tax	188,149,053.12	9	16,933,414.78
8	H	Special tax and
		duties
9	I	Construction and	Direct fees based on	205,082,467.90		205,082,467.90
		installation	benchmark + Other
		project fee	direct fees +
			Enterprise
			administration fees +
			Profits + Duties +
			Value-added tax +
			Special tax and
			duties
		Unit price for		470.00	m	436,345.68
		construction and
		installation
		project
		Estimated terminal				102,541,233.95
		project costs

– III-3-117 –

VALUATION REPORT C

APPENDIX III-3

• ② Preliminary and other fees and expenses

			Tax-
			exclusive
No.	Item	Rate	**rate **	Charging basis	Reference
1	Construction unit	0.68%	0.68%	Construction cost (tax	Ministry of Transport
	administrative fees			inclusive)	2019 No. 57
2	Engineering supervision	1.40%	1.32%	Construction cost (tax	Ministry of Transport
	fees			inclusive)	2019 No. 57
3	Environmental impact	0.03%	0.02%	Construction cost (tax	Ji Wei Huan Bao Zong Ju
	assessment fees			inclusive)	Ji Jia Ge (2002) No.
					125
4	Project proposal fees and	0.10%	0.09%	Construction cost (tax	Ji Wei Ji Jia Ge (1999)
	feasibility study fees			inclusive)	No. 1283
5	Survey and design fees	2.76%	2.61%	Construction cost (tax	Ministry of Transport
				inclusive)	2019 No. 57
6	Bidding agent fees	0.02%	0.02%	Construction cost (tax	Ministry of Transport
				inclusive)	2019 No. 57
7	Safety pre-assessment	0.03%	0.02%	Construction cost (tax	Guiding Opinions on
	fees			inclusive)	Safety Assessment Fees
					in Liaoning Province
					(2005)
9	Safety production fees	1.90%	1.79%	Construction cost (tax	Ministry of Emergency
				inclusive)	Management 2019
					Letter No. 428
	Total	6.92%	6.56%

• B Capital costs

According to the requirements under the “National Benchmark for the Time for Completion of Construction and Installation Projects”, the overall reasonable time for completion of projects is approximately 2.5 years. The construction funds are assumed to be evenly invested during the construction period. With regard to the loan interest rate, the capital costs are calculated based on the LRP rate of 4.25%, which is the LRP rate in August 2021 as announced by the People’s Bank of China for loans with a term of 2.5 years.

Capital costs = (Estimated construction and installation project costs + preliminary and other fees and expenses) × (1 + Loan interest rate) ^ (Reasonable time for completion/2-1)

– III-3-118 –

VALUATION REPORT C

APPENDIX III-3

• C Full replacement cost

Full replacement cost = Estimated construction and installation project costs + Preliminary and other fees and expenses + Capital costs – Deductible value-added tax

Details of the calculation are shown in the table below:

Table: Calculation of full replacement cost

Unit: RMB

				Result of
No.	Item	Fee Rate	Formula of Calculation	Calculation
1	Estimated construction and	0%	1 = (2 + 3 + 4 + 5) × (1 + correction	102,541,233.95
	installation project costs		coefficient)
2	Estimated terminal project costs		Calculated based on the benchmark	102,541,233.95
			budget and fees amount
3			Calculated based on the benchmark
			budget and fees amount
4			Calculated based on the benchmark
			budget and fees amount
5			Calculated based on the benchmark
			budget and fees amount
6	Preliminary and other fees and		6 = 7 + 8	7,343,969.73
	expenses
7	Based on fee rate	6.92%	6 = 1 × Fee rate	7,092,046.69
8	Based on floor area	0	7 = Floor area × Fee rate	0
9	Capital costs	4.25%	9 = (1 + 6) × [(1 + Loan interest	5,854,886.68
			rate)^Reasonable time for
			completion/2-1]
10	Replacement costs	Rounded	10 = 1 + 6 + 9	115,488,167.32
11	Deductible value-added tax		11 = Construction and installation	8,828,675.29
			fee/1.09*9% + (Preliminary fees –
			Construction and installation fee
			*Construction management
			fee)/1.06*6%
12	Replacement costs (after tax)		12 = Replacement costs – Deductible	106,659,700.00
			value-added tax
13	Replacement unit price (after	235	13 = Replacement costs (after tax)/Floor	453,871.09
	tax)		area

That is, the full replacement cost of Port Pool A1# Oil wharf (after tax) is RMB106,659,700.00 (rounded).

– III-3-119 –

VALUATION REPORT C

APPENDIX III-3

• (3) Determination of integrated residue ratio

• (1) Residue ratio based on serviced years

The economic service life of the structure is 50.00 years. As of the benchmark date, the berth has been used for 12.21 years, then:

Residue ratio based on serviced years = (1 – serviced years/economic service years) × 100% = 76% (see the table on surveyed residue ratio for details)

• (2) Surveyed residue ratio

The score of residue is calculated through on-site survey and by taking into account the correction coefficient of the structure.

Name of	A Port pool 1#	Structure of
structure	oil wharf	construction	High pile Type of project		Hydraulic berth
Property	/	Building	235 Date of			2009/6/17
Certificate No		parameters	completion
Land certificate	/	Floors	/ Useful life			50
No.
Original book	98,191,154.05	valuation	2021/8/31 Remaining useful			37.79
value		benchmark	life
		date
Structure and current conditions				Standard	valuation of	Appraised
				score	current	score
					conditions
Main part of	1. Foundation	Sand and gravel bedding, drainage slab; filter		20	Conditions of	16
quay wall G		layer			settlement,
					basically stable,
					with load-
					bearing
					capacity
	2. Base	Concrete caisson; concrete cover; block stone;		20	Prefabricated	15
		infill pile; track beam			components,
					displacement,
					basically stable,
					with load-
					bearing
					capacity

– III-3-120 –

VALUATION REPORT C

APPENDIX III-3

Structure and current conditions	Structure and current conditions			Standard	valuation of	Appraised
				score	current	score
					conditions
	3. Quay wall	Masonry, concrete parapet wall; compression		20	Cast steel	14
		roof; concrete block			concrete:
					corrosion,
					sinking
					deformation
	4. Accessory	Ship pillars; Ship sides;	Ship piers; Other ship-	20	Breakage,	14
	components	supporting elements Rail slab; concrete beam			deformation
		slab			displacement
					wear and tear,
					with cracking
	5. Structural	Track slab; concrete beam slab		20	Tear and wear;	14
	surface layer				cracks
	Sub-total: (1 + 2	+ 3 + 4 +	37	100	0.50	73
	5)*Weight =
Soft foundation	6. Soft	Grating; geotextile; drainage board; sand filler		25	Stable and can be	19
groove part S	foundation				used normally
	7. Dredging	Self-propelled rake suction; winch suction type;		25	Cutter suction	18
		chain bucket type; grab bucket type; bucket			vessel
		dredging; reef blowing and reef clearing			dredging:
					small-scale
					back silting in
					the harbor
					basin
	8. Mud	800, 1000, 1250, 1450m	3/h mud blowing; silt	25	Hydraulic filling:	18
	cleaning	removal; dumping			1450m 3/hydraulic
					filling, small-
					scale back
					silting in the
					harbor basin
	9. Cofferdam	Sand and gravel filling;	masonry; inspection	25	The cofferdam	18
		wells; pipelines; drains			tube well is
					deformed and
					sagging; in
					normal use
	Sub-total: (6 + 7	+ 8 +	22	100	0.30	73
	9)*Weight =
Berth land part	10. Foundation	(1) Foundation stone; (2) Concrete cushion; (3)		30	The block stone	22
F		Water stability; (4) Filter layer; (5) Concrete			concrete is
		foundation			basically in
					good conditions
					and firm

– III-3-121 –

VALUATION REPORT C

APPENDIX III-3

Structure and current conditions			Standard	valuation of	valuation of	Appraised
			score	current		score
				conditions
11. Tear and	(1) Chain block; (2) Concrete panel; (3) Asphalt		30	Cracks in the		22
wear layer	concrete; (4) Curb; (5) Runway beam				concrete block
					concrete slab
					are found; in
					normal use
12. Pipes and	(1) Water supply and drainage pipeline; (2)		30	Subsidence of the		22
networks	Inspection well; (3) Rain sewage tank; (4)				tube well is
	Electrical equipment				found; in
					normal use
13. Others	(1) In good conditions; (2) Basically in good		10	Can be used		7
	conditions and in normal use; (3) can not be				normally
	used normally; (4) Damaged severely;
Sub-total: (10 +	11 + 12 + 13 +	15	100	0.20		73
14 +...)*Weight =
Appraised score(P): P = G + S + B =				73
Valuation by service years (N)%: Remaining useful				76
life/(Serviced years + remaining useful life) =
Integrated residue ratio %: Residue ratio P*Weight + Residue				74
ratio N*Weight =

• (3) Integrated residue ratio (%)

Integrated residue ratio = Residue ratio based on serviced years × 40%+ Surveyed residue ratio × 60% = 76 × 40%+73 × 60% = 74%

1. Determination of the appraised value

Appraised value = Full replacement cost × Integrated residue ratio

• = 106,659,700.00 × 74%

• = RMB78,928,178.00 (rounded)

– III-3-122 –

VALUATION REPORT C

APPENDIX III-3

(III) Fixed assets – equipment

1. Scope of valuation

The quantity and book value of equipment under the fixed assets on the valuation benchmark date are set out in the table below:

Table: Summary of Equipment Under the Fixed Assets

Unit: RMB

	Declared	**Book **	Value
Name of Item	Amount	Original Value		Net Value
	(Number of
	Items)
Total	913	955,406,674.32	503,085,343.74
Machinery and equipment	735.00	950,582,770.39	502,780,178.24
Vehicle	8.00	3,834,000.00		191,700.00
Electronic equipment	170.00	989,903.93		113,465.50

2. Overview of assets

• (1) Machinery and equipment

The machinery and equipment included in the capital increase in the valuation are mainly distributed in the plant area where it is located, including: ore loading machines, belt conveyors, various types of pumps, power transformation and distribution systems, storage tanks, oil transmission system process pipelines, loaders, forklifts and monitoring system, etc. As of the valuation benchmark date, all machinery and equipment are in good conditions and are in normal use.

(2) Vehicles

The Company has a total of 8 vehicles, mainly including trucks, vacuum cleaners, etc. As of the valuation benchmark date, all vehicles are in normal use.

(3) Electronic equipment

The Company’s electronic equipment mainly includes: various models of computers, printers, air conditioners, copiers, servers, cameras, monitoring equipment, etc. As of the valuation benchmark date, all electronic equipment is in normal use.

– III-3-123 –

VALUATION REPORT C

APPENDIX III-3

3. Methods and results of asset verification

(1) Methods of asset verification

On the basis of the matching of the accounts, the appraiser, with the cooperation of the relevant personnel of the assessed enterprise, conducts on-site verification of the fixed assets under the equipment category, surveys their operating conditions under appropriate conditions, and uses on-site and case-by-case survey (for equipment directly used in production) and sampling survey (for other equipment) to check the current condition of assets and collect relevant technical information to verify relevant information on ownership.

(2) Results of asset verification

The result of on-site verification shows that the ownership of fixed assets of all commissioned equipment is clear, and all equipment can be used normally.

4. Method of valuation

Based on the purpose of the valuation and the characteristics of the subject asset, assuming that it will continue to be used for the purpose which is identical to that of the current use, and on the basis of on-site surveys, the replacement costs method is adopted for valuation.

Basic formula: Appraised value = Full replacement cost × Residue ratio

(1) Determination of full replacement cost

1) Determining the full replacement costs of machinery and equipment

Full replacement cost = Equipment fee + Transportation and miscellaneous fees + Installation and commissioning fee + Equipment foundation fee + Preliminary and other expenses + Capital costs – Deductible input VAT

① Purchase price

It is mainly determined by inquiring equipment manufacturers or sales companies, or referring to price materials such as the “Mechanical and Electrical Products Quotation Manual 2021”, and by referring to recent contract prices of similar equipment. For a small amount of equipment for which the purchase prices are not available, the price change rate of the equipment of the same age and category is used to calculate the purchase price.

– III-3-124 –

VALUATION REPORT C

APPENDIX III-3

② Transportation and miscellaneous fees

Transportation and miscellaneous fees refer to the transportation fees, purchase fees, storage fees, unloading fees and other related miscellaneous fees incurred during the transportation of the equipment. The formula of calculation is as follows:

Transportation and miscellaneous fees for domestic equipment= Purchase price of the equipment (tax inclusive)× Transportation and miscellaneous fee rate for the equipment

The Transportation and miscellaneous fee rates are calculated based on the rates specified in the relevant industry costs indicators with reference to the rate standard as stipulated by the “Manual of Data and Parameters Commonly Used in Assets Valuation”.

Transportation and miscellaneous fees will not be charged if the purchase price includes transportation expenses.

③ Foundation fee

If the foundation of the equipment is independent or inseparable from the building, the equipment foundation fee shall be considered in the valuation of fixed assets under building category, the equipment foundation fee rate shall be calculated based on the rate specified in the relevant industry budget index or by referring to the “Manual of Methods and Parameters Commonly Used in Assets Valuation”.

Equipment foundation fee = Purchase cost of equipment (tax inclusive)× Equipment foundation fee rate

• ④ Installation and commissioning fee

The fee is determined based on the consumption of auxiliary materials, the installation foundation, and the difficulty of installation of the assessed equipment with reference to the “Manual of Data and Parameters Commonly Used in Assets Valuation”. For small equipment that does not need to be installed, installation costs are not considered.

Equipment installation and commissioning fee = Equipment purchase price (tax inclusive) × Installation and commissioning fee rate

– III-3-125 –

VALUATION REPORT C

APPENDIX III-3

⑤ Construction and other expenses

Construction and other expenses are calculated based on the characteristics of the equipment and the equipment purchase price (tax inclusive). It includes construction unit management fee, engineering survey and design fee, engineering supervision fee, environmental impact assessment fee, bidding agency fee, feasibility study fee, etc. The fee rates are detailed in the table below:

			Tax-
			exclusive
No.	Item	Rate	**rate **	Charging basis	Reference
1	Construction unit	0.68%	0.68%	Construction cost (tax	Ministry of Transport
	administrative			inclusive) × rate	2019 No. 57
	fees
2	Engineering	1.40%	1.32%	Construction cost (tax	Ministry of Transport
	supervision fees			inclusive) × rate	2019 No. 57
3	Environmental	0.03%	0.02%	Construction cost (tax	Ji Wei Huan Bao Zong
	impact			inclusive) × rate	Ju Ji Jia Ge (2002)
	assessment fees				No. 125
4	Project proposal	0.10%	0.09%	Construction cost (tax	Ji Wei Ji Jia Ge (1999)
	fees and			inclusive) × rate	No. 1283
	feasibility study
	fees
5	Survey and design	2.76%	2.61%	Construction cost (tax	Ministry of Transport
	fees			inclusive) × rate	2019 No. 57
6	Bidding agent fees	0.02%	0.02%	Construction cost (tax	Ministry of Transport
				inclusive) × rate	2019 No. 57
7	Safety pre-	0.03%	0.02%	Construction cost (tax	Guiding Opinions on
	assessment fees			inclusive) × rate	Safety Assessment
					Fees in Liaoning
					Province (2005)
9	Safety production	1.90%	1.79%	Construction cost (tax	Ministry of Emergency
	fees			inclusive) × rate	Management 2019
					Letter No. 428
	Total	6.92%	6.56%

– III-3-126 –

VALUATION REPORT C

APPENDIX III-3

⑥ Capital costs

The capital cost was calculated based on the sum of the purchase price, transportation and miscellaneous fees, installation fees, the preliminary and other fees and expenses in accordance with the even input of capital within the reasonable construction period of the appraised enterprise, with reference to the loan prime rate (LPR) published by the National Interbank Funding Centre with authorization granted by the People’s Bank of China as at the valuation benchmark date. The formula of the capital cost is as follows:

Capital costs = (Equipment purchase costs + Transportation and miscellaneous fees + Foundation costs +Installation and commissioning fees + Preliminary and other fees and expenses) × Reasonable time for completion × Benchmark loan rate × 1/2.

⑦ Deductible tax

According to “Notice on Several Issues Concerning the Implementation of VAT Reform in the Whole Country” (Cai Shui [2008] No. 170), “Notice on the Comprehensive Rollout of the Business Tax to Value Added Tax Transformation Pilot Program” (Caishui [2016] No. 36)), Caishui (2018) No. 32 promulgated by the Ministry of Finance and State Administration of Taxation, and Announcement No. 39 of 2019 issued by the Ministry of Finance, State Administration of Taxation and General Administration of Customs, when calculating the replacement costs of machinery and equipment that meets the requirements for value-added tax deduction, the corresponding value-added tax should be deducted. In this valuation, the deductible input tax is calculated according to the corresponding value-added tax rate for the equipment purchase price, transportation and miscellaneous fees, installation fee, basic fee, and preliminary fees and expenses:

Tax deductible for domestic equipment = Equipment purchase price/(1 + 13%) × 13% + Transportation and miscellaneous fees/(1 + 9%) × 9% + (Installation fee + Basic fee)/(1 + 9%) × 9% + (Preliminary fees and expenses – Construction unit management fee)/(1 + 6%) × 6%

2) Determination of the full replacement cost of transportation vehicles

To derive the formula of calculation, firstly, we determine the current purchase price (before tax) of transportation vehicles based on recent vehicle market price data, such as information on sales in the local car market, and secondly, on this basis, we include vehicle purchase tax and new vehicle registration duties and fees. We also take into account relevant policies, which stipulate that the value-added tax on the purchase of vehicles can be deducted, such as the requirements under the “Interim Regulations on Vehicle Purchase Tax of the People’s Republic of China” issued by the Ministry of Finance and

– III-3-127 –

VALUATION REPORT C

APPENDIX III-3

the State Administration of Taxation, the “Notice on Incorporating Railway Transportation and Postal Services into the Pilot Program of Changing Business Tax to Value-added Tax” (Caishui [2013] No. 106) and the Announcement No. 39 of 2019 issued by the State Administration of Taxation and the General Administration of Customs. The formula of calculation is as follows:

Full replacement cost = Current purchase price + Vehicle purchase tax + New vehicle registration fee – Deductible value-added tax

• ① Purchase price: The vehicle purchase price for this valuation is determined according to the vehicle market information and recent vehicle market price data from relevant sources, such as “Automobile Quotation Database by pcauto.com”, yiche.com, and by referring to the latest market price of similar models in the same location. For vehicles purchased a long time ago, when the purchase price of the original model and specification cannot be found, the price of a similar vehicle with the same displacement can be used as the reference price for evaluating the purchase price of the vehicle.

• ② Purchase tax: Calculated in accordance with the “Law of the People’s Republic of China on Vehicle Purchase Tax” (《中華人民 共和國車輛購置稅法》) (adopted at the Seventh Session of the Standing Committee of the Thirteenth National People’s Congress on 29 December 2018); Vehicle purchase tax payable = Taxable price × 10%. The “taxable price for the purchase of a vehicle by a taxpayer for his own use shall not include value-added tax.”

Vehicle purchase tax = Purchase price ÷ (1 + Value-added tax rate) × Vehicle purchase tax rate

Vehicle purchase tax rate: 10%

• ③ Production cost of new car license, including cost of license, examination fee and procedural cost, is fixed at RMB300.00 per unit according to charging standards published by local automobile administration department.

• ④ Determination of the input tax amount incurred on the purchase of vehicles

The input tax incurred when purchasing the vehicles = Vehicle purchase price × Value-added tax rate ÷ (1 + Value-added tax rate)

The vehicle purchase value-added tax rate: 13%

– III-3-128 –

VALUATION REPORT C

APPENDIX III-3

• 3) Determination of full replacement cost of electronic devices

The price of electronic devices as at the valuation benchmark date is determined based on the local market information and recent market price information published by Zol.com.cn and PConline.com.cn. Generally, manufacturers or agents will provide free delivery, installation and commissioning services. The full replacement cost is then determined as follows:

Full replacement cost = Purchase price – Deductible tax amount

Deductible value-added tax amount = Purchase price/1.13×13%

In addition, for any electronic device which was purchased long time ago, its full replacement cost is determined by reference to prices in the secondhand market.

(2) Determination of residue ratio

• 1) Integrated residual ratio of machinery and equipment

Residue ratio of machinery and equipment is comprehensively determined with reference to the economic service life of the equipment, through conducting survey on components of the equipment by on-site survey on present condition of the equipment and reviewing the information on operation, repair and management records of the equipment. Residue ratio, N, is calculated on such basis, i.e.:

N = Remaining service life/(Practical serviced life + Remaining service life) × 100%

• 2) Integrated residual ratio of vehicles

In accordance with the Standards for Compulsory Scrapping of Motor Vehicles (No. 12 Order in 2012) jointly released by the Ministry of Commerce, the National Development and Reform Commission, the Ministry of Public Security, and the Ministry of Ecology and Environment, the smaller of the residue ratios as determined below is taken as the final residue ratio of vehicles, i.e.:

Residue ratio of service life = (1 – Serviced life/Specified or economic service life) × 100%

Residue ratio of mileage = (1 – Travelled mileage/Specified mileage) ×

100%

– III-3-129 –

VALUATION REPORT C

APPENDIX III-3

Residue ratio = Min (Residue ratio of service life, Residue ratio of mileage)

Meanwhile, necessary survey and evaluation are conducted for the vehicles to be assessed. Where survey and evaluation result shows great difference from the residue ratio determined above, appropriate adjustment should be made; where the two are equivalent to each other, no adjustment is required. Namely:

Residue ratio = Min (Residue ratio of service life, Residue ratio of mileage) + a

a: Adjustment factors for special vehicle conditions.

• (3) Residue ratio of electronic devices

Remaining useful life method is adopted to determine the residue ratio.

Residue ratio = [Remaining useful life ÷ (Used life + Remaining useful life)] × 100%

Furthermore, it is not necessary to determine the residue ratio of electronic devices that were evaluated directly based on the prices in the second-hand market.

• (3) Determination of appraised value

Appraised value = Full replacement cost × Residue ratio

5. Result of valuation

After the valuation, the valuation results of the fixed assets under the equipment category included in the scope of valuation as at 31 August 2021, being the valuation benchmark date is shown in the table below:

Unit: RMB

Name of Item	Book	Value	Appraised	Value	Amount of	Appreciation
	Original Value	Net Value	Original Value	Net Value	Appreciation	Rate
Total – Equipment	955,406,674.32	503,085,343.74	1,051,243,880.00	519,262,839.00	16,177,495.26	3.22%
Fixed assets –
machinery and
equipment	950,582,770.39	502,780,178.24	1,048,247,800.00	518,265,849.00	15,485,670.76	3.08%
Fixed assets – Vehicles	3,834,000.00	191,700.00	2,542,100.00	852,708.00	661,008.00	344.81%
Fixed assets –
Electronic equipment	989,903.93	113,465.50	453,980.00	144,282.00	30,816.50	27.16%

– III-3-130 –

VALUATION REPORT C

APPENDIX III-3

Generally speaking, the difference in the comparison between the appraised value and book value of the Company’s fixed assets under the equipment category are mainly reflected in the following aspects:

• 1) With regard to machinery and equipment, on the one hand, the reasons for the appreciation of the original appraised value are: firstly, the purchase price of the equipment on the benchmark date increased slightly, and secondly, the machinery and equipment within the valuation scope are accounted for at the contract price, while the preliminary fees and capital costs are calculated in accordance with the relevant policies for the purpose of the valuation, and these factors led to the increase in the original appraised value. This leads to an increase in the original appraised value. On the other hand, the reasons for the increase in the net appraised value are: firstly, the increase on original value, and secondly, the depreciation life of the enterprise’s machinery and equipment is shorter than the economic service life used in the valuation.

• 2) With regard to vehicles, the original appraised value is decreased as the price of vehicles is reduced year due to the fierce competition in the auto market and the fast rate of upgrading; the net appraised value is increased as the depreciation period of the Company’s vehicles is shorter than the economic period used in the valuation.

• 3) With regard to electronic equipment, the original appraised value is decreased for the following reasons: firstly, the market price of electronic equipment changes rapidly due to the rapid upgrading of products on the electronic equipment market, and secondly, some of the electronic equipment was purchased a long time ago, while they are assessed using the market method; the net appraised value of equipment is increased as the depreciation period of the enterprise’s electronic equipment is shorter than the economic service life used in the valuation.

6. Valuation case

Case 1: Ore Loading Machine – Machinery and Equipment Inventory and Valuation List No. 116

• (1) Overview of the equipment

Name of equipment: Ore loading machine Model of equipment: 3,500t/h Manufacturer: Shenyang Shengjia Machinery Manufacturing Co., Ltd. Date of purchase: December 2012 Date of being commissioned for operation: December 2012 Original book value: RMB11,430,000.00 Net book value: RMB3,280,640.93

– III-3-131 –

VALUATION REPORT C

APPENDIX III-3

Quantity: 1 set Main technical specifications: Rated production capacity: 3,500t/h Maximum production capacity: 4,375t/h Telescopic speed: 6m/min Retractable belt width: 1,600mm Telescopic belt groove angle: 35° Roller diameter of telescopic belt conveyor: � = 159mm Speed of telescopic belt: V = 2.5m/s Material types: iron ore, including fine ore, lump ore, pellets Total length of the loading line: approximately 705m.

• (2) Determination of full replacement cost

1) Equipment purchase price

After consulting with the manufacturer on the quotation, the appraiser determines that the unit sale price of this model of equipment (before tax) on the valuation benchmark date was RMB12,600,000.00 per set.

2) Transportation and miscellaneous fees

After consulting with the manufacturer and inquiring on the contract price, and referring to the asset valuation manual, it is determined that the equipment installation fee rate is 2% of the purchase price, then:

Transportation and miscellaneous fees = Purchase price × Transportation and miscellaneous fee rate

• = 12,600,000.00 × 2%

• = RMB252,000.00

3) Installation and commissioning fee

After consulting with the manufacturer and inquiring on the contract price, and referring to the asset valuation manual, it is determined that the equipment installation fee rate is 8% of the purchase price, then:

Installation and commissioning fee = Purchase price × Installation fee rate

= 12,600,000.00 × 8%

• = RMB1,008,000.00

– III-3-132 –

VALUATION REPORT C

APPENDIX III-3

4) Basic fee

As the basic fee of the equipment are included in the civil construction work, the basic rate is 0%.

5) Preliminary and other fees and expenses

The preliminary and other fees and expenses are estimated based on the overall project, and the preliminary fee (before and after tax) rate is 6.92% and 6.56%, respectively.

Preliminary fees (before tax) = (Equipment purchase fee + Transportation and miscellaneous fees + Installation fee + Basic fee) × 6.92% = RMB958,597.47

Preliminary fees (after tax) = (Equipment purchase fee + Transportation and miscellaneous fees + Installation fee + Basic fee) × 6.56% = RMB909,700.87

6) Capital costs

The capital costs are calculated based on the reasonable time for completion of 2.5 years for the subject company under valuation. On the valuation benchmark date, the loan prime rate (LPR) announced by the National Interbank Funding Center as authorized by the People’s Bank of China is 3.85% for 1-year and 4.65% for 5-year loans, respectively. The interest rate (LPR) of a loan with a term of 2.5-years (i.e., time for completion) is determined to be 4.25%, the average of the LPR on the benchmark date for 1-year and 5-year loans. The formula of calculation of the capital costs is as follows:

Capital costs = (Equipment purchase costs + Transportation and miscellaneous costs + Installation and commissioning costs + Basic costs + Preliminary and other fees and expenses) × Reasonable time for completion × loan interest rate × 1/2

= RMB787,237.99

– III-3-133 –

VALUATION REPORT C

APPENDIX III-3

7) Deductible value-added tax

Deductible value-added tax = Equipment purchase price/1.13 × 13% + (Transportation and miscellaneous fees + Installation and commissioning fee + Equipment basic fee)/1.09 × 9% + preliminary and other fees and expenses (before tax) – Preliminary and other fees and expenses (after tax)

= RMB1,602,490.82

8) Calculation of full replacement cost

Full replacement cost = (Equipment purchase price + Transportation and miscellaneous fees + Installation and commissioning fee + Equipment basic fee + Preliminary and other fees and expenses + Capital costs) – Deductible value-added tax

= RMB14,003,300.00 (RMB/unit, rounded)

(3) Integrated residue ratio

The economic life of the equipment was determined to be 18 years with reference to the characteristics of the industry. The equipment was put into use in December 2012 and has been in use for 8.72 years as of the valuation benchmark date. Through on-site surveys, the equipment is currently in normal operation thanks to the good maintenance. According to the judgement of relevant technical personnel after taking into account various factors, the remaining service life of the equipment is 9 years, then:

Residue ratio = Remaining service life/(Remaining service life + Serviced life) × 100%

= 9/(9 + 8.72) × 100%

==> picture [31 x 8] intentionally omitted <==

(4) Determination of appraised value

Appraised value = Full replacement cost × Integrated residue ratio

= 14,003,300.00 × 51%

• = 7,141,683.00 (RMB/unit, rounded)

– III-3-134 –

VALUATION REPORT C

APPENDIX III-3

Case 2: Stacker – Machinery and equipment Inventory and Evaluation List No.3

• (1) Overview of the equipment

Equipment name: Stacker Equipment model: DB6000t/h Manufacturer: Dalian Huarui Heavy Industry Group Co., Ltd. Purchase Date: January 2015 Date of being commissioned for operation: January 2015 Original book value: RMB19,980,000.00 Net book value: RMB9,244,510.76 Quantity: 1 set Main technical specifications: Rated stacking capacity: 6000t/h Maximum stacking capacity: 7500t/h Shape (length * width * height): 1081223.75m Total installed capacity: 550KW Power supply: AC10000V/50HZ Total weight: 750t

• (2) Determination of full replacement cost

1) Equipment purchase price

After consulting with the manufacturer on the quotation, the appraiser determines that the unit sale price of this model of equipment (before tax) on the valuation benchmark date was RMB22,000,000.00 per set.

2) Transportation and miscellaneous fees

As the quotation includes transportation fee, the transportation and miscellaneous fees rate is determined to be 0%.

3) Installation and commissioning fee

After consulting with the manufacturer and inquiring on the contract price, and referring to the asset valuation manual, it is determined that the equipment installation fee rate is 7% of the purchase price, then:

Installation and commissioning fee = Purchase price × installation fee rate

• = 22,000,000.00 × 7%

• = RMB1,540,000.00

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4) Basic fee

As the basic fee of the equipment are included in the civil construction work, the basic rate is 0%.

5) Preliminary and other fees and expenses

The preliminary and other fees and expenses are estimated based on the overall project, and the preliminary fee (before and after tax) rate is 6.92% and 6.56%, respectively.

Preliminary fees (before tax) = (Equipment purchase fee + Transportation and miscellaneous fees + Installation fee + Basic fee) × 6.92% = RMB1,628,094.11

Preliminary fees (after tax) = (Equipment purchase fee + Transportation and miscellaneous fees + Installation fee + Basic fee) × 6.56% = RMB1,545,047.51

6) Capital costs

The capital costs are calculated based on the reasonable time for completion of 2.5 years for the subject company under valuation. On the valuation benchmark date, the loan prime rate (LPR) announced by the National Interbank Funding Center as authorized by the People’s Bank of China is 3.85% for 1-year and 4.65% for 5-year loans, respectively. The interest rate (LPR) of a loan with a term of 2.5-years (i.e., time for completion) is determined to be 4.25%, the average of the LPR on the benchmark date for 1-year and 5-year loans. The formula of calculation of the capital costs is as follows:

Capital costs = (Equipment purchase costs + Transportation and miscellaneous costs + Installation and commissioning costs + Basic costs + Preliminary and other fees and expenses) × Reasonable time for completion × loan interest rate × 1/2

= RMB1,337,055.00

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7) Deductible value-added tax

Deductible value-added tax = Equipment purchase price/1.13 × 13% + (Transportation and miscellaneous fees + Installation and commissioning fee + Equipment basic fee)/1.09 × 9% + preliminary and other fees and expenses (before tax) – preliminary and other fees and expenses (after tax)

= RMB2,741,176.02

8) Calculation of full replacement cost

Full replacement cost = (equipment purchase price + Transportation and miscellaneous fees + Installation and commissioning fee + Equipment basic fee + Preliminary and other fees and expenses + Capital costs) – Deductible value-added tax

= 23,764,000.00 (RMB/unit, rounded)

(3) Integrated residue ratio

The economic life of the equipment is determined to be 18 years with reference to the characteristics of the industry. The equipment was put into use in January 2015 and has been in use for 6.61 years as of the valuation benchmark date. Through on-site surveys, the equipment is currently in normal operation thanks to the good maintenance. According to the judgement of relevant technical personnel after taking into account various factors, the remaining service life of the equipment is 11 years, then:

Residue ratio = Remaining service life/(Remaining service life + Serviced life) × 100% = 11/(11 + 6.61) × 100% = 62%

(4) Determination of appraised value

Appraised value = Full replacement cost × Integrated residue ratio

= 23,764,000.00 × 62%

• = 14,733,680.00 (RMB/unit, rounded)

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Case 3: Sinotruk Howo Truck (Vehicle Evaluation List No. 2)

• (1) Overview of vehicle

Vehicle name: Sinotruk Howo truck Model: ZZ1317M4667C Manufacturer: Shandong Jinan Truck Co., Ltd. License plate number: Liao A-H7108 Driving mileage: 63,258 kilometers Date of purchase: July 2011 Date of being commissioned for operation: July 2011 Original book value: RMB366,000.00 Net book value: RMB18,300.00 Main technical specifications:

Type of steering: Steering wheel Chassis Type: Type II Name of product: Truck chassis Product trademark: Sinotruk Howo Specification: Length 11,700 Engine power (ML): 247 Width 2,496 Height 3,025 Fuel type: Diesel fuel Standard: GB17691-2001 (Phase II), GB3847-2005 Type of steering: Steering wheel Approach departure 16/19 angles: Number of axes: 4 Maximum speed: 90,102 Engine capacity (ML) 9,726 Number of tires: 12 Tire specifications: 11.00-20 Wheel distance: Front track: 2,022 Rear track: 1830 Total weight: 31,000 Front suspension and 1,500/2,450, 2,425 rear suspension: Gross weight: 11,110 Number of passengers 2 at front seats:

• (2) Determination of full replacement cost

1) Vehicle purchase price

The vehicle was purchased in July 2011. After inquiring about vehicle market information and recent vehicle market price data from relevant sources, such as auto.qq.com, the price of this type of vehicle on the valuation benchmark date is RMB270,000.00 (before deducting value-added tax).

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2) Vehicle purchase tax

Since the vehicle is running within the port and bears a license plate for operating within the port factory, the vehicle purchase tax is not included.

3) Cost of new vehicle license plate

The cost of a new vehicle license issuance fee is RMB300.00 per vehicle.

• 4) Deductible value-added tax

Deductible tax amount = Vehicle purchase price/(1 + Value-added tax rate) × Value-added tax rate

• = 270,000.00/(1+13%) × 13%

• = RMB31,061.95

5) Full replacement cost

Full replacement cost = Vehicle purchase price + New vehicle license issuance fee – Deductible tax

• = 239,200.00 (RMB/vehicle, rounded)

(3) Determination of residue ratio

With reference to the requirements under the “Regulations on Standards for Compulsory Retirement of Motor Vehicles” (Order No. 12 of 2012 issued the Ministry of Commerce, Development and Reform Commission, Ministry of Public Security, and Ministry of Environmental Protection), the service life of the vehicle is determined to be 15 years, and the prescribed mileage is 600,000 kilometers. Then:

1) Residue ratio based on serviced years

Residue ratio based on service life = (1-serviced life/economic service life) × 100%

The vehicle was put into use in July 2011. It has a service life of 10.12 years, and an economic service life of 15 years. Then:

Residue ratio based on service life = (1–10.12/15) × 100%

• = 33%

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APPENDIX III-3

2) Residue ratio based on mileage

Residue ratio based on mileage = (1- Mileage driven/Prescribed mileage) × 100%

The vehicle has a mileage of 63,258 kilometers, and the prescribed mileage is 600,000 kilometers, then:

Residue ratio of driving mileage = (1–63,258/600,000) × 100% = 89%

The vehicle is in normal use and maintenance and is not subject to extraordinary conditions. Based on the actual conditions of the vehicle, the adjustment coefficient a = 0

Residue ratio = Min (Residue ratio based on serviced years, Residue ratio based on mileage) + 0

= Min (33%, 89%) + 0

= 33%

• (4) Determination of appraised value

Appraised value = Full replacement cost × Residue ratio

= 239,200.00 × 33%

• = 78,936.00 (RMB/vehicle, rounded)

Case 4: Camera (Electronic Equipment Valuation List No.146)

• (1) Overview of the asset

Equipment name: Camera Specification and model: HXR-NX5R Manufacturer: Sony Corporation Date of purchase: December 2018 Date of being commissioned for operation: December 2018 Original book value: RMB16,120.69 Net book value: RMB8,163.14 Quantity: 1 set Main technical specifications: Product type Camera all-in-one Product Positioning Professional Camera Sensor type Exmor 3CMOS Sensor size (1/2.8) inch

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APPENDIX III-3

Effective pixels 2.07 megapixels Optical zoom 20 times Digital zoom 40 times Actual focal length f = 4.1-82mm LCD screen size 3.5 inches LCD screen pixels 1.56 megapixels

• (2) Determination of full replacement cost

1) Equipment purchase price

Based on information available online, the appraiser determines that the unit sale price of the equipment (before tax) on the valuation benchmark date is RMB16,999.00.

2) Deductible value-added tax

Deductible value-added tax = Equipment purchase fee ÷ (1 + Value-added tax rate) × Value-added tax rate

• = 16,999.00÷1.13 × 13%

• = RMB1,955.64

3) Full replacement cost

Full replacement cost = Equipment purchase fee – Deductible valueadded tax

• = 16,999.00-1,955.64

• = 15,040.00 (RMB/unit, rounded)

(3) Determination of residue ratio

After on-site survey, the appraiser is of the opinion that the equipment is in normal use. The economic service life of the equipment is 6 years, and it has been used for 2.73 years as of the valuation benchmark date. It is determined that its remaining service life is 3 years, then:

Residue ratio = Remaining service life/(serviced life + Remaining service life) × 100%

= 3/(3 + 2.73) × 100%

= 52%

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APPENDIX III-3

• (4) Determination of appraised value

Appraised value = Full replacement cost × Residue ratio

• = 15,040.00 × 52%

• = 7,821.00 (RMB, rounded)

(IV) Intangible Assets – Land Use Right

1. Overview of the Subject of Evaluation

(1) Land registration

The land involved in this valuation is 27 plots of land. The subject land is located in Bayuquan Port District, Yingkou City. The total area of the valuation target is 4,396,185.69 square meters. The original book value of land use right is RMB1,481,122,772.84, and the net book value is RMB1,104,467,003.97. The details of land registration are shown in the table below:

Table: Details of Land Registration

Unit: m[2]

									Transfer area
									included in
				Date of	Termination	Nature of		Area	the scope of
No.	Title certificate no.	Parcel name	Location	acquisition	date	land	Land usage	recorded	valuation
1	Bayuquan Guo Yong	Port Pool A	In the Port	2009/12/16	2059/12/15	Transfer	Land for	486,764.80	126,764.80
	[2009] No. 268	2# Land	Area				transportation
2	Liao (2020) Yingkou	Port Pool A	In the Port	2020/11/11	2059/6/9	Transfer	Land for	384,618.90	384,538.25
	Bayuquan Real	1# Land	Area				transportation
	Estate
	No. 0032395
3	Liao (2020) Yingkou	Phase IV	In the Port	2020/11/10	2059/12/15	Transfer	Land for	535,388.00	484,941.15
	Bayuquan Real	Project 7#	Area				transportation
	Estate	Land
	No. 0032260
4	Liao (2018) Yingkou	Phase IV 4#	In the Port	2018/1/24	2056/10/15	Transfer	Port terminal	965,263.59	231,288.84
	Bayuquan Real	Plot	Area
	Estate
	No. 0029366

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VALUATION REPORT C

									Transfer area
									included in
				Date of	Termination	Nature of		Area	the scope of
No.	Title certificate no.	Parcel name	Location	acquisition	date	land	Land usage	recorded	valuation
5	Liao (2020) Yingkou	Logistics	In the Port	2020/9/23	2052/10/8	Transfer	Port terminal	22,452.32	4,222.96
	Bayuquan Real	Parcel 1	Area
	Estate
	No. 0027169
6	Liao (2020) Yingkou	Logistics	In the Port	2020/9/23	2052/10/8	Transfer	Port terminal	413,338.24	14,697.35
	Bayuquan Real	Parcel 2	Area
	Estate
	No. 0027266
7	Bayuquan Guo Yong	Administrative	Outside the	2009/6/5	2059/6/3	Transfer	Commercial	42,987.66	245.00
	[2009] No. 0127	Zone 1	Port Area				and
							residential
8	Liao (2020) Yingkou	Administrative	Outside the	2020/9/23	2059/6/3	Transfer	Commercial	29,016.61	100.00
	Bayuquan Real	Zone 2	Port Area				and
	Estate						residential
	No. 0027176
9	Bayuquan Guo Yong	Port Pool A	In the Port	2009/12/16	2059/12/15	Transfer	Land for	396,995.30	396,179.07
	[2009] No. 267	4# Land	Area				transportation
10	Liao (2020) Yingkou	Parcel 01#	In the Port	2007/12/18	2049/12/25	Transfer	Port terminal	43,979.50	43,979.50
	Bayuquan Real		Area
	Estate
	No. 0029352
11	Liao (2020) Yingkou	Parcel 02#	In the Port	2007/12/18	2049/12/25	Transfer	Port terminal	38,455.14	38,455.14
	Bayuquan Real		Area
	Estate
	No. 0027222
12	Bayuquan Guo Yong	Parcel 04#	In the Port	2007/12/18	2049/12/25	Transfer	Port terminal	20,049.55	20,049.55
	[2007] No. 0216		Area
13	Liao (2020) Yingkou	Parcel 03#	In the Port	2007/12/18	2049/12/25	Transfer	Port terminal	199,427.59	199,427.59
	Bayuquan Real		Area
	Estate
	No. 0029375
14	Liao (2020) Yingkou	Parcel 07#	In the Port	2020/9/23	2049/12/25	Transfer	Port terminal	298,720.25	294,174.75
	Bayuquan Real		Area
	Estate
	No. 0027263
15	Bayuquan Guo Yong	Parcel 05#	In the Port	2007/12/18	2049/12/25	Transfer	Port terminal	17,452.00	17,452.00
	[2007] No. 0217		Area

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APPENDIX III-3

									Transfer area
									included in
				Date of	Termination	Nature of		Area	the scope of
No.	Title certificate no.	Parcel name	Location	acquisition	date	land	Land usage	recorded	valuation
16	Liao (2020) Yingkou	Parcel 06#-1	Haixingban	2010/12/21	2052/6/17	Transfer	Industrial	189,206.47	189,206.47
	Bayuquan Real
	Estate
	No. 0029388
17	Liao (2020) Yingkou	Parcel 06#-2	Haixingban	2005/9/27	2052/6/17	Transfer	Industrial	141,174.75	141,174.75
	Bayuquan Real
	Estate
	No. 0032270
18	Liao (2020) Yingkou	Parcel 08#	Haixingban	2010/12/21	2052/6/17	Transfer	Industrial	90,787.67	90,787.67
	Bayuquan Real
	Estate
	No. 0029354
19	Liao (2020) Yingkou	Parcel 09#-1	Haixingban	2010/12/21	2052/6/17	Transfer	Industrial	63,085.71	63,085.71
	Bayuquan Real
	Estate No.
	0029361
20	Liao (2020) Yingkou	Parcel 09#-2	Haixingban	2006/7/18	2052/6/17	Transfer	Port terminal	87,327.49	87,327.49
	Bayuquan Real
	Estate No.
	0027242
21	Liao (2020) Yingkou	Parcel 10#	Haixingban	2020/10/12	2052/6/17	Transfer	Port terminal	382,688.05	336,238.11
	Bayuquan Real
	Estate No.
	0029391
22	Liao (2020) Yingkou	Parcel 11#	In the Port	2020/11/10	2052/6/17	Transfer	Port terminal	294,463.16	235,562.67
	Bayuquan Real		Area
	Estate No.
	0032298
23	Liao (2020) Yingkou	Parcel 13#	Haixingban	2010/12/21	2052/6/17	Transfer	Industrial	112,879.91	112,879.91
	Bayuquan Real
	Estate No.
	0027228
24	Liao (2020) Yingkou	East of	Outside the	2005/9/27	2046/11/27	Transfer	Warehousing	29,923.93	29,923.93
	Bayuquan Real	Tianshan	Port Area
	Estate No.	Street,
	0032267	Bayuquan
		District

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APPENDIX III-3

									Transfer area
									included in
				Date of	Termination	Nature of		Area	the scope of
No.	Title certificate no.	Parcel name	Location	acquisition	date	land	Land usage	recorded	valuation
25	Liao (2020) Yingkou	Administrative	Outside the	2020/9/23	2059/6/9	Transfer	Industrial	256,523.19	44,350.38
	Bayuquan Real	Zone 11	Port Area
	Estate No.
	0027202
26	Liao (2020) Yingkou	Phase III	In the Port	2020/12/7	2052/7/17	Transfer	Port terminal	1,153,176.60	797,872.65
	Bayuquan Real	project – 47	Area
	Estate No.
	0035276
27	Yingkou Guo Yong	Yanchang	In the Port	2009/7/8	2054/5/19	Transfer	Industrial	159,787.30	11,260.00
	[2015] No. 5066	Village	Area
		Parcel
	Total							6,855,933.68	4,396,185.69

2. Definition of land price

The appraised value is categorized as market value. Based on the valuation purpose and the actual circumstance of the subject parcels of land, the land price set out in the Report refers to the value of land use rights of the subject parcels of land for designated use and to the extent of development in the remaining use life cycle under normal property market on 31 December 2018.

3. Valuation principle

Pursuant to the principle of the most effective use, the principle of supply and demand, the principle of substitution and the principle of contribution of land valuation, a fair, objective, reasonable and scientific valuation of the target shall be carried out.

① Principle of most effective use

Due to the diversity of land use, different ways of use can generate different amounts of income for the title holders, and the title holders expect to gain more benefits from the land they own, and the determination of ways of land use is based on the purpose. Therefore, the price of land is conditional on the most effective use of the land.

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• ② Principle of supply and demand

In a completely free market, the price of general commodities depends on the equilibrium point of the relationship between demand and supply. When demand exceeds supply, the price increases accordingly; otherwise, the price decreases. The dynamics is conditional on:

• A. Suppliers and demanders compete for homogeneous commodities;

• B. The supply of homogeneous commodities could be freely adjusted as per the changes in price. It is the same case with the land, whereas the price is also determined by the interrelationship between demand and supply.

• ③ Principle of substitution

The land price follows the law of substitution. The price of a parcel of land is controlled by the price of other parcels of land with the same use value, that is, the same class of land with possibility of substitution. In other words, the parcels of land with the same use value and possibility of substitution will mutually affect and compete with each other, and the prices will be aligned with each other.

④ Principle of contribution

The total income derived from land is the outcome of joint effects between land and other factors of production. The value of land is determined by the contribution of land to the total income of such land.

(4) Analysis of factors of land price

• (1) General factors

• ① Geographical location and administrative division

Bayuquan District (Yingkou Economic and Technological Development Zone), a district under the jurisdiction of Yingkou City, Liaoning Province, is located in the south of Yingkou City, about 60 kilometers away from the old downtown of Yingkou, and is the new downtown of Yingkou City; the total area is 268 square kilometers. As of June 2020, the district consists of 3 streets and 3 towns. According to the seventh census data, as of 0:00 on 1 November 2020, the settled population of Bayuquan District is 541,113.

Yingkou Port is seated within Bayuquan District, and it’s the second largest port in Northeast China and one of the top ten ports in the country. The district is very rich in resources including minerals, timber, grain, fruit, and aquatic products. The district also enjoys convenient traffic facilities, as it

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connects the Harbin-Dalian Railway, Harbin-Dalian Highway, major arterial roads such as the Shenyang-Dalian Expressway, and the Harbin-Dalian High-speed Railway Passenger Line, which was completed and opened to traffic in 2012; having a 25-kilometer-long coastline, Bayuquan District boasts a wealth of landscapes, including the Asian Herbarium, Wanger Mountain, underground hot springs, seaside ancient beacon towers, Xianren Island, the Qinglong Mountain Forest Park, making it a seaside tourist resort with mountains, sea, forests and springs.

Bayuquan District (Yingkou Economic and Technological Development Zone) is located in the south-central part of Liaoning Province, in the center of the Liaodong Peninsula and the east coast of Liaodong Bay. It is one of the four districts under the administration of Yingkou City. It’s 52 kilometers away to the south of downtown area of Yingkou. Its geographical coordinates are 40°15’-40°20’ north latitude and 121°8’-122°15’ east longitude. The total area is 268 square kilometers.

② The economic and social development status

In 2019, the total investment in fixed assets in Bayuquan District was RMB6.75 billion, a decrease of 6.8% over the previous year. Among them, investment in infrastructure was RMB1.31 billion, an increase of 2.8% over the previous year. Among the investment in construction projects throughout the year, the ratio of state-owned economic investment to non-state-owned economic investment was 49.7:50.3. Completed investment in industrial projects amounted to RMB1.26 billion, accounting for 37.5%; investment in the tertiary industry accounted for 79.8%. There was a total of 75 construction projects throughout the year. Among them, 4 new projects commenced construction with a total investment of RMB310 million.

In 2020, Bayuquan District actually recorded a GDP of RMB37 billion, an increase of 1.2% year-on-year, completing 93.9% of the annual planed target; the total investment in fixed asset across the district was RMB6.9 billion, an increase of 2.3% year-on-year, completing 95.2% of the annual planed target; the general public budget revenue was RMB3.56 billion, a decrease of 2.4% year-on-year, completing 91.3% of annual planed target; it completed 94.7% of the annual budget. The overall tax revenue of the district was RMB3.02 billion, a decrease of 4.3% year-on-year, completing 89.7% of the annual planed target; it completed 85.8% of the annual budget. The per capita disposable income of residents in the district was RMB43,926, an increase of 0.9% year-on-year. By industry, the primary industry delivered an added value of RMB1.14 billion, an increase of 0.6%; the secondary industry delivered an added value of RMB13.21 billion, a decrease of 1.1%; the tertiary

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industry delivered an added value of RMB22.65 billion, an increase of 2.8%. The weightings of the added value of the three types of industries as a proportion of the GDP were 3.1:35.7:61.2.

Primary industry

In 2019, the total output value of agriculture, forestry, animal husbandry and fishery in Bayuquan District was RMB2.04 billion. The agriculture, forestry, animal husbandry and fishery delivered an added value of RMB1.1 billion, an increase of 1.5% over the previous year at comparable prices. Among them, the agriculture delivered an added value of RMB250 million, the forestry delivered RMB45 million, the animal husbandry delivered RMB180 million, the fishery delivered RMB615 million, and the added value of agriculture, forestry, animal husbandry and fishery services was RMB10 million. The total output of grain for the year was 13,125 tons, a decrease of 4.7% over the previous year; the output of vegetables was 32,523 tons, an increase of 7.0% over the previous year; the output of fruits was 121,213 tons, an increase of 3.4% over the previous year; the total output of meat was 4,598 tons, a decrease from the previous year 29.2%; the output of poultry and eggs was 5,027 tons, a decrease of 12.4% over the previous year; the total sown area of crops for the year was 3,054 hectares, a decrease of 0.1% over the previous year. At the end of the year, the total mechanical power used in agriculture was 120,000 kilowatts, flat compared to the previous year. The total fertilizer amount used in agriculture was 4,978 tons, a decrease of 0.6% over the previous year.

Secondary industry

In 2019, the added value of industries above designated size in Bayuquan District increased by 5.2% over the previous year. Among them, the added value of joint-stock enterprises increased by 6.2%, and the added value of foreign, Hong Kong, Macao and Taiwan-invested enterprises declined by 12.5%. By industry, the added value of metallurgical industries above designated size for the year increased by 2.0% over the previous year, accounting for 59.0% of the total added value of industries above designated size; the added value of equipment manufacturing industry increased by 36.3% over the previous year, accounting for 13.9%; the added value of the food industry decreased by 25.9% over the previous year, accounting for 6.9%; the added value of the new building materials industry decreased by 1.2% over the previous year, accounting for 6.32%. Among the output of major product of industrial enterprises above designated size for the year, pig iron was 5.896 million tons, an increase of 14.6%; crude steel was 6.262 million tons, an increase of 14.6%; steel was 6.469 million tons, an increase of 3.8%; refractory products were 346,000 tons, a decrease of 6.5%; cement was 914,000 tons, a decrease of 4.7%; refined edible vegetable oil was 479,000 tons, an increase of

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4.7%; coke was 2.577 million tons, an increase of 9.5%. The electricity power generated for industrial purpose above designated size was 9.84 billion kWh, an increase of 5.9%. The annual product sales rate of industrial enterprises above designated size was 100%. Among them, the product sales rate of joint-stock enterprises was 100.3%, and the product sales rate of foreign, Hong Kong, Macao and Taiwan-invested enterprises was 99%. The total output value of industries above designated size for the year was RMB45.77 billion, a decrease of 2.5% over the previous year; the annual added value of industries above designated size was RMB10.44 billion, an increase of 5.2% over the previous year at comparable prices. The sales output value is RMB45.76 billion, and the product sales rate of industrial enterprises is 100%. The operating revenue was RMB48.47 billion, an increase of 1.0% over the previous year; total profits and taxes was RMB2.52 billion, a decrease of 48.5% over the previous year; the profit was RMB1.41 billion, a decrease of 53.9% over the previous year.

In 2019, the total output value delivered by the construction industry in Bayuquan District was RMB3.84 billion, a decrease of 16.9% over the previous year at comparable prices. The total contract value of general contractors and professional contracting construction enterprises which have obtained qualifications of the construction industry was RMB4.68 billion, a decrease of 18.0%; the floor area of buildings under actual construction was 1.765 million square meters, a decrease of 23.9%; the tax paid amounted to RMB120 million, a decrease of 33.3%; the profit delivered was RMB50 million, a decrease of 68.8%; the per capita productivity measured by the total output value of the construction industry was RMB422,000 per person, down 9.4%.

In 2020, the added value of industries above designated size in Bayuquan District was actually RMB10.46 billion, an increase of 1.6% year-on-year. The number of projects which commenced construction with an investment of above RMB10 million in the district was 110, completing 131% of the annual planed target; among them, the projects with an investment of above RMB100 million was 61, completing 100% of the annual planed target.

In 2020, Bayuquan District spared no effort to accelerate the construction of a logistics hub, and was granted the state special funds for logistics hub construction in the amount of RMB34 million for the year. Yingkou Port delivered a throughput of 228 million tons and a container transport volume of 5.649 million TEUs, of which 5.617 million TEUs were transported by containers for domestic trade. 66.39 million tons of cargo was transported via the Shaba Railway. The construction of the railway project from the free trade zone to Bayuquan port officially kicked off. More than 400 material trade

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enterprises were newly attracted for the year, delivering the transportation of commodities of RMB120 billion in value and tax revenue at the amount of RMB1.27 billion. The sea-and-rail joint freight capacity exceeded 1 million TEUs.

In 2020, Bayuquan District was successfully approved as a pilot for the integrated development of national advanced manufacturing industries and modern service industries. The enterprise strived to enhance intelligent manufacturing level, of which 20 companies have vigorously implemented technological transformation, one company was rated as a national ecofriendly factory, and one company was awarded as a pilot exemplary entity for intelligent manufacturing factories. One company was awarded the provinciallevel “Gazelle” (瞪羚) enterprise, and 6 companies were awarded the provincial-level “Young Eagle” (雛鷹) enterprise. Two companies have been awarded as provincial-level “specialized, sophisticated and new” small and medium-sized enterprises. In the year, there were a total of 17 new national high-tech enterprises, delivering an output value of high-tech products of RMB13.3 billion. Two new provincial-level professional technology centers were established. A total of 9 scientific and technological results were applied into use, and 76 authorized patents were granted. The output value of advanced manufacturing industries reached RMB39.28 billion.

Tertiary Industry

In 2019, the investment in property development in Bayuquan District reached RMB3.4 billion, a decrease of 11.9% over the previous year. New fixed assets reached RMB2.21 billion, an increase of 54.5% over the previous year. The floor area of buildings under construction was 5.717 million square meters, an increase of 0.6% over the previous year. Among them, the floor area of residential buildings was 4.359 million square meters, an increase of 4.4% over the previous year. The floor area of completed buildings was 648,000 square meters, an increase of 32.8% over the previous year. Among them, the floor area of completed residential houses were 484,000 square meters, an increase of 36.7% over the previous year.

In 2019, the total retail sales of consumer goods in Bayuquan District reached RMB16.51 billion, an increase of 9.6% over the previous year. Among the retail value of wholesale and retail commodities above designated size, the annual retail sales of grain, oil and food were RMB10 million, a decrease of 35.4% over the previous year; the retail sales of beverages were RMB2 million, a decrease of 31.9% over the previous year; the retail sales of tobacco and alcohol was RMB3 million, a decrease of 66.9% over the previous year; the retail sales of books, newspapers and magazines were RMB7 million, a decrease of 18.9% over the previous year; the retail sales of electronic publications and audio-visual products were RMB500,000, a decrease of

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36.4% over the previous year; the retail sales of traditional Chinese medicine and western medicine was RMB80 million, an increase of 155.7% over the previous year; the retail sales of cultural and office supplies were RMB300,000, a decrease of 19.7% over the previous year; the retail sales of petroleum and related products were RMB1.14 billion, a decrease of 4.9% over the previous year; the retail sales of automobiles was RMB520 million, an increase of 14.1% over the previous year; retail sales of other categories of goods was RMB260 million, an increase of 10.9% over the previous year. The sales of wholesale and retail trade industries above designated size totaled RMB17.81 billion, an increase of 44.8% over the previous year. The revenue of the lodging and catering industries above designated size was RMB410 million, an increase of 7.1% over the previous year.

In 2019, Bayuquan District delivered a foreign trade export of RMB3,835.3 million, a decrease of 22.6% over the previous year. The actual foreign investment was USD57.47 million, a decrease of 26.6% over the previous year. The actual investment made in the province from internal and external resources was RMB6.63 billion. The consumer price of urban residents rose by 2.3% over the previous year. By category, price of food, tobacco and alcohol rose by 5.2%, among them price of clothing up by 2.8%, price of housing up by 0.6%, price of daily necessities and services up by 1.8%, price of education, culture, and entertainment up by 0.8%, price of health care up by 1.9%, price of other supplies and services up by 5.6%, and price of transportation and communications down by 1.7%. The ex-factory price of industrial producers for the year declined by 2.7% over the previous year; the purchasing price of industrial producers dropped by 0.2% over the previous year.

In 2019, the overall fiscal revenue of Bayuquan District was RMB6.02 billion, a decrease of 11.9% over the previous year. Public budget revenue was RMB3.65 billion, a decrease of 9.0% over the previous year. The overall tax revenue was RMB5.54 billion, a decrease of 15.5% over the previous year. Among various taxes, the district delivered a value-added tax of RMB700 million, business tax of RMB1 million, corporate income tax of RMB690 million, urban land use tax of RMB550 million, land value-added tax of RMB100 million, and deed tax of RMB200 million. The public budget expenditure for the whole year was RMB3.64 billion, a decrease of 3.4% over the previous year. Among them, expenditure on agriculture, forestry and water supply was RMB90 million, science and technology expenditure was RMB40 million, medical and health expenditure was RMB200 million, general public service expenditure was RMB360 million, education expenditure was RMB400 million, social security and employment expenditure was RMB480 million, and expenditure for urban and rural community affairs was RMB480 million, and housing security expenditure was RMB200 million. The balance of various loans outstanding of financial institutions for the year was RMB97.6 billion, an

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increase of 18% over the previous year; the balance of various deposits was RMB84.27 billion, a decrease of 17.1% over the previous year; the balance of household deposits was RMB46.75 billion, an increase of 17.9% over the previous year.

In 2020, the total retail sales of consumer goods in Bayuquan District declined by 4.2% year-on-year. The floor area of commercial housing sold in the district was 866,000 square meters, an increase of 4.4% over the year, and completing 99.2% of the annual planed target. The sales of commercial housing amounted to RMB4.28 billion, an increase of 10.1% over the previous year. The actual foreign investment in the district was USD5.5 million (upon adjustment to task metrics), completing 100% of the annual planed target. The total foreign trade import and export of the district is expected to reach RMB20 billion, an increase of 6.3% over the previous year. The electricity power consumption for industrial purpose of the whole district was RMB4.21 billion kWh, an increase of 0.88% year-on-year, and completing 96% of the annual planed target.

In 2020, the competitiveness of financial service of Bayuquan District continued to increase, and the Jinzhou Bank Bayuquan Branch was officially opened for business. There was a total of 119 financial and quasi-financial institutions in the district. A bank-enterprise connectivity platform was built up which has raised RMB5.746 billion for enterprises. Financial platforms such as Liangdawang (糧達網) and Dongbeiliangwang (東北糧網) have been well running, serving more than 150 companies. The financial risk management and control solutions were formulated and improved, to prevent and resolve the financial risks through multiple measures. The overall deposit balance of the district was RMB145.6 billion, and the overall loan balance was RMB104.8 billion. The financial industry delivered tax revenue of RMB840 million.

In 2020, the establishment of the Bayuquan National Tourism Exemplary Zone and the building-up of the key provincial-level tourism zone were carried out in an orderly manner. New tourism projects such as Magic Hot Spring and Wanda Yihua Hotel were opened for business. A series of activities were successfully launched, such as the Wangershan Mother’s Love Cultural Festival, the International Seaside Hot Spring Tourism Festival, and the Ice and Snow Hot Spring Carnival. In the year, 9.24 million visits of tourists were recorded, with the total tourism income amounting to RMB9.65 billion. Wangershan Village has been awarded as a provincial-level leisure agricultural and rural tourism village.

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(2) Regional factors

① Overview of the region

Bayuquan Port and Yingkou conventional port are collectively referred to as Yingkou Port, and they are collectively managed by YKP Group and are independent of the local administration. Bayuquan and Yingkou maintain the administrative jurisdiction relationship between district and city. From the perspective of long-term development, Bayuquan Port has a more promising future, and it is also the most developed district in Yingkou. Bayuquan Port is an important integrated hub port in the country. It is the nearest port to the Northeast China and eastern Inner Mongolia, the largest cargo transportation port in the Northeast China, and the core port of the Liaodong Bay Economic Zone. Bayuquan Port area has deep water and small waves, free of silt or freezing, and is open to navigation in all seasons. It is a deep-water port in northern China; meanwhile, having a geographical advantage, Bayuquan Port area is connected to Shenyang-Dalian Expressway, Harbin-Dalian Highway and Changchun – Dalian Railway. Located 210 kilometers from Shenyang to the north and 180 kilometers from Dalian to the south, it enjoys convenient traffic facilities and has a strong capacity of collecting and distributing cargo.

Yingkou Port has 9 types of specific cargo terminals including containers, automobiles, coal, grain, ore, steel, large equipment, refined oil and liquefied chemicals, and crude oil. Among them, both the ore terminal and the crude oil terminal have a capability of 300,000 tons and the container terminal is able to accommodate the fifth-generation container vessels. The cargo types mainly include iron ore, steel, coal, grain, non-minerals, refined oil and chemical products, fertilizers, crude oil, domestic commodities, automobiles, containers, etc.

② Traffic conditions

As the Harbin-Dalian High-speed Railway, Shenyang-Haikou Expressway, Harbin-Dalian Highway and Binhai Highway run through Bayuquan District, the traffic facility is very convenient. In 2019, the cargo throughput of the port was 238.17 million tons, a decrease of 35.6% over the previous year; the container throughput was 5.478 million TEUs, a decrease of 15.6% over the previous year. The passenger capacity of the passenger terminal was 4.29 million persons, the passenger capacity of buses was 7.05 million persons, and the passenger capacity of taxis was 34.41 million persons. The general road freight capacity was 8.82 million tons.

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Railway

Bayuquan Station

The Harbin-Dalian High-speed Railway, Changchun-Dalian Railway and Shaba Railway have set Bayuquan Station (High-speed Rail), Xiongyuecheng Station and Lujiatun Station.

The Bayuquan Station, located in Datie Village, Xiongyue Town, is the stop of 23 high-speed trains every day, which connects Yingkou East, Shenyang, Dalian, Changchun West, Harbin West Station, etc.

Xiongyuecheng Station, located in Xiongyue Town, is the stop of 50 ordinary trains every day, which connects various places across the country.

Highway

Shenyang – Haikou Highway (G15), Heilongjiang-Dalian Highway (G202), Binhai Avenue, etc.

The passenger station (Bayuquan Passenger Station) is located on Changjiang Road, Qinglongshan Street, and the passenger lines starting from the station reach places in and out of the city, including Beijing, Tianjin, Liaoyuan, Tongliao, Xifeng, Tieling, Kaiyuan, Jinzhou, Fushun, Jianchang, Chaoyang, Dalian, Shenyang, Fuxin, Anshan, Liaoyang, Wafangdian, Zhuanghe, Fengcheng, Xiuyan, Xingcheng and Gaizhou, Dashiqiao, Wanfu, Xiongyue, Xinglongtai, Haicheng, Laobian.

Air transport

Yingkou Airport, Bayuquan is 30 kilometers away from Yingkou Airport.

Marine transport

Yingkou Port International Passenger Terminal is located at Huanghe Road, Liaodong Bay Avenue. On every Monday and Thursday, there runs an international passenger liner “Lilac” (紫丁香號) bound for Incheon Port in South Korea.

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5. Valuation approach

(1) Selection of valuation approach

Pursuant to the Regulations on Valuation of Urban Land (《城鎮土地估價規 程》) (“Regulations”), the current prevailing valuation approaches for land mainly include hypothetical development method, market comparison method, income capitalization method, cost approximation method, and benchmark land premium coefficient correction approach. The valuation approach shall be selected based on the valuation techniques of land price set out in the “Regulations” after considering the local real estate market development and characteristics of the target assets and the valuation purpose.

The subject parcels of land include port terminal land, commercial and residential land, and industrial land. Different valuation method will be adopted based on different type of land use. Since this valuation involves many uses of parcels of land, the valuation method is briefly described as follows: most of the land used for port terminals within the scope of valuation was formed by land reclamation. The benchmark land price does not include the land price of the land for such purpose, and there are no comparable transaction cases. The income from such land cannot be reasonably estimated. Therefore, in evaluating the value of wharf land, it is assumed that the development approach, market comparison approach, income reduction method, and benchmark land price coefficient correction approach are not applicable, and the cost approximation method is used for the valuation. As there are few comparable transaction cases of industrial, commercial, residential and storage land within the scope of valuation, and the current development costs and benefits cannot be reasonably predicted, it is assumed that development approach, market comparison approach, income reduction approach, and cost approximation approach are not applicable, and the benchmark land price coefficient correction approach is used for valuation.

(2) Cost approximation approach

By cost approximation approach, the subject land is valued by using the sum of various expenses consumed for the acquisition and development of the subject land plus a certain amount of profit, interest, taxes payable and land appreciation earnings taking into account the district factor and land useful life.

The basic formula of calculation is:

Land price = (land acquisition fee + land development fee + tax + interest + profit + land appreciation +individual factor revision)×Due day revision coefficient

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• (3) Benchmark land premium coefficient revision approach

Basic formula of the benchmark land premium coefficient revision approach:

Pi= [P×Py×Pq+ Differences in the degree of infrastructure development] ×(1+K) ×IIS

Where: Pi – the land price of the subject parcel of land

P – the benchmark land premium corresponding to the subject parcel of land

Py – land use revision coefficient

Pq – due day revision coefficient

K – district factor revision coefficient

IIS – the product of individual factor revision coefficient of the subject parcel of land

6. Valuation case:

Case 1: 10# Land (see Intangible Assets – Land Use Right Valuation List No. 21)

The 10# parcel is located in Haixing Office, which is used for port terminal purpose. The land use right certificate number is Liao (2020) Yingkou Bayuquan Real Estate No. 0029391. The area set out in the certificate is 382,688.05 square meters. The area proposed for the purpose of capital increase is 336,238.11 square meters. The type of use right is transfer, and the use right will expire on 17 June 2052, and the remaining useful life as of the benchmark date of valuation is 30.80 years. According to the status of subject land, the costs method is adopted for valuation.

The costs approximation method is the method mainly based on the sum of various expenses in acquiring and developing the land, plus profits, interests, taxes payable, and gains from land appreciation, and by taking into account the location of the land, the useful life, etc. to fix the adjustment coefficient to determine the land price.

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The basic formula of calculation is:

Land price = (Land acquisition cost + Land development cost + Taxes + Investment interest + Investment profit + Gain on appreciation of land + Correction of individual factors) × Correction coefficient of useful life

• (1) The land acquisition cost refers to the average cost paid for acquisition of similar land in the area where the subject parcel of land is located. As required by the “Regulations on Urban Land Valuation”, investigation will be carried out in respect of the use of land surrounding the subject parcel of land, as per the relevant fee and charge requirements set out in relevant land reclamation documents issued by the government of Bayuquan District, Liaoning Province. The acquisition cost will be determined after the abovementioned analysis. See the valuation estimate table for details.

• (2) Land development cost

The development cost of infrastructure in the land refers to the costs required to develop the land into the expected conditions in the valuation. The land development cost shall be determined with reference to the benchmark land price including the cost incurred by the electricity supply, road access, water supply, communication, drainage, gas supply and land levelling in Bayuquan District, and the market surveys. See the valuation estimate table for details.

(3) Interest expense

According to the status and scale of development of the subject land and the entire terminal project, the fees and charges will be calculated over a span of 2 years. The interest is calculated based on the one-year loan interest rate of 4.25% published by the People’s Bank of China on the valuation benchmark date. The land acquisition cost is paid on a lump sum basis once at the time of land acquisition, and the development cost is incurred evenly during the development period, calculated at compound interest. See the valuation estimate table for details.

(4) Profit

Profit is the return deriving from investment in land, namely the economic return of the land acquisition cost and development cost at a reasonable rate of return on investment (yield). The profit rate is determined based on the nature of the development, with reference to the general profit level of the industry, in combination with local actual circumstances after comprehensive consideration. Please refer to the valuation estimate table for details.

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• (5) Gain on appreciation of land

The value-added income is calculated based on the increased value of the land in the area due to the change of purpose or land development to enable the subject land under construction to satisfy the certain condition.

(6) Correction of useful life

If the remaining specified useful life of the subject parcel of land is 30.80 years, the correction coefficient of the incurred price of land use right with a fixed useful life shall be determined by the following formula:

K= 1-1/(1+r) ^n=0.8338

Where: n – the remaining useful life of the land

r – land capitalization rate (based on the issued local benchmark land price, the land capitalization rate is determined to be 6.00%)

• (7) Correction coefficient of individual factors

Based on the location of the subject land, the conditions, the alignment of the land with the surrounding market and other factors, the correction shall be made to the individual factors as per the merits of the subject parcel of land. Please refer to the valuation estimate table for details.

• (8) Unit price of subject parcel of land

Adopting the formula of calculation of the cost approximation method, the unit price of the subject land shall be determined after analysis, calculation, and correction. For details of the valuation calculation process, please refer to the valuation estimate table.

			Calculated
Items of Calculation		Basis and Formula of Calculation	Value
			(RMB/㎡)
1. Land acquisition cost	Sandblast	Based on the unilateral market price	170.45
	reclamation	of regional hydraulic reclamation
	project cost	and the average hydraulic
		reclamation height, the cost of
		reclamation engineering for land
		reclamation is about RMB170.45/㎡

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VALUATION REPORT C

			Calculated
Items of Calculation		Basis and Formula of Calculation	Value
			(RMB/㎡)
2. Relevant fees and duties	Ownership	Actual local fee level	1.36
	investigation and
	survey fee
	Sea area	“Notice on Strengthening the	190
	utilization fee	Collection and Management of Sea
		Area Utilization Fee” (Caizong
		[2007] No. 10) RMB190/m2 for the
		use of sea area through reclamation
		for construction purpose in
		Bayuquan District
	Ecological	Local actual ecological	5.85
	compensation	compensation standard
	fee
	Agricultural	Notice the on Issuing the	7.05
	development	“Administrative Measures for
	fund	Transfer Funds in Respect of Land
		for Agricultural Land Development”
		issued by the Ministry of Finance
		and Ministry of Land and Resources
		(Ministry of Land and Resources
		Caizong [2004] No. 49)
	Farmland water	According to the “Notice on	24.67
	conservancy	Matters Concerning the Provision
	fund Education	for Farmland Water Conservancy
	fund	Construction Funds from Land
		Transfer Proceeds” issued by the
		Ministry of Finance and the
		Ministry of Water Resources (Cai
		Zong [2011] No. 48), and taking
		into account local actual standards
		for such fees
	Planning and	Local actual fee level	1.25
	graphic design
	fee
	Total		230.18

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				Calculated
Items of Calculation		Basis and Formula of Calculation		Value
				(RMB/㎡)
3. Land development fee	Infrastructure	Water supply		18
	and auxiliary	Drainage		30
	facilities fees	Electricity		24
		Road access		24
		Communication		12
	Land levelling	Land levelling		2
	fee
	Total			110
4. Investment interest income	Land acquisition cost + Relevant fees		and duties) × [(1	24.57
	+ 4.25%)2-1]+Land development fee × [(1 +
	4.25%)2/2-1]
5. Investment profit	Land acquisition cost + Relevant fees		and duties +	67.64
	Land development	fee) *10%
6. Gain on appreciation of	10% of the amount in Items 1 to 5			129.12
land
Total	1 + 2 + 3 + 4 + 5	+ 6		559.50
7. Correction for individual	Factors	Appraisal	Correction rate
factors	Monopoly rent		10%	727.35
	correction
8. Correction of useful life	30.80	[1-1/(1 + 6.00%)n]		0.8338
7. Appraised unit price		Total × (1 + Correction of		606
(RMB/㎡)		individual factors) × Correction for
		years

• (9) Value of the subject parcel of land

Value of the subject parcel of land = unit price × floor area + deed tax

= 606 × 336,238.11 × 1.04

= RMB211,910,706

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Case 2: Lot 06#-1 (see Intangible Assets-Land Use Right Valuation Schedule No. 16)

The Lot 06#-1 is located in the port area of Xingang Community, Haixing Office, and is an industrial land. The land use right certificate number is Liao (2020) Yingkou Bayuquan Real Estate No. 0029388, covering an area of 189,206.47 square meters. The type of use right is transfer, the use right will expire on 17 June 2052, and the remaining useful life as of the valuation benchmark date is 30.8 years. According to the state of parcels under valuation, the benchmark land price coefficient correction approach is used for valuation.

(1) Calculation process

① Benchmark land price

The land to be valued is located in the port area of Xingang Community, Haixing Office, and is an industrial land. Under the relevant provisions in the Notice on Adjusting the Unit Price of Land Transfer in Bayuquan District (Ba Zheng Fa [2018] No. 31) issued by the People’s Government of Bayuquan District, Yingkou City:

The base price of the benchmark land price for industrial land in Bayuquan shall be not less than RMB450/m[2] . The connotation of benchmark land price is that the land for industrial use has a term commencing from 1 January 2016 (being the benchmark date), a transfer period of 50 years, and has road access, water supply, electricity supply, communication and drainage channel, and the premium in the land parcel is leveled.

② Due day correction

The valuation benchmark date is 31 August 2021, and the benchmark date of the benchmark land price is 1 January 2016. Based on survey calculations, there is no increase in industrial land in Yingkou City. Therefore, the transaction date correction coefficient of the industrial land is 1 at the valuation benchmark date.

③ Land development correction

The land development of the parcel to be valued is road accessible with water supply, electricity supply, communication and drainage channel and land leveling within the red line of the parcel. According to “Yingkou Municipal Urban Land Grading and Benchmark Land Price Valuation Results Report (2016)”, the connotation of the benchmark land price is that the industrial land is road accessible with water supply, electricity supply, communication and drainage channel and land leveling within the red line of the parcel, and has reached the connotation of the benchmark land price. The extent of land development is not corrected in the valuation.

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④ Regional factor correction

According to the regional factors of the parcels to be valued and the correction system of “Yingkou Municipal Urban Land Grading and Benchmark Land Price Valuation Results Report (2016)”, the regional factors and individual factors are corrected as follows:

Plots to be valued-Modification table for regional factors of industrial

land

			Correction
Factor	Coefficient	Valuation	Score
			(%)
Regional factors	Road type	Excellent	4.95
	Distance to railway station	Better	0.89
	(m)
	Distance to the port (m)	Excellent	1.39
	Distance to the expressway	Normal	0
	(km)
	Infrastructure completeness	Better	0.89
	Environmental quality	Better	0.79
	status (atmosphere, noise)
	Industrial agglomeration	Better	1.09
Individual factors	Distance from the main	Better	0.99
	road (m)
	Parcel shape	Excellent	1.58
	Parcel topography	Excellent	1.39
	Total		13.96

Other factor correction

A. Service life correction

The remaining useful life of the land to be valued is 30.80 years. According to the correction system in “Yingkou Municipal Urban Land Grading and Benchmark Land Price Valuation Results Report (2016)”, the industrial land restoration rate is 6%, and the legal maximum useful life is 50 years, then service life correction factor = [1-1/(1+6.0%)^30.80]/[1-1/(1+6.0%)^50] = 0.8816

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B. FAR correction

The land to be valued is industrial land. According to the correction system in “Yingkou Municipal Urban Land Grading and Benchmark Land Price Valuation Results Report (2016)”, the industrial land plot ratio correction coefficient is determined to be 1.

⑥ Calculation of unit price of land

Unit price of land use right=450×(1+13.96%)×1×0.8816×1

= 452.10/m[2]

(2) Determination of land price

According to the Rules for Urban Land Valuation and the specific conditions of the parcels to be valuated, the appraisers conducted an investigation based on the valuation purpose under the valuation principles, valuation procedures and adopting scientific and reasonable valuation approaches on top of carefully analyzing the existing data. Based on valuation experience and the value factors of the industrial land, the benchmark land price coefficient correction approach is used to calculate the unit price for transfer of state-owned land use right of the parcel to be valued. The appraisers investigated the market conditions, land use conditions, and land price conditions of the surrounding similar land, and analyzed that the results of the approach were close to the market rate.

Total price of parcels = unit price of parcels × area of land use rights + deed tax

= RMB452.10/m[2] ×189,206.47×1.04

= RMB88,962,270

7. Conclusion and analysis of valuation

The valuation is implemented on the basis of complete survey, knowledge and analysis, and in accordance with the rational valuation procedure. The valuation determines the value of the land use right is RMB2,698,618,672 in the remaining useful life on the benchmark date of 31 August 2021 under the anticipated land price of the subject land. The appraised value has a premium of RMB1,590,771,018.19 over the book value, and the appreciation rate is 143.59%.

The main reason for appreciation is that it takes a long time to obtain the land use right. In recent years, the primary development cost and market price of the land have risen significantly, resulting in a large appreciation of the land use right.

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(V) Current liabilities

1. Accounts payable, receipts in advance and other payables

The book value of accounts payable is RMB24,344,883.56, which is mainly payable for materials; the book value of receipts in advance is RMB20,224,525.62, which is mainly payable for port service fees collected in advance; the book value of other payables is RMB365,317,274.79, which is mainly payable for deposits payable and value-added tax payable to headquarters. Following the valuation procedure, we implement external confirmation in respect of the current payments at relatively large amounts. After verifying the authenticity and completeness of each payment, the appraised value of other payables that are not subject to payment is determined to be nil. After the valuation, the appraised value shall be determined after taking into consideration of accounts payable, receipts in advance, and other payables of RMB24,344,883.56, RMB20,224,525.62 and RMB365,317,274.79 respectively.

2. Employee benefits payable

The book value of employee benefits payable is RMB1,815,798.01, which is mainly the provision of wages, funds allocated to labor union and employee benefits. The appraiser inspected and verified the provision of employee benefits payable in accordance with the valuation procedure. In case of no error identified, the appraised value shall be determined by the verified book value. The appraised value of employee benefits payable is RMB1,815,798.01.

3. Taxes payable

The book value of the tax payable is RMB610,644.59, which is mainly the payable for property tax, environmental protection tax, stamp tax and withholding and payment of individual income tax. The appraiser follows the established valuation procedure to learn about the applicable tax collection regulations, including applicable tax types, tax bases, tax rates and the scope and timeframe of tax collection, exemption, and deduction. The appraiser also inspects and verifies relevant accounts, tax returns and accounting vouchers, etc. Therefore, the appraised value shall be determined based on the verified book value of RMB610,644.59.

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IV. EXPLANATION ON THE VALUATION APPROACH – INCOME APPROACH

• (I) The valuation target, being the value of all shareholders’ equity of Yingkou Port Bulk Cargo Terminal Co., Ltd.

• (II) Reconditions for application of and reasons and rationales for selecting the income approach

1. Definition and principle of income approach

The income approach refers to a method of determining the value of the appraised entity by estimating the future income and the selected discount rate (the amount of current value on the valuation benchmark date) of the appraised entity. When evaluating the overall assets of an enterprise using the income approach, three basic elements are mainly involved, namely the expected return of the asset under valuation, the discount rate or capitalization rate, and the duration of the expected return of the asset under valuation.

The basic theoretical formula of the income approach can be expressed as:

The appraised value of the asset = the sum of the present value of the expected return of the asset for each year

2. Preconditions for application of the income approach

This appraisal is designed to value the assets of the appraised entity in a complete and real course of business and market environment. As the appraisal is based on the estimated future income and the selected discount rate of the appraised entity, the appraised assets shall satisfy the following preconditions:

• (1) The appraised assets are individual assets or aggregate assets the future income of which can be and shall be measured in currency;

• (2) The appraised assets are in stable proportion to the income therefrom, and the future income and the future business risks to be borne by the title holder(s) shall also be measured in currency;

• (3) The expected profitable years of the appraised assets shall be predictable.

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3. Reasons and rationales for selecting the income approach

The appraised entity is an enterprise with independent profitability, whose assets are in stable proportion to the operating income. Both its future income and the risks associated with the generation of such income are predicted and can be quantified, which satisfy the preconditions for application of the income approach from the perspective of the entity’s own condition.

4. Assumptions for the income forecast

The assumptions of the income approach should be determined in conjunction with the specific conditions of the project under valuation, which generally include:

• (1) There will be no significant changes in the relevant prevailing laws, regulations and policies as well as macro-economic situation of the country and place where the valuation target resides, significant changes in the political, economic or social environment in the regions in which the parties to the transaction are located, or material adverse effects arising from other unforeseeable factors and force majeure.

• (2) In view of the actual conditions of assets as at the valuation benchmark date, we assume that the appraised entity operates on an ongoing-concern basis.

• (3) It is assumed that the operator of the company will be responsible and the management has the capacity to perform its duties.

• (4) It is assumed that unless otherwise stipulated, the company in full compliance with all relevant laws and regulations.

• (5) It is assumed that the accounting policies to be adopted by such enterprise in the future are basically consistent with those adopted during the preparation of this report in material aspects.

• (6) It is assumed that, based on its current management approaches and standards, the enterprise’s scope and model of business will remain consistent with the current orientation.

• (7) It is assumed that there will be no material changes in the relevant interest rates, exchange rates, taxation bases and tax rates, and government levies.

• (8) It is assumed that no other force majeure and unforeseeable factors will have a material adverse effect on the enterprise.

• (9) It is assumed that the enterprise will have balanced cash inflows and cash outflows.

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According to the requirements of the asset valuation, these assumptions are deemed to be valid on the Valuation Benchmark Date. We will not accept any responsibility for any different valuation conclusions resulting from any changes in these assumptions when the economic environment changes significantly in the future.

(III) Macroeconomic Analysis

1. World macroeconomic analysis

In 2020, the once-in-a-century COVID-19 pandemic hit the global economy hard. The coronavirus lockdown measures of various countries led to a global economic shutdown and a surge in unemployment rate. The GDP decline in the second quarter generally hit a historical extreme; after the epidemic eased and the economy restarted, although the GDP rebounded sharply in the third quarter, it also caused a strong counterattack against the epidemic. Some countries were forced to restart “foot ban”, and economic activity contracted again in the fourth quarter; more countries preferred the latter in the difficult balance between “life preservation” and “preservation of livelihoods”, but the economy was “operating with illness” and the momentum of recovery was significantly slowed down.

According to the “Global Economic Outlook” released by the International Monetary Fund (IMF) in October, the global economy is expected to shrink by 4.4% in 2020 (equivalent to seven times the decline in 2009), the worst setback since the great depression in 1930s. However, the progress of the treatment has raised people’s expectations for the future, and the active process of vaccine research and development has brought hope to end the epidemic. The IMF predicts that in 2021, the global economy is expected to return to the output level of 2019 before the epidemic. The Outlook Report issued by the Organization for Economic Cooperation and Development (OECD) in early December predicts that the global economy will shrink by 4.2% in 2020 and grow by 4.2% in 2021.

Compared with the economic recovery after the international financial crisis 11 years ago, the global economic rebound in 2021 is unspeakably strong. The global GDP decline caused by the epidemic is 7 times that of 2009. The base effect of the economic recovery after the epidemic is much stronger than the recovery after the last crisis, but the expected global economic growth rate in 2021 is not even as good as the 5.1% in 2010. Moreover, this recovery is expected to be very uneven and will have a profound impact on the evolution of the world economic structure.

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• (1) The US economy has been hit hard, but the overall performance remains better than most developed countries

As the world’s number one developed country, the United States has advanced medical technology and medical systems, but the prevention and control of the COVID-19 epidemic has been shocked. As of the end of November, the United States had a total of 13.93 million confirmed cases and 274,000 deaths, ranking first in the world.

A large-scale outbreak in the United States in late March, financial markets foresee, the US stock market began to plummet at the end of February, Treasury bond yields fell sharply, and the US dollar index rose above 100 points due to tight liquidity. In order to stabilize the market, the Fed cut interest rates twice in the first half of March by 50 and 100 basis points, the federal funds rate fell to a low of 0.25%, and announced the adoption of quantitative easing measures without caps, and launched 15 monetary policies in the second half of March to inject liquidity into the market and directly provide credit support to entities. Under the super-loose monetary policy, the Fed’s balance sheet expanded sharply in the first half of 2020, and its ratio to US GDP rose rapidly from about 20% before the outbreak to over 35%.

In late March, the impact of the epidemic on the real economy suddenly appeared. The number of people applying for unemployment benefits for the first time soared from 211,000 in the first week of March to 6.867 million in the last week; the consumer confidence index in February was 101, which was a new high since March 2018, but it dropped 11.9 points in March and 17.3 points in April, a record low since December 2011. In order to stabilize the economy, the US government has successively introduced four batches of fiscal stimulus measures with a total scale of USD2.6 trillion. In fiscal year 2020 (as of September 30), the US federal budget deficit is USD3.132 trillion US dollars, equivalent to 16.9% of GDP, far exceeding the level of 9.8% in 2009.

Stimulated by unprecedented monetary policy and fiscal relief measures, the U.S. stock market began to rebound at the end of March. While the U.S. economy fell precipitously in the second quarter, the Nasdaq Index recovered all the lost points and exceeded its previous high in June. So far, it has exceeded the pre-epidemic high by about 28%. With the restart of the economy in May and June, major economic indicators have picked up significantly. The unemployment rate has dropped from 14.7% in April to 6.7% in November. After falling by 1.3% and 9.0% in the first and second quarters, GDP rebounded sharply by 7.4% in the third quarter.

But at the same time, the US epidemic has not been brought under control, and the number of new cases and deaths has started to climb since October. The upward trend has not diminished so far (early December), and the prospects for continued economic recovery have been overshadowed by this. The Fed’s latest Beige Book

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states that four of the 12 Fed regions have “almost or no growth” in recent weeks, and only moderate growth in other regions. Non-agricultural employment fell by 74,000 in November, the first decline since the economic restart in May. The unemployment rate fell by 0.2 percentage points in November, which is also the lowest drop since May. The current unemployment rate of 6.7% remains significantly higher than the level of around 3.5% at the beginning of the year. With the expiration of the previous residents’ subsidies, the new fiscal stimulus policy is still suspended in the two houses, and the consumer confidence index in November dropped significantly by 4.9 points.

Fed Chairman Powell said that the recovery of the US economy will largely depend on the control of the epidemic. The number of confirmed cases of the COVID-19 in the United States and overseas has risen again, posing challenges to the economic recovery in the coming months. Although the positive news from vaccine research and development is beneficial to medium-term economic growth, major challenges and uncertainties still exist. Only when people are convinced that they can safely engage in a wide range of economic activities, will the US economy be able to fully recover.

Some analysts also believe that people have adapted to living at home to a large extent, and the federal government has no willingness to implement comprehensive closure measures again. The impact of the continued epidemic on economic activities will be significantly less than the impact of the initial outbreak of the epidemic. Judging from the latest progress in vaccine research and development, the United States is expected to implement a large-scale vaccination in the first half of 2021, and the US economy may have a strong performance in the summer. Currently, it is generally expected that the US economy will grow by about 3.2% in 2021.

In the first three quarters of 2020, US GDP fell by 3.8% year on year, which was significantly better than the 7.4% decline in the Eurozone and the 11% decline in the United Kingdom, and also better than the decline of 5.9% in Japan and 5.4% in Canada.

• (2) European economy may experience double dip, and its road to recovery will be difficult and long-lasting.

The outbreak in Europe predates the US, and the social distancing measures adopted by governments to prevent and control the pandemic are generally stricter than those in the US. Europe has also introduced loose monetary and fiscal stimulus policies that are larger than those during the financial crisis, but they are limited by the collective decision-making mechanism of the European Union (EU) and the Eurozone. The policy strength is not as strong as that of the US and the speed of action is also slower than that of the US. These caused the European economy to shrink more than the US in the pandemic.

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According to Eurostat, in the second quarter of 2020, the euro zone’s Gross Domestic Product (GDP) fell by 11.8% YOY (The biggest drop during the financial crisis was only 3.1%). Spain fell by 21.5% and was the worst. Germany, the best performer, also fell by 9.8%, which was higher than the 9% decline in the US over the same period. The decline in the United Kingdom (UK) was as deep as 19.8%, the worst recession in 300 years according to the Bank of England.

After a large area of “blockade” and “foot ban”, the European epidemic was once well controlled, and the number of new cases and new deaths fell to 1/10 and 1% of the peak in spring. The economy also experienced rapid recovery. In the third quarter, Eurozone GDP surged by 12.6% month-on-month, and the UK rebounded by 15.5%.

However, the relaxation of quarantine and the restart of the economy have also caused the rapid rebound of the epidemic. After the summer, the epidemic in Europe has been out of control, and the number of new cases has reached new highs, which was several times the peak in spring by November (Thanks to the improvement of treatment standards and other factors, the number of new deaths has not exceeded the previous peak). Due to the “second epidemic”, major European countries such as UK, France, Germany, and Spain successively re-implemented the “foot ban” in November, but the measures were far less stringent than those in the spring.

Under the “second pandemic” and “second blockade”, the recovery momentum of the European economy has slowed down significantly. Authorities including the European Central Bank believe that the economic outlook of the euro zone has deteriorated. Lagarde, President of European Central Bank, pointed out that the increase in new cases and related anti-epidemic measures are affecting economic activities, and the euro zone economic growth rate is likely to turn negative again in the fourth quarter.

The Kiel Institute for the World Economy (IFW) predicts that the pace of economic recovery in the euro zone will slow down significantly, especially in Spain and France. If the epidemic cannot be controlled, it may enter a second recession. If Spain’s recession eventually reaches twice that of Germany’s, any recovery fund or rescue plan will be difficult to help it out of its predicament. The widening of the North-South economic gap in Europe will also increase the risk of conflicts in the distribution of interests among EU countries, thereby weakening the collective resistance of member states to risks.

Looking forward to 2021, there are several positive blessings for the European economic rebound. First of all, Europe has the conditions to start large-scale vaccination against the COVID-19. Germany’s Biontech stated that delivery of vaccines in Europe could start in the second half of December 2020 at the earliest. The vaccine production of Biontech and Pfizer could reach 50 million doses during the year, and as many as 1.3 billion will be produced in 2021. Second, the external

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environment in Europe is expected to improve significantly. The change of the US government will obviously repair the relationship between the United States and Europe, and the trade dispute between the two sides is expected to be resolved. In addition, in order to prevent the deterioration of the European economic outlook, the European Central Bank has made it clear that it will study and introduce monetary easing policies that further support the upward economic and inflationary growth this year. Institutions generally predict that the European Central Bank will expand the scale of its emergency debt purchase plan by about EU$500 billion. Financing conditions in the euro zone are expected to remain loose for a longer period of time.

The IMF, OECD and European Commission predict that the euro zone economy is expected to grow by 4.2%-5.2% in 2021. But this obviously cannot make up for its shrinking of about 8% in 2020. It is optimistic that the euro zone will not be able to return to its pre-epidemic economic output level until the second half of 2022 at the earliest. After the last financial crisis, the euro zone’s economic recovery was interrupted by the European debt crisis. It took more than six years to return to the pre-crisis level. That time the United States took 3 years.

• (3) The ASEAN economy has been hit hard by the epidemic, but the recovery momentum is stronger than that of Europe and the United States

According to the Global Economic Outlook published by the IMF in October, the GDP of emerging ASEAN economies (Indonesia, Malaysia, the Philippines, Thailand and Vietnam) is expected to decline by 4.3% in 2020, outperforming Europe and the United States, and is expected to grow by 6.2% in 2021. The recovery momentum is also better than that of Europe and the United States.

Vietnam’s economic performance is “outstanding” in ASEAN, and it is the only country that maintains positive growth. Vietnam is one of the first countries outside of China to find confirmed COVID-19 cases, but the epidemic control is a model. Except for an imported case of local infection involving hundreds of people and spreading to 10 provinces at the end of July, there have been no local cases in the past two hundred days. Yang Mengxiong, director of the National Account System Department of the General Statistics Office of Vietnam (越南統計總局國家 賬戶系統司), said that the Vietnamese economy in 2020 is like a compressed spring. The most stressful time is the second quarter. GDP only increased by 0.39%, a record low, but it showed significant improvement in the third quarter, an period-on-period increase of 2.62%, and the situation is getting better after October. He said that effective control of the epidemic is a crucial factor.

Thailand’s epidemic control has also achieved remarkable results. So far, only more than 4,000 confirmed cases have been reported. However, the economic cost of epidemic prevention has been high. Thailand’s tourism industry accounts for about 1/5 of GDP. Thailand has been banning tourists from entering the country from April to September. In October, it opened inbound tourism with limitation, and

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there were only 1,201 inbound tourists, and there were fewer tourists in November, with only 681. Since July, there have been frequent anti-government demonstrations, which has made Thailand’s economy worse. In the first three quarters, Thailand’s GDP fell by 6.8% year on year, second only to the Philippines, which is known as the most “hard-core” epidemic prevention.

The Philippines declared a six-month national emergency in March. However, due to national conditions, strict prevention and control measures are difficult to implement. The number of new cases increased every day to August, reaching a maximum of 6,870. Although there has been a remission since then, the number of new cases in the recent days has still exceeded 1,000, with a total of 440,000 cases. In the first three quarters, the Philippine GDP fell by 9.7% year on year, of which the second quarter fell by 16.9% year on year, and the third-quarter decline remained as high as 11.5%.

The number of new cases in Malaysia before the end of September was basically controlled to less than 100 people. The prevention and control of the epidemic in the early stage was remarkable, but the economic cost was high. In order to help people and businesses tide over the difficulties, the government has launched economic stimulus plans amounting to a total of 295 billion ringgits (approximately US$70.7 billion), including financial injection of 45 billion ringgits, equivalent to 3% of GDP. Despite this, the GDP in the second quarter fell by 17.1% year on year, the largest decline in ASEAN countries during the same period; the decline in the third quarter narrowed sharply to 2.7%, showing a strong recovery trend. However, in the fourth quarter, the outbreak in Malaysia suddenly broke out, and the number of new cases per day quickly exceeded 1,000, which has remained high so far, with the cumulative number of cases exceeding 70,000. The government is forced to strengthen the “movement restriction order”, which may cast a shadow on the economic recovery in the fourth quarter.

At the beginning of the epidemic in Indonesia, President Joko Widodo used the analogy of “slamming on the brakes” and “refueling”, demanding both epidemic prevention and economy. Since the outbreak of the epidemic, Indonesia has implemented “large-scale social restrictions” twice, and has eased restrictions twice to restart the economy. During this period, the number of new cases continued to rise, and the increase has not decreased so far. The cumulative number of cases so far has exceeded 500,000. While the number of new cases has not decreased significantly, and the recent increase in cases remains above 6,000, Jakarta and the surrounding metropolitan area have been relaxed to the “transitional period of social restrictions.” Indonesia’s looser prevention and control have at least little impact on the immediate economy. Indonesia’s GDP in the first three quarters of 2020 has dropped by 1.9% year on year, and its economic performance is second only to Vietnam.

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In general, the epidemic in Southeast Asia is not as severe as that in developed countries in Europe and America, as well as India in South Asia and Brazil in Latin America. Most ASEAN countries are export-oriented economies. Except for the local epidemic, economic fluctuations in 2020 are largely affected by the external environment. Economic fluctuations are basically synchronized with developed countries. With the exception of Vietnam, the economic decline is comparable to Europe. However, due to the greater endogenous driving force of its economy, it is expected that the recovery momentum of ASEAN after the epidemic will be significantly stronger than that of Europe and the United States.

• (4) BRIC countries (excluding China) have a long way to go to restore their vitality

As representatives of major developing countries, the BRICS countries are located on different continents of the world, with different development conditions, different levels of development, and different industrial structures, and their performance in this epidemic is also different. In terms of epidemic prevention and control, with the exception of China, other BRICS countries have nothing to praise. The cumulative number of confirmed cases in India, Brazil, and Russia ranks second to fourth in the world, and South Africa ranks 17th, but its total population infection rate is no less than that of India. In terms of economic performance, according to the latest Global Economic Outlook issued by the IMF, except for China, the economies of other BRICS countries will shrink significantly in 2020. Although they will resume positive growth in 2021, they are different from emerging ASEAN economies. The BRIC countries’ GDP growth rate in 2021 is not expected to be enough to offset the decline in 2020.

• ① India: Large-scale suspension of economic activities

India has implemented “closing policy” on March 25, and a wide range of economic activities has been “shut down.” In the first quarter, GDP also increased by 3.1% year on year, during which the output of manufacturing industry dropped dramatically. In the second quarter, it fell sharply and dropped by 23.9% year on year. Moreover, the “closed country” that paid a heavy price did not prevent the spread of the epidemic. At the end of the second quarter, the number of new cases per day was nearly 20,000 (less than 100 before the country was closed). Epidemic prevention and economy are both out of control, which is the so-called lost both of “people” and “money”.

In order to stabilize the economy, India began to unblock it on June 8, and then the epidemic broke out more violently. By mid-September, the number of new cases approached 100,000, exceeding the US record. However, the Indian economy, which was restarted with “illness”, rebounded significantly in the third quarter, and the year-on-year decline narrowed sharply to 7.5%. In September, industrial output has turned positive year on year. While the

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economy is recovering, the epidemic has also improved miraculously. After mid-September, the number of new cases turned down and continued to drop to the recent level of 35,000. So far, the cumulative number of confirmed cases has reached nearly 10 million.

The IMF’s Global Economic Outlook report in October predicts that India’s economy will decline by 10.3% in 2020. However, the latest economic data shows that India’s economic recovery is better than IFM’s expectations, and the year-on-year GDP decline in the fourth quarter is expected to continue to narrow to 4%. The GDP for the whole year of 2020 is expected to fall by about 8.1%, and it is expected to increase by 5.5% in 2021.

② Russia: Energy exports suffered heavy losses

The Russian epidemic situation has not been substantially relieved since it reached its peak in early March. It deteriorated again at the beginning of September, and the number of new cases continued to rise. Recently, there are about 28,000 new cases per day, nearly three times the peak in spring. Russian Health Minister Murashko said recently that it may be necessary to consider restricting people’s travel to a certain extent, including restricting traffic between states. But Peskov, the president’s press secretary, immediately clarified: “At present, we still believe that there is no such need.”

The Russian economy is heavily dependent on oil and gas revenue. In the year of the pandemic, global oil and gas demand shrank, and oil and gas prices fell sharply, which severely hit Russia’s energy exports. In 2018 and 2019, the average export price of Russian crude oil was US$495 and US$454 per ton, respectively. Since March 2020, the average price has fallen to US$264, a 41.9% drop from 2019. At the same time, the average export price of natural gas has fallen to US$101.7 per thousand cubic meters, a 45.6% drop compared to the average export price of US$186.8 in 2019.

Russia’s GDP in the second quarter fell by 8% year on year, a sharp drop of 9.6 percentage points from the first quarter; the rate of decline narrowed to 3.6% in the third quarter. Given that the epidemic is still deteriorating, the year-on-year decline in GDP in the fourth quarter may expand again. According to the IMF’s October forecast, Russia’s GDP will fall by 4.1% in 2020 and will rebound by 2.8% in 2021. The latest economic data shows that the decline in 2020 and the increase in 2021 may be better than IMF’s expectations. The Russian Ministry of Economic Development has recently adjusted the GDP decline in 2020 from 4.8% to 3.9%, and forecasts that the growth rate will be 3.3% in 2021, 3.4% in 2022, and 3% in 2023.

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• ③ Brazil: The biggest economic recession in nearly 120 years

The total number of confirmed cases in Brazil has reached 6.78 million, which is 2.7 times that of Russia. The actual epidemic situation may be more serious. Brazil’s testing coverage rate is less than 1/4 of Russia’s, and a large number of cases may not be included in the statistics. Judging from the number of deaths from the COVID-19, Brazil has reached 176,000, which is more than four times that of Russia. The average daily number of new cases in Brazil exceeded 46,000 at its peak in July, and has dropped by 2/3 since then. However, it resumed its upward trend in September and has recently averaged more than 40,000.

In Brazil’s economic structure, the service industry accounts for approximately 63% of GDP, the highest among the BRIC countries (54% in Russia). It is the service industry that is most impacted by social isolation measures such as the large-scale closure of commercial activities. Brazil’s GDP in the second quarter fell by 10.9% year on year, and the decline narrowed to 3.9% in the second quarter. However, the rapid rebound of the epidemic in November may further expand the GDP decline in the fourth quarter. The economy is expected to shrink by 5.1% throughout the year.

Since the epidemic, Brazil’s social distancing measures aimed at slowing the spread of the COVID-19 have paralysed economic activities from investment to household consumption. Relevant OECD data shows that in the second quarter of 2020, among the world’s 31 advanced economies and emerging market countries, Brazil ranked fourth in terms of investment decline. According to data from Instituto Brasileiro de Geografia e Estatística (IBGE), the investment rate in Brazil in the second quarter fell by 15.4% year on year.

In September 2020, the Institute of Geography and Statistics (地理和統計 研究院) under the Ministry of Economic Affairs of Brazil announced statistical results showing that Brazil’s gross domestic product (GDP) fell by 9.7% in the second quarter from the previous month. The biggest drop since Institute of Geography and Statistics began to conduct quarterly statistics on the national GDP in 1996. In addition, the Global Economic Outlook issued by the IMF stated that Brazil will experience its biggest economic recession in nearly 120 years in 2020.

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• ④ South Africa: The problems are difficult to get rid of, and the economy worsens.

The epidemic in South Africa reached its peak in July, with an average of 10,000 new cases per day; from then to early September, it dropped to about 1,600 per day, and remained at this level for about two months; it began to rebound after early November, and the latest number of new cases per day has exceeded 3,800.

South Africa’s economy has been weak for many years, and problems such as high debt and high unemployment rate have been difficult to get rid of. The epidemic has worsened South Africa’s economy. According to data from Department of Statistics of South Africa, before the outbreak, South Africa’s GDP had shrunk continuously in the third and fourth quarters of 2019, with an increase of only 0.2% throughout the year. In the first quarter of 2020, it dropped 0.5% from the previous quarter, and in the second quarter it dropped by 16.4%. The rate of decline is second only to India in the world. The economy rebounded by 13.5% in the third quarter, but the unemployment rate reached a new high at the end of the third quarter, reaching 30.8%. South Africa’s economy is expected to shrink by 6.7% in 2020, and it is expected to grow by 3.2% in 2021, which is less than half of the decline in 2020.

2. Domestic macroeconomic analysis

In 2020, in the face of the huge impact of the COVID-19 epidemic and the complex and severe domestic and foreign environment, all regions and departments will scientifically coordinate normal epidemic prevention and control and economic and social development, and the national economy will continue to stabilize and recover. Looking forward to 2021, China’s economy is expected to return to a normal trend, and the annual GDP growth rate is expected to rebound greatly on the basis of the low base effect.

In 2020, in the face of the global pandemic and the complicated and severe internal and external development environment, the Communist Party of China Central Committee and the State Council will coordinate the deployment of epidemic prevention and control and economic and social development work. The domestic epidemic has been well controlled in the short term, the fundamentals of China’s long-term economic improvement remain unchanged, and the economic growth center is still in a stable operation channel.

Looking ahead to 2021, the economy will continue to recover with strong momentum, investment is expected to return to pre-epidemic levels, consumption is expected to improve significantly, and the net export contribution may weaken due to the return of export normality and the rebound of imports. On the whole, the GDP growth rate in 2021 is expected to rebound significantly on the basis of the low base effect in 2020.

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At the beginning of 2020, the sudden COVID-19 epidemic has brought an unprecedented impact on China’s economic and social development. The international epidemic continues to spread, the world economy is severely recessed, the industrial supply chain loop is blocked, international trade and investment are shrinking, and instability and uncertainties affecting the Chinese economy have increased significantly.

Fortunately, the domestic COVID-19 epidemic has been well controlled in the short term, and the impact of the epidemic has not affected the fundamentals of China’s long-term economic growth. The long-term growth center of the Chinese economy is still in a stable operation channel. The latest report of the International Monetary Fund predicts that China’s economy will grow by 1.9% in 2020, making it the only major economy in the world to achieve positive growth.

The Party Central Committee recently proposed that China’s economy should “accelerate the formation of a new development pattern in which the domestic cycle is the main body, and the domestic and international double cycles promote each other.” The construction of the double-loop structure will help China optimize the industrial structure and supply chain structure, and boost the vitality of production capacity through supply-side structural reforms and factor market reforms.

It is worth noting that there are profound changes in current internal and external environment of China’s economy, and there are many uncertainties that restrict the construction of the double-loop structure. On the one hand, the wave of deglobalization is surging. Sino-US frictions have escalated and spread from the economic and trade level to other levels. The international trade environment has become tense, and the international governance system has also become fragmented. The forces of extreme mercantilism, populism and nationalism are on the rise. The normal international economic and trade environment has also been severely impacted. On the other hand, the domestic economic downturn triggered by the epidemic is still in the process of repairing. Although the rebound and recovery momentum is relatively strong, there remains many uncertainties. In the current complex and severe situation, China may face many risks and challenges in the construction of a new development pattern of international and domestic mutual promotion.

First, in terms of economic growth, although China’s dependence on foreign trade has continued to decline in recent years, it is still at a relatively high level relative to developed economies such as Europe, the United States and Japan, and China’s dependence on the international market remains high. In 2019, China’s dependence on foreign trade is 31.84%, which is higher than that of the United States (19.32%), Japan (28.07%), and the European Union (28.87%). The dependence on some industries is even higher to about 50%.

As a result, in the process of replacing the international loop with the domestic loop, there will be many challenges, such as cost issues, logistics issues, adaptability issues, etc. The Chinese economy may suffer losses in terms of efficiency, speed and welfare.

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Second, in terms of international payments, during the construction of the double-loop structure, the decline in exports and the increase in imports may become a trend, thereby reducing the stimulating effect of net exports on the domestic economy. However, under the constraints of “steady growth”, in order to ensure a desirable economic growth rate, there is a theoretical lower limit to the decline in exports, and the rate of decline in exports constrains the growth of imports.

Thirdly, in terms of employment, most of the enterprises in China’s export trade industry chain are small and medium-sized private enterprises, and their employment contribution is decisive. According to statistics from the Ministry of Commerce, the number of domestic employment directly and indirectly in relation to foreign trade is as high as 200 million. After the formation of the new development pattern with the inner circle as the mainstay, the operation of foreign trade enterprises may be under pressure, and relevant impact on employment should not be underestimated. In the process of transforming external demand to domestic demand, how to properly promote the transformation of foreign trade is an important challenge that needs to be dealt with carefully in the future.

What needs to be realized is that the transformation of the double-loop economic structure is the only way for the development of a powerful country. China’s strategic deployment for the construction of the double-loop structure is not only derived from the current economic status, but also from the prediction of the trend of world changes.

Anti-globalization, national sentiments and trade disputes under the conflict between the conservative countries and the rising countries will suppress global economic growth. The cost of relying solely on the international economic and trade system loop is increasing, and the risks are increasing.

The launch of the double loop will lay a new pattern for the development of China’s economy in the next one to two decades, and will become an important strategic plan for determining China’s rise in the future. Therefore, although we may face many difficulties and challenges in the future, we must strengthen our confidence, focus on resolving all kinds of contradictions, and promote the continuous development of the construction of the double-loop structure.

(1) China’s economy will continue to recover after the epidemic in 2020

In 2020, under the global epidemic crisis and the complex and severe internal and external development environment, governments at all levels, in accordance with the important strategic deployment of the Party Central Committee and the State Council, coordinated the prevention and control of the epidemic and economic and social development, deepened supply-side structural reforms, and increased responses to macroeconomics policy and thoroughly implemented “six stabilities”, the tasks of “six guarantees”, to accelerate the construction of a new development pattern of double loops and ensure the completion of a well-off society in all

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respects and the successful conclusion of the “13th Five-Year Plan”, and seek for stable economic progress. As a result, the overall economic pattern has shown a steady and positive trend, and many positive changes have occurred in the economic operation: first, the economic support of new kinetic energy has become prominent; second, the income of residents under the economy has increased; third, industrial production has basically recovered to normal level; fourth, the growth rate of corporate sales revenue has increased quarter by quarter.

On the other hand, China’s economy is also showing signs of lagging demand restoration, unstable consumer demand, weak infrastructure investment, difficulties in small and medium-sized foreign trade enterprises, and increasing regional growth imbalances. We should carefully summarize, find the root causes, and adopt corresponding measures. On the whole, there are four major structural risks and challenges that restrict China’s economic growth: the first is the simultaneous occurrence of low birth rate and aging population; second, there are structural contradictions in employment; third, consumption growth is weak; the fourth is the trend of high export growth is hard to sustain.

• ① Positive changes in economic operations

Since the third quarter of 2020, after the epidemic has been basically brought under control, China’s economic recovery has continued to improve, total demand has steadily rebounded, and major indicators have improved quarter by quarter. In the first three quarters, China’s GDP grew by 0.7% year on year, and for the first time this year, it turned from negative to positive, outperforming among major economies.

• The economic support of the new kinetic energy is prominent. In the first three quarters, the added value of high-tech manufacturing above designated size increased by 5.9%, and the added value of equipment manufacturing increased by 4.7%; investment in high-tech industries increased by 9.1%, an acceleration of 2.8 percentage points. New business formats and new models such as online shopping and live delivery of goods remains hot, and emerging demands such as online office, remote consultation and online education are very strong. The online retail sales of physical goods in the first three quarters increased by 15.3% year on year, and the growth rate was 1 percentage point higher than that in the first half of the year, accounting for 24.3% of the total retail sales of consumer goods. Under the impact of the epidemic, the driving force for industrial transformation and development has accelerated significantly. New momentum represented by the Internet economy has grown against the trend, and has played a very active role in helping epidemic prevention and control, protecting residents’ lives, and promoting economic growth.

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• Economic restoration drives the increase of residents’ income. In the first three quarters, the economy recovered steadily, the growth rate turned from negative to positive, and gradually accelerated, the employment also improved, and the growth rate of residents’ income also turned from negative to positive. In the first three quarters, the national per capita disposable income of residents was RMB23,781, a year-on-year increase of 3.9%, and the actual increase was 0.6% after deducting price factors, which turned positive for the first time during the year. The recovery of residents’ income has led to a rebound in consumer demand, which in turn promotes the recovery of the tertiary industry, stimulates employment, and makes the economy enter a virtuous circle. From the perspective of income gap, the ratio of per capita disposable income of urban and rural residents was 2.67, a decrease of 0.08 compared to the same period in 2019, indicating that the urban-rural income gap has further narrowed and income distribution has improved. Various localities have actively introduced poverty alleviation policies, and rural poverty alleviation policies have achieved certain results.

• Industrial production has basically returned to normal. From January to October, the added value of the industrial enterprises above designated size increased by 1.8% year on year, and the cumulative growth rate accelerated again by 0.6 percentage points from the previous month, which was in the positive growth range for three consecutive months. From a single month perspective, the added value of the national industrial enterprises above designated size increased by 6.9% year on year in October, and the growth rate was flat from the previous month, a significant increase of 2.2 percentage points from the same period in 2019; the total profit of industrial enterprises above designated size in September increased by 10.1% year on year from -5.3% in the same period in 2019. The Manufacturing Purchasing Managers’ Index of China was 51.4% in October, staying above the threshold for eight consecutive months. In addition, the utilization rate of national industrial capacity was 76.7% in the third quarter, an increase of 2.3 percentage points from the second quarter, which is also higher than the 76.4% in the second and third quarters of 2019, further reflecting that industrial production has basically returned to the pre-epidemic level.

• The growth rate of corporate sales revenue is picking up quarter by quarter. Since 2020, the growth rate of sales revenue of Chinese enterprises has generally shown a trend of picking up quarter by quarter. From January to October, the cumulative sales revenue of national enterprises increased by 3.2% year on year, and the growth rate increased by 1.4 percentage points from the previous three quarters. The economic recovery is further consolidated. In quarterly terms, China’s economy was hit harder by the epidemic in the first quarter, with corporate sales falling 17.6% year on year; economy grew by 9%

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in the second quarter and 12.4% in the third quarter. The growth rate in October further improved, with a year-on-year increase of 15.1%, an increase of 2.7 percentage points from the third quarter.

• ② Outstanding problems in economic operation

While a large number of positive changes have emerged in economic operations, the structural risks and challenges faced by certain domestic sectors are also worthy of attention.

• The birth population in China continues to decline, and the aging population is accelerating. In 2019, China’s total population was 1.40005 billion, exceeding 1.4 billion for the first time, an increase of 4.67 million from 2018. The population increment continued to narrow, and the natural growth gradually slowed down. The report of Evergrande Research Institute predicts that China’s population will fall into negative growth during the “14th Five-Year Plan” period. Starting from around 2050, China’s total population will shrink sharply and fall to less than 800 million by 2100, by then, the proportion of China’s population will drop from the current 19% to 7%. On the other hand, the aging speed and scale of China’s population are unprecedented. It will enter a deeply aging society accounting for more than 14% in 2022, and a super-aging society accounting for more than 20% in 2033, and then further rise rapidly to about 35% in 2060. The demographic dilemma reflects the disappearance of China’s demographic dividend, the potential decline in China’s economic growth rate, and a change in the consumption structure.

Figure 1: Both the Willingness to Marry and the Birth Population Trends have Declined Significantly

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Year-on-year growth in Growth rate of birth
marriage registration population
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Source: Xianhua Finance

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• The employment is generally improving, and structural contradictions cannot be ignored. Although the overall employment tends to improve, the problem of structural imbalance in employment remains, which is mainly reflected in the decline in the number of migrant workers in employment and the difficulty in employment for college students.

On the one hand, at the end of the third quarter, the total number of rural migrant workers was 170 million, an increase of 2 million from the end of the second quarter, but a decrease of 3.84 million from the same period last year, a year-on-year decrease of 2.1%. It shows that although the employment of migrant workers is getting better, it still shrinks to a certain extent compared with 2019.

The main reason is that national policy of encouraging nearby employment has played an effect, making more migrant workers work locally in the future, and the demand for migrant workers declined; in addition, the recovery of the manufacturing industry has been relatively slow after the economy has been hit by the epidemic, and corporate demand for labor has decreased compared with the same period in 2019, which also led to a decline in the employment demand of migrant workers.

On the other hand, the employment pressure of university graduates remains relatively high. Affected by the epidemic, college graduates in the job market in 2020 will face the dual impact of a sharp drop in employment demand and shortened application time. In September, the surveyed unemployment rate for persons aged 20-24 years old and above rose by 4 percentage points from 2019, reflecting that the employment of graduates has improved but remains under pressure.

Figure 2: Employment is generally improving, but there are hidden structural contradictions

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Urban surveyed unemployment rate
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Source: Xianhua Finance

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• Consumption growth is sluggish, and the foundation for economic recovery is not yet solid. Generally speaking, consumption is the first driving force for China’s economic growth. In 2019, consumption contributed 57.8% to the economy, investment was 31.2%, and exports were 11.0%. At this stage, the growth rates of investment and exports have exceeded the levels of the same period in 2019.

The difference is that the cumulative consumption of retails sales in the first three quarters fell by 9.11% year on year, which greatly dragged down the GDP growth rate in the first three quarters by 2.5 percentage points. In the same period of 2019, it increased the current GDP growth rate by 3.8 percentage points, reflecting that the endogenous growth momentum of the Chinese economy remains relatively weak, and the foundation for economic recovery is not yet solid.

Figure 3: Consumption drags down economic growth

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

Percentage points 2020–09 2019–09
5
3.8
4
3.1
3
2 1.2 1.2
1
0.1
0
–1
–2
–3 –2.5
The drive of consumption on GDP The drive of investment on GDP The drive of net exports to GDP
----- End of picture text -----

Source: Xianhua Finance

• The continued high growth of exports is doubtful, and its stimulating effect on the economy may be weakened. In the first three quarters, China’s trade surplus was RMB2.3054 trillion, a year-on-year increase of 14.2%, driving a 0.1% increase in GDP. In the first three quarters, the total export amounted to RMB12.7 trillion, a year-on-year increase of 1.8%, which was much higher than the 0.7% GDP growth rate in the first three quarters.

Recently, export growth has exceeded expectations to compensate for the sluggish consumption, which has played a positive role in supporting economic recovery.

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However, it should be noted that the export growth rate of about 10% may be difficult to sustain. Recently, the driving force of exports is mainly the export of anti-epidemic materials, the export of “home economy” products brought about by home office, and the substitution effect of Chinese production brought about by the severe epidemic in Europe and the United States.

With the gradual easing of the epidemic in Europe and the United States, the gradual recovery of the economy, and the widespread use of vaccines, the sustainability of China’s high export growth in the future is doubtful, and there is a high probability that it will return to the average in recent years.

• (2) The economy is expected to return to the normal cyclical trend in 2021

• ① Investment and consumption are expected to increase, and the economy is expected to rebound significantly in 2021

In the first three quarters of 2020, GDP grew by 0.7% accumulatively, and the growth rate changed from negative to positive for the first time this year. Among them, the GDP in the third quarter increased by 4.9%, an increase by 1.7 percentage points from the second quarter. It was in the economic recovery channel for two consecutive quarters. In the third quarter, nominal GDP grew by 3.6%, 2.3 percentage points higher than that in in the second quarter.

Against the backdrop of the global economic recession, China’s exports rose against the trend, and the growth rate in the second half of the year was even better than that before the epidemic. The reason is that European and American fiscal stimulus has maintained the consumption capacity of residents, and China’s epidemic control and policy focus have preserved the supply capacity of enterprises. Under the raging epidemic, the global production side has cleared to a large extent, which has weakened the supply capacity of the international market.

The misalignment of domestic and foreign supply and demand has pushed China’s exports up against the trend, and China’s position as a global supply center has been further strengthened in the short term.

The data shows that since the second quarter, the net export’s contribution to GDP has turned from negative to positive. Since July 2020, the growth rate of exports has been higher than the level before the epidemic. However, considering that China’s share of world exports is already at a high level, it is difficult to further increase. Therefore, after the global epidemic is effectively controlled, there is a high probability that China’s exports will return to the average level in recent years.

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From the perspective of industries, the contribution rates of the primary, secondary and tertiary industries in the third quarter were 20.3%, 49.2%, and 30.5%, respectively. Compared with the same period in 2019, the contribution rate of the primary and secondary industries increased by 17.2 and 13.3 percentage points, respectively, while the contribution rate of the tertiary industry decreased by 30.5 percentage points.

From an industry perspective, the financial, information services, industry, agriculture, forestry, fishery and animal husbandry industries contributed significantly in the third quarter, with rates of 94.7%, 90.2%, 37.6% and 25.2%, respectively. In contrast, industries such as wholesale and retail, accommodation and catering, leasing, and commercial services have a greater drag, with contribution rates of -67.6%, -57.7%, and -44.7%, respectively.

Figure 5: Trends in the contribution rate of the three industries

Figure 6: Trends in the contribution rate of key industries

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Primary Secondary Tertiary Leasing and business
industry industry Industry services
Information service
Real estate industry
Finance industry
Accommodation and
catering industry
Wholesale and retail
Delivery and
warehousing
industry
Construction
industry
Industry
Agriculture, forestry,
fishery and animal
husbandry
Other service
industries
Source: Xianhua Finance
----- End of picture text -----

After modeling and analyzing economic data, it is found that the potential economic growth rate is running smoothly, and the cycle’s pull on the economy has declined significantly. Judging from the long-term trend of economic growth, the current potential economic growth rate is showing a sound and stable operation trend. Since the third quarter of 2019, the potential economic growth rate has maintained a level of about 6.0% for several consecutive quarters.

From a cyclical perspective, starting from the fourth quarter of 2019, economic data such as industrial production, PPI and profits have shown a certain degree of improvement, and the Kitchen cycle is now bottoming out. Data shows that Kitchin growth rate fell to 0.3% in November 2019, which is quite close to the bottom.

From historical experience, the bottom of the cycle in 2016 was -1.9% and -0.8% in 2009. At that time, the cycle point was quite close to the historical low. According to the regularity of the cycle, China’s economy is expected to enter the upward phase of the Kitchin cycle in 2020, but the COVID-19 epidemic interrupted this process.

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Fortunately, the Kitchin cycle has recently seen a trend of upward trend. The Kitchin growth rates in July-September 2020 were 7.4%, 7.9% and 8.2%, respectively, showing a significant upward trend in volatility as a whole. According to the regularity of the cycle, the upward period of this round of inventory cycle is expected to last until the third quarter of 2021 or longer.

In contrast, the Jugala cycle has been under repair since March 2020. It has reached 2.83% in October, and it is expected to return to the pre-epidemic level of 4.2% in the near future. Given that the Jugala cycle is still in the downward phase as a whole, its effect of boosting the economy is limited.

Judging from the epidemic control, key leading indicators and socio-economic expectations, the momentum for further recovery of China’s economy in 2021 is not weak, and the low base effect is superimposed, and the economy is expected to return from a trough to a cyclical trend under normal conditions. From the perspective of regulatory agencies and policies, macroeconomic policies may become normalized in 2021, and economic recovery will also rely more on procyclical kinetic energy such as consumption, manufacturing investment, and exports rather than countercyclical policies.

From the perspective of expenditure approach as a whole, investment growth is expected to return to pre-epidemic levels in 2021, consumption is expected to rebound significantly from the low level in 2020, and net export contributions may decline as exports return to normal and imports rebound.

On the whole, the economic growth rate for the whole year of 2021 is expected to rise significantly on the basis of the low base effect in 2020, and the actual economic growth rate for the whole year is expected to be around 9%.

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Figure 7: Long-term growth keynote Figure 8: Kitchin cycle climbs for
remains stable the better
Actualgrowth rate Potential growth rate(Right axis) Kitchin Jugra Inventory ofraw material
cycle cycle (Right axis)
----- End of picture text -----

Source: Xianhua Finance

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APPENDIX III-3

• ② CPI trend will weaken in the future, and PPI is expected to accelerate upward

• The CPI trend was weak during the year, and the downturn of meat prices in the future may continue to suppress the CPI. Since 2020, in addition to the weak demand under the influence of the epidemic, the sharp decline in CPI year on year is mainly due to the high base of pork prices. However, in June to July, affected by seasonal factors and flood conditions, there has been a phased rebound. Looking ahead to 2021, pork prices are expected to fall to a certain extent, which will drag down the CPI, which is expected to be about 1.5% for the whole year.

• PPI continues to stabilize and is expected to accelerate its upward trend in the future. Under the influence of the early stage of the outbreak in 2020, global economic activities have stagnated and crude oil prices have fallen sharply, dragging down the weak PPI. Looking forward to 2021, the PPI is expected to rise out of deflation and reach about 1.2% for the whole year.

On the one hand, the current crude oil price is still at a historically low level. The global economy is likely to recover in 2021, and crude oil prices are expected to rise. On the other hand, since the beginning of 2020, the growth rate of M1 bottomed out and rebounded, which is also conducive to PPI’s exit from deflation.

Figure 9: CPI maintains decline, PPI trend is stable

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CPI YoY PPI YoY
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Source: Xianhua Finance

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• ③ The growth expectations of each investment segment are relatively optimistic, and the performance of fixed asset investment in 2021 can be expected

• Real estate remains at a high level, infrastructure construction is accelerating, and manufacturing is improving. Fixed asset investment is expected to accelerate in 2021. The cumulative growth rate of fixed asset investment from January to October was 1.8%, an increase of 1.0 percentage point from the previous month. Based on this calculation, fixed asset investment in October increased by 12.2% year on year, and the growth rate was 3.5 percentage points higher than that in September.

Among them, real estate investment increased by 12.7% year on year, an increase by 0.7% from the previous month, which remained high; infrastructure investment increased by 4.4% year on year, a 1.2% increase from the previous month; manufacturing investment increased by 3.7% year on year, 0.7 percentage point increase from the previous month.

Looking ahead to 2021, among the growth components of fixed asset investment, manufacturing investment is expected to rebound significantly, infrastructure investment is expected to improve, and real estate investment will remain at a high level. It is expected that fixed asset investment will grow rapidly in 2021, with a growth rate of 9.5 %.

Figure 10: Fixed asset investment continues to improve

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Cumulative year-on-year growth in investment in fixed assets
Cumulative year-on-year growth in private investment in fixed assets
----- End of picture text -----

Source: Xianhua Finance

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APPENDIX III-3

• Real estate investment maintains strong resilience and is expected to remain at a relatively high level in the future. From January to October, real estate investment increased by 6.34% year on year, and the growth rate increased by 0.75 percentage points from the previous month. Among them, real estate investment in October increased by 12.7% year on year, and the growth rate increased by 0.7 percentage points from the previous month, setting a new high since August 2018.

Since 2020, the rapid growth of land purchase fees has provided the main support for real estate investment to maintain resilience. Data show that the cumulative increase in land purchase fees in the first nine months was 8.44% year on year, the highest value since 2020. In the first nine months, the cumulative year-on-year growth rate of real estate investment deducting land purchase fees was only 4.2%, which was 1.4 percentage points lower than the full-scale investment growth rate in the same period.

Looking ahead, under the influence of the three red line policies, the market has turned pessimistic about real estate investment, and future investment growth will be under pressure. However, considering that the land purchase area and transaction price generally affect the land purchase fee after three quarters, and the growth rate of land transaction price has rebounded significantly since April 2020, the growth rate of real estate investment in 2021 may not be significantly stalled due to the tightening of financing policies, and the investment growth rate for the whole year is expected to be around 6%.

Figure 11: High land purchase fees provide active support for real estate investment to maintain resilience

Figure 12: The growth rate of land trading prices rebounded

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

Cumulative year-on-year increase in investment amount of real estatedevelopment completed Cumulative year-on-year increase in land trading price
Cumulative year-on-year increase in investment amount of real estatedevelopment completed (deducting land purchase fees)
Cumulative year on-year changes in land purchase fees (right axis)
----- End of picture text -----

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

Source: Xianhua Finance
----- End of picture text -----

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• Infrastructure investment is expected to improve in the future, but the upward trend is moderate. From January to October, infrastructure construction investment (on consolidated basis) and infrastructure construction investment (excluding electricity) increased by 3.01% and 0.70% year on year, respectively, and the growth rate increased by 0.59 and 0.50 percentage point from the previous month.

According to data forecast, the growth rate of infrastructure investment on consolidated and partial basis in October was 7.3% and 4.4%, respectively, which both rebounded from the growth rate in September.

The rebound in infrastructure investment in October, on the one hand, should be related to the low base of infrastructure investment in the same period in 2019. In October 2019, infrastructure investment was 2% year on year, which was significantly lower than 5% of similar month.

On the other hand, real estate has maintained a high boom since the third quarter, and the economic recovery which promoted a sharp rebound in local fiscal revenue growth. The pressure on infrastructure capital diversion has been significantly reduced. Local fiscal expenditures may also accelerate in October to provide support for infrastructure investment.

On the whole, important factors that have caused infrastructure investment to fall short of expectations since 2020 are the lack of high-quality projects, the need to improve the special debt system, the shift in government mission focus, etc. The shortcomings such as the mismatch of local powers and financial powers also restrict its development.

Looking ahead to 2021, infrastructure investment may improve moderately, with an expected growth rate of 3%-5%. On the one hand, the year 2021 is the first year of the “14th Five-Year”. The draft proposal proposes to maintain a reasonable increase in investment, accelerate the completion of shortcomings in infrastructure, municipal engineering and other fields, and promote new infrastructure, new urbanization and construction of major projects such as transportation and water conservancy, accelerate the construction of a strong transportation country, therefore, there is strong support for infrastructure investment.

On the other hand, the additional quota of special bonds in 2021 is likely to be less than that in 2020. Special government bonds are expected to be canceled, and high-quality projects are unlikely to grow significantly. The subjective demand for steady growth in infrastructure due to economic recovery will decline, therefore, the growth rate of infrastructure investment in 2021 is unlikely to improve significantly.

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Figure 13: Infrastructure investment improved in October

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

Cumulative year-on-year growth rate of Cumulative year-on-year growth rate of
infrastructure investment (full caliber) infrastructure investment (excluding electricity)
Source: Xianhua Finance
----- End of picture text -----

• Manufacturing investment continues to improve, and future performance is expected. From January to October, manufacturing investment fell by 5.3% year on year, and the decline narrowed by 1.2 percentage points from the previous month; in October, the growth rate of manufacturing investment rebounded by 0.7 percentage point to 3.7%.

Looking forward to 2021, it is expected that manufacturing investment will continue to recover as the economy recovers. Supported by factors such as the pick up trend of inventory cycle, increase in capacity utilization rates, sustained high growth in exports, improving corporate profits, and the launch of vaccines boosting entrepreneurs’ confidence, there is a strong certainty of steady growth of manufacturing investment in 2021, and the annual growth rate is expected to be 10%.

Figure 14: Investment in manufacturing continues to improve

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

Cumulative year-on-year growth rate
of investment in manufacturing
----- End of picture text -----

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

Source: Xianhua Finance
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• ④ Consumption continues to improve, and rapid growth is expected in 2021

From January to October 2020, the total retail sales of consumer goods fell by 5.9% year on year, an increase by 1.3 percentage points from the previous month. The total retail sales of consumer goods in October increased by 4.3% year on year, an increase by 1 percentage point from the previous month. The consumption downturn in 2020 is mainly affected by residents’ subjective concerns about the epidemic and the objective restrictions of the government’s epidemic control policies on some consumption scenarios, which greatly suppressed residents’ consumer demand.

Considering that the current economic upturn brings employment and income improvements, consumption potential is expected to be released. At the same time, the draft of the “14th Five-Year” Plan proposes to promote consumption in an all-round way, and the policy will also be more friendly in supporting consumption growth. It is expected that the growth rate of retail sales of consumer goods may rebound to about 15% in 2021.

Figure 15: Year-on-year growth rate of total retail sales of consumer goods continued to improve

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

Year-on-year growth rate of total retail sales of consumer goods for the month
Cumulative year-on-year growth of total retail sales of consumer goods
----- End of picture text -----

Source: Xianhua Finance

• ⑤ The export performance in 2020 has exceeded expectations, and the trade surplus may shrink in 2021

In US dollars, the total value of imports and exports in the first ten months of 2020 was US$3.71 trillion, a cumulative year-on-year decrease of 0.8%, and the rate of decline narrowed by 1 percentage point from the previous month. Among them, exports increased by 0.5% year on year, imports fell by 2.3% year on year, and the trade surplus was US$384.5 billion, a year-on-year increase of 14.2%.

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From a single month perspective, the total value of China’s foreign trade imports and exports in October increased by 8.4% year on year; exports increased by 11.4% year on year, exceeding market expectations by 10.2%, setting a new 19-month high; imports increased by 4.7% year on year, with a trade surplus of US$58.44 billion, a year-on-year increase of 38.1%. The main driving force behind China’s outstanding export performance in the first 10 months was the export of epidemic prevention materials, the export of “home economy” products brought about by home office, and the substitution effect of Chinese production brought about by the severe epidemic in Europe and the United States.

Since 2020, exports to the United States have improved significantly, and exports to the EU have dropped significantly. From January to October, China’s exports to the United States increased by 1.74% year on year, which was significantly better than the 11.31% decline in the same period in 2019. It increased the cumulative growth rate of exports by 0.3 percentage point, while it slowed down the growth rate of exports by 2.17 percentage points in the same period in 2019.

On the other hand, China’s exports to the EU from January to October fell by 24.20% year on year, which significantly slowed down the cumulative growth rate of exports by 4.19%, which was significantly weaker than the 4.42% growth in the same period in 2019, which increased by 0.73%.

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

Figure 16: Outstanding export performance Figure 17: Decomposition of cumulative growth rate
in the first 10 months in exports (by export area)
Cumulative year-on-year increase India
in imports and exports
Cumulative year-on-year growth in exports Russia
Cumulative year-on-year increase in imports Australia
Taiwan, China
South Korea
Hong Kong, China
ASEAN
Japan
America
European Union
other
----- End of picture text -----

Source: Xianhua Finance

Looking forward to 2021, the overall momentum of exports may weaken relative to the second half of 2020, and exports are expected to grow by 5% in 2021.

Recently, the economic activities of many developed economies such as the United States and Europe have continued to recover. China’s exports are expected to continue to improve under the recovery of external demand. It is expected that exports are expected to continue to show a relatively high degree of prosperity in the short term. However, under the influence of factors such as the base effect and the appreciation of the Renminbi, the high point of export growth may appear around the first half of 2021.

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From the second half of 2021, the negative impact of factors such as the repair of overseas production and demand gaps on China’s export chain will gradually become apparent. Regarding imports, taking into account the continuous recovery of domestic demand and the improvement of overseas epidemics, the continuous improvement of China’s import expansion actions and the accelerated pace of opening up, it is expected that the import growth rate in 2021 is expected to rise, and the annual import growth rate is expected to be 8.5%.

On the whole, it is expected that the growth rate of exports in 2021 will be slower than that in 2020, imports are expected to improve, the size of the trade surplus will shrink, and net exports will have a smaller effect on the economy than in 2020.

3. Industry conditions

(1) General introduction to the port industry

The port industry, together with railways, highways, water transportation, aviation, etc., constitute the transportation lifeline of the national economy. As a comprehensive transportation hub and cargo distribution center, ports play a pivotal role in the entire transportation system. The port industry has the characteristics of large investment and relatively stable long-term income, which can promote the development of a large number of related industries such as warehousing and transportation, customs declaration and freight forwarding, and trade. Since the United States switched its container transportation from land transportation to sea shipment in 1956, the international container shipping business has developed rapidly and has become the main mode of transportation for international trade. Compared with other modes of transportation, the container business has the characteristics of large transportation volume and low cost, and has a huge competitive advantage. It has become the core business in the port industry and a barometer reflecting the state of the national economy. Therefore, the development level of the port has become one of the important indicators to measure the economic modernization level of a country.

Port is the hub of resource allocation and plays a vital role in the transportation system. The port industry is an important fundamental industry for national economic and social development and is closely related to the development of macro economy. Due to the imbalance in the distribution of resources, economic development levels and consumption levels among countries and regions, they need to be adjusted through trade. The flow of goods formed by such trading activities constitutes the demand for port operations. Port plays an important role in meeting the transportation need of national energy, raw materials and other bulk materials, supporting economic, social and trade development, improving people’s living standards, and enhancing the comprehensive strength of the country.

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APPENDIX III-3

With the continuous expansion of the functions of ports, port enterprises have gradually developed from a pure sea-land cargo transshipment provider to an integrated logistics service provider, providing integrated logistics support for the transportation by vessels, vehicles and trains as well as the storage, driving the formation of a port-surrounding industrial park with processing, wholesale, distribution, storage and other functions near the ports, which greatly enhanced the competitiveness of the ports as integrated transportation connection points. The cargoes for transshipment at ports are divided into five major categories, namely dry bulk cargo, liquid bulk cargo, general cargo, containers and Ro-Ro vehicles. Bulk cargos such as coal, metal ore, cement and grain are mainly transported in bulk, while industrial products such as mechanical and electrical products, textiles and clothing, toys, etc. are mainly transported in containers. Transportation of bulk cargo in bulk and general cargo in container is conducive to enhancing transport efficiency and reducing transport costs, which has become the development trend in the global marine transportation industry.

(2) Overview of the development of port industry

According to the 2020 Global Top 20 Container Port Forecast Report issued by the Chinese Academy of Sciences in September 2020, it is pointed out that in 2020, China will still own nearly half of the world’s top 20 container ports, and 7 of the top 10 container ports will come from China. Compared with that in 2009, the growth rate of port container throughput in China dropped to a large extent.

In 2020, under the influence of the epidemic and trade disputes, most of China’s ports saw a decline in container transportation demand, but the ports in Guangzhou, Qingdao, and Tianjin will continue to maintain positive growth. According to the results of the model calculation by Chinese Academy of Sciences, 9 of the world’s top 20 container ports are from China, and the development of China’s container transport remains the center and foundation for stable global development.

Table 4: Forecast of the world's top 20 container ports in 2020 (unit: ten thousand TEU)

Rank in 2020	Rank in 2019	Port	Nation	Container throughput (ten thousand TEU)
1	1	Shanghai Port	China	4,060–4,130
2	2	Port of Singapore	Singapore	3,600–3,620
3	3	Ningbo Zhoushan Port	China	2,630–2,660
4	4	Shenzhen Port	China	2,320–2,340
5	5	Guangzhou Port	China	2,290–2,320
6	6	Port of Busan	South Korea	2,210–2,250
7	7	Qingdao Port	China	2,110–2,140
8	8	Tianjin port	China	1,810–1,840
9	9	Hong Kong Port	China	1,730–1,170
10	10	Port of Rotterdam	Netherlands	1,380–1,420
11	11	Dubai Port Jebel Ali	UAE	1,340–1,360
12	12	Port Klang	Malaysia	1,280–1,330
13	13	Port of Antwerp	Belgium	1,240–1,280
14	14	Xiamen Port	China	1,070–1,090
15	15	Kaohsiung Port	China	980–1,000
16	18	Tanjong Palapas Port	Malaysia	900–910
17	17	Port of Hamburg	German	890–900
18	16	Port of Los Angeles	America	780–800
19	20	Laem Chabang	Thailand	760–780
20	21	Port of Long Beach	America	730–750

Source: Chinese Academy of Sciences; Foresight Industry Research Institute

@Foresight Economist APP

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APPENDIX III-3

① Throughput

Containers are a group of tools that can be loaded with or unpackaged goods for transportation, and are convenient for loading, unloading and handling with mechanical equipment. The biggest success of the container lies in the standardization of its products and the establishment of a complete set of transportation systems. A behemoth with a load of tens of tons can be standardized, and on this basis, a logistics system supporting ships, ports, routes, highways, transfer stations, bridges, tunnels, and multimodal transportation can be gradually realized globally.

Since the emergence of container transportation services in 1961, container transportation has become an increasingly important mode of transportation. At present, more than 60% of general cargo are transported through containers. With the rapid development of container transportation, the construction of container ports has also made great progress.

As an important indicator of the comprehensive strength and hub position of a port, container throughput reflects the level of economic development of a region to a large extent. From 2014 to 2020, the container throughput of China’s ports has increased year by year from 202.44 million TEU in 2014 to 264.3 million TEU in 2020, with a compound annual growth rate of 4.54%.

==> picture [376 x 173] intentionally omitted <==

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

Container throughput of China’s ports in 2014 to 2020
30,000 0.09
0.08
25,000
0.07
20,000 0.06
0.05
15,000
0.04
10,000 0.03
0.02
5,000
0.01
0 0
2014 2015 2016 2017 2018 2019 2020
Container throughput (0’000 TEU) 20,244 21,156 22,005 23,838 25,112 26,107 26,430
Growth rate 4.51% 4.01% 8.33% 5.34% 3.96% 1.24%
----- End of picture text -----

Source: Ministry of Transport, www.ibaogao.com

In the process of industrial transfer in the development of global economic integration, the development of China’s container ports has driven and promoted the upgrading of national industries, enabling a large number of manufacturing industries in developed countries to transfer to the Asia-Pacific region, especially China.

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Port container throughput is mainly distributed in coastal ports. In 2020, the container throughput of China’s coastal ports was 234.29 million TEU, accounting for 88.6% of the total port container throughput; the inland port container throughput was 30.01 million TEU, accounting for 11.4% of the total port container throughput.

==> picture [354 x 179] intentionally omitted <==

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

Distribution of container throughput of China's ports in 2014 to 2020
25,000
20,000
15,000
10,000
5,000
0
2014 2015 2016 2017 2018 2019 2020
Coastal ports (0’000 TEU) 18,178 18,907 19,590 21,099 22203 23092 23429
Inland river ports (0’000 TEU) 2,066 2,249 2,415 2,739 2,909 3,015 3,001
----- End of picture text -----

Source: Ministry of Transport, www.ibaogao.com

• ② Coastal ports

In 2020, the container throughput of coastal ports in Guangdong Province, Shanghai and Zhejiang was 60.44 million TEU, 43.5 million TEU and 32.19 million TEU, respectively, and the container throughput of coastal ports in Shandong and Tianjin was 31.91 million TEU and 18.35 million TEU, respectively.

==> picture [355 x 196] intentionally omitted <==

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

Distribution of container throughput of China’s coastal ports in 2020
Guangdong 6044
Shanghai 4350
Zhejiang 3219
Shandong 3191
Tianjin 1835
Fujian 1720
Liaoning 1311
Jiangsu 507
Guangxi 505
Hebei 447
Hainan 300
0 1000 2000 3000 4000 5000 6000 7000
Container throughput (0’000 TEU)
----- End of picture text -----

Source: Ministry of Transport, www.ibaogao.com

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In 2020, the top 5 coastal ports of China in terms of container throughput are located in Ningbo Zhoushan, Shenzhen, Guangzhou, Qingdao and Xiamen; the throughputs are 28.72 million TEU, 26.55 million TEU, 23.17 million TEU, 22.01 million TEU and 11.41 million TEU, respectively.

Top 25 coastal ports for container throughput of China in 2020

		Container	Container	Container
		throughput of
Rank	Port	**coastal **		port
		(0’000 TEU)
1	Ningbo Zhoushan		2,872
2	Shenzhen		2,655
3	Guangzhou		2,317
4	Qingdao		2,201
5	Xiamen		1,141
6	Yingkou			565
7	Dalian			511
8	Guangxi Beibu Gulf Port			505
9	Rizhao			486
10	Lianyungang			480
11	Fuzhou			352
12	Dongguan			342
13	Yantai			330
14	Tangshan			312
15	Quanzhou			226
16	Haikou			197
17	Jiaxing			196
18	Zhuhai			184
19	Jinzhou			164
20	Shantou			159
21	Zhongshan			138
22	Zhanjiang			123
23	Weihai			122
24	Yangpu			102
25	Wenzhou			101

Source: Ministry of Transport, www.ibaogao.com

③ Inland river ports

Data from the Competition Landscape Analysis and Development Trend Forecast of Container Port Industry of China in 2021-2027 released by Zhiyan Consulting Group shows that in 2020, the container throughput of inland river ports in Jiangsu Province, Guangdong Province and Hubei Province were 13.88 million TEU, 6.85 million TEU and 2.29 million TEU, respectively.

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==> picture [284 x 9] intentionally omitted <==

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

Distribution of container throughput of China’s inland river ports in 2020
----- End of picture text -----

==> picture [339 x 160] intentionally omitted <==

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

Jiangsu 1,388
Guangdong 685
Hubei 229
Anhui 194
Chongqing 115
Gaungxi 112
Zhejiang 108
Jiangxi 75
Hunan 67
Sichuan 27
0 200 400 600 800 1000 1200 1400 1600
Container throughput (0’000 TEU)
----- End of picture text -----

Source: Ministry of Transport, www.ibaogao.com

In 2020, the top 5 ports for container throughput among China’s inland river ports were ports in Suzhou, Foshan, Nanjing, Wuhan and Nantong; the throughputs were 6.29 million TEU, 4.05 million TEU, 3.02 million TEU, 1.96 million TEU, and 1.91 million TEU.

Top 25 ports among China’s inland river ports for container throughput in 2020

		Container	Container
		throughput of
Rank	Inland river port	coastal ports
		(0’000 TEU)
1	Suzhou		629
2	Foshan		405
3	Nanjing		302
4	Wuhan		196
5	Nantong		191
6	Wuhu		110
7	Jiangmen		92
8	Wuzhou		76
9	Jiujiang		61
10	Zhaoqing		58
11	Huzhou		56
12	Yangzhou		52
13	Jiangyin		51
14	Yueyang		51
15	Dongguan		38
16	Zhenjiang		37

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APPENDIX III-3

VALUATION REPORT C

		Container
		throughput of
Rank	Inland river port	coastal ports
		(0’000 TEU)
17	Hefei	37
18	Changzhou	35
19	Guigang	35
20	Taizhou	33
21	Inland river of Jiaxing	31
22	Huai’an	26
23	Wuhe	24
24	Maanshan	19
25	Huizhou	19

Source: Ministry of Transport, www.ibaogao.com

Prospects for the port industry: the integration of port resources is accelerating, and the profitability of the industry is expected to increase

• A. Steady progress in the integration of port resources to solve overcapacity and vicious competition

Almost the major listed port companies along the coast of China are within the framework of resource integration. The integration of port resources mainly involves the integration of natural resources, administrative resources, and management resources of the port. Natural resources include port land, anchorages, shorelines and other resources, while administrative resources involve the derivative industries and the government’s administrative management resources. The integration of port resources involves two main bodies, namely, government management agencies and market operation platforms. Taking Ningbo Port and Beibu Gulf Port as examples, corresponding unified government management agencies have been established to perform port management functions, avoid conflicts of interest of local governments, trigger competition between local governments, and form a unified market operation body at the market operation, so as avoid overcapacity and vicious competition, and become bigger and stronger.

As the integration of port resources advances steadily, resources between ports will be effectively used, low-price competition between ports and competition supplemented by other means will be greatly reduced, port externality costs can be reduced, which will help to further increase profitability and make larger and stronger the main body of the regional port. From the perspective of the profit model of the port industry, the port’s gross profit margin and net profit margin have dropped from 30% and 40% in 2007 to the current 15% and 20%. In the medium and long term, the profitability of the port industry is expected to be improved with the opening up and upgrading, the optimization of the competitive environment, and the improvement of internal quality and efficiency.

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The integration process of port resources in 2015 to 2019

The integration process of port resources in 2015 and 2019	The integration process of port resources in 2015 and 2019	The integration process of port resources in 2015 and 2019	The integration process of port resources in 2015 and 2019
Time	Event	Region	Listed companies involved
August 2015	Zhejiang Preparatory Construction of Marine Port Management Committee-Port resource integration is beginning to show its effectiveness	Yangtze River Delta	Port of Ningbo
October 2015	Guangxi Beibu Gulf Port Management Bureau was formally established	Southwest Region	Beibu Gulf Port
July 2016	Tangshan Port Group and Tianjin Port Group formally signed a contract in Tangshan to form a joint venture to establish Tangshan Container Terminal Co., Ltd.	Rim Bohai	Tianjin Port, Tangshan Port
December 2016	The Hainan Provincial People's Government issued the Hainan Provincial Port Resources Integration Plan	Hainan Island	Hainan Strait Shipping
End of 2016	The Liaoning Provincial Department of Communications was working on the preparation of the Liaoning coastal port integrationplan	Rim Bohai	Dalian Port, Yingkou Port, Jinzhou Port
February 2017	The Secretary of the Guangdong Provincial Party Committee investigated Guangzhou Nansha Port and pointed out that the integration of coastal and river port resources should be accelerated	Pearl River Delta	Yantian Port, Guangzhou Port, Zhuhai Port
March 2017	The preparation team of Jiangsu Port Group prepared for the establishment of Jiangsu Port Group Co., Ltd.	Yangtze River Delta	Nanjing Port, Lianyungang Port
April 2017	Chongqing Gangjiu, Yibin Port and SIPG jointly established a joint venture, Yibin Port International Container Terminal Co., Ltd.	Upper Yangtze River	Chongqing Gangjiu, SIPG
May 2017	Jiangsu Port Group Co., Ltd. was established in Nanjing	Yangtze River Delta	Nanjing Port, Lianyungang Port
June 2017	The Liaoning Provincial Government and China Merchants Group signed a port cooperation framework agreement on10 June 2017. The Liaoning Provincial Government supported China Merchants Group’s investment in Liaoning Port Group	North-east area	China Merchants Port, Yingkou Port, Dalian Port, Jinzhou Port
August 2017	The General Offce of the Ministry of Transport and the General Offces of the People's Governments of Tianjin and Hebei jointly issued the “Work Plan for Accelerating the Coordinated Development of Tianjin-Hebei Ports (2017-2020)”	Rim Bohai	Tianjin Port, QHD Port, Tangshan Port
November 2017	Shenzhen Chiwan suspended	Pearl River Delta	China Merchants Port, Shenzhen Chiwan
December 2018	Guangzhou Port Co., Ltd. acquired 52.51% of Zhongshan Port & Shipping	Pearl River Delta	Guangzhou Port
December 2018	Guangzhou Port Co., Ltd. acquired 52.51% of Zhongshan Port & Shipping	Pearl River Delta	Guangzhou Port
December 2018	Anhui Port and Shipping Group Company was established	Yangtze River Delta	Huaihe Energy
February 2019	SIPG and Zhejiang Seaport Group signed the "Xiaoyangshan Port Area Comprehensive Development Cooperation Agreement"	Yangtze River Delta	SIPG, Ningbo Port
August 2019	Shandong Port Group Co., Ltd. was formally established in Qingdao	Rim Bohai	Qingdao Port, Rizhao Port

Source: Public information

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APPENDIX III-3

• B. Accelerate the implementation of regional economic development strategies and achieve multi-polarization of growth

In December 2019, it was emphasized at the Central Economic Work Conference on accelerating the implementation of regional development strategies, improving regional policies and spatial layout, giving full play to the comparative advantages of various regions, building a new source of power for high-quality development across the country, and promoting the coordinated development of Beijing-Tianjin-Hebei and the integration of the Yangtze River Delta to build a world-class innovation platform and growth pole. We believe that regional growth in the Beijing-Tianjin-Hebei region, the Yangtze River Delta, Guangdong, Hong Kong, and Macao in 2020 is very likely to receive more institutional and policy support, and related targets will usher in policy incentives and investment opportunities catalyzed by themes.

• C. Further promote a new pattern of all-round opening up and accelerate the release of opening dividends

It is pointed out at the Central Economic Work Conference the need “to reduce the overall rate of tariffs, give full play to the role of the Pilot Free Trade Zone as a pilot for reform and opening up, promote the construction of Hainan Free Trade Port, and improve the ‘Belt and Road’ investment policy and service system.” The Central Economic Work Conference proposed for the first time “to reduce the general rate of tariffs”. At present, China’s arithmetic average tariff rate and weighted average tariff rate are 7.5% and 4%. We believe that China has entered a new round of opening-up cycle, and the breadth and depth of opening up is the most profound in history. Free trade has become the ultimate goal and specific practice of China’s opening up. Carriers such as free trade zones and free trade ports are expected to further enjoy the open dividend policy.

Distribution of Opening Pattern of Chinese Ports

==> picture [428 x 320] intentionally omitted <==

Source: Public information

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APPENDIX III-3

The Evolution of Free Trade Ports in China

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

The Evolution of Free Trade Ports in China
----- End of picture text -----

The Evolution of Free Trade Ports in China	The Evolution of Free Trade Ports in China
Time	Event
1983	In the “Approval on the Implementation Plan of Xiamen Special Economic Zone”, the State Council agreed to the gradual trial of certain policies of the free port in Xiamen
27 September 2013	The State Council approved the establishment of China (Shanghai) Pilot Free Trade Zone.
12 November 2013	The Third Plenary Session of the 18th Central Committee of the Communist Party of China decided to comprehensively deepen reforms on several major issues. On the basis of advancing the existing pilots, a number of qualifed places were selected to develop free trade park (port) areas.
20 April 2015	The State Council approved the establishment of 3 free trade zones, being China (Guangdong) Pilot Free Trade Zone, China (Tianjin) Pilot Free Trade Zone, and China (Fujian) Pilot Free Trade Zone.
31 March 2017	The State Council approved the establishment of 7 free trade zones including Liaoning, Zhejiang, Henan, Hubei, Chongqing, Sichuan, and Shaanxi.
March 2017	The State Council issued a plan for comprehensively deepening the reform and opening up of China (Shanghai) Pilot Free Trade Zone. It clearly proposed to establish free trade zones in special customs supervision areas such as the Yangshan Bonded Port Area and the Shanghai Pudong Airport Comprehensive Bonded Zone, to be benchmarked to the highest international level and implement higher standards of "frst-line liberalization" and "second-line safe and effcient control"of the trade supervision system. By 2020, taking the lead in establishing an institutional system that is consistent with international investment and trade rules, building a pilot free trade zone, into an international high-standard free trade park with free investment and trade, open and transparent rules, fair and effcient supervision, and convenient business environment.
May 2017	According to relevant personnel of the Shanghai Municipal Government, in accordance with the framework of the plan approved by the State Council, a free port construction plan will be formed before the end of this year.
July 2017	At the 39th meeting (expansion) of the Standing Committee of the 14th Shanghai Municipal People’s Congress, Ying Yong , the Deputy Secretary of the Shanghai Municipal Party Committee and Mayor, clearly emphasized the need to build its own trade port area. The free trade port area to be built in Shanghai is not a simply upgraded version of the bonded area or special customs supervision area, but is benchmarked to the highest international level, and is the frst to explore higher standards and higher-level economic management systems and mechanisms.
October 2017	The report of the 19th National Congress of the Communist Party of China proposed that the pilot free trade zone should be given greater reform autonomy to explore the construction of a free trade port.
October 2017	The Ministry of Commerce is working with Shanghai Municipal Government and relevant departments to study and formulate relevant construction plans for the Shanghai Free Trade Port Area.
November 2017	Wang Yang wrote an article in the People’s Daily: Promote the formation of a new pattern of comprehensive opening, optimize the layout of regional opening, and explore the construction of a free trade port.
13 April 2018	Xi Jinping, General Secretary of the Central Committee of the Communist Party of China, President of the State, and Chairman of the Central Military Commission announced that the Party Central Committee has decided to support the construction of a free trade pilot zone on the whole island of Hainan, and support Hainan to gradually explore and steadily promote the construction of a free trade port with Chinese characteristics.
14 April 2018	Guiding Opinions of the Central Committee of the Communist Party of China and the State Council on Supporting Hainan’s Comprehensive Deepening of Reform and Opening-up was issued.
24 May 2018	The State Council’s plan to further deepen the reform and opening up of the pilot free trade zones in Tianjin, Guangdong and Fujian.
16 October 2018	China (Hainan) Pilot Free Trade Zone overall plan was released.
25 October 2018	Xi Jinping made important instructions for the construction of the pilot free trade zone, emphasizing to continue to emancipate the mind, actively explore and strengthen overall planning, reform and innovation, and build the pilot free trade zone into a new highland for reform and opening up in the new era. Li Keqiang gave instructions and Han Zheng attended the ffth anniversary of the construction of the pilot free trade zone and gave a speech.
5 November 2018	The establishment of a new area in China Shanghai Pilot Free Trade Zone will encourage and support Shanghai’s bold and innovative explorations in advancing investment and trade liberalization and facilitation, accumulate more replicable and extendable experience for the country, and support the integrated development and growth of the Yangtze River Delta region, which will become national strategy.
November 2019	Hainan Province deliberated and approved the Decision of the “Hainan Provincial Committee of the Communist Party of China on Improving the Modernization of the Governance System and Governance Capability and Accelerating the Construction of Hainan Free Trade Port”.
December 2019	The Central Committee of the Communist Party of China and the State Council issued the “Outline of the Yangtze River Delta Regional Integration Development Plan” (full text).
December 2019	According to the Deputy Governor of Hainan Province, Hainan strives to gradually implement the free trade port policy and payment system starting in the second quarter of next year. The design of policies and institutional systems focuses on freedom of trade and investment to establish an internationally competitive special tax system compatible with high-level free trade ports, etc.

Source: Public information

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• (3) The future development trend of China’s port industry

• ① The port industry of China will continue to grow

The development of the port industry is closely related to the development of the national economy and domestic and foreign trade. Although China’s economic growth has slowed down in the short term, it will maintain sustained and rapid development in the long term. The process of industrialization and urbanization will continue to accelerate, which will directly drive the demand for bulk raw materials such as coal, petroleum, and ore, and drive the development of bulk cargo business in China’s ports, such as coal business. The unbalanced distribution of China’s coal resources and the economic growth in the southeast coastal areas will drive the demand for coal, which will drive coastal ports’ demand for the business of “West-to-East coal transportation” and “North-to-South coal transportation”.

• ② The degree of large-scale and deep-water berths in port terminals has been further improved

Large-scale ships have been one of the main trends in the development of the global shipping industry in recent years. Major shipping companies have adopted large ships to reduce operating costs and enhance competitiveness. In order to adapt to such development trend of global ship transportation, Chinese ports are developing in the direction of large-scale and deep-water, and continue to improve the capacity and modernization of hardware facilities such as waterways, wharfs, storage yards, cargo collection and distribution, and port machinery.

③ Port enterprises are developing into comprehensive logistics enterprises

Integrated logistics center is the basic feature of modern ports, and it is also the aim of modern port function expansion. In order to meet the requirements of economic, trade, shipping and logistics development, with the help of the development of port and shipping information technology, Chinese port companies have begun to develop from a single terminal operator to an integrated logistics operator, providing customers with multifaceted logistics value-added services, including cargo transportation, freight forwarding, cargo packaging, assembly, distribution, labeling, etc. At the same time, the scope of the port has been further expanded to include not only the port area, but also the logistics center area, in order to achieve a networked logistics transportation organization and drive the rapid development of coastal industry.

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APPENDIX III-3

• ④ Accelerate the promotion of port integration

The construction and operation of the port has the characteristics of large investment and long construction period, and it is also competitive. It is an industry with obvious scale benefits. In recent years, the expansion of China’s port production capacity has intensified the competition among ports in the same region, which has further increased the necessity of regional port integration. Under the promotion of transportation management departments and local governments, the port integration in China will further accelerate.

Establishing port alliances has become an inevitable choice for global port companies to cope with the current situation, and strengthening cooperation with ports along the Maritime Silk Road to achieve regional port interaction and promote the overall improvement of the comprehensive competitiveness of regional port clusters (belts) will become the main development trend of China’s port logistics industry in the future. The establishment of a port alliance is of great significance in the current market environment.

First, integrate resources and improve port service efficiency. The overlapping of the port hinterland, the unreasonable layout of wharf construction in various regions and the phenomenon of repeated construction often occur, while the port alliance can help port enterprises achieve economies of scale through the sharing and coordination of resources such as docks, storage yards, and warehouses, and improve resource utilization, optimize resource allocation and improve the service quality and international competitiveness of port enterprises.

Second, co-raising funds, optimizing the construction of port infrastructure, responding to super alliance, and meeting the needs of large ships. To meet the needs of shipping companies, relying on a single terminal is no longer enough, and the port alliance provides a new way for the development of port companies.

Third, promote information sharing and mutual benefit and win-win results. As far as the regional port group (belt) is concerned, the port alliance will promote the rapid transmission and exchange of information, realize information sharing in ship dispatching, forecasting marine weather, natural disaster information, and maintaining maritime safety, and save operation and management costs of port enterprises, thereby improving the quality of service.

Fourth, sharing technologies to enhance service competitiveness. Through alliance cooperation, the technological innovation of port enterprises, the establishment of industry technical standards, and complementary integration of technologies, the port can expand its own logistics service methods and realize diversified operations to improve service quality and reduce service costs, thereby increasing competitiveness.

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APPENDIX III-3

According to the different alliance objects, the model of port alliance can be divided into port-port alliance, port-shipping alliance, and port-area alliance.

First, port-port alliance

There are two main approaches to the port-port alliance: one is a local cooperation model, and the other is an alliance of ports in countries and regions along the Maritime Silk Road.

The local cooperation model is a cooperation model that is aimed at the overlapping of the port hinterland and generated from the unreasonable layout of terminal construction in various regions. It is mainly manifested in the coordinated development of port groups, through resource sharing and rational utilization, etc., to better optimize resource allocation, resulting in 1+ 1>2 synergistic effect. The alliance model of local cooperation is conducive to correctly and objectively handle the rational division of labor and functional positioning of the port; it is conducive to the principle of reasonable shoreline planning for deep water use and shallow water use; it is conducive to fair competition, complementary advantages, and maintains a good public relations among ports and achieve a win-win situation.

The alliance of ports of countries and regions along the Maritime Silk Road mainly refers to the extensive establishment of friendly ports, the development of multi-level, wide-ranging, and normalized communication, and strengthening of cooperation in port development and construction, logistics, investment and financing, and business operations, to achieve mutual benefit and win-win results. The establishment of the Port Alliance and the East Asia Port Alliance formed by China and Malaysia this year belong to the port alliances of countries and regions along the Maritime Silk Road.

Second, the port-shipping alliance

Throughput has always been one of the important indicators to measure the competitiveness of ports, and cooperation with shipping companies, especially large container shipping companies, is the fundamental guarantee for the steady growth of port throughput. There are many ways of cooperation under port-shipping alliance, and there are 3 more mainstream ones. One is to jointly develop the investment and operation of terminal and logistics infrastructure, share investment opportunities and information such as terminals and logistics, and expand the strategic cooperation between the two parties from domestic to international. The second is the transfer of shares by the port to allow liner companies to hold shares. For example, Maersk owns 30% shares of Tanjung Pelepas and also actively participates in the cooperation and operation of the fourth phase of Shanghai Waigaoqiao. The third is that the two sides focus on port logistics, comprehensive logistics and other aspects, actively explore, research, and carry out business cooperation projects, including ports and inland storage yards and warehouses, shipping agents and their extended services.

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Third, the port-area alliance

Coastal industrial parks and logistics parks are important positions for innovation of the modern port alliance. To promote the expansion of industrial cooperation content with ports along the route, it is necessary to jointly build industrial parks such as port industrial parks and logistics parks. In the park, the advantages of the alliance can be fully utilized, so that the logistics park and the coastal industrial park can form complementary advantages, promote the coastal industries with logistics, and drive a virtuous circle of port logistics with coastal industries.

• ⑤ Imported coal restriction policy highlights the strategic position of coal launching port

Although China is a large coal producer, it has been a net coal importer in recent years. However, since the implementation of the Interim Measures for the Quality Management of Commercial Coal in January 2015, the import of commercial coal such as Indonesian lignite and American high-sulfur coal has been strictly restricted. The decline in the demand for imported commercial coal will increase the demand for domestically produced commercial coal to a certain extent, and stimulate the growth of coal transportation from northern coal-producing areas to southern areas.

4. Major business introduction of the appraised unit

Yingkou Port Bulk Cargo Terminal Co., Ltd. was established on 26 August 2021 by Ying Kou Port Group Corporation Limited with physical assets. The major assets included in the new company are as follows:

• (1) The physical assets and land use rights included in the a scope of valuation are as follows:

Unit: RMB

		Original carrying	Net carrying
Name of item	Quantity	amount	amount
Fixed assets
Buildings	73,238.10	110,707,480.32	75,383,613.16
Structures	145	5,164,992,084.90	3,823,735,896.54
Machinery and equipment	735.00	950,582,770.39	502,780,178.24
Vehicles	8.00	3,834,000.00	191,700.00
Electronic equipment	170.00	989,903.93	113,465.50
Intangible assets
Land use rights	4,396,185.69	1,481,122,772.84	1,107,847,653.69
Total		7,712,229,012.38	5,510,052,507.13

– III-3-207 –

VALUATION REPORT C

APPENDIX III-3

• (2) The basic information of the terminal assets included in the scope of the valuation is as follows:

A total of 18 berths are included in the scope of the valuation, with a total length of 4,954.00 meters. The assets were self-built between 2008 and 2015.

					Front
		Structure	Berthing		water
**No. **	Berth name	and form	capacity	Length	**depth **	Quantity	Main usage
			(ton)	(m)	(m)
1	Port pool A 3# general	Gravity	7	255	-18	1	General bulk
	berth	caisson
2	Port pool A 4# general	Gravity	7	255	-18	1	General bulk
	berth	caisson
3	Port pool A 5# general	Gravity	7	255	-18	1	General bulk
	berth	caisson
4	Port pool A 6# general	Gravity	7	255	-18	1	General bulk
	berth	caisson
5	1#-2# refined oil and	High pile	5	470	-14.4	2	Refined oil
	liquid chemicals	pier
	terminals
6	18# terminal berth	High pile	30	452	-22	1	Ore
7	61# general berth	Gravity	7	260	-15.5	1	General bulk
		block
8	62# general berth	Gravity	7	260	-15.5	1	General bulk
		block
9	63# general berth	Gravity	7	260	-15.5	1	General bulk
		block
10	64# general berth	Gravity	7	310	-15.5	1	Steel and
		block					general
							cargo
11	65# general berth	Gravity	7	352	-15.5	1	Steel and
		block					general
							cargo
12	66# general berth	Gravity	7	260.1	-15.5	1	Steel and
		block					general
							cargo
13	67# general berth	Gravity	7	240.9	-15.5	1	Steel and
		block					general
							cargo
14	68#-71# general berths	Gravity	7	1,069	-15.5	4	Steel and
		block					general
							cargo
	Total			4,954.00		18

– III-3-208 –

VALUATION REPORT C

APPENDIX III-3

• (3) The specific ownership registration for the land occupied by the assets appraised is shown in the table below:

									Transfer
									area
									included in
				Date of	Nature of		Termination	Area	the scope of
No.	Title certificate no.	Parcel name	Location	acquisition	land	Land usage	date	recorded	valuation
1	Bayuquan Guo Yong	Port Pool A	In the Port	2009/12/16	Transfer	Land for	2059/12/15	486,764.80	126,764.80
	[2009] No. 268	2# Land	Area			transportation
2	Liao (2020) Yingkou	Port Pool A	In the Port	2020/11/11	Transfer	Land for	2059/6/9	384,618.90	384,538.25
	Bayuquan Real	1# Land	Area			transportation
	Estate No. 0032395
3	Liao (2020) Yingkou	Phase IV	In the Port	2020/11/10	Transfer	Land for	2059/12/15	535,388.00	484,941.15
	Bayuquan Real	Project 7#	Area			transportation
	Estate No. 0032260	Land
4	Liao (2018) Yingkou	Phase IV 4#	In the Port	2018/1/24	Transfer	Port terminal	2059/12/15	965,263.59	231,288.84
	Bayuquan Real	Plot	Area
	Estate No. 0029366
5	Liao (2020) Yingkou	Logistics	In the Port	2020/9/23	Transfer	Port terminal	2052/10/8	22,452.32	4,222.96
	Bayuquan Real	Parcel 1	Area
	Estate No. 0027169
6	Liao (2020) Yingkou	Logistics	In the Port	2020/9/23	Transfer	Port terminal	2052/10/8	413,338.24	14,697.35
	Bayuquan Real	Parcel 2	Area
	Estate No. 0027266
7	Bayuquan Guo Yong	Administrative	Outside the	2009/6/5	Transfer	Commercial and	2049/6/3	42,987.66	245.00
	[2009] No. 0127	Zone 1	Port Area			residential
8	Liao (2020) Yingkou	Administrative	Outside the	2020/9/23	Transfer	Commercial and	2079/6/3	29,016.61	100.00
	Bayuquan Real	Zone 2	Port Area			residential
	Estate No. 0027176
9	Bayuquan Guo Yong	Port Pool A	In the Port	2009/12/16	Transfer	Land for	2059/12/15	396,995.30	396,179.07
	[2009] No. 267	4# Land	Area			transportation
10	Liao (2020) Yingkou	Parcel 01#	In the Port	2007/12/18	Transfer	Port terminal	2049/12/25	43,979.50	43,979.50
	Bayuquan Real		Area
	Estate No. 0029352
11	Liao (2020) Yingkou	Parcel 02#	In the Port	2007/12/18	Transfer	Port terminal	2049/12/25	38,455.14	38,455.14
	Bayuquan Real		Area
	Estate No. 0027222
12	Bayuquan Guo Yong	Parcel 04#	In the Port	2007/12/18	Transfer	Port terminal	2049/12/25	20,049.55	20,049.55
	[2007] No. 0216		Area

– III-3-209 –

VALUATION REPORT C

APPENDIX III-3

									Transfer
									area
									included in
				Date of	Nature of		Termination	Area	the scope of
No.	Title certificate no.	Parcel name	Location	acquisition	land	Land usage	date	recorded	valuation
13	Liao (2020) Yingkou	Parcel 03#	In the Port	2007/12/18	Transfer	Port terminal	2049/12/25	199,427.59	199,427.59
	Bayuquan Real		Area
	Estate No. 0029375
14	Liao (2020) Yingkou	Parcel 07#	In the Port	2020/9/23	Transfer	Port terminal	2049/12/25	298,720.25	294,174.75
	Bayuquan Real		Area
	Estate No. 0027263
15	Bayuquan Guo Yong	Parcel 05#	In the Port	2007/12/18	Transfer	Port terminal	2049/12/25	17,452.00	17,452.00
	[2007] No. 0217		Area
16	Liao (2020) Yingkou	Parcel 06#-1	Haixingban	2010/12/21	Transfer	Industrial	2049/12/25	189,206.47	189,206.47
	Bayuquan Real
	Estate No. 0029388
17	Liao (2020) Yingkou	Parcel 06#-2	Haixingban	2005/9/27	Transfer	Industrial	2052/6/17	141,174.75	141,174.75
	Bayuquan Real
	Estate No. 0032270
18	Liao (2020) Yingkou	Parcel 08#	Haixingban	2010/12/21	Transfer	Industrial	2052/6/17	90,787.67	90,787.67
	Bayuquan Real
	Estate No. 0029354
19	Liao (2020) Yingkou	Parcel 09#-1	Haixingban	2010/12/21	Transfer	Industrial	2052/6/17	63,085.71	63,085.71
	Bayuquan Real
	Estate No. 0029361
20	Liao (2020) Yingkou	Parcel 09#-2	Haixingban	2006/7/18	Transfer	Port terminal	2052/6/17	87,327.49	87,327.49
	Bayuquan Real
	Estate No. 0027242
21	Liao (2020) Yingkou	Parcel 10#	Haixingban	2020/10/12	Transfer	Port terminal	2052/6/17	382,688.05	336,238.11
	Bayuquan Real
	Estate No. 0029391
22	Liao (2020) Yingkou	Parcel 11#	In the Port	2020/11/10	Transfer	Port terminal	2052/6/17	294,463.16	235,562.67
	Bayuquan Real		Area
	Estate No. 0032298
23	Liao (2020) Yingkou	Parcel 13#	Haixingban	2010/12/21	Transfer	Industrial	2052/6/17	112,879.91	112,879.91
	Bayuquan Real
	Estate No. 0027228

– III-3-210 –

VALUATION REPORT C

APPENDIX III-3

									Transfer
									area
									included in
				Date of	Nature of		Termination	Area	the scope of
No.	Title certificate no.	Parcel name	Location	acquisition	land	Land usage	date	recorded	valuation
24	Liao (2020) Yingkou	East of	Outside the	2005/9/27	Transfer	Warehousing	2046/11/27	29,923.93	29,923.93
	Bayuquan Real	Tianshan	Port Area
	Estate No. 0032267	Street,
		Bayuquan
		District
25	Liao (2020) Yingkou	Administrative	Outside the	2020/9/23	Transfer	Industrial	2059/6/9	256,523.19	44,350.38
	Bayuquan Real	Zone 11	Port Area
	Estate No. 0027202
26	Liao (2020) Yingkou	Phase III	In the Port	2020/12/7	Transfer	Port terminal	2052/7/17	1,153,176.60	797,872.65
	Bayuquan Real	project – 47	Area
	Estate No. 0035276
27	Yingkou Guo Yong	Yanchang	In the Port	2009/7/8	Transfer	Industrial	2054/5/19	159,787.30	11,260.00
	[2015] No. 5066	Village	Area
		Parcel
	Total							6,855,933.68	4,396,185.69

(IV) Valuation Calculation and Analysis Process

1. Selection of income model

• (1) Specific measurement method and model of selecting the income approach

The income approach in the valuation of enterprise value is a valuation method that capitalises or discounts the expected income to determine the value of the valuation target. The specific methods frequently used by the income approach include the dividend discount method and the discounted cash flow method.

This valuation adopts the FCFF discount model in the discounted cash flow method. The specific steps are to take the Weighted Average Cost of Capital (WACC) as the discount rate, discount and aggregate the expected Free Cash Flow of Firm (FCFF) for each year in the future periods to determine the value of operating assets, further add the value of surplus assets and non-operating assets to such value to acquire the value of total assets of the enterprise, and then deduct the value of interest-bearing debts to determine the value of the entire shareholders’ equity. The basic formula is:

Value of the entire shareholders’ equity = Value of operating assets – Value of interest-bearing debts + Value of non-operating assets – Value of non-operating liabilities + Value of surplus assets

– III-3-211 –

VALUATION REPORT C

APPENDIX III-3

• (2) Calculation formula and parameters

The value of the enterprise is calculated based on the audited simulated statements of the enterprise by adopting discounted cash flow. First, the enterprise discounted cash flow model is used to calculate the discounted value of the overall income of the enterprise, and by add the value of non-operating assets and surplus assets and subtracting interest-bearing liabilities and non-operating debt, the value of the shareholders’ equity of the assessed entity is arrived.

The specific formula is:

P= P’+A’-D’-D

==> picture [183 x 31] intentionally omitted <==

Wherein:

• Appraised value of all shareholders’ equity of the appraised entity

• The present value of the entity’s overall income

• Interest-bearing debt of the appraised entity

• Non-operating assets and surplus assets

– Non-operating debt

• Expected income for the i-th income period in the future (corporate free cash flow)

• i: Income period, i=0.17, 0.84, 1.84, ……,n

• r: Discount rate

2. Determination of forecast period and profit period

In the valuation, the forecast period is reasonably determined based on the comprehensive analysis of the entity’s income cost structure, capital structure, capital expenditure and risk level, in combination with macro policies, industry cycles and other factors that affect the entity’s entry into a stable period, assuming that the income period is unlimited. The forecast period is divided into two stages, the first stage is from 1 September 2021 to 31 December 2026; and the second stage is from 1 January 2027 until perpetual. Among them, it is assumed that the expected income in 2027 and beyond remains stable according to the income level in 2026.

– III-3-212 –

VALUATION REPORT C

APPENDIX III-3

3. Balance sheet and adjustments to income statement

As of the valuation benchmark date, the adjustments to the simulated balance sheet of Yingkou Port Bulk Cargo Terminal Co., Ltd. are as follows:

Unit: RMB0’000

		Recognition	January to
		of non-	August 2021
	January to	operating	after
Items	August 2021	assets	adjustment
Cash at bank and on hand	698.87		698.87
Accounts receivable	3,776.20		3,776.20
Prepayments	20.00		20.00
Other receivables	25.74		25.74
Inventories	36.03		36.03
Other current assets	36,716.99	-36,500.83	216.16
Total current assets	41,273.83		4,773.00
Fixed assets	440,220.49		440,220.49
Cost of fixed assets	623,110.62		623,110.62
Less: accumulated depreciation	182,439.37		182,439.37
Net value of fixed assets	440,671.25		440,671.25
Less: impairment of fixed assets	450.77		450.77
Net amount of fixed assets	440,220.49		440,220.49
Intangible assets	110,784.77		110,784.77
Total non-current assets	551,005.25		551,005.25
III. Total assets	592,279.08		555,778.25
Accounts payable	2,434.49		2,434.49
Advances from customers	2,022.45		2,022.45
Employee benefits payable	181.58		181.58
Taxes payable	61.06		61.06
Other payable	36,531.73	-36,500.83	30.90
Total current liabilities	41,231.31		4,730.49
Total owners’ equity	551,047.77		551,047.77

Note: The above adjustment is mainly to deduct the recognized non-operating assets, non-operating liabilities and interest-bearing liabilities in the statement. The calculation of additional working capital will exclude the above factors.

As of the valuation benchmark date, no adjustment has been made to the income statement of Yingkou Port Bulk Cargo Terminal Co., Ltd..

– III-3-213 –

VALUATION REPORT C

APPENDIX III-3

4. Determination of future income

• (1) The relevance of the production and operation model to the main body and caliber of income

Based on the business characteristics and operation mode of the appraised entity, the appraisers determined the entity’s future net profit through tits predicted future income, costs, period expenses, income tax and other variables, and finally determined its free cash flow based on its future development plans, asset purchase plans and fund management after predicting the corresponding capital expenditures and changes in working capital.

The forecast data of the valuation was provided by Yingkou Port Bulk Cargo Terminal Co., Ltd.. The appraisers conducted an independent and objective analysis of the forecast provided by it. The analysis work includes a full understanding of the basis and explanation of the preparation of the forecast, analysis of the supporting evidence of the forecast, the basic assumptions of the forecast, the accounting policy selected for the forecast, and the calculation method of the forecast data.

(2) Income forecast

Yingkou Port Bulk Cargo Terminal Co., Ltd. is mainly engaged in the loading and unloading business of bulk cargo, steel groceries and refined oil. Its historical annual operating conditions are as follows:

Unit: 0’000 tons

					January
					to August
**Business **	volume	2018	2019	2020	2021
A3		259.07	284.90	440.65	261.00
62		164.77	123.29	159.51	150.65
63		200.47	134.62	144.83	114.12
64		188.92	178.09	194.06	131.97
65		179.38	222.34	178.14	164.34
A5		–	–	–	8.00
61		154.92	142.84	181.97	95.15
66		198.03	140.06	233.63	109.33
67		121.81	105.87	124.17	102.41
68		204.74	144.36	175.55	157.10
69		282.68	223.84	217.21	99.30
70		293.53	213.16	250.37	198.87
A4\5\6		940.90	1,194.99	1,568.62	1,026.31
18		2,304.26	2,107.08	1,845.85	869.19
A1		65.02	78.98	110.92	48.85
A2		36.36	75.93	76.26	61.97
71		62.53	176.37	187.91	116.13
Total		5,657.39	5,546.72	6,089.63	3,714.68

– III-3-214 –

VALUATION REPORT C

APPENDIX III-3

Judging from the business volume of the previous years, the operation of each berth is stable.

The business volume of each berth is determined according to the business undertakings of the business department in future years, as follows:

Unit: 0’000 tons

		September to
		December
**Business **	volume	2021	2022	2023	2024	2025	2026
A3		181.00	456.00	461.00	463.00	485.00	485.00
62		31.35	185.00	195.00	195.00	200.00	220.00
63		47.88	165.00	170.00	175.00	178.00	180.00
64		58.03	195.00	200.00	200.00	210.00	215.00
65		131.86	270.00	275.00	280.00	285.00	290.00
A5		3.00	12.00	18.00	20.00	25.00	30.00
61		63.85	168.00	173.00	175.00	177.00	189.00
66		68.67	166.00	175.00	178.00	180.00	192.00
67		62.59	175.00	182.00	185.00	188.00	192.00
68		95.90	254.00	259.00	261.00	263.00	260.00
69		55.70	157.00	160.00	162.00	167.00	180.00
70		124.14	323.50	325.00	336.50	328.00	330.00
A4\5\6		676.69	1,500.00	1,530.00	1,560.60	1,591.81	1,591.81
18		649.40	1,617.72	1,621.69	1,625.65	1,629.62	1,633.58
A1		41.15	92.00	95.00	97.00	100.00	100.00
A2		26.03	90.00	92.00	95.00	98.00	98.00
71		63.87	185.00	190.00	192.00	200.00	205.00
Total		2,381.11	6,011.22	6,121.69	6,200.75	6,305.43	6,391.39

The annual revenue, cost and gross profit margin as confirmed by the auditor are as follows:

Unit: RMB0’000

		January to
Item	2020	August 2021
Operating income	184,738.16	118,633.57
Operating costs	135,548.65	86,685.41
Gross profit	49,189.51	31,948.16
Gross profit margin	26.63%	26.93%

– III-3-215 –

VALUATION REPORT C

APPENDIX III-3

According to the business volume and comprehensive unit price of each berth provided by the business department, it is determined that each berth may achieve the following income:

Unit: RMB0’000

		September to
		December
**Operating **	income	2021	2022	2023	2024	2025	2026
A3		5,017.30	12,768.00	12,908.00	12,964.00	13,580.00	13,580.00
62		1,919.64	7,945.92	8,394.91	8,374.18	8,632.02	9,551.68
63		2,373.88	6,777.85	6,993.52	7,198.94	7,365.46	7,445.52
64		2,581.96	8,161.89	8,381.24	8,378.23	8,840.14	9,008.39
65		5,983.25	10,599.50	10,793.29	10,971.35	11,242.01	11,404.57
A5		72.00	288.00	432.00	480.00	600.00	720.00
61		3,850.39	7,174.68	7,388.71	7,482.69	7,588.76	8,169.04
66		2,557.50	6,608.85	6,993.01	7,102.56	7,212.41	7,743.65
67		2,280.69	7,093.36	7,419.30	7,513.31	7,683.87	7,841.22
68		3,371.37	9,938.94	10,104.02	10,136.47	10,270.97	10,107.28
69		1,964.66	6,171.28	6,319.30	6,386.16	6,633.87	7,148.66
70		4,359.73	12,640.85	12,664.51	13,054.55	12,787.09	12,797.31
A4\5\6		18,021.54	48,000.00	48,960.00	49,939.20	50,937.98	50,937.98
18		18,832.70	42,060.72	42,163.81	42,266.90	42,369.99	42,473.08
A1		1,736.40	3,605.97	3,919.46	3,956.70	4,077.71	4,100.61
A2		1,098.42	3,527.58	3,795.68	3,875.12	3,996.15	4,018.60
71		3,043.61	7,206.82	7,371.12	7,406.29	7,741.93	7,877.97
Total		79,065.06	200,570.20	205,001.90	207,486.66	211,560.38	214,925.54

The berths of respective storage yards will generate a small amount of storage income. The forecast annual operating income is as follows:

Unit: RMB0’000

September to

December Item 2021 2022 2023 2024 2025 2026 Loading and unloading income 79,065.06 200,570.20 205,001.90 207,486.66 211,560.38 214,925.54 Storage income 2,338.18 8,241.33 8,450.02 8,667.42 8,876.11 8,876.11 Total 81,403.24 208,811.53 213,451.92 216,154.07 220,436.49 223,801.66

– III-3-216 –

VALUATION REPORT C

APPENDIX III-3

(2) Forecast of operating costs

Fuel, materials, utilities, outsourcing costs – machinery costs, port and terminal service fees, railway usage fees, etc. mainly change with the business volume. Based on historical data, as business volume increases, the unit variable cost showed a slight downward trend.

Labor costs: Staff wages are mainly composed of salaries and benefits, of which salaries are basically fixed and have a relatively large proportion. Therefore, the per capita annual salary has basically remained stable.

Fixed costs mainly include depreciation and amortization expenses, which account for a large proportion of operating costs.

Labor costs is calculated based on the future annual staff plan provided by the entity in the valuation; depreciation and amortization is calculated based on the entity’s existing fixed assets and new assets and its depreciation and amortization policy; for other operating costs, as there is little change in the annual expenditure, a slight increase will be considered in the future forecast.

The operating costs for the forecast years are as follows:

Unit: RMB0’000

	September to
	December
Item	2021	2022	2023	2024	2025	2026
Outsourcing costs
– machinery
costs	18,397.74	54,889.29	54,961.10	55,197.07	56,061.81	56,469.98
Port and terminal
service fees	4,626.47	10,071.29	10,216.87	10,238.24	10,408.12	10,485.60
Labor costs	15,198.78	30,741.63	32,751.07	33,718.49	35,471.60	37,097.39
Outsourcing costs
– operation
costs	2,233.17	5,411.19	5,468.62	5,473.82	5,471.95	5,459.96
Depreciation	8,210.20	24,581.92	24,881.27	25,019.56	25,232.08	25,458.69
Others	14,662.10	25,732.74	26,863.93	26,376.61	27,332.31	27,456.25
Total	63,328.47	151,428.06	155,142.86	156,023.78	159,977.87	162,427.87

– III-3-217 –

VALUATION REPORT C

APPENDIX III-3

(3) Taxes and surcharges

The items under the taxed and surcharges of the enterprise are urban construction tax, educational surcharge and local educational surcharge based on the difference of output tax minus input tax. The urban construction tax, educational surcharge and local educational surcharge are 7%, 3% and 2% of the value-added tax payable respectively. At the same time, the subject also accounts for taxes such as property tax and land use fees. The specific forecast is as follows:

Unit: RMB0’000

	September to
	December
Item	2021	2022	2023	2024	2025	2026
Urban
maintenance
and
construction tax	329.71	766.71	743.92	761.87	777.16	789.31
Educational
surcharges
(including local
educational
surcharges)	235.50	547.65	531.37	544.19	555.11	563.79
Property tax	26.67	80.00	80.00	80.00	80.00	80.00
Land use fees	766.67	2,300.00	2,300.00	2,300.00	2,300.00	2,300.00
Total	1,358.54	3,694.37	3,655.28	3,686.06	3,712.27	3,733.10

• (4) General and administrative expenses

General and administrative expenses are the labor costs of management personnel, property management expenses and others.

The forecast of annual general and administrative expenses is as follows:

RMB0’000

	September to
	December
Item	2021	2022	2023	2024	2025	2026
Employees’
remuneration	504.93	977.56	1,025.94	1,028.11	1,063.94	1,076.01
Property
management
fees	101.06	164.91	170.32	170.31	174.97	177.32
Others	1,811.01	3,814.36	3,851.74	3,867.81	3,897.16	4,054.90
Total	2,416.99	4,956.84	5,047.99	5,066.23	5,136.06	5,308.23

– III-3-218 –

VALUATION REPORT C

APPENDIX III-3

• (5) Finance costs

Finance costs are mainly interest expenses, income and handling fees.

As of the valuation benchmark date, the entity has no interest-bearing liabilities, and interest expenses are not considered in the valuation.

Interest income and handling fees will not be considered in the valuation due to the small amount.

• (6) Non-operating income and expenses

Non-operating income and expenses are non-recurring income and expenditure in the course of business operations.

The impact of other non-operating income and expenses have not been taken into consideration in the valuation.

(7) Income tax and net profit after tax

The total profit of the assessed entity in the future can be arrived based on the forecasts above. On this basis, the income tax and net profit of each future year are estimated according to the income tax rate implemented by the entity. The predicted profit and loss statement of the assessed entity in the future years are ultimately arrived based on the processes aforesaid.

Unit: RMB0’000

		September to
		December
Item		2021	2022	2023	2024	2025	2026
I.	Income from
	principal business	81,403.24	208,811.53	213,451.92	216,154.07	220,436.49	223,801.66
	Less: Operating
	costs	63,328.47	151,428.06	155,142.86	156,023.78	159,977.87	162,427.87
	Business taxes and
	surcharges	1,358.54	3,694.37	3,655.28	3,686.06	3,712.27	3,733.10
	General and
	administrative
	expenses	2,416.99	4,956.84	5,047.99	5,066.23	5,136.06	5,308.23
II.	Operating profits	14,299.24	48,732.27	49,605.78	51,378.01	51,610.28	52,332.46
III.	Total profits	14,299.24	48,732.27	49,605.78	51,378.01	51,610.28	52,332.46
	Less: Income tax
	expenses	3,571.52	12,183.07	12,401.44	12,844.50	12,902.57	13,083.11
IV.	Net profit	10,727.72	36,549.20	37,204.33	38,533.50	38,707.71	39,249.34

– III-3-219 –

VALUATION REPORT C

APPENDIX III-3

(8) Capital expenditure forecast

The capital expenditure of the entity is mainly the daily update and maintenance expenditure. The annual capital expenditure was determined based on the entity’s estimated fixed asset renewal plan, which is mainly used for upgrading production equipment and equipment in daily operation.

Unit: RMB0’000

Item		2022	2023	2024	2025	2026
Terminal	facilities	0	5,000.00	5,000.00	5,000.00	5,000.00
Total		0	5,000.00	5,000.00	5,000.00	5,000.00

Perpetual capital expenditures are calculated based on annuities, and the fixed assets and intangible assets annuities is RMB177,846,100.

(9) Stub forecast of working capital

In order to ensure the continuous development of the business, the entity should invest more operating capital in the future period. The factors affecting working capital mainly include the increase or decrease of operating cash, operating receivables and operating payables, of which operating receivables include accounts receivable, inventories and other receivables, etc.; operating payables include accounts payable, advance from customers, employee benefit payable, taxes payable and other payables, etc.; specific considerations for the impact of various types of payments on changes in working capital are as follows:

For operating cash, based on the use of corporate funds, forecasts are based on the entity’s one-month cash payment cost.

When considering the future scale of the operating receivables, since the accounts receivable are closely related to the income of the entity, the accounts receivable in the future is determined based on the predicted operating income and the turnover rate of the accounts receivable in previous years. For other receivables that are not closely related to the entity’s operating income, it is assumed that the current scale will continue to increase in the coming years. As inventories are closely related to operating costs and have a certain proportional relationship, the appraisers determine the prepayments for future years based on the predicted operating costs and with reference to the percentage of operating costs in previous years.

– III-3-220 –

APPENDIX III-3

VALUATION REPORT C

The future scale of the operating payables is determined based on the predicted operating income with reference to the proportion of historical annual receipts to operating income as the advances from customers are closely related to operating income and there is a certain proportional relationship. For accounts payable, because it is closely related to operating costs and has a certain proportional relationship, the appraisers determined the accounts payable in future years based on the predicted operating costs and with reference to the turnover rate of accounts payable in previous years. The employee benefits payable in future is determined based on the predicted total labor cost with reference to the ratio of employee benefits payable in previous years to the total labor cost. The taxes payable in future is determined based on the predicted taxes and fees, as well as the one-month balance of turnover tax and the one-quarter balance of corporate income tax. For other payables that are not closely related to the business cost of the business, it is assumed that the scale will maintain in the coming years.

Unit: RMB0’000

	September to
	December
Item	2021	2022	2023	2024	2025	2026	2027
Out-of-pocket
costs	62,465.32	148,167.80	147,898.79	151,809.37	152,659.08	156,677.24	156,677.24
Minimum
cash
maintained	15,616.33	12,347.32	12,324.90	12,650.78	12,721.59	13,056.44	13,056.44
Inventories	36.03	36.03	36.03	36.03	36.03	36.03	36.03
Receivables	4,120.30	4,120.30	4,301.04	4,396.62	4,452.28	4,540.49	4,540.49
Payables	6,804.05	6,804.05	6,791.70	6,971.28	7,010.30	7,194.81	7,194.81
Working
capital	12,968.62	9,699.60	9,870.28	10,112.16	10,199.61	10,438.15	10,438.15
Increase in
working
capital	13,111.36	9,842.35	170.68	241.88	87.45	238.54	–

– III-3-221 –

VALUATION REPORT C

APPENDIX III-3

• (10) Calculation of depreciation and amortization

According to the amortization policy and the updated expenditure plan for fixed assets in coming years of the entity, the depreciation and amortization in the valuation was calculated as follows:

Unit: RMB0’000

	September
	to December						Perpetual
	2021	2022	2023	2024	2025	2026	year
Electronic device	193,491	522,263	469,370	256,667	204,067	185,748
Real estate and
terminal yard	50,617,736	151,803,136	151,719,194	151,499,795	151,323,539	150,899,556
Mechanical
equipment Vehicles	19,533,719 467,745	58,454,464 1,171,321	58,334,331 1,088,500	56,815,964 1,088,500	55,840,523 1,084,699	55,405,842 894,482	143,978,111
Depreciation of
additional fixed
assets			3,333,333	6,666,667	10,000,000	13,333,333
Total depreciation	70,812,691	211,951,185	214,944,728	216,327,592	218,452,828	220,718,960
Amortization of
intangible assets	11,289,324	33,867,971	33,867,971	33,867,971	33,867,971	33,867,971	33,867,971
Total depreciation
and amortization	82,102,014	245,819,155	248,812,699	250,195,563	252,320,799	254,586,931	177,846,082

• (11) Determination of discount rate

① Model of selected discount rate

Discount rate is the rate used to discount the finite expected income in the future to the present value. It represents the yield under certain conditions and describes the level of yield derived from the asset. The free cash flow of the company was selected as the source of income for this valuation. The corresponding discount rate should be the weighted average return of investment. The commonly used WACC model was adopted by the appraisers to actually determine the discount rate.

WACC=Ke×E/(E+D)+Kd×D/(E+D)

Ke: Cost of equity capital

Kd: Cost of after-tax debts

– III-3-222 –

VALUATION REPORT C

APPENDIX III-3

• E: Market value of equity capital

• D: Market value of interest-bearing debts

Ke is determined by adopting CAPM model, namely Ke = Rf + � × (Rm-Rf) + Rs

Rf: Risk-free rate of return

Rm-Rf: Market risk premium

• �: Risk coefficient of the appraised entity

Rs: Risk rate of return specific to the entity

• ② The selection process of relevant parameters in the model

• A. Risk-free rate of return

The risk-free rate of return is based on the yield to maturity of the most recent 10-year treasury bond on the valuation benchmark date, and Rf is determined based on its compound interest average value. Through calculation, the risk-free rate of return is Rf = 2.85%.

B. Market risk premium

The market risk premium is the difference between the market rate of return on investment and the risk-free rate of return. Among them, the market rate of return on investment is based on the trading price indexes of shares on Shanghai Stock Exchange and Shenzhen Stock Exchange, and the annualized rate of return from 1992 to 2020 is selected, and the weighted average is calculated based on the market value of the Shanghai and Shenzhen stock exchanges at the end of 2020. The calculated market rate of return on investment is 9.84%, and the risk-free rate of return is taken from the geometric mean 3.29% of the yield to maturity of 10-year (from 2006 to 2020) Chinese government bonds released by Bloomberg, that is, the market risk premium is 6.55%.

– III-3-223 –

VALUATION REPORT C

APPENDIX III-3

C. Beta coefficient

� coefficient

We inquired about listed companies related to the Chinese securities market and port and terminal industries through Royal Flush terminal. The selection process of comparable companies is as follows:

The assets under valuation are located in Yingkou Port, which mainly engaged in bulk cargo and crude oil business. In the valuation, listed companies related to the port were selected from Royal Flush terminal, and the listed companies in the port segment were as follows:

				Remove
			Name of principal	financial
Stock code	Stock name	Principal business	products	leverage beta
600017.SH	Port of Rizhao	Loading and unloading	Bulk cargo loading	0.5029
		business, storage business	and unloading,
		and port management	storage, transit
		business
600018.SH	SIPG	Container loading and	Containers, bulk	0.6843
		unloading business, bulk	cargo, port
		cargo loading and unloading	logistics, port
		business, port service	services
		business and port logistics
		business
600190.SH	Jinzhou Port	Port management, port loading	Port and related	0.5062
		and unloading, water	services
		transportation auxiliary
		industry (except passenger
		and cargo transportation);
		road transportation; material
		storage, etc.
600279.SH	Chongqing	Loading and unloading,	Loading and	0.5117
	Gangjiu	integrated logistics,	unloading and
	Co., Ltd.	merchandise sales, etc.	passenger and
			freight agency
			business,
			integrated logistics
			business,
			commodity trading
			business, blasting
			construction
			business

– III-3-224 –

VALUATION REPORT C

APPENDIX III-3

				Remove
			Name of principal	financial
Stock code	Stock name	Principal business	products	leverage beta
600717.SH	Tianjin Port	Loading and unloading, sales,	Loading and	0.4897
		logistics and port	unloading, sales,
		comprehensive supporting	logistics, and ports
		services, etc.	integrated
			supporting
			services
601000.SH	Tangshan Port	Engages in comprehensive	Loading, unloading	0.7114
		port transportation business	and storage, port
			management,
			merchandise sales,
			ship
			transportation,
			logistics
601008.SH	Lianyungang	Port cargo loading and	Loading and	0.6162
	Port	unloading, storage and	unloading
		related port management	business, storage
		business	business, port
			management
			business, sales
			agency business,
			financial service
			business
601018.SH	Ningbo Port	Loading and unloading of	Container loading	0.7169
		containers, iron ore, crude	and unloading,
		oil, coal, liquefied oil	iron ore loading
		products, grain, mineral	and unloading,
		construction materials and	crude oil loading
		other cargo types and	and unloading,
		related businesses, and other	general cargo
		businesses such as	loading and
		integrated logistics, trade	unloading,
		sales, etc.	integrated logistics
601228.SH	Guangzhou Port	Loading and unloading and	Loading and	0.5666
		warehousing of containers,	unloading and
		coal, grain, steel,	related business,
		automobiles, metal ore, oil	logistics auxiliary
		and other goods, and	business, port
		providing comprehensive	auxiliary business,
		services such as logistics,	trading business
		trade, finance, tugboats, and
		tally.

– III-3-225 –

VALUATION REPORT C

APPENDIX III-3

				Remove
			Name of principal	financial
Stock code	Stock name	Principal business	products	leverage beta
601298.SH	Qingdao Port	Provision of loading and	Container loading	0.8149
		unloading and supporting	and unloading and
		services for various types of	supporting
		cargo such as containers,	services, metal
		metal ore, coal and crude	ore, coal and other
		oil, logistics and port value-	cargo handling
		added services, and port	and supporting
		supporting services	services, liquid
			bulk handling and
			supporting
			services, logistics
			and port value-
			added services,
			port supporting
			services-
			engineering, labor
			and port
			machinery
			construction
601326.SH	Qinghaungdao	Provision of highly integrated	Loading and	0.6254
	Port	comprehensive port services	unloading, storage,
			warehousing,
			transportation and
			logistics services
601880.SH	Liaoning Port	International and domestic	Oil products,	0.6790
		cargo loading and	containers,
		unloading, transportation,	groceries, ore,
		transit, warehousing and	bulk grains,
		other port business and	passenger
		logistics services;	transportation,
		international and domestic	value-added
		routes ship tally business,	services,
		tugboat business; port	automobiles
		logistics and port
		information technology
		consulting services; crude
		oil storage (to the extent of
		applications for bonded
		qualification and port
		storage), refined oil storage
		(to the extent of
		applications for bonded
		qualification and port
		storage); import and export
		of goods and technologies

– III-3-226 –

VALUATION REPORT C

APPENDIX III-3

				Remove
			Name of principal	financial
Stock code	Stock name	Principal business	products	leverage beta
000088.SZ	Yantian Port	Port investment, development	Expressway toll	0.8222
		and operation; cargo loading	collection, port
		and unloading and	cargo loading and
		transportation business,	unloading and
		terminal construction project	transportation,
		management, toll highway	customs
		operation management,	supervision
		export cargo supervision	warehouse, and
		warehouse and other port	other port
		supporting warehouse	supporting
		logistics operations.	warehousing
			operations
000507.SZ	Zhuhai Port	Investment in ports and	Terminal operation	0.5045
		supporting facilities	services, logistics
		projects; investment in	trade, import and
		power projects; investment	export trade,
		in glass fiber product	logistics services,
		projects;investment in	property
		beverages projects;	management,
		investment in chemical raw	integrated energy,
		materials and chemical	beverages and
		products project.	food
000582.SZ	Beibu Gulf Port	Engaged in investment and	Loading, unloading	0.6313
		construction of ports, docks,	and storage,
		loading and unloading,	commodity trading
		warehousing management	and sales, tugboat
		and services, transportation	and port
		(general freight), mechanical	management,
		processing and repair,	logistics agency
		foreign shipping agency,	business, tally
		logistics agency services,	business
		domestic and international
		commercial trade, etc.
000905.SZ	Xiamen Port	Port-based integrated logistics	Terminal business,	0.7024
		business, as well as the	building material
		loading and unloading of	sales, agency-
		bulk cargo and domestic	related business,
		trade containers, stacking,	tugboat assistance
		storage, warehousing,	business,
		berthing and unberthing of	transportation
		ships, trade, building	labor service,
		materials, etc.	trading business,
			tally business,
			logistics extension
			service

– III-3-227 –

VALUATION REPORT C

APPENDIX III-3

				Remove
			Name of principal	financial
Stock code	Stock name	Principal business	products	leverage beta
001872.SZ	CM Terminals	Port loading and unloading,	Port loading,	0.4530
		warehousing, transportation	unloading and
		and other supporting	warehousing
		services for containers and	business, port
		bulk cargo	supporting
			business, bonded
			logistics business
002040.SZ	Nanjing Port	The principal business is to	Loading and	0.6875
		provide loading and	unloading and port
		unloading and warehousing	management,
		services for crude oil,	storage, unpacking
		refined oil, liquid chemical	and refurbishment,
		products and general cargo,	port insurance,
		providing docks for ships,	leasing, power
		and providing logistics	transfer and
		services in the port area.	provision of labor
			services

The average �U coefficient of the above listed companies is 0.6237.

Since Yingkou Port Bulk Cargo Terminal Co., Ltd. has no interestbearing liabilities, the capital structure is 0, and the �L coefficient of the appraised entity is 0.6237.

In summary, the appraised entity initially determined the expected return on equity for the valuation, that is, the cost of equity capital is 9.00%.

• ② WACC model is adopted to calculate the weighted average cost of capital

According to the formula under WACC model: WACC = ke × [E ÷ (D + E)] + kd × (1-t) × [D ÷ (D + E)]

– III-3-228 –

VALUATION REPORT C

APPENDIX III-3

After analyzing the assets and liabilities of the entity, on the valuation benchmark date, there is no interest-bearing debt of the appraised entity, so the value of kd is 0. The weighted average cost of capital of the entity calculated based on WACC model is as follows:

	September to
	December
Item	2021 to �
Income tax rate	25%
Lending rate
�coefficient without financial leverage	0.6237
�’ coefficient with financial leverage	0.6237
Risk premium	6.55%
Risk-free rate of return	2.85%
Scale adjustment factor	2%
Ke	9.00%
Kd	0.00%
We	100.00%
Wd	0.00%
WACC(CAPM)	9.00%

(V) Calculation Process and Conclusion of the Appraised Value

1. The value of operating assets

Free cash flow = net profit after tax + depreciation and amortization-capital expenditure-additional amount of working capital + interest * (1- income tax rate)

Based on the foregoing forecasts and estimates, after determining the free cash flow and discount rate of the entity, the appraisers calculate the discounted value of the overall income of the entity based on DCF model.

2. Analysis on operating assets, non-operating assets and liabilities and surplus assets

Operating assets mainly refer to assets held by an enterprise for profit-making purposes and that are actually profitable; assets that do not contribute to the formation of the profitability of the enterprise or even weaken the profitability of the enterprise are non-operating assets. Surplus assets can be considered as assets which are not necessary for the continuing operation of the business, such as cash surplus, marketable securities and other assets that are not directly related to the projection on cash flow of revenue. Based on the definition and after the appraisers’ investigation and analysis and confirmation with the entity, the appraised entity has the following non-operating assets and liabilities.

– III-3-229 –

VALUATION REPORT C

APPENDIX III-3

After verification, within the scope of the valuation, the non-operating assets of Yingkou Port Bulk Cargo Terminal Co., Ltd. are the value-added tax (input tax) generated by asset appreciation in other current assets in an amount of RMB365,008,300, and non-operating liabilities are the value-added tax generated by capital increase payable to Ying Kou Port Group Corporation Limited among the other payables in an amount of RMB365,008,300.

3. Estimation of final value

Unit: RMB0’000

	September
	to December
Item	2021	2022	2023	2024	2025	2026	Perpetuity
Net profit	10,727.72	36,549.20	37,204.33	38,533.50	38,707.71	39,249.34	48,256.76
Add: Depreciation
and
amortization of
fixed assets	8,210.20	24,581.92	24,881.27	25,019.56	25,232.08	25,458.69	17,784.61
Borrowing
interest	–	–	–	–	–	–	–
Less: Capital
expenditure	–	–	5,000.00	5,000.00	5,000.00	5,000.00	17,784.61
Increase in
working capital	9,842.35	170.68	241.88	87.45	238.54	–	–
Free cash flow	9,095.58	60,960.44	56,843.72	58,465.61	58,701.26	59,708.03	48,256.76
Discount
coefficient	0.9855	0.9302	0.8534	0.7829	0.7183	0.6590	7.3222
Discounted
corporate free
cash flow	8,963.69	56,705.40	48,510.43	45,772.73	42,165.11	39,347.59	353,345.65
Accumulation of
discounted
enterprise free
cash flow	594,810.60	–	–	–	–	–	–
Less: Present
value of
interest-bearing
debts	–
Add: Surplus
assets	–
Add: Non-
operating assets	36,500.83
Less: Non-
operating
liabilities	36,500.83
Appraised value
of shareholders’
equity of the
entity	594,810.60

– III-3-230 –

VALUATION REPORT C

APPENDIX III-3

4. Valuation Conclusion

Appraised value of shareholders’ equity = The present value of the overall income + Non-operating assets – Non-operating liabilities + Surplus assets – Interest-bearing liabilities

= 594,810.60+36,500.83-36,500.83+0.00-0.00

• = 594,810.60 (RMB0’000)

V. VALUATION CONCLUSION AND ANALYSIS

(I) Valuation conclusion by asset-based approach

On the Valuation Benchmark Date, being 31 August 2021, the carrying amounts of assets, liabilities and shareholders’ equity of Yingkou Port Bulk Cargo Terminal Co., Ltd. (營口港散貨碼頭有限公司) are RMB5,922,790,800, RMB412,313,100 and RMB5,510,477,700, respectively. The appraised value of total assets, liabilities and shareholders’ equity are RMB7,711,756,800, RMB412,313,100 and RMB7,299,443,700, respectively. The valuation of the total assets represents an increase of RMB1,788,966,000 and an appreciation rate of 30.20% as compared to the carrying amount; the valuation of the shareholders’ equity represents an increase of RMB1,788,966,000 and an appreciation rate of 32.46% as compared to the carrying amount. Details of the valuation results are set out in the below table:

Asset Valuation Results Summary Table

Valuation benchmark date: 31 August 2021

Appraised entity: Yingkou Port Bulk Cargo Terminal Co., Ltd. (營口港散貨碼頭有 限公司)

Unit: RMB0’000

				Appreciation
		Carrying	Appraised	or	Appreciation
	Items	amount	value	depreciation	rate
		A	B	**C=B-A **	D=C/A×100%
1	Current assets	41,273.83	41,273.83	0.00	0.00%
2	Non-current assets	551,005.25	729,901.85	178,896.60	32.47%
3	Fixed assets	440,220.49	460,039.98	19,819.50	4.50%
4	Intangible assets	110,784.77	269,861.87	159,077.10	143.59%
5	Total assets	592,279.08	771,175.68	178,896.60	30.20%
6	Current liabilities	41,231.31	41,231.31	0.00	0.00%
7	Total liabilities	41,231.31	41,231.31	0.00	0.00%
8	Net assets (owners’	551,047.77	729,944.37	178,896.60	32.46%
	equity)

– III-3-231 –

VALUATION REPORT C

APPENDIX III-3

• (II) Difference of the appraised value and the carrying amount and reasons thereof

1. Comparison of valuation conclusions and carrying amount

Unit: RMB

		Net appraised		Appreciation
Name of item	Net book value	value	Appreciation	Rate
Buildings	75,383,613.16	104,249,100.00	28,865,486.84	38.29%
Structures and other
auxiliary equipment	3,823,735,896.54	3,976,887,892.00	153,151,995.46	4.01%
Fixed assets –
Machinery and
equipment	502,780,178.24	518,265,849.00	15,485,670.76	3.08%
Fixed assets –
vehicles	191,700.00	852,708.00	661,008.00	344.81%
Fixed assets –
electronic devices	113,465.50	144,282.00	30,816.50	27.16%
Land use rights	1,107,847,653.69	2,698,618,671.87	1,590,771,018.19	143.59%
Total appreciation			1,788,965,995.75

2. The analysis of the reasons for the appreciation or depreciation of various assets is as follows:

• (1) The major reasons for the appreciation of buildings are as follows:

  • 1) The cost of materials and labor has increased in recent years;

  • 2) In the valuation, the impairment provision is appraised as zero, so the net value increases.

• (2) The changes in the comparison between the appraisal value and carrying amount of equipment under fixed assets are mainly reflected in the following aspects:

  • 1) For machinery and equipment, the reason for the appreciation of the original value is that the purchase price of the equipment on the benchmark date has increased slightly, and the machinery and equipment within the scope of valuation are accounted for at the contract price, and the preliminary fee and capital cost are calculated under the relevant policies during the valuation, which leads to an increase in the original value. The increase in the original value, and the shorter depreciation life of the machinery and equipment than the economic service life used in the valuation lead to an increase in the net value.

– III-3-232 –

VALUATION REPORT C

APPENDIX III-3

• 2) Regarding vehicles, due to the fierce competition in the auto market and the rapid replacement rate, the price of vehicles is reduced year by year, which leads to impairment of the original value o;. The shorter depreciation life of the vehicles than the economic life used in the valuation leads to the appreciation in net appraised value.

• 3) Regarding electronic device, firstly, the market price of electronic device changes rapidly due to the rapid replacement of the electronic device market, and some electronic devices have been purchased for a long time. As the valuation was based on the market method, which leads to impairment of original value. As the depreciation period of the electronic device is shorter than the economic service life used in the valuation, the net appraised value of the electronic device is increased.

• (3) The major reason for the appreciation of land use rights is that the market price of the land in valuation has risen, resulting in a certain percentage of appreciation in the appraised value.

(III) Valuation conclusion by income approach

On the Valuation Benchmark Date, being 31 August 2021, the appraised value of all equity interests of shareholders of Yingkou Port Bulk Cargo Terminal Co., Ltd. (營口港 散貨碼頭有限公司) is RMB5,948,106,000, which represents an increase of RMB437,628,400 and an appreciation rate of 7.94% as compared to the carrying amount of RMB5,510,477,700 of all shareholders’ equity.

• (IV) Differences between the two valuation results on all shareholders’ equity interests are set out in the table below:

Unit: RMB0’000

	All	All
	shareholders’	shareholders’
	equity	equity
	Carrying	Appraised		Appreciation
Valuation Approach	amount	Value	Appreciation	Rate
Asset-based approach Income approach	551,047.77	729,944.37 594,810.60	178,896.60 43,762.84	32.46% 7.94%
Differences between the approaches		135,133.77

– III-3-233 –

VALUATION REPORT C

APPENDIX III-3

The main reason for the difference is that the asset-based approach considers all the identifiable assets of the enterprise, which is the embodiment of the market value of all the identifiable assets of the enterprise on the valuation benchmark date; the key indicators for the valuation of the income approach are the future income and the discount rate. When the indicators are forecasted, various factors such as domestic and foreign macroeconomic conditions, industry conditions, enterprise development plans, and operating capabilities have been comprehensively considered, resulting in differences in the appraised values of the two valuation approaches.

(IV) Selection of valuation conclusion

The asset-based approach is to appraise the asset value through appraising value of each single asset taking into consideration the relevant liabilities from the perspective of asset replacement. The income approach is to appraise the asset value through capitalisation or discount of the expected revenue of the valuation target from the perspective of making judgment on the profitability of assets.

The income approach reflects the profitability of a company’s assets, and the profitability is affected by many factors. There are uncertainties in the future domestic and international macro markets, industry conditions, and enterprise development. (1) Affected by domestic and international objective factors, there are major gaps in the economic development of the regions where various domestic port companies are located. In addition, the intensification of international economic and trade frictions in recent years and the stagnant development of the upstream and downstream industries of port companies have a certain impact on the operation and development of domestic port enterprises. (2) The appraised entity is affected by the macro and micro factors in the industry and the entity’s own operation and management, and there is a certain degree of uncertainty in the realization of future earnings.

Considering that the investment in production facilities of enterprises accounts for a large proportion of total assets, the adoption of the asset-based approach can more steadily reflect the value of the enterprise. Therefore, the valuation conclusion of the asset-based approach is the final valuation conclusion.

The valuation conclusion is that the appraised value of all shareholders’ equity of Yingkou Port Bulk Cargo Terminal Co., Ltd. (營口港散貨碼頭有限公司) on the Valuation Benchmark Date is RMB7,299,443,700 (SEVEN THOUSAND TWO HUNDRED NINETY-NINE MILLION FOUR HUNDRED FORTY-THREE THOUSAND SEVEN HUNDRED, rounding to the nearest one hundred).

The validity period of the valuation conclusion is one year, starting from 31 August 2021 (valuation benchmark date) to 30 August 2022.

– III-3-234 –

PROPERTY VALUATION REPORT

APPENDIX IV

The following is the full text of the letter, summary of valuations and valuation report prepared for the purpose of incorporation into this circular received from C&W, an independent valuer, in connection with the valuation as at 31 August 2021 of the market values of the property interests of by Ying Kou Port Group Corporation Limited (營口港務集團有限 公司) and its subsidiaries.

==> picture [119 x 39] intentionally omitted <==

27/F, One Island East Taikoo Place 18 Westlands Road Quarry Bay Hong Kong

29 November 2021 The Board of Directors Liaoning Port Co., Ltd. 31st Floor, Tower Two Times Square 1 Matheson Street Causeway Bay Hong Kong

Dear Sirs,

Re: Portfolio Property Valuations in Yingkou, Liaoning Province, the People’s Republic of China

INSTRUCTIONS, PURPOSE & VALUATION DATE

In accordance with the instructions of Liaoning Port Co., Ltd. (the “Company”) for us to carry out valuation of the market values of the Properties (the “Properties”) held by Ying Kou Port Group Corporation Limited (營口港務集團有限公司) (“YKP”) and its subsidiaries (together the “YKP Group”) in the People’s Republic of China (the “PRC”), we confirm that we have carried out an inspection, made relevant enquiries and obtained such further information as we considered necessary for the purpose of providing you with our opinion of the market values in existing state of the Properties as at 31 August 2021 (the “Valuation Date”).

DEFINITION OF MARKET VALUE

Our valuation of each of the Properties represents its Market Value which in accordance with the HKIS Valuation Standards 2020 published by the Hong Kong Institute of Surveyors (“HKIS”) is defined as “the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion”.

– IV-1 –

PROPERTY VALUATION REPORT

APPENDIX IV

VALUATION BASIS & ASSUMPTIONS

In valuing the Property, we have complied with the requirements set out in Chapter 5 and Practice Note 12 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and the HKIS Valuation Standards 2020.

Our valuations of the Properties exclude an estimated price inflated or deflated by special terms or circumstances such as atypical financing, sale and leaseback arrangement, special considerations or concessions granted by anyone associated with the sale, or any element of value available only to a specific owner or purchaser.

In the course of our valuations of the Properties held in the PRC, with reference to the PRC legal opinion of the Company’s PRC legal adviser, King & Wood Mallesons (金杜律師 事務所) dated 29 November 2021 (the “PRC Legal Opinion”), we have prepared our valuations on the basis that transferable land use rights in respect of the Properties for their respective specific term at nominal annual land use fee has been granted and that any premium payable has already been fully paid. We have relied on the information and advice given by YKP and the PRC Legal Opinion, regarding the titles to the Properties and the interests in the Properties. According to the PRC legal opinion, there are certain legal flaws of the Properties (details refer to the summary of valuations and valuation report) owned by the YKP Group and are being utilized in business activities without obstacles or any government notice of fine or dismantle. In valuing the Properties with good title, we have prepared our valuations on the basis that the owners have enforceable title to the Properties and have free and uninterrupted rights to use, occupy or assign the Properties with good title for the whole of the unexpired terms as granted. In valuing the Properties with legal flaws, we have prepared our valuations on the basis that the owners have free and uninterrupted rights to use, occupy or assign the Properties with legal flaws for the whole of the unexpired terms as granted.

No allowance has been made in our valuations for any charges, pledges or amounts owing on the Properties nor any expenses or taxation that may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the Properties are free from encumbrances, restrictions and outgoings of any onerous nature that could affect their values.

METHOD OF VALUATION

In valuing the Properties which are held by the YKP Group for owneroccupation/investment in the PRC, in the absence of relevant market data to arrive at the market value of the Properties by means of market-based evidence, we have valued the Properties by Depreciated Replacement Cost Method which requires a valuation of the market value of the land in its existing use by Direct Comparison Approach by making reference to comparable sales evidences as available on the market; and an estimate of the new replacement cost of the buildings and structures, from which deductions are made to allow for the age, condition and functional obsolescence. The reported market values by Depreciated Replacement Cost Approach only apply to the whole of the Properties as a unique interest, and no piecemeal transaction of the Properties are assumed.

– IV-2 –

PROPERTY VALUATION REPORT

APPENDIX IV

For ease of reference, Depreciated Replacement Cost Approach comprises the valuations of (a) the buildings and structures; and (b) the land erected thereon. The buildings and structures are valued by Cost Method whist the land are valued by Market Comparison Method.

SOURCE OF INFORMATION

We have relied to a very considerable extent on the information given by YKP and the PRC Legal Opinion. We have accepted advice given to us on such matters as planning approvals or statutory notices, easements, tenure, identification of Properties, completion date of building, particulars of occupancy, construction cost, site and floor areas and all other relevant matters.

Dimension, measurements and areas included in this valuation report are based on the information provided to us and are therefore only approximations. We have no reason to doubt the truth and accuracy of the information provided to us by the YKP Group, which is material to the valuations. We were also advised that no material facts have been omitted from the information supplied.

We would point out that the copies of documents provided to us are mainly compiled in Chinese characters, and the transliteration into English represents our understanding of the contents. We would therefore advise the Company to make reference to the original Chinese edition of the documents and consult its legal adviser regarding the legality and interpretation of these documents.

TITLE INVESTIGATION

We have been provided by the YKP Group with copies or extracts of documents in relation to the title to the Properties. However, we have not inspected the original documents to verify ownership or to ascertain any amendments which may not appear on the copies handed to us. We are also unable to ascertain the title of the Properties in the PRC and we have therefore relied on the advice given by the PRC Legal Opinion and the YKP Group.

SITE INSPECTION

Our Dalian Office valuers, Wendy Hou and Guangyi Zhang (China Real Estate Appraisers), had inspected the exterior and, wherever possible, the interior of the Properties in September 2021. However, no structural survey has been made, but in the course of our inspection, we did not note any serious defects. We are not, however, able to report that the Properties are free from rot, infestation or any other structural defects. No test was carried out to any of the services. Moreover, we have not carried out investigation on site to determine the suitability of the soil conditions and the services etc. for any future development. Our valuations are prepared on the assumption that these aspects are satisfactory and that no extraordinary costs or delays will be incurred during the construction period.

– IV-3 –

PROPERTY VALUATION REPORT

APPENDIX IV

Unless otherwise stated, we have not been able to carry out detailed on-site measurements to verify the site and floor areas of the Properties. We have assumed that the areas shown on the copies of documents handed to us are correct.

CURRENCY

Unless otherwise stated, all monetary amounts stated in our valuations are in Renminbi (“RMB”), which is the official currency of the PRC.

MARKET VOLATILITY

The recent outbreak of the Novel Coronavirus (COVID-19) has brought high volatility to global financial markets and uncertainty to the property market. It is expected that property values will be very sensitive to development of the pandemic and changes in the financial markets. The extents of impact on different sectors of the market are different and the time for marketing and negotiating sale of a property will be longer than normal. There will be less certainty as to how long a valuation may sustain and property prices may fluctuate rapidly and materially over a short period of time. Our valuations of the Properties are valid only at the Valuation Date and any subsequent changes in market conditions as well as the resulting impacts on property values after the Valuation Date cannot be taken into account. If any party intends to make reference to our valuations when entering into any transaction, he must bear in mind the high market volatility during this period of time and that property values may or may not have changed since the Valuation Date.

We attach herewith the summary of valuations and valuation report.

Yours faithfully, For and on behalf of

Cushman & Wakefield Limited

Philip C Y Tsang

Registered Professional Surveyor (General Practice) Registered China Real Estate Appraiser

MSc, MHKIS

Director

Note: Mr. Philip C Y Tsang is Registered Professional Surveyor who has over 28 years’ experience in the valuation of properties in the PRC.

– IV-4 –

PROPERTY VALUATION REPORT

APPENDIX IV

SUMMARY OF VALUATIONS

The summary of valuations and all material information of the major parameters in quantifying the valuations of each of the Properties are listed below. In the course of our valuations, we have relied on the information provided by YKP and the Company’s PRC legal advisers regarding the title to the Properties.

The valuation report of each of the Properties, which complied with the requirements set out in Chapter 5 and Practice Note 12 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and HKIS Valuation Standards 2020, are attached.

			Market value in
			existing state
		Market value in	attributable to the
	No. of	existing state as at	YKP Group as at
	Properties	31 August 2021	31 August 2021
		(RMB Million)	(RMB Million)
Properties held by the YKP Group for
investment/owner-occupation in the PRC	6	6,635.07	6,635.07

– IV-5 –

PROPERTY VALUATION REPORT

APPENDIX IV

			Market	Value in	Existing	State	Attributable	to the Group	as at	31 August	2021	(RMB	Million)	5,396.09
									Interest	Attributable	to the Group		(%)	100%
						Market	Value in	Existing	State as at	31 August	2021	(RMB	Million)	5,396.09
Group I – Properties held by the YKP Group for investment in the PRC (Property No. 1 & 5)	Group II – Properties held by the YKP Group for owner-occupation in the PRC (Property No. 2, 3, 4 & 6)	Summary of Valuations as at 31 August 2021					Gross Floor Gross Floor	Area of Area of	Site Area Buildings Buildings	Expiry Date of with Title with Title without Title Year of	No. Property Holding Entity City Land Use Land Use term Type of Property Certificate Certificate Certificate Built		sq m sq m sq m	1 Xinggang Avenue, YKP Yingkou Transportation, Due to expiry in The Property comprises fixed 4,396,185.69 66,857.00 869.08 1998 to	Haixing Subdistrict, Port Terminal, 2046 to 2079 assets (warehouse, stacking 2016	Bayuquan District, Industrial, respectively. area facilities and port	Yingkou, Warehouse Land facilities) and 4,396,185.69 sq	Liaoning, m land use rights. The port	the PRC facilities include 15 berths (1#	to 2# refined oil and liquid	中國 chemicals terminals, Port pool	遼寧省 A3# general berth, 18#	營口市 terminal berth, and 61# to 71#	鮁魚圈區 general berths). The berthing	海星街道 capacity is between 50,000 and	興港大道 300,000 tons. The warehouse	are steel warehouse, pump	buildings, substations and other	ancillary facilities. The	stacking area facilities are	road, fence (圍牆) and stacking	areas behind the berth (泊位後	方堆場) etc.

– IV-6 –

PROPERTY VALUATION REPORT

APPENDIX IV

Market	Value in	Existing	State	Attributable	to the Group	as at	31 August	2021	(RMB	Million)	2.49													1,131.34
						Interest	Attributable	to the Group		(%)	100%													100%
			Market	Value in	Existing	State as at	31 August	2021	(RMB	Million)	2.49													1,131.34
				Gross Floor	Area of	Buildings	without Title Year of	Certificate Built		sq m	– 1990 to	2018												– 2008 to	2021
				Gross Floor	Area of	Buildings	with Title	Certificate		sq m	2,272.07													1,912.69
						Site Area	with Title	Certificate		sq m	N/A													N/A
								Type of Property			The Property comprises fixed	assets-port facilities. The port	facilities include substation (變	電所), water supply regulating	station (供水調節站) and office	building of power station (供電	站辦公樓) etc.							The Property comprises fixed	assets (stacking area facilities	and port facilities). The port	facilities include 3 berths (Port	pool A4# to A6# general	berths), including berths, the	right of using sea area and	supporting facilities. The	berthing capacity is 70,000	tons. The stacking area	facilities are road and stacking	areas behind the berth (泊位後	方堆場).
							Expiry Date of	Land Use term			N/A													N/A
								Land Use			N/A													N/A
								City			Yingkou													Yingkou
								Holding Entity			YKP (As advised by	YKP, the ultimate	beneficiary of the	Property is 營口港務	集團有限公司水電分公	司, a wholly owned	subsidiary of YKP.)							YKP (As advised by	YKP, the ultimate	beneficiary of the	Property is 營口港務	集團有限公司第二分公	司, a wholly owned	subsidiary of YKP.)
								Property			No. 1 Shugang Road,	Haixing subdistrict,	Bayuquan District,	Yingkou,	Liaoning,	the PRC		中國	遼寧省	營口市	鮁魚圈區	海星街道	一號疏港路	Beier Road,	Haixing subdistrict,	Bayuquan District,	Yingkou,	Liaoning,	the PRC		中國	遼寧省	營口市	鮁魚圈區	海星街道	北二路
								No.			2													3

– IV-7 –

PROPERTY VALUATION REPORT

APPENDIX IV

Market	Value in	Existing	State	Attributable	to the Group	as at	31 August	2021	(RMB	Million)	1.26													60.71
						Interest	Attributable	to the Group		(%)	100%													100%
			Market	Value in	Existing	State as at	31 August	2021	(RMB	Million)	1.26													60.71
				Gross Floor	Area of	Buildings	without Title Year of	Certificate Built		sq m	– 1990 to	2008												235.17 2011 to	2020
				Gross Floor	Area of	Buildings	with Title	Certificate		sq m	1,273.46													–
						Site Area	with Title	Certificate		sq m	N/A													N/A
								Type of Property			The Property comprises fixed	assets (office building and two	steel plate frames (彩鋼板框	架)).										The Property comprises: fixed	assets (ancillary facilities,	buildings and port facilities)	and 3 sea area use rights. The	ancillary facilities are	gatehouse, seine and other	ancillary facilities. The fixed	assets-Building is maintenance	building. The port facilities	include the cable, transformer,	switchgear and high pole	lights.
							Expiry Date of	Land Use term			N/A													N/A
								Land Use			N/A													N/A
								City			Yingkou													Yingkou
								Holding Entity			YKP (As advised by	YKP, the ultimate	beneficiary of the	Property is 營口港務	集團有限公司輪駁分公	司, a wholly owned	subsidiary of YKP.)							YKP
								Property			No. 1 Shugang Road,	Haixing subdistrict,	Bayuquan District,	Yingkou,	Liaoning,	the PRC		中國	遼寧省	營口市	鮁魚圈區	海星街道	一號疏港路	Xinggang Avenue,	Haixing Subdistrict,	Bayuquan District,	Yingkou,	Liaoning,	the PRC		中國	遼寧省	營口市	鮁魚圈區	海星街道	興港大道
								No.			4													5

– IV-8 –

PROPERTY VALUATION REPORT

APPENDIX IV

Market	Value in	Existing	State	Attributable	to the Group	as at	31 August	2021	(RMB	Million)	43.18													6,635.07
						Interest	Attributable	to the Group		(%)	100%
			Market	Value in	Existing	State as at	31 August	2021	(RMB	Million)	43.18													6,635.07
				Gross Floor	Area of	Buildings	without Title Year of	Certificate Built		sq m	95.76 2000 to	2021												1,200.01
				Gross Floor	Area of	Buildings	with Title	Certificate		sq m	–													72,315.22
						Site Area	with Title	Certificate		sq m	N/A													4,396,185.69
								Type of Property			The Property comprises fixed	assets-port facilities. The port	facilities include substation (變	電所), pool (水池), well (水井)	and fence (圍牆) etc.									Grand Total:
							Expiry Date of	Land Use term			N/A
								Land Use			N/A
								City			Yingkou
								Holding Entity			YKP (As advised by	YKP, the ultimate	beneficiary of the	Property is 營口港務	集團有限公司水電分公	司, a wholly owned	subsidiary of YKP.)
								Property			No. 1 Shugang Road,	Haixing subdistrict,	Bayuquan District,	Yingkou,	Liaoning,	the PRC		中國	遼寧省	營口市	鮁魚圈區	海星街道	一號疏港路
								No.			6

– IV-9 –

PROPERTY VALUATION REPORT

APPENDIX IV

For reference purpose, the Market Value in existing state (Without Title Certificate) of the Properties are summarised as below:

Property No. 1. 2. 3. 4. 5. 6. Grand Total:	Market Value in existing state as at 31 August 2021 (Total RMB Million) a 5,396.09 2.49 1,131.34 1.26 60.71 43.18 6,635.07	Market Value in existing state as at 31 August 2021 (Without Title Certificate RMB Million) b* 1.24 – – – 0.34 0.09 1.67	Market Value in existing state as at 31 August 2021 (Total excluding without Title Certificate* portion RMB Million) a-b 5,394.85 2.49 1,131.34 1.26 60.37 43.09
			6,633.40

• Refer to Real Estate Title Certificate (for buildings).

The gross floor area without Real Estate Title Certificate (for buildings) are stated in the Summary of Valuations and Valuation Report.

Buildings without Real Estate Title Certificate

For the buildings that has not yet obtained the Real Estate Title Certificate, the YKP Group has not yet completed the registration of real estate in accordance with the “Property Law” and the establishment of the property rights has not been completed. The Company’s PRC legal advisers have advised that there are no substantial obstacles. It has not been found that the relevant government department or any other person has told the YKP Group to stop using or demolish the above-mentioned buildings.

– IV-10 –

PROPERTY VALUATION REPORT

APPENDIX IV

VALUATION REPORT

Group I – Properties held by the YKP Group for investment in the PRC

Property

Description and tenure

Market Value in Particulars of existing state as at occupancy 31 August 2021

Xinggang Avenue, The Property comprises fixed Haixing assets (warehouse, stacking area Subdistrict, facilities and port facilities) and Bayuquan District, 4,396,185.69 sq m land use Yingkou, rights. The port facilities include Liaoning, 15 berths (1# to 2# refined oil the PRC and liquid chemicals terminals, Port pool A3# general berth, 18# 中國 terminal berth, and 61# to 71# 遼寧省 general berths). The berthing 營口市 capacity is between 50,000 and 鮁魚圈區 300,000 tons. The warehouse are 海星街道 steel warehouse, pump buildings, 興港大道 substations and other ancillary facilities. The stacking area facilities are road, fence (圍牆) and stacking areas behind the berth (泊位後方堆場) etc.

1. Xinggang Avenue, Haixing Subdistrict, Bayuquan District, Yingkou, Liaoning, the PRC

According to the information provided by YKP, the total gross floor area of the buildings is 67,726.08 sq m, with a total gross floor area of 66,857 sq m have Real Estate Title Certificate 不動產權證; a total gross floor area of 869.08 sq m have no Real Estate Title Certificate.

As at the Valuation RMB5,396,090,000 Date, the Property (RENMINBI FIVE was subject to a BILLION THREE connected party HUNDRED NINETY tenancy, with a SIX MILLION subsidiary of the NINETY Company, due to THOUSAND) expire on 31 December 2021 as (100% interest port facilities. attributable to the YKP Group: RMB5,396,090,000 (RENMINBI FIVE BILLION THREE HUNDRED NINETY SIX MILLION NINETY THOUSAND) (Please see Note 1 below.)

The Property was constructed mainly during 1998 to 2016.

Please refer to the note for the title status of the Property.

Notes:

• (1) The Market Value in existing state of the Property is as below:

		Market value
		in existing
		state as at
Property	Area	31 August 2021	Remarks
	sq m	RMB
Fixed assets-Warehouse	Gross Floor Area 42,931.48	57,420,000	Please see Note 4
固定資產-倉庫			& 5 below.
Fixed assets- Stacking area	Gross Floor Area 14,291.65	596,010,000	Please see Note 4
facilities			& 5 below.
固定資產-堆場及場地
Fixed assets-Port facilities	Gross Floor Area 10,502.95	2,541,080,000	Please see Note
固定資產-港口碼頭設施			2, 4 & 5 below.
Fixed assets sub-total	N/A	3,194,510,000
固定資產小計:
Land use rights	Site Area	2,201,580,000	Please see Note 3
土地使用權	4,396,185.69		& 5 below.
Grand Total	N/A	5,396,090,000
總計:
	100% interest attributable	5,396,090,000
	to the YKP Group:

– IV-11 –

PROPERTY VALUATION REPORT

APPENDIX IV

• (2) According to the information provided by YKP, there are 15 berths, namely Oil Berths #A01 to #A02, Berths #A3, #18, and Berths #61 to #71 as follows:

					Construction
			Front		time/
			water	Berthing	renovation
No.	Berth name	Length	depth	capacity	time	Structure type	Major use
		(m)	(m)	(Tonne)
1	1# refined oil	235	14.40	50,000	2008	High pile	Refined oil
	and liquid
	chemicals
	terminals
2	2# refined oil	235	14.40	50,000	2008	High pile	Refined oil
	and liquid
	chemicals
	terminals
3	Port pool A	255	18.00	70,000	2008	Gravity caisson	General bulk
	3# general						cargo
	berth
4	18# terminal	452	24.50	300,000	2010	High pile beam	Ore
	berth
5	61# general	260	15.50	70,000	2008	Gravity block	General bulk
	berth						cargo
6	62# general	260	15.50	70,000	2008	Gravity block	General bulk
	berth						cargo
7	63# general	260	15.50	70,000	2008	Gravity block	General bulk
	berth						cargo
8	64# general	310	15.50	70,000	2010	Gravity block	Steel and
	berth						general
							cargo
9	65# general	253	15.50	70,000	2011	Gravity block	Steel and
	berth						general
							cargo
10	66# general	260	15.50	70,000	2011	Gravity block	Steel and
	berth						general
							cargo
11	67# general	241	15.50	70,000	2011	Gravity block	Steel and
	berth						general
							cargo
12	68# general	267	15.50	70,000	2012	Gravity block	Steel and
	berth						general
							cargo
13	69# general	267	15.50	70,000	2012	Gravity block	Steel and
	berth						general
							cargo
14	70# general	267	15.50	70,000	2013	Gravity block	Steel and
	berth						general
							cargo
15	71# general	268	15.50	70,000	2014	Gravity block	Steel and
	berth						general
							cargo

– IV-12 –

PROPERTY VALUATION REPORT

APPENDIX IV

• (3) According to the following Real Estate Title Certificate/Certificate for the Use of State-owned Land, the land use rights of the Property has been granted to YKP as follows:

No. Certificate No. 1 Bayuquan Guo Yong [2009] No. 268 2 Liao (2021) Yingkou Bayuquan Real Estate No. 0017667 3 Liao (2020) Yingkou Bayuquan Real Estate No. 0032260 4 Liao (2021) Yingkou Bayuquan Real Estate No. 0023194 5 Bayuquan Guo Yong [2015] No.5066 6 Liao (2021) Yingkou Bayuquan Real Estate No. 0023976 7 Liao (2021) Yingkou Bayuquan Real Estate No. 0023974 8 Liao (2021) Yingkou Bayuquan Real Estate No. 0017770 9 Liao (2020) Yingkou Bayuquan Real Estate No. 0029352 10 Liao (2020) Yingkou Bayuquan Real Estate No. 0027222 11 Bayuquan Guo Yong [2007] No. 0216 12 Liao (2020) Yingkou Bayuquan Real Estate No. 0029375 13 Liao (2020) Yingkou Bayuquan Real Estate No. 0027263 14 Bayuquan Guo Yong [2007] No. 0217 15 Liao (2020) Yingkou Bayuquan Real Estate No. 0029388 16 Liao (2020) Yingkou Bayuquan Real Estate No. 0032270 17 Liao (2020) Yingkou Bayuquan Real Estate No. 0029354 18 Liao (2020) Yingkou Bayuquan Real Estate No. 0029361 19 Liao (2020) Yingkou Bayuquan Real Estate No. 0027242 20 Liao (2021) Yingkou Bayuquan Real Estate No. 0023260 21 Liao (2021) Yingkou Bayuquan Real Estate No. 0024333 22 Liao (2020) Yingkou Bayuquan Real Estate No. 0027228 23 Liao (2020) Yingkou Bayuquan Real Estate No. 0032267 24 Liao (2021) Yingkou Bayuquan Real Estate No. 0024334 25 Liao (2021) Yingkou Bayuquan Real Estate No. 0023048 26 Liao (2021) Yingkou Bayuquan Real Estate No. 0023975 27 Liao (2021) Yingkou Bayuquan Real Estate No. 0017661 Grant Total:	Site Area (sq m) 486,764.80 384,618.90 535,388.00 965,263.59 159,787.30 42,987.66 29,016.61 396,995.30 43,979.50 38,455.14 20,049.55 199,427.59 298,720.25 17,452.00 189,206.47 141,174.75 90,787.67 63,085.71 87,327.49 382,688.05 287,271.91 112,879.91 29,923.93 253,188.19 1,153,176.60 212,592.32 413,338.24 7,035,547.43	In which Site Area Use Expiry Date (sq m) 126,764.80 Land for transportation 2059/12/15 384,538.25 Land for transportation 2059/6/9 484,941.15 Land for transportation 2059/12/15 231,288.84 Port Terminal 2056/10/15 11,260.00 Industrial 2054/5/19 245.00 Commercial and residential 2079/6/3 100.00 Commercial and residential 2079/6/3 396,179.07 Land for transportation 2059/12/15 43,979.50 Port Terminal 2049/12/25 38,455.14 Port Terminal 2049/12/25 20,049.55 Port Terminal 2049/12/25 199,427.59 Port Terminal 2049/12/25 294,174.75 Port Terminal 2049/12/25 17,452.00 Port Terminal 2049/12/25 189,206.47 Industrial 2052/6/17 141,174.75 Industrial 2052/6/17 90,787.67 Industrial 2052/6/17 63,085.71 Industrial 2052/6/17 87,327.49 Port Terminal 2052/6/17 336,238.11 Port Terminal 2052/6/17 235,562.67 Port Terminal 2052/6/17 112,879.91 Industrial 2052/6/17 29,923.93 Warehousing 2046/11/27 44,350.38 Industrial 2059/6/9 797,872.65 Port Terminal 2052/7/17 4,222.96 Port Terminal 2052/10/8 14,697.35 Port Terminal 2052/10/8 4,396,185.69

• As advised by YKP, site area of 4,396,185.69 sq m is the scope of valuation.

– IV-13 –

PROPERTY VALUATION REPORT

APPENDIX IV

• (4) According to the Real Estate Title Certificate 不動產權證, the buildings, with a total gross floor area of 66,857 sq m, are held by YKP.

• (5) According to the PRC legal opinion:

• (i) YKP has 15 berths but YKP has not registered real estate for these 15 berths. In the port industry, it is common for berths to have not registered for ownership. YKP has not handled real estate registration for the 15 berths, and has not completed the establishment of property rights. Except for the actual possession, use and profit, YKP has not obtained full ownership of the 15 berths;

• (ii) YKP has obtained Real Estate Title Certificate/Certificate for the Use of State-owned Land and is the legal right holder of the 27 state-owned land. Within the period of land use term as indicated, YKP is legally entitled to possess, use, lease, mortgage and transfer such state-owned land in accordance with the law. The 27 state-owned land are not subject to any mortgage or other rights restrictions;

• (iii) YKP has obtained Real Estate Title Certificate of the buildings with a total 66,857 sq m. YKP has legal ownership of such buildings. The buildings are not subject to any mortgage or other rights restrictions; and

• (iv) YKP has not obtained Real Estate Title Certificate of the buildings with a total 869.08 sq m. YKP is engaged in business activities using the above-mentioned self-owned buildings that has not obtained the real estate certificate, and there are no substantial obstacles. It has not been found that the relevant government department or any other person has told YKP to stop using or demolish the above-mentioned buildings; YKP has not yet completed the registration of real estate in accordance with the “Property Law” and the establishment of the property rights has not been completed.

• (6) The status of the title and grant of major approvals and licences in accordance with the information provided by YKP and the opinion of the PRC legal:

Real Estate Title Certificate (for land)/Certificate for the Use of State-owned Land Real Estate Title Certificate (for buildings)

Yes Yes (Partly)

– IV-14 –

PROPERTY VALUATION REPORT

APPENDIX IV

VALUATION REPORT

Group II – Properties held by the YKP Group for owner-occupation in the PRC

Property Description and tenure

The Property comprises fixed assets-port facilities. The port facilities include substation(變電 所), water supply regulating station (供水調節站) and office building of power station (供電站 辦公樓) etc.

1. No. 1 Shugang Road, Haixing subdistrict, Bayuquan District, Yingkou, Liaoning, the PRC

中國 遼寧省 According to the information 營口市 provided by YKP, the total gross 鮁魚圈區 floor area of the buildings is 海星街道 2,272.07 sq m, which with all 一號疏港路 total gross floor area have Real Estate Title Certificate 不動產權 證.

The Property was constructed mainly during 1990 to 2018. Please refer to the note for the title status of the Property.

Market Value in Particulars of existing state as at occupancy 31 August 2021 As at the Valuation RMB2,490,000 Date, the Property (RENMINBI TWO was owner-occupied MILLION FOUR as port facilities. HUNDRED NINETY THOUSAND) As advised by YKP, the ultimate beneficiary of the Property is 營口港務 集團有限公司水電分 公司, a wholly owned subsidiary of YKP. (100% interest attributable to the Group: RMB2,490,000 (RENMINBI TWO MILLION FOUR HUNDRED NINETY THOUSAND) (Please see Note 1 below.)

Notes:

• (1) The Market Value in existing state of the Property is as below:

		Market value
		in existing
		state as at
Property	Area	31 August 2021	Remarks
	sq m	RMB
Fixed assets-Port facilities	Gross Floor Area 2,272.07	2,490,000	Please see Note 2
固定資產-港口碼頭設施			& 3 below.
Fixed assets sub-total	N/A	2,490,000
固定資產小計:
Grand Total	N/A	2,490,000
總計:
	100% interest attributable	2,490,000
	to the YKP Group:

• (2) According to the Real Estate Title Certificate 不動產權證, the buildings, with a total gross floor area of 2,272.07 sq m, are held by YKP.

– IV-15 –

PROPERTY VALUATION REPORT

APPENDIX IV

• (3) According to the PRC legal opinion:

• (i) The Target Company has obtained Real Estate Title Certificate of the buildings with a total 2,272.07 sq m. The Target Company has legal ownership of such buildings. The buildings are not subject to any mortgage or other rights restrictions.

• (4) The status of the title and grant of major approvals and licences in accordance with the information provided by the Target Company and the opinion of the PRC legal:

Real Estate Title Certificate (for buildings)

Yes

– IV-16 –

PROPERTY VALUATION REPORT

APPENDIX IV

VALUATION REPORT

Group II – Properties held by the YKP Group for owner-occupation in the PRC

Property

Description and tenure

Market Value in Particulars of existing state as at occupancy 31 August 2021

1. Beier Road, Haixing subdistrict, Bayuquan District, Yingkou, Liaoning, the PRC

Beier Road, The Property comprises fixed Haixing assets (stacking area facilities subdistrict, and port facilities). The port Bayuquan District, facilities include 3 berths (Port Yingkou, Liaoning, pool A4# to A6# general berths), the PRC including berths, the right of using sea area and supporting 中國 facilities. The berthing capacity 遼寧省 is 70,000 tons. The stacking area 營口市 facilities are road and stacking 鮁魚圈區 areas behind the berth (泊位後方 海星街道 堆場). 北二路

According to the information provided by YKP, the total gross floor area of the buildings is 1,912.69 sq m which have Real Estate Title Certificate 不動產權 證.

The Property was constructed mainly during 2008 to 2021.

Please refer to the note for the title status of the Property.

As at the Valuation RMB1,131,340,000 Date, the Property (RENMINBI ONE was owner-occupied BILLION ONE as port facilities. HUNDRED THIRTY ONE MILLION THREE HUNDRED FORTY THOUSAND)

As advised by YKP, the ultimate beneficiary of the Property is 營口港務 集團有限公司第二分 公司, a wholly owned subsidiary of YKP.

(100% interest attributable to the Group: RMB1,131,340,000 (RENMINBI ONE BILLION ONE HUNDRED THIRTY ONE MILLION THREE HUNDRED FORTY THOUSAND)

(Please see Note 1 below.)

Notes:

• (1) The Market Value in existing state of the Property is as below:

Market value in existing state as at Property Area 31 August 2021 Remarks sq m RMB Fixed assets-Stacking area N/A 222,330,000 Please see Note 4 facilities below. 固定資產-堆場及場地 Fixed assets-Port facilities Gross Floor Area 1,912.69 909,010,000 Please see Note 固定資產-港口碼頭設施 2, 3 & 4 below. Fixed assets sub-total N/A 1,131,340,000 固定資產小計: Grand Total N/A 1,131,340,000 總計: 100% interest attributable 1,131,340,000 to the YKP Group:

– IV-17 –

PROPERTY VALUATION REPORT

APPENDIX IV

• (2) According to the information provided by YKP, there are 3 berths, namely Berths #A4 to #A6 as follows:

					Construction
			Front		time/
			water	Berthing	renovation
No.	Berth Name	Length	depth	capacity	time	Structure type	Major use
		(m)	(m)	(Tonne)
1	Port pool A	255	18	70,000	2008	Gravity caisson	General bulk
	4# general						cargo
	berth
2	Port pool A	278	18	70,000	2009	Gravity caisson	General bulk
	5# general						cargo
	berth
3	Port pool A	255	18	70,000	2009	Gravity caisson	General bulk
	6# general						cargo
	berth

• (3) According to the Real Estate Title Certificate 不動產權證, the buildings, with a total gross floor area of 1,912.69 sq m, are held by YKP.

• (4) According to the PRC legal opinion:

• (i) YKP has 3 berths but YKP has not registered real estate for these 3 berths. In the port industry, it is common for berths to have not registered for ownership. YKP has not handled real estate registration for the 3 berths, and has not completed the establishment of property rights. Except for the actual possession, use and profit, YKP has not obtained full ownership of the 3 berths; and

• (ii) YKP has obtained Real Estate Title Certificate of the buildings with a total 1,912.69 sq m. YKP has legal ownership of such buildings. The buildings are not subject to any mortgage or other rights restrictions.

• (5) The status of the title and grant of major approvals and licences in accordance with the information provided by YKP and the opinion of the PRC legal:

Real Estate Title Certificate (for buildings)

Yes

– IV-18 –

PROPERTY VALUATION REPORT

APPENDIX IV

VALUATION REPORT

Group II – Properties held by the YKP Group for owner-occupation in the PRC

Property Description and tenure

1. No. 1 Shugang The Property comprises fixed Road, Haixing assets (office building and two subdistrict, steel plate frames (彩鋼板框架)). Bayuquan District, Yingkou, Liaoning, According to the information the PRC provided by YKP, the total gross floor area of the building is

中國 1,273.46 sq m which have Real 遼寧省 Estate Title Certificate 不動產權 營口市 證. 鮁魚圈區 海星街道 The Property was constructed 一號疏港路 during 1990 to 2008. Please refer to the note for the title status of the Property.

Market Value in Particulars of existing state as at occupancy 31 August 2021 As at the Valuation RMB1,260,000 Date, the Property (RENMINBI ONE was owner-occupied MILLION TWO as port facilities. HUNDRED SIXTY THOUSAND) As advised by YKP, the ultimate beneficiary of the Property is 營口港務 集團有限公司輪駁分 公司, a wholly owned subsidiary of YKP.

(100% interest attributable to the YKP Group: RMB1,260,000 (RENMINBI ONE MILLION TWO HUNDRED SIXTY THOUSAND) (Please see Note 1 below.)

Notes:

• (1) The Market Value in existing state of the Property is as below:

		Market value
		in existing
		state as at
Property	Area	31 August 2021	Remarks
	sq m	RMB
Fixed assets-Building	Gross Floor Area 1,273.46	1,150,000	Please see Note 2
固定資產-房屋			& 3 below.
Fixed assets-Steel plate frames	N/A	110,000
固定資產-(彩鋼板框架)
Fixed assets sub-total	N/A	1,260,000
固定資產小計:
Grand Total	N/A	1,260,000
總計:
	100% interest attributable	1,260,000
	to the YKP Group:

• (2) According to the Real Estate Title Certificate 不動產權證, provided by YKP, the building, with a total gross floor area of 1,273.46 sq m, is held by YKP.

– IV-19 –

PROPERTY VALUATION REPORT

APPENDIX IV

• (3) According to the PRC legal opinion:

• (i) YKP has obtained Real Estate Title Certificate of the building with a total 1,273.46 sq m. YKP has legal ownership of such building. The building is not subject to any mortgage or other rights restrictions.

• (4) The status of the title and grant of major approvals and licences in accordance with the information provided by YKP and the opinion of the PRC legal:

Real Estate Title Certificate

Yes

– IV-20 –

PROPERTY VALUATION REPORT

APPENDIX IV

VALUATION REPORT

Group I – Properties held by the YKP Group for investment in the PRC

Description and tenure

Property

1. Xinggang Avenue, The Property comprises: fixed Haixing assets (ancillary facilities, Subdistrict, buildings and port facilities) and Bayuquan District, 3 sea area use rights. The Yingkou, Liaoning, ancillary facilities are gatehouse, the PRC seine and other ancillary facilities. The fixed assets中國 Building is maintenance building. 遼寧省 The port facilities include the 營口市 cable, transformer, switchgear 鮁魚圈區 and high pole lights. 海星街道 興港大道 According to the information provided by YKP, the total gross floor area of the buildings is 235.17 sq m which have no Real Estate Title Certificate.

Market Value in Particulars of existing state as at occupancy 31 August 2021 As at the Valuation RMB60,710,000 Date, the Property (RENMINBI SIXTY was subject to a MILLION SEVEN connected party HUNDRED TEN tenancy, with a THOUSAND) subsidiary of the Company, due to (100% interest expire on attributable to the 31 December 2021 as YKP Group: port facilities. RMB60,710,000 (RENMINBI SIXTY MILLION SEVEN HUNDRED TEN THOUSAND) (Please see Note 1 below.)

The Property was constructed mainly during 2011 to 2020.

Please refer to the note for the title status of the Property.

Notes:

• (1) The Market Value in existing state of the Property is as below:

		Market value
		in existing
		state as at
Property	Area	31 August 2021	Remarks
	sq m	RMB
Fixed assets-Ancillary facilities	N/A	1,300,000	Please see Note 3
固定資產-配套			below.
Fixed assets-Building	Gross Floor Area 235.17	340,000	Please see Note 3
固定資產-商住房屋			below.
Fixed assets-Port facilities	N/A	55,690,000
固定資產-港口碼頭設施
Fixed assets sub-total	N/A	57,330,000
固定資產小計:
Sea area use rights	N/A	3,380,000	Please see Note 2
海域使用權			& 3 below.
Grand Total	N/A	60,710,000
總計:
	100% interest attributable	60,710,000
	to the YKP Group:

– IV-21 –

PROPERTY VALUATION REPORT

APPENDIX IV

• (2) According to the Sea Area Use Certificate, the details are as follows:

宗海面積(公頃) 證書編號 Area of Sea 用海類型 終止日期 Certificate No. Plot (hectares) Types of Sea Area Use Expiry Date 國海證082100166號 42.54 交通運輸用海-港口用海 2059/5/20 Transportation – Ports 國海證082100167號 43.02 港池用海 Ports 2059/5/20 國海證2015C21080419266號 28.06 交通運輸用海-港口用海 2059/7/31 Transportation – Ports

• (3) According to the PRC legal opinion:

• (i) YKP has obtained 3 sea area use rights in accordance with the law. There is no mortgage or other rights restriction on the rights to use these sea areas; and

• (ii) YKP has not obtained the Building Ownership Certificate of the building with a total 235.17 sq.m.. YKP is engaged in business activities using the above-mentioned self-owned building that has not obtained the real estate certificate, and there are no substantial obstacles. It has not been found that the relevant government department or any other person has told YKP to stop using or demolish the above-mentioned building; YKP has not yet completed the registration of real estate in accordance with the “Property Law” and the establishment of the property rights has not been completed.

• (4) The status of the title and grant of major approvals and licences in accordance with the information provided by YKP and the opinion of the PRC legal:

Real Estate Title Certificate No Sea Area Use Certificate Yes

– IV-22 –

PROPERTY VALUATION REPORT

APPENDIX IV

VALUATION REPORT

Group II – Properties held by the YKP Group for owner-occupation in the PRC

Description and tenure

Property

1. No. 1 Shugang Road, Haixing subdistrict, Bayuquan District, Yingkou, Liaoning, the PRC

The Property comprises fixed assets-port facilities. The port facilities include substation (變電 所), pool (水池), well (水井) and fence (圍牆) etc.

According to the information 中國 provided by YKP, the total gross 遼寧省 floor area of the buildings is 營口市 95.76 sq m which has no Real 鮁魚圈區 Estate Title Certificate 不動產權 海星街道 證. 一號疏港路 The Property was constructed mainly during 2000 to 2021.

Please refer to the note for the title status of the Property.

Market Value in Particulars of existing state as at occupancy 31 August 2021 As at the Valuation RMB43,180,000 Date, the Property (RENMINBI FORTY was owner-occupied THREE MILLION as port facilities. ONE HUNDRED EIGHTY THOUSAND) As advised by YKP, the ultimate beneficiary of the Property is 營口港務 集團有限公司水電分 公司, a wholly owned subsidiary of the YKP Company. (100% interest attributable to the YKP Group: RMB43,180,000 (RENMINBI FORTY THREE MILLION ONE HUNDRED EIGHTY THOUSAND) (Please see Note 1 below.)

Notes:

• (1) The Market Value in existing state of the Property is as below:

		Market value
		in existing
		state as at
Property	Area	31 August 2021	Remarks
	sq m	RMB
Fixed assets-Port facilities	Gross Floor Area 95.76	43,180,000	Please see Note 2
固定資產-港口碼頭設施			below.
Fixed assets sub-total	N/A	43,180,000
固定資產小計:
Grand Total	N/A	43,180,000
總計:
	100% interest attributable	43,180,000
	to the YKP Group:

– IV-23 –

PROPERTY VALUATION REPORT

APPENDIX IV

• (2) According to the PRC legal opinion:

• (i) YKP has not obtained Real Estate Title Certificate of the buildings with a total 95.76 sq m. YKP is engaged in business activities using the above-mentioned self-owned buildings that has not obtained the real estate certificate, and there are no substantial obstacles. It has not been found that the relevant government department or any other person has told YKP to stop using or demolish the above-mentioned buildings; YKP has not yet completed the registration of real estate in accordance with the “Property Law” and the establishment of the property rights has not been completed.

• (3) The status of the title and grant of major approvals and licences in accordance with the information provided by YKP and the opinion of the PRC legal:

Real Estate Title Certificate

No

– IV-24 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX V

I. UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

The following unaudited pro forma financial information of the Enlarged Liaoning Port Co., Ltd. (hereinafter referred to as the “Company”, or the “Group” when including subsidiaries) (the “Unaudited Pro forma Financial Information”) has been prepared in accordance with the basis of the notes set out below and in accordance with paragraph 4.29 of the Listing Rules for the purpose of illustrating the effects of the Transaction on the Group.

The Unaudited Pro Forma Financial Data is prepared to illustrate the effects of the Transaction on the assets and liabilities of the Group on 30 June 2021, as if the Transaction had been carried out and completed on 30 June 2021.

The Unaudited Pro Forma Financial Information has been prepared in accordance with the Group’s accounting policies contained in the interim report published by the Company for the six months ended 30 June 2021.

The Unaudited Pro Forma Financial Information of the Enlarged Group is prepared based on (i) the unaudited consolidated balance sheet of the Group as of 30 June 2021 which has been extracted from the Company’s published interim report for the six months ended 30 June 2021; and (ii) the audited balance sheet of the Target Assets of the Transaction as of 31 August 2021 which was extracted from the Accountants’ Report of the Target Assets set out in Appendix II of this Circular, as if the Transaction had been completed on 30 June 2021, after making pro forma adjustments relating to the acquisition.

The Unaudited Pro Forma Financial Information has been by the directors of the Company based on their judgments, estimates and assumptions for illustrative purposes only, and because of its hypothetical nature, it may not give a true picture of the assets and liabilities of the Enlarged Group on the completion date. Accordingly, the Unaudited Pro Forma Financial Information does not purport to describe the assets and liabilities of the Enlarged Group that would have been attained had the Transaction been completed on the date indicated herein or any future date.

The Unaudited Pro Forma Financial Information is prepared based on the Company’s unaudited consolidated balance sheet as of 30 June 2021 which has been extracted from the Company’s published interim report for the six months ended 30 June 2021. A narrative description of the pro forma adjustments of the completion of the acquisition that are (i) directly attributable to the Transactions concerned and not relating to future events or decisions; and (ii) factually supportable, is summarised in the accompanying notes.

The Unaudited Pro Forma Financial Information should be read in conjunction with the financial data of the Group and the Target Assets contained in other sections of this Circular and other financial data contained in this Circular.

– V-1 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX V

II. UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP AS AT 30 JUNE 2021

RMB0’000

						The
	The Group	The Target				Enlarged
	as at	as at				Group as
	30 June	31 August				at 30 June
Item	2021	2021	Adjustment	Adjustment	Adjustment	2021
	(Note 1)	(Note 2)	(Note 3)	(Note 4)	(Note 5)
Current assets
Cash at bank and on hand	605,314.15	698.87	–	-762.50	–	605,250.52
Notes receivable	36,726.77	–	–	–	–	36,726.77
Accounts receivable	273,111.69	3,776.20	–	–	-2,355.40	274,532.49
Financing receivable	33,888.01	–	–	–	–	33,888.01
Advances to suppliers	5,972.96	20.00	–	–	–	5,992.96
Other receivables	50,716.24	25.74	–	–	–	50,741.98
Inventories	11,237.55	36.03	–	–	–	11,273.58
Other current assets	5,083.60	36,716.99	–	–	–	41,800.59
Total current assets	1,022,050.97	41,273.83	–	-762.50	-2,355.40	1,060,206.90
Non-current assets
Long-term receivables	3,042.83	–	–	–	–	3,042.83
Long-term equity investments	369,278.37	–	–	–	–	369,278.37
Investments in other equity
instruments	20,262.50	–	–	–	–	20,262.50
Investment properties	18,251.70	–	–	–	–	18,251.70
Fixed assets	2,633,277.78	541,623.38	1,176.46	–	–	3,176,077.62
Construction in progress	270,885.42	–	–	–	–	270,885.42
Right-of-use assets	675,233.68	–	-361,505.01	–	–	313,728.67
Intangible assets	301,498.05	110,942.44	172,415.09	–	–	584,855.58
Goodwill	23,214.80	–	–	–	–	23,214.80
Long-term prepaid expenses	5,430.82	–	–	–	–	5,430.82
Deferred income tax assets	15,801.15	–	–	–	–	15,801.15
Other non-current assets	2,186.90	–	–	–	–	2,186.90
Total non-current assets	4,338,364.00	652,565.82	-187,913.46	–	–	4,803,016.36
Total assets	5,360,414.97	693,839.65	-187,913.46	-762.50	-2,355.40	5,863,223.26

– V-2 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX V

RMB0’000

						The
	The Group	The Target				Enlarged
	as at	as at				Group as
	30 June	31 August				at 30 June
Item	2021	2021	Adjustment	Adjustment	Adjustment	2021
	(Note 1)	(Note 2)	(Note 3)	(Note 4)	(Note 5)
Current liabilities
Accounts payable	29,013.68	2,434.49	–	–	-2,355.40	29,092.77
Advances from customers	297.51	–	–	–	–	297.51
Contract liabilities	18,718.36	2,022.45	–	–	–	20,740.81
Employee compensation
payable	16,676.62	181.58	–	–	–	16,858.20
Taxes payable	14,701.33	61.06	–	–	–	14,762.39
Other payables	135,895.56	36,531.74	852,410.80	–	–	1,024,838.10
Non-current liabilities due
within one year	141,312.88	–	–	–	–	141,312.88
Total current liabilities	356,615.94	41,231.32	852,410.80	–	-2,355.40	1,247,902.66
Non-current liabilities
Long-term borrowings	102,660.54	–	–	–	–	102,660.54
Bonds payable	248,291.58	–	–	–	–	248,291.58
Lease liabilities	680,436.59	–	-373,927.36	–	–	306,509.23
Long-term payables	2,507.00	–	–	–	–	2,507.00
Estimated liabilities	3,276.02	–	–	–	–	3,276.02
Deferred income	52,579.63	–	–	–	–	52,579.63
Deferred income tax
liabilities	36,442.27	–	-3,447.14	–	–	32,995.13
Other non-current liabilities	6,883.48	–	–	–	–	6,883.48
Total non-current liabilities	1,133,077.11	–	-377,374.50	–	–	755,702.61
Total liabilities	1,489,693.05	41,231.32	475,036.30	–	-2,355.40	2,003,605.27
Owners’ equity
Owners’ equity	3,870,721.92	652,608.33	-662,949.76	-762.50	–	3,859,617.99
Total owners’ equity	3,870,721.92	652,608.33	-662,949.76	-762.50	–	3,859,617.99
Liabilities and owners’ equity	5,360,414.97	693,839.65	-187,913.46	-762.50	-2,355.40	5,863,223.26

– V-3 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX V

III. NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

1. The financial information of the Group is extracted from the consolidated financial position of the Group as at 30 June 2021 as set out in the Group’s published interim report dated 26 August 2021.

2. The financial information of the Target Assets is extracted from the financial position of the Target Assets in Appendix II of this Circular.

3. This Pro Forma Adjustment reflects the effects of the acquisition:

The Group will acquire the Target Assets of the Transaction with cash of RMB8,524,108,000.

The Group consider whether the Target Assets of the Transaction constitutes a business in accordance with the Interpretation No. 13 of the Accounting Standards for Business Enterprises promulgated by the Ministry of Finance of the People’s Republic of China.

The Group and the Target Assets that constitute the business are under the control of China Merchants Group Co., Ltd. before and after the acquisition. For accounting purposes, it is regarded as a business combination under common control. According to Interpretation No. 6 of the Accounting Standards for Business Enterprises promulgated by the Ministry of Finance of the People’s Republic of China, partial of the assets and liabilities of the Target Assets that constitute the business shall be included in the consolidated financial statements of the Enlarged Group based on the carrying amounts as reflected in the financial statements of China Merchants Group Co., Ltd., its ultimate controlling party.

The assets of the Target Assets that does not constitute a business is mainly the assets of Ying Kou Port Group Corporation Limited which are leased by Liaoning Port Co., Ltd. before the transaction, which has been included in the consolidated balance sheet of the Enlarged Group in accordance with the provisions of China Accounting Standard for Business Enterprises No. 21 “Lease”.

Based on the above matters, other payables were increased by RMB8,524,108,000, fixed assets were increased by RMB11,764,600, intangible assets was increased by RMB1,724,150,900, rights-of-use assets was reduced by RMB3,615,050,100, and lease liabilities was reduced by RMB3,739,273,600, and deferred income tax liabilities was reduced by RMB34,471,400.

In the opinion of the directors, since the about adjustments on the Target Assets may be materially different from their respective amounts used in the preparation of the Unaudited Pro Forma Financial information, the final amounts of the Target Assets to be recognised in connection with the completion of the acquisition may be materially different from the amounts as shown above.

1. As far as the Unaudited Pro Forma Financial Information is concerned, the board of directors estimated the transaction costs, such as professional service fee directly relating to acquisition amounted to RMB7.625 million, as if the Transaction had already been completed on 30 June 2021.

2. The adjustment represents the elimination of the inter-group balances between the Company and Target Assets as at 30 June 2021.

3. Other than the above adjustments, no other adjustment had been made to reflect any trading results or other transactions that the Enlarged Group and Target Assets entered into subsequent to 30 June 2021.

– V-4 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX V

B. INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION

The following is the text of a report received from the reporting accountants, ShineWing Certified Public Accountants LLP, Certified Public Accountants, in respect of the Enlarged Group’s unaudited pro forma financial information for the purpose of incorporation in this Circular.

==> picture [424 x 61] intentionally omitted <==

INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION

To the Directors of Dalian Port (PDA) Company Limited

We have completed our assurance engagement to report on the compilation of unaudited pro forma financial information of Dalian Port (PDA) Company Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”) and Target Assets (collectively the “Enlarged Group”) by the directors of the Company (the “Directors”) for illustrative purposes only. The unaudited pro forma financial data consists of the unaudited pro forma statement of assets and liabilities of the Enlarged Group as at 30 June 2021 and related notes (the “Unaudited Pro Forma Financial Information”) as set out on pages V-1 to V-4 of the circular dated 29 November 2021 issued by the Liaoning Port Co., Ltd. (遼寧港口股份有限公 司, the “Company”) dated 30 June 2021 in connection with the major and connected transaction in relating to acquisition of Target Assets by the Company (the “Transaction”). The applicable criteria on the basis of which the Directors have compiled the Unaudited Pro Forma Financial Data are described on pages V-1 to the Circular.

The Unaudited Pro Forma Financial Information has been compiled by the Directors to illustrate the impact of the Transaction on the Group’s assets and liabilities as at 30 June 2021 as if the Transaction had taken place at 30 June 2021. As part of this process, As part of this process, information about the Group’s financial position has been extracted by the Directors from the Group’s Interim financial information for the six months ended 30 June 2021, on which a review report has been published.

– V-5 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX V

Directors’ responsibility for the Unaudited Pro Forma Financial Information

The Directors are responsible for compiling the Unaudited Pro Forma Financial Information in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and with reference to Accounting Guideline (“AG”) 7 “Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”).

Our independence and quality control

We have complied with the independence and other ethical requirement of the Code of Ethics for Professional Accountants of the Chinese Institute of Certified Public Accountants (“CICPA”), which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour.

Our firm applies China Standards on Quality Control 5101-Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements issued by the CICPA and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

Reporting Accountant’s responsibilities to the Unaudited Pro Forma Financial Information

Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the Listing Rules, on the Unaudited Pro Forma Financial Information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the Unaudited Pro Forma Financial Information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

We conducted our engagement in accordance with Hong Kong Standard on Assurance Engagements 3420 Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus issued by the HKICPA. This standard requires that the reporting accountant plan and perform procedures to obtain reasonable assurance about whether the Directors have compiled the Unaudited Pro Forma Financial Data in accordance with paragraph 4.29 of the Listing Rules and with reference to AG 7 issued by the HKICPA.

For purposes of this engagement, we are not responsible for updating or reissuing any reports or opinions on any historical financial data used in compiling the Unaudited Pro Forma Financial Data, nor have we, in the course of this engagement, performed an audit or review of the financial data used in compiling the Unaudited Pro Forma Financial Data.

– V-6 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX V

The purpose of unaudited pro forma financial data included in a circular is solely to illustrate the impact of a significant even or transaction on the unadjusted financial data of the entity as if the event had occurred or the transaction had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the Transaction as at 30 June 2021 would have been as presented.

A reasonable assurance engagement to report on whether the unaudited pro forma financial data has been properly compiled on the basis of the applicable criteria involves performing procedures to assess whether the applicable criteria used by the directors in the compilation of the unaudited pro forma financial data provide a reasonable basis for presenting the significant effects directly attributable to the transaction, and to obtain sufficient appropriate evidence about whether:

• The related pro forma adjustments give appropriate effect to those criteria; and

• The unaudited pro forma financial information reflects the proper application of those adjustments to the unadjusted financial information.

The procedures selected depend on the reporting accountants’ judgment, having regard to the reporting accountants’ understanding of the nature of the company, the event or transaction in respect of which the unaudited pro forma financial data has been compiled, and other relevant engagement circumstances.

The engagement also involves evaluating the overall presentation of the unaudited pro forma financial data.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion

In our opinion:

• (a) the Unaudited Pro Forma Financial Information has been properly compiled by the directors of the Company on the basis stated;

• (b) such basis is consistent with the accounting policies of the Group; and

• (c) the adjustments are appropriate for the purpose of the Unaudited Pro Forma Financial Data as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

Yours faithfully,

ShineWing Certified Public Accountants (Special General Partnership)

Beijing, China

29 November 2021

– V-7 –

GENERAL INFORMATION

APPENDIX VI

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 Company. 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

As at the Latest Practicable Date:

• (i) none of the Directors, supervisors or senior management of the Company and any of their respective associates had any interests or short positions in the Shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) (i) which would have to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they had taken or deemed to have under such provisions of the SFO); (ii) which were recorded in the register required to be kept by the Company under section 352 of the SFO; (iii) which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules or (iv) required to be disclosed under the Takeovers Code; and

• (ii) none of the Directors was interested in or owned or controlled any relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) in the Company.

3. INTERESTS AND SHORT POSITIONS OF SUBSTANTIAL SHAREHOLDERS OF THE COMPANY IN SHARES, UNDERLYING SHARES AND DEBENTURES

As far as it is known by or otherwise notified by any Director or the chief executive of the Company, as at the Latest Practicable Date, no other persons or companies which had an interest or short position in the Shares or underlying Shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO as recorded in the register required to be kept by the Company pursuant to section 336 of the SFO or were entitled to exercise, or control the exercise of 10% or more of the voting power at any general meeting of the Company (i.e. within the meaning of substantial shareholders of the Listing Rules), except the following:

				Approximate
		Number of		percentage of	Approximate
		Shares/		relevant class	percentage of
	Class of	underlying		of share	total share
Name	Shares	Shares held	Capacity	capital	capital
		(Shares)		(%)	(%)
YKP	A Shares	6,983,494,602	Beneficial	37.09	29.11
		(L)	owner

– VI-1 –

GENERAL INFORMATION

APPENDIX VI

				Approximate
		Number of		percentage of	Approximate
		Shares/		relevant class	percentage of
	Class of	underlying		of share	total share
Name	Shares	Shares held	Capacity	capital	capital
		(Shares)		(%)	(%)
PDA	A Shares	5,310,255,162	Beneficial	28.20	22.14
		(L)	owner
China Merchants	H Shares	3,577,213,495	Interest of	69.34	14.91
Securities (HK) Co.,		(L)	controlled
Ltd.			corporations
China Securities	H Shares	853,462,600	Beneficial	16.54	3.56
Depository and		(L)	owner
Clearing Company
Limited
PDA	H Shares	722,166,000	Beneficial	14.00	3.01
		(L)	owner
Ansteel Group	A Shares	922,841,600	Beneficial	4.90	3.85
Corporation		(L)	owner

Notes:

• (1) (L) – Long position; (S) – Short position; (P) – Lending pool.

• (2) Number of Shares in the relevant class of share capital of the Company as at the Latest Practicable Date: A Shares – 18,828,349,817; H Shares – 5,158,715,999.

• (3) Total number of Shares in the share capital of the Company as at the Latest Practicable Date: 23,987,065,816.

Save as disclosed above, as at the Latest Practicable Date, so far as known to the Company, no other person had an interest or short position in the shares of the Company which would fall to be disclosed to the Company and the Hong Kong Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO or as recorded in the register required to be kept by the Company under section 336 of the SFO.

4. DIRECTORS’ INTERESTS IN CONTRACTS OR ARRANGEMENT

As at the Latest Practicable Date, so far as the Directors were aware, none of the Directors was materially interested in any contracts or arrangements subsisting as at the Latest Practicable Date which was significant in relation to the business of the Group.

5. DIRECTORS’ SERVICE CONTRACTS

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

– VI-2 –

GENERAL INFORMATION

APPENDIX VI

6. DIRECTORS’ INTERESTS IN COMPETING BUSINESS

As at the Latest Practicable Date, so far as the Directors were aware, none of the Directors or their respective close associates was interested in any business which competes or is likely to compete, either directly or indirectly, with business of the Group, or had or might have any other conflicts of interest with the Group pursuant to Rule 8.10 of the Listing Rules.

7. DIRECTOR’S OR SUPERVISOR’S INTERESTS IN THE GROUP’S ASSETS OR CONTRACTS

As at the Latest Practicable Date, to the best knowledge and information of the Directors, none of the Directors, supervisors of the Company had any interest in any assets which has been, since 31 December 2020 (being the date to which the latest published audited accounts of the Company were made up), acquired or disposed of by or leased to any member of the Group, or were proposed to be acquired or disposed of by or leased to any member of the Group.

As at the Latest Practicable Date, to the best knowledge and information of the Directors, none of the Directors or supervisors was materially interested in any contract or arrangement subsisting at the Latest Practicable Date which is significant in relation to the business of the Group.

8. MATERIAL LITIGATION

• (i) Pending litigation and arbitration concerning Liaoning Port Holdings (Yingkou) Co., Ltd. (遼港控股(營口)有限公司), a subsidiary of the Group

On 19 August 2015, Kunlun International Trading Limited (昆侖國際貿易有限公司) (hereinafter referred to as “ Kunlun International ”) filed a lawsuit with Dalian Maritime Court against Yingkou Port Liability Co., Ltd. on the rejection of its application for delivery of goods, requesting Yingkou Port to compensate for a loss of RMB285.60 million and accrued interest. On 28 December 2018, Dalian Maritime Court issued the first instance judgment titled (2015) Da Hai Shang Chu Zi No. 517 ((2015)大海商初字第517號), ruling that Yingkou Port shall pay Kunlun International short delivery losses of RMB50.46 million, and the interest thereon at the loan interest rate set by the People’s Bank of China for the same period from 20 August 2015 to the date of actual payment. The court ruled that Yingkou Port shall pay Kunlun International a net compensation of RMB32.76 million after taking into full account of the storage fees and other fees of RMB25.88 million payable to Yingkou Port by Kunlun International. At the same time, the equity interests in Yingkou Xingang Ore Terminal Co., Ltd. and Sinograin Yingkou Storage and Transportation Co., Ltd. held by Yingkou Port were frozen for a period of 3 years. Yingkou Port made provisions for estimated liabilities of RMB32.76 million as at the end of 2018 based on the above ruling.

– VI-3 –

GENERAL INFORMATION

APPENDIX VI

Both Yingkou Port and Kunlun International refused to accept the judgment and filed a second instance to the Higher People’s Court of Liaoning Province in January 2019. The Higher People’s Court of Liaoning Province issued a civil ruling ((2019) Liao Min Zhong No. 685 ((2019)遼民終685號)) on 6 November 2019, ruling that: (1) the civil judgment titled (2015) Da Hai Shang Chu Zi No. 517 ((2015)大海商初字第517號) issued by Dalian Maritime Court be revoked; (2) the case be remanded to Dalian Maritime Court.

On 31 August 2020, Yingkou Port offered Dalian Maritime Court with a bank guarantee of RMB216.11 million as equivalent guarantee asset for a guarantee period from 31 August 2020 to 30 August 2022. On 1 September 2020, Dalian Maritime Court made a ruling that the equity interests in Yingkou Xingang Ore Terminal Co., Ltd. and Sinograin Yingkou Storage and Transportation Co., Ltd. held by Yingkou Port shall be released. Kunlun International filed with Dalian Maritime Court for a review of the ruling.

On 7 September 2020, Dalian Maritime Court issued a civil ruling (the first (2020) Liao 72 Min Chu No. 27 ((2020)遼72民初27號之一)), rejecting Kunlun International’s request for a review. On 10 June 2021, Dalian Maritime Court issued a civil ruling ((2020) Liao 72 Min Chu No. 27 ((2020)遼72民初27號)), rejecting all of the claims of Kunlun International.

Kunlun International refused to accept the ruling, and filed a second instance to the Higher People’s Court of Liaoning Province in June 2021.

As at the Latest Practicable Date, the hearing of this case has not been initiated by the Higher People’s Court of Liaoning Province.

(ii) Pending litigation and arbitration concerning DCT Logistics Co., Ltd., a subsidiary of the Group

From January 2020 to February 2021, Shunde (Dalian) Supply Chain Management Co., Ltd. (舜德(大連)供應鏈管理股份有限公司) (hereinafter referred to as “ Shunde ”), an independent third party to the Company, carried out cooperation with Qingdao Kaitou International Trade Co., Ltd. (青島開投國際貿易有限公司) and, Fujian Rongjiang Import & Export Co., Ltd. and other companies (hereinafter referred to as “ Import Agents ” or “ Warehousing Clients ”) by entering into Import Agent Agreement or Agent Procurement Contract with such Import Agents by which the Import Agents agreed to license Shunde’ s imported goods and open of letter of credit in the name of the Import Agents for the payment of imported goods, and the risks and liabilities of related imported goods shall be borne by Shunde. Meanwhile, the Import Agent signed a Customs Declaration Logistics Warehousing Agreement or Import Freight Forwarding Agreement with DCT Logistics Co., Ltd. (hereinafter referred to as “ DCT Logistics ”), a subsidiary of the Group, agreeing that DCT Logistics handles import goods customs declaration, goods warehousing and custody services for the Import Agents.

– VI-4 –

APPENDIX VI

GENERAL INFORMATION

In actual business, the costs incurred under the Customs Declaration Logistics Warehousing Agreement or Import Freight Forwarding Agreement shall be settled by Shunde in accordance with the Packing and Unpacking (Packing up) Agreement it signed with DCT Logistics. Given that both the ultimate owner of the imported goods in these businesses and the relevant warehousing cost settler are Shunde, DCT Logistics released the relevant goods under the instructions of Shunde, the ultimate cargo owner. As Shunde failed to repay part of the import letter of credit payment to the Import Agents as scheduled, 7 of the Import Agents filed lawsuits against DCT Logistics in Dalian Maritime Court and other people’s courts, respectively, requesting DCT Logistics and Shunde return the relevant goods under the Customs Declaration Logistics Warehousing Agreement or the Import Freight Forwarding Agreement signed with DCT Logistics. In May 2021, DCT Logistics was approved by the Dalian Maritime Court to file a pre-litigation property preservation against Shunde.

Subsequently, after thorough communication and negotiation with the parties to the litigation, one of the Warehousing Clients has settled with Shunde and withdrawn its case against Shunde and DCT Logistics and this settlement arrangement does not involve any compensation obligation for DCT Logistics. Other 6 Import Agents are in the process of negotiating a settlement plan, including applying for withdrawal of their cases after signing the settlement agreement.

As at the Latest Practicable Date, the total amount claimed by the other 6 Warehousing Clients was RMB1,060 million. DCT Logistics is a limited liability company with a net asset of RMB186 million. Other members of the Group does not have guarantee liability or joint and several liability over any such liability of DCT Logistics.

Based on the evidence that the Group has already obtained and the professional opinions of external legal advisor, the management of the Group believes that the Warehousing Clients are Shunde’s import business agents, and the goods involved in the case are actually owned by Shunde, the release by DCT Logistics of the goods to Shunde, the owner of the goods, did not infringe the rights of the Warehousing Clients; If the advance provided by the Warehousing Clients to Shunde was not repaid by Shunde as scheduled, and there was no causal relationship with the delivery of goods by DCT Logistics.

As at the Latest Practicable Date, the above-mentioned cases have been accepted by the relevant courts, but so far some of the cases have not been formally heard, and preliminary judgments have not been made. The outcomes of such litigation and compensation obligations (if any) cannot be estimated reliably for the time being.

Save as disclosed above, neither the Company nor any of its subsidiaries was engaged in any litigation or arbitration or claims of material importance which is known to the Directors to be pending or threatened by or against either the Company or any of its subsidiaries as at the Latest Practicable Date.

– VI-5 –

GENERAL INFORMATION

APPENDIX VI

9. MATERIAL CONTRACTS AND ACQUISITIONS

On 7 July 2020, the Company entered into a merger agreement with Yingkou Port Liability Co., Ltd., pursuant to which the Company acquired 100% equity interest of Yingkou Port Liability Co., Ltd. and the merger was completed on 4 February 2021. Further details are set out in the announcements and circular of the Company dated 7 July 2020, 10 September 2020 and 4 February 2021.

Save as disclosed above, no other contract (being contracts entered into outside the ordinary course of business carried on by the Group) had been entered into by members of the Group within the two years immediately preceding the date of this circular and up to the Latest Practicable Date.

10. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse changes in the financial or trading position of the Group since 31 December 2020 (being the date to which the latest published audited consolidated financial statements of the Group were made up).

11. QUALIFICATIONS OF EXPERT AND CONSENT

The following is the qualification of the professional adviser who has given its opinion or advice which is contained in this circular:

Name Qualifications TC Capital International Limited A licensed corporation under the SFO to engage in type 1 (dealing in securities) and type 6 (advising on corporate finance) of the regulated activities as set out in schedule 5 of the SFO Cushman & Wakefield Limited Independent property valuer China Tong Cheng Assets Appraisal Co., Independent valuer Ltd.

King & Wood Mallesons PRC legal advisor

As at the Latest Practicable Date, each of the above experts (i) had no shareholding in any member of the Group and did not have any right, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for securities in any member of the Group; (ii) had no direct or indirect interest in any assets which had been, since 31 December 2020 (the date to which the latest published audited consolidated financial statements of the Group were

– VI-6 –

GENERAL INFORMATION

APPENDIX VI

made up pursuant to the Listing Rules), acquired, disposed of by, or leased to any member of the Group, or were proposed to be acquired, disposed of by, or leased to any member of the Group; and (iii) has given and has not withdrawn its consent to the issue of this circular with the inclusion of its letter and the reference to its name included herein in the form and context in which it appears.

12. DOCUMENTS ON DISPLAY

The following documents will be available on the websites of the Stock Exchange (www.hkexnews.hk/) and the Company (www.lnport.com/) during the period of 14 days from the date of this circular:

• (a) this circular;

• (b) the Articles of Association of the Company;

• (c) the letter of recommendation from the Independent Board Committee to the Independent Shareholders in relation to the Agreements and the Transaction contemplated thereunder, the text of which is set out on page 16 of this circular;

• (d) the letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in relation to the Agreements and the Transaction contemplated thereunder, the text of which is set out on page 17 to 35 of this circular;

• (e) the report on unaudited pro forma financial information of the Group, the text of which is set out in Appendix V to this circular;

• (f) the property valuation report set out in Appendix IV to this circular;

• (g) the annual reports of the Company for the years ended 31 December 2018, 31 December 2019 and 31 December 2020 respectively and the interim report of the Company for the six months ended 30 June 2021;

• (h) the Agreements;

• (i) the written consent letters referred to in the paragraph headed “QUALIFICATIONS OF EXPERT AND CONSENT” in this Appendix;

• (j) the material contracts to in the paragraph headed “Material Contracts” in this Appendix;

• (k) Valuation reports A, B and C as set out in Appendix III to this circular;

• (l) Account report of the Assets as set out in Appendix II-1 to this circular; and

– VI-7 –

GENERAL INFORMATION

APPENDIX VI

• (m) Statutory account of the SPV as set out in Appendix II-2 to this circular.

13. MISCELLANEOUS

The joint company secretaries of the Company are Ms. Wang Huiying and Mr. Lee Kin Yu, Arthur. Mr. Lee Kin Yu, Arthur is a member of the American Institute of Certified Public Accountants and the Hong Kong Institute of Certified Public Accountants.

The registered office of the Company is at Xingang Commercial Building, Dayao Bay, Dalian Free Trade Zone, the PRC (116600). The principal place of business of the Company in PRC is at Xingang Commercial Building, Jingang Road, Dalian International Logistics Park Zone, Liaoning Province, the PRC (116601). The principal place of business of the Company in Hong Kong is at 31st Floor, Tower Two, Times Square, 1 Matheson Street, Causeway Bay, Hong Kong.

The English text of this Circular shall prevail over the Chinese text in the case of inconsistency.

– VI-8 –