Macau E&M Holding Limited — Proxy Solicitation & Information Statement 2006

Dec 29, 2006

THE CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

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

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

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(Incorporated in Hong Kong with limited liability)

(Stock Code: 604)

DISCLOSEABLE AND CONNECTED TRANSACTION DISPOSAL OF INTEREST IN AN INVESTMENT

Independent financial adviser to the Independent Board Committee and Independent Shareholders

A letter from the Board is set out on pages 5 to 15 of this circular. A letter from the Independent Board Committee containing its recommendation to the Independent Shareholders is set out on page 16 to 17 of this circular. A letter from Partners Capital International Limited, the independent financial adviser to the Independent Board Committee and the Independent Shareholders, is set out on pages 18 to 27 of this circular.

A notice convening an extraordinary general meeting of the Company to be held at Garden Room C&D, 2/F, Hotel Nikko, 72 Mody Road, Tsimshatsui East, Kowloon, Hong Kong on 9 February 2007 at 2 p.m. is set out on pages 35 to 36 of this circular. Whether or not you are able to attend the extraordinary general meeting, you are requested to complete the accompanying form of proxy, in accordance with the instructions printed thereon and return it to the registered office of the Company at 8th Floor, New East Ocean Centre, 9 Science Museum Road, Tsimshatsui, Kowloon, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the extraordinary general meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude Shareholders from attending and voting at the extraordinary general meeting if they so wish.

29 December 2006

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
Letter from the Independent Financial Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18
Appendix – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	28
Notice of the EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	35

– i –

DEFINITIONS

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

“Agreement”	the agreement dated 8 December 2006 entered into between
	the Vendor and the Purchaser pursuant to which the Vendor
	has conditionally agreed to sell and the Purchaser has
	conditionally agreed to purchase the 26.76% interest of the
	Subject Company pursuant to the terms and conditions of
	such agreement
“associate(s)”	has the meaning ascribed to it under the Listing Rules
“Board”	the board of Directors
“Company”	Shenzhen Investment Limited（深圳控股有限公司）, a
	company incorporated in Hong Kong with limited liability,
	the shares of which are listed on the main board of the
	Stock Exchange
“Completion”	completion of the Disposal (for use under the heading
	“Conditions” of this circular)
“Conditions”	the conditions precedent to Completion, as more particularly
	set out under the section headed “Conditions” of this circular
“connected person(s)”	has the meaning ascribed to it under the Listing Rules
“Consideration”	the aggregate amount payable by the Purchaser to the Vendor
	pursuant to the Agreement, as more particularly set out
	under the section headed “The Consideration” of this
	circular
“CRT”	cathode ray tube, a display device
“CRT RPTV”	cathode ray tube rear projection television, a type of
	television display technologies
“Directors”	the directors of the Company
“Disposal”	the transfer of the Sale Shares by the Vendor to the
	Purchaser pursuant to the Agreement

– 1 –

DEFINITIONS

“EGM”	an extraordinary general meeting of the Company to be
	convened at Garden Room C&D, 2/F, Hotel Nikko, 72 Mody
	Road, Tsimshatsui East, Kowloon, Hong Kong on 9
	February 2007 at 2 p.m to consider and approve, if thought
	fit, among other things, the Agreement and all the
	transactions contemplated thereunder
“FPD”	flat panel display, a type of thin screen display device that
	uses any of a number of technologies, such as LCD, plasma,
	and etc.
“Group”	the Company and its subsidiaries
“Hitachi SEG”	深圳日立賽格顯示器有限公司, a limited liability company
	established in the PRC, which is owned as to 70% by
	Independent Third Parties and as to 30% by Shenzhen SEG
	Hitachi
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“Independent Board Committee”	the independent board committee of the Company
	comprising three independent non-executive Directors,
	namely, Mr. Wong Po Yan, Mr. Wu Wai Chung, Michael
	and Mr. Li Wai Keung
“Independent Shareholder(s)”	the Shareholder(s) other than the Purchaser
“Independent Third Party”	the parties independent of and not connected with the
	Company and its subsidiaries and any of the directors, chief
	executive or substantial shareholders of the Company or
	any of its subsidiaries and their respective associates (as
	defined in the Listing Rules)
“Latest Practicable Date”	22 December 2006, being the latest practicable date prior
	to the printing of this circular for ascertaining certain
	information contained herein
“LCD”	liquid crystal display, a digital flat panel display device
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange

– 2 –

DEFINITIONS

“MD RPTV”	micro-display rear projection television, a type of television
	display technologies
“Partners Capital”	Partners Capital International Limited, a corporation
	licensed to engage in type 1 (dealing in securities) and type
	6 (advising on corporate finance) regulated activities under
	the Securities and Futures Ordinance (Cap. 571 of the Laws
	of Hong Kong)
“PDP”	plasma display panel, a digital flat panel display device
“PRC”	The People’s Republic of China which for the purpose of
	this circular excludes Hong Kong, the Macao Special
	Administrative Region of the PRC and Taiwan
“Purchaser”	Shum Yip Holdings Company Limited（深業（集團）有限
	公司）, a company incorporated in Hong Kong with limited
	liability and the controlling shareholder of the Company
“Sale Shares”	the shares in the issued capital of the Subject Company,
	representing 26.76% of the total equity interest in the
	Subject Company
“Shares”	share(s) of the Company
“Shareholder(s)”	holders of Shares
“Shenzhen SEG Hitachi”	深圳賽格日立彩色顯示器件有限公司, a sino-foreign
	equity joint venture established in the PRC on 20th May
	1989
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Subject Company”	深圳市賽格中電彩色顯示器件有限公司, a limited
	liability company incorporated in PRC and is owned by the
	Vendor as to 26.76% and by an Independent Third Party as
	to 73.24%
“TFT-LCD”	LCD adopting thin film transistor technology, which has a
	transistor for each pixel enabling the current that triggers
	the pixel illumination to be switched on and off more
	quickly

– 3 –

	DEFINITIONS
“Vendor”	Shum Yip Investment (Shenzhen) Limited（深業控股（深
	圳）有限公司）, a limited liability company incorporated
	in PRC and is a wholly-owned subsidiary of the Company
“working day(s)”	a day on which commercial banks in the PRC and Hong
	Kong are generally open for business (excluding Saturdays,
	Sundays and public holidays of both places)
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“RMB”	Renminbi yuan, the lawful currency of the PRC
%	per cent.

Note: For the purpose of this circular, the following exchange rate has been used for the conversion of Renminbi into Hong Kong dollars for indication only: RMB 1.01 = HK$1.00.

– 4 –

LETTER FROM THE BOARD

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(Incorporated in Hong Kong with limited liability)

(Stock Code: 604)

Executive Directors: HU Aimin (Chairman) ZHANG Yijun ZHAO Gesheng XIAO Rihai LIANG Kaiping LIU Weijin ZHANG Huaqiao TAM Ping Lung

Registered Office and Head Office: 8th Floor, New East Ocean Centre 9 Science Museum Road Tsimshatsui, Kowloon Hong Kong

Non-Executive Directors:

HU Zuoyuan LEE Yip Wah, Peter Dr. WU Jiesi

Independent Non-Executive Directors: WONG Po Yan LI Wai Keung WU Wai Chung, Michael

29 December 2006

To the Independent Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION DISPOSAL OF INTEREST IN AN INVESTMENT

INTRODUCTION

With reference to the announcement of the Company dated 8 December 2006, the Company announced that, the Vendor and the Purchaser entered into the Agreement relating to the Disposal pursuant to which the Vendor has agreed to sell and the Purchaser has agreed to acquire the Sale Shares at a Consideration of RMB71.2 million payable in HK$ (equivalent to approximately HK$70.5 million). The Sale Shares, being 26.76% of the issued share capital of the Subject Company, represents the entire interest held by the Vendor in the Subject Company. The Subject Company holds 75% equity interest in Shenzhen SEG Hitachi which operates development, design, manufacture and sale of CRT.

– 5 –

LETTER FROM THE BOARD

The Vendor is a wholly-owned subsidiary of the Company. The Purchaser is a controlling shareholder of the Company holding 49.66% of the issued share capital of the Company. Therefore, the Purchaser is a connected person of the Company under the Listing Rules. Accordingly, the Disposal constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules and is subject to the reporting, announcement and approval of the Independent Shareholders at the EGM by way of poll under the requirements of the Listing Rules. To the best of the Company’s knowledge, information and belief having made all reasonable enquiries, as at the Latest Practicable Date, there are no associates of the Purchaser interested in any Shares. The Purchaser will abstain from voting in respect of the relevant resolution(s) approving the Disposal at the EGM. As the relevant percentage ratios in respect of the Disposal are more than 5% but less than 25%, the Disposal also constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules.

An Independent Board Committee, comprising three independent non-executive Directors, namely, Mr. Wong Po Yan, Mr. Wu Wai Chung, Michael and Mr. Li Wai Keung has been formed to advise the Independent Shareholders on whether the terms and conditions of the Agreement and the transactions contemplated therein are on normal commercial terms, fair and reasonable and in the interest of the Company and the Shareholders as a whole. Partners Capital has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders as to whether the terms and conditions of the Agreement and the transactions contemplated therein are on normal commercial terms, fair and reasonable and in the interest of the Company and the Shareholders as a whole.

The purpose of this circular is to (i) provide you with further information on the Agreement; (ii) set out the letter of advice from Partners Capital to the Independent Board Committee and the Independent Shareholders; and (iii) give the notice of the EGM to the Shareholders.

THE AGREEMENT DATED 8 DECEMBER 2006

1. The parties

(a) Vendor: Shum Yip Investment (Shenzhen) Limited（深業控股（深圳）有 限公司）a limited liability company incorporated in PRC and is a wholly-owned subsidiary of the Company.

(b) Purchaser: Shum Yip Holdings Company Limited（深業（集團）有限公司） a limited liability company incorporated in Hong Kong and is the controlling shareholder of the Company.

– 6 –

LETTER FROM THE BOARD

2. The Disposal

Pursuant to the Agreement, the Vendor has conditionally agreed to sell and the Purchaser has conditionally agreed to acquire the Sale Shares, representing 26.76% of the total issued shares of the Subject Company.

The present shareholding structure of the Subject Company is as follows:–

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

Purchaser
49.66%
Company
100%
An Independent Third Party
Vendor
(Note 1)
26.76% 73.24%
An Independent Third Party
Subject Company
(Note 1)
75% 25%
Shenzhen SEG Hitachi
(Note 2)
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Note 1: To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, each of such independent third party is not a connected person of the Company and is independent of and not connected with the directors, chief executive and substantial shareholders of the Company and their subsidiaries and their respective associates.

• Note 2: Shenzhen SEG Hitachi is the holder of 30% equity interests in the share capital of Hitachi SEG. To the best of the Director’s knowledge, information and belief having made all reasonable enquiries, the other 70% equity interests in Hitachi SEG are held by Independent Third Parties.

– 7 –

LETTER FROM THE BOARD

After Completion, the respective shareholding interest in the Subject Company will be as follows:–

	Interest in the Subject Company
	(%)
Purchaser	26.76%
An Independent Third Party	73.24%

After Completion, the Vendor will no longer have any shareholding interest in the Subject Company and the Subject Company will cease to be an associated company of the Company.

Information on the Subject Company

The Subject Company is a limited liability company incorporated under the laws of PRC, which its 26.76% equity interest is owned by the Vendor and 73.24% equity interest is owned by an Independent Third Party. The Subject Company holds 75% equity interest in Shenzhen SEG Hitachi which operates development, design, manufacture and sale of CRT. Shenzhen SEG Hitachi owns 30% interest in Hitachi SEG, which is engaged in production of projection TV tubes.

Save as disclosed herein, the Subject Company does not have any subsidiaries, associated companies or investments and any other principal activities.

Financial information on the Subject Company

Based on the audited consolidated financial information of the Subject Company, which is prepared in accordance with the generally accepted accounting principles in Hong Kong, the profit/(loss) before and after taxation and before minority interests of the Subject Company for the two years ended 31st December 2004 and 31st December 2005 are as follows:–

	For years ended	For years ended	31st December
		2004	2005
		RMB/HK$	RMB/HK$
	(approximately)		(approximately)
		(in million)	(in million)
Net profit/(loss) before taxation		77/76	(350)/(347)
Net profit/(loss) after taxation		74/73	(350)/(347)

– 8 –

LETTER FROM THE BOARD

The consolidated net asset value of the Subject Company as of 30th June 2006 (being the latest available figure) is HK$574 million.

The carrying value of the Sale Shares as disclosed in the unaudited accounts of the Group as at 30th June 2006 is approximately HK$153.6 million.

3. The Consideration

The Consideration payable by the Purchaser under the Agreement shall be RMB71.2 million payable in HK$ (equivalent to approximately HK$70.5 million). The Consideration is taken to include all profits and losses arising from the Sale Shares after 30th September 2006. Subject to Completion, all dividends (including the undistributed portions) arising from the Sale Shares after 30th September 2006, if any, shall be attributed to the Purchaser.

The Consideration is payable by the Purchaser in the following manner:–

• (i) the amount of RMB14.2 million payable in HK$ (equivalent to approximately HK$14.1 million), which is equivalent to 20% of the Consideration, has been paid by the Purchaser upon signing of the Agreement as deposit money which has become part of the Consideration on the date of Completion; and

• (ii) the amount of RMB57.0 million payable in HK$ (equivalent to approximately HK$56.4 million), which is equivalent to 80% of the Consideration, shall be paid by the Purchaser to the Vendor within 3 working days from the complete fulfillment of the Conditions.

All the above-mentioned payment of the Consideration shall be paid by the Purchaser by way of depositing the amount into a bank account designated by the Vendor.

The Consideration was arrived at arm’s length negotiations between the Vendor and the Purchaser, and was determined by reference to the valuation which was carried out by an independent valuer and the financial performance of the Subject Company in the recent years. The valuation performed by the independent valuer on the Sale Shares is RMB71.2 million (equivalent to approximately HK$70.5 million). The basis of the valuation is market value, which is defined as the estimated amount for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing where the parties had each acted acknowledgeably, prudently and without compulsion. The valuation adopted market approach and cost approach to determine the market value of the assets which is attributable to the 26.76% interest in the Subject Company.

– 9 –

LETTER FROM THE BOARD

4. Conditions

Completion of the Agreement is conditional upon satisfaction of all of the following conditions:–

• (a) approval of the Disposal as contemplated under the Agreement, by the Independent Shareholder(s) of the Company at the EGM convened by the Company in accordance with the relevant requirement under the Listing Rules, the relevant laws and the Stock Exchange;

• (b) the Vendor having obtained all the necessary approval documents and consents for the purpose of Completion of the transaction as contemplated under the Agreement in accordance with the relevant requirement under the applicable laws and articles of association of the Vendor; and

• (c) the Purchaser having obtained all the necessary approval documents and consents for the purpose of Completion of the Agreement in accordance with the relevant requirement under the applicable laws and articles of association of the Purchaser.

As of the Latest Practicable Date, all of the three conditions have not been completely fulfilled. While the fulfillment of Condition (a) would depend on the voting results in the EGM, the Vendor and the Purchaser are still working on obtaining the approval documents and consents and hence the fulfillment of both Conditions (b) and (c) are in progress. As of the Latest Practicable Date, the Company is not aware of any adverse situations that may hinder fulfillment of the Conditions.

If the Conditions cannot be fulfilled on or before 31st March 2007 or such other date as the Vendor and the Purchaser may agree in writing, the Agreement shall automatically terminate. In such case, the Vendor shall refund the deposit amount paid by the Purchaser to the Vendor.

5. Completion

Completion shall take place within 30 working days from the date of fulfillment of all the Conditions. For Completion, the Vendor shall deliver to the Purchaser the followings:–

• 1) the documents proving that the Vendor being the legal owner of the Sale Shares as registered by the Administration for Industry and Commerce in PRC*（工商行政管 理部）and having obtained necessary approval from the relevant legitimate approval authority in relation to the transaction as contemplated under the Agreement; and

• 2) copy of the shareholders meeting resolutions of the Vendor in approving Completion of the transaction as contemplated under the Agreement.

The Vendor shall also procure that the director(s) of the Subject Company nominated by the Vendor resign and the persons nominated by the Purchaser be appointed as directors of Subject Company. After completion of the Disposal, the Group will cease to have any equity interest in the Subject Company.

– 10 –

LETTER FROM THE BOARD

REASONS FOR AND BENEFITS OF THE DISPOSAL

The market demand of CRT television sets has been shifting rapidly to LCD television sets and PDP television sets in recent years. This results in intense competition of the CRT market with price cutting strategy adopted by market players. Against such background, products’ average sales price of the Subject Company declined by over 30% (from that of 2004) whereas the Subject Company recorded loss since 2005.

The Directors are not optimistic towards the long term prospect of the CRT market. As such, in spite of a one-off loss of HK$83.1 million from the Disposal, the Directors are of the view that the Disposal is beneficial to the Company in the long run and will save it from possible further downturn of the CRT market.

On the other hand, the Disposal is consistent with the Group’s long term policy:–

• to exit from non-core businesses and to focus resources on core businesses of property and infrastructure development so as to boost the capital return level of the Group as a whole; and

• to obtain control and management of companies and business in which it is interested. The Group’s indirect interest in Shenzhen SEG Hitachi (through it shareholding in the Subject Company) has been held only as an investment so far with no active management involvement by the Group.

The Directors (excluding the independent non-executive Directors, who have formed the Independent Board Committee and with their opinion given in a letter set out on pages 16 to 17 in this circular) consider that the Disposal is on normal commercial terms, and the terms of the Agreement are fair and reasonable and in the interests of the Group and the Shareholders as a whole.

FINANCIAL EFFECTS OF THE DISPOSAL

Based on the carrying value of the Sale Shares as at 30th June 2006 and the Consideration, the Company is expected to incur a loss of approximately HK$83.1 million from the Disposal. Following the Disposal, the Group’s consolidated total assets and consolidated net asset value will decrease by approximately HK$83.1 million.

USE OF PROCEEDS

The Company intends to apply the net proceeds of the Disposal of approximately HK$69.3 million for the general working capital purposes of the Group.

– 11 –

LETTER FROM THE BOARD

DISCLOSEABLE AND CONNECTED TRANSACTION

The Vendor is a wholly-owned subsidiary of the Company. The Purchaser is a controlling shareholder of the Company holding 49.66% of the issued share capital of the Company. Therefore, the Purchaser is a connected person of the Company under the Listing Rules. Accordingly, the Disposal constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules and is subject to the reporting, announcement and approval of the Independent Shareholders at the EGM by way of poll under the requirement of the Listing Rules. The Purchaser will abstain from voting in respect of the relevant resolution(s) approving the Disposal at the EGM. As the relevant percentage ratios in respect of the Disposal are more than 5% but less than 25%, the Disposal also constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules.

An Independent Board Committee has been formed to advise the Independent Shareholders in relation to the Disposal and Partners Capital International Limited has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in this regard. The Company will seek Independent Shareholders’ approval at the EGM by way of poll. Please refer to the section headed “Recommendation” of this letter and the “Letter from the Independent Board Committee” set out on pages 16 to 17 of this circular.

Your attention is also drawn to the paragraph headed “Financial effect of the Agreement on the Group” in the letter from Partners Capital set out on pages 18 to 27 of this circular, in which the effects of the Agreement and the transactions contemplated therein on the net assets value, income and working capital of the Company are described.

GENERAL

The Group is principally engaged in property development, property investment and management, infrastructure investment, provision of transportation services, manufacture and sale of industrial and commercial products.

The principal activity of the Vendor is the holding of equity interest in the Subject Company as long term investment. The Purchaser is an investment holding company mainly involved in holding of investment in the Company.

– 12 –

LETTER FROM THE BOARD

THE EGM

A notice convening the EGM, which is to be held at Garden Room C&D, 2/F, Hotel Nikko, 72 Mody Road, Tsimshatsui East, Kowloon, Hong Kong on 9 February 2007 at 2 p.m. is set out on pages 35 to 36 of this circular. The EGM will be held for the purpose of proposing an ordinary resolution to consider and, if thought fit, approving the Agreement and the transactions contemplated thereunder.

At the EGM, any connected persons of the Company or of any Shareholders with a material interest in the Agreement and its associates will abstain from voting in respect of the ordinary resolution to be proposed thereat and at any adjournment thereof. As far as the Company was aware having made all reasonable enquiries, as at the Latest Practicable Date, there are no associates of the Purchaser interested in any Shares. Accordingly, the Purchaser will abstain from voting at the EGM or any adjournment thereof.

As far as the Company was aware having made all reasonable enquiries, as at the Latest Practicable Date,

• (a) the Purchaser controlled or were entitled to exercise control over the voting right in respect of their respective Shares; and

• (b) (i) there were no voting trust or other agreement or arrangement or understanding (other than an outright sale) entered into by or binding upon the Purchaser;

• (ii) there were no obligations or entitlement of the Purchaser

whereby such persons had or might have temporarily or permanently passed control over the exercise of the voting right in respect of their Shares to third parties, either generally or on a case-by-case basis; and

• (c) there were no discrepancies between the beneficial shareholding interest of the Purchaser and the number of Shares in respect of which it would control or would be entitled to exercise control over the voting right at the EGM.

A form of proxy for use at the EGM is enclosed with this circular. Whether or not you are able to attend the EGM, you are requested to complete the accompanying form of proxy, in accordance with the instructions printed thereon and return it to the registered office of the Company at 8th Floor, New East Ocean Centre, 9 Science Museum Road, Tsimshatsui, Kowloon, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM if you so wish.

– 13 –

LETTER FROM THE BOARD

PROCEDURES FOR DEMANDING A POLL

Pursuant to Article 73 of the articles of association of the Company, at any general meeting, a resolution put to the vote of the meeting shall be decided on a show of hands unless a poll is taken as may from time to time be required under the Listing Rules or any other applicable laws, rules or regulations or unless a poll is (before or on the declaration of the results of the show of hands) demanded by:

• (a) the chairman of the meeting; or

• (b) at least three Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorized representative or by proxy for the time being entitled to vote at the meeting; or

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

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

Pursuant to Article 78, at any general meeting on a show of hands every Shareholder who (being an individual) is present in person or (being a corporation) is present by a representative duly authorized under Section 115 of the Companies Ordinance shall have one vote and on a poll every Shareholder present in person or by proxy or by duly authorized representative shall have one vote for every fully paid Share of which he is the holder. On a poll a Shareholder entitled to more than one vote need not, if he votes, use all his votes or cast all the votes he uses the same way.

– 14 –

LETTER FROM THE BOARD

RECOMMENDATION

Partners Capital has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders with regard to the Agreement and the transactions contemplated thereunder. Partners Capital is of the view that the terms of the Agreement are on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and in the interest of the Company and the Shareholders as a whole. Accordingly, Partners Capital advises the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM to approve the Agreement. Your attention is drawn to the text of the letter of advice from Partners Capital set out on pages 18 to 27 of this circular.

The Independent Board Committee, having taken into account the advice of Partners Capital, considers that the terms of the Agreement and the transactions contemplated thereunder to be on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and in the interest of the Company and the Shareholders as a whole. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM to approve the Agreement. Your attention is drawn to the text of the letter from the Independent Board Committee set out on page 16 to 17 of this circular.

ADDITIONAL INFORMATION

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

Yours faithfully, By Order of the Board Shenzhen Investment Limited Hu Aimin

Chairman

– 15 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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(Incorporated in Hong Kong with limited liability)

(Stock Code: 604)

Independent Non-Executive Directors: WONG Po Yan LI Wai Keung WU Wai Chung, Michael

Registered Office and Head Office: 8th Floor, New East Ocean Centre 9 Science Museum Road Tsimshatsui, Kowloon Hong Kong

To the Independent Shareholders

29 December 2006

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION DISPOSAL OF INTEREST IN AN INVESTMENT

INTRODUCTION

We, being the independent non-executive Directors comprising the Independent Board Committee, are writing to you to set out our recommendation in respect of the Disposal. The Independent Board Committee has been appointed by the Board to advise you as Independent Shareholders whether in its view the entering into of the Agreement will be in the interests to the Company and its Shareholders as a whole. Terms defined in the circular shall have the same meanings when used herein unless the context otherwise requires.

We wish to draw your attention to the letter from the Board which sets out, among other things, information relating to the Disposal and the letter of advice from Partners Capital, which contains its advice to us and to you set out on pages 18 to 27 of the circular respectively.

– 16 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Having taken into account the terms of the Agreement and the advice of Partners Capital, we consider the terms of the Agreement are on normal commercial terms, are fair and reasonable so far as the Independent Shareholders are concerned, and are in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend you to vote in favour of the ordinary resolution to be proposed at the EGM to approve the Agreement.

Yours faithfully,

Independent Board Committee

WONG Po Yan LI Wai Keung WU Wai Chung, Michael

Independent non-executive Directors of Shenzhen Investment Limited

– 17 –

LETTER FROM PARTNERS CAPITAL

The following is the text of a letter to the Independent Board Committee and the Independent Shareholders from Partners Capital in respect of the Agreement prepared for the purpose of incorporation in this circular.

Partners Capital International Limited Unit 3906, 39/F, COSCO Tower 183 Queen’s Road Central Hong Kong

To the Independent Board Committee and the Independent Shareholders

29 December 2006

Dear Sirs,

DISCLOSEABLE TRANSACTION AND CONNECTED TRANSACTION DISPOSAL OF INTEREST IN AN INVESTMENT

INTRODUCTION

We refer to our engagement as independent financial adviser to advise the Independent Board Committee and the Independent Shareholders of the Company in respect of the terms of the Agreement, particulars of which are set out in the circular (the “Circular”) of the Company dated 29 December 2006 and in which this letter is reproduced. Unless the context requires otherwise, capitalised terms used in this letter shall have the same meanings as ascribed to them under the section headed “Definitions” in the Circular.

As set out in the letter from the Board (the “Letter from the Board”), the Vendor (a whollyowned subsidiary of the Company) and the Purchaser entered into the Agreement relating to the Disposal pursuant to which the Vendor has agreed to sell and the Purchaser has agreed to acquire the Sale Shares at a Consideration of RMB71.2 million (approximately HK$70.5 million). The Sale Shares represent 26.76% of the issued share capital of the Subject Company, which holds 75% equity interest in Shenzhen SEG Hitachi which in turn is engaged in the development, design, manufacture and sale of CRT. The Purchaser is a controlling shareholder of the Company holding 49.66% of the issued share capital of the Company and is therefore a connected person of the Company under the Listing Rules. The Disposal constitutes a connected transaction of the Company under the Listing Rules and is subject to the reporting, announcement and approval of the Independent Shareholders at the EGM by poll.

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LETTER FROM PARTNERS CAPITAL

In formulating our opinion, we have relied on the accuracy of the information and representations contained in the Circular and have assumed that all information and representations made or referred to in the Circular as provided by the Directors were true at the time they were made and continue to be true as at the date of the Circular. We have also relied on our discussion with the Directors regarding the Group and the Agreement, including the information and representations contained in the Circular. We have also assumed that all statements of belief, opinion and intention made by the Directors respectively in the Circular were reasonably made after due enquiry. We consider that we have reviewed sufficient information to reach an informed view, to justify our reliance on the accuracy of the information contained in the Circular and to provide a reasonable basis for our advice. We have no reason to suspect that any material facts have been omitted or withheld from the information contained or opinions expressed in the Circular nor to doubt the truth, accuracy and completeness of the information and representations provided to us by the Directors. We have not, however, conducted an independent in-depth investigation into the business and affairs of the Group, the Subject Company, Shenzhen SEG Hitachi, Hitachi SEG and their respective associates, nor have we carried out any independent verification of the information supplied to us.

PRINCIPAL FACTORS CONSIDERED

In arriving at our opinion regarding the terms of the Agreement, we have considered the following principal factors and reasons:

1. Reasons for entering into the Agreement

As set out in the Letter from the Board, the Group is principally engaged in property development, property investment and management, infrastructure investment, provision of transportation services, manufacture and sale of industrial and commercial products.

(i) Background of the Subject Company

We understand from the Directors that the Subject Company is engaged in the manufacture of (i) color picture tubes (“CPT”, a type of CRT used for displaying image in a television set)（彩色顯像管）(via Shenzhen SEG Hitachi, a 75%-owned subsidiary) and (ii) (to an insignificant extent) projection TV tubes（彩色投影管） (via Hitachi SEG, a 30%-owned associated company of Shenzhen SEG Hitachi).

At present, Shenzhen SEG Hitachi has a total of four production lines for the manufacture of 21”, 29”, 34” CRT with an annual production capacity of about 6.5 million units. According to the website information of Shenzhen SEG Hitachi, as to about 50% of CRT products of Shenzhen SEG Hitachi were exported overseas (to South East Asia, Middle East, Europe, Australia, North and South America).

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LETTER FROM PARTNERS CAPITAL

(ii) Reasons for the Disposal

• Realignment of the Group’s core business under its majority control

As set out in the Letter from the Board, the Disposal is consistent with the Group’s long term policy:

• (a) to exit from non-core businesses and to focus resources on core businesses of property and infrastructure development so as to boost the capital return level of the Group as a whole; and

• (b) to obtain control and management of companies and business in which it is interested. The Group’s indirect interest in Shenzhen SEG Hitachi (through its shareholding in Subject Company) has been held only as an investment so far with no active management involvement by the Group.

For (a), we observe that such policy has been previously disclosed in the interim report of the Group for the six months ended 30 June 2006. Upon review, we note that no turnover of the Group’s CRT business segment had been consolidated into that of the Group, and the contribution of the Subject Company to Group had been limited to share of profit/loss of associated company from accounting perspective. For analysis purposes, we understand from the Directors that the 26.76% share of consolidated net profit after tax of the Subject Company (based on Hong Kong GAAP) accounted for an insignificant proportion of about 1.9% of the consolidated net profit of the Company for the year ended 31 December 2004 (whereas the comparison for the year ended 31 December 2005 is not applicable given the then loss-making result of the Subject Company). We consider that the findings reinforce the Directors’ view that the CRT segment represents a non-core business of the Group.

For (b), upon enquiry, we understand from the Directors that the Group’s indirect interest in Shenzhen SEG Hitachi has been held only as an investment in an associated company with only one out of a total of seven board seats as represented by the Group.

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LETTER FROM PARTNERS CAPITAL

• Fading outlook of the CRT market

As set out in the Letter from the Board, the market demand of CRT television sets has been shifting rapidly to LCD television sets and PDP television sets in recent years. This results in intense competition of the CRT market with price cutting strategy adopted by market players. Against such background, products’ average sales price of the Subject Company declined by over 30% (from that of 2004) whereas the Subject Company recorded loss since 2005. The Directors are not optimistic towards the long term prospect of the CRT market. As such, in spite of a one-off loss of HK$83.1 million, the Directors are of the view that the Disposal is beneficial to the Company in the long run and will save it from possible further downturn of the CRT market.

Upon enquiry, we note that to the Directors’ belief, the nature of the said adverse factors for the CRT industry tends to be long-lasting rather than temporary. As advised by the Directors, the Group shared a loss-making result of HK$66.7 million from its investment in the Subject Company for the year ended 31 December 2005. Subsequently, the Group continued to share a lossmaking result of HK$19.7 million from its investment in the Subject Company for the six months ended 30 June 2006.

Upon our independent research, we note that according to a research report issued by DisplaySearch in 2005 on the global television market, the revenue share of CRT (amongst LCD, PDP, MD RPTV, CRT RPTV) is expected to fall significantly from 57.6% in 2004 to 15.9% in 2009. By contrast, the revenue share of each of LCD and PDP is expected to increase remarkably from 14.5% and 13.4% in 2004 to 58.7% and 20.0% in 2009 respectively. Meanwhile, LCD is expected to overtake CRT on a revenue basis as early as in 2006. We summarize the expected unit share and revenue share of CRT in the following chart from 2004 to 2009:

CRT

==> picture [274 x 183] intentionally omitted <==

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

%
100
Unit share
Revenue share
80
60
40
20
0
2004 2005 2006 2007 2008 2009
Year
----- End of picture text -----

Source: DisplaySearch, 2005

– 21 –

LETTER FROM PARTNERS CAPITAL

Based on information as set out in the Letter from the Board and as obtained from the Company, the financial performance of the Subject Company for the year ended 31 December 2004 and 2005 and the six months ended 30 June 2006 is summarised below:

	2004	2005	% change	1H 2006
Units sold_(million) (Note 1)_	6.1	5.4	-11.5%	2.7
Sales_(RMB million)_	2,309.9	1,590.3	-31.2%	693.6
Average Selling Price
(RMB) (Note 2)	378.7	294.5	-22.2%	256.9
Net profit/(loss)
(RMB million) (Note 3)	74.0	(350.0)	n/a	(101.5)
Net profit margin_(Note 3)_	3.2%	(22.0%)	n/a	(14.6%)

Note:

1. approximating figures based on the annual reports of Shenzhen SEG Co., Ltd., the shares of which are listed on Shenzhen stock exchange and which holds (amongst others) 73.24% interests in the Subject Company

2. representing sales (RMB million) as divided by units sold (million)

3. before deducting minority interests

As illustrated in the above table, the financial performance of the Subject Company worsened after 2004 in terms of (i) the units sold; (ii) the sales; (iii) the average selling price; and (iv) net profit/(loss), which was apparently in line with the increasingly erosion of the CRT market by FPD as substitute.

For comparison purpose, we have identified (to our best knowledge) that Irico Group Electronics Company Limited (“Irico”) is the only one company listed on the Stock Exchange which is principally engaged in the manufacture of CPT in the PRC. Upon comparison, and despite its market leader position in the CRT industry, we note that Irico suffered from similar pattern of worsening financial performance for the year ended 31 December 2005 in terms of (i) the sales; (ii) the average selling price; and (iii) net profit/(loss) on a year-on-year basis.

– 22 –

LETTER FROM PARTNERS CAPITAL

Upon our further enquiry, given the constraints of new capital expenditure and new technology/research and development work required, and given further the Group’s minority shareholder’s position, we are confirmed by the Directors that it is highly difficult for the Group to attempt proposing that the Subject Company should try to mitigate its industry risks by way of switching or expanding the existing CPT production lines into PDP or TFT-LCD production lines, thereby entering into the FPD sector.

On the above basis, and in light of the prevailing loss-making position and the fading outlook of the Group’s CRT business segment, we concur with the Directors’ view that the Agreement represents an opportunity to avoid incurring possible financial losses of the Subject Company for the foreseeable future.

• Waive of the first right of refusal by the existing majority shareholder of the Subject Company

According to the articles of the Subject Company as circulated by the Directors, we note that the existing shareholder(s) of the Subject Company (for example, Shenzhen SEG Co., Ltd.) has a first right of refusal to purchase the interests in the Subject Company which are contemplated to be disposed by the other shareholder(s) (for example, the Group) at the same terms and pricing. Against such background, we are confirmed by the Directors that Shenzhen SEG Co., Ltd. had effectively waived such right upon noting the Group’s contemplation to dispose of its minority interests in the Subject Company by way of approving the shareholders’ resolution on such transfer.

On the above basis, we are advised by the Directors that the Company turned out to resort to negotiate with its controlling shareholder with a view to disposing of the Group’s minority interests in the Subject Company at a consideration mutually accepted.

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LETTER FROM PARTNERS CAPITAL

2. Key terms of the Agreement

Pursuant to the Agreement, the Sale Shares are to be disposed of at the Consideration of RMB71.2 million payable in HK$ (approximately HK$70.5 million), payable as to 20% (representing RMB14.2 million (approximately HK$14.1 million)) upon signing of the Agreement as deposit money and as to the remaining 80% (representing RMB57.0 million (approximately HK$56.4 million)) within 3 working days from the complete fulfilment of the Conditions. The Consideration is taken to include all profits and losses arising from the Sale Shares after 30 September 2006. Subject to Completion, all dividends (including the undistributed portions) arising from the Sale Shares after 30 September 2006, if any, shall be attributed to the Purchaser.

As set out in the Letter from the Board, the Consideration was arrived at arm’s length negotiations between the Vendor and the Purchaser, and was determined by reference to the valuation which was carried out by an independent valuer and the financial performance of the Subject Company in the recent years. The valuation adopted market approach and cost approach to determine the market value of the assets which is attributable to the 26.76% interest in the Subject Company. We have discussed with the independent valuer concerned on the said valuation approaches and understand from the independent valuer concerned that the income approach should not be adopted for the purpose of valuing the assets underlying the Sale Shares as the income data is not applicable nor sufficient for self-used industrial properties or assets (which are not leased out in consideration for rental income receivable or otherwise). The nature of the assets of the Subject Company comprises (i) non-current assets (such as land, buildings and structures, and machinery/equipment) and (ii) current assets (such as receivables, inventory and cash), both of which represent self-used industrial properties or assets which are not leased out in consideration for rental income receivable.

As set out in the Letter form the Board, the carrying value of the Subject Company as disclosed in the unaudited accounts of the Group as at 30 June 2006 was approximately HK$153.6 million. Upon comparison, the valuation carried out by the independent valuer concerned on the Sale Shares is RMB71.2 million (approximately HK$70.5 million), which is less than the said carrying value. In this connection, we are confirmed by the Company and the independent valuer concerned that the valuation attributes the majority of diminution in value from the carrying value to (i) the legal title defect of certain land and buildings held by Shenzhen SEG Hitachi which precludes any right to transfer or to change in land use purpose (and which cannot be ratified legally without first resorting to public auction or open tender procedures) and (ii) the aged status (representing physical depreciation) of machinery/equipment held by Shenzhen SEG Hitachi (comprising and spread over 7,000 individual items) coupled with the fading outlook of the CRT industry (representing technological changes) which is poised to shorten the economic useful life of the production lines than that original scheduled from accounting perspective. Upon enquiry, we note that the machinery/equipment held by Shenzhen SEG Hitachi was built/installed/commissioned between 1991 to 2003. We also note that the industrial buildings and structures held by Shenzhen SEG Hitachi were completed between 1990 to 1999.

– 24 –

LETTER FROM PARTNERS CAPITAL

Based on the foregoing, we consider that the valuation methodology adopted by the independent valuer concerned (namely, market approach and cost approach) is generally in line with market practice of valuing assets (non-current and current) underlying the Sale Shares and is hence reasonable. Upon comparison, we note that the Consideration is not less than the valuation of RMB71.2 million (approximately HK$70.5 million). On such basis, we are of the view that the Consideration is acceptable.

As alternative ways of assessment of the Consideration, the following approaches are further taken into consideration:

• Price/earnings multiple and Price/EBITDA multiple

As the Subject Company is principally engaged in the manufacture of CRT, reference to price/earnings multiple and price/EBITDA multiple should be the most common approach adopted by the investment community in valuing such kind of revenue-generating entities. However, given the Directors’ advice that the earnings and the EBITDA of the Subject Company were both negative in 2005, such valuation approach is not applicable with respect to the latest published accounts of the Subject Company for the year ended 31 December 2005.

• Price/book multiple

In general, it may not be most relevant to value a company principally engaged in manufacturing by reference to its net assets. However, for the purpose of independently assessing the reasonableness of the Consideration by reference to the net assets, we have identified (to the best of our knowledge) one company (namely, Irico) listed on the Stock Exchange which is principally engaged in the manufacture of CPT in the PRC (the “Comparable Company”). Based on the closing share price of the Comparable Company as at 8 December 2006 (of HK$0.345) as divided by its net asset value per share as disclosed in its latest published financial report prior to 8 December 2006 (of HK$1.167), the price/book multiple of the Comparable Company is 0.30 times.

Upon comparison, we note that the price/book multiple as represented by the Consideration of HK$70.5 million as divided by the net assets of the Subject Company is approximately (i) 1.00 times (based on independent valuation of HK$70.5 million) or 0.46 times (based on carrying value of HK$153.6 million), both of which are greater than that of the Comparable Company of 0.30 times using this methodology.

– 25 –

LETTER FROM PARTNERS CAPITAL

On the above basis and from the perspective of assessment of the Consideration by way of the price/book multiple of the Comparable, we consider that the Consideration is fair and reasonable and the Agreement is on normal commercial terms.

3. Financial effect of the Agreement on the Group

(i) Earnings/(losses)

As set out in the Letter from the Board, based on the carrying value of Subject Company as at 30 June 2006 and the Consideration, the Company is expected to incur a loss of approximately HK$83.1 million from the Disposal. Despite such loss on disposal, which will be one-off in nature, the Disposal is expected to improve the profit position of the Group in the longer term as the loss-making trend of the Subject Company is poised to prevail due to the fading outlook of the CRT market.

(ii) Net assets

According to the interim report of the Company for the six months ended 30 June 2006, the unaudited consolidated net assets of the Group as at 30 June 2006 were approximately HK$4,729.7 million (after deducting minority interests). As set out in the Letter from the Board, the carrying value of the Subject Company as disclosed in the unaudited accounts of the Group as at 30 June 2006 was approximately HK$153.6 million.

As set out in the Letter from the Board, the Group’s consolidated net assets will decrease by approximately HK$83.1 million following the Disposal (attributable to the estimated loss on disposal which is of the same magnitude). Despite such negative impact, which will be one-off in nature, the Disposal is expected to improve the profit position (and indirectly the net assets position) of the Group in the longer term as the loss-making trend of the Subject Company is poised to prevail due to the fading outlook of the CRT market.

(iii) Liquidity/cashflow

As set out in the Letter from the Board, the Company intends to apply the net proceeds of the Disposal of approximately HK$69.3 million for the general working capital purposes of the Group. On the above basis, the Disposal is expected to have a positive impact on the liquidity position of the Group immediately upon Completion.

– 26 –

LETTER FROM PARTNERS CAPITAL

RECOMMENDATION

Having considered the above principal factors, in particular,

• (i) the reasons for entering into the Agreement, including (a) the realignment of the Group’s core business under its majority control and (b) the fading outlook of the CRT market;

• (ii) the key terms of the Agreement; and

• (iii) the financial effect of the Agreement on the Group, such as the one-off loss on disposal impacting negatively both the profits and loss position and the net assets position of the Group, which however is to be balanced with the expected improvement in the profit position of the Group in the longer term as the loss-making trend of the Subject Company is poised to prevail due to the fading outlook of the CRT market,

we consider that the terms of the Agreement to be on normal commercial terms and fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders to vote in favour of the resolution to approve the Agreement.

Yours faithfully, For and on behalf of Partners Capital International Limited Alan Fung Harry Yu Managing Director Executive Director

– 27 –

GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

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

2. DISCLOSURE OF INTERESTS

• (a) Directors’ interests and short positions in the securities of the Company and its associated corporations

As at the Latest Practicable Date, the interests and short positions of each of the Directors and the chief executive of the Company in the shares, underlying shares and debentures of the Company or its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (“the SFO”)) which (i) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) were required to be entered in the register maintained by the Company pursuant to section 352 of the SFO; or (iii) were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies as contained in the Listing Rules, were as follows:

(i) Long Position in the underlying shares of the Company

				Underlying
				shares		Percentage
Name of		Nature of	Number of	pursuant to	Aggregate	of issued
Director	Capacity	interests	shares	share options	interests	share capital
HU Aimin	Beneficial	Personal	3,000,000	10,000,000	13,000,000	0.46
	owner	interest
ZHANG Yijun	Beneficial	Personal	2,500,000	8,800,000	11,300,000	0.40
	owner	interest
ZHAO Gesheng	Beneficial	Personal	–	4,000,000	4,000,000	0.14
	owner	interest
XIAO Rihai	Beneficial	Personal	–	4,000,000	4,000,000	0.14
	owner	interest

– 28 –

APPENDIX

GENERAL INFORMATION

				Underlying
				shares		Percentage
Name of		Nature of	Number of	pursuant to	Aggregate	of issued
Director	Capacity	interests	shares	share options	interests	share capital
LIANG Kaiping	Beneficial	Personal	–	8,000,000	8,000,000	0.28
	owner	interest
LIU Weijin	Beneficial	Personal	–	6,000,000	6,000,000	0.21
	owner	interest
ZHANG Huaqiao	Beneficial	Personal	–	14,000,000	14,000,000	0.50
	owner	interest
TAM Ping Lung	Beneficial	Personal	–	8,000,000	8,000,000	0.28
	owner	interest
HU Zuoyuan	Beneficial	Personal	4,000,000	–	4,000,000	0.14
	owner	interest
WU Jiesi	Beneficial	Personal	–	10,000,000	10,000,000	0.35
	owner	interest
WONG Po Yan	Beneficial	Personal	3,400,000	–	3,400,000	0.12
	owner	interest
LEE Yip Wah,	Beneficial	Personal	3,400,000	–	3,400,000	0.12
Peter	owner	interest
WU Wai Chung,	Beneficial	Personal	–	2,600,000	2,600,000	0.09
Michael	owner	interest
LI Wai Keung	Beneficial	Personal	5,300,000	1,400,000	6,700,000	0.24
	owner	interest

– 29 –

GENERAL INFORMATION

APPENDIX

• (ii) Long Positions in the underlying shares of the associated corporation – Road King Infrastructure Limited

				Underlying
				shares		Percentage
Name of		Nature of	Number of	pursuant to	Aggregate	of issued
Director	Capacity	interests	shares	share options	interests	share capital
HU Aimin	Beneficial	Personal	–	250,000	250,000	0.04
	owner	interest
ZHANG Yijun	Beneficial	Personal	–	250,000	250,000	0.04
	owner	interest
ZHANG Huaqiao	Beneficial	Personal	300,000	700,000	1,000,000	0.15
	owner	interest
LI Wai Keung	Beneficial	Personal	30,000	–	30,000	0.004
	owner	interest

Save as disclosed above, as at the Latest Practicable Date, none of the Directors nor the chief executive of the Company had or was deemed to have any interests or short positions in the shares, underlying shares or debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO) which (i) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) were required to be entered in the register maintained by the Company pursuant to section 352 of the SFO; or (iii) were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies as contained in the Listing Rules.

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GENERAL INFORMATION

APPENDIX

• (b) Persons or corporations who have an interest or short position which is discloseable under Divisions 2 and 3 of Part XV of the SFO and substantial shareholders

So far as is known to each Director or the chief executive of the Company, as at the Latest Practicable Date, the following persons or corporations had an interest or short position in the shares and 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, or who/ which was, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group and the amount of each of such person’s/corporate’s interest in such securities, together with particulars of any options in respect of such capital, were as follows:

				Percentage
				of issued
		Nature of		share
Name	Capacity	interest	Number of shares	capital
Shum Yip Holdings	Beneficial	Corporate	1,401,123,966	49.66
Company Limited	owner	interest
(Note)

Note: Hu Aimin, Zhang Yijun, Zhao Gesheng and Hu Zuoyuan, being Directors are also directors of Shum Yip Holdings Company Limited.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors nor the chief executive of the Company was aware of any other person or corporation who 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.

3. DIRECTORS’ SERVICE CONTRACTS

Each of the non-executive Directors and the independent non-executive Directors has been appointed for a term of three years, commencing on 1st January 2005 (except for Mr. Hu Zuoyuan who was appointed on 23rd December 2005 and for Dr. Wu Jiesi who was appointed on 11th May 2006) and thereafter eligible for re-election. Save for an annual remuneration of HK$250,000, none of the non-executive Directors and independent non-executive Directors is expected to receive any other remuneration for holding their office as a non-executive Director and an independent non-executive Director (as the case may be).

– 31 –

GENERAL INFORMATION

APPENDIX

Save as disclosed above, as at the Latest Practicable Date, none of the Directors has entered, or proposed to enter, into a service contract the Group which does not expire or is not determinable by any member of the Group within one year without compensation (other than statutory compensation).

4. QUALIFICATION AND CONSENT OF EXPERT

The following is the qualifications of the expert who has given an opinion of advice which is contained in this circular:

Name Qualification

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

Partners Capital has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its letter and references to its name in the form and context in which their respectively appear.

As at the Latest Practicable Date, Partners Capital had no shareholding interest in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities of any member of the Group.

As at the Latest Practicable Date, Partners Capital was not interested, directly or indirectly, in any assets which had since 31 December 2005 (being the date to which the latest published audited accounts of the Company were made up) been acquired or disposed of by or leased to any member of the Group or which are proposed to be acquired or disposed of by or leased to any member of the Group.

5. LITIGATION

A statement of claim dated 27th August 2002 was issued by Fancheng Property Development Co., Limited (the “Plaintiff”) as plaintiff against Shum Yip Group (Shenzhen) Co., Ltd. (“Shum Yip Shenzhen”), a wholly-owned subsidiary of the Company as first defendant and Yaoheng Development Co., Ltd. as the second defendant in a civil claim at the court in PRC.

The Plaintiff claimed against Shum Yip Shenzhen for, inter alia, damages suffered by the Plaintiff as a result of the breach by Shum Yip Shenzhen of the terms of a cooperation agreement entered into between the Plaintiff and Shum Yip Shenzhen dated 8 July 1991, which include (i) Shum Yip Shenzhen’s deliberate registration of the properties named Shenfa Garden under the name of Shum Yip Shenzhen and its refusal to give the properties to the Plaintiff and (ii) Shum

– 32 –

GENERAL INFORMATION

APPENDIX

Yip Shenzhen’s appropriation of the Plaintiff’s sales proceeds to compensate the individual owners and the construction party of Shenfa Garden and the keeping of the income in relation to certain car parks an the kindergarten situated within the area of Shenfa Garden. The Plaintiff claimed a total compensation of approximately RMB1.3 million against the Plaintiff on 22nd October 2002. This case was heard in court on 26th March 2003 and 5th November 2004, the arbitration process is complicated and time-consuming. As at the Latest Practicable date, the parties are still waiting for the delivery of the arbitration award. The PRC lawyers of the Company are of the view that the outcome of the case is not determinable at this stage.

As advised by the Hong Kong lawyers of the Company, pursuant to a deed (the “Deed”) entered into on 12 February 1997 by Shum Yip Holdings Company Limited as covenantor in favour of the Company as covenantee in connection with the listing of the Company, the Company may be able to claim indemnity from Shum Yip Holdings Company Limited if the Plaintiff and/or the applicant are successful in their claims against Shum Yip Shenzhen on the ground that Shum Yip Shenzhen had materially breached the cooperation agreement, and the circumstances which gave rise to the above litigation was already in existence at the time of execution of the Deed.

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

6. COMPETING INTEREST

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

7. MATERIAL INTEREST

As at the Latest Practicable Date, no Directors was materially interested in any contract or arrangement entered into by any member of the Group subsisting at the Latest Practicable Date which was significant in relation to the business of the Group taken as a whole.

As at the Latest Practicable Date, no Directors had any direct or indirect interest in any assets which have been acquired or disposed of by or leased to any member of the Group since 31 December 2005 (being the date to which the latest audited financial statements of the Group were made up), or are proposed to be acquired or disposed of by or leased to any member of the Group.

– 33 –

GENERAL INFORMATION

APPENDIX

8. NO MATERIAL ADVERSE CHANGE

So far as the Directors are aware, as at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 December 2005, being the date to which the latest audited financial statements of the Group were made up.

9. GENERAL

• (a) The secretary of the Company is Mr. Cheung Wing Yui, who is a practising solicitor of Hong Kong.

• (b) The qualified accountant of the Company is Ms. Kwan Ka Yuet, who is a fellow of the Association of Chartered Certified Accountants and an associate member of Hong Kong Institute of Certified Public Accountants.

• (c) The registered office and head office of the Company is situate at 8th Floor, New East Ocean Centre, 9 Science Museum Road, Tsimshatsui, Kowloon, Hong Kong.

• (d) The share registrar and transfer office of the Company is Standard Registrars Ltd. of 26/F, Tesbury Centre, 28 Queen’s Road East, Hong Kong.

• (e) The English text of this circular shall prevail over the Chinese text in case of inconsistency.

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours at the office of Messrs. Woo, Kwan, Lee & Lo at 27th Floor, Jardine House, 1 Connaught Place, Central, Hong Kong up to and including 8 February 2007:

• (a) the Agreement;

• (b) the service contracts referred to in the paragraph headed “Directors’ service contracts” in this Appendix;

• (c) the letter from the Independent Board Committee as set out on page 16 to 17 of this circular;

• (d) the letter from Partners Capital as set out on pages 18 to 27 of this circular; and

• (e) the written consent of Partners Capital referred to in this appendix.

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NOTICE OF THE EGM

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(Incorporated in Hong Kong with limited liability)

(Stock Code: 604)

NOTICE IS HEREBY GIVEN that an Extraordinary General Meeting of Shenzhen Investment Limited (the “Company”) will be held at Garden Room C&D, 2/F, Hotel Nikko, 72 Mody Road, Tsimshatsui East, Kowloon, Hong Kong on 9 February 2007 at 2 p.m. for the purpose of considering and, if thought fit, passing, with or without modifications, the following resolution as ordinary resolution of the Company:–

ORDINARY RESOLUTION

“ THAT the agreement (the “Agreement”) dated 8 December 2006 entered into between Shum Yip Investment (Shenzhen) Limited*（深業控股（深圳）有限公司）(the “Vendor”) and Shum Yip Holdings Company Limited（深業（集團）有限公司）(the “Purchaser”) pursuant to which the Vendor has conditionally agreed to sell and the Purchaser has conditionally agreed to purchase the 26.76% interest of the深圳市賽格中電彩色顯示器件 有限公司 pursuant to the terms and conditions of such Agreement and the transactions contemplated thereunder be and are hereby approved, ratified and confirmed and that the directors of the Company be and are hereby authorized on behalf of the Company to sign, seal, execute, perfect, deliver and do all such documents, agreements, deeds, acts, matters and things as they may in their discretion consider necessary, desirable or expedient for the purpose of or in connection with the implementation of such Agreement.”

By Order of the Board Shenzhen Investment Limited

Hu Aimin

Chairman

Hong Kong, 29 December 2006

Registered office and head office:

8th Floor, New East Ocean Centre 9 Science Museum Road Tsimshatsui, Kowloon Hong Kong

• for identification purposes only

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NOTICE OF THE EGM

Notes:

• (1) A form of proxy for use at the meeting is enclosed.

• (2) A Shareholder who is entitled to attend and vote at the meeting shall be entitled to appoint proxies to attend and vote for him. Votes may be given either personally (or, in the case of a shareholder being a corporation, by its duly authorized representative) or by proxy in accordance with the articles of association of the Company. A proxy need not be a Shareholder of the Company but must attend this meeting in person to represent you. A Shareholder may appoint more than one proxy to attend on the same occasion.

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

• (4) To be valid, a form of proxy, together with the power of attorney or other authority, if any, under which it is executed or a notarially certified copy of that power or authority, must be delivered to the registered office of the Company at 8th Floor, New East Ocean Centre, 9 Science Museum Road, Tsimshatsui, Kowloon, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the EGM or any adjournment thereof. Delivery of an instrument appointing a proxy shall not preclude a Shareholder from attending and voting in person at the meeting or poll concerned and, in such event, the instrument appointing a proxy shall be deemed to be revoked.

• (5) The Purchaser will abstain from voting in respect of the resolution. The resolution is required to be voted by independent shareholders of the Company (any Shareholders other than controlling shareholders and their associates) by way of poll.

As at the date of this notice, the board of directors of the Company comprises eight executive Directors, namely, Mr. Hu Aimin, Mr. Zhang Yijun, Mr. Zhao Gesheng, Mr. Xiao Rihai, Mr. Liang Kaiping, Mr. Liu Weijin, Mr. Zhang Huaqiao and Mr. Tam Ping Lung and three non-executive Directors namely Mr. Lee Yip Wah, Peter, Mr. Hu Zuoyuan and Dr. Wu Jiesi and three independent non-executive Directors namely Mr. Wong Po Yan, Mr. Wu Wai Chung, Michael and Mr. Li Wai Keung.

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