Macau E&M Holding Limited - Proxy Solicitation & Information Statement 2016

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

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

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

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(Incorporated in Hong Kong with limited liability)

(Stock Code: 00604)

(1) DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO ACQUISITION OF APPROXIMATELY 95% OF THE ISSUED SHARE CAPITAL OF FAIRWIND POWER LIMITED AND (2) RE-ELECTION OF RETIRING DIRECTOR

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

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VMS Securities Limited

A letter from the Independent Board Committee containing its recommendation to the Independent Shareholders is set out on page 21 of this circular. A letter from VMS Securities Limited, the independent financial adviser, containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 22 to 36 of this circular.

A notice convening an extraordinary general meeting of the Company to be held at Academy Room, 1st Floor, InterContinental Grand Stanford Hong Kong, 70 Mody Road, Tsimshatsui East, Kowloon, Hong Kong at 10:30 a.m. on Friday, 11 March 2016 for considering the ordinary resolutions to approve the Acquisition and the re-election of retiring Director is set out on pages EGM-1 to EGM-2 of this circular. Whether you are able to attend the EGM, you are requested to complete and return the accompanying proxy form in accordance with the instructions printed thereon and deposited at the office of the Company’s share registrar, Tricor Standard Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the EGM or any adjournment thereof. Completion and return of the proxy form will not preclude you from attending and voting at the EGM or any adjournment thereof should you so wish.

23 February 2016

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Letter from the Independent Board Committee. . . . . . . . . . . . . . . . . . . . . . . . . .	21
Letter from the Independent Financial Adviser. . . . . . . . . . . . . . . . . . . . . . . . . .	22
Appendix I – Valuation Report on the property interests of
the Target Group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-1
Appendix II – Details of Director proposed for re-election . . . . . . . . . .	II-1
Appendix III – General Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
Notice of EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	EGM-1

– i –

DEFINITIONS

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

“Acquisition”

the proposed acquisition of the Sale Shares by the Company from the Vendor pursuant to the terms and conditions of the Sale and Purchase Agreement

“Agreed Exchange Rate”

the exchange rate of RMB1.0 = HK$1.182985, being the middle rate of the buying and selling rates of Offshore RMB against HK$ published by Bank of China (Hong Kong) Limited at about 11 a.m. on the date of the Sale and Purchase Agreement

“Announcement”

the announcement of the Company dated 21 December 2015 regarding discloseable and connected transaction in relation to the Acquisition

“associate(s)”
has the same meaning as defined in the Listing Rules
“Board”
the board of the Directors
“Business Day”

a day (other than a Saturday, Sunday or a public holiday or a day on which tropical cyclone warning signal No. 8 or above or a “black” rain storm warning is in force in Hong Kong at any time between 9:00 a.m. and 5:00 p.m.) on which licensed banks are generally open for business in Hong Kong

“BVI”

the British Virgin Islands

“Charm Peak”

Charm Peak Investments Limited, a company incorporated in the BVI with limited liability and an independent third party of the Company. As at the Latest Practicable Date, Charm Peak held 5,037 ordinary shares of the Target Company with a par value of US$1.00 each, representing approximately 5% of the issued share capital of the Target Company

“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 Acquisition

– 1 –

DEFINITIONS

“Completion Date”
the date falling on the second Business Day after all the conditions precedent under the Sale and Purchase Agreement have been fulfilled or waived by the Company (or such other date to be agreed by the Vendor and the Company in writing)
“connected person(s)” has the same meaning as defined in the Listing Rules
“Consideration”
the consideration in the amount of RMB1,914,000,000 (equivalent to HK$2,264,233,290 based on the Agreed Exchange Rate), payable by the Company to the Vendor for the Acquisition
“controlling shareholder” has the same meaning as defined in the Listing Rules
“Director(s)” the director(s) of the Company
“EGM”
the extraordinary general meeting of the Company to be convened at Academy Room, 1st Floor, InterContinental Grand Stanford Hong Kong, 70 Mody Road, Tsimshatsui East, Kowloon, Hong Kong at 10:30 a.m. on Friday, 11 March 2016 for the purpose of considering and, if thought fit, approving (i) the Sale and Purchase Agreement and the transactions contemplated thereunder and (ii) the re-election of Mr. HUANG Wei as a Director
“Enlarged Group” the Group as enlarged by the Acquisition
“GFA” gross floor area (建築面積)
“Group”
the Company and its subsidiaries from time to time
“HK Company”
Great Assets Development Limited (新旺發展有限公司), a company incorporated in Hong Kong with limited liability and a direct wholly-owned subsidiary of the Target Company
“HK$”
Hong Kong dollar(s), the lawful currency of Hong Kong
“Hong Kong”
the Hong Kong Special Administrative Region of the PRC

– 2 –

DEFINITIONS

“Independent Board Committee”
“Independent Financial Adviser” or “VMS”
“Independent Shareholders”
“Land A”
“Land B”
“Land B Land Use Right Grant Contract”
“Latest Practicable Date”
“Listing Rules”
an independent committee of the Board comprising all of the independent non-executive Directors, namely Mr. WU Wai Chung, Michael, Mr. LI Wai Keung and Dr. WONG Yau Kar, David, constituted in compliance with the Listing Rules, to advise the Independent Shareholders as regards the terms of the Acquisition
VMS Securities Limited, a corporation licensed to carry on Type 1 (dealing in securities), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the SFO, being the independent financial adviser appointed to advise the Independent Board Committee and the Independent Shareholders in relation to the terms of the Acquisition
the Shareholders other than the Vendor and its associates
the piece of land situated at the junction of Shennan East Road (深南東路) and Feng Huang Road (鳳凰路), Luohu District, Shenzhen, the PRC with lot number H219-0041, brief details of which are set out under the section headed “(B) The Acquisition – Assets to be acquired” in the letter from the Board of this circular
the piece of land situated at the junction of Shennan East Road (深南東路) and Feng Huang Road (鳳凰路), Luohu District, Shenzhen, the PRC with lot number H216-0030, brief details of which are set out under the section headed “(B) The Acquisition – Assets to be acquired” in the letter from the Board of this circular
the land use right grant contract dated 21 December 2015 made between the PRC Company and UPLRCS Bureau pursuant to which UPLRCS Bureau granted the land use right of Land B to the PRC Company
17 February 2016, being the latest practicable date prior to the printing of this circular for ascertaining certain information for inclusion in this circular
the Rules Governing the Listing of Securities on the Stock Exchange

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DEFINITIONS

“PRC” or “China”
the People’s Republic of China and, for the purpose of this circular, excluding Hong Kong, Macau Special Administrative Region of the People’s Republic of China and Taiwan
“PRC Company” 新旺實業發展(深圳)有限公司 (Xin Wang Industry Development (Shenzhen) Limited*), a company established in the PRC and a direct wholly-owned subsidiary of the HK Company
“Promissory Note”
a promissory note in the principal amount of HK$1,132,116,645 to be issued by the Company to the Vendor at Completion in partial settlement of the Consideration
“Reassessed NAV”
an amount representing the audited consolidated net liability value attributable to owners of the Target Company as at 30 June 2015 after having adjusted for (i) the valuation of the Target Project held by the Target Group; and (ii) the estimated potential tax liabilities of the Target Group upon disposal of the Target Project in its existing state
“Resettlement Properties”
portions of the properties to be redeveloped on Land A and to be reverted to the previous owners (回遷戶) of certain portions of Land A and Land B as compensation (i.e. resettlement area (回遷面積)), which shall, according to the terms of the relevant demolition and compensation agreements, comprise of 149,173.448 square metres of residential use, 3,925.46 square metres of commercial use and 200 bays of car-parking spaces
“RMB”
Renminbi, the lawful currency of the PRC
“Sale and Purchase Agreement”
the sale and purchase agreement dated 21 December 2015 made between the Company and the Vendor in respect of the Acquisition
“Sale Shares”
95,707 ordinary shares of the Target Company with a par value of US$1.00 each, representing approximately 95% of the issued share capital of the Target Company
“SFO”
Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

– 4 –

DEFINITIONS

“Share(s)” the ordinary share(s) of the Company
“Shareholder(s)” the holder(s) of the Share(s)
“Shenzhen SASAC”
深圳市人民政府國有資產監督管理委員會 (Shenzhen Municipal People’s Government State-owned Assets Supervision and Administration Commission)
“Shum Yip Group” 深業集團有限公司 (Shum Yip Group Limited*), a company established in the PRC and the holding company of the Vendor, which is ultimately whollyowned by Shenzhen SASAC
“Shum Yip Guarantees” the guarantees given by Shum Yip Group in favour of two lending banks in respect of bank loans granted to the PRC Company in the aggregate maximum principal amount of RMB1.7 billion under the loan agreements dated 28 May 2014 and 31 October 2014 respectively
“Shum Yip Loans”
the principal amounts owing to the Vendor and Shum Yip Group by the Target Group as described under the section headed “Information on the Target Group – Information on the Target Group”
“sq.m.”
square meter(s)
“Stock Exchange” The Stock Exchange of Hong Kong Limited
“Target Company”
Fairwind Power Limited (富寶有限公司*), a company incorporated in the BVI, which is held by the Vendor and Charm Peak as to approximately 95% and 5% respectively
“Target Group” the Target Company and its subsidiaries (namely, the HK Company and the PRC Company)
“Target Project” the work in progress redevelopment project on Land A and Land B at Huangbeiling, Luohu District, Shenzhen, the PRC
“UPLRCS Bureau” 深圳市規劃和國土資源委員會第一直屬管理局 (the First Direct Administration Bureau of Urban Planning and Land Resources Committee of Shenzhen)

– 5 –

DEFINITIONS

“US$”	United States dollars, the lawful currency of the United
	States of America
“Vendor” or “Shum Yip	Shum Yip Holdings Company Limited (深業(集團)有限
Holdings”	公司), a company incorporated in Hong Kong and a
	wholly-owned subsidiary of Shum Yip Group
“%”	per cent.

Unless otherwise specified, translations of US$ into HK$ in this circular are based on the exchange rate of US$1 = HK$7.7530. No representation is made that any amounts in US$ or HK$ can be or could have been converted at the relevant dates at the above rates or any other rates at all.

For identification purpose only

– 6 –

LETTER FROM THE BOARD

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(Incorporated in Hong Kong with limited liability) (Stock Code: 00604)

Executive Directors: Mr. LU Hua (Chairman) Mr. HUANG Wei (President) Mr. MOU Yong Mr. LIU Chong

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

Non-executive Directors:

Dr. WU Jiesi Mr. HUANG Yige

Independent non-executive Directors:

Mr. WU Wai Chung, Michael Mr. LI Wai Keung Dr. WONG Yau Kar, David

23 February 2016

To the Shareholders

Dear Sir or Madam,

(1) DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO ACQUISITION OF APPROXIMATELY 95% OF THE ISSUED SHARE CAPITAL OF FAIRWIND POWER LIMITED AND

(2) RE-ELECTION OF RETIRING DIRECTOR

(A) INTRODUCTION

The Board announced that on 21 December 2015 (after trading hours), the Company and the Vendor entered into the Sale and Purchase Agreement pursuant to which the Company has conditionally agreed to acquire and the Vendor has conditionally agreed to sell the Sale Shares, representing approximately 95% of the issued share capital of the Target Company.

The purpose of this circular is to give you, among other things, (i) further information on the Acquisition; (ii) the valuation report on the property interest of the Target Group; (iii) the recommendation of the Independent Board Committee regarding the terms of the Acquisition; (iv) the advice of the Independent Financial Adviser regarding the terms of the Acquisition; (v) information regarding the re-election of retiring Director; (vi) the notice of EGM; and (vii) other information as required under the Listing Rules.

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LETTER FROM THE BOARD

(B) THE ACQUISITION

This section sets out a summary of the principal terms and conditions of the Sale and Purchase Agreement.

The Sale and Purchase Agreement

Date: 21 December 2015

Parties: (1) the Company (as purchaser); and

(2) the Vendor (as vendor)

The Vendor is an investment holding company. As at the Latest Practicable Date, the Vendor was the direct controlling shareholder of the Company and it, together with its associates, held 4,480,478,142 Shares, representing approximately 60.68% of all issued Shares.

Assets to be acquired

Pursuant to the Sale and Purchase Agreement, the Company has conditionally agreed to acquire from the Vendor the Sale Shares, representing approximately 95% of the issued share capital of the Target Company as at the date of the Sale and Purchase Agreement.

Upon Completion, the members of the Target Group will become non wholly-owned subsidiaries of the Company.

The PRC Company is wholly-owned by the Target Company through the HK Company and is a project company holding the Target Project, being a redevelopment project on Land A and Land B at Huangbeiling, Luohu District, Shenzhen, the PRC which is in progress.

It is represented by the Vendor that the PRC Company is the lawful owner of the land use right of, and building ownership right over the buildings erected on, Land A.

At the time of entering into of the Sale and Purchase Agreement, the PRC Company had not yet received the Land B Land Use Right Grant Contract signed by UPLRCS Bureau. Nonetheless, it is represented by the Vendor that the PRC Company has fully paid the land fee, and has obtained the construction land planning permit (建設用地規劃許可證), in respect of Land B. As such, the Sale and Purchase Agreement has provided that completion of the Acquisition is conditional upon a land grant contract having been entered into between the PRC Company and UPLRCS Bureau in respect of Land B (please refer to the sub-section headed “Conditions precedent” under the section headed “(B) The Acquisition” for further information). The Vendor has further agreed that, in the event that the land fee required to be paid as provided under the Land B Land Use Right Grant Contract or other relevant legal documents is, and/or the actual amount paid by the PRC Company ends up to be more than the land fee already paid by the PRC Company in respect of Land B, the Vendor will fully

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LETTER FROM THE BOARD

indemnify the Company for the excess amount. On 28 December 2015, the Company was informed by the Vendor of the entering into of the Land B Land Use Right Grant Contract by the PRC Company and UPLRCS Bureau. The amount of land fee payable by the PRC Company as provided under the Land B Land Use Right Grant Contract is the same as the land fee already paid by the PRC Company as represented by the Vendor, and the use, total land area, total GFA and period of land use rights specified under the Land B Land Use Right Grant Contract are also the same as those as represented by the Vendor. As informed by the Vendor, the PRC Company has submitted application for the state-owned land use right certificate in respect of Land B to, and such application has been accepted for processing by, the relevant government authority. Other than such application, the PRC Company is not required to make any other application for the purpose of obtaining the state-owned land use right certificate in respect of Land B. In the course of processing such application, that relevant government authority may need to seek the views and coordinate with other government departments and may also require the PRC Company to provide further information. As stated in the relevant notification of acceptance for processing, the deadline for processing is 19 March 2016. The Company expects that the state-owned land use right certificate in respect of Land B will be obtained by the PRC Company by such deadline.

Brief details of Land A and Land B are set out in the table below:

Land A

Lot Number	:	H219-0041
Total land area	:	Approximately 48,434 sq.m.
Total GFA (counting for	:	343,593 sq.m. (inclusive of the Resettlement
plot ratio)		Properties)
(計容積率建築面積)
Total GFA (not counting for	:	110,147.69 sq.m.
plot ratio) (不計容積率建
築面積)
Use	:	Residential (Type II) and commercial
Period of land use right	:	70 years, commencing from 4 March 2013
		ending on 3 March 2083
Land B
Lot Number	:	H216-0030
Total land area	:	Approximately 6,750 sq.m.
Total GFA (counting for	:	57,200 sq.m.
plot ratio)
Use	:	Commercial
Period of land use right	:	40 years, commencing from 18 December 2015
		ending on 17 December 2055

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LETTER FROM THE BOARD

The Target Project, which is currently called “Shum Yip Dong Ling (深業東嶺)”, is a redevelopment project in Huangbeiling, Luohu District, Shenzhen, the PRC. The Target Project is situate at the junction of Feng Huang Road and Shennan East Road, which is an established residential area and central business district in Luohu District with access to Line No. 2, Line No. 5 and the planned Line No. 8 of the Shenzhen Metro.

Under the current plan, the Target Project will be developed into a comprehensive living complex comprising an open city commercial street, a metro shopping promenade, office towers, hotels and health-oriented residence. The redevelopment work of the Target Project was commenced in 2011. The redevelopment of Land A is currently expected to be completed in 2017. The redevelopment of Land B is currently expected to be completed in 2018.

As a redevelopment project, the PRC Company entered into certain demolition and compensation agreements and supplemental agreements thereto with the previous owners (回遷戶) of certain portions of Land A and Land B. Pursuant to such agreements, it was agreed that the Resettlement Properties are to be reverted to these previous owners as compensation, and any discrepancy between the actual GFA of the Resettlement Properties reverted to the previous owners and the agreed floor area will be dealt by way of cash payments (to be calculated at the pre-agreed price) by the PRC Company to the relevant previous owners (in the event that the actual GFA of the Resettlement Properties so reverted is less than the agreed floor area) or by the relevant previous owners to the PRC Company (in the event that the actual GFA of the Resettlement Properties is more than the agreed floor area). As stated in note 7 of the valuation certificate of Asset Appraisal Limited in the valuation report on the property interests of the Target Group in Appendix I to this circular, in arriving at their opinion of the market value of the Target Project as at 30 November 2015 in the amount of RMB6,573 million, the market values of the Resettlement Properties have been disregarded. After Completion, the Group will continue the redevelopment work of the Target Project and comply with its obligations under the demolition and compensation agreements and the supplemental agreements.

Pursuant to the property title certificate (房地產權屬證書) and the land use right grant contract in respect of Land A, the PRC Company is required to complete the site clearance in respect of certain land portions (including Land B and the specified portions which are for communal traffic road, greenery space and secondary school use), and to surrender such land portions to the PRC government without compensation. The PRC Company has completed such site clearance on such land portions and has surrendered to the PRC government the land portions which are required to be surrendered by the PRC Company.

While none of the property title certificate (房地產權屬證書), the land use right grant contract in respect of Land A and the Land B Land Use Right Grant Contract has imposed any obligations on the part of the PRC Company to complete the construction works of communal traffic road, greenery space and secondary school, the Company’s PRC legal advisers are of the view that pursuant to certain agreements and correspondence made with/issued by the relevant PRC government authorities a number of years before the entering into of the land use right grant contract in respect of Land A which are relevant to the Target Project, the PRC Company is under the obligation to complete the construction works of communal traffic road, greenery space and secondary school on certain land portions at the cost of the PRC Company.

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LETTER FROM THE BOARD

If the PRC Company is required by the relevant PRC government authorities to complete such construction works, the Company may consider, among other things, seeking indemnities from the Vendor for losses, liabilities or expenses incurred by the Company pursuant to the Sale and Purchase Agreement.

The Consideration

The Consideration is RMB1,914,000,000 (equivalent to HK$2,264,233,290 based on the Agreed Exchange Rate), which has been agreed after arm’s length negotiation between the Company and the Vendor. The Consideration has been determined with reference to, among other things, the initial Reassessed NAV of RMB2,077 million, being the audited consolidated net liability value attributable to owners of the Target Company as at 30 June 2015 after having adjusted for (i) the preliminary valuation of the Target Project held by the Target Group (using the direct comparison valuation approach to assess the land portion of the Target Project and having taking into account the incurred construction costs and the costs that will be incurred to complete the development to reflect the market value of the Target Project in its existing state) as at 30 September 2015 in the amount of RMB6,500 million (equivalent to approximately HK$7,689 million based on the Agreed Exchange Rate); and (ii) the estimated potential tax liabilities of the Target Group upon disposal of the Target Project in its existing state. The Consideration represents a discount of approximately 3% to an amount representing 95% of such initial Reassessed NAV (being the value attributable to the Sale Shares). It is expected that the Consideration will be funded by internal resources and/or banking facilities of the Group.

The Reassessed NAV has increased from RMB2,077 million (equivalent to approximately HK$2,457 million based on the Agreed Exchange Rate) based on the preliminary valuation of the Target Project as mentioned in the preceding paragraph to approximately RMB2,098 million (equivalent to approximately HK$2,482 million based on the Agreed Exchange Rate) based on the market value of the Target Project as at 30 November 2015 in the amount of RMB6,573 million as set out in the valuation report on the property interests of the Target Group in Appendix I to this circular. The Consideration represents a discount of approximately 4% to an amount representing 95% of the increased Reassessed NAV (being approximately RMB2,098 million).

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LETTER FROM THE BOARD

The Reassessed NAV could be reconciled as follows:

Audited consolidated net liability value
attributable to owners of the Target Company as
at 30 June 2015
Properties revaluation adjustment:
Appreciation of the Target Project (being the
difference between the valuation and the
relevant book value of the Target Project)
Less: Estimated potential tax liabilities
adjustment_(Note)_
Reassessed NAV
95% of the Reassessed NAV based on the Agreed
Exchange Rate
The Consideration
Discount of the Consideration to 95% of the
Reassessed NAV

Based on the market value of
the Target Project
as at 30
September
2015
as at 30
November
2015
RMB million
(approximately)
RMB million
(approximately)
(431.4)
(431.4)
4,768.3
4,768.3
(2,259.8)
(2,239.0)
2,077.1
2,097.9
HK$ million
(approximately)
HK$ million
(approximately)
2,334.3
2,357.7
2,264.2
2,264.2
3.0%
4.0%

Note: The relevant tax liabilities represent land appreciation tax and corporate income tax expected to be borne by the Target Group upon disposal of the Target Property in its existing state as estimated by the Company for deduction from the appreciation amount for the purpose of deriving the Reassessed NAV. For land appreciation, it is taxed at progressive tax rates ranging from 30% to 60% on the land appreciation amount. For corporate income, it is taxed at 25% on the assessable income which is arising from deducting the relevant expenses and costs (including the relevant land appreciation tax) from the relevant income.

The Consideration will be settled in HK$ in the following manner:

(i) as to HK$1,132,116,645, being 50% of the Consideration, will be paid by the Company in cash at Completion; and

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LETTER FROM THE BOARD

(ii) as to HK$1,132,116,645, being the remaining 50% of the Consideration, will be settled by the Promissory Note to be issued by the Company to the Vendor at Completion.

Promissory Note

The Promissory Note will be settled in cash by the Company within:

(i) three months after the date of Completion; or
(ii) 14 days after the date on which PRC Company has obtained the state-owned land use right certificate in respect of Land B,

whichever is later but if the last date of the period determined as aforesaid is not a Business Day, then, the latest date to settle the Promissory Note will be the Business Day immediately after such last date.

Conditions precedent

Completion is subject to the following conditions being fulfilled (or, if applicable, waived):

(i) the passing of an ordinary resolution by the Independent Shareholders at the EGM approving the Sale and Purchase Agreement and the transactions contemplated thereunder;
(ii) the Vendor having provided all relevant documents and information of the Target Group as required by the Company from time to time; and the Company having completed due diligence on the Target Group (including but not limited to in respect of the establishment, approvals, legal, financial, engineering, land, property, management, labour, insurance, environmental protection, foreign exchange, lending and borrowing, guarantee and investment of relevant companies) and being reasonably satisfied with the results of the due diligence;
(iii) the approvals having been obtained by the Vendor from Shenzhen SASAC for the sale and purchase of the Sale Shares pursuant to the Sale and Purchase Agreement;
(iv) the representations, warranties and undertakings given by the Vendor under the Sale and Purchase Agreement remaining true and accurate in all material respects and not misleading in any material respect upon Completion;
(v) the PRC Company and UPLRCS Bureau having entered into a legally enforceable land use right grant contract, pursuant to which UPLRCS Bureau granted the land use right of Land B to the PRC Company on terms and conditions satisfactory to the Company; and

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LETTER FROM THE BOARD

(vi) the PRC legal adviser engaged by the Company having issued legal opinion to the reasonable satisfaction of the Company in respect of (including but not limited to) the due establishment and existence of the PRC Company and its business operations and scopes, and properties (including the PRC Company’s ownership of the land use right in respect of Land B).

The Company may waive conditions precedent (ii), (iv) and/or (vi) above by notice in writing to the Vendor. If the above conditions precedent are not fulfilled (or waived as aforesaid) on or before 31 March 2016 (or such other longer period as agreed by the Vendor and the Company in writing), the Sale and Purchase Agreement will be terminated automatically and whereupon none of the Vendor and the Company will have any obligations towards the other save and except for any antecedent breach and in respect of a few provisions in Sale and Purchase Agreement relating to, among other things, confidentiality.

Having considered the terms and conditions of the Land B Land Use Right Grant Contract, and taking into account the advice of its PRC legal advisers (who are of the opinion that the Land B Land Use Right Grant Contract is a legally enforceable contract), condition precedent (v) as mentioned above has been fulfilled.

As at the Latest Practicable Date, other than condition precedent (v) as mentioned above, the other conditions precedent are yet to be fulfilled.

Completion

Upon fulfillment or (where relevant) waiver of all the conditions precedent set out above, Completion is required to take place on the Completion Date.

Indemnities and undertakings

Under the Sale and Purchase Agreement, the Company and the Vendor have agreed to indemnify each other for losses, liabilities or expenses, directly or indirectly incurred by such other party, arising from, as a result of or based on its non-compliance of any provision of the Sale and Purchase Agreement including any terms, representations, undertakings and warranties.

Pursuant to the Sale and Purchase Agreement, the Vendor has agreed to indemnify the Company for losses suffered by the Company due to, among others, (i) claims and proceedings arising from any causes or facts existing prior to Completion; and (ii) any breaches or non-compliance of the relevant laws and regulations of the PRC or contracts by members of the Target Group prior to Completion.

In addition, upon Completion, the Vendor is required to execute a tax indemnity deed in favour of the Company pursuant to which, among other things, the Vendor will undertake to indemnify the Company for, among others, (i) any loss incurred by the Target Group where the Target Group is required to bear any tax liabilities of the Vendor which may arise from the transactions pursuant to the Sale and Purchase Agreement; and (ii) any tax liabilities or claims due to or with reference to any income, profits or gains earned, accrued or received, transactions carried out by the Target Group prior to the Completion Date.

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LETTER FROM THE BOARD

(C) INFORMATION ON THE TARGET GROUP

Information on the Target Group

The Target Company was incorporated in the BVI and, through the HK Company, wholly-owns the PRC Company. The principal activities of both the Target Company and the HK Company are investment holding. The PRC Company was established in the PRC and it is a project company holding the Target Project.

The Vendor acquired the Sale Shares in 2011. The total acquisition cost of the Sale Shares incurred by the Vendor was US$68 million (equivalent to approximately HK$527 million).

The Shum Yip Loans were owing by the Target Group to (i) Shum Yip Group, in the principal amounts of RMB931 million as at the date of the Sale and Purchase Agreement as well as RMB1,131 million as at the Latest Practicable Date; and (ii) the Vendor, in the principal amounts of approximately HK$222 million and approximately US$61 million, as at the date of the Sale and Purchase Agreement and the Latest Practicable Date. Out of the Shum Yip Loans, (a) the principal amounts owing to Shum Yip Group carry interest at the interest rate of one-year bench mark lending rate and of which RMB931 million, RMB100 million and RMB100 million are repayable on 9 November 2016, 3 January 2017 and 25 January 2017, respectively; and (b) the principal amounts owing to the Vendor carry interest which is to be calculated according to the actual borrowing costs payable by the Vendor to the relevant banks from which the relevant amounts were obtained by the Vendor and are repayable on 9 November 2016. The Shum Yip Loans are expected to remain after Completion until full repayment.

As at the Latest Practicable Date, the Shum Yip Guarantees provided by Shum Yip Group were and remained valid and effective. Pursuant to the Sale and Purchase Agreement, the Company and the Vendor are required to, after Completion, on the basis of not causing any material adverse effect on the Target Group, use their respective reasonable endeavours to procure the full and valid release of the Shum Yip Guarantees.

The provision of the Shum Yip Loans and the Shum Yip Guarantees by the Vendor and/or Shum Yip Group to the Target Group will constitute continuing connected transactions of the Company after Completion. As the Shum Yip Loans and the Shum Yip Guarantees were provided on normal commercial terms or better and were not secured by the assets of the Target Group, they will be fully exempted from shareholders’ approval, annual review and all disclosure requirements under Chapter 14A of the Listing Rules.

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LETTER FROM THE BOARD

Shareholding structure of the Target Group

Set out below are the shareholding structure charts of the Target Group (i) as at the Latest Practicable Date; and (ii) immediately after Completion:

(i) As at the Latest Practicable Date

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The Vendor Charm Peak
(Hong Kong) (BVI)
Approx. 95% Approx. 5%
Target Company
(BVI)
100%
HK Company
(Hong Kong)
100%
PRC Company
(PRC)
Target Project
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LETTER FROM THE BOARD

(ii) Immediately after Completion and assuming there will be no change in (1) the shareholding structure of the Company; and (2) Charm Peak’s shareholding in the Target Company after the Latest Practicable Date

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The Vendor
(Hong Kong)
Approx. 60.68%
The Company Charm Peak
(Hong Kong) (BVI)
Approx. 95% Approx. 5%
Target Company
(BVI)
100%
HK Company
(Hong Kong)
100%
PRC Company
(PRC)
Target Project
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Financial Information of the Target Group

Set out below is the unaudited consolidated financial information of the Target Group for the two years ended 31 December 2013 and 2014 respectively and for the 6 months ended 30 June 2015 as taken from the consolidated management accounts of the Target Group:

		For the	For the	For the
		year ended	year ended	6 months ended
		31 December 2013	31 December 2014	30 June 2015
		HK$’000	HK$’000	HK$’000
Loss	before taxation	28,812	3,481	16,895
Loss	after taxation	28,812	3,481	16,895

The audited consolidated net liability attributable to owners of the Target Company as at 30 June 2015 was RMB431 million.

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LETTER FROM THE BOARD

(D) REASONS FOR AND BENEFITS OF THE ACQUISITION

The Group is principally engaged in property development, property investment and property management.

In recent years, the differentiation of the real estate industry has been accelerating, and the value of the assets in the core location of the first-tier cities in the PRC is gradually becoming prominent. The Group is optimistic about the long term development prospect of the real estate market in Shenzhen, a city acclaimed to be the capital of innovation of China with active economic activities. It is the Group’s strategy to “focus on the development in Shenzhen” and to continue to expand the land reserves in Shenzhen. The Target Group holds the Target Project which is located at the prime location of Luohu District, Shenzhen. The Directors consider that the Acquisition is in line with the Group’s development strategy and will further improve the Group’s profitability and facilitate the sustainable development of the Group in the long run.

It is expected that the Target Project will solidify and invigorate the prime location where it is situate at and maximize its value and function. As an important component to the business district in Luohu, the Target Project is expected to remodel the living area in the eastern part of Luohu and turn Huangbeiling into a central district which pools new culture and new means of exchange.

The Directors are of the view that the terms of the Sale and Purchase Agreement (and the transactions contemplated thereunder) are on normal commercial terms and in the ordinary and usual course of business of the Company, and the Acquisition are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

(E) LISTING RULES IMPLICATIONS

Listing Rules implications

As one of the applicable percentage ratios for the Acquisition exceeds 5% but all of them are less than 25%, the Acquisition constitutes a discloseable transaction of the Company and is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

As the Vendor is the direct controlling shareholder of the Company (it, together with its associates, held approximately 60.68% of the issued Shares as at the date of the Sale and Purchase Agreement), the Vendor is a connected person of the Company. Accordingly, the Acquisition constitutes a connected transaction of the Company and is subject to the reporting, announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

None of the Directors has a material interest in the Acquisition for which he shall be required to abstain from voting on the board resolution approving the Acquisition.

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LETTER FROM THE BOARD

As at the Latest Practicable Date, the Vendor and its associates controlled or were entitled to exercise control over the voting rights of 4,480,478,142 Shares (representing approximately 60.68% of the issued Shares). The Vendor and its associates are required to abstain from voting in respect of the resolution approving the Acquisition at the EGM.

Independent Board Committee

In compliance with the Listing Rules, the Independent Board Committee has been established to consider the terms of the Acquisition and to advise the Independent Shareholders as to whether they are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole and to give its recommendation as to the voting in respect of the resolution to be proposed at the EGM for approving the Acquisition, after taking into account the recommendation of the Independent Financial Adviser. In this connection, the Independent Financial Adviser has been appointed to advise the Independent Board Committee and the Independent Shareholders regarding the terms of the Acquisition.

(F) RE-ELECTION OF RETIRING DIRECTOR

The Board currently consists of nine Directors, namely Mr. LU Hua, Mr. HUANG Wei, Mr. MOU Yong, Mr. LIU Chong, Dr. WU Jiesi, Mr. HUANG Yige, Mr. LI Wai Keung, Mr. WU Wai Chung, Michael and Dr. WONG Yau Kar David.

Mr. HUANG Wei was appointed by the Board as Director to fill casual vacancy on 21 July 2015. In accordance with Article 91 of the Articles of Association, Mr. HUANG Wei will hold office as Director only until the next following general meeting following his appointment by the Board with effect from 21 July 2015 and, being eligible, he has offered himself for re-election at the EGM.

Details of Mr. HUANG Wei who is proposed to be re-elected as a Director at the EGM are set out in Appendix II to this circular.

(G) EGM

Set out on pages EGM-1 to EGM-2 is a notice convening the EGM to be held at Academy Room, 1st Floor, InterContinental Grand Stanford Hong Kong, 70 Mody Road, Tsimshatsui East, Kowloon, Hong Kong at 10:30 a.m. on Friday, 11 March 2016 at which ordinary resolutions will be proposed to consider and, if thought fit, to approve the Acquisition and to re-elect Mr. HUANG Wei as a Director.

A proxy form for use at the EGM is enclosed with this circular. Whether or not you intend to attend the EGM, you are requested to complete and return the proxy form in accordance with the instructions printed thereon to the office of the Company’s share registrar, Tricor Standard Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the EGM or any adjournment thereof. Completion and return of the proxy form will not preclude you from attending and voting at the EGM or any adjourned EGM should you so wish.

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LETTER FROM THE BOARD

The register of members of the Company will be closed from Wednesday, 9 March 2016 to Friday, 11 March 2016, both days inclusive, during which period no transfer of Shares will be registered. In order to be eligible to attend and vote at the EGM, all duly completed transfer forms accompanied by the relevant share certificates must be lodged with the Company’s share registrar, Tricor Standard Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong for registration no later than 4:30 p.m. on Tuesday, 8 March 2016.

(H) RECOMMENDATIONS

Your attention is drawn to the letter from the Independent Board Committee to the Independent Shareholders set out on page 21 of this circular and the letter from the Independent Financial Adviser on pages 22 to 36 to advise the Independent Board Committee and the Independent Shareholders in relation to the terms of the Acquisition.

The Directors consider that the terms of the Sale and Purchase Agreement are on normal commercial terms and in the ordinary and usual course of business of the Company and the Acquisition is fair and reasonable as far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend the Independent Shareholders to vote in favour of the resolution to be proposed at the EGM to approve the Acquisition. You are advised to read the letter from the Independent Board Committee and the letter from the Independent Financial Adviser mentioned above before deciding how to vote on such resolution to be proposed at the EGM.

The Directors also consider that the re-election of Mr. HUANG Wei as a Director is in the interests of the Company and the Shareholders as a whole and they recommend the Shareholders to vote in favour of the resolution to be proposed at the EGM to re-elect Mr. HUANG Wei as a Director.

(I) ADDITIONAL INFORMATION

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

Yours faithfully, For and on behalf of the Board of Shenzhen Investment Limited LU Hua Chairman

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

The following is the text of the letter of recommendation from the Independent Board Committee to the Independent Shareholders prepared for the purpose of incorporation in this circular.

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(Incorporated in Hong Kong with limited liability)

(Stock Code: 00604)

23 February 2016

To the Independent Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO ACQUISITION OF APPROXIMATELY 95% OF THE ISSUED SHARE CAPITAL OF FAIRWIND POWER LIMITED

We refer to the circular of the Company dated 23 February 2016 (the “ Circular ”), of which this letter forms part. Unless the context requires otherwise, capitalised terms used herein shall have the same meanings as those defined in the Circular.

We have been appointed by the Board as members of the Independent Board Committee to advise you on the terms of the Acquisition. VMS has been appointed as the independent financial adviser to advise you and us in the same regard. Details of their advice, together with the principal factors and reasons they have taken into consideration in giving such advice, are set out on pages 22 to 36 of the Circular. Your attention is also drawn to the “Letter from the Board” in the Circular and the additional information set out in the appendices thereto.

Having considered the terms of the Acquisition, and taking into account the advice of VMS, in particular the principal factors, reasons and advice as set out in their letter, we consider that the entering into of the Sale and Purchase Agreement and the performance of the transactions contemplated thereunder are in the interests of the Company and the Shareholders as a whole, and the terms of the Sale and Purchase Agreement are on normal commercial terms in the ordinary and usual course of business of the Company, and are fair and reasonable so far as the Independent Shareholders are concerned. We therefore recommend you to vote in favour of the ordinary resolution to be proposed at the EGM to approve the Acquisition.

Yours faithfully,

Independent Board Committee

Mr. LI Wai Keung Mr. WU Wai Chung, Michael Dr. WONG Yau Kar, David Independent non-executive Directors

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the full text of the letter of advice from VMS Securities Limited to the Independent Board Committee and the Independent Shareholders in relation to the Acquisition prepared for the purpose of incorporation in this circular.

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VMS Securities Limited 49/F, One Exchange Square 8 Connaught Place, Central, Hong Kong 香港中環康樂廣場8號交易廣場1期49樓 Tel/電話: (852) 2996 2100 Fax/傳真: (852) 2996 1210

23 February 2016

To: The Independent Board Committee and the Independent Shareholders of Shenzhen Investment Limited

Dear Sirs,

DISCLOSEABLE AND CONNECTED TRANSACTION

INTRODUCTION

We refer to our engagement as the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Acquisition, details of which are set out in the letter from the Board (the “ Letter from the Board ”) contained in the circular of the Company (the “ Circular ”) to the Shareholders dated 23 February 2016, of which this letter forms part. Capitalized terms used in this letter shall have the same meanings as those defined in the Circular unless the context otherwise requires.

On 21 December 2015 (after trading hours), the Board announced that the Company and the Vendor entered into the Sale and Purchase Agreement pursuant to which the Company has conditionally agreed to acquire and the Vendor has conditionally agreed to sell the Sale Shares, representing approximately 95% of the issued share capital of the Target Company as at the date of the Sale and Purchase Agreement.

As the Vendor is the direct controlling shareholder of the Company (it, together with its associates, held approximately 60.68% of all the issued Shares as at the date of the Sale and Purchase Agreement and the Latest Practicable Date), the Vendor is a connected person of the Company. Accordingly, the Acquisition constitutes a connected transaction of the Company and is subject to reporting, announcement and the independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

Since one of the applicable percentage ratios for the Acquisition exceeds 5% but all of them are less than 25%, the Acquisition also constitutes a discloseable transaction of the Company and is subject to reporting and announcement requirements under Chapter 14 of the Listing Rules.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

According to the Listing Rules, the Vendor and its associates are required to abstain from voting in respect of the resolution approving the Acquisition to be proposed at the EGM.

The Independent Board Committee comprising all independent non-executive Directors, namely Mr. Li Wai Keung, Mr. Wu Wai Chung, Michael and Dr. Wong Yau Kar, David, has been established to consider the terms of the Acquisition and to advise the Independent Shareholders as to whether they are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole and to give its recommendation as to how the Independent Shareholders shall vote in respect of the resolution to be proposed at the EGM for approving the Acquisition, after taking into account our recommendation.

During the past two years, VMS had no past engagement with the Company. As at the Latest Practicable Date, we were independent from and not connected with the Group under Rule 13.84 of the Listing Rules, and accordingly, qualified to give independent advice to the Independent Shareholders regarding the Sale and Purchase Agreement and the transactions contemplated thereunder. Apart from the normal advisory fee payable to us in connection with our appointment as the independent financial adviser to the Independent Board Committee and the Independent Shareholders, no arrangement exists whereby we shall receive any other fees or benefits from the Company.

In formulating our opinion, we have relied on the information and facts supplied, and the opinions expressed, by the executive Directors and management of the Company and have assumed that the information and facts provided and opinions expressed to us were true, accurate and complete in all material aspects at the time they were provided or expressed to us and remain so up to the date of this letter. We have also sought and received confirmation from the executive Directors that no material facts have been omitted from the information supplied and opinions expressed to us. We have relied on such information and consider that the information we have received is sufficient for us to reach the opinion set out in this letter and to justify our reliance on such information. We have no reason to believe that any material information has been withheld, nor doubt the truth or accuracy of the information provided. We have, however, not conducted any independent investigation into the business and affairs of the Group or the Target Group, nor have we carried out any independent verification of the information supplied.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion and advice in relation to the Acquisition, we have considered the following principal factors and reasons:

1. Background and reasons for entering into the Sale and Purchase Agreement

The Group is principally engaged in (i) property development, property investment and property management; and (ii) manufacturing and sale of industrial and commercial products. The property segment accounted for over 90% of the Group’s total turnover in the last two financial years. According to the Group’s published financial information, revenue from its property segment amounted to approximately HK$8,863.4 million, HK$12,830.3 million and HK$5,758.3 million, representing approximately 90.6%, 92.8% and 91.7% of total revenue for the years ended 31 December 2013 and 2014 and the 6 months ended 30 June 2015, respectively.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Directors are of the view that the PRC property sector has long term prospects in view of the continued PRC economic growth, urbanisation trends, high household savings rates, increasing demand of end-users and the governmental policy to promote urbanisation. Since land bank is one of the critical elements of a successful property company, the Group has put efforts to identify and secure new property projects for further expansion.

It was stated in the Group’s interim report for the 6 months ended 30 June 2015 that it will continue to implement its strategy of “intensifying the development in Shenzhen” and to continue to expand the land reserves in Shenzhen by, among others, asset injection from the parent company.

The Target Group is principally engaged in the Target Project, being a work in progress redevelopment project of two pieces of land at Huangbeiling, Luohu District, Shenzhen involving the development of a comprehensive living complex comprising an open city commercial street, a metro shopping promenade, office towers, hotels and health-oriented residence. The Target Project is situated at the junction of Feng Huang Road and Shennan East Road, which is an established residential area and central business district in Luohu District with access to Line No. 2, Line No. 5 and the planned Line No. 8 of the Shenzhen Metro. In view of prime location of the Target Project and redevelopment value, the Directors regard the Target Project as a good investment opportunity.

The redevelopment work of the Target Project has been commenced in 2011 and is currently expected to be completed by phases in 2017 and 2018. The Directors consider that it is a faster and easier way to increase the Group’s land bank in prime location and broaden the revenue base through the Acquisition.

In light that the Acquisition (i) is in line with the Group’s property business in which it is principally engaged; (ii) aligns with the Group’s strategy to focus on the development in Shenzhen; and (iii) increases the Group’s land bank of prime location which strengthens the Group’s market position in the PRC, we concur with the Directors’ views that the Acquisition is in the interests of the Company and Shareholders as a whole.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

2. Major terms of the Sale and Purchase Agreement

The following is our analyses and views on the major terms of the Sale and Purchase Agreement:

(i) The Consideration

Basis of the Consideration

The Consideration of RMB1,914,000,000 (equivalent to HK$2,264,233,290 based on the Agreed Exchange Rate) represents a discount of approximately 3% to an amount representing 95% of the initial Reassessed NAV of RMB2,077 million mentioned below (being the value attributable to the Sale Shares).

As stated in the Letter from the Board, the Consideration was determined after arm’s length negotiation between the Company and the Vendor. The consideration has been determined with reference to, among other things, the initial Reassessed NAV of RMB2,077 million, representing the audited consolidated net liability value attributable to owners of the Target Company as at 30 June 2015 after adjusting for (i) the preliminary valuation of the Target Project held by the Target Group (using the direct comparison valuation approach to assess the land portion of the Target Project and having taking into account the incurred construction costs and the costs that will be incurred to complete the development to reflect the market value of the Target Project in its existing state) as at 30 September 2015 in the amount of RMB6,500 million (equivalent to approximately HK$7,689 million based on the Agreed Exchange Rate); and (ii) the estimated potential tax liabilities of the Target Group upon disposal of the Target Project in its existing state.

Subsequent to the date of the Sale and Purchase Agreement, Asset Appraisal Limited (“ Asset Appraisal ”) has provided an updated valuation of the Target Project as at 30 November 2015. Based on the market value of the Target Project as at 30 November 2015 in the amount of RMB6,573 million as set out in the valuation report on the property interests of the Target Group in Appendix I to the Circular, the Reassessed NAV has increased from RMB2,077 million (equivalent to approximately HK$2,457 million based on the Agreed Exchange Rate) based on the preliminary valuation of the Target Project as at 30 September 2015 to approximately RMB2,098 million (equivalent to approximately HK$2,482 million based on the Agreed Exchange Rate) based on the market value of the Target Project as at 30 November 2015. The Consideration represents a discount of approximately 4% to an amount representing 95% of the increased Reassessed NAV (being approximately RMB2,098 million).

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Reassessed NAV (based on the market value of the Target Project as at 30 November 2015) could be reconciled as follows:

RMB million

(approximately)

Audited consolidated net liability value attributable to owners of the Target Company as at 30 June 2015 (431.4)

Properties revaluation adjustment:

Appreciation of the Target Project (being the difference

between the valuation appraised by Asset Appraisal as at 30 November 2015 and the relevant book value of the Target Project) 4,768.3

Less: Estimated potential tax liabilities adjustments[1] (2,239.0)

Reassessed NAV (based on the market value of the Target Project as at 30 November 2015) 2,097.9

HK$ million (approximately)

95% of the Reassessed NAV (based on the market value of the Target Project as at 30 November 2015 and the Agreed Exchange Rate) (2,097.9 x 0.95 x 1.182985) 2,357.7 The Consideration 2,264.2

Discount of the Consideration to 95% of the Reassessed NAV

(based on the market value of the Target Project as at 30 November 2015) 4.0%

As illustrated above, the updated discount of approximately 4.0% of the Consideration of RMB1,914.0 million to the amount of 95% of the Reassessed NAV (based on the market value of the Target Project as at 30 November 2015) of approximately RMB1,993.0 million is higher than the approximately 3.0% discount as intended at the time of signing the Sale and Purchase Agreement. The higher discount is

1 The relevant tax liabilities represent land appreciation tax and corporate income tax expected to be borne by the Target Group upon disposal of the Target Property in its existing state as estimated by the Company for deduction from the appreciation amount for the purpose of deriving the Reassessed NAV. For land appreciation, it is taxed at progressive tax rates ranging from 30% to 60% on the land appreciation amount. For corporate income, it is taxed at 25% on the assessable income which is arising from deducting the relevant expenses and costs (including the relevant land appreciation tax) from the relevant income.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

attributable to a higher valuation by the valuer for the Target Project as at 30 November 2015 as compared to that as at 30 September 2015 which was adopted by the parties when the Consideration was determined. The valuation as at 30 November 2015 is higher than the one as at 30 September 2015 as there were more construction costs incurred subsequently. The higher valuation also accordingly affects the estimated potential tax liabilities adjustment. As the Group enjoys a higher discount to the amount of 95% of the Reassessed NAV (based on the market value of the Target Project as at 30 November 2015), we consider that this is favourable to the Group.

The related estimated tax liabilities based on the preliminary valuation of the Target Project as at 30 September 2015 is agreed between the contracting parties, for the purpose of determining the Consideration. They are for deduction from the then appreciation of the Target Project based on such preliminary valuation to arrive at the Reassessed NAV which formed the basis for determination of the Consideration. The bases and the related amount of the estimated tax liabilities based on the preliminary valuation of the Target Project as at 30 September 2015 were agreed between the contracting parties for arriving at the consideration amount. Shareholders should note that, the estimated tax liabilities mentioned above should by no means to be viewed as the future tax liability position which could be higher or lower.

We concur with the Directors that the above adjustments were the relevant adjustments in arriving at the Consideration, as the net liability value of the Target Group as at 30 June 2015 did not take into account the relevant market valuation of the Target Project or the estimated potential tax payables upon disposal of the Target Project held by the Target Group in its existing state.

We note that there has been fluctuation of RMB in offshore market recently. The exchange rate of RMB at 6:00 p.m. on Latest Practicable Date was approximately RMB1 to HK$1.1931 (source: http://www.bloomberg.com) which is higher than the Agreed Exchange Rate of RMB1 to HK$1.182985. If this recent exchange rate was to be applied, the Consideration of RMB1,914,000,000 would be equivalent to HK$2,283,593,400 (1,914,000,000 x 1.1931) which is higher than the equivalent amount of HK$2,264,233,290 based on the Agreed Exchange Rate pursuant to the Sale and Purchase Agreement by approximately HK$19.4 million. Should there be no agreement to settle the Consideration in Hong Kong dollar at the Agreed Exchange Rate, any appreciation of RMB against Hong Kong dollar as compared to the Agreed Exchange Rate would result in the Group being required to pay more than HK$2,264,233,290 to settle the Consideration. The agreement to settle the Consideration in Hong Kong dollars at the Agreed Exchange Rate as provided in the Sale and Purchase Agreement therefore isolates the Company from exposure to the risk of appreciation in RMB against Hong Kong dollar when compared to the Agreed Exchange Rate. Shareholders should also note that exchange rate of RMB against Hong Kong dollar may fluctuate in the future. If the exchange rate drops below the Agreed Exchange Rate, the rate of discount will be lower than 4% as shown in the table above.

On the basis that (i) the Consideration represents a discount to the amount of 95% of the Reassessed NAV (after considering of the aforesaid recent exchange rate of RMB), which we consider to be commonly used in assessing the fairness of the Consideration;

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

and (ii) the valuation methodologies adopted by Asset Appraisal in establishing the market value of the properties attributable to the Target Group are reasonable and acceptable as detailed in the section below headed “Valuation of properties” of this letter, we consider the Consideration to be fair and reasonable.

(ii) Payment terms

As stated in the Letter from the Board, the Consideration will be settled in HK$ in the following manner:

(a) as to HK$1,132,116,645, being 50% of the Consideration, will be paid by the Company in cash at Completion; and
(b) as to HK$1,132,116,645, being the remaining 50% of the Consideration, will be settled by the Promissory Note to be issued by the Company to the Vendor at Completion. The Promissory Note will be settled in cash by the Company (i) within three months after the date of Completion; or (ii) within 14 days after the date on which the Target Group has obtained the state-owned land use right certificate for Land B, whichever is later but if the last date of the period determined as aforesaid is not a Business Day, then, the latest date to settle the Promissory Note will be the Business Day immediately after such last date.

As stated in the Letter from the Board, at the time of entering into the Sale and Purchase Agreement, the Target Group had not yet received the Land B Land Use Right Grant Contract signed by UPLRCS Bureau. Nonetheless, as represented by the Vendor, the Target Group has fully paid the land fee and has obtained the construction land planning permit (建設用地規劃許可證) for Land B. Completion of the Acquisition is conditional upon a land grant contract having been entered into between the PRC Company and UPLRCS Bureau for Land B. The Vendor agreed that, in the event that the land fee required to be paid as provided under the Land B Land Use Right Grant Contract or other relevant legal documents is, and/or the actual amount paid by the PRC Company ends up to be more than the land fee already paid by the PRC Company for Land B, the Vendor will fully indemnify the Company for the excess amount.

On 28 December 2015, the Company was informed by the Vendor of the entering into the Land B Land Use Right Grant Contract by the PRC Company and UPLRCS Bureau. The amount of land fee payable by the PRC Company as provided under the Land B Land Use Right Grant Contract is the same as the land fee already paid by the PRC Company as represented by the Vendor, and the use, total land area, total GFA and period of land use rights specified under the Land B Land Use Right Grant Contract are also the same as those as represented by the Vendor. As informed by the Vendor, the PRC Company is in the process of applying for the state-owned land use right certificate in respect of Land B. Further details are set out in the Letter from the Board.

As the Target Group has yet to obtain the land use right certificate of Land B, we are of the view that it is in the interests of the Company to honour the Promissory Note payment after the Target Group has obtained the state-owned land use right certificate for Land B.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(iii) The Indemnities

Under the Sale and Purchase Agreement, (i) the Company and the Vendor have agreed to indemnify each other for losses, liabilities or expenses, directly or indirectly incurred by such other party, arising from, as a result of or based on its non-compliance of any provision of the Sale and Purchase Agreement; and (ii) the Vendor has agreed to indemnify the Company for losses suffered by the Company due to, among others, (a) claims and proceedings arising from any causes or facts existing prior to Completion; and (b) any breaches or non-compliance of the relevant laws and regulations of the PRC or contracts by members of the Target Group prior to Completion.

Upon Completion, a tax indemnity deed is required to be executed by the Vendor pursuant to which the Vendor will undertake to indemnify the Company, among others, (i) any loss incurred by the Target Group where the Target Group is required to bear any tax liabilities of the Vendor which may arise from the transactions pursuant to the Sale and Purchase Agreement; and (ii) any tax liabilities or claims due to or with reference to any income, profits or gains earned, accrued or received, transactions carried out by the Target Group prior to the Completion Date.

The indemnities stated above are intended to enhance the protection of the Company from incurring any potential unnecessary losses from the Target Group arising from (i) any claims and proceedings or any non-compliance of the relevant laws and regulations of the PRC by the Target Group prior to Completion; (ii) any tax liabilities of the Vendor arising from the transactions pursuant to the Sales and Purchase Agreement; and (iii) any tax liabilities or claims due to or with reference to any income, profits or gains earned, accrued or received, transactions carried out by the Target Group prior to the Completion Date. We are of the view that the indemnities are in the interest of the Group and the Shareholders as a whole.

(iv) Conditions precedent and Completion

For the details please refer to the sub-section headed “Conditions precedent” in the Letter from the Board.

Completion is required to take place on the date falling on the second Business Day after all the conditions precedent under the Sale and Purchase Agreement have been fulfilled or waived by the Company (or such other date as the Vendor and the Company may agree in writing).

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

If the conditions precedent are not fulfilled (or waived as aforesaid) on or before 31 March 2016 (or such other longer period as agreed by the Vendor and the Company in writing), the Sale and Purchase Agreement will be terminated automatically and whereupon none of the Vendor and the Company will have any obligations towards the other, save and except for any antecedent breach and in respect of a few provisions in Sale and Purchase Agreement relating to, among other things, confidentiality.

It is stated in the Letter from the Board that (i) having considered the terms and conditions of the Land B Land Use Right Grant Contract; and (ii) taking into account the advice of the PRC legal advisers, it is considered that the condition of entering into a legally enforceable land use right grant contract between the PRC Company and UPLRCS Bureau for granting of the land use right of Land B by UPLRCS Bureau to the PRC Company has been fulfilled.

3. Information on the Target Group and Target Project

(a) The Target Group

Below is the unaudited consolidated financial information of the Target Group for the two years ended 31 December 2013 and 2014 and for the 6 months ended 30 June 2015, respectively, as set out in the Letter from the Board, such information is based on the consolidated management accounts of the Target Group:

	For the	For the		For the
	year ended	year ended	6 months ended
	31 December 2013	31 December 2014	30 June 2015
	HK$’000	HK$’000		HK$’000
Loss before and after
taxation	28,812	3,481		16,895

The principal asset of the Target Group is the Target Project which is a work in progress redevelopment project on Land A and Land B at Huangbeling, Luohu District, Shenzhen, the PRC. Since the Target Project is under construction, the Target Group mainly recorded operating expenses and finance costs with no revenue for the financial years of 2013 and 2014 and the first half of 2015. This resulted in losses of the Target Group. As further set out in the Letter from the Board, the audited consolidated net liability attributable to owners of the Target Company as at 30 June 2015 was RMB431 million which was primarily due to accumulated losses recorded by the Target Group.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(b) The Target Project

Details of Land A and Land B are as below:

Land A

Lot Number : H219-0041 Total land area : Approximately 48,434 sq.m. Total GFA (counting for : 343,593 sq.m. (inclusive of the Resettlement plot ratio) (計容積率建 Properties) 築面積) Total GFA (not counting : 110,147.69 sq.m. for plot ratio) (不計容積率建築面積) Use : Residential (Type II) and commercial Period of land use right : 70 years, commencing from 4 March 2013 ending on 3 March 2083

Land B

Lot Number : H216-0030 Total land area : Approximately 6,750 sq.m. Total GFA (counting for : 57,200 sq.m. plot ratio) Use : Commercial Period of land use right : 40 years, commencing from 18 December 2015 to 17 December 2055

The Target Project, called “Shum Yip Dong Ling (深業東嶺)”, is a redevelopment project in Huangbeiling, Luohu District, Shenzhen, the PRC. The Target Project is situated at the junction of Feng Huang Road and Shennan East Road, which is an established residential area and central business district in Luohu District with access to Line No. 2, Line No. 5 and the planned Line No. 8 of the Shenzhen Metro.

It is stated in the valuation report set out in Appendix I to the Circular that Land A is planned to be developed into a residential/commercial development project comprising 2 blocks of 45-storey residential building, 9 blocks of 26 to 43-storey residential building and 3 blocks of commercial/retail building and a nursery with a total gross floor area of 453,740.69 square metres which is attributable to (i) residential area of 289,628 square metres; (ii) commercial/retail area of 43,672 square metres; (iii) nursery area of 2,400 square metres; (iv) basement of 110,147.69 square metres; and (v) other areas of 7,893 square metres. A land use right certificate in respect of Land A was issued on 2 July 2013 in the name of the PRC Company.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As remarked in the land use right certificate in respect of Land A, such community facilities as nursery, property service office, cultural activity room, elderly activity station, public lavatories, social organization office, residents’ committee office and garbage collection station shall be provided within the development on Land A. The aforesaid public lavatories, social organization office, residents’ committee office and garbage collection station shall be surrendered to the government free of charge. It is further stated in the valuation report that as confirmed by the Target Company, out of the total gross floor area of 289,628 square metres of residential use, 43,672 square metres of commercial use and 1,997 bays of carparking spaces within the buildings on Land A, floor areas of 149,173.448 square metres of residential use, 3,925.46 square metres of commercial use and 200 bays of carparking spaces shall be reverted to the previous owners of the land parcel free of charge. Superstructure work of the lot is currently underway and the residential/commercial development is scheduled for completion by end of 2017.

As discussed in the valuation report, Land B is planned to be developed into a 31-storey (plus 4 basement levels) commercial building with a total gross floor area of 76,733.20 square metres which is attributable to (i) office area of 28,000 square metres; (ii) retail area of 29,085 square metres; and (iii) other areas of 19,648.2 square metres. A total of 472 bays of carparking spaces shall be provided in the development. Construction work of Land B is yet to commence and it is currently being occupied by site offices. The period of land use right of Land B have been granted for a term of 40 years.

It is stated in the Letter from the Board that, as a redevelopment project, the PRC Company entered into certain demolition and compensation agreements and supplemental agreements thereto with the previous owners (回遷戶) of certain portions of Land A and Land B. Pursuant to such agreements, it was agreed that the Resettlement Properties are to be reverted to these previous owners as compensation, and any discrepancy between the actual GFA of the Resettlement Properties reverted to the previous owners and the agreed floor area will be dealt by way of cash payments (to be calculated at the pre-agreed price) by the PRC Company to the relevant previous owners (in the event that the actual GFA of the Resettlement Properties so reverted is less than the agreed floor area) or by the relevant previous owners to the PRC Company (in the event that the actual GFA of the Resettlement Properties is more than the agreed floor area). As stated in note 7 of the valuation certificate of Asset Appraisal in the valuation report on the property interests of the Target Group in Appendix I to the Circular, in arriving at their opinion of the market value of the Target Project as at 30 November 2015 in the amount of RMB6,573 million, the market values of the Resettlement Properties have been disregarded. After Completion, the Group will continue the redevelopment work of the Target Project and comply with its obligations under the demolition and compensation agreements and the supplemental agreements.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

It is also stated in the Letter from the Board that pursuant to the property title certificate (房地產權屬證書) and the land use right grant contract in respect of Land A, the PRC Company is required to complete the site clearance in respect of certain land portions (including Land B and the specified portions which are for communal traffic road, greenery space and secondary school use), and to surrender such land portions to the PRC government without compensation. The PRC Company has completed such site clearance on such land portions and has surrendered to the PRC government the land portions which are required to be surrendered by the PRC Company.

It is further stated in the Letter from the Board that while none of the property title certificate (房地產權屬證書), the land use right grant contract in respect of Land A and the Land B Land Use Right Grant Contract has imposed any obligations on the part of the PRC Company to complete the construction works of communal traffic road, greenery space and secondary school, the Company’s PRC legal advisers are of the view that pursuant to certain agreements and correspondence made with/issued by the relevant PRC government authorities a number of years before the entering into of the land use right grant contract in respect of Land A which are relevant to the Target Project, the PRC Company is under the obligation to complete the construction works of communal traffic road, greenery space and secondary school on certain land portions at the cost of the PRC Company.

The Company’s PRC legal advisers are further of the view that since there has been no agreement between the relevant PRC government authorities and the Target Group on the requirements in respect of such construction works (such as their scale, standards and completion deadlines), such requirements can only be determined after negotiation between relevant PRC government authorities and the PRC Company. As stated in the Appendix I to the Circular, the PRC legal advisers are also of the view that the inaction of PRC Company to complete such construction works shall not constitute any legal impediment for PRC Company to obtain the land use right certificate and the pre-sale permit in respect of Land B. It is stated in the Letter from the Board that as informed by the Vendor, as at the Latest Practicable Date, the PRC Company had not been required by the relevant PRC government authorities to complete such construction works or to negotiate the requirements in respect of such construction works, and had no intention to initiate such negotiation.

It is set out in the Letter from the Board that if the PRC Company is required by the relevant PRC government authorities to complete such construction works, the Company may consider, among other things, seeking indemnities from the Vendor for losses, liabilities or expenses incurred by the Company pursuant to the Sale and Purchase Agreement.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

4. Valuation of properties

We draw the attention of the Independent Shareholders to the full text of the valuation report set out in Appendix I to the Circular. We have interviewed Asset Appraisal regarding its expertise and understand that Asset Appraisal provides professional appraisal service of tangible and intangible assets, land & buildings, plant & machinery in Hong Kong, the PRC and overseas. The executive signing the valuation report is a Registered Professional Surveyor in General Practice Division and has over 10 years’ valuation experience on properties in Hong Kong, Macau and the PRC. Further details of the qualifications and experiences of the executive who signed the valuation report are disclosed in the valuation report set out in Appendix I to the Circular.

We have reviewed Asset Appraisal’s terms of engagement and noted that the purpose of which is to prepare the valuation report, and provide the Company with the opinion of value on the Target Project held by the Target Group. The engagement letter also contains standard valuation scopes that are typical of property valuation carried out by independent property valuers.

As set out in the valuation report and based on our discussion with Asset Appraisal, the valuer has valued the Target Project on the basis that it will be developed and completed in accordance with the latest development scheme provided by the Company. In arriving at the opinion of value, Asset Appraisal has adopted the direct comparison approach to assess the land portion of the Target Project and has also taken into account the incurred construction costs and the costs that will be incurred to complete the development to reflect the market value of the Target Project in its existing state as at 30 November 2015.

We have reviewed and discussed with Asset Appraisal the methodology of and the valuation assumptions adopted for the valuation, which are summarised in the valuation report as set out in Appendix I to the Circular.

Asset Appraisal advised that under The HKIS Valuation Standards 2012 Edition published by the Hong Kong Institute of Surveyors, there are two valuation approaches commonly used, namely, the market approach and the income approach. Market approach is preferable for assets with an active market. When there is only rare transactions or even no transaction for the asset under consideration, the income approach is adopted as an alternative. Asset Appraisal advised that the direct comparison approach adopted by it to assess the land portion of the Target Project is one of the market approaches which is commonly used for properties with active transactions in the market. The market approach, based on market price information with less valuation assumptions, is superior to the income approach which is subject to numerous assumptions, not all of them can be easily quantified or ascertained. We note that the Target Project is situated in an established residential area and central business district in Luohu, Shenzhen which is a developed city and outstanding for its prosperous property market in the PRC. In this regard, we agree with Asset Appraisal that the direct comparison approach adopted is appropriate for valuation of the Target Project.

– 34 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

According to the valuation report and our discussions with Asset Appraisal, public lavatories, social organization office, residents’ committee office and garbage collection station shall be provided within the development on Land A and shall be surrendered to the government free of charge. The market value of such portions, if any, have been disregarded in the valuation of the Target Project. Also, part of the floor areas of residential use, commercial use and carparking spaces (i.e., the Resettlement Properties) shall be reverted to the previous owners of the Land A and Land B free of charge. The market values of the Resettlement Properties have been disregarded in the valuation of the Target Project. Since all the construction costs of the Resettlement Properties were/will be borne by PRC Company, Asset Appraisal has taken into consideration of the total construction costs and expended construction costs attributable to the Resettlement Properties and has slashed the market value of the Target Project by an amount corresponding to the further construction costs to complete the Resettlement Properties.

Based on our discussions with Asset Appraisal and our understanding of the work conducted by Asset Appraisal, we consider that the above methodologies are fair and reasonable to establish the appraised value of the Target Project.

5. Possible financial effects of the Acquisition

Upon Completion, members of the Target Company will become non wholly-owned subsidiaries of the Company. Their results, assets and liabilities will be consolidated into the Group’s consolidated financial statements.

It is stated in the Letter from the Board that under the current plan, the Target Project will be developed into a comprehensive living complex comprising an open city commercial street, a metro shopping promenade, office towers, hotels and health-oriented residence. The redevelopment work of the Target Project was commenced in 2011. The redevelopment of Land A and Land B is currently expected to be completed in 2017 and 2018, respectively. Accordingly, we consider that the Acquisition could potentially enhance the revenue stream of the Group. The Acquisition can also increase the land bank of the Group in respect of the property development business.

Under the Sale and Purchase Agreement, 50% of the Consideration in the amount of approximately HK$1.1 billion will be settled in cash and the remaining 50% of the Consideration in the amount of approximately HK$1.1 billion will be settled at Completion by the Promissory Note. The Promissory Note will be settled in cash within (i) three months after the date of Completion; or (ii) 14 days after obtaining the state-owned land use right certificate for Land B, whichever is later. We understand from the Directors that the Consideration will be financed by the Group’s internal resources and/or banking facilities of the Group. In this regard, we note that the Group had cash and cash equivalents of approximately HK$10.9 billion as at 30 June 2015 according to the financial information for the 6 months ended 30 June 2015. The management of the Company advised us that according to the unaudited management accounts of the Group as at 31 December 2015, the cash and cash equivalents held by the Group as at 31 December 2015 were not less than the amount held as at 30 June 2015. In this regard, we consider that the payment of the Consideration will not have an immediate adverse impact on the Group’s liquidity and working capital position.

– 35 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

6. Recommendation

Having considered the principal factors and reasons referred to above, we are of the opinion that the Acquisition, which is in the ordinary and usual course of business of the Group, is in the interests of the Company and the Shareholders as a whole, and the terms thereof are on normal commercial terms, and are fair and reasonable so far as the Group and the Independent Shareholders are concerned.

Accordingly, we advise (a) the Independent Shareholders and (b) the Independent Board Committee to recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM to approve the Acquisition.

Yours faithfully, For and on behalf of VMS Securities Limited Nick Man Managing Director Corporate Finance

Mr. Nick Man is a licensed person registered with the Securities and Futures Commission and regarded as a responsible officer of VMS Securities Limited to carry on Type 6 (advising on corporate finance) regulated activity under the SFO. Mr. Nick Man has over 10 years of experience in the corporate finance industry and has participated in the provision of independent financial advisory services for connected transactions involving companies listed in Hong Kong.

– 36 –

VALUATION REPORT ON THE PROPERTY INTERESTS OF THE TARGET GROUP

APPENDIX I

The following is the text of a letter and valuation certificate, prepared for the purpose of incorporation in this circular received from Asset Appraisal Limited, an independent valuer, in connection with its valuation as at 30 November 2015 of the property interests held by the Target Group.

Asset Appraisal Limited 中誠達資產評值顧問有限公司

Rm 901 9/F On Hong Commercial Building No.145 Hennessy Road Wanchai HK 香港灣仔軒尼詩道145號安康商業大廈9樓901室 Tel: (852) 2529 9448 Fax: (852) 3521 9591

23 February 2016

The Board of Directors Shenzhen Investment Limited

8th Floor, New East Ocean Centre

No. 9 Science Museum Road Tsimshatsui East, Kowloon Hong Kong

Dear Sirs,

Re: Valuation of Huangbeling Urban Redevelopment Project (the “Property”) at Lot Nos. H216-0030 and H219-0041 situated at the junction of Shennan East Road (深南東路) and Feng Huang Road (鳳凰路), Luohu District, Shenzhen City, Guangdong Province, the People’s Republic of China (the “PRC”)

In accordance with the instructions from Shenzhen Investment Limited (the “ Company ”) to value the Property, we confirm that we have inspected the Property, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market value of the Property as at 30 November 2015 (the “ date of valuation ”).

BASIS OF VALUATION

Our valuation of the Property represents its market value, which in accordance with The HKIS Valuation Standards 2012 Edition published by the Hong Kong Institute of Surveyors, is defined as “the estimated amount for which an asset or liability 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 knowledgeably, prudently, and without compulsion”.

TITLESHIP

We have been provided with copies of legal documents regarding the Property. However, we have not verified ownership of the Property and the existence of any encumbrances that would affect its ownership.

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VALUATION REPORT ON THE PROPERTY INTERESTS OF THE TARGET GROUP

APPENDIX I

We have also relied upon the legal opinion (the “ PRC Legal Opinion ”) provided by the PRC legal advisers, namely Zhong Lun Law Firm (the “ PRC Legal Adviser ”), to the Company on the relevant laws and regulations in the PRC, on the nature of the owner’s land use right in the Property. Its material content has been summarized in the valuation certificate attached herewith.

VALUATION METHODOLOGY

As at the date of valuation, the Property was under development. We have valued them on the basis that it will be developed and completed in accordance with the latest development scheme provided to us (if any). We have assumed that all consents, approvals and licences from the relevant government authorities for the development scheme have been obtained without onerous conditions or delays. As confirmed by the PRC Legal Adviser, the design and construction of the subject development are in compliance with the local planning regulations and have been approved by the relevant authorities. In arriving at our opinion of value, we have adopted the Direct Comparison Approach to assess the land portion of the Property and have also taken into account the incurred construction costs and the costs that will be incurred to complete the development to reflect the market value of the Property in its existing state.

ASSUMPTIONS

Our valuation has been made on the assumption that the owner sells the Property on the market without the benefit of deferred terms contracts, leaseback, joint ventures, management agreements or any similar arrangement which would serve to affect the value of the such Property.

As the Property is held by the owner by means of long term land use right granted by the Government, we have assumed that the owner has free and uninterrupted rights to use the Property for the whole of the respective unexpired terms of the land use right.

Other special assumptions for our valuation (if any) would be stated out in the footnotes of the valuation certificate attached herewith.

LIMITING CONDITIONS

Save for the construction costs attributable to those portions of the buildings to be erected on the Property (as mentioned in note 7 of the valuation certificate attached herewith), no allowance has been made in our report for any charges, mortgages or amounts owing on the Property nor for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the Property is free from encumbrances, restrictions and outgoings of an onerous nature, which could affect its value.

We have relied to a very considerable extent on the information given by Fairwind Power Limited (the “ Target Company ”) or its subsidiaries (hereinafter together referred to as the “ Target Group ”) or the Company and have accepted advice given to us on such matters as tenure, planning approvals, statutory notices, easements, particulars of occupancy, tenancy and all other relevant matters.

– I-2 –

VALUATION REPORT ON THE PROPERTY INTERESTS OF THE TARGET GROUP

APPENDIX I

We have not carried out detailed site measurements to verify the correctness of the site and floor areas in respect of the Property but have assumed that the floor areas shown on the documents and official site plans handed to us are correct. All documents and contracts have been used as reference only and all dimensions, measurements and areas are approximations.

The Property was lasted inspected by TSE Wai Leung, who is a member of the Royal Institution of Chartered Surveyors, the Hong Kong Institute of Surveyors and a Registered Professional Surveyor in General Practice, on 29 July 2015. We have inspected the exterior and, where possible, the interior of the buildings and structures of the Property. However, no structural survey has been made for them. In the course of our inspection, we did not note any apparent defects. We are not, however, able to report whether the buildings and structures inspected by us are free of rot, infestation or any structural defect. No test was carried out on any of the building services and equipment.

We must point out that we have not carried out site investigations to determine the suitability of ground conditions or the services for any property development of the Property. Our valuation is on the basis that these aspects are satisfactory and that no extraordinary expenses or delays will be incurred during construction period.

We have had no reason to doubt the truth and accuracy of the information provided to us by the Company and/or the Target Group. We have also sought confirmation from the Company and/or the Target Group that no material factors have been omitted from the information supplied. We consider that we have been provided with sufficient information to reach an informed view, and we have no reason to suspect that any material information has been withheld.

In valuing the Property, we have complied with all the requirements contained in Chapter 5 and Practice Note 12 to the Rules Governing the Listing of Securities issued by The Stock Exchange of Hong Kong Limited; the HKIS Valuation Standards (2012 Edition) published by The Hong Kong Institute of Surveyors.

All monetary sums stated in this report are in Renminbi (RMB).

Our valuation certificate is attached herewith.

Yours faithfully, for and on behalf of

Asset Appraisal Limited

Tse Wai Leung

MFin MRICS MHKIS RPS(GP) Director

Tse Wai Leung is a member of the Royal Institution of Chartered Surveyors, the Hong Kong Institute of Surveyors and a Registered Professional Surveyor in General Practice. He is on the list of Property Valuers for Undertaking Valuations for Incorporation or Reference in Listing Particulars and Circulars and Valuations in Connection with Takeovers and Mergers of the Hong Kong Institute of Surveyors, Registered Business Valuer under the Hong Kong Business Forum and has over 10 years’ experience in valuation of Property in Hong Kong, in Macau and in the PRC.

– I-3 –

VALUATION REPORT ON THE PROPERTY INTERESTS OF THE TARGET GROUP

APPENDIX I

VALUATION CERTIFICATE

Property interest held by the Target Group under development

Description and tenure

Property

Huangbeling Urban The property comprises two parcels of Redevelopment Project at land, namely, Lot Nos. H216-0030 and Lot Nos. H216-0030 and H219-0041 lying at the eastern side H219-0041 situated at the and the western side of Feng Huang junction of Shennan East Road with respective land area of Road (深南東路) and 48,434.15 square metres and 6,750.56 Feng Huang Road (鳳凰路), square metres. Luohu District, ShenzhenGuangdongthe PRC City,Province, LotdevelopedbasementNo. H216-0030levels)into a 31-storeycommercialis planned(plusbuildingto4be with a total gross floor area of 76,733.20 square metres (including basement floor area of 22,643.90 square metres) which is broken down into the following functional uses:

Market Value in Existing State as at Particulars of occupancy 30 November 2015 RMB The property is currently 6,573,000,000 vacant. (see note 7)

Use Office Retail Other	Planned GFA (sq.m.) 28,000.00 29,085.00 19,648.20
	76,733.20

A total of 472 bays of carparking spaces shall be provided in the development. Construction work for Lot No. H216-0030 is yet to

commence and it is currently being occupied by site offices. Lot No. H219-0041 is planned to be developed into a residential/ commercial development comprising 2 blocks of 45-storey residential building, 9 blocks of 26 to 43-storey residential building and 3 blocks of commercial/retail building and a nursery with a total gross floor area of 453,740.69 square metres which is broken down into the followings:

Use Residential Commercial/Retail Nursery Other Basement	Planned GFA (sq.m.) 289,628.00 43,672.00 2,400.00 7,893.00 110,147.69
	453,740.69

A total of 1,997 bays of car parking spaces shall be provided in the residential/commercial development.

Superstructure work of the development on Lot No. H219-0041 is currently underway and the residential/commercial development is scheduled for completion by end of 2017.

The land use right term of Lot No. H216-0030 is 40 years commencing on 18 December 2015 and expiring on 17 December 2055 for commercial uses.

The land use right term of Lot No. H219-0041 is 70 years commencing on 4 March 2013 and expiring on 3 March 2083 for commercial/residential (Type II) uses.

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VALUATION REPORT ON THE PROPERTY INTERESTS OF THE TARGET GROUP

APPENDIX I

Notes:

Pursuant to the State-Owned Land Use Right Grant Contract (Ref: Shen Di He Zi (2012) No. 6035) dated 18 March 2013, the land use right of Lot No. H219-0041 with a land area of 48,434.15 square metres was granted by the First Direct Administration Bureau of Urban Planning and Land Resources Committee of Shenzhen (深圳市規劃和國土資源委員會第一直屬管理局) to 新旺實業發展(深圳)有限公司 (Xin Wang Industry Development (Shenzhen) Limited, “ PRC Co. ”) (an indirect wholly-owned subsidiary of the Target Company) for a land use right term of 70 years commencing on 4 March 2013 and expiring on 3 March 2083 for commercial/residential (Type II) uses at a land premium, land development charge and infrastructure provision fee of RMB48,352,584, RMB2,090,737 and RMB271,907,238 respectively, all of which have been fully paid. As provided in the said State-Owned Land Use Right Grant Contract, the subject land parcel is subject to the following material land use conditions:

Land use : commercial/residential (type II) uses Plot Ratio : not more than 6.96× Building Height : not more than 180 metres Work Start : on or before 17 September 2014 Building Covenant : on or before 3 March 2018

Pursuant to another State-Owned Land Use Right Grant Contract (Ref: Shen Di He Zi (2014) No. 6016) dated 21 December 2015, the land use right of Lot No. H216-0030 with a land area of 6,750.56 square metres was granted by the First Direct Administration Bureau of Urban Planning and Land Resources Committee of Shenzhen (深圳市規劃和國土資源委員會第一直屬管理局) to PRC Co. for a land use right term of 40 years commencing on 18 December 2015 and expiring on 17 December 2055 for commercial uses at a land premium, land development charge and infrastructure provision fee of RMB20,229,847, RMB810,067 and RMB113,825,735 respectively, all of which have been fully paid. As provided in the said State-Owned Land Use Right Grant Contract, the subject land parcel is subject to the following material land use conditions:

Land use : commercial uses Gross Floor Area : not more than 57,200 square metres including 24,200 square metres for aboveground commercial (including 115 square metres for property management office), 28,000 square metres for office and 5,000 square metres for underground Work Start : on or before 20 June 2017 (within 18 months)

A Land Use Right Certificate (Ref. Shen Fang Di Zi No. 2000588587) issued on 2 July 2013 was issued in respect of Lot No. H219-0041 in the name of PRC Co.. As remarked in the Land Use Right Certificate, such community facilities as nursery (with a floor area of 2,400 square metres and exclusive land area of 2,700 square metres), property service office (with a floor area of 300 square metres), cultural activity room (with a floor area of 200 square metres), elderly activity station (with a floor area of 240 square metres), public lavatories (with a floor area of 80 square metres), social organization office (with a floor area of 400 square metres), residents’ committee office (with a floor area of 100 square metres) and garbage collection station (with a floor area of 80 square metres) shall be provided within the development on the lot. The aforesaid public lavatory, social organization office, residents’ committee office and garbage collection station shall be surrendered to the Government free of charge. The market value of such portions, if any, have been disregarded in the valuation of the Property.
Land Use Right Certificate for Lot No. H216-0030 has not yet been issued as at the date of valuation or the date hereof. Our valuation has been made on the basis that the PRC Co. shall have not legal impediment and subject to no payment of substantial amount for obtaining Land Use Right Certificate for the lot in due course.
According to the information provided by the Company, the total land acquisition costs of the Property (including land premium, land development charges, infrastructure provision fees and compensation/relocation costs) is approximately RMB1,230,000,000 of which a total sum of approximately RMB1,080,717,353.12 had been disbursed as at the date of valuation.
PRC Co. is an indirect wholly-owned subsidiary of the Target Company which was incorporated in the BVI and was held by Shum Yip Holdings Company Limited as to approximately 95%. Pursuant to a sale and purchase agreement entered into between Shum Yip Holdings Company Limited (referred to as the “ Vendor ”) and the Company (referred to as the “ Purchaser ”) on 21 December 2015 (the “ Acquisition Agreement ”), the Vendor conditionally agreed to sell and the Purchaser conditionally agreed to purchase approximately 95% of the issued share capital of the Target Company.

– I-5 –

APPENDIX I

VALUATION REPORT ON THE PROPERTY INTERESTS OF THE TARGET GROUP

As confirmed by the Target Company, out of the total gross floor area of 289,628 square metres of residential use, 43,672 square metres of commercial use and 1,997 bays of carparking spaces within the buildings on Lot No. H219-0041, floor areas of 149,173.448 square metres of residential use, 3,925.46 square metres of commercial use and 200 bays of carparking spaces (collectively, the “ Resettlement Properties ”) will be reverted to the previous owners of certain portions of the land parcels free of charge. The market values of the Resettlement Properties have been disregarded in the valuation of the Property. Since all the construction costs of the Resettlement Properties are borne by PRC Co., we have taken into consideration of the total construction costs and expended construction costs attributable to the Resettlement Properties and have slashed the market value of the Property by an amount corresponding to the further construction costs to complete the Resettlement Properties.
As revealed from two sets of Construction Land Use Planning Permit (Ref Shen Gui Tu Xu Nos. ZS-2012-0087 and ZS-2014-0065) issued by the First Direct Administration Bureau of the Urban Planning and Land Resources Committee of Shenzhen (深圳市規劃和國土資源委員會第一直屬管理局) to PRC Co. on 21 March 2013 and 8 April 2015 respectively, the aforesaid development scheme of the Property is in line with the planning conditions as mentioned in the permits.
Two sets of Construction Work Planning Permit (Ref Shen Gui Tu Jian Xu Nos. ZS-2014-0051 and ZS-2014-0067) were issued by the First Administration Bureau of the Urban Planning and Land Resources Committee of Shenzhen (深圳市規劃和國土資源委員會第一直屬管理局) to PRC Co. on 26 August 2014 and 27 October 2014 respectively in relation to the construction work being carried out on Lot No. H219-0041. Two sets of Construction Work Undertaking Permit (Construction Work Ref. Nos. 4403002012081203 and 4403002012081206) were issued by the Shenzhen Housing and Construction Bureau (深圳市住房和建設局) to PRC Co. on 17 September 2014 and 12 February 2015 respectively for the construction working being carried out on Lot No. H219-0041. The Construction Work Planning Permit and the Construction Work Undertaking Permit for Lot No. H216-0030 have not yet been issued as at the date of valuation.
In accordance with the information provided by the Group, the status of title and grant of major approvals and licences are as follows:

State-Owned Land Use Right Grant Contract Yes State-Owned Land Use Right Certificate Yes (Lot No. H219-0041 only) Construction Land Use Planning Permit Yes Construction Work Planning Permit Yes (Lot No. H219-0041 only) Construction Work Undertaking Permit Yes (Lot No. H219-0041 only)

As at the date of valuation, the further construction costs to be expended by PRC Co. to complete the construction in progress on Lot No. H219-0041 was approximately RMB2,223,000,000. The market value of the Property as if it were fully completed on the date of valuation (excluding those portions of the Property to be reverted to the previous owners as mentioned in note 7 above) is valued at RMB11,391,000,000.
The PRC Legal Opinion is summarized as follows:
12.1 Pursuant to the State-Owned Land Use Right Grant Contract (Ref: Shen Di He Zi (2012) No. 6035) entered into between the First Direct Administration Bureau of the Urban Planning and Land Resources Committee of Shenzhen (深圳市規劃和國土資源委員會第一直屬管理局) and PRC Co. on 18 March 2013, the land use right of Lot No. H219-0041 with a land area of 48,434.15 square metres was granted by the former party to the latter party for a land use right term of 70 years commencing on 4 March 2013 and expiring on 3 March 2083 for commercial/residential (Type II) uses at a land premium, land development charge and infrastructure provision fee of RMB48,352,584, RMB2,090,737 and RMB271,907,238 respectively. As revealed from the Acknowledgement of Full Receipt of Land Payment issued by the First Direct Administration Bureau of the Urban Planning and Land Resources Committee of Shenzhen (深圳市規劃和國土資源委員會第一直屬管理局) on 21 March 2013, all the aforesaid land payments were settled in full on 1 February 2013. A Land Use Right Certificate (Ref No. 2000588587) of the land lot has been issued to PRC Co..
12.2 As per the enquiry with the Urban Planning and Land Resources Committee of Shenzhen (深圳市規劃和國土資源委員會) made by the PRC Legal Adviser and the confirmation from PRC Co., the land use right of Lot No. H219-0041 was not subject to mortgage, seizure order and other encumbrances.

– I-6 –

VALUATION REPORT ON THE PROPERTY INTERESTS OF THE TARGET GROUP

APPENDIX I

12.3 As mentioned in the aforesaid State-Owned Land Use Right Grant Contract, the permissible plot ratio of Lot No. H219-0041 is equal to or less than 6.96. Hence, the total plot ratio gross floor area of the development over the land lot shall not be more than 337,100 square metres (comprising of 289,628 square metres for residential use, 300 square metres for property service use, 43,672 square metres for commercial use, 2,400 square metres for nursery use, 200 square metres for cultural activity room, 240 square metres for elderly activity station, 80 square metres for public lavatories, 400 square metres for social organization use, 100 square metres for residents’ committee office, 80 square metres for garbage collection station.
12.4 With reference to the property title certificate (房地產權屬證書) and the aforesaid State-Owned Land Use Right Grant Contract, PRC Co. shall surrender the land portions attributable to the communal traffic road and public greenery open space (02-01) to the PRC government without compensation at the time when it implements the property development on Lot No. H219-0041. Furthermore, PRC Co. has committed to complete the site clearance of, and to surrender to the PRC government without compensation, Lot No. H216-0030, the greenery street (街頭綠地) of Lot No. H216-0031 and the secondary school land parcel (01-01) before the commencement of pre-sale of Lot No. H219-0041. PRC Co. has completed the site clearance of such land portions and has surrendered to the PRC government such land portions (except Lot No. H216-0030, the land use right of which has been granted to PRC Co. pursuant to the Land Use Right Grant Contract in respect of Land B and as such PRC Co. is not obliged to surrender it to the PRC government). As confirmed by PRC Co., no administrative penalty had been imposed on PRC Co. as a result of the delay in surrender of the land portions attributable to the communal traffic road and public greenery open space (02-01).
12.5 The PRC Legal Adviser has advised the Company that pursuant to the redevelopment agreements made with 深圳市羅湖區建設局 (Shenzhen Luohu Construction Bureau) and a letter issued by 深圳市羅湖區舊城舊村改造辦公室 (Shenzhen Luohu Old Town & Village Renewal Office) a number of years before the entering into of the land use right grant contract in respect of Land A which are relevant to the Target Project, PRC Co. is under the obligation to complete the construction works of communal traffic road, greenery space and secondary school on certain land portions mentioned in note 12.4 above at the cost of PRC Co.. The PRC Legal Advisers are of the view that since there has been no agreement between the relevant PRC government authorities and the Target Group on the requirements in respect of such construction works (such as their scale, standards and completion deadlines), such requirements can only be determined after negotiation between relevant PRC government authorities and PRC Co.. The PRC Legal Advisers is also of the view that the inaction of PRC Co. to complete such construction works shall not constitute any legal impediment for PRC Co. to obtain the Land Use Right Certificate and the Pre-sale Permit in respect of Lot No. H216-0030.
12.6 The development scheme of Lot No. H219-0041 has gained relevant planning and construction approval including Shenzhen City Foreign Investment Project Endorsement (Ref: Shen Fa Gai He Zhun [2013] No. 0129) issued by the Development and Reform Committee of Shenzhen (深圳市發展和改革委員會), the Construction Land Use Planning Permit (Ref.: Shen Gui Tu Xu No. ZS-2012-0087) and the Construction Work Planning Permits (Ref.: Shen Gui Tu Jian Xu Nos. ZS-2014-0051 and ZS-2014-0067) all issued by the First Direct Administration Bureau of the Urban Planning and Land Resources Committee of Shenzhen (深圳市規劃和國土資源委員會第一直屬管理局), Construction Work Undertaking Permits (Construction Work Ref. Nos. 4403002012081203 and 4403002012081206) both issued by the Shenzhen Housing and Construction Bureau (深圳市住房和建設局). Particulars of the approved development scheme are set out as follows:

Developable land area : 48,434.14 square metres Permitted Uses : Residential (Type II) and commercial Developable floor area : 343,593 square metres (counting for Plot Ratio) 110,147.69 square metres (not counting for Plot Ratio)

12.7 The total plot ratio gross floor area of the aforesaid development scheme is 6,493 square metres greater than the permitted plot ratio gross floor area as provided in the aforesaid State-Owned Land Use Right Grant Contract (i.e. 337,100 square metres). Since PRC Co. has legally gained planning approval from the First Direct Administration Bureau of the Urban Planning and Land Resources Committee of Shenzhen (深圳市規劃和國土資源委員會第一直屬管理局) for the development scheme via the Construction Land Use Planning Permit and the Construction Work Planning Permits, it is lawful for PRC Co. to implement the development scheme with a total plot ratio gross floor area of 343,593 as per the Construction Work Planning Permits.
12.8 As confirmed by PRC Co., there was no delay in the commencement of the construction work of Lot No. H219-0041 and the construction-in-progress of the lot was not subject to any mortgage, seizure order, encumbrances and not involved in any dispute and argument.

– I-7 –

APPENDIX I

VALUATION REPORT ON THE PROPERTY INTERESTS OF THE TARGET GROUP

12.9 Pursuant to the State-Owned Land Use Right Grant Contract (Ref: Shen Di He Zi (2014) No. 6016) entered into between the First Direct Administration Bureau of the Urban Planning and Land Resources Committee of Shenzhen (深圳市規劃和國土資源委員會第一直屬管理局) and PRC Co. on 21 December 2015, the former party agreed to grant the land use right of Lot No. H216-0030 with a land area of 6,750.56 square metres to the latter party for a term of 40 years commencing on 18 December 2015 and expiring on 17 December 2055 for commercial use at a land premium, land development charge and infrastructure provision fee of RMB20,229,847, RMB810,067 and RMB113,825,735 respectively all of which were settled in full on 18 December 2014.
12.10 As confirmed by PRC Co., as at the date hereof, Lot No. H216-0030 was not subject to any mortgage, closure order and encumbrances. The issuance of Land Use Right Certificate for the lot is currently in progress under normal procedures and no legal impediment is found for the time being.
12.11 As revealed by the Construction Land Use Planning Permit (Ref.: Shen Gui Tu Xu No. ZS-2014-0065) issued by the First Direct Administration Bureau of the Urban Planning and Land Resources Committee of Shenzhen (深圳市規劃和國土資源委員會第一直屬管理局) on 8 April 2015, Lot No. 2013-001-0040 with an area of 6,750.61 square metres is permitted for commercial use.
12.12 Based on the confirmation of PRC Co. with due investigation of the PRC Legal Adviser, the portions of the Property to be reverted to the previous owners of certain portions of the subject land parcels as compensation are 149,173.448 square metres of residential units, 3,925.46 square metres of commercial units (being all commercial units of Level 1 and Level 2 of Tower 1 within the development) and 200 bays of carparking space (namely, the Resettlement Properties). Under the demolition and compensation agreements and the supplemental agreements entered into between PRC Co. and the previous owners, the parties agreed that any discrepancy between the actual gross floor area of the Resettlement Properties reverted to the previous owners and the agreed floor area shall be settled by way of cash payment (to be calculated at the pre-agreed price) by the PRC Company to the relevant previous owners (in the event the actual GFA of the Resettlement Properties so reverted is less than the agreed floor area) or by the relevant previous owners to the PRC Company (in the event the actual GFA of the Resettlement Properties is more than the agreed floor area).

– I-8 –

APPENDIX II DETAILS OF DIRECTOR PROPOSED FOR RE-ELECTION

The details of Mr. HUANG Wei proposed to be re-elected as Director at the EGM are set out below:

Mr. HUANG Wei , aged 45, an executive Director and President of the Company since 21 July 2015. Mr. HUANG was an on-the-job graduate at Guangdong Academy of Social Sciences, where he graduated with a major in law. He holds a master’s degree in Business Administration from Guanghua School of Management, Peking University. Mr. HUANG is currently a director and president of Shum Yip Group and Shum Yip Holdings. He is also a director of various members of the Group. Prior to joining the Company, he had served as the deputy secretary of the Party Working Committee, deputy director of the Management Committee and director of Social Work Committee of CPC Shenzhen Dapeng New District. He was a member of the Standing Committee, the director of district committee (government district) Office and a district government party member of Longgang District and the Longgang District Youth League secretary. Mr. HUANG has extensive experience in management. Save as disclosed above, Mr. HUANG did not hold any directorships in any other listed public companies in the last three years, nor does he hold any position with the Company or other members of the Group.

Save as disclosed above, Mr. HUANG does not have any relationships with any Directors, senior management, substantial or controlling shareholders of the Company.

As at the Latest Practicable Date, Mr. HUANG had beneficial interest in an option to subscribe for 3,196,000 Shares at a subscription price of HK$3.396 per Share within the meaning of Part XV of the SFO.

The Company has entered into an appointment letter with Mr. HUANG for a term of 3 years commencing on 21 July 2015, subject to retirement and re-election provision in the articles of association of the Company pursuant to which he is required to retire from office at the first general meeting of the Company following his appointment and is then be eligible for re-election. Thereafter, he is required to retire from office by rotation at the annual general meeting of the Company. Mr. HUANG is entitled to receive a basic salary and allowance of such amount per annum as the Board may determine from time to time. Mr. HUANG is currently entitled to receive a basic salary of HK$2,466,666 per annum which is subject to annual review by the Board. In addition, Mr. HUANG is also entitled to receive discretionary bonuses, share options or other benefits as may be decided by the Board having regard to his performance and duties, the Company’s performance and profitability and the prevailing market condition.

Save as disclosed above, Mr. HUANG is not aware of any other matters relating to his appointment that need to be brought to the attention of the Shareholders or any other information which is required to be disclosed pursuant to rule 13.51(2) of the Listing Rules.

– II-1 –

GENERAL INFORMATION

APPENDIX III

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the 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

(a) Interests and short positions of Directors and chief executives in the Shares, underlying Shares and debentures of the Company and its associated corporations

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

Long positions in the Shares and underlying Shares:

				Underlying
				Shares
Name of		Nature of	Number of	pursuant to	Aggregate	Percentage of
Director	Capacity	interests	Shares	share options	interests	issued Shares
LU Hua	Beneficial	Beneficial interest	1,122,383	7,830,000	8,952,383	0.12
	owner			(Note 1)
HUANG	Beneficial	Beneficial interest	–	3,196,000	3,196,000	0.04
Wei	owner			(Note 2)
MOU Yong	Beneficial	Beneficial interest	–	5,246,000	5,246,000	0.07
	owner			(Note 1)
LIU Chong	Beneficial	Beneficial interest	–	5,246,000	5,246,000	0.07
	owner			(Note 1)
WU Jiesi	Beneficial	Beneficial interest	3,400,000	–	3,400,000	0.05
	owner
LI Wai	Beneficial	Beneficial interest	1,131,866	–	1,131,866	0.02
Keung	owner

– III-1 –

GENERAL INFORMATION

APPENDIX III

Notes :

These share options were granted on 28 January 2014 at an exercise price of HK$2.85 per Share and are exercisable up to 40% from 28 January 2016 to 27 January 2017, and up to 70% from 28 January 2017 to 27 January 2018, and up to 100% from 28 January 2018 to 27 January 2019.
These shares options were granted on 27 July 2015 at an exercise price of HK$3.396 per Share and are exercisable up to 40% from 28 January 2016 to 27 January 2017, and up to 70% from 28 January 2017 to 27 January 2018, and up to 100% from 28 January 2018 to 27 January 2019.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or chief executives of the Company 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) which were required (i) to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including any interests or short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules, to be notified to the Company and the Stock Exchange.

(b) Interests and short position of Substantial Shareholders (of which a Director or a proposed Director is a director or employee) in the Shares and underlying Shares

As at the Latest Practicable Date, the interests and short position of a company (of which a Director or a proposed Director is a director or employee) in the Shares and underlying Shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, were as follows:

		Capacity of	Number of
Name of	Name of	Director in	Shares held by	Approximate %
Director	Shareholder	Shareholder	Shareholder	of issued Shares
LU Hua	Shum Yip Holdings	Chairman and	4,480,478,142	60.68%
		director
HUANG Wei	Shum Yip Holdings	President and	4,480,478,142	60.68%
		director
MOU Yong	Shum Yip Holdings	Director	4,480,478,142	60.68%
HUANG Yige	Shum Yip Holdings	Director	4,480,478,142	60.68%
LIU Chong	Shum Yip Holdings	Vice President	4,480,478,142	60.68%

– III-2 –

GENERAL INFORMATION

APPENDIX III

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or a proposed Director was a director or employee of a company which had, or was deemed to have, an interest or short position in the Shares or underlying Shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO.

3. DIRECTORS’ INTEREST IN CONTRACTS AND ASSETS

(a) As at the Latest Practicable Date, none of the Directors had any interest, direct or indirect, in any assets which had been, since 31 December 2014 (being the date to which the latest published audited consolidated accounts of the Group were made up), acquired or disposed of by or leased to any member of the Enlarged Group, or were proposed to be acquired or disposed of by or leased to any member of the Enlarged Group.
(b) No contract or arrangement in which any of the Directors was materially interested and which was significant in relation to the business of the Enlarged Group subsisted at the Latest Practicable Date.

4. DIRECTORS’ INTERESTS IN COMPETING BUSINESS

As at the Latest Practicable Date, Mr. LU Hua was the Chairman and a director, Mr. HUANG Wei was the President and a director, Mr. MOU Yong and Mr. HUANG Yige, were directors, and Mr. LIU Chong, was the vice president, of, both Shum Yip Holdings and Shum Yip Group. Shum Yip Holdings is principally engaged in investment holding and Shum Yip Group is principally engaged in, among others, investment in infrastructure and property development. Therefore, the above Directors were considered to have interest in the businesses which competed or were likely to compete, either directly or indirectly, with the businesses of the Group pursuant to the Listing Rules.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or their respective associates was interested in any business which competed or would be likely to compete, either directly or indirectly, with the business of the Group, other than those businesses where the Directors were appointed as directors to represent the interests of the Company and/or the Group.

5. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, there had been no material adverse changes in the financial or trading position of the Group since 31 December 2014 (being the date to which the latest published audited accounts of the Company were made up).

6. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had entered, or was proposing to enter, into any service contract with any member of the Enlarged Group which is not expiring or may not be terminated by the relevant member of the Enlarged Group within one year without payment of any compensation (other than statutory compensation).

– III-3 –

GENERAL INFORMATION

APPENDIX III

7. EXPERTS AND CONSENTS

The following are the qualifications of the experts whose advices and/or reports are contained in this circular:

Name

Qualification

Asset Appraisal Limited (“ Asset Appraisal ”)

Professional property valuer

VMS

A licensed corporation to carry out Type 1 (dealing in securities), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the SFO

Zhong Lun Law Firm (“ Zhong Lun ”)

PRC legal adviser

Each of Asset Appraisal, VMS and Zhong Lun (collectively the “ Experts ”) has given and has not withdrawn its written consent to the issue of this circular with the inclusion of, where applicable, its letter(s) of advices and/or report(s) and references to its name in the form and context in which they respectively appear.

As at the Latest Practicable Date, each of the Experts:

(a) did not have any 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; and
(b) did not have any direct or indirect interest in any assets which had been, since 31 December 2014 (being the date to which the latest published audited consolidated accounts of the Group were made up), acquired or disposed of by or leased to any member of the Enlarged Group, or were proposed to be acquired or disposed of by or leased to any member of the Enlarged Group.

8. DOCUMENTS AVAILABLE FOR INSPECTION

A copy of the Sale and Purchase Agreement is available for inspection during normal business hours from 9:00 a.m. to 5:00 p.m. (other than Saturdays, Sundays, and public holidays) at the principal place of business of the Company at 8th Floor, New East Ocean Centre, 9 Science Museum Road, Tsimshatsui, Kowloon, Hong Kong for a period of 14 days from the date of this circular.

9. MISCELLANEOUS

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

– III-4 –

NOTICE OF EGM

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==> picture [175 x 43] intentionally omitted <==

(Incorporated in Hong Kong with limited liability)

(Stock Code: 00604)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (“ Meeting ”) of Shenzhen Investment Limited (the “ Company ”) will be held at Academy Room, 1st Floor, InterContinental Grand Stanford Hong Kong, 70 Mody Road, Tsimshatsui East, Kowloon, Hong Kong at 10:30 a.m. on Friday, 11 March 2016 for the purpose of considering and, if thought fit, passing, with or without amendments, the following resolutions as ordinary resolutions of the Company:

ORDINARY RESOLUTIONS

“ THAT :
(a) the sale and purchase agreement dated 21 December 2015 entered into between the Company as purchaser and Shum Yip Holdings Company Limited (深業(集團)有限公司) (the “ Vendor ”) as vendor in respect of the proposed acquisition of 95,707 ordinary shares of Fairwind Power Limited (富寶有限公司) (the “ Target Company ”) with a nominal value of US$1.00 each, representing approximately 95% of the issued share capital of the Target Company (the “ Sale and Purchase Agreement ”, a copy of which has been produced before the Meeting marked “ A* ” and initialled by the chairman of the Meeting for the purpose of identification), and all transactions contemplated thereunder and in connection therewith be and are hereby approved, confirmed and ratified;
(b) the directors of the Company be and are hereby authorised for and on behalf of the Company to sign, execute, perfect, perform and deliver all such other agreements, instruments, deeds and documents and do all such acts or things and take all such steps as they may in their absolute discretion consider to be necessary, desirable, appropriate or expedient to implement or given effect to or otherwise in connection with or incidental to the Sale and Purchase Agreement and all the transactions contemplated thereunder and to agree to such variations, amendments or waivers as are, in the opinion of the directors of the Company, in the interests of the Company.”
“ THAT Mr. HUANG Wei, who retires pursuant to the articles of association of the Company and is eligible for re-election, be and is hereby re-elected as a director of the Company.”

By Order of the Board Shenzhen Investment Limited LU Hua Chairman

Hong Kong, 23 February 2016

– EGM-1 –

NOTICE OF EGM

Registered office:

8th Floor, New East Ocean Centre

9 Science Museum Road

Tsimshatsui, Kowloon

Hong Kong

For identification purpose only

Notes:

(1) A member of the Company entitled to attend and vote at the Meeting convened by the above notice is entitled to appoint one or more proxies to attend and vote in his/her stead. Votes may be given either personally (or, in the case of a shareholder being a corporation, by its duly authorised representative) or by proxy in accordance with the articles of association of the Company. A proxy need not be a member of the Company.
(2) The instrument appointing a proxy must be in writing under the hand of the appointor or of his/her attorney duly authorised in writing, or if the appointor is a corporation, either under seal, or under the hand of an officer or attorney duly authorised.
(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/she 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 of the Company in respect of such share(s) shall alone be entitled to vote in respect thereof.
(4) To be valid, the form of proxy, together with the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power or authority, must be delivered to the office of the Company’s share registrar, Tricor Standard Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the Meeting (or any adjournment thereof, as the case may be).
(5) Delivery of the proxy form shall not preclude a member of the Company from attending and voting in person at the meeting or poll concerned and, in such event, the proxy form shall be deemed to be revoked.
(6) The resolutions as set out in this notice will be decided by way of poll.
(7) To ascertain the shareholders’ entitlement to attend and vote at the Meeting, the register of members of the Company will be closed from Wednesday, 9 March 2016 to Friday, 11 March 2016, both days inclusive, during which period no transfer of shares will be registered. In order to be eligible to attend and vote at the Meeting, all duly completed transfer forms accompanied by the relevant share certificates must be lodged with the Company’s share registrar, Tricor Standard Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong for registration not later than 4:30 p.m. on Tuesday, 8 March 2016.

– EGM-2 –

AI assistant

Macau E&M Holding Limited — Proxy Solicitation & Information Statement 2016

49906_rns_2016-02-22_5d241026-e2d8-4a93-93ab-97d6c2e4bf34.pdf

(Stock Code: 00604)

(1) DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO ACQUISITION OF APPROXIMATELY 95% OF THE ISSUED SHARE CAPITAL OF FAIRWIND POWER LIMITED AND (2) RE-ELECTION OF RETIRING DIRECTOR

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

VMS Securities Limited

DEFINITIONS

the British Virgin Islands

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

(1) DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO ACQUISITION OF APPROXIMATELY 95% OF THE ISSUED SHARE CAPITAL OF FAIRWIND POWER LIMITED AND

(2) RE-ELECTION OF RETIRING DIRECTOR

(A) INTRODUCTION

(B) THE ACQUISITION

The Sale and Purchase Agreement

Assets to be acquired

LETTER FROM THE BOARD

Land A

LETTER FROM THE BOARD

LETTER FROM THE BOARD

The Consideration

Promissory Note

Conditions precedent

Completion

Indemnities and undertakings

(C) INFORMATION ON THE TARGET GROUP

Information on the Target Group

Shareholding structure of the Target Group

(i) As at the Latest Practicable Date

Financial Information of the Target Group

(D) REASONS FOR AND BENEFITS OF THE ACQUISITION

(E) LISTING RULES IMPLICATIONS

Listing Rules implications

Independent Board Committee

(F) RE-ELECTION OF RETIRING DIRECTOR

(G) EGM

LETTER FROM THE BOARD

(H) RECOMMENDATIONS

(I) ADDITIONAL INFORMATION

(Stock Code: 00604)

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO ACQUISITION OF APPROXIMATELY 95% OF THE ISSUED SHARE CAPITAL OF FAIRWIND POWER LIMITED

Yours faithfully,

Independent Board Committee

DISCLOSEABLE AND CONNECTED TRANSACTION

INTRODUCTION

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Background and reasons for entering into the Sale and Purchase Agreement

2. Major terms of the Sale and Purchase Agreement

(i) The Consideration

(ii) Payment terms

(iii) The Indemnities

(iv) Conditions precedent and Completion

3. Information on the Target Group and Target Project

(a) The Target Group

(b) The Target Project

Land A

Land B

4. Valuation of properties

5. Possible financial effects of the Acquisition

6. Recommendation

Asset Appraisal Limited 中誠達資產評值顧問有限公司

The Board of Directors Shenzhen Investment Limited

BASIS OF VALUATION

TITLESHIP

VALUATION METHODOLOGY

ASSUMPTIONS

LIMITING CONDITIONS

Tse Wai Leung

VALUATION CERTIFICATE

Property interest held by the Target Group under development

Description and tenure

Property

APPENDIX I

APPENDIX I

VALUATION REPORT ON THE PROPERTY INTERESTS OF THE TARGET GROUP

APPENDIX I

Macau E&M Holding Limited Proxy Solicitation & Information Statement 2016