Macau E&M Holding Limited - Proxy Solicitation & Information Statement 2018

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

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

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

==> picture [104 x 48] intentionally omitted <==

==> picture [211 x 52] intentionally omitted <==

(Incorporated in Hong Kong with limited liability)

(Stock Code: 00604)

CONNECTED TRANSACTIONS THE RELOCATION AND COMPENSATION AGREEMENTS AND NOTICE OF EXTRAORDINARY GENERAL MEETING

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

Alliance Capital Partners Limited

A letter from the Board is set out on pages 5 to 19 of this circular. A letter from the Independent Board Committee is set out on pages 20 to 21 of this circular. A letter from Alliance Capital Partners Limited, the independent financial adviser to the Independent Board Committee and the Independent Shareholders containing its advice in relation to the Transactions is set out on pages 22 to 40 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 Wednesday, 16 May 2018. Notice of the EGM setting out the resolution to be approved at the EGM is set out on pages EGM-1 to EGM-3 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.

26 April 2018

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

– i –

DEFINITIONS

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

“associate(s)”
has the meaning ascribed to this term under the Listing Rules
“Board” the board of Directors
“Company” Shenzhen Investment Limited, a company incorporated in Hong Kong with limited liability, the shares of which are listed on the main board of Stock Exchange
“connected person(s)” has the meaning ascribed thereto under the Listing Rules
“controlling shareholder” has the meaning ascribed thereto under the Listing Rules
“Director(s)” the director(s) of the Company
“EGM”
the extraordinary general meeting 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 Wednesday, 16 May 2018 for the purpose of considering, and if thought fit, approving the Relocation and Compensation Agreements and the transactions contemplated thereunder
“First Relocation and Compensation Agreement”
the relocation and compensation agreement dated 27 March 2018 entered into between the Project Company and Xinhongcheng
“Group”

the Company and its subsidiaries

“Hengxing”

Hengxing Industrial (Shenzhen) Co., Ltd. (liquidation team) (恒興實業(深圳)有限公司清算組). Hengxing Industrial (Shenzhen) Co., Ltd. (恒興實業(深圳)有限公司) is a limited liability company established in the PRC and an indirectly wholly-owned subsidiary of Shum Yip Holdings

“Independent Board Committee”

the independent board committee comprising all the independent non-executive Directors established to advise the Independent Shareholders in respect of the terms of the Relocation and Compensation Agreements

– 1 –

DEFINITIONS

“Independent Financial Adviser”
“Independent Shareholders”
“Independent Third Party(ies)”
“Land No. 1”
“Land No. 2”
“Latest Practicable Date”
“Listing Rules”
“PRC”

Alliance Capital Partners Limited, a licensed corporation to carry on Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO, being the independent financial adviser appointed by the Company to advise the Independent Board Committee and Independent Shareholders in relation to the terms of the Relocation and Compensation Agreements

the Shareholders other than Shum Yip Holdings and its associates
any person(s) or company(ies) and their respective ultimate beneficial owner(s) whom, to the best of the Directors’ knowledge, information and belief having made all reasonable enquires, are third parties independent of the Company and the connected persons of the Company
the two parcels of land (Zhongdi lot numbers A626-0001 and A626-0009) of 55,282 sq.m. in area located at Xiashijiacun, Jiangshicun, Gongming Subdistrict, Guangming New District, Shenzhen* (深圳市光明新區公明辦事處將石村下石家村)
the parcel of land (Zhongdi lot number A626-0012) of 8,184.78 sq.m. in area located at Xiashijiacun, Jiangshicun, Gongming Subdistrict, Guangming New District, Shenzhen* (深圳市光明新區公明辦事處將石村下石家村)
20 April 2018, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information for inclusion in this circular
the Rules Governing the Listing of Securities on the Stock Exchange
the People’s Republic of China which, for the purposes of this circular, excludes the Hong Kong Special Administrative Region, the Macau Special Administrative Region and Taiwan

– 2 –

DEFINITIONS

“Project Company”

Shenzhen Shumyip Minghong Real Estate Development Co., Ltd.* (深圳市深業明宏地產開發有限公司), a limited liability company established in the PRC and 65% of its equity interest is indirectly held by the Company and the remaining 35% of its equity interest is held by an Independent Third Party
“Project Land”
the parcels of land to be developed under the Redevelopment Project
“Properties No. 1” the various buildings erected on Land No. 1 with a total construction area of 72,425.90 sq.m.
“Properties No. 2”
the two plant rooms erected on Land No. 2 with a total construction area of 2,268 sq.m.
“Redevelopment Project”
the urban renewal project for Guangming New District, Gongming Street, Xinhong Chengpian District City Shenzhen* (深圳市光明新區公明街道信宏城片區城市更新項目)
“Relocation and Compensation the First Relocation and Compensation Agreement and Agreements” the Second Relocation and Compensation Agreement, together
“RMB”
Renminbi, the lawful currency of the PRC
“Second Relocation and Compensation Agreement”
the relocation and compensation agreement dated 27 March 2018 entered into between the Project Company, Xinhongcheng and Hengxing
“SFO”
Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
“Shareholder(s)” shareholder(s) of the Company
“Shum Yip Group”
Shum Yip Group Limited* (深業集團有限公司), a company incorporated in the PRC and the holding company of Shum Yip Holdings
“Shum Yip Holdings”

Shum Yip Holdings Company Limited (深業(集團)有限公司), a company incorporated in Hong Kong, and a controlling shareholder of the Company

– 3 –

DEFINITIONS

“sq.m.” square meters “Stock Exchange” The Stock Exchange of Hong Kong Limited “Transactions” the transactions contemplated under the Relocation and Compensation Agreements “Xinhongcheng” Shenzhen Shumyip Xinhongcheng Investment Co., Ltd.* (深圳市深業信宏城投資有限公司), a limited liability company established in the PRC, and a wholly-owned subsidiary of Shum Yip Group “%” per cent

The English names of the PRC nationals, enterprise, entities, departments, facilities, certificates, titles and the like are translation and/or transliteration of their Chinese names and are included for identification purposes only. In the event of inconsistency between the Chinese names and their English translations and/or transliterations, the Chinese names shall prevail.

– 4 –

LETTER FROM THE BOARD

==> picture [104 x 47] intentionally omitted <==

==> picture [211 x 52] intentionally omitted <==

(Incorporated in Hong Kong with limited liability)

(Stock Code: 00604)

Executive Directors : Dr. 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 Tsim Sha Tsui, Kowloon Hong Kong

Non-executive Directors :

Dr. WU Jiesi Mr. LIU Shichao

Independent non-executive Directors :

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

26 April 2018

To the Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTIONS THE RELOCATION AND COMPENSATION AGREEMENTS

(A) INTRODUCTION

The Board announced on 27 March 2018 (after trading hours) that, the Project Company had entered into (i) the First Relocation and Compensation Agreement with Xinhongcheng in respect of Properties No. 1 and (ii) the Second Relocation and Compensation Agreement with Xinhongcheng and Hengxing in respect of Properties No. 2 on 27 March 2018.

The purpose of this circular is to give you, among other things, (i) further information on the Relocation and Compensation Agreements; (ii) the valuation report of Properties No. 1 and Properties No.2; (iii) the recommendation of the Independent Board Committee regarding the terms of the Relocation and Compensation Agreements; (iv) the advice of the Independent Financial Adviser regarding the terms of the Relocation and Compensation Agreements; (v) the notice of EGM; and (vi) other information as required under the Listing Rules.

– 5 –

LETTER FROM THE BOARD

(B) BACKGROUND

The Project Company is the principal of the Redevelopment Project. The Redevelopment Project has been included in the 2015 Shenzhen City Urban Renewal Planning Second Proposal (2015年深圳市城市更新單元計劃第二批計劃) and was approved by the Urban Planning Land and Resources Commission of Shenzhen Municipality (深圳市規劃和國土資源委員會) for redevelopment into a community with residential and commercial functions. The Project Land has a total area of 90,417.5 sq.m.. The area for development construction is 48,680.3 sq.m., the gross floor area is 220,240 sq.m. and 180,000 sq.m. of which is for residential use, 19,340 sq.m. is for indemnificatory apartments, 12,000 sq.m. is for commercial buildings and 8,900 sq.m. is for public facilities.

As the principal of the Redevelopment Project, the Project Company has the right to redevelop and reconstruct the Project Land, which involves the demolition of buildings on the Project Land, arranging resettlement, and the construction of properties according to the approved plan. Save for the units to be used for resettlement, all the residential and commercial units developed are for sale. On 27 March 2018, the Project Company entered into (i) the First Relocation and Compensation Agreement with Xinhongcheng in respect of Properties No. 1; and (ii) the Second Relocation and Compensation Agreement with Xinhongcheng and Hengxing in respect of Properties No. 2.

(C) THE RELOCATION AND COMPENSATION AGREEMENTS

The major terms of each of the Relocation and Compensation Agreements are set out as below:

(1) The First Relocation and Compensation Agreement

Date

27 March 2018

Parties

(1) Project Company; and
(2) Xinhongcheng

Subject properties

Properties No. 1, which are situated in the approved urban redevelopment zone under the Redevelopment Project.

Relocation compensation

The Project Company shall compensate Xinhongcheng by:

(1) providing the residential resettlement properties to be constructed on the Project Land (“ Resettlement Properties No. 1 ”) with a total area of 41,989.99 sq.m. to Xinhongcheng.

– 6 –

LETTER FROM THE BOARD

The actual area of the resettlement properties shall be based on the completion survey report* (竣工測繪報告) of the said properties. If there is a difference between the agreed area and the actual area and the difference is above 10 sq.m., the parties shall either refund in cash or pay for the difference (only for the difference in area above 10 sq.m.). No refund or payment by either party is required in the case the difference is 10 sq.m. or below.

Any amount due arising from the above shall be settled by the parties within 30 days from the issuance of the completion survey report of the said resettlement properties.

and;

(2) paying compensation for loss due to suspension of operation and allowances for relocation and temporary settlement in the estimated total amount of RMB36,960,047.6 comprising:
a. RMB3,644,133.6 (calculated at RMB10/sq.m./month for the area on the first floor, RMB8/sq.m./month for the area on and above the second floor, for 6 months), being compensation for the suspension of operation, to be paid to Xinhongcheng within 5 business days of the completion of the inspection of the vacant Properties No.1 by, and the handover of them to, the Project Company;
b. RMB2,897,036 (calculated at RMB40/sq.m.), being the relocation allowance, to be paid to Xinhongcheng within 5 business days of the completion of the inspection of the vacant Properties No.1 by, and the handover of them to, the Project Company; and
c. a monthly temporary settlement allowance in the amount of RMB724,259 (calculated at RMB10/sq.m./month) payable for a period starting from date of the completion of the inspection of the vacant Properties No.1 by, and the handover of them to, the Project Company and ending on the date the Project Company notifying Xinhongcheng to complete the intake formalities of Resettlement Properties No. 1 (which is expected to take 42 months based on the current development schedule of the Redevelopment Project). Thus, the total temporary settlement allowance is estimated to be in the amount of RMB30,418,878. RMB8,691,108, being the payment of the allowance for temporary settlement for the following 12 months, shall be paid within 5 business days of the completion of the inspection of the vacant Properties No.1 by, and the handover of them to, the Project Company. Afterwards, for every 12 months, the Project Company shall pay RMB8,691,108, being the amount for the following year, within 5 business days of the expiry of the preceding 12 months period.

The compensation and allowances will be funded by internal resources of the Project Company and/or other financing means.

– 7 –

LETTER FROM THE BOARD

The basis for determining the relocation compensation

The relocation compensation was determined by the Project Company and Xinhongcheng after arms’ length negotiations and with reference to:

(1) in relation to Resettlement Properties No. 1, the market value of Properties No. 1 and the equivalent residential area to be provided based on the average unit price of new residential flats sold in the locality with reference to the preliminary valuation report prepared by an independent property valuer. Based on the preliminary valuation report, the market value of Properties No. 1 in existing state as at 28 February 2018, having considered the redevelopment rights under the Redevelopment Project, is RMB1,386 million, which is equivalent to the value of the residential area of Resettlement Properties No. 1.

The valuation of Properties No. 1, the average unit price of new residential flats sold in the locality and the gross floor area of the Resettlement Properties No. 1 are determined as follows:

A. Valuation of As advised by the independent property valuer, the Properties No. 1 valuation of Properties No. 1 was calculated according to the below formula:

Valuation = Planned gross x Unit price of – Fee payable to the of floor area to be Land No.1 [(Note][2)] government in Properties ( developed [(Note][1)] ) respect of land to No.1 be developed [(Note][3)]

Note:

The planned gross floor area to be developed for Properties No. 1 is approximately 134,932.30 sq.m..
The independent property valuer has adopted RMB15,000 per sq.m. as the value of Land No. 1 based on similar sales transactions for land available for commercial and residential development in Shenzhen.
The independent property valuer has adopted RMB4,728 per sq.m. as the amount to be paid to the government in respect of the value of the land of the Redevelopment Project. The total fee payable to the government is approximately RMB637,959,914.4 (RMB4,728 per sq.m. x 134,932.30 sq.m.).
B. Average unit As advised by the independent property valuer, it has price of new adopted RMB33,000 per sq.m. as the value of new residential flats residential flats based on similar transactions of new residential units surrounding Properties No. 1 with development quality taken into consideration.

– 8 –

LETTER FROM THE BOARD

C. Gross floor area The gross floor area of Resettlement Properties No. 1 of Resettlement was calculated according to the below formula: Properties No. 1 Gross floor = Valuation of / Average unit area of Properties price of new Resettlement No. 1 residential Properties flats No. 1

(2) in relation to the compensation for loss due to suspension of operation and allowances for relocation and temporary settlement, the “Temporary Implementation Measures on Expropriation of Properties and Compensation” (深圳市房屋徵收與補償實施辦法(試行)) (the “ Temporary Implementation Measures ”) relating to relocation and demolition compensation under urban redevelopment in Shenzhen and the level of compensation in other comparable urban redevelopment projects.

The Temporary Implementation Measures provide that (i) compensation for the suspension of operation shall be calculated based on market rental for 6 months; (ii) relocation allowance shall be calculated based on the gross floor area of the subject properties, at the rate of RMB40 per sq.m. for buildings used as factory, office, residential (including dormitory) purposes; and (iii) temporary settlement allowance shall be calculated based on market rental for 36 months, covering the period from handing over the original property, up to the delivery of the resettlement property.

As advised by the Company’s PRC legal advisers, the Temporary Implementation Measures is not a statutory requirement for the Redevelopment Project. The Temporary Implementation Measures were used as a reference in negotiating and determining the amount of compensation and allowance to be paid by the Project Company under the First Relocation and Compensation Agreement.

The compensation for loss due to suspension of operation and allowances for relocation and temporary settlement was calculated as follows:

(i) Compensation for suspension of operation

The monthly market rental of RMB10/sq.m. for ground floor and RMB8/sq.m. for other floors was determined with reference to the monthly market rental of factories and industrial sites in the vicinity of Properties No. 1. Accordingly, the compensation for suspension of operation for Properties No. 1 was calculated based on the aforementioned monthly market rental for 6 months (as set out in the Temporary Implementation Measures).

– 9 –

LETTER FROM THE BOARD

(ii) Relocation allowance

The relocation allowance of RMB40/sq.m. was determined based on the fixed rate as set out in the Temporary Implementation Measures.

(iii) Temporary settlement allowance

The market rental of RMB10/sq.m. was determined with reference to the monthly market rental of factories and industrial sites in the vicinity of Properties No. 1. Accordingly, the temporary settlement allowance to be paid by the Project Company was calculated based on the aforementioned monthly market rental for 42 months (based on the current development schedule of the Redevelopment Project).

Handover and demolition of Properties No. 1

Xinhongcheng shall vacate and handover Properties No. 1 within the time set by the Project Company for inspection.

The Project Company shall inspect the vacant Properties No. 1 within 5 days after the Xinhongcheng has vacated Properties No. 1. The Project Company shall proceed with the handover upon the satisfactory of the inspection of the vacant Properties No. 1.

The Project Company may demolish Properties No. 1 at its costs any time after the handover of Properties No. 1.

Resettlement Properties No. 1

Resettlement Properties No. 1 shall be constructed on the Project Land. The location and layout shall follow the construction planning permit (建設用地規劃許可證), construction engineering planning permit (建設工程規劃許可證) and the construction design implementation drawing* (建築設計施工圖) approved by relevant governmental authorities.

It is expected that completion of the construction of Resettlement Properties No. 1 shall take approximately 36 months starting from the date the Project Company obtains a construction permit issued by the Housing and Urban and Rural Construction Bureau* (住建局).

– 10 –

LETTER FROM THE BOARD

Delivery of Resettlement Properties No. 1

The Project Company shall notify Xinhongcheng to complete the intake formalities of Resettlement Properties No. 1 as soon as it has obtained records of construction project planning inspection (建設工程規劃驗收) and construction project completion inspection (建設工程竣工驗收) for Resettlement Properties No. 1.

The Project Company shall, on behalf of Xinhongcheng, apply for the land permit for Resettlement Properties No. 1 within 360 days after delivery of the Resettlement Properties No. 1 to Xinhongcheng. The relevant tax payable with regard to the application of the land permit shall be split between the Project Company and Xinhongcheng in accordance with the relevant regulations of the PRC, Guangdong Province and Shenzhen City.

Any outstanding amount payable under the First Relocation and Compensation Agreement should be settled before the Project Company proceeds with the land permit application.

Condition Precedent

The First Relocation and Compensation Agreement is conditional upon the Company having obtained approval of the Independent Shareholders of the transactions contemplated under the First Relocation and Compensation Agreement at the EGM.

(2) The Second Relocation and Compensation Agreement

Date

27 March 2018

Parties

(1) Project Company
(2) Xinhongcheng; and
(3) Hengxing

Subject properties

Properties No. 2, which are situated in the approved urban redevelopment zone under the Redevelopment Project.

Relocation compensation

The Project Company shall compensate Xinhongcheng and Hengxing by:

(1) providing the residential resettlement properties to be constructed on the Project Land (“ Resettlement Properties No. 2 ”) with an area of 808.15 sq.m. and 5,408.39 sq.m. to Xinhongcheng and Hengxing respectively.

– 11 –

LETTER FROM THE BOARD

The actual area of the resettlement properties shall be based on the completion survey report* (竣工測繪報告) of the said properties. If there is a difference between the agreed area and the actual area and the difference is above 10 sq.m., the parties can either refund in cash or pay for the difference (only for the part above 10 sq.m.). No refund or payment by either party is required in the case the difference is 10 sq.m. or below.

Any amount due arising from the above shall be settled by the parties within 30 days from the issuance of the completion survey report of the said resettlement properties.

and;

(2) paying compensation for loss due to suspension of operation and allowances for relocation and temporary settlement in the estimated total amount of RMB1,152,144 comprising:
a. RMB108,864 (calculated at RMB8/sq.m./month for 6 months), being compensation for the suspension of operation, to be paid to Xinhongcheng within 5 business days of the completion of the inspection of the vacant Properties No. 2 by, and the handover of them to, the Project Company;
b. RMB90,720 (calculated at RMB40/sq.m.), being the relocation allowance, to be paid to Xinhongcheng within 5 business days of the completion of the inspection of the vacant Properties No. 2 by, and the handover of them to, the Project Company; and
c. a monthly temporary settlement allowance in the amount of RMB22,680 (calculated at RMB10/sq.m./month) payable for a period starting from date of the completion of the inspection of the vacant Properties No. 2 by, and the handover of them to, the Project Company and ending on the date the Project Company notifying Xinhongcheng and Hengxing to complete the intake formalities of the Resettlement Properties No. 2 (which is expected to take 42 months based on the current development schedule of the Redevelopment Project). Thus, the total temporary settlement allowance is estimated to be in the amount of RMB952,560. RMB272,160, being the payment of the allowance for temporary settlement for the following 12 months, shall be paid within 5 business days of the completion of the inspection of the vacant Properties No. 2 by, and the handover of them to, the Project Company. Afterwards, for every 12 months, the Project Company shall pay RMB272,160, being the amount for the following year, within 5 business days of the expiry of the preceding 12 months period.

It was agreed that the compensation for loss due to suspension of operation and allowances for relocation and temporary settlement will not be paid to Hengxing by the Project Company.

– 12 –

LETTER FROM THE BOARD

The compensation and allowances will be funded by internal resources of the Project Company and/or other financing means.

Basis for determining the relocation compensation

The relocation compensation was determined by the Project Company, Xinhongcheng and Hengxing after arms’ length negotiations and with reference to:

(1) in relation to Resettlement Properties No. 2, the market value of Properties No. 2 and the equivalent residential area to be provided based on the average unit price of new residential flats sold in the locality with reference to the preliminary valuation report prepared by an independent property valuer. Based on the preliminary valuation report, the market value of Properties No. 2 in existing state as at 28 February 2018, having considered the redevelopment rights under the Redevelopment Project, is RMB205 million, which is equivalent to the value of the residential area of Resettlement Properties No.2.

The valuation of Properties No. 2, the average unit price of new residential flats sold in the locality and the gross floor area of the Resettlement Properties No. 2 are determined as follows:

A. Valuation of As advised by the independent property valuer, the Properties No. 2 valuation of Properties No. 2 was calculated according to the below formula:

Valuation = Planned gross x Unit price of – Fee payable to the of floor area to be Land No.2 [(Note][2)] government in Properties ( developed [(Note][1)] ) respect of land to No.2 be developed [(Note][3)]

Note:

The planned gross floor area to be developed for Properties No. 2 is approximately 19,977.41 sq.m..
The independent property valuer has adopted RMB15,000 per sq.m. as the value of Land No. 2 based on similar sales transactions for land available for commercial and residential development in Shenzhen.
The independent property valuer has adopted RMB4,728 per sq.m. as the amount to be paid to the government in respect of the value of the land of the Redevelopment Project. The total fee payable to the government is approximately RMB94,453,194.48 (RMB4,728 per sq.m. x 19,977.41 sq.m.).
B. Average unit price of new residential flats
As advised by the independent property valuer, it has adopted RMB33,000 per sq.m. as the value of new residential flats based on similar transactions of new residential units surrounding Properties No. 2 with development quality taken into consideration.

– 13 –

LETTER FROM THE BOARD

C. Gross floor area The gross floor area of Resettlement Properties No. 2 of Resettlement is calculated according to the below formula: Properties No. 2 Gross floor = Valuation of / Average unit area of Properties price of new Resettlement No. 2 residential Properties flats No. 2

(2) in relation to the compensation for loss due to suspension of operation and allowances for relocation and temporary settlement, the Temporary Implementation Measures in respect of relocation and demolition compensation under urban redevelopment in Shenzhen and the level of compensation in other comparable urban redevelopment projects.

As advised by the Company’s PRC legal advisers, the Temporary Implementation Measures is not a statutory requirement for the Redevelopment Project. The Temporary Implementation Measures was used as a reference in negotiating and determining the amount of compensation and allowance to be paid by the Project Company under the Second Relocation and Compensation Agreement.

The compensation for loss due to suspension of operation and allowances for relocation and temporary settlement was calculated as follows:

(i) Compensation for the suspension of operation

The monthly market rental of RMB8/sq.m. for all floors was determined with reference to the monthly market rental of factories and industrial sites in the vicinity of Properties No. 2. Accordingly, the compensation for suspension of operation for Properties No. 2 was calculated based on the aforementioned monthly market rental for 6 months (as set out in the Temporary Implementation Measures).

(ii) Relocation allowance

The relocation allowance of RMB40 per sq.m. was determined based on the fixed rate as set out in the Temporary Implementation Measures.

– 14 –

LETTER FROM THE BOARD

(iii) Temporary settlement allowance

The market rental of RMB10 per sq.m. was determined with reference to the monthly market rental of factories and industrial sites in the vicinity of Properties No. 2. Accordingly, the temporary settlement allowance to be paid by the Project Company was calculated based on the aforementioned monthly market rental for 42 months (based on the current schedule of the Redevelopment Project).

Handover and demolition of Properties No. 2

Xinhongcheng and Hengxing shall vacate and handover Properties No. 2 within the time set by the Project Company for inspection.

The Project Company shall inspect the vacant Properties No. 2 within 5 days after the Xinhongcheng and Hengxing have vacated Properties No. 2. The Project Company shall proceed with the handover upon satisfactory of the inspection of the vacant Properties No. 2.

The Project Company may demolish Properties No. 2 at its costs any time after the handover of Properties No. 2.

Resettlement Properties No. 2

Resettlement Properties No. 2 shall be constructed on the Project Land. The location and layout shall follow the construction planning permit (建設用地規劃許可證), construction engineering planning permit (建設工程規劃許可證) and the construction design implementation drawing* (建築設計施工圖) approved by relevant governmental authorities.

It is expected that completion of the construction of Resettlement Properties No. 2 shall take approximately 36 months, starting from the date the Project Company obtains a construction permit issued by the Housing and Urban and Rural Construction Bureau* (住建局).

Delivery of Resettlement Properties No. 2

The Project Company shall notify Xinhongcheng and Hengxing to complete the intake formalities of Resettlement Properties No. 2 as soon as it has obtained records of construction project planning inspection (建設工程規劃驗收) and construction project completion inspection (建設工程竣工驗收) for Resettlement Properties No. 2.

The Project Company shall, on behalf of Xinhongcheng and Hengxing, apply for the land permit for Resettlement Properties No. 2 within 360 days after delivery of Resettlement Properties No. 2 to Xinhongcheng and Hengxing. The relevant tax payable with regard to the application of the land permit shall be split between the Project Company and Xinhongcheng and Hengxing in accordance with the relevant regulations of the PRC, Guangdong Province and Shenzhen City.

– 15 –

LETTER FROM THE BOARD

Any outstanding amount payable under The Second Relocation and Compensation Agreement should be settled before the Project Company proceed with the land permit application.

Condition Precedent

The Second Relocation and Compensation Agreement is conditional upon the Company having obtained approval of the Independent Shareholders of the transactions contemplated under the Second Relocation and Compensation Agreement at the EGM.

As confirmed by Xinhongcheng, the original purchase cost of Properties No. 1 and Properties No. 2 was RMB132.94 million and RMB4.16 million respectively.

(D) REASONS FOR AND BENEFITS OF ENTERING INTO THE RELOCATION AND COMPENSATION AGREEMENTS

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

The Directors believe that the economic and social development of Shenzhen will continue to prosper resulting in long term healthy development of the local real estate market. Land supply in Shenzhen is limited and urban renewal project is one of the key sources of land supply in Shenzhen. The Group has in recent years accelerated its pace in urban redevelopment in Shenzhen and it was proved to be fruitful. The relocation of Properties No. 1 and Properties No. 2 is part of the Redevelopment Project which is located in Shenzhen. As the principal of the Redevelopment Project, the Project Company has the responsibility to provide resettlement plans to the relocated parties including the provision of monetary compensation, resettlement properties and transitional resettlement. The relocation compensation to be provided by the Project Company under the Relocation and Compensation Agreements was determined by the Project Company, Xinhongcheng and Hengxing after arms’ length negotiations and with reference to the preliminary property valuation prepared by an independent property valuer, the Implementation Measures of Urban Renewal of Shenzhen (深圳市城市更新辦法實施細則) (the “ Implementation Measures* ”), the Temporary Implementation Measures and the level of compensation in other comparable urban redevelopment projects.

The Implementation Measures provide that in a land redevelopment project to be approved by relevant government authority for implementation, the subject land has to be owned or otherwise entitled to be redeveloped under one entity, and the entitlement to redevelop under one entity could be achieved by way of entering into relocation and compensation agreements with the existing owners of the land and property situated on the subject land, such relocation and compensation agreements should set out provisions for the size and location of the resettlement properties, amount of compensation and arrangement for transitional period. As advised by the PRC legal advisers of the Company, the terms of the relocation and compensation agreements should be fair for both parties pursuant to the Implementation Measures. As further advised by the PRC legal advisers of the Company, the

– 16 –

LETTER FROM THE BOARD

basis for the calculation of the amount of relocation compensation set out in Temporary Implementation Measures is not a statutory requirement for the Redevelopment Project. Nevertheless, in the absence of other applicable laws and regulations, the Company considers the Temporary Implementation Measures to be a reasonable benchmark used as a reference when negotiating the amount of compensation and allowance to be paid by the Project Company under the Relocation and Compensation Agreements.

The total cost of the Redevelopment Project (including demolition cost of the Properties No. 1 and Properties No. 2 and construction of Resettlement Properties No.1 and Resettlement Properties No. 2) is estimated to be RMB3.610 billion, which will be paid by the Project Company. According to the current plan, after the completion of the Redevelopment Project, the Project Company (after deducting the area to be used for resettlement properties) will hold approximately 107,845.50 sq.m. of residential property, 11,388 sq.m. of commercial buildings and 19,340 sq.m. of indemnificatory apartments which are for sale. Based on the current real estate market in Shenzhen, it is expected that the Redevelopment Project will generate high return for the Group. Taking into account the above factors, including the principal business of the Group, the basis for determining the compensation and the benefits derived from the Redevelopment Project, the Board is of the view that, by participating in the development of the Project Land, the Group is able to seize opportunities of urban development from local authorities, which is in line with the Group’s strategies and will be beneficial to the future long-term benefits of the Group and the Shareholders as a whole.

(E) INFORMATION ON THE PARTIES

Project Company

The Project Company is a limited liability company established in the PRC and is a non-wholly owned subsidiary of the Company. The Project Company is principally engaged in property development and related matters under the Redevelopment Project.

Xinhongcheng

Xinhongcheng is a limited liability company established in the PRC and a wholly-owned subsidiary of the Shum Yip Group. Xinhongcheng is principally engaged in property development.

Hengxing

– 17 –

LETTER FROM THE BOARD

(F) LISTING RULES IMPLICATIONS

Listing Rules Implications

Xinhongcheng and Hengxing, being a subsidiary of Shum Yip Group (the ultimate holding company of the Company) and Shum Yip Holdings (a controlling shareholder of the Company) respectively, are connected persons of the Company. Accordingly, the transactions contemplated under the Relocation and Compensation Agreements constitute connected transactions of the Company under Chapter 14A of the Listing Rules. As one of the applicable percentage ratios in respect of the aggregate compensation to be made under the Relocation and Compensation Agreements exceeds 5%, the transactions contemplated under the Relocation and Compensation Agreements are subject to the reporting, announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

As of the Latest Practicable Date, Shum Yip Holdings is beneficially interested in approximately 4,897,856,631 shares of the Company, representing approximately 60.77% of the issued share capital of the Company. Shum Yip Holdings and its associates are required to abstain from voting on the resolution approving the Relocation and Compensation Agreements and the transactions contemplated thereunder at the EGM.

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

Independent Board Committee

In compliance with the Listing Rules, the Independent Board Committee has been established to consider the terms of the Relocation and Compensation Agreements 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 Transactions, 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 Transactions. The text of the letter from the Independent Board Committee is set out on pages 20 to 21 of this circular and the text of the letter from the Independent Financial Adviser containing its advice is out on pages 22 to 40 of this circular.

(G) EGM

Set out on pages EGM-1 to EGM-3 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 Wednesday, 16 May 2018 at which an ordinary resolution will be proposed to consider and, if thought fit, to approve the Relocation and Compensation Agreements and the transactions contemplated thereunder.

– 18 –

LETTER FROM THE BOARD

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.

The register of members of the Company will be closed from Friday, 11 May 2018 to Wednesday, 16 May 2018, both days inclusive, during which period no transfer of shares of the Company 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 Thursday, 10 May 2018.

(H) RECOMMENDATIONS

Your attention is drawn to the letter from the Independent Board Committee to the Independent Shareholders set out on pages 20 to 21 of this circular and the letter from the Independent Financial Adviser on pages 22 to 40 to advise the Independent Board Committee and the Independent Shareholders in relation to the terms of the Transactions.

The Directors are of the view that the Relocation and Compensation Agreements have been entered into in the ordinary and usual course of business of the Group, on normal commercial terms which are 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 Transactions. 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.

(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

– 19 –

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.

==> picture [104 x 48] intentionally omitted <==

==> picture [211 x 52] intentionally omitted <==

(Incorporated in Hong Kong with limited liability)

(Stock Code: 00604)

26 April 2018

To the Independent Shareholders,

Dear Sir or Madam,

CONNECTED TRANSACTIONS IN RELATION TO THE ENTERING INTO

(1) THE FIRST RELOCATION AND COMPENSATION AGREEMENT AND

(2) THE SECOND RELOCATION AND COMPENSATION AGREEMENT

We refer to the circular of the Company dated 26 April 2018 (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 Transactions. Alliance Capital Partners Limited 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 40 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 Transactions, and taking into account the advice of Alliance Capital Partners Limited, in particular the principal factors, reasons and advice as set out in their letter, we consider that the entering into of the Relocation and Compensation Agreements 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 Relocation and Compensation Agreements are on normal commercial terms in the ordinary and usual course

– 20 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

of business of the Group, 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 Transactions.

Yours faithfully, For and on behalf of the

Independent Board Committee Mr. LI Wai Keung Mr. WU Wai Chung, Michael Independent non-executive Directors

Dr. WONG Yau Kar, David

– 21 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

The following is the text of Letter from Alliance Capital Partners Limited to the Independent Board Committee and the Independent Shareholders, prepared for the purpose of inclusion in this circular.

Room 1502-03A, Wing On House 71 Des Voeux Road Central, Central Hong Kong

26 April 2018

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

CONNECTED TRANSACTIONS – THE RELOCATION AND COMPENSATION AGREEMENTS

INTRODUCTION

We refer to our appointment as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in relation to Relocation and Compensation Agreements, details of which are set out in the circular dated 26 April 2018 issued by the Company to the Shareholders (the “ Circular ”), of which this letter form part. Unless otherwise defined, capitalised terms used in this letter shall have the same meanings as those defined in the Circular.

Xinhongcheng and Hengxing are subsidiaries of Shum Yip Group (the ultimate holding company of the Company) and Shum Yip Holdings (a controlling shareholder of the Company) respectively, and are therefore connected persons of the Company. Accordingly, the transactions contemplated under the Relocation and Compensation Agreements constitute connected transactions of the Company under Chapter 14A of the Listing Rules. As one of the applicable percentage ratios in respect of the compensation to be made under the Relocation and Compensation Agreements exceeds 5%, the transactions contemplated under the Relocation and Compensation Agreements are subject to the reporting, announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

THE INDEPENDENT BOARD COMMITTEE

As at the Latest Practicable Date, the Independent Board Committee, comprising all of the independent non-executive Directors of the Company (namely Mr. LI Wai Keung, Mr. WU Wai Chung, Michael, and Dr. WONG Yau Kar, David) who have no direct or indirect interest in the Relocation and Compensation Agreements, has been established to advise the Independent Shareholders on whether (i) the terms of the Relocation and Compensation Agreements are fair and reasonable; (ii) the Relocation and Compensation Agreements are on normal commercial terms and in the ordinary and usual course of business of the Group;

– 22 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

(iii) the Relocation and Compensation Agreements are in the interests of the Group and the Shareholders as a whole, and (iv) the Independent Shareholders should vote in favour of the resolution approving the Relocation and Compensation Agreements to be proposed at the EGM so far as the Independent Shareholders are concerned. In this regard, we, Alliance Capital Partners Limited, have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders on this matter.

Apart from the normal advisory fee payable to us in connection with our appointment as the Independent Financial Adviser, there is no relationship or interests with the Company or any other parties that could reasonably be regarded as relevant to our independence. We consider that we are independent under Rule 13.84 of the Listing Rules.

BASIS OF OUR ADVICE

In arriving at our recommendations, we have relied on the statements, information and representations contained in the Circular and the information and representations provided to us by the Directors and the management of the Company. We have assumed that all information and representations contained or referred to in the Circular and all information and representations which have been provided by the Directors and the management of the Company are true and accurate at the time they were made and will continue to be true and accurate as at the date of the despatch of the Circular.

The Directors collectively and individually accept full responsibility for the accuracy of the information contained in the Circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, information contained in the Circular is accurate and complete in all material respects and not misleading or deceptive and there are no other matters the omission of which would make any statement contained in the Circular misleading. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Directors and the management of the Company. We consider that we have been provided with sufficient information on which to form a reasonable basis for our opinion. We have no reason to suspect that any relevant information has been withheld, nor are we aware of any facts or circumstances which would render the information provided and representations made to us untrue, inaccurate or misleading. We consider that we have performed all the necessary steps to enable us to reach an informed view and to justify our reliance on the information provided to us so as to provide a reasonable basis for our opinion. We have not, however, carried out any independent verification of the information provided by the Directors and the management of the Company, nor have we conducted an independent investigation into the business and affairs or the prospects of the Company, the Group, the Project Company, Xinhongcheng, Hengxing, or any of their respective associates.

Lastly, where information in this letter has been extracted from published or otherwise publicly available sources which are the latest information publicly available to the best of our knowledge, the sole responsibility of Alliance Capital Partners Limited is to ensure that such information has been correctly extracted from the relevant sources.

– 23 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

PRINCIPAL FACTORS AND REASONS CONSIDERED

In formulating our opinion and recommendations in respect of the terms of the Relocation and Compensation Agreements, we have taken into consideration the following principal factors and reasons.

I. Background of the Company

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

Set out below are certain key consolidated financial information of the Group, as extracted from the annual report for the year ended 31 December 2016 (“ 2016 Annual Report ”), and the announcement of the annual results for the year ended 31 December 2017 (“ 2017 Annual Results ”).

	For the year ended 31 December	For the year ended 31 December	For the year ended 31 December
	2015	2016	2017
	HK$’000	HK$’000	HK$’000
Revenue	18,428,172	21,353,993	10,254,496
Cost of sales	(12,053,688)	(13,083,234)	(6,703,088)
Gross profit	6,374,484	8,270,759	3,551,408
Profit before taxation	6,510,629	8,292,792	7,664,682
Profit for the year attributable to the
equity shareholder of the Company	2,868,796	3,170,581	4,950,941
	As	at 31 December
	2015	2016	2017
	HK$’000	HK$’000	HK$’000
Non-current assets	35,587,146	39,561,506	54,263,909
Current assets	55,498,072	56,984,059	62,963,238
Non-current liabilities	24,839,116	24,019,017	25,402,091
Current liabilities	30,677,036	36,305,614	46,724,224
Net assets	35,569,066	36,220,934	45,100,832
Net current assets	24,821,036	20,678,445	16,239,014

– 24 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

Segment revenue: Property development Property investment Property management Manufacture Others Total:	For the year ended 31 December 2015 2016 2017 HK$’000 HK$’000 HK$’000 15,056,911 17,807,883 6,381,479 789,473 764,802 929,847 1,369,006 1,556,802 1,820,429 430,800 298,050 325,645 781,982 926,456 797,096 18,428,172 21,353,993 10,254,496	For the year ended 31 December 2015 2016 2017 HK$’000 HK$’000 HK$’000 15,056,911 17,807,883 6,381,479 789,473 764,802 929,847 1,369,006 1,556,802 1,820,429 430,800 298,050 325,645 781,982 926,456 797,096 18,428,172 21,353,993 10,254,496
		10,254,496

Property development has been the major segment of the Group, contributing approximately 81.7%, 83.4% and 62.2% of the Group’s total revenue. As disclosed in the 2016 Annual Report, the Group was benefited from the destocking policy in the first half of year 2016, while managed to complete the sales of major projects substantially prior to the implementation of a series of stringent control policies for real estate properties in October 2016. The trend of property prices was stabilised under the impact of the control policies.

The Group’s revenue from property development segment decreased from approximately HK$17.8 billion for the year ended 31 December 2016, to approximately HK$6.3 billion for the year ended 31 December 2017. Based on 2017 Annual Results, it was affected by the implementation of a series of controlling measures including “purchase restrictions, credit restrictions, price restrictions and sales restrictions” which has led to slump in land and properties supply in Shenzhen, and resulting in an obvious decrease in trading volume while the price of Shenzhen real estate remained stable.

II. Background of the Xinhongcheng and Hengxing

Xinhongcheng is a limited liability company established in the PRC and a wholly-owned subsidiary of the Shum Yip Group. Xinhongcheng is principally engaged in property development.

Hengxing is a limited liability company established in the PRC and is an indirectly wholly-owned subsidiary of Shum Yip Holdings. Hengxing was principally engaged in clothing business. It is currently in the process of liquidation. According to the PRC legal opinion, the liquidation group (清算組) of Hengxing has the capacity to handle the assets of Hengxing and conclude contract for and on behalf of Hengxing.

– 25 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

III. Reasons for and benefits of the Relocation and Compensation Agreements

The relocation of Properties No. 1 and Properties No. 2 is part of the Redevelopment Project, which has been approved and announced by Urban Planning, Land & Resources Commission of Shenzhen Municipality (深圳巿規劃和國土資源委員會) in July 2015 (http://www.szpl.gov.cn/ywzy/csgx/gxjh/201507/t20150715_463691.html). According to a document issued by Urban Planning, Land & Resources Commission of Shenzhen Municipality in March 2018 regarding the Redevelopment Project (the “ March 2018 Document ”), the gross floor area for redevelopment is 220,240 sq.m., among which (i) 199,340 sq.m. is for residential use (inclusive of 19,340 sq.m. for indemnificatory apartments), (ii) 12,000 sq.m. is for commercial, hotel and office use, and (iii) 8,900 sq.m. is for public facilities.

The Board is of the view that, by participating in the development of the Project Land, the Group is able to seize opportunities of urban development from local authorities, which is in line with the Group’s strategies and will be beneficial to the future long-term benefits of the Group and the Shareholders as a whole.

We understand from the management of the Group that the implementation of the Redevelopment Project is expected to have positive financial impact to the Group, in particular, the size of Resettlement Properties No. 1 and Resettlement Properties No. 2 will be 41,989.99 sq.m and 6,216.54 sq.m. respectively, totaling 48,206.53 sq.m. and representing approximately 24.2% of the gross floor area of 199,340 sq.m. for residential use under the March 2018 Document, and the compensation and allowance to be paid to existing owners of the Properties No. 1 and Properties No. 2 have been taken into account in the appraisal of the Redevelopment Project.

IV. Industry outlook

According to the 2017 Shenzhen Statistical Yearbook (深圳統計年鑒2017) (http://www.sztj.gov.cn/xxgk/tjsj/tjnj/201712/t20171219_10611980.htm), the economy of Shenzhen City (“ Shenzhen ”) has been expanding throughout the years from 2011 to 2016. The compound annual growth rate (“ CAGR ”) of the gross domestic product of Shenzhen amounted to approximately 11.1% for the period from 2011 to 2016, while the CAGR of investment in fixed assets in Shenzhen of the same period amounted to approximately 14.6%. Permanent population of Shenzhen increased from approximately 10.47 million in 2011 to approximately 11.91 million in 2016, while the average annual disposable income per capita increased from approximately RMB24,080 in 2011 to approximately RMB36,481 in 2016, and the respective CAGR amounted to approximately 2.6% and 8.7%. These indicators reflected that the fixed assets market in Shenzhen has also been growing in recent years. The increase in disposable income of the permanent population in Shenzhen is a possible reason contributed to such growth in the fixed assets market.

– 26 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

	2011	2012	2013	2014	2015	2016	CAGR
Gross Domestic Product
(RMB billion)	1,151.59	1,297.15	1,457.27	1,600.18	1,750.29	1,949.26	11.1%
Investment in fixed assets
(RMB billion)	206.09	219.44	240.23	271.74	329.83	407.82	14.6%
Permanent population
(million)	10.47	10.55	10.63	10.78	11.38	11.91	2.6%
Annual disposable income
per capita (RMB)	24,080	26,728	28,812	24,485	32,359	36,481	8.7%

Source: Shenzhen Statistics Bureau

According to the monthly statistic of Shenzhen Statistics Bureau for December 2017 (深圳統計月報2017年12月), the aggregate gross domestic products of all four quarters of 2017 amounted to approximately RMB2,243.84 billion, representing an increase of approximately 15.1% as compared with the annual figure of 2016. Meanwhile, the aggregate investment in fixed assets for 12 months in 2017 amounted to approximately RMB514.73 billion, representing an increase of approximately 26.2% as compared with the annual figure of 2016.

The table below set out the average unit selling price of real estate properties in Shenzhen during the period from 2011 to 2016:

==> picture [380 x 233] intentionally omitted <==

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

Average unit selling price in secondary market
60,000
50,000
40,000
30,000
20,000
10,000
0
2011 2012 2013 2014 2015 2016
Year
- residential - office building - business use
RMB Yuan per sq.m.
----- End of picture text -----

Source: Shenzhen Statistics Bureau

– 27 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

Based on the table above, it is observed that the average selling price of the real estate properties has been on an upward trend during the period from 2011 to 2016 in general. The average selling price of residential housing increased from less than RMB20,000 per sq.m in 2011 to over RMB50,000 per sq.m. in 2016, representing a CAGR of approximately 22.9%.

In view of the growth in economy and real estate properties market as shown above, and the situation that the price of real estate remained stable under stringent control policies as described in 2016 Annual Report and 2017 Annual Results, the Group expects that the Redevelopment Project will bring positive impact on the Group’s revenue in the absence of unforeseeable circumstances.

V. Principal terms of the Relocation and Compensation Agreements

The First Relocation and Compensation Agreement

Parties

(1) Shenzhen Shumyip Minghong Real Estate Development Co., Ltd.* (深圳市深業明宏地產開發有限公司)
(2) Shenzhen Shumyip Xinhongcheng Investment Co., Ltd.* (深圳市深業信宏城投資有限公司)

Subject properties

The various buildings with a total construction area of 72,425.90 sq.m. erected on the two parcels of land of 55,282 sq.m. in area located at Xiashijiacun, Jiangshicun, Gongming Subdistrict, Guangming New District, Shenzhen (深圳市光明新區公明辦事處將石村下石家村), which are situated in the approved urban redevelopment zone under the Redevelopment Project.

Relocation compensation

(1) Provision of residential resettlement properties to be constructed on the Project Land with the total area of 41,989.99 sq.m. to Xinhongcheng. (the “ Resettlement Properties No. 1 ”)
(2) Payment of compensation for the suspension of operation of RMB3,644,133.6 (calculated at RMB10/sq.m./month for 6 months for ground floor, and RMB8/sq.m./month for 6 months for other floors)
(3) Payment of relocation allowance of RMB2,897,036 (calculated at RMB40/sq.m.)

– 28 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

(4) Payment of temporary settlement allowance in the amount of RMB30,418,878 (calculated at RMB10/sq.m/month, i.e. in aggregate monthly allowance of RMB724,259 for 42 months)

Settlement

(1) The construction of the Resettlement Properties No. 1 on the Project Land is expected to take approximately 36 months starting from the date the Project Company obtains a construction permit. Upon Project Company obtains records of construction project planning inspection (建設工程規劃驗收) and construction project completion inspection (建設工程竣工驗收) for Resettlement Properties No. 1., the Project Company shall notify Xinhongcheng to complete the intake formalities
(2) Compensation for the suspension of operation to be paid to Xinhongcheng within 5 business days of the completion of the inspection of the vacant Properties No. 1 by, and the handover of them to, the Project Company
(3) Relocation allowance to be paid to Xinhongcheng within 5 business days of the completion of the inspection of the vacant Properties No. 1 by, and the handover of them to, the Project Company
(4) Temporary settlement allowance will be payable for a period starting from the date of the completion of the inspection of the vacant Properties No. 1 by, and the handover of them to, the Project Company and ending on the date the Project Company notifying Xinhongcheng to complete the intake formalities of Resettlement Properties No. 1 (which is expected to take 42 months based on the current development schedule of the Redevelopment Project), for every 12 months in advance

The compensation and allowances will be funded by the internal resources of the Project Company and/or other financing means.

– 29 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

The Second Relocation and Compensation Agreement

Parties (1) Shenzhen Shumyip Minghong Real Estate Development Co., Ltd.* (深圳市深業明宏地產開發有限公司)
(2) Shenzhen Shumyip Xinhongcheng Investment Co., Ltd.* (深圳市深業信宏城投資有限公司)
(3) Hengxing Industrial (Shenzhen) Co., Ltd. (liquidation team)* (恒興實業(深圳)有限公司清算組)
Subject properties The two plant rooms with a total construction area of 2,268 sq.m. erected on the parcel of land of 8,184.78 sq.m. in area located at Xiashijiacun, Jiangshicun, Gongming Subdistrict, Guangming New District, Shenzhen* (深圳市光明新區公明辦事處將石村下石家村), which are situated in the approved urban redevelopment zone under the Redevelopment Project.
Relocation compensation (1) Provision of residential resettlement properties to be constructed on the Project Land with an area of 808.15 sq.m. and 5,408.39 sq.m. to Xinhongcheng and Hengxing respectively (the “ Resettlement Properties No. 2 ”)
(2) Payment of compensation for the suspension of operation of RMB108,864 (calculated at RMB8/sq.m./month for 6 months)
(3) Payment of relocation allowance of RMB90,720 (calculated at RMB40/sq.m.)
(4) Payment of temporary settlement allowance of RMB952,560 (calculated at RMB10/sq.m/month, i.e. in aggregate monthly allowance of RMB22,680 for 42 months)

– 30 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

Settlement

(1) The construction of the Resettlement Properties No. 2 on the Project Land is expected to take approximately 36 months starting from the date the Project Company obtains a construction permit. Upon Project Company obtains records of construction project planning inspection (建設工程規劃驗收) and construction project completion inspection (建設工程竣工驗收) for Resettlement Properties No. 2, the Project Company shall notify Xinhongcheng and Hengxing to complete the intake formalities
(2) Compensation for the suspension of operation to be paid to Xinhongcheng within 5 business days of the completion of the inspection of the vacant Properties No. 2 by, and the handover of them to, the Project Company
(3) Relocation allowance to be paid to Xinhongcheng within 5 business days of the completion of the inspection of the vacant Properties No. 2 by, and the handover of them to, the Project Company
(4) Temporary settlement allowance will be payable for a period starting from the date of the completion of the inspection of the vacant Properties No. 2 by, and the handover of them to, the Project Company and ending on the date the Project Company notifying Xinhongcheng and Hengxing to complete the intake formalities of Resettlement Properties No. 2 (which is expected to take 42 months based on the current development schedule of the Redevelopment Project), for every 12 months in advance

It was agreed that the compensation for loss due to suspension of operation, and allowances for relocation and temporary settlement will not be paid to Hengxing by the Project Company.

The compensation and allowances will be funded by the internal resources of the Project Company and/or other financing means.

– 31 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

Basis for resettlement, relocation compensation and allowance

Resettlement

As set out in the valuation report in Appendix I to the Circular (the “ Valuation Report ”), we understand that the size of the Resettlement Properties No. 1 and Resettlement Properties No. 2 are calculated based on the value of Properties No. 1 and Properties No. 2 respectively, and the unit price of new residential flats sold, both as at 28 February 2018, as follows:

Particulars of Properties No. 1/ Resettlement Properties No. 1 Size/price Remarks Gross floor area of A 72,425.9 sq.m. Properties No. 1 Value of Properties No. 1 B RMB1,385,669,670 Round to as at 28 February 2018 RMB1,386,000,000 per Valuation Report Unit price of new residential C RMB33,000/sq.m. Per Valuation Report flats as at 28 February 2018 Gross floor area of Resettlement D 41,989.99 sq.m. = B/C Properties No. 1 [(Note][1)] Particulars of Properties No. 2/ Resettlement Properties No. 2 Size/price Remarks Gross floor area of A 2,268 sq.m. Properties No. 2 Value of Properties No. 2 B RMB205,145,820 Round to as at 28 February 2018 RMB205,000,000 per Valuation Report Unit price of new residential C RMB33,000/sq.m. Per Valuation Report flats as at 28 February 2018 [3)] Gross floor area of Resettlement D 6,216.54 sq.m. [(Note] = B/C Properties No. 2 [(Note][2)]

Notes:

(1) 10 sq.m. deviation in gross floor area is allowed as per the First Relocation and Compensation Agreement. For the difference over and above 10 sq.m. such portion should be paid or refunded as appropriate.
(2) 10 sq.m. deviation in gross floor area is allowed as per the Second Relocation and Compensation Agreement. For the difference over and above 10 sq.m. such portion should be paid or refunded as appropriate.
(3) Resettlement Properties No. 2 is to be provided to Xinhongcheng as to 808.15 sq.m., and to Hengxing as to 5,408.39 sq.m.

– 32 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

We have discussed with the Independent Property Valuer, and understand that the size of the Resettlement Properties No. 1 and Resettlement Properties No. 2 are determined with reference to (i) the value of the Properties No. 1 and Properties No. 2, (ii) the fee payable to the government in respect of the value of the land of the Redevelopment Project, (iii) the unit price of the new residential flats surrounding the Project Land. We are of the view that the basis of calculation for the size of Resettlement Properties No. 1 and Resettlement Properties No. 2 is justifiable. For evaluation on the valuation of the Properties No. 1 and Properties No. 2, and the unit price of the new residential flats, please refer to paragraph VI below.

Given the above, and the evaluation of valuation set out in paragraph VI below, we are of the view that the size of the Resettlement Properties No. 1 and Resettlement Properties No. 2 under the Relocation and Compensation Agreements is fair and reasonable.

Compensation and allowance

Set out below the summary of compensation and allowance payable to the owners of Properties No. 1 and Properties No. 2 under Relocation and Compensation Agreements:

Properties No. 1 Properties No. 2 Total:	Compensation for the suspension of operation RMB 3,644,133.6 108,864.0 3,752,997.6	Relocation allowance RMB 2,897,036.0 90,720.0 2,987,756.0	Temporary settlement allowance RMB 30,418,878.0 952,560.0 31,371,438.0	Total RMB 36,960,047.6 1,152,144.0
				38,112,191.6

We understand that the (i) compensation for the suspension of operation, (ii) relocation allowance, and (iii) temporary settlement allowance are calculated with reference to “Temporary Implementation Measures on Expropriation of Properties and Compensation” (深圳市房屋徵收與補償實施辦法(試行)) where the followings are, inter alia, stipulated therein:

(i) Compensation for the suspension of operation
Calculated based on market rental for 6 months.

(ii) Relocation allowance

Calculated based on the gross floor area of the subject properties, and RMB40/sq.m., for buildings used as factory, office, residential (including dormitory) purposes.

– 33 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

(iii) Temporary settlement allowance

Calculated based on market rental for 36 months, covering the period from handing over the original property, up to the delivery of the resettlement property.

As discussed with the PRC legal adviser, we understand that pursuant to Implementation Measures of Urban Renewal of Shenzhen (深圳市城市更新辦法實施細則), for a land redevelopment project to be approved by relevant government authority for implementation, the subject land has to be owned or otherwise entitled to be redeveloped under one entity (the “ Proposed Redeveloper ”), and the entitlement to redevelop under one entity could be achieved by way of entering into relocation and compensation agreements between the Proposed Redeveloper and the existing owners of the land and property situated in the subject land, whereby the following, inter alia, shall be stipulated in the relocation and compensation agreements:

Size and location of resettlement properties
Amount of compensation
Arrangement for transitional period

As discussed with the management of the Company, we understand that the Project Company will be the Proposed Redeveloper for the subject land, which Land No. 1 and Land No. 2 are included.

As advised by the PRC legal adviser, under Implementation Measures of Urban Renewal of Shenzhen, the terms of the relocation and compensation should be fair for both parties, even though it has no specific provisions regarding the terms. We have further discussed with the industry consultant, and understand that it is a general market practice to negotiate the terms of relocation and compensation agreements with reference to the mechanism set out under the Temporary Implementation Measures on Expropriation of Properties and Compensation. Accordingly, despite it is not a statutory requirement for the Redevelopment Project, the types of compensation and allowance, the relevant parameters, and the calculation method as stipulated in the aforesaid Temporary Implementation Measures on Expropriation of Properties and Compensation are adopted in arriving at the amount of compensation and allowance in the Relocation and Compensation Agreements, and are evaluated further below:

(i) Compensation for the suspension of operation

For the market rental adopted for the calculation of the compensation for the suspension of operation, we understand that the industry consultant has made reference to the market rental of five nearby factories/industrial sites within 10 kilometres from Properties No. 1 and Properties No. 2, and the market rental ranged from approximately RMB8/sq.m. to RMB15/sq.m.

– 34 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

Therefore, the adoption of RMB10/sq.m. for ground floor and RMB8/sq.m. for other floors for calculation of the compensation for the suspension of operation are within the range of the market rentals described above. Accordingly, we are of the view that the adoption of market rental of RMB10/sq.m and RMB8/sq.m. are justifiable.

We further noted that the compensation for suspension of operation has been calculated by multiplying the aforementioned monthly market rental for 6 months, with reference to the provision of the Temporary Implementation Measures on Expropriation of Properties and Compensation.

(ii) Relocation allowance

For relocation allowance, it is stipulated in the Temporary Implementation Measures on Expropriation of Properties and Compensation that the relocation allowance is RMB40/sq.m. The Group has adopted the same rate for the calculation of the relocation allowance for Properties No. 1 and Properties No. 2.

(iii) Temporary settlement allowance

For the market rental adopted for the calculation of temporary settlement allowance, we understand that the industry consultant has made reference to the market rental of five nearby factories/industrial sites within 10 kilometres from Properties No. 1 and Properties No. 2, and the market rental ranged from approximately RMB8/sq.m. to RMB15/sq.m. Therefore, the adoption of RMB10/sq.m. for the purpose of calculation of temporary settlement allowance is within the range of the market rentals described above. Accordingly, we are of the view that the adoption of RMB10/sq.m. is justifiable.

We further note the compensation was calculated based on 42 months instead of 36 months as stipulated under Temporary Implementation Measures on Expropriation of Properties and Compensation, with reference to current development schedule of the Redevelopment Project.

Based on the above, and in view that it is a general market practice to include these three types of relocation compensation and allowance, we are of the view that (i) the compensation for suspension of operation, (ii) relocation allowance, and (iii) temporary settlement allowance under the Relocation and Compensation Agreements are fair and reasonable.

– 35 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

VI. Valuation of the Properties

Cushman & Wakefield Limited, a professional independent valuer, has been engaged by the Company to assess the value of the properties to be acquired by Project Company, and the Valuation Report is set out in Appendix I to the Circular. According to the Valuation Report, the market value of Properties No. 1 and Properties No. 2 in their existing state as at 28 February 2018 amounted to RMB1,386 million and RMB205 million respectively, which amounted to a total of RMB1,591 million.

Experience of the Independent Property Valuer and its engagement

We have conducted an interview with the Independent Property Valuer regarding its experience in valuing properties, and its independence. We understand that the Independent Property Valuer is an established valuation firm with a number of completed assignments acting for listed companies or listing applicant for assessing properties’ value. We also understand that the registered professional surveyor signing the Valuation Report has over 30 years’ experience in valuation of properties in the PRC. We have also reviewed the terms of engagement letter of the Independent Property Valuer and noted that the purpose of which is to prepare a valuation report and provide the Company with the opinion of value on the of Properties No. 1 and Properties No. 2. The engagement letter contains standard valuation scopes that are typical of valuation of properties carried out by independent valuers. The Independent Property Valuer confirmed that it did not have any material connection or involvement giving rise to a conflict of interest and is providing an objective and unbiased valuation. We are not aware of limitation of the scope of work which might have an adverse impact on the degree of assurance given by the Independent Property Valuer in the Valuation Report.

We note that the Independent Property Valuer mainly carried out its due diligence through discussion with the representative of the Group, and has relied on the extracts of documents relating to the titles of the properties in the PRC provided by the Group and the advice provided by the PRC legal adviser, without performing inspection of the original documents to ascertain any amendment which may not appear on the copies provided, nor performing searches for ascertaining the title of the property in the PRC. We were advised by the Independent Property Valuer that it has assumed data obtained in the course of the valuation, along with the opinions and representations provided by the Group have been prepared with reasonable care, and is accurate and complete.

Based on the above, and our discussion with the PRC legal adviser that Xinhongcheng is entitled to transfer the ownership of Properties No. 1 and Properties No. 2, and that land use right of Land No. 2, despite with defect, is likely to belong to Hengxing, we are satisfied that the Independent Property Valuer for the Valuation Report has relevant qualification as well as sufficient experience in performing the valuation, and that the engagement is under normal commercial terms and the scope of the Independent Property Valuer’s work is appropriate in conducting the valuation.

– 36 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

Valuation methodologies

In the process of assessing the value of the Properties No. 1 and Properties No. 2, we note from the Valuation Report that Independent Property Valuer has adopted the direct comparison approach assuming sale of the property in its existing state with the benefit of vacant possession by making reference to comparables sales evidences as available in the relevant market. Comparable sales of properties of similar size, character and location are selected and then analysed and weighed against all the respective advantages and disadvantages (such as proximity to prime location and property development quality) of each property in order to arrive at a fair comparison of capital values. As disclosed in the Valuation Report, income approach was not adopted because there was no property under valuation which is leased and has rental income. Cost approach is used when the property under valuation is special nature of buildings where there is no readily identifiable comparable market transactions and the property cannot be valued by comparable market transactions. Independent Property Valuer confirmed that the valuation of the Properties No. 1 and Properties No. 2 is complied with the HKIS Valuation Standards 2017 published by the Hong Kong Institutes of Surveyors, as well as the requirements set out in Chapter 5 and Practice Note 12 to the Listing Rules. As further confirmed by Independent Property Valuer, the aforesaid direct comparison approach is universally considered as an accepted valuation approach for valuing most forms of real estate and is also consistent with normal market practice.

Evaluation of the valuation

In our review of the comparable sales transactions adopted by Independent Property Valuer and as per their advice, we noted that Independent Property Valuer has made reference to comparable lands and buildings that are recently transacted.

Value of the Land No. 1 and Land No. 2

For the purpose of calculation of the size of the Resettlement Properties No. 1 and Resettlement Properties No. 2, the Independent Property Valuer has adopted RMB15,000/sq.m. as the value of Land No. 1 and Land No. 2. Based on the discussion with the Independent Property Valuer, we understand that the Independent Property Valuer has reviewed 10 transactions of similar land in Shenzhen, and, excluding the three outliers which were with exceptionally high unit value, the value of the remaining 7 transactions ranged from approximately RMB10,500/sq.m. to approximately RMB27,600/sq.m. The RMB15,000/sq.m. adopted by the Independent Property Valuer falls within the range and is slightly lower than the average.

– 37 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

We have obtained and reviewed documents which include pricing information of the aforesaid comparable sales transactions adopted by the Independent Property Valuer. As advised by the Independent Property Valuer, we noted that the selection basis of the comparable sales transactions is based on their relevance to Land No. 1 and Land No. 2 being the land available for commercial and residential development, and that the transactions are most updated when the Valuation Report is prepared. We are of the view that the adoption of RMB15,000/sq.m. for calculation of the value of the Land No. 1 and Land No. 2 is justifiable.

Fee payable to the government in respect of the value of the land of the Redevelopment Project

For calculation of the total value of the Land No. 1 and Land No. 2, the Independent Property Valuer adopted RMB4,728/sq.m. as the amount to be paid to the government in respect of the value of the land of the Redevelopment Project. As discussed with the Independent Property Valuer, we understand that the said amount is estimated with reference to the applicable regulation, namely Temporary Implementation Measures for Strengthening and Improving the Execution of Urban Renewal (關於加強和改進城巿更新實施工作的暫行措施). We have further discussed with the PRC legal adviser, and understand that the Temporary Implementation Measures for Strengthening and Improving the Execution of Urban Renewal is the applicable regulation.

We have obtained from the website of Urban Planning, Land & Resources Commission of Shenzhen Municipality and reviewed documents which indicates the benchmark price of land in various locations in Shenzhen. As discussed with the Independent Property Valuer, we understand that fee payable to the government represents the difference in value of the land upon the change of the use (e.g. from industrial use to residential/commercial use). According to Temporary Implementation Measures for Strengthening and Improving the Execution of Urban Renewal, and with the application of the adjustment factor and allowance towards the benchmark price for residential units situated in the same district of Land No. 1 and Land No. 2, the benchmark price ranges from approximately RMB2,560/sq.m. to RMB5,200/sq.m., and the RMB4,728/sq.m. adopted by the Independent Property Valuer falls within the range. We are of the view that the adoption of RMB4,728/sq.m. for calculation of the fee payable to government in respect of the Redevelopment Project for the Land No. 1 and Land No. 2 is justifiable.

– 38 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

Value of new residential flats

For the purpose of calculation of the size of the Resettlement Properties No. 1 and Resettlement Properties No. 2, the Independent Property Valuer has adopted RMB33,000/sq.m. as the value of new residential flats. Based on the discussion with the Independent Property Valuer, we understand that 6 transactions of new residential units surrounding Properties No. 1 and Properties No. 2 have been reviewed by Independent Property Valuer, and the unit values ranged from RMB31,700/sq.m. to RMB40,000/sq.m. The RMB33,000/sq.m. adopted by the Independent Property Valuer falls within the range, and near to the low end, after taking into consideration the adjustment factors such as development quality.

We have obtained and reviewed documents which include pricing information of the comparable sales transactions adopted by the Independent Property Valuer. As advised by the Independent Property Valuer, we noted that the selection basis of the comparable sales transactions is based on their relevance to the Properties No. 1 and Properties No. 2, and that the transactions are most updated when the Valuation Report is prepared. We are of the view that the adoption of RMB33,000/sq.m. for calculation of the value of the new residential flats is justifiable.

Based on the above, we have not identified any material facts which may lead us to doubt the basis and assumptions adopted for or the information used in the valuation of the Properties No. 1 and Properties No. 2, and the size of the Resettlement Properties No. 1 and Resettlement Properties No.2. We are of the view that the valuation of the Properties No. 1 and Properties No. 2 are fair and reasonable.

VII. Possible financial effects on the Group

As disclosed in the Letter from the Board, the compensation and allowance will be settled in cash by the internal resources of the Project Company and/or other financing means. As disclosed in the Group’s 2017 Annual Results, the Group’s cash and cash equivalents as at 31 December 2017 amounted to approximately HK$11.2 billion, which is more than sufficient to cover the aggregate compensation and allowance for 12 months under the Relocation and Compensation Agreements of approximately RMB15.7 million, or the aggregate compensation and allowance under the Relocation and Compensation Agreements of approximately RMB38.1 million.

As at 31 December 2017, the Group’s net assets and net current assets amounted to approximately HK$45.1 billion and HK$16.2 billion respectively. The compensation and allowance under the Relocation and Compensation Agreements of a total of approximately RMB38.1 million is relatively insignificant as compared to the Group’s net assets and net current assets, and therefore is not expected to have material impact to the financial performance of the Group.

– 39 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

RECOMMENDATIONS

Having considered the principal factors and reasons above, we are of the opinion that the terms of the Relocation and Compensation Agreements are on normal commercial terms and in the ordinary and usual course of business of the Group and in the interest of the Group and the Shareholders as a whole so far as the Independent Shareholders are concerned. Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders to vote in favour of the resolution approving the Relocation and Compensation Agreements to be proposed at the EGM.

Yours faithfully, For and on behalf of Alliance Capital Partners Limited Alyssa Ng Executive Director

Ms. Alyssa Ng is licensed person under the SFO to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities and has more than 10 years’ experience in participation and advising in various initial public offerings and transactions involving companies listed in Hong Kong, including but not limited to the provision of independent financial advisory services regarding connected transactions.

– 40 –

VALUATION REPORT

APPENDIX I

The following is the text of a letter, summary of valuations and valuation reports prepared for the purpose of incorporation in the Circular, received from Cushman & Wakefield Limited, an independent property valuer, in connection with its opinion of value of the property interest to be acquired by the Group as at 28 February 2018.

==> picture [119 x 40] intentionally omitted <==

16/F

Jardine House 1 Connaught Place Central Hong Kong

26 April 2018

The Directors

Shenzhen Investment Limited

8/F, New East Ocean Centre 9 Science Museum Road Tsim Sha Tsui, Kowloon Hong Kong

Dear Sirs,

Instructions, Purpose & Valuation date

In accordance with your instructions for us to value the properties to be acquired by Shenzhen Investment Limited (referred to as the “Company”) and its subsidiaries (hereinafter together referred to as the “Group”) in the People’s Republic of China (the “PRC”) (as more particularly described in the valuation reports), we confirm that we have inspected the properties, made relevant enquiries and obtained such further information as we consider necessary to provide you with our opinion of the value of such properties as at 28 February 2018 (the “valuation date”).

Definition of Market Value

Our valuation of each of the properties represents its Market Value which in accordance with the HKIS Valuation Standards 2017 published by the Hong Kong Institute of Surveyors is defined as “the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion”.

Valuation Basis and Assumptions

Our valuations exclude an estimated price inflated or deflated by special terms or circumstances such as atypical financing, sale and leaseback arrangements, special considerations or concessions granted by anyone associated with the sale, or any element of value available only to a specific owner or purchaser.

– I-1 –

VALUATION REPORT

APPENDIX I

In valuing the properties, we have complied with the requirements set out in Chapter 5 and Practice Note 12 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, The Code on Takeovers and Mergers and Share Repurchases of Securities and Future Commission and the HKIS Valuation Standards 2017 issued by the Hong Kong Institute of Surveyors.

In the course of our valuation of the properties in the PRC, we have assumed that, unless otherwise stated, the transferable land use rights of the properties for their term at nominal annual land use fees have been granted and that any premium payable has already been fully paid.

We have relied on the information provided by the Group and the advice provided by Commerce & Finance Law Offices, the Group’s legal advisor, regarding the title to the properties and the interest of the Group in the properties. In valuing the properties, we have assumed that the owners of the properties have an enforceable title to the properties and have free and uninterrupted rights to use, occupy or assign the properties for the whole of the unexpired land use term as granted.

In respect of the properties situated in the PRC, the status of titles and grant of major certificates, approvals and licenses, in accordance with the information provided by the Group are set out in the notes of the valuation reports.

No allowance has been made in our valuations for any charges, mortgages or amounts owing on the properties nor for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the properties are free from encumbrances, restrictions and outgoings of an onerous nature which could affect their value.

Method of Valuation

In valuing the properties to be acquired by the Group for future development in the PRC, we have valued the properties on the basis that they will be developed and completed in accordance with the latest development proposal (if any) provided to us. In arriving at our opinion of value, we have adopted direct comparison approach by making reference to comparable sales evidence as available in the relevant market.

We have used direct comparison approach as the main valuation method because most of the properties are held for the purpose of future development and comparable sales evidences for the type of properties in the relevant market are adequate.

We have not used other valuation methods such as income approach and cost approach because there was no property under valuation which is leased and has rental income. Moreover cost approach is used when the property under valuation is special nature of buildings where there is no readily identifiable comparable market transactions and the property cannot be valued by comparable market transactions.

– I-2 –

VALUATION REPORT

APPENDIX I

Source of Information

We have been provided by the Group with extracts of documents in relation to the titles to the properties. However, we have not inspected the original documents to ascertain any amendments which may not appear on the copies handed to us.

In the course of our valuation, we have relied to a very considerable extent on the information given to us by the Group in respect of the properties in the PRC and have accepted advice given by the Group on such matters as planning approvals or statutory notices, identification of land and buildings, completion date of buildings, construction cost, site and floor areas, interest attributable to be acquired by the Group and all other relevant matters.

Dimensions, measurements and areas included in the valuation reports are based on information provided to us and are therefore only approximations. We have had no reason to doubt the truth and accuracy of the information provided to us by the Group which is material to the valuation. We were also advised by the Group that no material facts have been omitted from the information provided.

Title Investigation

We have been provided with extracts of documents relating to the titles of the properties in the PRC but no searches have been made in respect of the property. We have not searched the original documents to verify ownership or to ascertain any amendment which may not appear on the copies handed to us. We are also unable to ascertain the title of the properties in the PRC and we have therefore relied on the advice given by the Group and the Group’s legal advisor, Commerce & Finance Law Offices regarding the Group’s interests in the PRC properties.

Unless otherwise stated, it is assumed that the properties are free from encumbrances, restrictions and outgoings of any onerous nature which could affect their values.

Site Inspection

Ms. Candy Gan, our Shenzhen office valuer, inspected the exterior and, whenever possible, the interior of the properties in March 2018. Ms. Candy Gan has about 9 years’ experience in property valuation in the PRC. However, we have not carried out investigations on site to determine the suitability of the ground conditions and the services etc. for any future development. Our valuation is prepared on the assumption that these aspects are satisfactory and that no unexpected costs or delays will be incurred during the construction period. Moreover, no structural survey has been made, but in the course of our inspection, we did not note any serious defects. We are, however, not able to report that the properties are free of rot, infestation or any other structural defects. No tests were carried out to any of the services. Unless otherwise stated, we have not been able to carry out on-site measurements to verify the site and floor areas of the properties and we have assumed that the area shown on the documents handed to us are correct.

– I-3 –

VALUATION REPORT

APPENDIX I

Currency

Unless otherwise stated, all money amounts indicated herein our valuation are in Renminbi (RMB), official currency of the PRC.

We enclose herewith our summary of valuations and valuation reports.

Yours faithfully,

for and on behalf of

Cushman & Wakefield Limited

Andrew K.F. Chan

Registered Professional Surveyor (General Practice) Registered China Real Estate Appraiser

MSc, MRICS, MHKIS

Regional Director

Valuation & Advisory Services, Greater China

Note: Mr. Andrew K. F. Chan is a Registered Professional Surveyor who has over 30 years of experience in the valuation of properties in the PRC.

– I-4 –

VALUATION REPORT

APPENDIX I

SUMMARY OF VALUATIONS

Property Market value in existing state as at 28 February 2018 Interest to be acquired by the Group (RMB) (%) Properties to be acquired by the Group for future development in the PRC 1. Various buildings of Hengxing Industrial District, Shijia Village, Gongming Town, Baoan District, Shenzhen, Guangdong Province, the PRC 中國廣東省深圳市寶安區公明鎮石家村恒興工業區內一些建築物 1,386,000,000 100 2. 2 plant rooms of Hengxing Industrial District, Shijia Village, Gongming Town, Baoan District, Shenzhen, Guangdong Province, the PRC 中國廣東省深圳市寶安區公明鎮石家村恒興工業區內兩間機房 205,000,000 100 Total : 1,591,000,000	Market value in existing state attributable interest to be acquired by the Group as at 28 February 2018 (RMB) 1,386,000,000 205,000,000
	1,591,000,000

Property
Market value in
existing state as at
28 February 2018
Interest to be
acquired by the
Group
(RMB)
(%)
Properties to be acquired by the Group for future development in the PRC
1.
Various buildings of
Hengxing Industrial
District, Shijia
Village, Gongming
Town, Baoan District,
Shenzhen, Guangdong
Province, the PRC
中國廣東省深圳市
寶安區公明鎮石家村
恒興工業區內一些建
築物
1,386,000,000
100
2.
2 plant rooms of
Hengxing Industrial
District, Shijia
Village, Gongming
Town, Baoan District,
Shenzhen, Guangdong
Province, the PRC
中國廣東省深圳市
寶安區公明鎮石家村
恒興工業區內兩間
機房
205,000,000
100
Total :
1,591,000,000

Market value in
existing state
attributable interest
to be acquired by
the Group as at 28
February 2018
(RMB)
1,386,000,000
205,000,000

1,591,000,000

– I-5 –

VALUATION REPORT

APPENDIX I

VALUATION REPORT

Property

Description and tenure

Market value in existing Particulars of state as at 28 occupancy February 2018

Properties to be acquired by the Group for future development in the PRC

Various buildings Completed in the period between 1992 of Hengxing and 1993, the property comprises Industrial District, various buildings of an industrial Shijia Village, complex erected on land with site area Gongming Town, of approximately 55,282.00 sq m. Baoan District, Shenzhen, The details of the buildings are as Guangdong follows: Province, the PRC

中國廣東省深圳市寶安區公明鎮石家村恒興工業區內一些建築物 Block No. No. of Storey 1 5 2 5 3 5 4 5 5 5 4 blocks of dormitory 6 Canteen 2 Total	Approximate Gross Floor Area (sq m) 10,485.50 10,239.00 4,260.50 10,239.00 10,485.50 22,717.60 3,998.80
	72,425.90

As at the valuation RMB1,386,000,000 date, the property was vacant. RENMINBI ONE THOUSAND THREE HUNDRED EIGHTY SIX MILLION (100% interest to be acquired by the Group: RMB1,386,000,000)

The immediate locality of the property is a sub-urban area in Shenzhen where are predominated by residential developments with commercial and communal facilities.

The property has been held with land use rights for industrial use. For details, please refer to Note (1) below.

Notes:-

(1) According to 48 Real Estate Title Certificates issued by 深圳市房地產權登記中心 (Shenzhen City Real Estate Registration Centre), the land use rights and building ownership of the property located in Shijia Village, Gongming Town, Baoan District, Shenzhen, have been vested in 深圳市深業信宏城投資有限公司 (Shenzhen Shumyip Xinhongcheng Investment Co., Ltd.) with details as follows:

The land lot no. is A626-0001 with site area of 28,117.70 sq m for industrial and storage uses with a land use term due to expire on 31 May 2040.

The land lot no. is A626-0009 with site area of 27,164.30 sq m for industrial use with a land use term due to expire on 31 July 2039.

– I-6 –

APPENDIX I

VALUATION REPORT

No.
Certificate No.
Date of issue
Name of building
Completion date
1
8000103938
25 Oct 2012
Level 1 of Block No. 1
18 Oct 1993
2
8000103939
25 Oct 2012
Level 2 of Block No. 1
18 Oct 1993
3
8000103936
25 Oct 2012
Level 3 of Block No. 1
18 Oct 1993
4
8000103935
25 Oct 2012
Level 4 of Block No. 1
18 Oct 1993
5
8000103934
25 Oct 2012
Level 5 of Block No. 1
18 Oct 1993
6
8000103309
5 Jan 2012
Level 1 of Block No. 2
14 May 1993
7
8000103312
5 Jan 2012
Level 2 of Block No. 2
14 May 1993
8
8000103313
5 Jan 2012
Level 3 of Block No. 2
14 May 1993
9
8000103308
5 Jan 2012
Level 4 of Block No. 2
14 May 1993
10
8000103310
5 Jan 2012
Level 5 of Block No. 2
14 May 1993
11
8000103321
5 Jan 2012
Level 1 of Block No. 3
20 Jun 1992
12
8000103319
5 Jan 2012
Level 2 of Block No. 3
20 Jun 1992
13
8000103318
5 Jan 2012
Level 3 of Block No. 3
20 Jun 1992
14
8000103320
5 Jan 2012
Level 4 of Block No. 3
20 Jun 1992
15
8000103933
26 Oct 2012
Level 5 of Block No. 3
20 Jun 1992
16
8000103311
5 Jan 2012
Level 1 of Block No. 4
20 Jun 1992
17
8000103322
5 Jan 2012
Level 2 of Block No. 4
20 Jun 1992
18
8000103345
10 Jan 2012
Level 3 of Block No. 4
20 Jun 1992
19
8000103326
5 Jan 2012
Level 4 of Block No. 4
20 Jun 1992
20
8000103324
5 Jan 2012
Level 5 of Block No. 4
20 Jun 1992
21
8000103327
5 Jan 2012
Level 1 of Block No. 5
20 Jun 1992
22
8000103325
5 Jan 2012
Level 2 of Block No. 5
20 Jun 1992
23
8000103329
5 Jan 2012
Level 3 of Block No. 5
20 Jun 1992
24
8000103323
5 Jan 2012
Level 4 of Block No. 5
20 Jun 1992
25
8000103328
5 Jan 2012
Level 5 of Block No. 5
20 Jun 1992
26
8000103016
26 Sep 2011
Level 1 of Dormitory No. 2
1 May 1992
27
(2017) 0092247
9 Jun 2017
Level 2 of Dormitory No. 2
1 May 1992
28
(2017) 0092226
9 Jun 2017
Level 3 of Dormitory No. 2
1 May 1992
29
8000103017
26 Sep 2011
Level 4 of Dormitory No. 2
1 May 1992
30
8000103018
26 Sep 2011
Level 5 of Dormitory No. 2
1 May 1992
31
8000103019
26 Sep 2011
Level 6 of Dormitory No. 2
1 May 1992
32
8000103020
26 Sep 2011
Level 1 of Dormitory No. 3
1 Jun 1992
33
8000103022
26 Sep 2011
Level 2 of Dormitory No. 3
1 Jun 1992
34
8000103021
26 Sep 2011
Level 3 of Dormitory No. 3
1 Jun 1992
35
8000103023
26 Sep 2011
Level 4 of Dormitory No. 3
1 Jun 1992
36
8000103009
26 Sep 2011
Level 5 of Dormitory No. 3
1 Jun 1992
37
8000103013
26 Sep 2011
Level 6 of Dormitory No. 3
1 Jun 1992
38
8000103338
10 Jan 2012
Level 1 of Dormitory No. 4
1 Dec 1992
39
8000103340
10 Jan 2012
Level 2 of Dormitory No. 4
1 Dec 1992
40
8000103341
10 Jan 2012
Level 3 of Dormitory No. 4
1 Dec 1992
41
8000103342
10 Jan 2012
Level 4 of Dormitory No. 4
1 Dec 1992
42
8000103343
10 Jan 2012
Level 5 of Dormitory No. 4
1 Dec 1992
43
8000103344
10 Jan 2012
Level 6 of Dormitory No. 4
1 Dec 1992
44
8000103937
25 Oct 2012
Dormitory No. 5
1 Dec 1992
45
8000103014
26 Sep 2011
Level 1 of Canteen No. 1
1 May 1992
46
8000103015
26 Sep 2011
Level 2 of Canteen No. 1
1 May 1992
47
8000103024
26 Sep 2011
Level 1 of Canteen No. 6
1 Dec 1992
48
(2017) 0092223
9 Jun 2017
Level 2 of Canteen No. 6
1 Dec 1992
Total:

Gross floor area
(sq m)
2,097.10
2,097.10
2,097.10
2,097.10
2,097.10
2,047.80
2,047.80
2,047.80
2,047.80
2,047.80
852.10
852.10
852.10
852.10
852.10
2,047.80
2,047.80
2,047.80
2,047.80
2,047.80
2,097.10
2,097.10
2,097.10
2,097.10
2,097.10
946.50
946.50
946.60
946.60
946.60
946.60
946.50
946.50
946.60
946.60
946.60
946.60
946.50
946.50
946.60
946.60
946.60
946.60
5,679.40
996.40
1,003.00
996.40
1,003.00

72,425.90

(2) According to Business License dated 1 November 2017, 深圳市深業信宏城投資有限公司 (Shenzhen Shumyip Xinhongcheng Investment Co., Ltd.) was established on 27 June 2011 as a limited company.

– I-7 –

VALUATION REPORT

APPENDIX I

(3) According to a notice issued by 深圳市規劃和國土資源委員會 (Shenzhen City Planning and Land Resource Committee) issued on 28 March 2016, the property is situated in an approved urban redevelopment zone for residential and commercial redevelopment.
(4) As advised by the Group, the property is situated in an approved redevelopment zone for development of residential and commercial developments. The planned gross floor area to be developed for the part of the property is approximately 134,932.30 sq m.
(5) In the course of undertaking our valuation of the property in existing state, we have considered the redevelopment rights as shown above.
(6) Based on the above valuation result of RMB1,386 million and our opinion of average unit price of new residential flats sold in the locality, RMB33,000 as at valuation date, the equivalent residential gross floor area to be provided is approximately 41,989.99 sq m.
(7) We have been provided with a legal opinion on the property prepared by the Group’s PRC legal adviser, which contains, inter alia, the following information:-
(i) The Real Estate Title Certificates of the property are valid, legal and enforceable under the PRC laws;
(ii) 深圳市深業信宏城投資有限公司 (Shenzhen Shumyip Xinhongcheng Investment Co., Ltd.) is the sole legal land user of the property and has the rights to freely lease, transfer, mortgage and dispose of the land use rights and building ownership of the property; and
(iii) The property is situated in an urban redevelopment zone and was approved by 深圳市規劃和國土資源委員會 (Shenzhen City Planning and Land Resource Committee) on 28 March 2016.
(8) The status of title and grant of major approvals and licenses in accordance with the information provided to us by the Group are as follows:

Real Estate Title Certificates Yes Business Licence Yes

(9) In our valuation, we have adopted an average unit price of accommodation value of RMB15,000 per sq.m for the land.
(10) In the course of our valuation, we have made references to various recent sales transactions and asking prices of some similar developments which have characteristics comparable to the property. The prices of accommodation value of those sales transactions are in a range of RMB10,000 and RMB27,000 per sq.m. for land. The unit prices assumed by us are consistent with the said sales transactions and asking price references. Due to adjustments to the unit prices of those sales transactions and asking price, references have been made to reflect factors including but not limited to time, location, size, floor, difference and quality in arriving at the key assumptions.

– I-8 –

VALUATION REPORT

APPENDIX I

VALUATION REPORT

Property

Description and tenure

Particulars of occupancy

Market value in existing state as at 28 February 2018

Properties to be acquired by the Group for future development in the PRC

2 plant rooms of Completed in 1992, the property Hengxing comprises 2 plant rooms of an Industrial District, industrial complex erected on land Shijia Village, with site area of approximately Gongming Town, 8,184.78 sq m. Baoan District, Shenzhen, The details of the buildings are as Guangdong follows: Province, the PRC

Shenzhen, Guangdong Province, the PRC The details of the bui follows:	ldings are as
中國廣東省深圳市寶安區公明鎮石家村恒興工業區內兩間機房 Plant room No. No. of Storey No. 7 1 No. 8 1 Total	Approximate Gross Floor Area (sq m) 1,134.00 1,134.00
	2,268.00

As at the valuation RMB205,000,000 date, the property was vacant. RENMINBI TWO HUNDRED AND FIVE MILLION (100% interest to be acquired by the Group: RMB205,000,000)

The immediate locality of the property is a sub-urban area in Shenzhen where are predominated by residential developments with commercial and communal facilities.

The property has been held with land use rights for industrial use with land use term due to expire on 1 June 2040.

Notes:-

(1) According to Granted Contract of Land Use Rights No. (1992) 108 dated 23 May 1992, a parcel of land with site area of 40,452 sq m located in Shijia Village, Baoan District, Shenzhen, have been granted to 深圳垣興實業有限公司 (Shenzhen Hengxing Enterprise Co., Ltd.) for industrial use with land use term due to expire on 1 June 2040.

As advised by the Group, the subject land of the property is part of the above land and the land lot no. is A626-0012 with site area of 8,184.78 sq m.

As advised by the Group, the land use rights of the property transferred to 深圳市深業信宏城投資有限公司 (Shenzhen Shumyip Xinhongcheng Investment Co., Ltd.).

– I-9 –

VALUATION REPORT

APPENDIX I

(2) According to two Building Ownership Certificates issued by Guangdong Province People’s Government, the building ownership of the property located in Shijia Village, Gongming Town, Baoan District, Shenzhen, have been vested in 深圳垣興實業有限公司製衣廠 (Shenzhen Hengxing Enterprise Clothes Manufacturing Co., Ltd.) with details as follows:

No. Certificate No. Date of issue Name of building Completion year 1 1662696 21 May 1992 Plant room No. 7 1992 2 1662695 21 May 1992 Plant room No. 8 1992 Total:	Gross floor area (sq m) 1,134.00 1,134.00
	2,268.00

As advised by the Group and the Group’s PRC legal adviser, the ownership of the buildings on the property has been transferred to 深圳市深業信宏城投資有限公司 (Shenzhen Shenyexinhongcheng Investment Co., Ltd.).

(3) According to Business License dated 1 November 2017, 深圳市深業信宏城投資有限公司 (Shenzhen Shumyip Xinhongcheng Investment Co., Ltd.) was established on 27 June 2011 as a limited company.
(4) According to a notice issued by 深圳市規劃和國土資源委員會 (Shenzhen City Planning and Land Resource Committee) issued on 28 March 2016, the property is situated in an approved urban redevelopment zone for residential and commercial redevelopment.
(5) As advised by the Group, the property is situated in an approved redevelopment zone for development of residential and commercial developments. The planned gross floor area to be developed for the part of the property is approximately 19,977.41 sq m.
(6) In the course of undertaking our valuation of the property in existing state, we have considered the redevelopment rights as shown above.
(7) Based on the above valuation result of RMB205 million and our opinion of average unit price of new residential flats sold in the locality, RMB33,000 as at valuation date, the equivalent residential gross floor area to be provided is approximately 6,216.54 sq m.
(8) We have been provided with a legal opinion on the property prepared by the Group’s PRC legal adviser, which contains, inter alia, the following information:-
(i) The Building Ownership Certificates of the property are valid, legal and enforceable under the PRC laws;
(ii) 深圳市深業信宏城投資有限公司 (Shenzhen Shumyip Xinhongcheng Investment Co., Ltd.) is the sole legal user of the buildings on the property and has the rights to freely lease, transfer, mortgage and dispose of the building ownership of the property; and
(iii) The property is situated in an urban redevelopment zone and was approved by 深圳市規劃和國土資源委員會 (Shenzhen City Planning and Land Resource Committee) on 28 March 2016.
(9) The status of title and grant of major approvals and licenses in accordance with the information provided to us by the Group are as follows:

Grant Contract of Land Use Rights	Yes
Building Ownership Certificates	Yes
Business Licence	Yes

(10) In our valuation, we have adopted an average unit price of accommodation value of RMB15,000 per sq.m for the land.
(11) In the course of our valuation, we have made references to various recent sales transactions and asking prices of some similar developments which have characteristics comparable to the property. The prices of accommodation value of those sales transactions are in a range of RMB10,000 and RMB27,000 per sq.m. for land. The unit prices assumed by us are consistent with the said sales transactions and asking price references. Due to adjustments to the unit prices of those sales transactions and asking price, references have been made to reflect factors including but not limited to time, location, size, floor, difference and quality in arriving at the key assumptions.

– I-10 –

GENERAL INFORMATION

APPENDIX II

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 any associated corporations (within the meaning of Part XV of the SFO) which were required to be (i) 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 the directors and chief executives of the Company were taken or deemed to have pursuant to Divisions 7 and 8 of Part XV of the SFO), or (ii) entered in the register required to be kept under Section 352 of the SFO or (iii) required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the “ Model Code ”) adopted by the Company were as follows:

Long positions in the shares and underlying shares of the Company (“Shares”):

			Underlying
			Shares
			pursuant		Percentage
Name of		Number	to share	Aggregate	of issued
Director	Capacity	of Shares	options	interests		Shares1
LU Hua	Beneficial owner	1,133,713	11,003,597	12,137,310		0.15%
HUANG Wei	Beneficial owner	–	9,941,861	9,941,861		0.12%
MOU Yong	Beneficial owner	–	7,190,305	7,190,305		0.08%
LIU Chong	Beneficial owner	–	7,188,880	7,188,880		0.08%
WU Jiesi	Beneficial owner	3,400,000	–	3,400,000		0.04%
LI Wai Keung	Beneficial owner	1,180,880	–	1,180,880		0.01%

Note:

The percentage was calculated based on 8,058,624,983 Shares in issue as at the Latest Practicable Date.

– II-1 –

GENERAL INFORMATION

APPENDIX II

Save as disclosed above, none of the Directors and chief executives of the Company had, as at the Latest Practicable Date, any interests or short positions in any Shares and underlying Shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which would have to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which the directors and chief executives of the Company were taken or deemed to have pursuant to Divisions 7 and 8 of Part XV of the SFO), or which were entered in the register required to be kept by the Company under Section 352 of the SFO, or which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code.

(B) Interests and short position of the Shareholders in the Shares and underlying Shares

As at the Latest Practicable Date, so far as is known to any Director or chief executive of the Company, the interests and short positions of the Shareholders (other than directors or chief executives of the Company) who had interests or short positions in the Shares and underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were entered in the register required to be kept by the Company pursuant to Section 336 of the SFO, and, where any Director is a director or employee of such Shareholders, the names and the positions held by them in such Shareholders, were as follows:

					Capacity of
		Number of	Percentage of		the Director in
Name of Shareholder	Capacity of Shareholder	Shares held by Shareholder	Shares in Issue1	Name of Director	the Shareholder
Shum Yip	Interest in	4,965,577,232 (L) 2	61.61%	LU Hua	Chairman and
Group	controlled				Director
	corporation			HUANG Wei	President and
					Director
				MOU Yong	Director
				LIU Chong	Vice President
				LIU Shichao	Director and
					Chief
					Financial
					Officer
Shum Yip	Beneficial	4,897,856,631 (L)	60.77%	LU Hua	Chairman and
Holdings	owner				Director
				HUANG Wei	President and
					Director
				MOU Yong	Director
				LIU Chong	Vice President
				LIU Shichao	Director
	Interest in	67,720,601 (L) 3	0.84%
	controlled
	corporation

Note:

The percentage was calculated based on 8,058,624,983 Shares in issue as at the Latest Practicable Date.
Shum Yip Group is deemed to be interested in the 4,965,577,232 Shares which Shum Yip Holdings is interested in by virtue of Shum Yip Holdings being its direct wholly-owned subsidiary.

– II-2 –

GENERAL INFORMATION

APPENDIX II

These 67,720,601 Shares were held by Goldclass Industrial Limited, a wholly-owned subsidiary of Successful Years Holdings Limited, which in turn is wholly-owned by Shum Yip Finance Company Limited (“SYF”). SYF is a wholly-owned subsidiary of Shum Yip Holdings and accordingly, Shum Yip Holdings is deemed to be interested in these 67,720,601 Shares.
The letter “L” denotes the person’s long position in the Shares.

Save as disclosed above, as at the Latest Practicable Date, the Company had not been notified by any person (other than directors and chief executives of the Company) who had interests or short positions in the Shares and underlying Shares under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were entered in the register required to be kept under Section 336 of the SFO.

3. DIRECTORS’ INTERESTS

As at the Latest Practicable Date,

a. none of the Directors were materially interested in any contract or arrangement subsisting and which was significant in relation to the business of the Group; and
b. none of the Directors had any interest, direct or indirect, in any assets which had been acquired or disposed of by or leased to any member of the Group or were proposed to be acquired or disposed of by or leased to any member of the Group since 31 December 2017, being the date to which the latest published audited consolidated financial statements of the Company were made up.

4. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 December 2017, being the date to which the latest published audited consolidated financial statements of the Group were made up.

5. COMPETING INTERESTS

As at the Latest Practicable Date, Dr. LU Hua is the chairman and a director, Mr. HUANG Wei, is the president and a director, Mr. MOU Yong and Mr. LIU Shichao are directors, and Mr. LIU Chong is the vice president, of both Shum Yip Holdings and Shum Yip Group. Shum Yip Holdings and Shum Yip Group, through their subsidiaries and associates, have interests in property investment and development businesses in PRC.

In addition, Mr. MOU Yong is also a non-executive director of Road King Infrastructure Limited (1098.HK), an associated company of the Company, whose shares are listed on the Stock Exchange and engages in property investment and development businesses.

– II-3 –

GENERAL INFORMATION

APPENDIX II

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or their respective close associates was considered to have an interest in a business which competes or was likely to compete, either directly or indirectly, with the business of the Group other than those business to which the Directors or his close associates were appointed to represent the interests of the Company and/or the Group.

6. 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 Group which is not expiring or may not be terminated by the relevant member of the Group within one year without payment of any compensation (other than statutory compensation).

7. EXPERTS AND CONSENTS

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

Name	Qualification
Cushman & Wakefield Limited	Qualified property valuer
Alliance Capital Partners Limited	A licensed corporation to carry on Type 1
	(dealing in securities) and Type 6 (advising
	on corporate finance) regulated activities
	under the SFO
Commerce & Finance Law Offices	PRC legal counsel

Each of the above experts has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its statement as set out in this circular and references to name in the form and context in which it appears in this circular.

As at the Latest Practicable Date, none of the above experts had any shareholding directly or indirectly in any member of the Group nor any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group, nor did any of them have any interest, directly or indirectly, in any asset acquired or disposed of by or leased to any member of the Group or proposed to be acquired or disposed of by or leased to any member of the Group since 31 December 2017, being the date to which the latest published audited financial statements of the Company were made up.

8. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the Relocation and Compensation Agreements are available for inspection 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 any inconsistency, the English text of this circular shall prevail over the Chinese text.

– II-4 –

NOTICE OF EGM

==> picture [104 x 47] intentionally omitted <==

==> picture [211 x 52] 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 Wednesday, 16 May 2018 for the purpose of considering and, if thought fit, passing the following resolution as ordinary resolution of the Company:

ORDINARY RESOLUTION

“ THAT :

(a) the relocation and compensation agreement dated 27 March 2018 entered into between Shenzhen Shumyip Minghong Real Estate Development Co., Ltd. (深圳市深業明宏地產開發有限公司) (the “ Project Company ”) and Shenzhen Shumyip Xinhongcheng Investment Co., Ltd. (深圳市深業信宏城投資有限公司) (“ Xinhongcheng ”) in respect of the various buildings erected on the two parcels of land (Zhongdi lot numbers A626-0001 and A626-0009) located at Xiashijiacun, Jiangshicun, Gongming Subdistrict, Guangming New District, Shenzhen (深圳市光明新區公明辦事處將石村下石家村) (the “ First Relocation and Compensation Agreement* ”, a copy of which has been produced before the Meeting marked “A” and initialed 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 relocation and compensation agreement dated 27 March 2018 entered into between the Project Company, Xinhongcheng and Hengxing Industrial (Shenzhen) Co., Ltd. (liquidation team) (恒興實業(深圳)有限公司清算組) in respect of the two plant rooms erected on the parcel of land (Zhongdi lot number A626-0012) located at Xiashijiacun, Jiangshicun, Gongming Subdistrict, Guangming New District, Shenzhen (深圳市光明新區公明辦事處將石村下石家村) (the “ Second Relocation and Compensation Agreement ”, a copy of which has been produced before the Meeting marked “B” and initialed by the chairman of the Meeting for the purpose of identification, together with the First Relocation and Compensation Agreement, the “ Relocation and Compensation Agreements ”), and all transactions contemplated thereunder and in connection therewith be and are hereby approved, confirmed and ratified; and

– EGM-1 –

NOTICE OF EGM

(c) 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 Relocation and Compensation Agreements 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.”

By order of the Board Shenzhen Investment Limited LU Hua Chairman

Hong Kong, 26 April 2018

Registered office:

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

For identification purpose only

Notes:

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.
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.
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.
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).
Delivery of an instrument appointing a proxy 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 instrument appointing a proxy shall be deemed to be revoked.

– EGM-2 –

NOTICE OF EGM

The resolution as set out in this notice will be decided by way of poll.
To ascertain the shareholders’ entitlement to attend and vote at the Meeting, the register of members of the Company will be closed from Friday, 11 May 2018 to Wednesday, 16 May 2018, 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 Thursday, 10 May 2018.

– EGM-3 –

AI assistant

Macau E&M Holding Limited — Proxy Solicitation & Information Statement 2018

49906_rns_2018-04-25_866d5155-a8f5-4d8b-836c-c883ed88fead.pdf

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

(Stock Code: 00604)

CONNECTED TRANSACTIONS THE RELOCATION AND COMPENSATION AGREEMENTS AND NOTICE OF EXTRAORDINARY GENERAL MEETING

Alliance Capital Partners Limited

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

(Stock Code: 00604)

CONNECTED TRANSACTIONS THE RELOCATION AND COMPENSATION AGREEMENTS

(A) INTRODUCTION

(B) BACKGROUND

(C) THE RELOCATION AND COMPENSATION AGREEMENTS

(1) The First Relocation and Compensation Agreement

Date

Parties

Subject properties

Relocation compensation

The basis for determining the relocation compensation

(i) Compensation for suspension of operation

(ii) Relocation allowance

(iii) Temporary settlement allowance

Handover and demolition of Properties No. 1

Resettlement Properties No. 1

Delivery of Resettlement Properties No. 1

Condition Precedent

(2) The Second Relocation and Compensation Agreement

Date

Parties

Subject properties

Relocation compensation

LETTER FROM THE BOARD

Basis for determining the relocation compensation

LETTER FROM THE BOARD

(i) Compensation for the suspension of operation

(ii) Relocation allowance

(iii) Temporary settlement allowance

Handover and demolition of Properties No. 2

Resettlement Properties No. 2

Delivery of Resettlement Properties No. 2

Condition Precedent

(D) REASONS FOR AND BENEFITS OF ENTERING INTO THE RELOCATION AND COMPENSATION AGREEMENTS

LETTER FROM THE BOARD

(E) INFORMATION ON THE PARTIES

Project Company

Xinhongcheng

Hengxing

(F) LISTING RULES IMPLICATIONS

Listing Rules Implications

Independent Board Committee

(G) EGM

LETTER FROM THE BOARD

(H) RECOMMENDATIONS

(I) ADDITIONAL INFORMATION

(Stock Code: 00604)

CONNECTED TRANSACTIONS IN RELATION TO THE ENTERING INTO

(1) THE FIRST RELOCATION AND COMPENSATION AGREEMENT AND

(2) THE SECOND RELOCATION AND COMPENSATION AGREEMENT

CONNECTED TRANSACTIONS – THE RELOCATION AND COMPENSATION AGREEMENTS

INTRODUCTION

THE INDEPENDENT BOARD COMMITTEE

LETTER FROM INDEPENDENT FINANCIAL ADVISER

BASIS OF OUR ADVICE

PRINCIPAL FACTORS AND REASONS CONSIDERED

I. Background of the Company

LETTER FROM INDEPENDENT FINANCIAL ADVISER

II. Background of the Xinhongcheng and Hengxing

III. Reasons for and benefits of the Relocation and Compensation Agreements

IV. Industry outlook

LETTER FROM INDEPENDENT FINANCIAL ADVISER

LETTER FROM INDEPENDENT FINANCIAL ADVISER

V. Principal terms of the Relocation and Compensation Agreements

The First Relocation and Compensation Agreement

The Second Relocation and Compensation Agreement

LETTER FROM INDEPENDENT FINANCIAL ADVISER

Resettlement

Macau E&M Holding Limited Proxy Solicitation & Information Statement 2018