National Electronics Holdings Limited — Proxy Solicitation & Information Statement 2008

Oct 3, 2008

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

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

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

(Incorporated in Bermuda with limited liability)

(Stock Code: 127)

REFRESHMENT OF REPURCHASE MANDATE AND NOTICE OF SPECIAL GENERAL MEETING

A notice of Special General Meeting to be held at Chatham Room, Level 7, Conrad Hong Kong, Pacific Place, 88 Queensway, Hong Kong on Wednesday, 22nd October, 2008 at 10:00 a.m. is set out on pages 10 to 12 of this circular. A form of proxy for use by the Shareholders at the Special General Meeting is enclosed together with this circular for dispatch to the Shareholders. Whether or not you intend to attend and vote at the Special General Meeting in person, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return it to the Company’s branch registrar and transfer office in Hong Kong, Computershare Hong Kong Investor Services Limited at Rooms 1806-07, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as practicable but in any event not later than 48 hours before the time for holding the Special General Meeting. Completion and return of the form of proxy will not preclude you from attending and voting in person at the Special General Meeting should you so wish.

6th October, 2008

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	ii
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Appendix – Explanatory Statement for the Repurchase Mandate . . . . . . . . . . . . . . . . . . .	5
Notice of Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10

Should there be any discrepancy between English and Chinese versions, the English version shall prevail.

– i –

DEFINITIONS

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

“associate(s)”	has the same meaning as ascribed to it under the Listing Rules
“Board”	the board of Directors
“Bye-laws”	the bye-laws of the Company
“Company”	Chinese Estates Holdings Limited, an exempted company
	incorporated in Bermuda with limited liability, the shares of
	which are listed on the main board of the Stock Exchange
“connected person(s)”	has the same meaning as ascribed to it under the Listing Rules
“Director(s)”	the director(s) of the Company from time to time
“Existing Repurchase Mandate”	the general and unconditional mandate granted to the Directors
	by the Shareholders at the annual general meeting of the
	Company on 15th May, 2008 to repurchase up to 229,848,437
	Shares, representing 10% of the then issued share capital of
	the Company
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong”	the Hong Kong Special Administrative Region of the People’s
	Republic of China
“Latest Practicable Date”	2nd October, 2008, being the latest practicable date prior to
	the printing of this circular for ascertaining certain information
	referred to in this circular
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Repurchase Mandate”	a general and unconditional mandate to the Directors to exercise
	the power of the Company to repurchase issued and fully paid
	up shares in the share capital of the Company up to a maximum
	of 10% of the aggregate nominal amount of the issued share
	capital of the Company as at the date of passing of the relevant
	resolution

– ii –

DEFINITIONS

“Share(s)” the ordinary share(s) of HK$0.10 each in the share capital of the Company “Shareholder(s)” the holder(s) of the Share(s) “Special General Meeting” the special general meeting of the Company to be held at Chatham Room, Level 7, Conrad Hong Kong, Pacific Place, 88 Queensway, Hong Kong on Wednesday, 22nd October, 2008 at 10:00 a.m. or any adjournment thereof (as the case may be), notice of which is set out on pages 10 to 12 of this circular “Stock Exchange” The Stock Exchange of Hong Kong Limited “Takeovers Codes” the Codes on Takeovers and Mergers and Share Repurchases “%” per cent.

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LETTER FROM THE BOARD

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(Incorporated in Bermuda with limited liability)

(Stock Code: 127)

Executive Directors: Registered Office: Joseph Lau, Luen-hung Canon’s Court (Chairman and Chief Executive Officer) 22 Victoria Street Lau, Ming-wai Hamilton HM 12 Bermuda

Non-executive Director: Amy Lau, Yuk-wai

Amy Lau, Yuk-wai Principal Office in Hong Kong: 26th Floor Independent Non-executive Directors: MassMutual Tower Chan, Kwok-wai 38 Gloucester Road Cheng, Kwee Wanchai Phillis Loh, Lai-ping Hong Kong 6th October, 2008

To the Shareholders

Dear Sir or Madam,

REFRESHMENT OF REPURCHASE MANDATE AND NOTICE OF SPECIAL GENERAL MEETING

INTRODUCTION

The purpose of this circular is to provide you with the notice of the Special General Meeting as set out on pages 10 to 12 of this circular, and with information regarding the ordinary resolutions in respect of (i) the granting of the Repurchase Mandate to the Directors and (ii) granting to the Directors a general and unconditional mandate to issue Shares not exceeding the aggregate nominal amount of share capital repurchased pursuant to the Repurchase Mandate, to be proposed at the Special General Meeting to enable the Shareholders to make an informed decision on whether to vote for or against the resolutions.

– 1 –

LETTER FROM THE BOARD

REFRESHMENT OF REPURCHASE MANDATE

At the annual general meeting of the Company held on 15th May, 2008, the Shareholders approved, among other things, ordinary resolution to approve the grant of Existing Repurchase Mandate to the Directors to repurchase Shares. As at the date of passing such resolution, there were a total of 2,298,484,378 Shares in issue and thus the Directors were authorized to repurchase 10% thereof, being 229,848,437 Shares under the Existing Repurchase Mandate.

During the period from the grant of the Existing Repurchase Mandate to the Latest Practicable Date, the Existing Repurchase Mandate had been utilized as to 189,969,000 Shares, representing approximately 82.65% of the Existing Repurchase Mandate.

At the Special General Meeting, an ordinary resolution will be proposed to grant to the Directors a general and unconditional mandate to exercise all powers of the Company to repurchase issued Shares subject to the criteria set out in this circular. The maximum number of Shares that may be repurchased pursuant to the Repurchase Mandate will be such number which represents 10% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing of the relevant resolution subject to the Listing Rules. The Repurchase Mandate will lapse on the earliest of, the date of the next annual general meeting, or the date by which the next annual general meeting of the Company is required to be held by law and/or the Bye-laws, or the date upon which such authority is revoked or varied by ordinary resolution of the Company in general meeting. The validity of the Existing Repurchase Mandate shall not be affected or lapsed before the Repurchase Mandate has granted to the Directors at the Special General Meeting. If the Repurchase Mandate has not been granted to the Directors at the Special General Meeting, the validity of the Existing Repurchase Mandate shall not be affected or lapsed.

In accordance with the Listing Rules, the Company is required to send to the Shareholders an explanatory statement containing all the information reasonably necessary to enable the Shareholders to make an informed decision on whether to vote for or against the resolution to grant to the Directors the Repurchase Mandate which is set out in the appendix to this circular.

GENERAL MANDATE TO ISSUE NEW SHARES

Subject to the passing of the aforesaid ordinary resolution of the Repurchase Mandate, an ordinary resolution will also be proposed to authorize the Directors to issue new Shares in an amount not exceeding the aggregate nominal amount of the Shares purchased pursuant to the Repurchase Mandate.

– 2 –

LETTER FROM THE BOARD

SPECIAL GENERAL MEETING

The notice of the Special General Meeting is set out on pages 10 to 12 of this circular. At the Special General Meeting, resolutions will be proposed to approve the Repurchase Mandate and the extension of general mandate to issue Shares (granted at the annual general meeting of the Company held on 15th May, 2008) to the Shares purchased pursuant to the Repurchase Mandate.

A form of proxy for the Special General Meeting is enclosed together with this circular for despatch to Shareholders. Whether or not you intend to attend and vote at the Special General Meeting in person, you are requested to complete the form of proxy and return it to the Company’s branch registrar and transfer office in Hong Kong, Computershare Hong Kong Investor Services Limited at Rooms 1806-07, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, in accordance with the instructions printed thereon as soon as practicable but in any event no later than 48 hours before the time for holding the Special General Meeting. Completion and return of a form of proxy will not preclude you from attending and voting at the Special General Meeting in person should you so wish.

RIGHT TO DEMAND A POLL

Pursuant to Bye-law 75 of the Bye-laws, a resolution put to the vote at the Special General Meeting shall be decided on a show of hands, unless a poll is (before or on the declaration of the result of the show of hands) demanded by:–

• (a) the chairman of the meeting; or

• (b) at least three members present in person or by proxy for the time being entitled to vote at the meeting; or

• (c) any member or members present in person or by proxy and representing not less than one-tenth of the total voting rights of all the members having the right to vote at the meeting; or

• (d) a member or members present in person or by proxy and holding Shares in the Company conferring a right to vote at the meeting being Shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the Shares conferring that right.

– 3 –

LETTER FROM THE BOARD

RECOMMENDATION

The Directors are of the opinion that proposals regarding the granting of the Repurchase Mandate and the extension of general mandate to issue Shares to the Shares purchased pursuant to the Repurchase Mandate are in the best interests of the Company and recommend you to vote in favour of the relevant resolutions to be proposed at the Special General Meeting.

Yours faithfully, Joseph Lau, Luen-hung Chairman

– 4 –

APPENDIX EXPLANATORY STATEMENT FOR THE REPURCHASE MANDATE

This Appendix serves as an explanatory statement, as required by the Listing Rules, to provide requisite information to all Shareholders for their consideration of the Repurchase Mandate.

1. SHARE CAPITAL

As at the Latest Practicable Date, the issued and fully-paid share capital of the Company was 2,149,634,624 Shares of HK$0.10 each.

Subject to the passing of the ordinary resolution granting the Repurchase Mandate and on the basis that no further Shares are issued or repurchased prior to the Special General Meeting, the Company would be allowed under the Repurchase Mandate to repurchase a maximum of 214,963,462 Shares, being 10% of the entire issued share capital of the Company.

2. REASONS FOR REPURCHASES

The Directors believe that the Repurchase Mandate is in the best interests of the Company and the Shareholders as repurchases of Shares may, depending on market conditions and funding arrangements at that time, lead to an enhancement of the net asset value per Share and/or earnings per Share. The Board will review the Share price of the Company and its underlying net asset value regularly and continue to repurchase its Shares on the Stock Exchange, when the Share price represents a significant discount to its net asset value. Shareholders can be assured that the Directors would only make such purchases in circumstances where they consider them to be in the best interests of the Company.

During the period from the grant of the Existing Repurchase Mandate to the Latest Practicable Date, the Existing Repurchase Mandate had been utilized as to 189,969,000 Shares, representing approximately 82.65% of the Existing Repurchase Mandate. The Board therefore proposes to seek Shareholders’ approval by way of ordinary resolution to be proposed at the Special General Meeting to refresh the Repurchase Mandate. The Directors believe that granting of the Repurchase Mandate would give the Company additional flexibility that would be beneficial to the Company and its Shareholders.

3. FUNDING OF REPURCHASES

In making repurchases, the Company may only apply funds legally available for such purposes in accordance with the Bye-laws and the laws of Bermuda. The laws of Bermuda provide that the amount of capital repaid in connection with a share repurchase may only be paid out of either the capital paid up on the relevant shares, or the funds of the Company that would otherwise be available for dividend or distribution or the proceeds of a fresh issue of shares made for the purpose. The premium payable on repurchase may only be paid out of either the funds of the

– 5 –

APPENDIX EXPLANATORY STATEMENT FOR THE REPURCHASE MANDATE

Company that would otherwise be available for dividend or distribution or out of the Company’s share premium before the Shares are repurchased. In accordance with the laws of Bermuda, the Shares so repurchased would be treated as cancelled but the aggregate amount of authorised share capital would not be reduced.

On the basis of the consolidated financial position of the Company as at 31st December, 2007 (being the date to which the latest published audited consolidated financial statements of the Company have been made up) and in particular the working capital position of the Company at that time and the number of Shares now in issue, the Directors consider that there might be a material adverse impact on the working capital position and the gearing position of the Company in the event that purchases of all the Shares subject to the Repurchase Mandate were to be carried out in full at any time during the Repurchase Mandate period. No purchase would be made in circumstances that would have a material adverse impact on the working capital position or the gearing position of the Company.

4. PRICES OF SHARES

The highest and lowest prices at which the Shares traded on the Stock Exchange during each of the previous twelve months before the Latest Practicable Date are as follows:

	Price per Share	Price per Share
	Highest	Lowest
	HK$	HK$
October 2007	16.30	12.40
November 2007	16.48	13.40
December 2007	15.64	12.82
January 2008	14.98	11.60
February 2008	12.10	10.24
March 2008	12.40	10.38
April 2008	12.54	10.88
May 2008	13.34	12.00
June 2008	13.38	10.60
July 2008	12.30	10.90
August 2008	11.60	10.60
September 2008	10.96	8.49
October 2008 (up to the Latest Practicable Date)	9.50	8.91

– 6 –

APPENDIX EXPLANATORY STATEMENT FOR THE REPURCHASE MANDATE

5. UNDERTAKING

The Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the power of the Company to make repurchases pursuant to the Repurchase Mandate in accordance with the Listing Rules and the laws of Bermuda.

None of the Directors nor, to the best of their knowledge having made all reasonable enquiries, their associates, have any present intention to sell any Shares to the Company in the event that the Repurchase Mandate is approved by the Shareholders.

No connected persons of the Company have notified the Company that they have a present intention to sell Shares to the Company, or have undertaken not to do so, in the event that the Repurchase Mandate is granted by the Shareholders.

6. THE CODES ON TAKEOVERS AND MERGERS AND SHARE REPURCHASES

If a Shareholder’s proportionate interest in the voting rights of the Company increases as a result of a Share repurchases, such increase will be treated as an acquisition of voting rights for the purposes of the Takeovers Codes and, if such increase results in a change of control, may in certain circumstances give rise to an obligation to make a general offer for Shares under Rule 26 of the Takeovers Codes.

As at the Latest Practicable Date, Mr. Joseph Lau, Luen-hung together with his associates (as defined in Takeovers Codes), had deemed interests in the Shares representing approximately 64.24% of the issued share capital of the Company.

In the event that the Directors exercise in full the Repurchase Mandate which to be approved by the Shareholders (assuming that the Existing Repurchase Mandate is also exercised in full), the shareholding in the Company of Mr. Joseph Lau, Luen-hung together with his associates would be increased to approximately 74.49% of the issued share capital of the Company. The Directors believe that such an increase would not give rise to an obligation to make a mandatory offer under the Takeovers Codes if both the Existing Repurchase Mandate and the Repurchase Mandate were exercised in full.

Assuming that there is no further issue of Shares between the Latest Practicable Date and the date of repurchase, the exercise of both Existing Repurchase Mandate and Repurchase Mandate whether in whole or in part will not result in less than 25% of the issued share capital of the Company being held by the public as required by Rule 8.08 of the Listing Rules. The Directors have no present intention to exercise both the Existing Repurchase Mandate and the Repurchase Mandate to an extent as may result in a public shareholding of less than such prescribed percentage.

– 7 –

APPENDIX EXPLANATORY STATEMENT FOR THE REPURCHASE MANDATE

7. SHARE REPURCHASES MADE BY THE COMPANY

The Company has repurchased a total of 189,969,000 Shares on the Stock Exchange during the six months preceding the Latest Practicable Date, details of which are as follows:

			Repurchase	Repurchase
		Number of	Price per Share
Date of Repurchase	Shares Repurchased		Highest	Lowest
			HK$	HK$
29/05/2008		420,000	13.22	13.18
30/05/2008		2,400,000	13.30	13.10
23/06/2008		2,597,000	11.08	10.72
24/06/2008		3,288,000	11.34	10.92
25/06/2008		2,038,000	11.50	11.34
26/06/2008		1,045,000	11.66	11.40
27/06/2008		1,287,000	11.58	11.22
30/06/2008		1,633,000	11.80	11.48
02/07/2008		1,345,000	12.12	11.76
03/07/2008		9,979,000	11.76	11.16
04/07/2008		8,222,000	11.44	11.20
19/08/2008		10,583,000	11.26	10.80
20/08/2008		6,588,000	11.14	10.94
21/08/2008		3,071,000	11.14	10.80
25/08/2008		6,795,000	11.18	10.94
26/08/2008		5,924,000	11.14	10.92
27/08/2008		6,336,000	11.14	10.88
28/08/2008		9,407,000	10.98	10.64
29/08/2008		9,374,000	11.18	10.82
01/09/2008		11,723,000	10.96	10.56
02/09/2008		5,329,000	10.86	10.66
03/09/2008		5,266,000	10.86	10.26
04/09/2008		4,563,000	10.62	10.48
05/09/2008		5,075,000	10.70	10.28
08/09/2008		4,578,000	10.84	10.56
09/09/2008		3,287,000	10.62	10.40
10/09/2008		7,983,000	10.68	10.40

– 8 –

EXPLANATORY STATEMENT FOR THE REPURCHASE MANDATE

APPENDIX

			Repurchase	Repurchase
		Number of	Price per Share
Date of Repurchase	Shares Repurchased		Highest	Lowest
			HK$	HK$
11/09/2008		2,051,000	10.44	10.32
12/09/2008		1,658,000	10.48	10.30
16/09/2008		671,000	10.18	9.92
17/09/2008		2,109,000	10.28	9.94
18/09/2008		1,104,000	9.85	9.22
19/09/2008		1,470,000	10.06	9.82
22/09/2008		3,473,000	10.36	10.04
23/09/2008		3,864,000	10.30	9.94
24/09/2008		4,408,000	10.30	10.16
25/09/2008		3,968,000	10.26	9.95
26/09/2008		5,970,000	10.18	9.63
29/09/2008		7,909,000	9.62	9.33
30/09/2008		7,748,000	9.55	9.04
02/10/2008		3,430,000	9.48	8.98

The Directors considered that the aforesaid Shares were purchased at a discount to the net asset value per Share and resulted in an increase in the net asset value per Share then in issue.

– 9 –

NOTICE OF SPECIAL GENERAL MEETING

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(Incorporated in Bermuda with limited liability)

(Stock Code: 127)

NOTICE IS HEREBY GIVEN that the Special General Meeting of Chinese Estates Holdings Limited (the “Company”) will be held at Chatham Room, Level 7, Conrad Hong Kong, Pacific Place, 88 Queensway, Hong Kong on Wednesday, 22nd October, 2008 at 10:00 a.m. (the “Meeting”) for the following purposes:

1. To consider and, if thought fit, pass with or without amendments, the following resolution as an Ordinary Resolution of the Company:

“ THAT :

• (a) subject to paragraph (c) below, the exercise by the Directors of the Company during the Relevant Period of all the powers of the Company to purchase issued shares of HK$0.10 each in the capital of the Company subject to and in accordance with all applicable laws and requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited as amended from time to time be and is hereby generally and unconditionally approved;

• (b) the approval in paragraph (a) above shall authorise the Directors on behalf of the Company during the Relevant Period to procure the Company to purchase its Shares at a price determined by the Directors;

• (c) the aggregate nominal amount of the Shares which are authorised to be purchased by the Directors of the Company pursuant to the approval in paragraph (a) above shall not exceed 10 per cent. of the aggregate nominal amount of the share capital of the Company in issue as at the date of passing this resolution, and the said approval shall be limited accordingly; and

– 10 –

NOTICE OF SPECIAL GENERAL MEETING

• (d) for the purposes of this resolution:

  • “Relevant Period” means the period from the date of passing of this resolution until whichever is the earliest of:

  • (i) the conclusion of the next annual general meeting of the Company; or

  • (ii) the expiration of the period within which the next annual general meeting of the Company is required by law and/or the Company’s Bye-laws to be held; or

  • (iii) the date upon which the authority set out in this resolution is revoked or varied by way of ordinary resolution of the Company in general meeting.”

• To consider and, if thought fit, pass with or without amendments, the following resolution as an Ordinary Resolution of the Company:

“ THAT conditional upon the passing of the resolution no. 1 of the notice convening this meeting, the general mandate for issue of Shares granted to the Directors of the Company at the annual general meeting of the Company held on 15th May, 2008 be and hereby extended by the addition thereto of an amount representing the aggregate nominal amount of share capital of the Company purchased by the Company under the authority granted pursuant to the resolution no. 1 of the notice convening this meeting, provided that such amount shall not exceed 10 per cent. of the aggregate nominal amount of the issued share capital of the Company as at the date of passing this resolution.”

By Order of the Board Lam, Kwong-wai Company Secretary

Hong Kong, 6th October, 2008

– 11 –

NOTICE OF SPECIAL GENERAL MEETING

Notes:

1. The register of members will be closed from 20th October, 2008 to 22nd October, 2008, both days inclusive. For the purpose of ascertaining the members’ entitlement to the attendance of the Meeting, all Share transfers documents accompanied by the relevant share certificates must be lodged with the Company’s branch registrar and transfer office in Hong Kong, Computershare Hong Kong Investor Services Limited at Shops 1712-16, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not later than 4:30 p.m. on 17th October, 2008.

2. Any Shareholder entitled to attend and vote at the Meeting is entitled to appoint one or more separate proxies to attend and to vote instead of him. A proxy need not be a Shareholder of the Company.

3. To be valid, a form of proxy in the prescribed form together with the power of attorney or other authority (if any) under which it is signed (or a notarially certified copy thereof) must be deposited at the Company’s branch registrar and transfer office in Hong Kong, Computershare Hong Kong Investor Services Limited at Rooms 180607, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not less than 48 hours before the time fixed for holding the Meeting or at any adjournment thereof.

4. A circular containing the information with respect to the relevant resolutions and this notice will be sent to the Shareholders.

5. As at the date hereof, the Board comprised Mr. Joseph Lau, Luen-hung and Mr. Lau, Ming-wai as Executive Directors, Ms. Amy Lau, Yuk-wai as Non-executive Director and Mr. Chan, Kwok-wai, Mr. Cheng, Kwee and Ms. Phillis Loh, Lai-ping as Independent Non-executive Directors.

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