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 stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Huali Holdings (Group) Limited (the “Company”), you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

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

This circular appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for the securities of the Company.

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HUALI HOLDINGS (GROUP) LIMITED

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 3366)

DISCLOSEABLE AND CONNECTED TRANSACTION IN RESPECT OF ACQUISITION OF 49% EQUITY INTEREST IN OCT INVESTMENTS LIMITED AND PROPOSED CHANGE OF NAME OF THE COMPANY

Financial adviser

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

Hantec Capital Limited

A letter from the Board is set out on pages 4 to 14 of this circular. A letter from the Independent Board Committee is set out on page 15 of this circular and a letter from the Independent Financial Adviser is set out on pages 16 to 26 of this circular.

A notice convening an extraordinary general meeting of the Company to be held on 9 October 2007 (Tuesday) at 11:00 a.m. at suites 3203-3204, Tower 6, The Gateway, Harbour City, Canton Road, Tsim Sha Tsui, Kowloon, Hong Kong is set out on pages 37 to 38 of this circular. Whether or not you are able to attend the extraordinary general meeting, you are requested to complete and return the enclosed proxy form in accordance with the instructions printed thereon to the Company’s principal place of business at suites 3203-3204, Tower 6, The Gateway, Harbour City, Canton Road, Tsim Sha Tsui, Kowloon, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for holding the extraordinary general meeting or any adjournment thereof. Completion and return of the proxy form will not preclude you from attending and voting in person at the extraordinary general meeting, or any adjournment thereof, should you so wish.

12 September 2007

	Page
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
LETTER FROM THE INDEPENDENT BOARD COMMITTEE. . . . . . . . . . . . . .	15
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER . . . . . . . . . . . . .	16
APPENDIX I – VALUATION REPORT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	27
APPENDIX II – GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . .	32
NOTICE OF EXTRAORDINARY GENERAL MEETING. . . . . . . . . . . . . . . . . . .	37

– i –

DEFINITIONS

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

“Acquisition”	the acquisition of the Sale Shares and the Shareholder’s
	Loan by the Company from the Vendor pursuant to the
	terms and subject to the conditions set out in the Share
	Transfer Agreement
“associate(s)”	has the meaning ascribed thereto under the Listing Rules
“Board”	the board of Directors
“Business Day”	a day (other than a Saturday) on which banks in Hong
“Chengdu OCT”	Kong are open for business (Chengdu Tianfu
	OCT Industry Development Co., Ltd.), a company
	incorporated in the PRC on 31 October 2005, with a
	registered capital of RMB400 million (equivalent to
	approximately HK$412.37 million)
“Company”	Huali Holdings (Group) Limited, an exempted company
	incorporated in the Cayman Islands with limited liability,
	the Shares of which are listed on the main board of the
	Stock Exchange
“Completion”	the completion of the Share Transfer Agreement
“Completion Date”	the fifteenth Business Day after the fulfillment or waiver
	of the conditions precedent of the Share Transfer
	Agreement (or such other date as may be agreed between
	the Vendor and the Company before the Completion
	Date)
“connected person(s)”	has the meaning ascribed thereto under the Listing Rules
“Consideration Shares”	26,000,000 Shares to be allotted and issued by the
	Company to the Vendor (or its nominee) credited as fully
	paid pursuant to the Share Transfer Agreement
“Director(s)”	director(s) of the Company
“EGM”	an extraordinary general meeting of the Company to be
	convened for the purpose of considering, and if thought
	fit, approving the Acquisition and the Proposed Name
	Change
“Group”	the Company and its subsidiaries

– 1 –

DEFINITIONS

“Hantec” or “Independent Hantec Capital Limited, the independent financial Financial Adviser” adviser to the Independent Board Committee and the Independent Shareholders in relation to the Acquisition “Hong Kong” the Hong Kong Special Administrative Region of the PRC

“Independent Board Committee” the committee comprising all the independent nonexecutive Directors, namely Ms. Wong Wai Ling, Mr. Chen Xiangdong and Mr. Xiao Yongping formed to advise the Independent Shareholders in respect of the Acquisition
“Independent Shareholders” Shareholders other than Pacific Climax and its associates “Last Trading Day” 21 August 2007, being the last day on which the Shares were traded on the Stock Exchange prior to suspension of trading in the Shares pending release of the announcement of the Company dated 24 August 2007 in relation to, inter alia, the Acquisition
“Latest Practicable Date” 10 September 2007, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information contained in this circular
“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange
“OCT Group” (Overseas Chinese Town Enterprises Co.), a company incorporated in the PRC and is the holding company of the Vendor
“OCT Investments” OCT Investments Limited, a company incorporated in the British Virgin Islands with limited liability
“Pacific Climax” Pacific Climax Limited, a company incorporated in the British Virgin Islands with limited liability, is the controlling Shareholder which held 134,370,000 Shares, representing approximately 61.08% of the existing issued share capital of the Company as at the Latest Practicable Date. The entire issued share capital of Pacific Climax is wholly owned by the Vendor
“PRC” the People’s Republic of China “Project” a metropolitan composite area which will be developed and managed by Chengdu OCT and contain modern theme parks, metropolitan entertainments, and high-class residential buildings located at both sides of Shaxi line, outer Sanhuan Road, Jinniu Disctrict, Chengdu City, the PRC

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DEFINITIONS

“Proposed Name Change”	the proposed change of the existing name of the Company	the proposed change of the existing name of the Company
	to “Overseas Chinese Town (Asia) Holdings Limited
	”
“RMB”	Renminbi, the lawful currency of the PRC
“Sale Shares”	49 shares of OCT Investments, representing	49% equity
	interest of OCT Investments as at the Latest	Practicable
	Date
“SFO”	the Securities and Futures Ordinance (Chapter 571 of the
	Laws of Hong Kong) as amended, modified and
	supplemented from time to time
“Share(s)”	share(s) of HK$0.10 each in the share capital of the
	Company
“Share Transfer Agreement”	the agreement for the transfer of the 49% equity interest
	and the Shareholder’s Loan in OCT Investments from the
	Vendor to the Company dated 21 August 2007 entered
	into between the Vendor and the Company
“Shareholder(s)”	holder(s) of the Shares
“Shareholder’s Loan”	49% of the shareholder’s loan owed by OCT	Investments
	to the Vendor. As at the Latest Practicable	Date, OCT
	Investments has borrowed from the	Vendor a
	shareholder’s loan of HK$95,908,870
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Target Group”	OCT Investments and Chengdu OCT
“Vendor”	Overseas Chinese Town (HK) Company	Limited, a
	company incorporated in Hong Kong on 31 October 1997
	and is the holding company of Pacific Climax, which in
	turn is the controlling Shareholder
“HK$”	Hong Kong dollar(s), the lawful currency of	Hong Kong
“%”	per cent.

If there is any inconsistency between the Chinese names of PRC entities, departments, facilities or titles mentioned in this circular and their English translations, the Chinese version shall prevail.

Unless otherwise specified in this circular, the conversion of RMB and US$ into HK$ is based on the exchange rate of HK$1.00=RMB0.97 and US$1.00=HK$7.80 respectively. Such conversion should not be construed as a representation that the amount in question has been, could have been or could be converted on any particular rate at all.

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LETTER FROM THE BOARD

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HUALI HOLDINGS (GROUP) LIMITED

(Incorporated in the Cayman Islands with limited liability) (Stock Code: 3366)

Executive Directors: Mr. Zheng Fan (Chairman) Mr. Ni Zheng Ms. Xie Mei Mr. Zhou Guangneng

Independent non-executive Directors: Ms. Wong Wai Ling Mr. Chen Xiangdong Mr. Xiao Yongping

Registered Office: Clifton House 75 Fort Street PO Box 1350 GT George Town Grand Cayman Cayman Islands

Head Office and

Principal Place of Business: Suites 3203-3204, Tower 6 The Gateway, Harbour City Canton Road Tsim Sha Tsui Kowloon, Hong Kong

12 September 2007

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION IN RESPECT OF ACQUISITION OF 49% EQUITY INTEREST IN OCT INVESTMENTS LIMITED AND PROPOSED CHANGE OF NAME OF THE COMPANY

INTRODUCTION

On 24 August 2007, the Board announced that the Company entered into the Share Transfer Agreement with the Vendor, pursuant to which the Company has conditionally agreed to acquire and the Vendor has conditionally agreed to sell the Sale Shares and the Shareholder’s Loan at an aggregate consideration of HK$140,000,000. Upon Completion, the Company will be interested in 49% equity interest in OCT Investments, which in turn holds 25% equity interest in Chengdu OCT.

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LETTER FROM THE BOARD

As the applicable percentage ratios as defined in the Listing Rules exceeds 5% but less than 25%, the Acquisition constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules. The Vendor is an indirect controlling Shareholder, holding approximately 61.08% of the issued share capital of the Company through Pacific Climax as at the Latest Practicable Date. Under Chapter 14A of the Listing Rules, the Vendor is a connected person of the Company and therefore the Acquisition constitutes a connected transaction of the Company. The Acquisition, including the issue of the Consideration Shares by way of a specific mandate to be sought from the Independent Shareholders, are subject to the reporting and announcement requirements, and the approval of the Independent Shareholders at an extraordinary general meeting by way of poll under the Listing Rules. Pacific Climax and its associates are required to abstain from voting on the resolution in respect of the Acquisition at the EGM.

On 24 August 2007, the Board also announced that the Board proposes to change the existing name of the Company to “Overseas Chinese Town (Asia) Holdings Limited ”, subject to the conditions set out below.

The purpose of this circular is to provide you with further details, in relation to, among other things, (i) further details of the Acquisition and the Proposed Name Change; (ii) the advice of the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in relation to the Acquisition; (iii) the recommendation of the Independent Board Committee to the Independent Shareholders in relation to the Acquisition; and (iv) a notice of EGM at which resolutions will be proposed to be considered and if thought fit, approve the Share Transfer Agreement and the transactions thereunder and the Proposed Name Change, and certain information as required by the Listing Rules.

THE SHARE TRANSFER AGREEMENT

On 21 August 2007, the Company entered into the Share Transfer Agreement with the Vendor, pursuant to which the Company has conditionally agreed to acquire and the Vendor has conditionally agreed to sell the Sale Shares, representing 49% of the total issued share capital of OCT Investments, and the Shareholder’s Loan of HK$46,995,346, at an aggregate consideration of HK$140,000,000.

1. Principal terms of the Share Transfer Agreement

The principal terms of the Share Transfer Agreement are set out below:

Date

21 August 2007

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LETTER FROM THE BOARD

Parties

Vendor:

Overseas Chinese Town (HK) Company Limited, a company incorporated in Hong Kong and is beneficially wholly owned by OCT Group. The principal business activity of the Vendor is investment holding and its investments cover different areas of businesses such as paper-based packaging containers, hotels, tourism and property.

Purchaser: The Company.

Subject matter of the Share Transfer Agreement

Pursuant to the Share Transfer Agreement, the Company has conditionally agreed to purchase and the Vendor has conditionally agreed to sell (i) the Sale Shares, representing 49% of the total issued share capital of OCT Investments, free from encumbrance and together with all rights now or hereinafter attached thereto including but not limited to all dividends and distributions declared, paid or made in respect thereof on or after the date of the Share Transfer Agreement; and (ii) the Shareholder’s Loan. Upon Completion, the Company will be interested in 49% equity interest in OCT Investments, which in turn holds 25% equity interest in Chengdu OCT. Accordingly, the Company will be indirectly interested in 12.25% equity interest in Chengdu OCT. OCT Investments will become an associated company of the Company.

The consideration of the Acquisition

The aggregate consideration of the Acquisition payable by the Company to the Vendor on the Completion Date for the Acquisition shall be HK$140,000,000, of which:

(i) HK$51,600,000 is payable by the Company to the Vendor in cash; and
(ii) HK$88,400,000 shall be satisfied by the Company issuing and allotting the Consideration Shares to the Vendor (or its nominee(s)).

The aggregate consideration of the Acquisition has been determined after arm’s length negotiations between the Company and the Vendor with reference to, among other things, (i) the net asset value of Chengdu OCT of RMB400 million (equivalent to approximately HK$412.37 million); and (ii) the prospect of the Project which is further elaborated in the section headed “Information on OCT Investments and Chengdu OCT” below. The Directors intends to finance the cash payment of HK$51,600,000 by internal resources of the Group. The Directors will seek a specific mandate from its Shareholders for the issue and allotment of the Consideration Shares to the Vendor or its nominee.

The Directors (including the independent non-executive Directors) considered that the aggregate consideration of the Acquisition is fair and reasonable and on normal commercial terms and that the entering into the Share Transfer Agreement is in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE BOARD

Conditions precedent of the Share Transfer Agreement

Completion of the Acquisition is conditional upon fulfillment of the conditions including but not limited to the following:

(i) there being no material adverse impact on the legal, financial, commercial or trading position of the Target Group from the date of the Share Transfer Agreement up to the Completion Date;
(ii) the Company being satisfactory with the due diligence results in relation to, inter alia, the finance, taxation, business, rights to its assets and other aspects of the Target Group;
(iii) the Company having obtained the approval by the Independent Shareholders at the extraordinary general meeting in respect of the Share Transfer Agreement and the transactions contemplated under the Share Transfer Agreement including the issue of the Consideration Shares;
(iv) the Listing Committee of the Stock Exchange having granted the listing of, and permission to deal in the Consideration Shares; and
(v) the issue of a legal opinion by the PRC legal advisers in relation to, inter alia, Chengdu OCT.

If the conditions precedent as set out in the Share Transfer Agreement have not been fulfilled or waived by the Company (other than conditions (iii) and (iv) which may not be waived) within 6 months from the date of the Share Transfer Agreement (or such other date as the parties to the Share Transfer Agreement may agree), the provisions of the Share Transfer Agreement (other than, among others, the confidentiality clause) shall from such date become null and void.

Completion

Completion shall take place on the fifteenth Business Day after the fulfillment or waiver of the conditions of the Share Transfer Agreement (or such other date as may be agreed between the Vendor and the Company before the Completion Date).

2. Consideration Shares

The issue price of the Consideration Shares of HK$3.40 per Share represents:

(i) a discount of approximately 29.75% to the closing price of HK$4.84 per Share as quoted on the Stock Exchange on the Latest Practicable Date;
(ii) a discount of approximately 10.05% to the closing price of HK$3.78 per Share as quoted on the Stock Exchange on the Last Trading Day;

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LETTER FROM THE BOARD

(iii) a discount of approximately 7.15% to the average of the closing prices of HK$3.662 per Share for the last five consecutive trading days up to and including the Last Trading Day;
(iv) a discount of approximately 8.08% to the average of the closing prices of HK$3.699 per Share for the last ten trading days up to and including the Last Trading Day; and
(v) a premium of approximately 101.30% to the audited consolidated net asset value per Share of approximately HK$1.689 as at 31 December 2006 based on the latest published audited consolidated financial statements of the Group for the year ended 31 December 2006.

The issue price of HK$3.40 per Consideration Share was arrived at by the Company and the Vendor after taking into account of the closing prices of the Shares as shown as (ii) to (iv) above.

The Consideration Shares comprising 26,000,000 Shares represent (i) approximately 11.82% of the issued share capital of the Company as at the Latest Practicable Date; and (ii) approximately 10.57% of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares. Immediately after the issue of the Consideration Shares, there will be no change in control of the Company resulting from the issue of the Consideration Shares.

Based on the closing price of HK$3.78 per Share on the Last Trading Day, the market value of the Consideration Shares was HK$98.28 million.

3. Listing application

An application will be made to the Stock Exchange for the listing of and permission to deal in the Consideration Shares which will rank pari passu with the existing Shares.

4. Information on OCT Investments and Chengdu OCT

OCT Investments is a company incorporated in the British Virgin Islands with limited liability on 6 September 2005. As at the Latest Practicable Date, OCT Investments had paid-up capital of US$100 (equivalent to approximately HK$780). OCT Investments has been wholly-owned by the Vendor since its incorporation. The principal business activity of OCT Investments is investment holding. As at the Latest Practicable Date, the Vendor has provided a non-interest bearing shareholder’s loan of HK$95,908,870 to OCT Investments. Save as holding the 25% equity interest in Chengdu OCT and the shareholder loan of HK$95,908,870, OCT Investments does not have any other investment or operations, and does not have any other loan or liabilities to the Vendor or other creditors. According to the management account of OCT Investments, as at 30 June 2007, the unaudited total assets of OCT Investments was approximately HK$95,903,518 and the unaudited net liabilities of OCT Investments was approximately HK$5,352. As Chengdu OCT has not commenced its business operation up to

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LETTER FROM THE BOARD

the date of the Share Transfer Agreement, no turnover was recorded by OCT Investments since its incorporation on 6 September 2005 up to 31 December 2006. OCT Investments had recorded loss of HK$5,360 for the period from its incorporation on 6 September 2005 to 31 December 2005, and had recorded no profits or losses (both before and after taxation and extraordinary items) for the year ended 31 December 2006.

Chengdu OCT is a company incorporated in the PRC on 31 October 2005 with a registered capital of RMB400 million (equivalent to approximately HK$412.37 million) which has been fully paid-up. As at the Latest Practicable Date, Chengdu OCT was owned as to 38%, 35%, 25% and 2% by (Shenzhen OCT Properties Co., Ltd.), (Shenzhen OCT Holdings Co., Ltd.), OCT Investments, and (Chengdu Jinpeng Investment Management Co., Ltd.), respectively. OCT Investments has contributed RMB100 million (equivalent to approximately HK$103.09 million) as registered capital to Chengdu OCT at the date of its incorporation. Shenzhen OCT Properties Co., Ltd. and Shenzhen OCT Holdings Co., Ltd. are non-wholly owned subsidiaries of OCT Group. In March 2007, OCT Group entered into a share transfer agreement with Chengdu Jinpeng Investment Management Co., Ltd to acquire the 2% equity interest of Chengdu OCT from Chengdu Jinpeng Investment Management Co., Ltd., the acquisition of which was not completed as at the Latest Practicable Date. Based on the articles of association of Chengdu OCT, the total investment amount of Chengdu OCT is RMB780 million (equivalent to approximately HK$804.12 million). Save for the registered capital of RMB400 million (equivalent to approximately 412.37 million) which has been fully paid-up, the shareholders of Chengdu OCT are not obliged to make further capital investment in Chengdu OCT of the difference between the total investment amount of RMB780 million (equivalent to approximately 804.12 million) and the registered capital of RMB400 million (equivalent to approximately 412.37 million). The difference of RMB380 million (equivalent to approximately 391.75 million) has been financed by way of bank loans as at the Latest Practicable Date.

The principal business activities of Chengdu OCT are the provision of the development and operation of travel facilities, development and management of real estate, management of restaurant and entertainment, organization of culture activities, stage design, manufacturing and sale of travel souvenir products, travel information services, arts training, and garden design.

Chengdu OCT entered into a land use rights transfer agreement with (Land Resource Bureau of Chengdu City, Sichuan Province, the PRC) on 29 September 2006, pursuant to which Chengdu OCT has agreed to purchase a plot of land for a consideration of approximately RMB1,833.10 million (equivalent to approximately HK$1,889.79 million). The plot of land, amounting to approximately 2,036,779 square meters, is located at both sides of Shaxi line, outer Sanhuan Road, Jinniu District, Chengdu, the PRC. The acquisition costs for the land of approximately RMB1.8 billion (equivalent to approximately HK$1.86 billion) is payable by Chengdu OCT in cash. As at the Latest Practicable Date, Chengdu OCT had paid approximately RMB733.24 million (equivalent to approximately HK$755.92 million) and the remaining sum of approximately

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LETTER FROM THE BOARD

RMB1,099.86 million (equivalent to approximately HK$1,133.88 million) shall be paid on or before 28 March 2008. Chengdu OCT intends to finance the remaining acquisition costs for the plot of land with bank facilities. Chengdu OCT intends to develop the Project given the tourism industry and the real estate industry are two of the core industries of Chengdu, which are highly emphasized by the local authorities. The increase in domestic purchasing power in Chengdu will also stimulate the market growth of the two industries. Hence, it will bring business opportunities to the Project. Therefore, the Directors believe that the Project has good prospects in the future.

As at the Latest Practicable Date, save as entering into the above land use rights transfer agreement, Chengdu OCT had not commenced any business since its incorporation. Therefore, no turnover and net profits or losses (both before and after taxation and extraordinary items) were recorded by Chengdu OCT since its incorporation on 31 October 2005 up to 31 December 2006. Chengdu OCT had not generated any revenue up to the Latest Practicable Date. According to the management accounts of Chengdu OCT, as at 30 June 2007, the unaudited total assets of Chengdu OCT was approximately RMB865.81 million (equivalent to approximately HK$892.59 million) and the unaudited net asset value of Chengdu OCT was RMB400 million (equivalent to approximately HK$412.37 million). Pursuant to the Share Transfer Agreement, the Company has not committed to make other financial commitment other than the payment of the consideration as mentioned in the section headed “The consideration of the Acquisition” above.

5. Reasons for and the benefits of the Acquisition

The Group is principally engaged in the manufacture of quality paper-based packaging containers and materials, including corrugated paperboard and printed cartons for customer.

As stated in the annual report of the Company for the year ended 31 December 2006, since raw material prices, energy prices, labour costs and interest rates have been rising continuously on different extents, the competition in the paper packaging industry became increasingly intensive. Under such circumstances, the Group still managed to achieve a business growth and the Group will continue its existing business after completion of the Acquisition. However, the Directors consider that it would be beneficial to the Company to broaden the Group’s business horizon and new income stream by acquiring the Sale Shares. Moreover, as the joint-venture partners of Chengdu OCT, Shenzhen Overseas Chinese Town Holdings Co., Ltd. and Shenzhen Overseas Chinese Town Properties Co., Ltd., have successful experience on developing and operating metropolitan entertainment parks and high-class residential buildings, the Directors consider that the Acquisition will leverage the successful experience of the joint venture to the Group. Having considered the above, the Directors (including the independent non-executive Directors) consider that the terms of the Share Transfer Agreement are fair and reasonable and the Acquisition is in the interest of the Company and the Shareholders as a whole.

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LETTER FROM THE BOARD

6. Changes in the shareholding interests of the Company

The shareholding interests of the Company as at (i) the Latest Practicable Date; and (ii) immediately after the issue and allotment of the Consideration Shares are set out as follows:

Shareholder Pacific Climax and parties acting in concert with it Polyfairz Group Limited Public Shareholders Total	As at the Latest Practicable Date Number of Shares % (approximately) 134,370,000 61.08 15,630,000 7.10 70,000,000 31.82 220,000,000 100.00	Immediately after completion of the issue and allotment of the Consideration Shares Number of Shares % (approximately) 160,370,000 65.19 15,630,000 6.35 70,000,000 28.46 246,000,000 100.00	Immediately after completion of the issue and allotment of the Consideration Shares Number of Shares % (approximately) 160,370,000 65.19 15,630,000 6.35 70,000,000 28.46 246,000,000 100.00
			100.00

7. Financial impact of the Acquisition

Upon Completion, the Company will be interested in 49% equity interest in OCT Investment, which in turn holds 25% equity interest in Chengdu OCT. OCT Investment will become an associated company of the Company, and its results will be equity accounted for in the consolidated financial statements of the Group.

As OCT Investments and Chengdu OCT had not recorded any revenue and profit, the Acquisition will not have any effect on the revenue or profit of the Company immediately after Completion. As part of the Consideration will be satisfied by the issue of the Consideration Shares, the total assets and net asset value of the Group will increase and there will be no change in the Group’s liabilities.

PROPOSED CHANGE OF COMPANY NAME OF THE COMPANY

For the purpose of reflecting the adjustment of the business development of the Company, the Directors will propose a special resolution to the Shareholders to change the existing name of the Company to “Overseas Chinese Town (Asia) Holdings Limited ” at the EGM.

Conditions

The Proposed Name Change is subject to the satisfaction of the following conditions:

the passing of a special resolution by the Shareholders at an extraordinary general meeting of the Company to be convened and held, inter alia, to approve the Proposed Name Change; and

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LETTER FROM THE BOARD

the approval of the Proposed Name Change by the Registrar of Companies in the Cayman Islands to effect the Proposed Name Change.

Subject to the approval of the Registrar of Companies in the Cayman Islands, the Proposed Name Change shall take effect upon the passing of the special resolution by the Shareholders at the extraordinary general meeting of the Company approving the Proposed Name Change, or at such effective date as specified in the special resolution. Upon the Proposed Name Change taking effect and the receipt of the certificate of incorporation on change of name issued by the Registrar of Companies in the Cayman Islands, the Company will carry out the necessary filing procedures with the Registrar of Companies in Hong Kong under Part XI of the Companies Ordinance (Chapter 32, Laws of Hong Kong). Subject to the Proposed Name Change becoming effective, the English and Chinese stock short names of the Company will also be changed. Further announcement on the change of the Company’s name and change in stock short names will be made once the Proposed Name Change has become effective.

Effects of change of name

The Proposed Name Change, once approved and after becoming effective, will not in any way affect any of the rights of any Shareholders and all existing share certificates of the Company in issue bearing the present name of the Company will, after the Proposed Name Change has become effective, continue to be effective as documents of title to the shares of the Company and will be valid for trading, settlement and registration purposes.

Accordingly, there will not be any arrangement for free exchange of existing share certificates for new share certificates under the new name. Should the Proposed Name Change become effective, all new share certificates of the Company will be issued in the new name of the Company thereafter.

IMPLICATIONS UNDER THE LISTING RULES

As the applicable percentage ratios as defined in the Listing Rules exceeds 5% but less than 25%, the Acquisition constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules. The Vendor is an indirect controlling Shareholder, holding approximately 61.08% of the issued share capital of the Company through Pacific Climax as at the Latest Practicable Date. Under Chapter 14A of the Listing Rules, the Vendor is a connected person of the Company and therefore the Acquisition constitutes a connected transaction of the Company. The Acquisition, including the issue of the Consideration Shares by way of a specific mandate to be sought from the Independent Shareholders, are subject to the reporting and announcement requirements, and the approval of the Independent Shareholders at an extraordinary general meeting by way of a poll under the Listing Rules. Pacific Climax and its associates are required to abstain from voting on the resolution in respect of the Acquisition at the EGM.

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LETTER FROM THE BOARD

INDEPENDENT BOARD COMMITTEE

The Independent Board Committee, comprising all of the independent non-executive Directors, has been formed to advise the Independent Shareholders in respect of the Acquisition. Your attention is drawn to the advice from the Independent Board Committee set out in their letter dated 12 September 2007 on page 15 of this circular.

Having regard to the opinion of Hantec which is set out on pages 16 to 26 of this circular, the Independent Board Committee is of the opinion that the terms of the Acquisition are fair and reasonable so far as the Independent Shareholders are concerned and the Acquisition is in the interests of the Company and the Shareholders as a whole. Accordingly, the Independent Board Committee recommends the Independent Shareholders to approve the Share Transfer Agreement and the transactions thereunder at the EGM.

INDEPENDENT FINANCIAL ADVISER

Hantec has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Acquisition. The letter from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders, containing its advice and recommendations, is set out on pages 16 to 26 of this circular. Hantec is of the view that the Acquisition is on normal commercial terms, in the ordinary and usual course of business of the Group, fair and reasonable, and in the interests of the Company and the Shareholders as a whole. Accordingly, Hantec advises the Independent Board Committee to recommend the Independent Shareholders to approve the Share Transfer Agreement and the transactions thereunder at the EGM. Hantec also recommends the Independent Shareholders to approve the Share Transfer Agreement and the transactions thereunder at the EGM.

EXTRAORDINARY GENERAL MEETING

A notice convening the EGM to be held on 9 October 2007 (Tuesday) at 11:00 a.m. at suites 3203-3204, Tower 6, The Gateway, Harbour City, Canton Road, Tsim Sha Tsui, Kowloon, Hong Kong is set out on pages 37 to 38 of this circular for the purpose of considering and, if thought fit, passing the resolutions set out therein. The voting in respect of the approval of the resolutions will be conducted by way of poll.

You will find enclosed a proxy form for use at the EGM. Whether or not you are able to attend the EGM, you are requested to complete and return the enclosed proxy form in accordance with the instructions printed thereon to the Company’s principal place of business at suites 3203-3204, Tower 6, The Gateway, Harbour City, Canton Road, Tsim Sha Tsui, Kowloon, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for holding the EGM. Completion and return of the proxy form will not preclude you from attending and voting in person at the EGM, or any adjournment thereof, should you so wish.

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LETTER FROM THE BOARD

PROCEDURES FOR DEMANDING A POLL BY SHAREHOLDERS

Pursuant to Article 72 of the Articles, a resolution put to the vote of a general meeting shall be decided on a show of hands unless (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded by: (i) the chairman of such meeting; or (ii) at least two shareholders present in person (or in the case of a shareholder being a corporation by its duly authorized representative) or by proxy for the time being entitled to vote at the meeting; or (iii) any shareholder or shareholders present in person (or in the case of a shareholder being a corporation, by its duly authorized representative) or by proxy and representing not less than one-tenth of the total voting rights of all the shareholders having the right to vote at the meeting; or (iv) any shareholder or shareholders present in person (or in the case of a shareholder being a corporation, by its duly authorised representative) or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the shares conferring that right.

Pursuant to Article 73 of the Articles, unless a poll is demanded and the demand is not withdrawn, a declaration by the chairman of the general meeting that a resolution has on a show of hands been carried, or carried unanimously, or by a particular majority, or lost, and an entry to that effect made in the book containing the minutes of the proceedings of the Company, shall be conclusive evidence of the facts without proof of the number or proportion of the votes recorded for or against the resolution.

RECOMMENDATION

The Directors consider that (i) the Share Transfer Agreement was entered into on normal commercial terms after arm’s length negotiation and the terms of the Share Transfer Agreement are fair and reasonable and in the interests of the Company and the Shareholders as a whole; and (ii) the Proposed Name Change is in the best interest of the Company and the Shareholders as a whole. According, the Directors recommend the Independent Shareholders should vote in favour of the ordinary resolution to be proposed at the EGM to approve the Share Transfer Agreement and the transactions thereunder and the Shareholders should vote in favour of the special resolution to be proposed at the EGM to approve the Proposed Name Change.

ADDITIONAL INFORMATION

Your attention is also drawn to the additional information set out in the appendice to this circular and the notice of the EGM.

By order of the Board Huali Holdings (Group) Limited Zheng Fan Chairman

– 14 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

The following is the text of a letter from the Independent Board Committee setting out its recommendation to the Independent Shareholders in relation to the Acquisition.

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HUALI HOLDINGS (GROUP) LIMITED

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 3366)

12 September 2007

To the Independent Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION IN RESPECT OF ACQUISITION OF 49% EQUITY INTEREST IN OCT INVESTMENTS LIMITED

We have been appointed as members of the Independent Board Committee to advise you in respect of the Acquisition, details of which are set out in the letter from the Board in the circular of the Company dated 12 September 2007 (the “Circular”) to the Shareholders, of which this letter forms part. Unless the context otherwise requires, terms defined in the Circular shall have the same meanings when used in this letter.

Your attention is drawn to the advice of Hantec in respect of the Acquisition as set out in the section “Letter from the Independent Financial Adviser” in the Circular.

Recommendation

Having taken into account the principal factors and reasons considered by Hantec regarding the Acquisition and its conclusion and advice, we concur with the view of Hantec and consider the terms of the Share Transfer Agreement are fair and reasonable and that the Acquisition is in the interests of the Company and the Shareholders as a whole. We therefore recommend that the Independent Shareholders to approve the Share Transfer Agreement and the transactions thereunder.

Yours faithfully,

For and on behalf of the

Independent Board Committee

Wong Wai Ling Chen Xiangdong

Independent non-executive Director

Xiao Yongping Independent non-executive Director

– 15 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the full text of a letter of advice from Hantec to the Independent Board Committee and the Independent Shareholders for the purpose of inclusion in this circular.

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Hantec Capital Limited

45th Floor, COSCO Tower 183 Queen’s Road Central Hong Kong

12 September 2007

To the Independent Board Committee and the Independent Shareholders

Dear Sirs,

DISCLOESABLE AND CONNECTED TRANSACTION: ACQUISITION OF 49% EQUITY INTEREST IN OCT INVESTMENTS LIMITED

INTRODUCTION

We refer to our engagement as the independent financial adviser to the Independent Board Committee and the Independent Shareholders on the Acquisition, details of which are contained in the Letter from the Board (the “Letter from the Board”) contained in the circular (the “Circular”) of the Company to the Shareholders dated 12 September 2007, of which this letter forms part. Terms used in this letter have the same meanings as defined in the Circular unless the context otherwise requires.

On 21 August 2007, the Company entered into the Share Transfer Agreement with the Vendor, pursuant to which the Company has conditionally agreed to acquire and the Vendor has conditionally agreed to sell the Sale Shares and the Shareholders’ Loan at an aggregate consideration of HK$140 million.

The Vendor is an indirect controlling Shareholder, holding approximately 61.08% of the issued share capital of the Company through Pacific Climax. Under Chapter 14A of the Listing Rules, the Vendor is a connected person of the Company and therefore the Acquisition constitutes a connected transaction of the Company. The Acquisition, including the issue of the Consideration Shares by way of a specific mandate to be sought from the Independent Shareholders, are subject to the reporting and announcement requirements, and the approval of the Independent Shareholders at the EGM by way of poll under the Listing Rules. Pacific Climax and its associates will be required to abstain from voting on the resolutions to approve the Acquisition at the EGM.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Independent Board Committee has been established to advise whether the terms of the Acquisition are fair and reasonable and whether the Acquisition is in the interests of the Company and its Independent Shareholders as a whole and to advise the Independent Shareholders on how to vote. The Independent Board Committee comprising Ms. Wong Wai Ling, Mr. Chen Xiangdong and Mr. Xiao Yongping, all being independent non-executive Directors, has been formed to advise the Independent Shareholders in this respect.

BASIS OF OUR ADVICE

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

The Directors jointly and severally 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, opinions expressed in the Circular have been arrived at after due and careful consideration and there are no other facts not contained in the Circular the omission of which would make any such statement contained in the Circular misleading. 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 fact or circumstance which would render the information provided and representations and opinions made to us untrue, inaccurate or misleading. Having made all reasonable enquiries, the Directors have further confirmed that, to the best of their knowledge, they believe there are no other facts or representations the omission of which would make any statement in the Circular, including this letter, misleading. We have not, however, carried out any independent verification of the information provided by the Directors and management of the Company, nor have we conducted an independent investigation into the business and affairs of the Group.

PRINCIPAL FACTORS TAKEN INTO ACCOUNT

The principal factors and reasons that we have taken into consideration in assessing the terms of the Acquisition and arriving at our opinion are set out as follows:

1. Background and reason for the Acquisition

The Group is principally engaged in the manufacture of quality paper-based packaging containers and materials, including corrugated paperboard and printed cartons for customer.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The principal activities of OCT Investments is investment holding. As at the Latest Practicable Date, the Vendor has provided a non-interest bearing shareholder’s loan of approximately HK$95.9 million to OCT Investments. OCT Investments currently holds 25% equity interest in Chengdu OCT. No turnover has been recorded by OCT Investments since its incorporation to the Latest Practicable Date.

Chengdu OCT, the only investment held by OCT Investments, is principally engaged in the provision of development and operation of travel facilities, development and management of real estate, management of restaurant and entertainment, organization of culture activities, stage design, manufacturing and sale of travel souvenir products, travel information services, arts training and garden design. As at the Latest Practicable Date, Chengdu OCT was owned as to 38%, 35%, 25% and 2% by Shenzhen OCT Properties Co., Ltd. (“OCT Properties”), Shenzhen OCT Holdings Co., Ltd. (“OCT Holdings”), OCT Investments and Chengdu Jinpeng Investment Management Co., Ltd. OCT Properties and OCT Holdings are non-wholly owned subsidiaries of OCT Group. In March 2007, OCT Group entered into a share transfer agreement with Chengdu Jinpeng Investment Management Co., Ltd to acquire the 2% equity interest of Chengdu OCT from Chengdu Jinpeng Investment Management Co., Ltd, the acquisition of which was not completed as at the Latest Practicable Date.

The principal asset of Chengdu OCT is a parcel of land (the “Land”) of approximately 2 million square metres located at Jinniu District, Chengdu, which was agreed to be purchased by Chengdu OCT from Land Resource Bureau of Chengdu City, Sichuan Province, the PRC pursuant to a land use rights transfer agreement dated 29 September 2006 for a consideration of approximately RMB1.8 billion. As at the Latest Practicable Date, Chengdu OCT has paid approximately RMB0.7 billion and the remaining RMB1.1 billion shall be paid on or before 28 March 2008. Chengdu OCT intends to develop the Land into a metropolitan area containing modern theme parks, metropolitan entertainments, and high-class residential buildings.

Chengdu was awarded the title of (China Outstanding Tourism City) by China National Tourism Administration in 1998 and (China Best Tourism City) by China National Tourism Administration and the United Nations World Tourism Organization in 2007. According to Chengdu Statistic Bureau, despite Chengdu tourism market was declined in 2003 due to the adverse effect on international tourist arrivals by the outbreak and spread of SARS, the domestic tourist arrivals recorded approximately 40.0

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

million in 2006 and the international tourist arrivals recorded approximately 0.6 million in 2006, showing a compound annual growth rate of approximately 7.5% and approximately 15.2% respectively during the period from 1998 to 2006. Expenditure by the domestic tourists recorded approximately RMB32.4 billion in 2006, representing a compound annual growth rate of 15.2% from 1998 to 2006. Expenditure by the international tourists recorded approximately US$200 million in 2006, representing a compound annual growth rate of 26.0% from 1998 to 2006. We also noted from the data released by Chengdu Statistic Bureau that the real estate industry in Chengdu has been experienced continuous growth during the past years. The investments on property development in Chengdu recorded approximately RMB61.9 billion in 2006, being approximately 8 times over that in 1998.

OCT Holdings is a pioneer in the theme park industry in China and is dedicated to develop amusement entertainment in the tourism industry. OCT Holdings invested in several metropolitan and profitable theme parks in China, including but not limited to (Shenzhen Happy Valley), (Shenzhen Splendid China), (Shenzhen Window of the World), and (China Folk Culture Villages). Since the opening of abovementioned theme parks invested by OCT Holdings and up to 30 September 2006, the tourist arrivals of the theme parks had reached 100 million visitors in aggregate and generate an aggregate net profit of over RMB2.1 billion. OCT Properties owns over 20 years’ property development experiences and is one of the largest property development enterprises in Shenzhen.

In view of the promising growth of the tourism and real estate markets in Chengdu and the ample experience of OCT Properties and OCT Holdings in developing and operating metropolitan entertainment parks and high-class residential buildings, we concur with the Directors that Chengdu OCT can leverage the successful experience of its shareholders to capitalize on the business opportunities offered by the growing tourism and real estate market. Accordingly, we are of the view that the Acquisition is in the interest of the Group and the Shareholders as a whole as (i) it is in line with the Group’s aim to participate in other industries with good development outlook; (ii) it makes use of the experiences and expertise of the related companies of the Company’s controlling Shareholders.

2. Terms of the Acquisition

(a) Consideration

The aggregate consideration (the “Consideration”) of the Acquisition payable by the Company to the Vendor on the Completion Date for the Acquisition shall be HK$140 million of which: (i) HK$51.6 million is payable by the Company to the Vendor in cash; and (ii) HK$88.4 million shall be satisfied by the Company to issue and allot the Consideration Shares to the Vendor (or its nominee(s)).

The Consideration has been determined after arm’s length negotiations between the Company and the Vendor with reference to, among other things, (i) the net asset value of Chengdu OCT of RMB400 million (equivalent to approximately HK$412.37 million); and (ii) the prospect of the Project. The Directors intends to finance the cash payment of HK$51.6 million by internal resources of the Group.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As confirmed by the Directors, OCT Investments does not have any investment or operations other than the investment in 25% equity interest in Chengdu OCT. Upon Completion, the Company will be interested in 49% equity interest in OCT Investments. Accordingly, the Company will be indirectly interested in 12.25% equity interest of Chengdu OCT.

According to the management accounts of Chengdu OCT, the unaudited net asset value of Chengdu OCT was RMB400 million (equivalent to approximately HK$412.37 million) as at 30 June 2007. As set out in the valuation report of the Land made by Savills Valuation and Professional Services Limited (“ Savills ”), an independent property valuer of the Group, which is set out in Appendix I to the Circular, Savills has assigned no commercial value to the Land as Chengdu OCT has not obtained the State-owned Land Use Certificate. However, the market value (the “ Valuation ”) of the Land as at 30 June 2007 would be approximately RMB2.56 billion had a valid State-owned Land Use Certificate been obtained by Chengdu OCT. We understand that according to the legal opinion of the Company’s PRC legal adviser, Win & Sun Law Firm, Chengdu OCT can apply for State-owned Land Use Certificate when the land grant premium of the Land has been fully paid. As at the Latest Practicable Date, Chengdu OCT has paid the land grant premium for RMB733,240,512 whilst the outstanding land grant premium will be RMB1,099,860,768. The aforesaid payment is in compliance with the terms as stipulated in the State-owned Land Use Rights Grant Contract. We have reviewed the Valuation and have discussed with Savills on the methodology adopted and assumptions used in arriving at the market value of the Land as at 30 June 2007. We understand that Savills has adopted direct comparison approach assuming sale in its existing state with the benefit of vacant possession and by making reference to comparable sales evidence as available in the relevant market. We have no reason to doubt the fairness and appropriateness of the methodology adopted and assumptions used by Savills in arriving at the Valuation which is in general, such methodology and assumptions usually used in the market for valuation of such property.

Based on the Valuation, the land grant premium of the Land of approximately RMB1.8 billion and assuming that Chengdu OCT can obtain the State-owned Land Use Certificate for the Land, the Land would have a valuation surplus of approximately RMB0.76 billion, which translate into a revalued net asset value of Chengdu OCT of approximately RMB1.16 billion (equivalent to approximately HK$1.2 billion). A 12.25% equity interest of Chengdu OCT accordingly would share a revalued net asset of approximately RMB142 million (equivalent to approximately HK$146 million). The Consideration therefore represents a slight discount of approximately 4% to the Company’s share of revalued net asset value of Chengdu OCT.

As Chengdu OCT has not yet commenced its business and no earnings have been recorded, it is not applicable to use the price-to-earnings ratio to justify the Consideration. Based on the 12.25% indirect interest of Chengdu OCT to be acquired by the Company and the unaudited net asset of Chengdu OCT of RMB400 million as at 30 June 2007, the Company will share a net asset of Chengdu OCT of approximately RMB49 million. The Consideration of HK$140 million would therefore represent a price to net asset multiple of approximately 2.8 times. We have identified the following companies (the “Comparable Companies”) listed in Hong Kong which is principally engaged in

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

similar business to that of Chengdu OCT, that is property development in the PRC, and examined the price to net asset multiple (“P/B”, calculated based on the net asset value per their respective latest published financial statement and the market capitalization of such companies based on their closing prices as quoted on 24 August 2007, the date of announcement of the Company in relation to the Acquisition) of the Comparable Companies, which are set out in the following table:

	Market
	capitalisation	Audited
Company name	as at	consolidated
(stock code)	24 August 2007	net asset value	P/B
	HK$	HK$	times
China Fair Land Holdings Ltd.	177,450,000	256,919,000	0.69
(169)
China Properties Group Ltd.	6,720,317,640	7,199,262,000	0.93
(1838)
New Heritage Holdings Ltd.	461,230,141	458,506,000	1.01
(95)
New World China Land Ltd.	28,473,799,030	24,035,015,000	1.18
(917)
Beijing Capital Land Ltd.	5,450,837,040	3,892,511,340	1.40
– H Shares (2868)
Shui On Land Ltd. (272)	32,522,090,019	14,383,373,196	2.26
SPG Land (Holdings) Ltd. (337)	6,380,625,000	2,757,325,773	2.31
Guangzhou R&F Properties Co.,	29,747,071,120	8,501,703,093	3.50
Ltd. – H Shares (2777)
Hong Long Holdings Ltd.	2,963,246,000	846,734,021	3.50
(1383)
Hopson Development Holdings	32,073,690,000	7,837,665,000	4.09
Ltd. (754)
China Resources Land Ltd.	52,057,986,677	11,513,357,000	4.52
(1109)
Shimao Property Holdings Ltd.	66,258,883,466	11,884,916,495	5.58
(813)
Greentown China Holdings Ltd.	25,272,590,536	4,509,044,330	5.60
(3900)

– 21 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

	Market
	capitalisation	Audited
Company name	as at	consolidated
(stock code)	24 August 2007	net asset value	P/B
	HK$	HK$	times
Agile Property Holdings Ltd.	51,914,847,600	7,597,454,639	6.83
(3383)
China Overseas Land &	118,000,977,344	15,449,445,000	7.64
Investment Ltd. (688)
Franshion Properties (China)	13,452,296,000	767,365,000	17.53
Ltd. (817)
KWG Property Holding Ltd.	25,159,375,000	1,017,553,608	24.73
(1813)
Country Garden Holdings Co.	160,491,600,000	1,350,337,113	118.85
Ltd. (2007)			(Note)
		Lowest	0.69
		Highest	118.85
		Median	3.50
		Mean	5.49

Source: www.hkex.com.hk

Note: The P/B of approximately 118.85 times is excluded in our comparison and calculation of median and mean as it is unusually high and may distort our analysis on the Comparable Companies.

As shown in the above table, the P/B of the Comparable Companies are in the range of 0.69 time to 118.9 times. The average and median of these P/B are 5.5 times and 3.5 times respectively. The P/B in relation to the Consideration of 2.8 times fall within the range of the Comparable Companies and is lower than the average and median.

In view of the above analysis and the prospect of the Project, we consider that the Consideration is fair and reasonable so far as the Group and the Independent Shareholders are concerned.

(b) Consideration Shares

HK$88.4 million out of the Consideration will be satisfied by the Company to issue and allot the Consideration Shares to the Vendor (or its nominees(s)). The Directors will seek a specific mandate from its Shareholders for the issue and allotment of the Consideration Shares. The Consideration Shares comprising 26,000,000 Shares represent (i) approximately 11.8% of the issued share capital of the Company as at the Latest Practicable Date; and (iii) approximately 10.6% of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares.

– 22 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The issue price of the Consideration Shares of HK$3.40 per Share (the “Issue Price”) represents:

(i) a discount of approximately 10.05% to the closing price of HK$3.78 per Share as quoted on the Stock Exchange on the Last Trading Day;
(ii) a discount of approximately 7.15% to the average of the closing prices of HK$3.662 per Share for the last five consecutive trading days up to and including the Last Trading Day;
(iii) a discount of approximately 8.08% to the average of the closing prices of HK$3.699 per Share for the last ten trading days up to and including the Last Trading Day; and
(iv) a premium of approximately 101.30% to the audited consolidated net asset value per Share of approximately HK$1.689 as at 31 December 2006 based on the latest published audited consolidated financial statements of the Group for the year ended 31 December 2006; and
(v) a premium of approximately 97.22% to the unaudited consolidated net asset value per Share of approximately HK$1.724 as at 30 June 2007 based on the latest published unaudited consolidated financial statements of the Group for the six months ended 30 June 2007.

The issue price of HK$3.40 per Consideration Share was arrived at by the Company and the Vendor after taking into account of the closing prices of the Shares as shown above.

In order to assess the fairness and reasonableness of the Issue Price, we have identified and reviewed, on a best effort basis, the placements/ subscriptions of shares (the “Comparable Issues”) of other companies listed on the Stock Exchange announced since 1 August 2007 up to 24 August 2007, being the date of the announcement of the Company in relation to the Acquisition, as summarized below:

				Premium/	Premium/	Premium/
			Premium/	(discount) of	(discount) of	(discount) of
			(discount) of	issue price to	issue price to	issue price to
			issue price to	the average	the average	the audited
			the closing	closing price	closing price	consolidated
			price as at	for the last	for the last	net asset
	Date of	Issue	the last	five trading	ten trading	value per
Company name (stock code)	announcement	price	trading day	days	days	share
		HK$	%	%	%	%
S.A.S. Dragon Holdings Limited	1 August 2007	1.18	(10.61)	(12.59)	(10.74)	(21.84)
(1184)
HKC (Holdings) Limited (190)	1 August 2007	2.80	(10.54)	(18.41)	(14.66)	161.54
Omnicorp Limited (94)	2 August 2007	3.00	(27.01)	(21.79)	(8.37)	224.95

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

				Premium/	Premium/	Premium/
			Premium/	(discount) of	(discount) of	(discount) of
			(discount) of	issue price to	issue price to	issue price to
			issue price to	the average	the average	the audited
			the closing	closing price	closing price	consolidated
			price as at	for the last	for the last	net asset
	Date of	Issue	the last	five trading	ten trading	value per
Company name (stock code)	announcement	price	trading day	days	days	share
		HK$	%	%	%	%
Heritage International Holdings	2 August 2007	0.18	(4.76)	(12.11)	(12.11)	(23.32)
Limited (412)
Hycomm Wireless Limited (499)	3 August 2007	0.126	(17.65)	(19.75)	(20.25)	231.71
Radford Capital Investment	3 August 2007	0.50	5.26	(0.50)	(0.50)	(50.79)
Limited (901)
Wonderful World Holdings	7 August 2007	1.0	(19.35)	(28.37)	(32.84)	6,635.37
Limited (109)
Leroi Holdins Limited (221)	7 August 2007	0.265	(10.17)	(19.94)	(19.94)	9,714.81
Leroi Holdins Limited (221)	7 August 2007	0.10	(66.10)	(69.79)	(69.79)	3,603.70
China Fair Land Holdings	7 August 2007	0.58	(17.14)	(19.89)	(22.04)	(33.94)
Limited (169)
China National Building Material	9 August 2007	17.80	(1.98)	(2.00)	2.35	690.93
Company Limited (3323)
Solartech International Holdings	13 August 2007	0.68	(17.07)	(17.27)	(21.75)	(64.95)
Limited (1166)
Broad Intelligence International	13 August 2007	0.97	(8.49)	(9.68)	(13.24)	(11.01)
Pharmaceutical Holdings
Limited (1149)
Get Holdings Limited (1003)	14 August 2007	0.128	(4.48)	(8.96)	(22.61)	46.77
Cardlink Technology Group	14 August 2007	0.67	(19.30)	(19.10)	(16.10)	336.14
Limited (8066)
Everpride Biopharmaceutical	15 August 2007	0.25	(16.67)	(18.57)	(26.36)	N/A (Note)
Company Limited (8019)
Galileo Holdings Limited (8029)	20 August 2007	0.275	(1.79)	(19.59)	(23.82)	4,865.26
China Golden Development	22 August 2007	0.55	(9.84)	(12.42)	(10.13)	316.08
Holdings Limited (162)
Sino Katalytics Investment	23 August 2007	0.18	(18.18)	(18.18)	(22.21)	(73.88)
Corporation (2324)
B.A.L. Holdings Limited (8079)	24 August 2007	0.067	(17.28)	(19.47)	(29.40)	(61.75)
Chung Tai Printing Holdings	24 August 2007	0.9	(15.09)	(19.64)	(30.18)	(47.66)
Limited (55)
Highest premium/(lowest			5.26	(0.50)	2.35	9,714.81
discount)
Highest discount			(66.10)	(69.79)	(69.79)	(73.88)
Median			(15.09)	(18.57)	(20.25)	104.16
Mean			(14.68)	(18.48)	(20.22)	1,321.91
The Company (3366)	24 August 2007	3.40	(10.05)	(7.15)	(8.08)	101.30

Source: www.hkex.com.hk

Note: The company had negative net asset value.

– 24 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As shown in the table above, the premium/(discount) of issue price to the closing price as at the last trading day of the Comparable Issues range from a discount of approximately 66.10% to a premium of approximately 5.26% with a median discount of approximately 15.09% and a mean discount of approximately 14.68% respectively. The discount of approximately 10.05% represented by the Issue Price to the closing price per Share on the Last Trading Day falls within the said range and is smaller than the median and mean discount of the Comparable Issues.

The discount of issue price to the average closing price for the last five trading days of the Comparable Issues range from approximately 69.79% to approximately 0.50% with a median discount of approximately 18.57% and a mean discount of approximately 18.48% respectively. The discount of approximately 7.15% represented by the Issue Price to the average closing price per Share for the last five trading days up to and including the Last Trading Day falls within the said range and is smaller than the median and mean discount of the Comparable Issues.

The premium/(discount) of issue price to the average closing price for the last ten trading day of the Comparable Issues range from a discount of approximately 69.79% to a premium of approximately 2.35% with a median discount of approximately 20.25% and a mean discount of approximately 20.22% respectively. The discount of approximately 8.08% represented by the Issue Price to the average closing price per Share for the last ten trading days up to and including the Last Trading Day falls within the said range and is smaller than the median and mean discount of the Comparables Issues.

The premium/(discount) of issue price to the audited consolidated net asset value per share of the Comparable Issues range widely from a discount of approximately 73.88% to a premium of approximately 9,714.81% with a median premium of approximately 104.16% and a mean premium of approximately 1,321.91% respectively. The premium of approximately 101.30% represented by the Issue Price to the audited consolidated net asset value per Share falls within the said range and is smaller than the median and mean premium of the Comparable Issues.

Based on the above comparison with the Comparable Issues, we are of the view that the Issue Price is fair and reasonable so far as the Company and the Shareholders are concerned.

We also noted from the announcement of the Company dated 24 August 2007 in relation to the Acquisition and a placing and subscription that the Issue Price is identical to the placing price of HK$3.40 per share, which have been placed to third parties independent of the Company or any of its subsidiaries or any director(s), substantial shareholder(s) or chief executive (as defined in the Listing Rules) of the Company or any of its subsidiaries or any of their associates (as defined in the Listing Rules).

In view of the above analysis, we consider that the issue price of HK$3.40 per Consideration Share is fair and reasonable so far as the Company and the Independent Shareholders are concerned.

– 25 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

3. Financial effect of the Disposal on the Group

Upon completion of the Acquisition, OCT Investments will become an associated company of the Company. Accordingly, the Company’s shareholding in OCT Investments will be accounted for by the Company by equity method.

(i) Earnings

Upon completion of the Acquisition, the Group will recognize a proportionate share of OCT Investments’ income in its earnings. On the other hand, OCT Investments’ income will depend on the profitability of Chengdu OCT. As Chengdu OCT has not yet commenced its operation, its profitability is uncertain.

(ii) Net asset value

According to the interim report of the Group for the six month ended 30 June 2007, as at 30 June 2007, the consolidated net assets of the Group was approximately RMB344.8 million. Since the Consideration will be satisfied by internal resources of the Group and the issue of the Consideration Shares, the consolidated net asset value of the Group will be enhanced upon completion of the Acquisition.

(iii) Cash position/gearing of the Group

As set out in the interim report of the Group for the six month ended 30 June 2007, the cash at bank of the Group was approximately RMB83.0 million as at 30 June 2007. As part of the Consideration will be satisfied by internal resources of the Group, the cash position of the Group will decrease upon completion of the Acquisition. The Group had total borrowings of approximately RMB86.4 million as at 30 June 2007, representing a gearing ratio (defined as total borrowings over total assets) of approximately 13.8%. Since the Consideration will be satisfied by internal resources of the Group and the issue of the Consideration Shares, it is not expected to have any significant impact to the gearing ratio of the Group as a result of the Acquisition.

RECOMMENDATION

Having taken into account the principal factors and reasons referred to the above, we are of the opinion that the terms of the Acquisition are fair and reasonable so far as the Independent Shareholders are concerned and the Acquisition is in the interests of the Company and the Shareholders as a whole. We therefore advise the Independent Board Committee to recommend the Independent Shareholders to vote in favour of the ordinary resolutions to be proposed at the EGM to approve the Share Transfer Agreement and the transactions thereunder.

Yours faithfully, For and on behalf of Hantec Capital Limited Kinson Li

Director

– 26 –

APPENDIX I

VALUATION REPORT

The following is the text of a letter and valuation certificate, prepared for the purpose of incorporation in this circular and received from Savills Valuation and Professional Services Limited, an independent property valuer, in connection with the valuation as at 30 June 2007 of the property interest held by Chengdu OCT.

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==> picture [76 x 72] intentionally omitted <==

12 September 2007

The Directors Huali Holdings (Group) Limited Suite 3203-4, Tower 6 The Gateway, Harbour City Canton Road, Tsimshatsui Kowloon Hong Kong

Dear Sirs,

In accordance with the instructions from Huali Holdings (Group) Limited (the “Company”) for us to value the property held by Chengdu Tianfu OCT Industry Development Co., Ltd. (“Chengdu OCT”) in the People’s Republic of China (the “PRC”), we confirm that we have carried out an inspection, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of value of the property as at 30 June 2007 for the purpose of incorporation in a public circular.

Our valuation of the property is our opinion of its market value which we would define as intended to mean “the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion”.

– 27 –

APPENDIX I

VALUATION REPORT

The market value is the best price reasonably obtainable in the market by the seller and the most advantageous price reasonably obtainable in the market by the buyer. This estimate specifically excludes an estimated price inflated or deflated by specifically terms or circumstances such as atypical financing, sale and leaseback arrangements, joint ventures, management agreements, special considerations or concessions granted by anyone associated with the sale, or any element of special value. The market value of a property is also estimated without regard to costs of sale and purchase, and without offset for any associated taxes.

We have valued the property by using the direct comparison approach by making reference to the comparable market transactions as available in the market assuming sales with the benefit of immediate vacant possession.

We have been provided with copies of title documents relating to the property, such as Contract for the Grant of State-owned Land Use Rights and Construction Land Planning Permit. However, we have not inspected the original documents to verify ownership or to ascertain the existence of any amendments which do not appear on the copies handed to us. In the course of our valuation, we have relied to a considerable extent on the information given by the Company and its PRC legal advisers, Win & Sun Law Firm, regarding the title to the property. We have also accepted advice given to us on such matters as planning approvals or statutory notices, easements, tenure, particulars of occupancy, site and floor areas and all other relevant matters. Dimensions, measurements and areas included in the valuation certificate are based on information contained in the documents provided to us and are therefore only approximations. No on-site measurements have been taken. We have had no reason to doubt the truth and accuracy of the information provided to us by the Company which is material to our valuation. We have also sought confirmation from the Company that no material facts have been omitted from the information supplied.

We have inspected the property. In the course of our inspection, we have not carried out investigations on site to determine the suitability of the ground conditions and the services for future development. Our valuation is prepared on the assumption that these aspects are satisfactory and no extraordinary expenses or delay will be incurred during the development period.

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

In valuing the property, we have had regard to the requirements set out in Chapter 5 and Practice Note 12 of the Rules Governing the Listing of Securities issued by The Stock Exchange of Hong Kong Limited and the Valuation Standards on Properties (First Edition January 2005) published by the Hong Kong Institute of Surveyors.

– 28 –

VALUATION REPORT

APPENDIX I

Unless otherwise stated, all money amounts stated in our report are in Renminbi (RMB).

We enclose herewith our valuation certificate.

Yours faithfully

For and on behalf of

Savills Valuation and Professional Services Limited

Charles C K Chan

MSc FRICS FHKIS MCIArb RPS(GP)

Managing Director

Note: Charles C K Chan, MSc, FRICS, MCIArb, RPS (GP), is a qualified valuer and has about 23 years’ experience in the valuation of properties in Hong Kong and has about 18 years’ experience in the valuation of properties in the PRC.

– 29 –

VALUATION REPORT

APPENDIX I

VALUATION CERTIFICATE

Property

Four parcels of land located at Section 1, North 3rd Ring Road Chengdu, Sichuan Province, The PRC

Description and tenure

The property comprises four parcels of land with a total site area of approximately 2,036,779.18 sq.m. (21,923,891 sq.ft.), the breakdown of which is as follows:

Market value in existing state as at 30 June 2007

Particulars of occupancy

Construction work on No commercial Land B has value commenced whilst the remaining portion of the property is vacant.

Land Area Use (sq.m.) A 200,000.00 Culture and Entertainment B 393,979.53 Residential and Commercial C 800,000.00 Theme Park D 642,799.65 Residential and Commercial Total 2,036,779.18

The property is proposed to be developed into a composite development accommodating modern theme parks, metropolitan entertainments, high-class residential buildings, commercial, kindergarten and other ancillary facilities. Upon completion, the proposed development will provide a total gross floor area of approximately 1,800,000 sq.m. (19,375,200 sq.ft.).

The land use rights of the property will be granted to Chengdu OCT for terms of 40 years for commercial and theme park uses and 70 years for residential use from 29 September 2006 upon the settlement of the land grant premium in full.

– 30 –

VALUATION REPORT

APPENDIX I

Notes:

Pursuant to the Contract for the Grant of State-owned Land Use Rights No. 5101 Jinnui (2006) Chu Rang He Tong 47 entered into between Chengdu State-owned Land Resources Bureau (the “Grantor”) and Chengdu OCT on 29 September 2006, the Grantor has agreed to grant the land use rights of four parcels of land with an area of approximately 2,036,779.18 sq.m. to Chengdu OCT at a total consideration of RMB1,833,101,280. The said Contract contains, inter-alia, the salient conditions as follows:

Usage: Cultural and entertainment, theme park, residential and kinderganten and other ancillary facilities Land Use Term: 40 years for commercial and theme park uses and 70 years for residential use Plot ratio: Land A: not exceeding 1.8 Land B: not exceeding 1.8 for residential use Land C: not exceeding 0.25 Land D: not exceeding 1 for residential use

Based on the aforesaid Contract and advice from the Company, Lands A and C are not transferable.

Pursuant to the Construction Land Planning Permit No. Cheng Gui You Di [2007] 170 issued by Cheungdu Urban Planning Bureau on 30 April 2007, a development for residential, commercial, office and other ancillary uses is permitted to be constructed on a site with an area of 1,527,260.1 sq.m.
Pursuant to the Joint Venture Contract and its Supplement entered into among Shenzhen Huaqiaocheng Estate Co., Ltd (Party A), Shenzhen Huaqiaocheng Holdings Limited (Party B), OCT Investment Limited (Party C) and Chengdu Jinpeng Investment Management Limited (Party D) on 28 May 2006, all parties agreed to establish a joint venture company named Chengdu Tianfu OCT Industry Development Co., Ltd. The salient conditions as stipulated in the said contract are as follows:

(i) Period of operation: 40 years commencing on 31 October 2005 and expiring on 30 October 2045 (ii) Total investment amount: RMB780,000,000 (iii) Registered capital: RMB400,000,000

Pursuant to the Business Licence No. Qi He Chuan Rong Zong Zi Di 003774 dated 31 October 2005 issued by Chengdu Industrial and Commercial Administration Bureau, Chengdu OCT was established with a registered capital of RMB400,000,000 for an operation period of 40 years from 31 October 2005.
We have been provided with a legal opinion on the title to the property issued by the Company’s PRC legal adviser, Win & Sun Law Firm, which contains, inter alia, the following information:
i. Chengdu OCT can apply for the State-owned Land Use Certificate and obtain the land use rights of the property when it settles the land grant premium;
ii. Chengdu OCT has paid the land grant premium for RMB733,240,512 whilst the outstanding land grant premium will be RMB1,099,860,768. The aforesaid payment is in compliance with the terms as stipulated in the Contract as mentioned in Note (1); and
iii. Chengdu OCT has no rights to transfer, lease or mortgage the property as it has not settled the land grant premium.
We have assigned no commercial value to the property as Chengdu OCT has not obtained the State-owned Land Use Certificate.
Had a valid State-owned Land Use Certificate been obtained by Chengdu OCT, the market value of the property as at 30 June 2007 assuming that all land grant premium has been fully paid would be RMB2,560,000,000. We have assigned no commercial value to Lands A and C as they are not transferable.

– 31 –

GENERAL INFORMATION

APPENDIX II

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Group.

The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief there are no other facts the omission of which would make any statement in this circular misleading.

2. DISCLOSURE OF INTERESTS

(i) Directors’ and chief executive’s interests and/or short positions in securities of the Company and its associated corporations

As at the Latest Practicable Date, interests and short positions in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) held by the Directors and chief executives of the Company which have been 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 were taken or deemed to have under such provisions of the SFO) or have been entered in the register maintained by the Company pursuant to section 352 of the SFO, or otherwise have been notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies (the “Model Code”) are as follows:

Long Positions in the Ordinary Shares of the Company

			Approximate
		No. of shares	shareholding
Name	Capacity/Nature	involved	percentage
Ni Zheng (Note 1)	Beneficial owner	2,000,000	0.91%
Zhou Guangneng (Note 2)	Beneficial owner	1,700,000	0.77%

Notes:

(1) Ni Zheng is taken to be interested as a grantee of options to subscribe for 2,000,000 Shares under the share option scheme of the Company.
(2) Zhou Guangneng is taken to be interested as a grantee of options to subscribe for 1,700,000 Shares under the share option scheme of the Company.

– 32 –

APPENDIX II

GENERAL INFORMATION

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or chief executives of the Company had any interests or short positions in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) as recorded in the register required to be kept by the Company under section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code.

As at the Latest Practicable Date, none of the Directors has any direct or indirect interest in any assets which have been, since 31 December 2006, being the date to which the latest published audited accounts of the Group were made up, acquired or disposed of by, or leased to any members of the Group, or are proposed to be acquired or disposed of by, or leased to any members of the Group.

As at the Latest Practicable Date, none of the Directors is materially interested in any contracts or arrangements entered into by any members of the Group which is subsisting at the date of this circular and which is significant in relation to the business of the Group.

(ii) Persons who have interests or short positions which are discloseable under Divisions 2 and 3 of Part XV of the SFO

As at the Latest Practicable Date, as far as is known to the Directors, the following persons (not being a Director or chief executive of the Company) had interests or short positions in the shares or underlying shares of the Company which fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO as recorded in the register required to be kept by the Company pursuant to section 336 of the SFO:

Long Position in the Ordinary Shares of the Company

			Approximate
			shareholding
Name	Capacity/Nature	No. of Shares	percentage
Substantial Shareholders
Pacific Climax (Note 1)	Beneficial owner	134,370,000	61.08%
Overseas Chinese Town (HK)	Interest of a controlled	134,370,000	61.08%
Company Limited (“OCT	corporation (Note 3)
(HK)”) (Note 2)
	Beneficial owner	26,000,000	11.82%
OCT Group (Note 4)	Interest of a controlled	160,370,000	72.90%
	corporation (Note 5)

– 33 –

GENERAL INFORMATION

APPENDIX II

			Approximate
			shareholding
Name	Capacity/Nature	No. of Shares	percentage
Others
Polyfairz Group Limited	Beneficial owner	15,630,000	7.10%
(formerly known as
Polyfair Limited)
Zhang Zhilin	Interest of a controlled	15,630,000	7.10%
	corporation (Note 6)
Tang Qinmei	Interest of spouse	15,630,000	7.10%
	(Note 7)

Notes:

(1) Mr. Ni Zheng, Mr. Zhou Guangneng and Ms. Xie Mei, Directors, are also directors of Pacific Climax.
(2) Mr. Zheng Fan, a Director, is the chairman of the board of directors of OCT (HK). Ms. Xie Mei and Mr. Zhou Guangneng, Directors, are the deputy general managers of OCT (HK). Mr. Ni Zheng is also a director of OCT (HK).
(3) OCT (HK) is the beneficial owner of all the issued share capital in Pacific Climax. Therefore OCT (HK) is deemed, or taken to be interested in these shares which are beneficially owned by Pacific Climax for the purpose of the SFO. OCT (HK) is also deemed, or taken to be interested in the Consideration Shares that may be issued to it (or its nominee) upon Completion.
(4) Mr. Zheng Fan, a Director, is the Chief Cultural Officer of OCT Group.
(5) OCT Group is the beneficial owner of all the issued shares in OCT (HK) (OCT Group holds 454,999,998 shares in OCT (HK) in its own name. Mr. Zheng Fan, an executive Director, and Mr. Guo Yubin hold one share each in OCT (HK) on trust for OCT Group) and which is in turn the beneficial owner of all the issued share capital in Pacific Climax and therefore OCT Group is deemed, or taken to be, interested in the 134,370,000 shares which are beneficially owned by Pacific Climax for the purposes of the SFO, and the Consideration Shares which OCT (HK) is deemed, or taken to be interested.
(6) Polyfairz Group Limited (formerly known as Polyfair Limited) is beneficially owned as to 90% by Mr. Zhang Zhilin and thus a controlled corporation of Mr. Zhang Zhilin, and Mr. Zhang Zhilin is deemed, or taken to be, interested in the 15,630,000 shares which are beneficially owned by Polyfairz Group Limited for the purpose of the SFO.
(7) Ms. Tang Qinmei is the spouse of Mr. Zhang Zhilin. Therefore, Ms. Tang Qinmei is deemed, or taken to be, interested in all the Shares in which Mr. Zhang Zhilin is interested for the purpose of the SFO.

Save as disclosed above, no other interests required to be recorded in the register kept under section 336 of the SFO have been notified to the Company.

3. COMPETING INTERESTS

As at the Latest Practicable Date, so far as the Directors are aware, none of the Directors or their respective associates (as defined in the Listing Rules) has any interest in any business which competes or is likely to compete with the business of the Group.

– 34 –

GENERAL INFORMATION

APPENDIX II

4. SERVICE CONTRACT

As at the Latest Practicable Date, none of the Directors has a service contract with any member of the Group which was not determinable by the Group within one year without payment of compensation (other than normal statutory compensation).

5. LITIGATION

As at the Latest Practicable Date, so far as the Directors are aware, neither the Company nor any of its subsidiaries was engaged in any litigation or arbitration of material importance, and so far as the Directors are aware, no litigation or arbitration of material importance is pending or threatened against the Company or any of its subsidiaries.

6. EXPERTS AND CONSENT

(a) The following is the qualification of the experts which have given their advice contained in this circular:

Name

Qualification

Hantec Capital Limited

a deemed licensed corporation under the SFO permitted to engage in types 1 and 6 of the regulated activities as defined in the SFO

Savills Valuation and

Independent property valuer

Professional Services Limited

(b) As at the Latest Practicable Date, each of Hantec and Savills Valuation and Professional Services Limited did not have any shareholding in any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.
(c) Each of Hantec and Savills Valuation and Professional Services Limited has given and have not withdrawn their written consent to the issue of this circular with the inclusion of their letters or reports and references to their names in the form and context in which they are included.
(d) As at the Latest Practicable Date, each of Hantec and Savills Valuation and Professional Services Limited did not have any interest, direct or indirect, in any assets which have been acquired or disposed of by or leased to any member of the Group, or which are proposed to be acquired or disposed of by or leased to any member of the Group since 31 December 2006, being the date to which the latest published audited consolidated financial statements of the Company were made up.
(e) The letters and reports given by Hantec and Savills Valuation and Professional Services Limited are given as of the date of this circular for incorporation herein.

– 35 –

GENERAL INFORMATION

APPENDIX II

7. MATERIAL ADVERSE CHANGE

The Directors confirm that, as at the Latest Practicable Date, they were not aware of any material adverse change in the financial or trading position of the Group since 31 December 2006, being the date to which the latest published audited consolidated financial statements of the Company were made up.

8. GENERAL

(a) The company secretary and the qualified accountant of the Company is Mr. Fong Fuk Wai, who is a fellow member of the Hong Kong Institute of Certified Public Accountants.
(b) The Company’s registered office is at Clifton House, 75 Fort Street, PO Box 1350 GT, George Town, Grand Cayman, Cayman Islands. The head office and principal place of business is at suites 3203-3204, Tower 6, The Gateway, Harbour City, Canton Road, Tsim Sha Tsui, Kowloon, Hong Kong.
(c) The authorised share capital of the Company was HK$200,000,000, comprising 2,000,000,000 Shares of HK$0.1 each. As at the Latest Practicable Date, the total issued share capital of the Company was 220,000,000 Shares. Upon completion of the issue and allotment of the Consideration Shares, the Company’s total issued share capital will increase to 246,000,000 Shares.
(d) The Hong Kong branch share registrar and transfer office of the Company is Computershare Hong Kong Investor Services Ltd. at Shops 1712-1716, 17/F, Hopewell Centre, 183 Queen’S Road East, Wan Chai, Hong Kong.
(e) The English text of this circular shall prevail over the Chinese text.

9. DOCUMENTS AVAILABLE FOR INSPECTION

A copy of the Share Transfer Agreement is available for inspection during normal business hours except on Saturday, Sunday and public holidays at the offices of the Company in Hong Kong at suites 3203-3204, Tower 6, The Gateway, Harbour City, Canton Road, Tsim Sha Tsui, Kowloon, Hong Kong from the date of this circular up to and including 27 September 2007.

– 36 –

NOTICE OF EXTRAORDINARY GENERAL MEETING

==> picture [57 x 39] intentionally omitted <==

==> picture [65 x 49] intentionally omitted <==

HUALI HOLDINGS (GROUP) LIMITED

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 3366)

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “Meeting”) of Huali Holdings (Group) Limited (the “Company”) will be held on 9 October 2007 (Tuesday) at 11:00 a.m. at suites 3203-3204, Tower 6, The Gateway, Harbour City, Canton Road, Tsim Sha Tsui, Kowloon, Hong Kong for considering and, if thought fit, passing, with or without amendments, the following resolutions as ordinary resolution and special resolution of the Company:

ORDINARY RESOLUTION

(1) “ THAT
(a) the share transfer agreement entered into between Huali Holdings (Group) Limited (as purchaser) and Overseas Chinese Town (HK) Company Limited (as vendor) dated 21 August 2007 (the “Share Transfer Agreement”) in relation to the acquisition of 49% equity interest in OCT Investments Limited (the “Acquisition”) (a copy of which has been produced to the Meeting marked “A” and initialled by the Chairman of the Meeting for the purpose of identification) and the transaction contemplated therein be and is hereby approved, confirmed and ratified;
(b) the issue by the Company of 26,000,000 shares of HK$0.10 each in the capital of the Company to Overseas Chinese Town (HK) Company Limited (or to such other person or persons as it may nominate) credited as fully paid which shall rank pari passu in all respects with the existing shares of the Company in issue at the date of allotment of such new shares as part of the consideration under the Share Transfer Agreement be and is hereby approved; and
(c) each of the directors of the Company be and is hereby authorised to do all such further acts and things, negotiate, approve, agree, sign, initial, ratify and/or execute such further documents and take all steps which may be in their opinion necessary, desirable or expedient to implement and/or give effect to the terms of the Share Transfer Agreement and the transaction contemplated thereunder.”

– 37 –

NOTICE OF EXTRAORDINARY GENERAL MEETING

SPECIAL RESOLUTION

(1) “ THAT subject to and conditional upon the approval of the Registrar of Companies in the Cayman Islands being obtained, the name of the Company be and is hereby changed from “Huali Holdings (Group) Limited ” to “Overseas Chinese Town (Asia) Holdings Limited ”, with effect from the date of passing of this special resolution and THAT the Directors be and are hereby authorised to do all such acts and things and execute all such documents they consider necessary, desirable or expedient to give effect to the aforesaid change of name of the Company.”

By Order of the Board FONG Fuk Wai Company Secretary

Hong Kong, 12 September 2007

Notes:

Any member of the Company entitled to attend and vote at the Meeting shall be entitled to appoint another person as his proxy to attend and vote instead of him. A member who is the holder of two or more shares may appoint more than one proxy to represent him and vote on his behalf at the Meeting. A proxy need not be a member of the Company. On a poll, votes may be given either personally or by proxy.
The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under its seal or under the hand of an officer, attorney or other person authorized to sign the same.
To be valid, the instrument appointing a proxy and (if required by the Board) the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of such power or authority, shall be delivered to the principal place of business of the Company at suites 3203-3204, Tower 6, The Gateway, Harbour City, Canton Road, Tsim Sha Tsui, Kowloon, Hong Kong not less than 48 hours before the time appointed for holding the Meeting or any adjournment thereof.
No instrument appointing a proxy shall be valid after expiration of 12 months from the date named in it as the date of its execution, except at an adjourned meeting or on a poll demanded at the Meeting or any adjournment thereof in cases where the Meeting was originally held within 12 months from such date.
Where there are joint holders of any shares, any one of such joint holders may vote at the Meeting, either in person or by proxy, in respect of such share as if he/she were solely entitled thereto, but if more than one of such joint holders be present at the Meeting, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose, seniority shall be determined by the order in which the names stand in the Register of Members of the Company in respect of the joint holding.
Completion and delivery of an instrument appointing a proxy shall not preclude a member from attending and voting in person at the Meeting if the member so wish and in such event, the instrument appointing a proxy should be deemed to be revoked.
The transfer books and Register of Members of the Company will be closed from 5 October 2007 to 9 October 2007, both days inclusive. During such period, no share transfers will be effected. In order to qualify for attending the Meeting, all transfer documents, accompanied by the relevant share certificates, must be lodged with the Company’s branch share registrars in Hong Kong, Computershare Hong Kong Investor Services Limited whose share registration public offices are located at Shops 1712-16, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong for registration no later than 4:30 p.m. on 4 October 2007.

– 38 –

AI assistant

RemeGen Co., Ltd. — Proxy Solicitation & Information Statement 2007

51206_rns_2007-09-11_b21d8b55-9399-4dda-b1da-0f50a843cc27.pdf

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

HUALI HOLDINGS (GROUP) LIMITED

DISCLOSEABLE AND CONNECTED TRANSACTION IN RESPECT OF ACQUISITION OF 49% EQUITY INTEREST IN OCT INVESTMENTS LIMITED AND PROPOSED CHANGE OF NAME OF THE COMPANY

Hantec Capital Limited

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

HUALI HOLDINGS (GROUP) LIMITED

To the Shareholders

DISCLOSEABLE AND CONNECTED TRANSACTION IN RESPECT OF ACQUISITION OF 49% EQUITY INTEREST IN OCT INVESTMENTS LIMITED AND PROPOSED CHANGE OF NAME OF THE COMPANY

INTRODUCTION

LETTER FROM THE BOARD

THE SHARE TRANSFER AGREEMENT

1. Principal terms of the Share Transfer Agreement

Date

Parties

Subject matter of the Share Transfer Agreement

The consideration of the Acquisition

Conditions precedent of the Share Transfer Agreement

Completion

2. Consideration Shares

3. Listing application

4. Information on OCT Investments and Chengdu OCT

LETTER FROM THE BOARD

LETTER FROM THE BOARD

5. Reasons for and the benefits of the Acquisition

6. Changes in the shareholding interests of the Company

7. Financial impact of the Acquisition

PROPOSED CHANGE OF COMPANY NAME OF THE COMPANY

Conditions

LETTER FROM THE BOARD

Effects of change of name

IMPLICATIONS UNDER THE LISTING RULES

INDEPENDENT BOARD COMMITTEE

INDEPENDENT FINANCIAL ADVISER

EXTRAORDINARY GENERAL MEETING

PROCEDURES FOR DEMANDING A POLL BY SHAREHOLDERS

RECOMMENDATION

ADDITIONAL INFORMATION

HUALI HOLDINGS (GROUP) LIMITED

(Stock Code: 3366)

DISCLOSEABLE AND CONNECTED TRANSACTION IN RESPECT OF ACQUISITION OF 49% EQUITY INTEREST IN OCT INVESTMENTS LIMITED

Recommendation

Independent Board Committee

Hantec Capital Limited

DISCLOESABLE AND CONNECTED TRANSACTION: ACQUISITION OF 49% EQUITY INTEREST IN OCT INVESTMENTS LIMITED

INTRODUCTION

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

BASIS OF OUR ADVICE

PRINCIPAL FACTORS TAKEN INTO ACCOUNT

1. Background and reason for the Acquisition

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

2. Terms of the Acquisition

(a) Consideration

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(b) Consideration Shares

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

3. Financial effect of the Disposal on the Group

(i) Earnings

(ii) Net asset value

(iii) Cash position/gearing of the Group

RECOMMENDATION

APPENDIX I

VALUATION REPORT

APPENDIX I

VALUATION REPORT

Yours faithfully

For and on behalf of

Charles C K Chan

VALUATION CERTIFICATE

Property

Description and tenure

Market value in existing state as at 30 June 2007

RemeGen Co., Ltd. Proxy Solicitation & Information Statement 2007