Shanxi Installation Group Co., Ltd. — Proxy Solicitation & Information Statement 2024

Dec 9, 2024

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Shanxi Installation Group Co., Ltd., you should at once hand this circular and the accompanying form of proxy and reply slip to the purchaser or the transferee or to the bank or stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

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

山西安装

Shanxi Installation Group Co., Ltd.

山西省安装集團股份有限公司

(A joint stock company incorporated in the People's Republic of China with limited liability)

(Stock Code: 2520)

PROVISION OF GUARANTEE TO A CONNECTED PERSON AND

NOTICE OF THE

2024 FIRST EXTRAORDINARY GENERAL MEETING

A letter from the Board is set out on pages 4 to 9 of this circular. A notice of the extraordinary general meeting of the Company to be held at 3:00 p.m. on Friday, December 27, 2024 at the Conference Room, East Side, 2/F, Shanxi Installation Office Building, No. 8 Xinhua Road, Shanxi Transformation and Comprehensive Reform Demonstration Zone, Shanxi Province, PRC, (the "Extraordinary General Meeting") together with a form of proxy for the Extraordinary General Meeting were published on the HKEx's website (www.hkexnews.hk) and the Company's website (www.sxaz.com.cn) on Monday, December 9, 2024.

Shareholders who intend to appoint a proxy to attend the Extraordinary General Meeting shall complete and return the proxy form in accordance with the instructions printed thereon. The proxy form must be signed by you or your attorney duly authorised in writing or, in case of a legal person, must either be executed under its seal or under the hand of its director or other attorney duly authorised to sign the same. If the proxy form is signed by an attorney of the appointor, the power of attorney authorising that attorney to sign, or other document of authorisation, must be notarized.

In the case of joint holders of the H Shares, only the holder whose name stands first in the register of members of the H Shares of the Company shall alone be entitled to vote at the Extraordinary General Meeting, either in person or by proxy in respect of such H Shares.

For Shareholders, please return the proxy form together with any documents of authority to the H Share registrar of the Company in Hong Kong, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong as soon as possible, and in any event not later than 24 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.

December 9, 2024

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CONTENTS

Page

DEFINITIONS ... 1
LETTER FROM THE BOARD ... 4
NOTICE OF THE 2024 FIRST EXTRAORDINARY GENERAL MEETING ... 10

Note: If there are any discrepancies between the Chinese version and the English version of this circular, the Chinese version shall prevail.

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DEFINITIONS

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

“applicable percentage ratio(s)”, “connected person(s)” and “subsidiary(ies)”
have the meanings ascribed to them under the Listing Rules

“Board”
the board of Directors of the Company

“CEXIM”
The Export-Import Bank of China, Hunan Branch

“Company”
Shanxi Installation Group Co., Ltd. (山西省安裝集團股份有限公司), a joint stock company incorporated in the PRC with limited liability, whose H Shares are listed on the main board of the Hong Kong Stock Exchange (stock code: 2520)

“Controlling Shareholder(s)”
has the meaning ascribed to it under the Listing Rules and, unless the context requires otherwise, refers to Shanxi CIG

“Director(s)”
director(s) of the Company

“Envision Enterprise”
Envision Enterprise Investment Limited (遠景企業投資有限公司), a company established under the laws of Hong Kong, which is held as to 60% and 40% by Wuling HongKong International Energy Investment Limited (五凌香港國際能源投資有限公司) and Shanxi CIII respectively

“Extraordinary General Meeting”
the 2024 first extraordinary general meeting of the Company to be convened and held at 3:00 p.m. on December 27, 2024 at the Conference Room, East Side, 2/F, Shanxi Installation Office Building, No. 8 Xinhua Road, Shanxi Transformation and Comprehensive Reform Demonstration Zone, Shanxi Province, PRC

“Financing Loan Agreement”
the financing loan agreement intended to be signed by Envision Enterprise with CEXIM to borrow a loan with a maximum amount not exceeding USD82 million (approximately RMB590.4 million) from CEXIM as operating funds of the project

“Guarantee”
the joint and several liability guarantee provided by the Company for the debts of Envision Enterprise under the Financing Loan Agreement for a maximum guarantee amount of USD13 million (approximately RMB93.4 million) pursuant to the Guarantee Agreement

“Guarantee Agreement”
the guarantee agreement intended to be signed between the Company and CEXIM in respect of the Guarantee

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DEFINITIONS

“H Share(s)”	overseas listed foreign share(s) in the share capital of the Company with a nominal value of RMB1.00 each, which are subscribed for and traded in Hong Kong dollars and listed on the main board of the Hong Kong Stock Exchange
“HKEx”	Hong Kong Exchanges and Clearing Limited
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“Hong Kong dollars”	Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Listing Rules”	the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange
“PRC” or “China”	the People's Republic of China, which, for the purpose of this circular, excludes Hong Kong, the Macau Special Administrative Region and Taiwan
“RMB”	Renminbi, the lawful currency of the PRC
“Shanxi CIG”	Shanxi Construction Investment Group Co., Ltd.* (山西建設投資集團有限公司), a state-owned company established under the laws of the PRC and the Controlling Shareholder of the Company
“Shanxi CIG HK”	Shanxi Construction Investment Group (Hong Kong) Limited* (山西建設投資集團(香港)有限公司), a company established under the laws of Hong Kong with limited liability and a wholly-owned subsidiary of Shanxi CIG
“Shanxi CIIC”	Shanxi Construction Investment International Construction Group Ltd.* (山西建設國際建設集團有限公司), a company established under the laws of the PRC with limited liability and a wholly-owned subsidiary of Shanxi CIG
“Shanxi CIII”	Shanxi Construction Investment International Investment Co., Ltd.* (山西建設國際投資有限公司), a company established under the laws of the PRC with limited liability and a subsidiary of Shanxi CIG
“Share(s)”	ordinary share(s) in the share capital of the Company with a nominal value of RMB1.00 each, comprising the Domestic Share(s) and H Share(s)
“Shareholder(s)”	holder(s) of the H Share(s)

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DEFINITIONS

"USD"
U.S. dollar, the lawful currency of the United States of America

"%"
per cent

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LETTER FROM THE BOARD

山西安装

SHANXI CIG

Shanxi Installation Group Co., Ltd.

山西省安装集團股份有限公司

(A joint stock company incorporated in the People's Republic of China with limited liability)

(Stock Code: 2520)

Executive Directors:
Mr. WANG Limin (Chairman of the Board)
Mr. REN Rui
(Vice President and General Manager)
Mr. ZHANG Yan (Vice President)

Non-executive Directors:
Mr. XU Guanshi
Mr. ZHANG Hongjie
Mr. MU Jianwei
Mr. FENG Cheng

Independent non-executive Directors:
Mr. WANG Jingming
Professor WU Qiusheng
Ms. SHIN Chuck Yin
Mr. GUO He

Headquarters and Registered office:
No. 8 Xinhua Road
Tanghuai Industrial Park
Shanxi Transformation and Comprehensive
Reform Demonstration Zone
Shanxi
PRC

Principal place of business
in Hong Kong:
5/F, Manulife Place
348 Kwun Tong Road
Kowloon
Hong Kong

December 9, 2024

To the Shareholders

Dear Sir or Madam,

PROVISION OF GUARANTEE TO A CONNECTED PERSON

AND

NOTICE OF THE

2024 FIRST EXTRAORDINARY GENERAL MEETING

1. INTRODUCTION

The purpose of this circular is to provide you with the notice of the Extraordinary General Meeting and detailed information about the ordinary resolution to be proposed at the Extraordinary General Meeting to enable you to make informed decision on whether to vote for or against the ordinary resolution to be proposed at the Extraordinary General Meeting.

2. PROVISION OF GUARANTEE TO A CONNECTED PERSON

Reference is made to the announcement of the Company dated December 9, 2024 in relation to the provision of guarantee to a connected person.

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LETTER FROM THE BOARD

To develop the 66MW Koba wind power project in Bangladesh, Envision Enterprise intends to sign the Financing Loan Agreement with CEXIM and borrow a loan with a maximum amount not exceeding USD82 million (approximately RMB590.4 million) as operating funds of the project, with a loan term of 12 years.

On December 9, 2024, as one of the conditions precedent to the Financing Loan Agreement, the Board approved the resolution regarding the Guarantee at the 38th meeting of the first session of the Board. Accordingly, the Board agreed that the Company shall enter into the Guarantee Agreement with CEXIM, and provide joint and several liability guarantee for the debts of Envision Enterprise under the Financing Loan Agreement (including the loan principal, interest, and any other amounts payable by Envision Enterprise under the Financing Loan Agreement) for a maximum guarantee amount of USD13 million (approximately RMB93.4 million) and with a maximum liability period of 12 years, subject to the term of the Guarantee Agreement to be entered into.

As at the date of this circular, the Company holds 30% equity interests in Shanxi CIII, while Shanxi CIII holds 40% equity interests in Envision Enterprise. Given that the Company has provided a guarantee in excess of its shareholding percentage for Envision Enterprise under the Guarantee Agreement, Shanxi CIG HK and Shanxi CIIC have agreed to provide counter-guarantees to the Company in respect of its guarantee liabilities under the Guarantee Agreement according to their respective shareholding percentages in Shanxi CIII, whereby the Company is entitled to recover from Shanxi CIG HK and Shanxi CIIC 70% of the aggregate amount of guarantee or indemnity liabilities assumed by it under the Guarantee. The term of the counter-guarantees above is up to the expiration of the liability period of the Company as stipulated in the Guarantee Agreement.

Reasons for and Benefits of the Guarantee

As a key project in Bangladesh, the Bangladesh's 66MW Koba wind power project is the country's first centralised wind farm. The construction plan includes 22 wind turbines with a single unit capacity of 3MW each, along with a supporting booster station and transmission lines. The project is entirely constructed using Chinese technology, Chinese standards, and Chinese equipment, and has been praised by local Bangladeshi media as a "model of China-Bangladesh energy cooperation". The 66MW Koba wind power project in Bangladesh is undertaken by the Company, representing a strong exploration of the Company's response to the "Belt and Road" initiative and the promotion of high-quality transformation and development. Through providing a guarantee for the borrowings of the project company, Envision Enterprise, Envision Enterprise can obtain continuous operating funds, ensuring the smooth advancement and implementation of the Koba wind power project. The implementation of the Koba project can effectively promote the Company's "Grand Overseas" development strategy by continuously optimising the "Going Global" cooperation model, assisting in local infrastructure construction, consistently enhancing the corporate brand, and supporting the Company's high-quality development with overseas operational achievements.

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LETTER FROM THE BOARD

To the best of the knowledge, information and belief of the Company having made all reasonable enquiries, CEXIM is a third party independent of the Company and its connected persons.

Directors' View

The Company held the 38th meeting of the first session of the Board on 9 December 2024, at which the resolution regarding the Guarantee was approved. Pursuant to the Listing Rules, the Directors Mr. Wang Limin, Mr. Xu Guanshi, Mr. Zhang Hongjie, Mr. Mu Jianwei and Mr. Feng Cheng are deemed to have material interest in the transactions under the Guarantee and have abstained from voting on the resolution regarding the Guarantee proposed at the Board meeting. Save as disclosed above, no other Director has a material interest in the Guarantee.

The Board of the Company (including the independent non-executive Directors) considers that the terms of the Guarantee Agreement are fair and reasonable, that the Guarantee is conducted on normal commercial terms or better and that it in the interests of the Company and the Shareholders as a whole.

Listing Rules Implications

Shanxi CIII is a subsidiary of Shanxi CIG, the controlling shareholder of the Company, and Shanxi CIII holds 40% equity interests in Envision Enterprise, thus Envision Enterprise is an associate of Shanxi CIG and is therefore a connected person of the Company. As one or more of the applicable percentage ratios (as defined in the Listing Rules) in respect of the transactions under the Guarantee exceed 0.1% but are less than 5%, such transactions constitute the connected transactions of the Company and are therefore subject to the reporting, announcement and annual review requirements but exempt from independent shareholders' approval requirement under Chapter 14A of the Listing Rules.

Pursuant to the articles of association of the Company, the transactions under the Guarantee are subject to approval at the general meeting of the Company.

Information on the Parties

The Company

The Company is a construction service provider, and is mainly engaged in specialized industrial construction, specialized auxiliary construction, other construction and non-construction business. The Company is ultimately controlled by the State-owned Assets Supervision and Administration Commission of the People's Government of Shanxi Province.

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LETTER FROM THE BOARD

CEXIM

CEXIM is a state-funded and state-owned policy bank under the direct leadership of the State Council of China. It is dedicated to supporting China's foreign trade, investment and international economic cooperation and provides a wide variety of banking services, including, among others, providing short-term, mid-term and long-term loans in support of approved foreign trade and the "going global" endeavors, including export credit, import credit, loans for offshore project contracts and overseas investment, Chinese government concessional loans and preferential export buyer's credit.

Shanxi CIII

Shanxi CIII is a company established in the PRC with limited liability. Under the guidance of Shanxi CIG's "One Core, Two Wings" "Grand Overseas" strategy, it adheres to the "Belt and Road" initiative of the PRC, promotes interconnectivity of industrial chains and capacity cooperation, and steadfastly advances the "Going Global" pace. It primarily focuses on investment in new energy projects, infrastructure investment, construction and operation, international capacity cooperation, mineral resource development, real estate development, industrial park development, sewage treatment, and international trade.

Envision Enterprise

Envision Enterprise is a company established in Hong Kong with limited liability, and is mainly engaged in, among other things, the design and manufacturing of smart wind turbines, software business for smart wind farms, smart remote diagnosis and technical services, integrated project management service, assets management service and energy investment service. As at the date of this circular, it is held as to 60% by Wuling HongKong International Energy Investment Limited and 40% by Shanxi CIII.

The financial information of Envision Enterprise for the most recent two financial years is as follows:

	As of December 31, 2022	As of December 31, 2023
Unit: RMB	(Unaudited)	(Unaudited)
Total assets	672,615,420	894,386,036
	2022	2023
	(Unaudited)	(Unaudited)
Revenue	0	0
Net profit	6,764,763	211,127

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LETTER FROM THE BOARD

3. EXTRAORDINARY GENERAL MEETING

The Extraordinary General Meeting will be held at 3:00 p.m. on Friday, December 27, 2024 at the Conference Room, East Side, 2/F, Shanxi Installation Office Building, No. 8 Xinhua Road, Shanxi Transformation and Comprehensive Reform Demonstration Zone, Shanxi Province, PRC. A notice convening the Extraordinary General Meeting is set out on pages 10 to 11 of this circular. The notice convening the Extraordinary General Meeting and the proxy form for the Extraordinary General Meeting are published on the website of HKEx (www.hkexnews.hk) and the website of the Company (www.sxaz.com.cn).

As Shanxi CIG (directly and indirectly controlling 1,000,000,000 Shares, representing approximately 72.81% of the issued share capital of the Company as at the date of this circular) has a material interest in the ordinary resolution to be proposed at the Extraordinary General Meeting, Shanxi CIG and its associates are required to abstain from voting at the Extraordinary General Meeting. Save as disclosed, no Shareholder is required to abstain from voting on the ordinary resolution to be proposed at the Extraordinary General Meeting.

For Shareholders, the proxy form and, if the proxy form is signed by a person under a power of attorney or other authority on behalf of the appointor, a notarized copy of that power of attorney or other authority, must be delivered to the Company's H Share registrar, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong, not less than 24 hours before the time for holding the Extraordinary General Meeting or any adjournment thereof in order for such documents to be valid. Please note that Wednesday, December 25, 2024 and Thursday, December 26, 2024 are not working days in Hong Kong, and the office of Computershare Hong Kong Investor Services Limited will not be open on these days for the physical delivery of proxy forms.

4. CLOSURE OF REGISTER OF MEMBERS OF H SHARES

The register of members of the H Shares will be closed from December 23, 2024 to December 27, 2024 (both days inclusive), during which period no transfer of H Shares will be effected. For unregistered Shareholders who intend to attend the Extraordinary General Meeting, all share certificates and the relevant transfer documents must be lodged with the H Share registrar of the Company in Hong Kong, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong, not later than 4:30 p.m. on December 20, 2024.

5. VOTING BY POLL

Pursuant to Rule 13.39(4) of the Listing Rules, all votes of the Shareholders at the Extraordinary General Meeting must be taken by poll except where the chairman, in good faith, decides to allow a resolution which relates purely to a procedural or administrative matter to be voted on by a show of hands. As such, the resolution proposed at the Extraordinary General Meeting will be voted by poll.

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LETTER FROM THE BOARD

6. RECOMMENDATION

The Directors consider that the ordinary resolution in relation to the Guarantee proposed at the Extraordinary General Meeting is in the interests of the Company and its Shareholders as a whole. As such, the Directors recommend the Shareholders to vote in favour of the ordinary resolution to be proposed at the Extraordinary General Meeting.

7. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

By order of the Board

Shanxi Installation Group Co., Ltd.

山西省安装集團股份有限公司

Mr. Wang Limin

Chairman and Executive Director

• For identification purpose only

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NOTICE OF THE 2024 FIRST EXTRAORDINARY GENERAL MEETING

山西安装

Shanxi Installation Group Co., Ltd.

山西省安装集團股份有限公司

(A joint stock company incorporated in the People's Republic of China with limited liability)

(Stock Code: 2520)

NOTICE OF THE

2024 FIRST EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that the 2024 first extraordinary general meeting of Shanxi Installation Group Co., Ltd. (the "Company") will be held at 3:00 p.m. on Friday, December 27, 2024 at the Conference Room, East Side, 2/F, Shanxi Installation Office Building, No. 8 Xinhua Road, Shanxi Transformation and Comprehensive Reform Demonstration Zone, Shanxi Province, PRC for the purpose of considering, and if thought fit, passing the following resolution. Unless otherwise indicated, capitalized terms used herein shall have the same meanings as defined in the circular of the Company dated December 9, 2024.

ORDINARY RESOLUTION

1. To consider and approve the Resolution on the Provision of Guarantee to Envision Enterprise Investment Limited by Shanxi Installation Group.

By order of the Board
Shanxi Installation Group Co., Ltd.
山西省安装集團股份有限公司
Mr. Wang Limin
Chairman and Executive Director

Shanxi, the PRC,
December 9, 2024

Notes:

1. The register of members of the H Shares will be closed from December 23, 2024 to December 27, 2024 (both days inclusive), during which period no transfer of H Shares will be effected. For unregistered Shareholders who intend to attend the Extraordinary General Meeting, all share certificates and the relevant transfer documents must be lodged with the H Share registrar of the Company in Hong Kong, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong, not later than 4:30 p.m. on December 20, 2024.
2. Shareholders who are entitled to attend and vote at the Extraordinary General Meeting may appoint one or more proxies to attend and vote on their behalves. A proxy need not be a Shareholder.

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NOTICE OF THE 2024 FIRST EXTRAORDINARY GENERAL MEETING

1. The instrument appointing a proxy must be in writing under the hand of a Shareholder or his attorney duly authorised in writing. If the Shareholder is a legal person, that instrument must be executed either under its seal or under the hand of its director or other attorney duly authorised to sign the same on its behalf.

2. In order to be valid, the proxy form must be deposited to the H Share registrar of the Company, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong not less than 24 hours before the time for holding the Extraordinary General Meeting. If the proxy form is signed by a person under a power of attorney or other authority, a notarized copy of that power of attorney or other authority shall be deposited at the same time as mentioned in the proxy form. Please note that Wednesday, December 25, 2024 and Thursday, December 26, 2024 are not working days in Hong Kong, and the office of Computershare Hong Kong Investor Services Limited will not be open on these days for the physical delivery of proxy forms. Completion and return of the proxy form will not preclude the Shareholders from attending and voting in person at the Extraordinary General Meeting or any adjourned meetings should they so wish.

3. Shareholders shall produce their identification documents and supporting documents in respect of the shares of the Company held when attending the Extraordinary General Meeting. If corporate Shareholders appoint authorised representative to attend the Extraordinary General Meeting, the authorised representative shall produce his/her identification documents and a notarized copy of the relevant authorisation instrument signed by the board of directors or other authorised parties of the corporate shareholders or other notarized documents allowed by the Company. Proxies shall produce their identification documents and the proxy form signed by the Shareholders or their attorney when attending the Extraordinary General Meeting.

4. The Extraordinary General Meeting is expected to take for less than half a day. Shareholders attending the Extraordinary General Meeting shall be responsible for their own travel and accommodation expenses.

5. All voting at the Extraordinary General Meeting will be conducted by poll.

6. References to times and dates of this notice are to Hong Kong times and dates.

This circular (in both English and Chinese versions) is available on the Company’s website at www.sxaz.com.cn.

Shareholders may request for printed copy of the circular free of charge or change their choice of means of receipt and language of the Company’s corporate communications by sending reasonable notice in writing to the Company’s H Share registrar, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong or by sending an email to sxaz.ecom@computershare.com.hk.

Shareholders who have chosen to receive the Company’s corporate communications in either English or Chinese version will receive both English and Chinese versions of this circular since both languages are bound together into one booklet.