Snack Empire Holdings Limited — Proxy Solicitation & Information Statement 2005

May 26, 2005

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

This circular is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities of Shanghai Zendai Property Limited.

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

If you have sold or transferred all your shares in Shanghai Zendai Property Limited, you should at once hand this circular, together with enclosed form of proxy, to the purchaser or the transferee or to the bank manager, licensed securities dealer 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.

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SHANGHAI ZENDAI PROPERTY LIMITED

*

(Incorporated in the Bermuda with limited liability)

(Stock Code: 755)

DISCLOSEABLE AND CONNECTED TRANSACTION

Independent financial adviser to the Independent Board Committee and Independent Shareholders

A letter from the Independent Board Committee is set out on page 13 of this circular. A letter from Altus Capital Limited, the Independent Financial Adviser, containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 14 to 19 of this circular.

A notice convening the SGM to be held at 3:00 p.m. on Wednesday, 15 June 2005 at Unit 6108, The Center, 99 Queen’s Road Central, Hong Kong is set out on pages 32 to 33 of this circular.

A form of proxy for use at the SGM is enclosed with this circular. Whether or not you are able to attend such meeting, please complete and return the enclosed form of proxy in accordance with the instructions printed hereon to the registered office of the Company’s branch share registrar in Hong Kong, Secretaries Limited, at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gluocester Road, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the SGM. Completion and return of the form of proxy will not preclude you from attending and voting at the meeting or any adjournment thereof should you so wish.

* for identification purpose only

26 May 2005

CONTENTS

		Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
**Letter from the **	Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
**Letter from the **	Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Letter from Altus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		14
Appendix I –	Valuation Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	20
Appendix II –	General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	26
Notice of SGM	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	32

−i −

DEFINITIONS

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

• “Acquisition”

the proposed acquisition of the entire issued share capital of Myway by the Company for a consideration of HK$100,000,000 which shall be satisified as to HK$50,000,000 by cash and HK$50,000,000 by the allotment and issue of 288,350,634 Consideration Shares at HK$0.1734 each to the Vendor pursuant to the Sale and Purchase Agreement

“Altus” or “Independent Altus Capital Limited, the independent financial adviser Financial Adviser” to the Independent Board Committee in relation to the Acquisition and a corporation licensed to conduct type 1 (dealing in securities), type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (advising on assets management) regulated activities under the SFO

• “Announcement” the announcement of the Company dated 4 May 2005 “associate(s)” have the meaning ascribed to it in the Listing Rules “Board” the board of Directors “Business Day” a day (other than a Saturday and Sunday) on which banks are open for business in Hong Kong

• “Company” Shanghai Zendai Property Limited, a company incorporated in Bermuda with limited liability, the shares of which are listed on the Stock Exchange

“Completion” the completion of the Acquisition, which shall take place on the fifth Business Days following the fulfillment of all the conditions (or such other date as the parties to the Sale and Purchase Agreement may otherwise agree) “Consideration Shares” the 288,350,634 new Shares to be allotted and issued to the Vendor at HK$0.1734 each as part of the consideration for the proposed Acquisition pursuant to the Sale and Purchase Agreement “Director(s)” the director(s) of the Company

−1 −

DEFINITIONS

“Giant Glory” Giant Glory Assets Limited, a limited company incorporated in the British Virgin Islands and is the controlling Shareholder holding approximately 54.62% of the entire issued share capital of the Company as at the Latest Practicable Date

• “Group” the Company and its subsidiaries

• “Haimen Zendai” (Haimen Zendai Riverside

• Real Estate Limited), is a sino-foreign equity joint venture established in the PRC and the registered capital of which is owned as to 90.91% by Myway and the remaining 9.09% is owned by an associate of Mr. Dai

• “Hong Kong” the Hong Kong Special Administrative Region of the PRC

• “Independent Board Committee” the independent board committee of the Company comprising Messrs. Lo Mun Lam, Raymond, Lai Chik Fan and Ma Chi Kui, Sandroff, both being independent non-executive Directors

• “Independent Shareholders” Shareholders other than Mr. Dai, Giant Glory and their respective associates

• “Independent Third Party(ies)” person(s) or company(ies) together with its/their ultimate beneficial owner who or which is/are, to the best of the Director’s knowledge, information and belief having made all reasonable enquiry, third party(ies) independent of the Group and its connected person (as defined in the Listing Rules)

• “Latest Practicable Date” 23 May 2005, being the latest practicable date for the purpose of ascertaining certain information for inclusion in this circular

• “Listing Committee” Listing Committee of the Stock Exchange

• “Listing Rules” Rules Governing the Listing of Securities on the Stock Exchange

• “Mr. Dai” Mr. Dai Zhikang, an executive Director and the chairman of the Company and is interested in the entire issued share capital of Giant Glory

−2 −

DEFINITIONS

“Myway” “PRC” “Sale and Purchase Agreement” “Sallmanns” “SFO” “SGM” “Share(s)” “Shareholder(s)” “Stock Exchange” “Vendor” “HK$” “RMB” “%” “sq.m.”

Myway Developments Limited, a company incorporated in the British Virgin Islands with limited liability which is beneficially and wholly owned by the Vendor the People’s Republic of China which, for the purpose of this circular, excludes Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan the sale and purchase agreement dated 29 April 2005 entered into between the Company and the Vendor in respect of the Acquisition Sallmanns (Far East) Limited, an independent property valuer not connected with any of the directors, chief executive or substantial shareholders of the Company, its subsidiaries or any of their respective associates the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) the special general meeting of the Company to be convened for the purpose of approving the Sale and Purchase Agreement and the transactions contemplated thereunder share(s) of HK$0.02 each in the capital of the Company holder(s) of the Shares The Stock Exchange of Hong Kong Limited (Zendai Investment Developments Limited), a company incorporated in Hong Kong with limited liability, which is wholly-owned by Mr. Dai, an executive Director, as at the Latest Practicable Date Hong Kong dollars, the lawful currency of Hong Kong Renminbi per cent. square metre

For the purpose of this circular, unless otherwise specifics, conversion of Renminbi into Hong Kong dollars and US dollars into Hong Kong dollars are based on the approximately exchange rates of RMB1.06 = HK$1.00 and US$1 = HK$7.8 respectively.

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LETTER FROM THE BOARD

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SHANGHAI ZENDAI PROPERTY LIMITED

*

(Incorporated in the Bermuda with limited liability)

(Stock Code: 755)

Executive Directors:

Mr. Dai Zhikang (Chairman) Mr. Tang Jian Mr. Zhao Hangsheng Mr. Zhang Wei Mr. Zhu Nansong

Independent non-executive Directors:

Mr. Lo Mun Lam, Raymond Mr. Lai Chik Fan Mr. Ma Chi Kui, Sandroff

Registered office: Canon’s Court 22 Victoria Street Hamilton HM12 Bermuda

Head office and principal place of business: Unit 6108, The Center 99 Queen’s Road Central Hong Kong

26 May 2005

To the Shareholders and, for information only, holders of the convertible notes of the Company

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION

INTRODUCTION

The Board announced that, on 29 April 2005, the Company entered into the Sale and Purchase Agreement with the Vendor, pursuant to which the Company has conditionally agreed to acquire and the Vendor has conditionally agreed to sell the entire issued share capital of Myway for an aggregate consideration of HK$100,000,000, which shall be satisfied as to (i) HK$50,000,000 by cash; and (ii) HK$50,000,000 by the allotment and issue of 288,350,634 Consideration Shares at HK$0.1734 each to the Vendor. The 288,350,634 Consideration Shares represent approximately 6.24% of the issued share capital of the Company as at the Latest Practicable Date and approximately 5.87% of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares.

* for identification purpose only

−4 −

LETTER FROM THE BOARD

Myway is an investment holding company. As at the Latest Practicable Date, Myway owns approximately 90.91% interests in the registered capital of Haimen Zendai and the remaining 9.09% interest is owned by an associate of Mr. Dai. Save as its interest in Haimen Zendai, Myway does not own any other investment. Haimen Zendai is a sino-foreign equity joint venture established in the PRC principally engaged in property development and property management services in the PRC. As at the Latest Practicable Date, it owns two parcels of land in Haimen, Jiangsu Province, the PRC, for the development of a residential and commercial property project named “ ” (“Zendai Garden-Riverside Town”).

Pursuant to the Listing Rules, the Acquisition constitutes a discloseable transaction of the Company. As at the Latest Practicable Date, the Vendor is beneficially and wholly-owned by Mr. Dai, being an executive Director and the chairman of the Company and interested in the entire issued share capital of Giant Glory, which is the controlling Shareholder holding approximately 54.62% interest in the entire issued share capital of the Company as at the Latest Practicable Date. Accordingly, the Acquisition also constitutes a connected transaction of the Company under the Listing Rules and is subject to the approval of the Independent Shareholders at the SGM by way of poll. Mr. Dai and his associates holding approximately 54.62% interest in the entire issued share capital of the Company will abstain from voting in respect of the ordinary resolution to be proposed at the SGM to approve the Acquisition and the allotment and issue of the Consideration Shares.

The Independent Board Committee has been established to advise the Independent Shareholders in relation the Acquisition. Altus has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in this respect.

The purpose of this circular is (i) to provide you with further information regarding, among other things, details of the Acquisition; (ii) to set out the advice of Altus to the Independent Board Committee in respect of, and the recommendation of the Independent Board Committee to the Independent Shareholders in respect of the terms of the Acquisition; and (iii) to give you the notice of the SGM, which shall be convened for the purpose of considering and, if thought fit, approving the resolutions in relation to the Acquisition.

1. THE SALE AND PURCHASE AGREEMENT DATED 29 APRIL 2005

Particulars of the Sale and Purchase Agreement

The Company entered into the Sale and Purchase Agreement with the Vendor, pursuant to which the Company has conditionally agreed to acquire and the Vendor has conditionally agreed to sell the entire issued share capital of Myway for an aggregate consideration of HK$100,000,000.

−5 −

LETTER FROM THE BOARD

Parties to the Sale and Purchase Agreement

Vendor : The Vendor; and Purchaser : The Company

Consideration

The aggregate consideration of HK$100,000,000 will be satisfied as to:

• (i) HK$50,000,000 by cash; and

• (ii) HK$50,000,000 by the allotment and issue of 288,350,634 Consideration Shares at HK$0.1734 each to the Vendor.

An initial deposit of HK$20,000,000 has been paid by the Company to the Vendor upon the signing of the Sale and Purchase Agreement. In the event that Completion does not take place in accordance with the terms of the Sale and Purchase Agreement, the Vendor will return, without interest, such initial deposit to the Company. The remaining HK$30,000,000 by cash will be paid to the Vendor upon Completion.

As at the Latest Practicable Date, the authorised share capital of the Company is HK$200,000,000 divided into 10,000,000,000 of HK$0.02 each. The 288,350,634 Consideration Shares represent approximately 6.24% of the issued share capital of the Company as at the Latest Practicable Date and approximately 5.87% of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares. The issue price of Consideration Shares of HK$0.1734 each (i) represents a premium of approximately 7.04% over the closing price of HK$0.162 per share on the Stock Exchange as at the Latest Practicable Date; (ii) is equivalent to the average closing share price per Share as quoted on the Stock Exchange for the consecutive five trading days up to and including 28 April 2005, being the last trading day immediately prior to the publication of the Announcement; (iii) represents a premium of approximately 2.0% over the closing price of HK$0.1700 per Share as quoted on the Stock Exchange on 28 April 2005; and (iv) represents a premium of approximately 144.2% over the audited net asset value per Share as at 31 December 2004 of approximately HK$0.071.

The Consideration Shares, when issued and fully paid, will rank equally with the Shares in issue as at the date of issue of the Consideration Shares. An application will be made to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Consideration Shares to be issued pursuant to the Sale and Purchase Agreement.

The total consideration payable by the Company to the Vendor of approximately HK$100,000,000 has been determined after arms’ length negotiations and on normal commercial terms between the parties to the Sale and Purchase Agreement and with

−6 −

LETTER FROM THE BOARD

reference to the adjusted net asset value of Haimen Zendai of approximately HK$110,859,696 (“Adjusted NAV”), based on the audited net asset value of Haimen Zendai as at 31 December 2004 of approximately RMB105,597,270 (equivalent to approximately HK$99,620,066) as audited by a PRC auditor and the contribution to the registered capital of Haimen Zendai of HK$11,239,630 by Myway subsequent to 31 December 2004. The 90.91% attributable interest of the Adjusted NAV amounted to approximately HK$100,782,550. The consideration of HK$100,000,000 represents a discount of approximately 0.78% to the 90.91% attributable interest of the Adjusted NAV.

As at 28 April 2005, the open market value of the two parcels of land held by Haimen Zendai amounted to approximately RMB210,000,000 (equivalent to approximately HK$198,113,208) as valued by Sallmanns, details of which are set out in the valuation report in Appendix I to this circular.

The original costs paid by Haimen Zendai in the acquisition of the aforesaid parcel of land was approximately RMB121,271,850 (equivalent to approximately HK$114,407,406). Myway is wholly-owned by the Vendor. The Directors considered that the total cost to the Vendor in Myway includes the contribution to the registered capital of Haimen Zendai of US$2,200,000 (equivalent to approximately HK$17,160,000) by Myway and the undistributable profits of Haimen Zendai as at 31 December 2004 that should be entitled to Myway in accordance with its shareholding in Haimen Zendai. According to the PRC audited accounts, Haimen Zendai has an undistributable profits of approximately RMB97,504,878 as at 31 December 2004. As at the Latest Practicable Date, the undistributable profits of Haimen Zendai as at 31 December 2004 have not been distributed to its shareholders and there is no current intention to distribute such undistributable profits.

The Directors consider that the terms and conditions are fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

Conditions

Completion of the Sale and Purchase Agreement is conditional upon:

1. the approval of the Sale and Purchase Agreement and the transactions contemplated thereunder (including the allotment and issue of the Consideration Shares) by the Independent Shareholders at the SGM;

2. the Listing Committee of granting the listing of and permission to deal in the Consideration Shares;

3. the Bermuda Monetary Authority having granted its consent to the allotment and issue of the Consideration Shares;

4. all necessary approvals and consents in relation to the Acquisition having been obtained; and

−7 −

LETTER FROM THE BOARD

1. the Company having obtained a PRC legal opinion in relation to, among other matters, the legality and validity of the establishment and operations of Haimen Zendai.

Save as condition 5 above, none of the conditions above can be waived by the Company. In the event that the conditions above have not been fulfilled or waived (as the case may be) on or before 31 July 2005 (the “Long Stop Date”), the Sale and Purchase Agreement shall cease and determine and none of the parties thereto shall have any obligations and liabilities thereunder save for any antecedent breach.

Completion

Completion shall take place on the fifth Business Day after the conditions set out above have been fulfilled or waived (as the case may be) and is expected to take place on or before the Long Stop Date.

2. EFFECT ON THE SHAREHOLDING OF THE COMPANY IMMEDIATELY BEFORE AND AFTER THE ACQUISITION

The following table sets out the shareholding structure of the Company immediately before and after the Acquisition:

Giant Glory (Note 1) Honour Great Holdings Limited (Note 2) Other public Shareholders	Shareholding structure as at the Latest Practicable Date Number of Shares held % of issued Shares held (approximately) 2,525,075,000 54.62 496,900,000 10.75 1,600,912,558 34.63 4,622,887,558 100.00	Shareholding structure immediately upon Completion Number of Shares held % of issued Shares held (approximately) 2,813,425,634 57.29 496,900,000 10.11 1,600,912,558 32.60 4,911,238,192 100.00	Shareholding structure immediately upon Completion Number of Shares held % of issued Shares held (approximately) 2,813,425,634 57.29 496,900,000 10.11 1,600,912,558 32.60 4,911,238,192 100.00
			100.00

Notes:

1. Giant Glory Assets Limited, a limited liability company incorporated in the British Virgin Islands, is wholly and beneficially owned by Mr. Dai, the chairman of the Company and an executive Director.

2. So far as is known to the Directors, Honour Great Holdings Limited, a limited liability company incorporated in the British Virgin Islands, is wholly and beneficially owned by Ms. Liu Lijuan, who is an Independent Third Party.

Upon completion of the Acquisition, Giant Glory will be interested in approximately 57.29% of the issued share capital of the Company as enlarged by the Consideration Shares and remains as the controlling shareholder of the Company.

−8 −

LETTER FROM THE BOARD

3. INFORMATION ON MYWAY AND HAIMEN ZENDAI

The principal business of Myway is investment holding. As at the Latest Practicable Date, Myway owns approximately 90.91% interest in the registered capital of Haimen Zendai and the remaining interest of approximately 9.09% is owned by an associate of Mr. Dai. Save as its interest in Haimen Zendai, Myway does not own any other investment.

Haimen Zendai is a sino-foreign equity joint venture established in the PRC in December 2003. Haimen Zendai is principally engaged in property development and property management services in the PRC. As at the Latest Practicable Date, it holds two parcels of land in Haimen, Jiangsu Province, the PRC for the development of a residential and commercial property project named “ ” (“Zendai Garden-Riverside Town”).

Zendai Garden-Riverside Town is located in Haimen Economic Development Area, Haimen, Jiangsu Province, the PRC, which is near to the city centre of Haimen and in close proximity to Shanghai. Leveraging on the geographical advantage of close proximity to Shanghai, one of the fastest growing financial centres in Asia, Haimen has experienced fast economic growth over the past few years and the Directors believe that such fast economic growth will continue in the future. In addition, Chong Hai Bridge ( ) (which connects Chongming Island ( ) and Haimen) and Chongming Cross River Tunnel ( ) (which connects Chongming Island and Shanghai) are currently under construction and the completion of the same is expected to greatly improve the traffic between Haimen and Shanghai. Upon the opening of Chong Hai Bridge and Chongming Cross River Tunnel which is expected to be in around year 2009, it is expected that the traveling time between Haimen and Shanghai will be shortened to approximately an hour only. In light of the foregoing, Haimen is considered to be within the “One-hour Economic Zone” ( ) in the greater Shanghai region. The Directors consider that Zendai Garden-Riverside Town is situated in a location which is expected to benefit from the improvement in the aforesaid traffic infrastructure between Haimen and Shanghai.

Zendai Garden-Riverside Town is a large-scale residential and commercial property development project. It occupies a total site area of approximately 577,485 sq.m. which has been divided into two parcels of land for development. The first parcel of land occupies a total site area of approximately 253,313 sq.m. and the project is named as “ ” (Zendai-Dong Zhou Mansion). Zendai-Dong Zhou Mansion is all detached houses and the whole development of Zendai-Dong Zhou Mansion is divided into three phases. The first phase comprises 53 blocks of detached houses with a total saleable floor area of approximately 17,131 sq.m.. Pre-sale permit and pre-sale of these 53 blocks of detached houses have been obtained and commenced on 11 April 2005 and 18 April 2005 respectively. As at 28 April 2005, 15 blocks of detached houses of approximately 4,763.7 sq.m. have been sold which accounted for approximately 27.81% of the total saleable area of approximately 17,131 sq.m. for the first phase of Zendai-Dong Zhou Mansion and the total consideration received was approximately RMB20,505,911 (equivalent to approximately HK$19,345,199). The construction of the first phase of Zendai-Dong Zhou Mansion is currently expected to be completed in or around June 2006. The second phase comprises 78 blocks of detached houses with a total saleable floor area

−9 −

LETTER FROM THE BOARD

of approximately 23,663 sq.m.. The construction of the second phase of Zendai-Dong Zhou Mansion is expected to commence in July 2005 and it is expected that the completion of which would be in or around August 2006. The final phase of Zendai-Dong Zhou Mansion is currently under planning and the construction work of which has not yet commenced as at the Latest Practicable Date. As confirmed by the Company, the total construction cost incurred was RMB30.97 million, of which some RMB8 million has been paid as at 28 April 2005, the date of the valuation report in Appendix I to this circular.

The second parcel of land occupies a total site area of approximately 324,172 sq.m. and is planned to be developed into a combination of multi-storey apartments, high-rise apartments and town houses. It is currently expected that the construction work for the second parcel of land will commence in the third quarter of this year.

No PRC audited account has been prepared for the year ended 31 December 2003 as Haimen Zendai was incorporated in December 2003. According to the PRC audited accounts of Haimen Zendai for the year ended 31 December 2004, the audited net profit both before and after taxation and extraordinary items of Haimen Zendai was approximately RMB97,504,878 (equivalent to approximately HK$91,985,734) as there was no provision for taxation. The aforesaid audited net profit for the year ended 31 December 2004 has included a non-operating subsidy income received from the government of Haimen of approximately RMB99,616,100. The audited net asset value of Haimen Zendai as at 31 December 2004 was approximately RMB105,597,270 (equivalent to approximately HK$99,620,066).

As at 28 April 2005, total consideration received from the sales of Zendai-Dong Zhou Mansion was approximately RMB 20,505,911 (equivalent to approximately HK$19,345,199) and based on the above, the Directors considered that such sales will contribute future earning to the Group. On the other hand, upon Completion, the net assets value of the Group will be increased by the Adjusted NAV of HK$110,859,696, net-off by the payment of HK$50,000,000 by cash.

4. REASONS FOR THE PROPOSED ACQUISITION

The Group is principally engaged in property investment and development in the PRC. Over the past few years, the Group has successfully completed several property development projects in Shanghai including Shui Qing Mu Hua and Zendai Jia Yuan and it has established itself as a reputable property developer in Shanghai. Taking into account of the Group’s successful experience in property development in Shanghai, the Board is optimistic about the prospect of the property market in Shanghai and its close surrounding areas. Haimen, Jiangsu Province, the PRC, is located in close proximity to Shanghai, one of the fastest growing financial centres in Asia, and is considered to be within in “One-hour Economic Zone” ( ) in the greater Shanghai region. Leveraging on such geographical advantage, Haimen has experienced fast economic growth over the past few years and the Directors believe that such fast economic growth will continue in the future. In anticipation of the promising economic growth in Haimen, Jiangsu Province, the PRC, the Directors are confident with the prospect of the property market in Haimen, the PRC. The Directors consider that the

−10 −

LETTER FROM THE BOARD

Acquisition provides the Group an invaluable opportunity to capitalize on the promising property market in Haimen, Jiangsu Province, the PRC as well as to replenish its land reserve to cater for future development. In doing so, the Directors expect that the Group’s future revenue and earning bases could be improved and it will be in the interest of the Group and the Shareholders as a whole.

5. APPLICATION FOR LISTING

Application will be made by the Company to the Stock Exchange for the grant of the listing of, and permission to deal in, the Consideration Shares.

GENERAL

Pursuant to the Listing Rules, the Acquisition constitutes a discloseable transaction of the Company. As at the Latest Practicable Date, the Vendor is beneficially and wholly-owned by Mr. Dai, being an executive Director and the chairman of the Company and interested in the entire issued share capital of Giant Glory, which is the controlling Shareholder holding approximately 54.62% interest in the entire issued share capital of the Company as at the Latest Practicable Date. Accordingly, the Acquisition also constitutes a connected transaction of the Company under the Listing Rules and is subject to the approval of the Independent Shareholders at the SGM by way of poll. Mr. Dai and his associates holding approximately 54.62% interest in the entire issued share capital of the Company will abstain from voting in respect of the ordinary resolution to be proposed at the SGM to approve the Acquisition and the allotment and issue of the Consideration Shares.

An Independent Board Committee has been appointed to advise the Independent Shareholders in respect of the Acquisition. Altus has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in this respect.

SGM

A notice convening the SGM (to be held at 3:00 p.m. on Wednesday, 15 June 2005 at Unit 6108, The Center, 99 Queen’s Road Central, Hong Kong) at which an ordinary resolution will be proposed to the Independent Shareholders to consider and, if thought fit, to approve the Acquisition, is set out on pages 32 to 33 of this circular.

Whether or not you are able to attend the SGM, please complete and return the enclosed form of proxy in accordance with the instructions printed thereon to the Company’s branch share registrar in Hong Kong, Secretaries Limited, at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong, as soon as possible and in any event not less than 48 hours before the time appointed for holding of the SGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM (or any adjourned meeting thereof) should you wish to do so.

The ordinary resolution as set out in the notice of the SGM will be put to the vote of the Independent Shareholders by poll.

−11 −

LETTER FROM THE BOARD

An announcement will be made by the Company following the conclusion of the SGM to inform you of its results.

RECOMMENDATION

The Independent Board Committee comprising Mr. Lo Mun Lam, Raymond, Mr. Lai Chik Fan and Mr. Ma Chi Kui, Sandroff, all being independent non-executive Directors, has been formed to advise the Independent Shareholders as to the fairness and reasonableness of the terms of the Acquisition set out in its letter on page 13 of this circular. Your attention is drawn to the letter of advice from Altus to the Independent Board Committee and the Independent Shareholders in respect of the Acquisition set out on pages 14 to 19 of this circular.

The Independent Board Committee having taken into account the advice of Altus and the principal factors and reasons considered by Altus, considers that the Acquisition is on normal commercial terms, the Acquisition is in the interest of the Company and the Shareholders as a whole and are fair and reasonable so far as the Independent Shareholders are concerned and recommend that the Independent Shareholders vote in favour of the Acquisition on at the SGM.

FURTHER INFORMATION

Your attention is drawn to the letter from the Independent Board Committee set out on page 13 of this circular which contains its recommendation to the Independent Shareholders and the letter from Altus set out on pages 14 to 19 of this circular which contains its recommendation to the Independent Board Committee and the Independent Shareholders and the principal factors and reasons taken into consideration.

On behalf of the Board

Shanghai Zendai Property Limited Dai Zhikang Chairman

−12 −

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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**SHANGHAI ZENDAI PROPERTY LIMITED ***

(Incorporated in the Bermuda with limited liability)

(Stock Code: 755)

DISCLOSEABLE AND CONNECTED TRANSACTION

26 May 2005

To the Independent Shareholders

Dear Sir or Madam,

We refer to the circular dated 26 May 2005 issued by the Company (the “Circular”), of which this letter forms part. Terms defined in the Circular shall have the same meanings when used herein unless the context otherwise requires.

The Independent Board Committee has been established by the Board for the purpose of advising the Independent Shareholders in connection with the Acquisition, details of which are set out in the letter from the Board in the Circular. The Independent Board Committee comprises three independent non-executive Directors. Altus has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders regarding the Acquisition. Details of the advice from Altus together with the principal factors and reasons taken into consideration in arriving at such advice, are set out on pages 14 to 19 of the Circular.

Having considered the Acquisition, the interests of the Independent Shareholders, the principal factors and reasons considered by Altus and the advice of Altus, we consider that the Acquisition is fair and reasonable so far as the Independent Shareholders are concerned and is in the interests of the Company and its Shareholders as a whole.

Accordingly, we recommend the Acquisition to the Independent Shareholders.

Yours faithfully,

Independent Board Committee

Mr. Lo Mun Lam, Raymond Mr. Lai Chik Fan Mr. Ma Chi Kui, Sandroff

Independent non-executive Directors

* for identification purpose only

−13 −

LETTER FROM ALTUS

The following is the text of the letter of advice from Altus to the Independent Board Committee and the Independent Shareholders in relation to the Acquisition for incorporation in this circular.

8/F Hong Kong Diamond Exchange Building 8 Duddell Street, Central Hong Kong

26 May 2005

The Independent Board Committee and the Independent Shareholders

Shanghai Zendai Property Limited

Unit 6108, The Center 99 Queen’s Road Central Hong Kong

Dear Sirs,

DISCLOSEABLE AND CONNECTED TRANSACTION

POSSIBLE ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL OF MYWAY

INTRODUCTION

We refer to the Sale and Purchase Agreement relating to the Acquisition by the Company of the entire equity interest of Myway, details of which are set out in the circular of the Company dated 26 May 2005 (the “Circular”), to the Shareholders of which this letter forms part. Capitalised terms used in this letter shall have the meanings ascribed to them in the Circular unless the context otherwise requires.

The Company announced on 4 May 2005 that it entered into the Sale and Purchase Agreement on the same day to acquire, subject to certain conditions, from the Vendor, the entire issued share capital of Myway. The Acquisition constitutes a discloseable transaction of the Company under Rule 14.06 of the Listing Rules. As the Vendor is beneficially and wholly-owned by Mr. Dai, who is a connected person of the Company, the Acquisition also constitutes a connected transaction of the Company under Rule 14A.13 of the Listing Rules.

The Independent Board Committee, the composition of which is set out in the letter from the board (the “Letter from the Board”) contained in the Circular, has been formed to advise the Independent Shareholders in relation to the Acquisition. Votes of the Independent Shareholders at the SGM shall be taken by poll and Mr. Dai and its associates (as defined in the Listing Rules) shall abstain from voting in the SGM with respect to the ordinary resolution to approve the Acquisition.

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LETTER FROM ALTUS

BASIS OF OUR OPINION

In formulating our opinion, we have relied to a considerable extent on the information, statements, opinion and representations contained or referred to in the Circular and the information and representations contained or referred to in the Circular and all information and representations which have been provided by the Directors, for which they are solely and wholly responsible, are true and accurate at the time when they were made and continue to be so at the date hereof. We have also assumed that all statements of belief, opinion and intention of the Directors as set out in the Letter from the Board were reasonably made after due and careful inquiry. We have also sought and obtained confirmation from the Company that no material facts have been omitted from the information provided and referred to in the Circular. We note that Sallmanns (Far East) Limited, an independent valuer (the “Independent Valuer”) and an Independent Third Party, has confirmed that the valuation report in relation to the two parcels of land (including improvement) held by Haimen Zendai (the “Land”) was prepared in compliance with the requirements contained in Practice Note 12 to the Listing Rules. Therefore, we consider that it is fair and reasonable for us to take into account the valuation of the Land as valued by the Independent Valuer when arriving at our recommendation.

The Directors confirmed that they have provided us with all currently available information and documents which are available under present circumstances to enable us to reach an informed view and we have relied on the accuracy of the information contained in the Circular so as to provide a reasonable basis of our opinion. We have no reason to suspect that any material facts or information (which is known to the Company) have been omitted or withheld from the information supplied or opinions expressed in the Circular nor to doubt the truth and accuracy of the information and facts, or the reasonableness of the opinions expressed by the Company and the Directors which have been provided to us. We have not, however, carried out any independent verification on the information provided to us by the Directors, nor have we conducted any form of independent in-depth investigation into the business and affairs or the prospects of the Group, Myway and Haimen Zendai, or any of their respective subsidiaries or associates.

THE ACQUISITION

In arriving at our opinion for the Acquisition, we have considered the following principal factors and reasons:

Background and reasons

The Group has principally been engaging in property investment and development in the PRC and has completed several property development projects in Shanghai, including Shui Qing Mu Hua and Zendai Jia Yuan.

As reported in the annual report of the Company for the financial year ended 31 December 2004, the Directors believe that the economic austerity measures implemented by the PRC government since March 2003 has resulted in optimization of the structure of

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LETTER FROM ALTUS

the property market and are beneficial to both the development of the general economy and the property market in the long run. This in turn ensures the healthy development of the property market and will likely result in more growth opportunities for the Group. In light of this, the Group intends to focus on developing mid to high-end properties in Shanghai while exploring business opportunities in other cities, including Changchun, Tianjin, Nantong, Haimen, Yangzhou and Chengdu. It plans to establish itself as a composite property development corporation with systematic management, high operational efficiency as well as renowned brand name.

The principal business of Myway is investment holding. As at the Latest Practicable Date, Myway owns 90.91% interest in the registered capital of Haimen Zendai with the remaining interest of approximately 9.09% being owned by an associate of Mr. Dai. Save as its interest in Haimen Zendai, Myway does not own any other investment. The Acquisition is effectively the purchase of 90.91% attributable interest in Haimen Zendai (the “HZ Equity Interest”).

Haimen Zendai is a sino-foreign equity joint venture established in the PRC in December 2003. Haimen Zendai is principally engaged in property development and property management services in the PRC. As at the Latest Practicable Date, it holds two parcels of land in Haimen, Jiangsu Province, for the development of a residential and commercial property project namely “ ” (“Zendai Garden-Riverside Town”). Details of Zendai Garden-Riverside Town are set out in the Letter from the Board.

The Directors, leveraging on the Group’s experience in property development in Shanghai, are optimistic about the prospect of the property market in Shanghai and its surrounding areas. Haimen, which will be within the “One-hour Economic Zone” in the greater Shanghai region upon completion of the Chong Hai Bridge and Chongming Cross River Tunnel in around 2009, has had fast economic growth over the past few years. The Directors, in anticipation of the economic growth in Haimen in future, consider that the Acquisition provides the Group an opportunity to participate in the property market in Haimen, replenish its land reserve to cater for future development and enhance the Group’s future revenue and earning base. The Acquisition is therefore beneficial to the Group and is in line with its business objective and plans. As advised by the Directors, it is the intention of the Company that the future development of Zendai GardenRiverside Town shall be financed by resources of Haimen Zendai such as borrowings and proceeds from pre-sale of properties where permissible by the relevant laws and regulations. Currently, Haimen Zendai does not have any substantial bank and other borrowings. As at 28 April 2005, 15 blocks of detached houses have been pre-sold since its launch in April 2005.

In summary: (i) the Sale and Purchase Agreement is entered into in the ordinary course of business of the Group in line with its business objective; (ii) the terms and conditions of the Acquisition have been determined after arm’s length negotiations and on normal commercial terms between the parties to the Sale and Purchase Agreement; (iii)

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LETTER FROM ALTUS

Zendai-Dong Zhou Mansion has proven marketability as evidenced by the pre-sale of 15 blocks of detached houses out of a total of 53 blocks pursuant to a pre-sale permit obtained on 11 April 2005 and with pre-sale commenced on 18 April 2005 respectively, representing approximately 27.8% of the total saleable area of approximately 17,131 sq.m. for the first phase of Zendai-Dong Zhou Mansion; (iv) the Acquisition offers an opportunity for the Group to participate in the property market in Haimen, to replenish its land reserve for future development of mid to high-end properties in the proximity of Shanghai, which is in line with its business objective; and (v) the Acquisition offers an opportunity for the Group to enhance its revenue and earnings base in the future.

The Consideration

Basis of Consideration

The consideration for the Acquisition of HK$100 million (the “Consideration”) was determined after arm’s length negotiations between the parties to the Sale and Purchase Agreement with reference to the adjusted net asset value of Haimen Zendai of approximately HK$110.9 million (the “Adjusted NAV”) based on: (i) the audited net asset value (“NAV”) of Haimen Zendai as at 31 December 2004 of approximately RMB105.6 million (equivalent to approximately HK$99.6 million) as audited by a PRC auditor; and (ii) the contribution to the registered capital of Haimen Zendai of approximately HK$11.2 million by Myway subsequent to 31 December 2004. The Consideration of HK$100 million therefore represents a discount of approximately 0.78% to the Adjusted NAV of the HZ Equity Interest of approximately HK$100.8 million.

Haimen Zendai acquired the two parcels of land at approximately RMB121.3 million (equivalent to approximately HK$114.4 million) of which the relevant land use rights were granted on 21 January 2005. Since then, it has incurred total construction costs of approximately RMB31.0 million (equivalent to approximately HK$29.2 million) up to 28 April 2005. Based on the valuation of the Land by the Independent Valuer, the Land was valued at RMB210 million (equivalent to approximately HK$198.1 million as at 28 April 2005. On this basis, we noted that the value of the Land is higher compared to its value as reflected in the financial statements of Haimen Zendai as at 31 December 2004.

The Consideration represents a discount of approximately 0.78% to the Adjusted NAV of the HZ Equity Interest as at 31 December 2004. Having taken into account the valuation report aforementioned that the Land is of higher value than that reflected in the financial statements of Haimen Zendai as at 31 December 2004, we are of the view that the bases for determining the Consideration are fair and reasonable.

Payment method

The Consideration of HK$100 million will be satisfied partly by cash of HK$50 million (the “Cash Consideration”) and partly by the issue of 288,350,634 Consideration Shares at HK$0.1734 each (the “Subscription Price”) to the Vendor.

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LETTER FROM ALTUS

The Cash Consideration

The Company intends to finance the Cash Consideration with the Group’s internal resources. Based on its audited balance sheet, the Company had bank balances and cash of approximately HK$271.5 million as at 31 December 2004. As the Cash Consideration represents approximately 18.4% of the bank balances and cash as at 31 December 2004, we are of the view that the Company has the necessary financial resources to finance the Cash Consideration and its financial position will not be adversely affected by the Acquisition.

The issue of Consideration Shares

The 288,350,634 Consideration Shares represent approximately 6.24% of the issued share capital of the Company as at the Latest Practicable Date and approximately 5.87% of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares.

The Subscription Price of HK$0.1734:

• (i) is equivalent to the average closing price per Share as quoted on the Stock Exchange for the five consecutive trading days up to and including 28 April 2005, being the last trading day immediately prior to publication of the Announcement;

• (ii) represents a premium of approximately 2.0% over the closing price of HK$0.170 per Share as quoted on the Stock Exchange on 28 April 2005;

• (iii) represents a premium of approximately 144.2% over the audited NAV per Share as at 31 December 2004 of approximately HK$0.071; and

• (iv) represents a premium of approximately 7.04% over the closing price of HK$0.162 per Share as quoted on the Stock Exchange as at the Latest Practicable Date.

Based on the above, the Subscription Price is equivalent or represents premiums to the various comparison Share prices and audited asset value listed above. We consider that the Subscription Price is fair and reasonable so far as the Company and the Independent Shareholders are concerned.

As at the Latest Practicable Date, the Company has a total of 4,622,887,558 Shares in issue. The issue and allotment of 288,350,634 Consideration Shares will result in a dilution of the shareholding of the public shareholders from approximately 34.63% immediately before the Acquisition to approximately 32.60% immediately after the Acquisition. We consider that the issue of the Consideration Shares as part of the payment method can reduce the impact of the Acquisition on the working capital position of the Group.

POSSIBLE FINANCIAL EFFECTS

The following analysis is based on the audited consolidated financial statements of the Company for the financial year ended 31 December 2004. Upon the Completion, the result of Myway will be consolidated into the financial results of the Company.

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LETTER FROM ALTUS

Earnings

Based on the PRC audited accounts, Haimen Zendai has audited net profit both before and after taxation and extraordinary items of approximately RMB97.5 million (equivalent to approximately HK$92.0 million) as at 31 December 2004. The aforesaid profit is attributable to a non-operating subsidy income received from the government of Haimen of approximately RMB99.6 million.

The Zendai-Dong Zhou Mansion has proven marketability, as evidenced by its pre-sale of 15 blocks of detached houses out of 53 blocks in April 2005, generating revenue of approximately RMB20.5 million (equivalent to approximately HK$19.3 million).

Taking into account its sales performance, we believe that the Acquisition can potentially make positive contributions to the revenue and earnings of the Group in future.

Net asset value

As at 31 December 2004, the Group had consolidated NAV of approximately HK$326.7 million. As the Consideration represents a discount of approximately 0.78% to the Adjusted NAV of the HZ Equity Interest and part of the Consideration of HK$50 million shall be satisfied by the allotment and issue of the 288,350,634 Consideration Shares at HK$0.1734 each to the Vendor which represents a premium of approximately 144.2% over the audited NAV per Share as at 31 December 2004 of approximately HK$0.071, the consolidated NAV of the Company shall be improved immediately after the Completion.

Working capital

The Company intends to finance the Acquisition by the internal resources of the Group. As previously discussed, the Company had bank balances and cash of approximately HK$271.5 million as at 31 December 2004. Given that the Cash Consideration of HK$50 million represents only about 18.4% of such cash and bank balances available, we are of the view that the Acquisition will not have any adverse impact on the working capital position and the normal operations of the Group following the Acquisition.

RECOMMENDATION

Having considered the above factors, we are of the view that the Acquisition and the terms and conditions of the Sale and Purchase Agreement are fair and reasonable as far as the Independent Shareholders are concerned and the entering into the Sale and Purchase Agreement is in the interests of the Company and the Shareholders as a whole. We would therefore advise the Independent Shareholders, as well as the Independent Board Committee to recommend to the Independent Shareholders, to vote in favour of the relevant resolution to be proposed at the SGM.

Yours faithfully, For and on behalf of

Arnold Ip Sean Pey, Chang Executive Director Executive Director

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VALUATION REPORT

APPENDIX I

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26 May 2005

The Board of Directors Shanghai Zendai Property Limited Unit 6108 The Center 99 Queen’s Road Central Hong Kong

Dear Sirs,

In accordance with your instructions to value the property in which ( ) (Haimen Zendai Riverside Real Estate Limited) (the “Company”) and its subsidiaries (hereinafter together referred to as the “Group”) has an interest in the People’s Republic of China (the “PRC”) to be acquired by Shanghai Zendai Property Limited, we confirm that we have carried out an inspection, made relevant enquiries and searches and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the capital value of the property interest as at 28 April 2005 (the “date of valuation”).

Our valuation of the property interest represents the 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”.

We have valued the property interest by the direct comparison approach assuming sale of the property interest in its existing state with the benefit of immediate vacant possession and by making reference to comparable sale transactions as available in the relevant market.

Our valuation has been made on the assumption that the seller sells the property interest on the open market without the benefit of a deferred term contract, leaseback, joint venture, management agreement or any similar arrangement, which could serve to affect the value of the property interest.

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APPENDIX I

VALUATION REPORT

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

In valuing the property interest, we have complied with all the requirements contained in Chapter 5 and Practice Note 12 to the Rules Governing the Listing of Securities issued by The Stock Exchange of Hong Kong Limited (except where a waiver under Practice Note 16 has been obtained by the Company); the RICS Appraisal and Valuation Standards (5th Edition) published by the Royal Institution of Surveyors and effective from May 2003; and the HKIS Valuation Standards on Properties (First Edition 2005) published by the Hong Kong Institute of Surveyors effective from 1 January 2005.

We have relied to a very considerable extent on the information given by the Group and have accepted advice given to us on such matters as tenure, planning approvals, statutory notices, easements, particulars of occupancy, lettings, and all other relevant matters.

We have been shown copies of various title documents including State-owned Land Use Rights Certificate and official plans relating to the property interest and have made relevant enquiries. Where possible, we have examined the original documents to verify the existing title to the property interest in the PRC and any material encumbrances that might be attached to the property interest or any lease amendments. We have relied considerably on the advice given by the Company’s PRC legal adviser, , concerning the validity of the Group’s title to the property interest.

We have not carried out detailed site measurements to verify the correctness of the site area in respect of the property but have assumed that the site areas shown on the documents and official site plan handed to us are correct. All documents and contracts have been used as reference only and all dimensions, measurements and areas are approximations. No on-site measurement has been taken.

We have inspected the exterior and, where possible, the interior of the property. However, no structural survey has been made, but in the course of our inspection, we did not note any serious defects. We are not, however, able to report whether the property is free of rot, infestation or any other structural defects. No tests were carried out on any of the services.

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

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VALUATION REPORT

APPENDIX I

Unless otherwise stated, all monetary figures stated in this report are in Renminbi (RMB).

Our valuation is summarized below and the valuation certificate is attached.

Yours faithfully, for and on behalf of Sallmanns (Far East) Limited Paul L. Brown

B.Sc. FRICS FHKIS

Director

Note: Paul L. Brown is a Chartered Surveyor who has 22 years’ experience in the valuation of properties in the PRC and 25 years of property valuation experience in Hong Kong, the United Kingdom and the Asia-Pacific region.

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VALUATION REPORT

APPENDIX I

SUMMARY OF VALUE

Group I – Property interest owned and held for development by the Group in the PRC

No. Property

1. Two parcels of land located at Tongda Road South Haimen Economic Development Area Haimen Jiangsu Province The PRC

Total:	Capital value in existing state as at 28 April 2005 RMB 210,000,000
	210,000,000

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VALUATION REPORT

APPENDIX I

VALUATION CERTIFICATE

Property interest owned and held for development by the Group in the PRC

				Capital value
				in existing state
			Particulars of	as at 28 April
	Property	Description and tenure	occupancy	2005
				RMB
1.	Two parcels of	The property comprises two parcels	As advised by the	210,000,000
	land	of land with a total site area of	Group, the property is
	located at	approximately 577,485 sq.m.	currently under
	Tongda Road		construction.
	South	The first parcel of land occupies a
	Haimen Econimic	site area of approximately 253,313	A Pre-sale Permit for
	Development Area	sq.m. and the project will be named	Phase I was obtained
	Haimen	“ (Zendai-Dong Zhou	on 11 April 2005 and
	Jiangsu Province	Mansion)”. The development is	pre-sale was
	The PRC	divided into three phases for	immediately
		construction.	commenced on 18
			April 2005.
		Phase I will comprise 53 detached
		houses with a total saleable floor area
		of approximately 17,131 sq.m. and the
		construction was commenced in
		March 2005.

Phase II will comprise 78 detached houses with a total planned saleable floor area of approximately 23,633 s.q.m. The construction of the second phase is expected to commence in July 2005 and it is expected that the completion of which would be in or around August 2006.

Phase III is currently under planning and the construction had not commenced as at the date of valuation.

The second parcel of land occupies a site area of approximately 324,172 sq.m. and is planned to be developed into a combination of multi-storey, high-rise apartments and townhouses. The construction work is scheduled to commence in the third quarter of 2005.

The land use rights were granted for a common term of 70 years expiring on 17 March 2074 for residential uses.

Notes:

1. Pursuant to a Stated-owned Land Use Rights Certificate issued by the People’s Government of Haimen City on 21 January 2005, the land use rights of a parcel of land with site area of approximately 253,313 sq.m. were granted to (Haimen Zendai Riverside Real Estate Limited).

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VALUATION REPORT

APPENDIX I

1. Pursuant to a Stated-owned Land Use Rights Certificate issued by the People’s Government of Haimen City on 21 January 2005, the land use rights of a parcel of land with site area of approximately 324,172 sq.m. were granted to (Haimen Zendai Riverside Real Estate Limited).

2. Pursuant to a Construction Land and Planning Permission Certificate No. 2005008 issued by the Construction Bureau of Haimen City on 1 February 2005, the development is approved.

3. Pursuant to a Construction Works and Planning Permission Certificate No. 2005018 issued by the Construction Bureau of Haimen City on 3 March 2005, the development with a gross floor area of 17,331 sq.m. is approved.

4. Pursuant to a Construction Works Commencement Permission Certificate No. 2005022-1 issued by the Construction Bureau of Haimen City on 3 March 2005, the construction works were permitted to commence.

5. Pursuant to a Pre-sale Permit Hai Fang Xiao Zi Di No. Yu 2005008 issued by the Construction Bureau of Haimen City on 11 April 2005, Phase 1 of the development with a total gross floor area of 17,131 sq.m. was permitted for disposal.

6. As advised by the Group, some 15 detached houses are currently held under the pre-sale contracts with a total consideration of approximately RMB20,505,911.

7. As confirmed by the Company, the total construction cost incurred was RMB30.97 million, of which some RMB8 million has been paid as at the date of valuation.

8. We have prepared our valuation on the following assumptions:

9. (i) Haimen Zendai Riverside Real Estate Limited is in possession of a proper legal title to the property and is entitled to transfer the property with the residual term of its land use rights without payment of an extra land premium or other onerous payment to the government;

10. (ii) All land premium and other costs of ancillary utility services have been settled in full;

11. (iii) The design and construction of the property are in compliance with the local planning regulations and have been approved by the relevant government authorities; and

12. (iv) The property may be disposed of freely to both local and overseas purchasers.

13. We have been provided with a legal opinion to the property interest by the Company’s PRC legal adviser, which, contains, inter alia, that Haimen Zendai Riverside Real Estate Limited legally owns the land use rights of the property.

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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 jointly and severally accept responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable inquiries and that to the best of their knowledge and belief, there are no other facts the omission of which would made any statement herein misleading.

2. DIRECTORS’ INTERESTS OR SHORT POSITIONS IN SHARES AND OPTIONS

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

			Approximate
Name of	Number	Capacity and	percentage of
Director	of Shares	nature of interests	issued share capital
Mr. Dai	2,525,075,000	Interests of controlled	54.62%
		corporation
		(Note 1)
	288,350,634	Interests of controlled	6.24%
		corporation
		(Note 2)

Notes:

1. All of these interests represent long positions. Mr. Dai Zhikang is the beneficial owner of the entire issued share capital of Giant Glory, and is therefore deemed to be interested in the 2,525,075,000 Shares held by Giant Glory pursuant to the SFO.

2. These Shares represent the Consideration Shares which might be allotted and issued to the Vendor, which is wholly and beneficially owned by Mr. Dai Zhikang.

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

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GENERAL INFORMATION

APPENDIX II

Save as the Sale and Purchase Agreement, none of the Directors was materially interested in any contract or arrangement entered into by any member of the Group subsisting as at the Latest Practicable Date which was significant in relation to the business of the Group.

Save as disclosed herein, as at the Latest Practicable Date, none of the Directors nor experts named under the section headed “Experts” in this Appendix was interested, directly or indirectly, in any assets which had since 31 December, 2004 (being the date to which the latest published audited financial statements of the Company were made up) been acquired or disposed of by or leased to any member of the Group, or were proposed to be acquired or disposed of by or leased to any member of the Group.

3. SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, so far as was known to the Directors or chief executive of the Company, the persons (other than a Director or chief executive of the Company) who had an interest or short position in the shares and underlying shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or who was, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other members of the Group or had any options in respect of such capital were:

				Approximate
				percentage
			Number	of issued
Name	Capacity		of Shares	share capital
Giant Glory	Beneficial	(Note 1 & 3)	2,525,075,000	54.62%
	interests
The Vendor	Beneficial	(Note 2 & 3)	288,350,634	6.24%
	interests
Honour Great	Beneficial	(Note 4)	496,900,000	10.75%
Holdings	interests
Limited
Ms. Liu Lijuan ( )	Interests of controlled	(Note 4)	496,900,000	10.75%
	corporation

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GENERAL INFORMATION

APPENDIX II

					Approximate
					percentage
				Number	of issued
Name		Capacity		of Shares	share capital
Genuine Assets		Beneficial	(Note 5)	300,000,000	6.49%
Limited		interests
Ms. Huang Jin		Interests of	(Note 5)	300,000,000	6.49%
(	)	controlled
		corporation
Value	Partners	Beneficial owner	(Note 6)	338,063,333	7.31%
Limited
Cheah	Cheng Hye	Interests of	(Note 6)	338,063,333	7.31%
		controlled
		corporation

Notes:

1. The entire issued share capital of Giant Glory is owned by Mr. Dai.

2. These Shares represent the Consideration Shares which might be allotted and issued to Zendai Investment Developments Limited, which is wholly and beneficially owned by Mr. Dai.

3. Mr. Dai is deemed to be interested in the 2,525,075,000 Shares and 288,350,634 Shares held by Giant Glory and Zendai Investment Developments Limited respectively.

4. Ms. Liu Lijuan is the beneficial owner of the entire issued share capital of Honour Great Holdings Limited and therefore is deemed to be interested in the 496,900,000 Shares held by Honour Great Holdings Limited pursuant to the SFO.

5. Ms. Huang Jin is the beneficial owner of the entire issued share capital of Genuine Assets Limited and therefore is deemed to be interested in the 300,000,000 Shares held by Genuine Assets Limited pursuant to the SFO.

6. Value Partners Limited is interested in the 4,730,000 Shares held by it and 333,333,333 Shares to be allotted and issued to it pursuant to the exercise of the conversion rights under the convertible notes in an aggregate principal amount of HK$80,000,000 at a initial conversion price of HK$0.24. Cheah Cheng Hye is the controlling shareholder of Value Partners Limited, who owns approximately 31.82%, and therefore is deemed to be interested in the 338,063,333 Shares held or to be held by Value Partners Limited.

All the interests stated above represent long positions. As at the Latest Practicable Date, no short positions were recorded in the register kept by the Company under section 336 of the SFO.

Save as disclosed herein, the Directors and the chief executive of the Company were not aware of any person (other than a Director or the chief executive of the Company or a member of the Group) who had an interest or short position in the shares and underlying shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part

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GENERAL INFORMATION

APPENDIX II

XV of the SFO, or who was, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other members of the Group or had any options in respect of such capital as at the Latest Practicable Date.

4. MATERIAL CHANGES

As at the Latest Practicable Date, the Directors were not aware of any material adverse changes in the financial or trading position of the Group since 31 December 2004, the date to which the latest published audited consolidated accounts of the Group had been made up.

5. OTHER INTERESTS OF THE DIRECTORS AND THE EXPERTS

As at the Latest Practicable Date:

• (i) none of the Directors had any direct or indirect interest in any assets which have, since 31 December 2004, being the date of the latest published audited accounts of the Group, been acquired or disposed of by, or leased to, or are proposed to be acquired or disposed of by, or leased to, any member of the Group save for the Acquisition;

• (ii) none of the Directors was materially interested in any contract or arrangement entered into by any member of the Group which contract or arrangement is subsisting as at the date of this circular and which is significant in relation to the business of the Group taken as a whole save for the Acquisition;

• (iii) Altus and Sallmanns did not have any direct or indirect interest in any assets which have, since 31 December 2004, being the date of the latest published audited accounts of the Group, been acquired or disposed of by, or leased to, or are proposed to be acquired or disposed of by, or leased to, any member of the Group; and

• (iv) Altus and Sallmanns not materially interested in any contract or arrangement entered into by any member of the Group which contract or arrangement is subsisting as at the date of this circular and which is significant in relation to the business of the Group taken as a whole.

6. LITIGATION

As at the Latest Practicable Date, neither the Company nor any of its subsidiaries was engaged in any litigation or arbitration of material importance and no litigation or claim of material importance was known to the Directors to be pending or threatened against the Company or any of its subsidiaries.

7. SERVICE CONTRACTS

As at the Latest Practicable Date, there was no existing and proposed service contract between any of the Directors and any member of the Group (excluding contracts expiring or determinable by the employer within one year without payment of compensation (other than statutory compensation)).

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GENERAL INFORMATION

APPENDIX II

8. COMPETING INTEREST

Shanghai Zendai Investment Development Company Limited was beneficially owned as to approximately 65.67% by Mr. Dai, an executive Director and the chairman of the Company, approximately 19.33% by Mr. Dai Zhixiang, a brother of Mr. Dai, and approximately 15.0% by Mr. Zhu Nansong, an executive Director, as at the Latest Practicable Date. Mr. Dai and Mr. Zhu Nansong, both executive Directors, are also directors of Shanghai Zendai Investment Development Company Limited.

Shanghai Zendai Investment Development Company Limited is principally engaged in investment management and property related business. In view of the nature of business of Shanghai Zendai Investment Development Company Limited, it may potentially compete with the Group’s business.

Save as disclosed above, as at the Latest Practicable Date, so far as the Directors were aware, none of themselves or their respective associates had any interest in a business which competes or may compete with the business of the Group.

9. QUALIFICATION OF EXPERT

The qualification of the expert who has given opinion in this circular is as follows:

Name Qualification Altus a company licensed by the Securities and Futures Commission of Hong Kong for types 1, 4, 6 and 9 regulated activities under the SFO, which is the independent financial adviser of the Company to the Independent Board Committee and the Independent Shareholders

Sallmanns professional property surveyors and valuers

As at the Latest Practicable Date, Altus and Sallmanns were not beneficially interested in the share capital of any member of the Group and did not have any right to subscribe or to nominate persons to subscribe for securities in any member of the Group.

10. CONSENTS

Altus and Sallamnns have given and have not withdrawn their written consents to the issue of this circular with the inclusion herein of their letters and the reference to their names included herein in the form and context in which they are included.

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GENERAL INFORMATION

APPENDIX II

11. GENERAL

• (a) The secretary of the Company is Mr. Tso Shiu Kei Vincent, a solicitor of the High Court of the Hong Kong. The qualified accountant of the Company is Mr. Wong Ngan Hung, who is a member of Hong Kong Institute of Certified Public Accountants.

• (b) The registered office of the Company is at Canon’s Court, 22 Victoria Street, Hamilton HM12, Bermuda and its head office and principal place of business in Hong Kong is at Unit 6108, The Center, 99 Queen’s Road Central, Hong Kong.

• (c) The branch share registrar and transfer office of the Company in Hong Kong is Secretaries Limited at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong.

• (d) The English text of this circular and the form of proxy shall prevail over the Chinese text.

12. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal business hours at the head office and principal place of business in Hong Kong of the Company at Unit 6108, The Center, 99 Queen’s Road Central, Hong Kong from the date of this circular up to the date of the SGM:

• (a) the memorandum and articles of association of the Company;

• (b) the annual reports of the Company for the two years ended 31 December 2004 and the interim report for the six months ended 30 June 2004;

• (c) the Sale and Purchase Agreement;

• (d) the valuation report of Sallmanns dated 26 May 2005;

• (e) the letter of advice from Altus dated 26 May 2005;

• (f) the letter from the Independent Board Committee dated 26 May 2005; and

• (g) the written consents referred to in the paragraph headed “Consents” in this Appendix.

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NOTICE OF SGM

==> picture [61 x 32] intentionally omitted <==

**SHANGHAI ZENDAI PROPERTY LIMITED ***

(Incorporated in the Bermuda with limited liability)

(Stock Code: 755)

NOTICE IS HEREBY GIVEN that a special general meeting of Shanghai Zendai Property Limited (the “ Company ”) will be held at Unit 6108, The Center, 99 Queen’s Road Central, Hong Kong on Wednesday, 15 June 2005, at 3:00 p.m., to consider and, if thought fit, pass, with or without modification, the following resolution as ordinary resolution of the Company:

ORDINARY RESOLUTION

“ THAT :

• (a) the sale and purchase agreement dated 29 April 2005 (the “ Sale and Purchase Agreement ”, a copy of which has been produced to this meeting marked “A” and initialled by the chairman of the meeting for the purpose of identification) entered into between Shanghai Zendai Property Limited (the “ Company ”) as purchaser and Zendai Investment Developments Limited (the “ Vendor ”) as vendor in relation to the sale and purchase of the entire issued share capital of Myway Developments Limited and the performance and implementation of the transactions contemplated thereunder be and are hereby confirmed, approved and ratified;

• (b) the allotment and issue of an aggregate of 288,350,634 shares (the “ Consideration Shares ”) of HK$0.02 each in the capital of the Company to the Vendor (or as it may direct) at HK$0.1734 each, credited as fully paid, pursuant to the Sale and Purchase Agreement be and is hereby approved and that the Consideration Shares, when allotted and issued, shall rank pari passu in all respects with all other shares of HK$0.02 each in the capital of the Company in issue as at the date of allotment and issue of the Consideration Shares; and

* for identification purpose only

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NOTICE OF SGM

• (c) the directors of the Company be and are hereby authorised to do all such acts and things and execute all such documents as they in their absolute discretion consider necessary or expedient to give effect to the Sale and Purchase Agreement and the implementation of all transactions contemplated thereunder.”

By order of the Board Dai Zhikang Chairman

Hong Kong, 26 May 2005

Registered office: Canon’s Court 22 Victoria Street Hamilton HM 12 Bermuda

Principal place of business in Hong Kong: Unit 6108 The Center 99 Queen’s Road Central Hong Kong

Notes:

1. Any member entitled to attend and vote at a meeting of the Company is entitled to appoint another person as his proxy to attend and, vote instead of him. A proxy need not be a member of the Company.

2. To be valid, a form of proxy and the power of attorney or other authority (if any) under which it is signed or a notarially certified copy of that power of attorney or authority must be deposited at the Company’s branch share registrar in Hong Kong, Secretaries Limited at Ground Floor, BEA Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong not less than 48 hours before the time fixed for the holding of the meeting or any adjournment(s) thereof.

3. Where there are joint holders of a share of the Company, any one of such holders may vote at the meeting either personally or by proxy in respect of such share as if he was solely entitled thereto, but if more than one of such holders be present at the meeting personally or by proxy, that one of such holders so present whose name stands first on the register of members of the Company in respect of such share shall alone be entitled to vote in respect thereof.

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