THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Shenzhen Expressway Corporation Limited, you should at once hand this circular to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or 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.

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(a joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock Code: 00548)

(1) PROPOSED ISSUANCE OF A SHARES TO SPECIFIC TARGETS UNDER SPECIFIC MANDATE;

(2) CONNECTED TRANSACTION: ENTERING INTO THE A SHARE SUBSCRIPTION AGREEMENT;

(3) IMPLEMENTATION OF EXTERNAL DONATION FOR RURAL REVITALISATION STRATEGY; AND

(4) NOTICES OF THE FIRST EXTRAORDINARY GENERAL MEETING 2023 AND THE CLASS MEETINGS

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

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A letter from the Independent Board Committee is set out on pages 33 to 34 of this circular. A letter from the Independent Financial Adviser, is set out on pages 35 to 67 of this circular.

The first extraordinary general meeting 2023 (“ EGM ”), the first class meeting 2023 of holders of A Shares (“ ACM ”) and the first class meeting 2023 of holders of H Shares (“ HCM ”, together with the ACM referred to as the “ Class Meetings ”) of Shenzhen Expressway Corporation Limited (the “ Company ”) are to be held consecutively at the conference room of the Company at 10:00 a.m. on 46th Floor, Hanking Center Tower, No. 9968 Shennan Avenue, Nanshan District, Shenzhen, the PRC on Wednesday, 20 September 2023. The notices of the EGM and the HCM are set out on pages EGM-1 to EGM-7 and HCM-1 to HCM-7 of this circular. The respective proxy forms for the EGM and HCM are enclosed hereto. For the notice of the ACM, please refer to the notice separately published by the Company on 24 August 2023.

Whether or not you intend to attend the said meetings, you are requested to complete the relevant proxy forms in accordance with the instructions printed thereon and return the same to the registrar of H Shares of the Company, Hong Kong Registrars Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong (for H Shareholders) or to the Company on 46th Floor, Hanking Center Tower, No. 9968 Shennan Avenue, Nanshan District, Shenzhen, the PRC (for A Shareholders) as soon as possible and in any event not less than 24 hours before the time appointed for the holding of the relevant meetings. Completion and return of the proxy forms will not preclude you from attending and voting in at the EGM, Class Meetings and/or any adjourned meeting(s) thereof in person if you so wish.

24 August 2023

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	33
Letter from the Independent Financial Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	35
Appendix I: Resolution in relation to the Company’s satisfaction of the requirements of
the Issuance of A Shares to Specific Targets . . . . . . . . . . . . . . . . . . . .	I-1
Appendix II: Plan of the Issuance of A Shares to Specific Targets for 2023 . . . . . . . . . .	II-1
Appendix III: Demonstration and analysis report of the proposal of the Issuance of A
Shares to Specific Targets for 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
Appendix IV: General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	IV-1
Notice of the EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	EGM-1
Notice of the HCM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	HCM-1

DEFINITIONS

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

“ACM” the first class meeting 2023 of the holders of A Shares to be convened by the Company on 20 September 2023 to consider and, if thought fit, approve, among other things, the grant of specific mandate for the Issuance of A Shares to Specific Targets (including authorisation arrangements) through special authorisation and XTC Company A Share Subscription “A Share(s)” domestic shares with nominal value of RMB1.00 each in the ordinary share capital of the Company, which are listed on the SSE and traded in RMB (Security Code: 600548) “A Shareholder(s)” holder(s) of A Shares “A Share Subscription Agreement” the share subscription agreement dated 14 July 2023 entered into between the Company and XTC Company in relation to the XTC Company A Share Subscription “Articles of Association” the articles of association of the Company “associate(s)” has the meaning ascribed thereto under the Listing Rules “Board” the board of directors of the Company “Class Meetings” the ACM and the HCM “Company” Shenzhen Expressway Corporation Limited, a joint stock limited company incorporated in the PRC with limited liability, the H Shares of which are listed on the Hong Kong Stock Exchange and the A Shares of which are listed on the SSE “connected person(s)” has the meaning ascribed thereto under the Listing Rules “controlling shareholder” has the meaning ascribed thereto under the Listing Rules “CSRC” China Securities Regulatory Commission “Director(s)” director(s) of the Company

DEFINITIONS

“EGM”	the first extraordinary general meeting 2023 to be convened by the
	Company on 20 September 2023 to consider and, if thought fit,
	approve, among other things, the grant of specific mandate for the
	Issuance of A Shares to Specific Targets (including authorisation
	arrangements) through special authorisation, XTC Company A
	Share Subscription and implementation of external donation for
	rural revitalisation strategy
“Group”	the Company and its subsidiaries
“HCM”	the first class meeting 2023 of the holders of H Shares to be
	convened by the Company on 20 September 2023 to consider and,
	if thought fit, approve, among other things, the grant of specific
	mandate for the Issuance of A Shares to Specific Targets (including
	authorisation arrangements) through special authorisation and XTC
	Company A Share Subscription
“H Share(s)”	the overseas listed foreign share(s) with nominal value of RMB1.00
	each in the ordinary share capital of the Company, which are listed
	on the Main Board of the Hong Kong Stock Exchange and traded in
	Hong Kong in HK$ (Stock Code: 00548)
“H Shareholder(s)”	holder(s) of H Shares
“HK$”	Hong Kong dollar(s), the lawful currency of Hong Kong
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“Hong Kong Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Independent Board Committee”	an independent board committee comprising all the independent
	non-executive directors of the Company
“Independent Financial Adviser” or	Lego Corporate Finance Limited, a corporation licensed to carry on
“Lego”	Type 6 (advising on corporate finance) regulated activities under
	the SFO, being the independent financial adviser appointed to
	advise the Independent Board Committee and the Independent
	Shareholders in respect of the XTC Company A Share Subscription
“Independent Shareholder(s)”	the Shareholders other than the Specific Targets and their
	associates; as at the Latest Practicable Date, being Shareholders
	other than Shenzhen International and its associates

DEFINITIONS

“Issuance of A Shares to Specific Targets” or “Issuance”
the proposed issuance of no more than 654,231,097 (inclusive) new A Shares to no more than 35 (inclusive) Specific Targets (including XTC Company) by the Company at the final issue price under the Issuance with an expected proceeds (before deducting relevant issuance expenses) of no more than RMB6.5 billion
“Latest Practicable Date”
11 August 2023. being the latest practicable date for ascertaining certain information for inclusion in this circular
“Listing Rules” the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
“Outer Ring Expressway (Shenzhen section)” or “Outer Ring Project”
the Shenzhen section of Outer Ring Expressway in Shenzhen with a total length of approximately 77 km which is invested, constructed, operated and managed by the Company’s wholly-owned subsidiary Shenzhen Outer Ring Expressway Investment Company Limited (深圳市外環高速公路投資有限公司) (“ Outer Ring Company ”). The project is being implemented in three phases, among which, the 35.58km from Shajing to Guanlan and the 15.07km from Longcheng to Pingdi, totaling approximately 51km (“ Outer Ring Phase I ”), opened to traffic on 29 December 2020. The 9.35km from Pingdi to Kengzi (“ Outer Ring Phase II ”) opened to traffic on 1 January 2022. The 16.8 km from Kengzi to Dapeng (“ Outer Ring Phase III ”) is in the course of undergoing preliminary work
“PRC” the People’s Republic of China
“Pricing Benchmark Date”
the first day of the issuance period of the Issuance of A Shares to Specific Targets
“RMB” Renminbi, the lawful currency of the PRC
“SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
“Shareholder(s)” shareholder(s) of the Company
“Shenzhen International” Shenzhen International Holdings Limited, a company incorporated in Bermuda with limited liability, the shares of which are listed on the Main Board of the Hong Kong Stock Exchange (stock code: 00152)
“Specific Target(s)” not more than 35 (inclusive) specific investors (including XTC Company), which meet the criteria required by the CSRC, and will subscribe A Shares from the Company under the Issuance
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DEFINITIONS

“SSE” Shanghai Stock Exchange

“substantial shareholder” has the meaning ascribed thereto under the Listing Rules “Trading Day” a day on which the SSE is open for dealing or trading in securities

“Wind” Wind Information Co., Ltd., a financial data and information data provider incorporated in the PRC

“XTC Company” Xin Tong Chan Development (Shenzhen) Co., Ltd.* (新通產實業開發（深圳）有限公司), a limited liability company established in the PRC and a wholly-owned subsidiary of Shenzhen International
“XTC Company A Share the proposed subscription for new A Shares of the Company in the Subscription” amount of not more than RMB1.51 billion by XTC Company pursuant to the A Share Subscription Agreement as part of the Issuance
“%” percentage

Note:

In this circular, certain English name of Chinese entities are translation of their Chinese names, and are included herein for identification purpose only. In the event of any inconsistency, the Chinese names shall prevail.

LETTER FROM THE BOARD

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(a joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock Code: 00548)

Executive Directors: Mr. LIAO Xiang Wen (President) Mr. WANG Zeng Jin Mr. WEN Liang

Legal Address: Fumin Toll Station, Fucheng Street, Longhua District, Shenzhen, the PRC

Non-executive Directors: Mr. DAI Jing Ming Ms. LI Xiao Yan Mr. LÜ Da Wei

Independent Non-executive Directors: Mr. BAI Hua Mr. LI Fei Long Mr. MIAO Jun Mr. XU Hua Xiang

Place of Business in the PRC: 46th Floor, Hanking Center Tower, No.9968 Shennan Avenue, Nanshan District, Shenzhen, the PRC

Principal Place of Business in Hong Kong Room 1603, 16/F, China Building, 29 Queen’s Road Central, Central, Hong Kong

24 August 2023

To the Shareholders of the Company

Dear Sirs or Madams,

(1) PROPOSED ISSUANCE OF A SHARES TO SPECIFIC TARGETS UNDER SPECIFIC MANDATE;

(2) CONNECTED TRANSACTION: ENTERING INTO THE A SHARE SUBSCRIPTION AGREEMENT;

(3) IMPLEMENTATION OF EXTERNAL DONATION FOR RURAL REVITALISATION STRATEGY; AND

(4) NOTICES OF THE FIRST EXTRAORDINARY GENERAL MEETING 2023 AND THE CLASS MEETINGS

(I) INTRODUCTION

Reference is made to the joint announcement published by the Shenzhen International and the Company on 14 July 2023 in relation to, among others, the proposed Issuance of A Shares to Specific Targets under specific mandate, the entering into the A Share Subscription Agreement and implementation of external donation for rural revitalisation strategy.

LETTER FROM THE BOARD

The purpose of this circular is to provide you with details of the above matters to enable the Shareholders to make an informed decision on voting on the resolutions proposed at the EGM and the Class Meetings.

(II) PROPOSED ISSUANCE OF A SHARES TO SPECIFIC TARGETS UNDER SPECIFIC MANDATE

1. PROPOSAL FOR THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS

A summary of the proposal for the Issuance of A Shares to Specific Targets is set out as follows:

(1) Class and nominal A Shares with nominal value of RMB1.00 each value of shares to be issued: The aggregate nominal value of the A Shares to be issued to the Specific Targets will be no more than RMB654,231,097.

The new A Shares to be issued will rank pari passu with the existing A Shares in all respects.

(2) Method and timing The Issuance will be conducted by way of issuance of shares of the issuance: to Specific Targets.

The Company will issue A Shares to the Specific Targets at an appropriate time upon having obtained approval from the SSE and within the effective registration period consent by the CSRC.

(3) Target subscribers The subscribers under the Issuance of A Shares to Specific and method of Targets include no more than 35 (inclusive) Specific Targets subscription: (including XTC Company), which meet the criteria required by the CSRC. All Specific Targets shall subscribe the A Shares under the Issuance in cash, among which, XTC Company agreed to subscribe for A Shares under the Issuance in the amount of no more than RMB1.51 billion.

Apart from XTC Company, the scope of the other Specific Targets includes securities investment fund management companies, securities companies, trust companies, finance companies, insurance institutional investors, qualified foreign institutional investors and other legal persons, natural persons or other qualified institutions which satisfy the investor requirements of the CSRC. Among them, securities investment fund management companies, securities companies, qualified foreign institutional investors, and RMB qualified foreign institutional investors who subscribe

LETTER FROM THE BOARD

for the shares through two or more products under their management shall be deemed as one Specific Target. Specific Targets who are trust investment companies shall only subscribe with their own funds.

Upon the Company having obtained approval from the SSE and the CSRC having provided its consent for the relevant registration, the Board or its authorised person(s) will identify the Specific Targets (other than XTC Company) upon negotiations with its sponsor (the lead underwriter) in accordance with the bidding results and pursuant to the authorisation granted at the EGM and the Class Meetings.

As Shenzhen International is the controlling shareholder of the Company as at the Latest Practicable Date, the XTC Company A Share Subscription constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules. The Company shall comply with the relevant regulatory rules and be subject to the approval and disclosure requirements in respect of the transaction accordingly.

As at the Latest Practicable Date, save for the A Share Subscription Agreement, the Company has not entered into any agreement with any potential subscriber in relation to the Issuance. The Specific Targets (other than XTC Company) and their respective ultimate beneficial owners will be third parties independent of the Company and its connected persons, and none of such Specific Targets will become a substantial shareholder of the Company after completion of the subscription under the Issuance. If any Specific Target (other than XTC Company) is a connected person of the Company, the Company will take all reasonable measures to comply with the relevant requirements under Chapter 14A of the Listing Rules.

(4) Issue price and The pricing benchmark date shall be the first day of the pricing method: issuance period of the Issuance.

The issue price of the Issuance shall not be lower than the higher of (the “ Minimum Issue Price ”):

The Company’s audited net assets per share attributable to the ordinary shareholders of the parent company as at the end of the most recent period prior to the Issuance.
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LETTER FROM THE BOARD

In the event that the Company carries out ex-dividend and ex-right activities such as distribution of dividend, bonus share issue, allotment of shares, conversion of capital reserve into share capital during the period from the balance sheet date of the latest audited financial report up to the issuance date, the value of the above net assets per share shall be adjusted accordingly.

As disclosed in the 2022 annual report of the Company, as at the Latest Practicable Date, the audited net assets value per share of the Company attributable to the ordinary shareholders of the parent company as at the end of the most recent period is RMB7.954 per share. The Company distributed dividend of RMB0.462 per share in 2023. Accordingly, the adjusted net asset value per share is RMB7.492 per share. The above information is for reference only.

80% of the average trading price of the Company’s A Shares in the 20 Trading Days prior to the Pricing Benchmark Date (excluding the Pricing Benchmark Date). The average trading price of the Company’s A Shares in the 20 Trading Days prior to the Pricing Benchmark Date = the total trading value of the Company’s A Shares in the 20 Trading Days prior to the Pricing Benchmark Date/the total trading volume of the Company’s A Shares in the 20 Trading Days prior to the Pricing Benchmark Date.

In the event that the Company carries out ex-dividend and ex-right activities such as distribution of dividend, bonus share issue, allotment of shares, conversion of capital reserve into share capital, which result in adjustment of its share price during the 20 Trading Days prior to the Pricing Benchmark Date, the trading prices of the Trading Days prior to such price adjustment shall be calculated according to the prices as adjusted by the relevant ex-dividend and ex-right activities.

LETTER FROM THE BOARD

On the basis of the aforementioned Minimum Issue Price, the final issue price shall be determined by negotiations between the Board or its authorised person(s) and the sponsor (the lead underwriter) according to the price bidding results, under the authorisation to be granted at the EGM and the Class meetings, and in compliance with the relevant laws and regulations and requirements of regulatory authority, after the Company having obtained approval from the SSE and the CSRC having provided its consent for the relevant registration.

In case the Company carries out ex-dividend and ex-right activities such as distribution of dividend, bonus share issue, allotment of shares, conversion of capital reserve into share capital during the period from the Pricing Benchmark Date to the issuance date, the final issue price shall be adjusted in accordance with the following formula:

Assuming P0 denotes the issue price before the adjustment, N denotes the ratio of bonus shares or the conversation rate of capital reserve, D denotes the amount of cash dividends payable per share, and P1 denotes the new issue price after adjustment, then:

In the case of distribution of cash dividends: P1=P0-D In the case of grant of bonus shares or conversion of capital reserve into share capital: P1=P0/(l+N)

In case both of the above occur simultaneously: P1=(P0-D)/(1+N)

XTC Company will not participate in the market price bidding process for determining the issue price of the Issuance, and undertook that it will subscribe the A Shares at the price determined by the price bidding, which will be same as the price to be offered to the other Specific Targets. If the final issue price of the Issuance cannot be determined through bidding, XTC Company will not participate in the subscription of the A Shares under the Issuance.

(5) Number of A Shares to be issued:

The number of A Shares to be issued under the Issuance shall be no more than 30% of the total number of issued shares of the Company immediately prior to the Issuance, i.e. not more than 654,231,097 shares (inclusive). Number of shares to be subscribed = subscription amount/final issue price per share, and the number of shares to be subscribed is rounded down to the nearest integer.

LETTER FROM THE BOARD

In the event the Company grants bonus shares, convert its capital reserve into share capital, or carries out any other activities leading to changes in its total share capital during the period from the approval date of its Board resolutions in relation to the Issuance up to the issuance date, the maximum number of A Shares to be issued under the Issuance shall be adjusted accordingly.

The final number of A Shares to be issued shall be determined by the negotiations between the Board or its authorised person(s) and its sponsor (the lead underwriter) pursuant to the authorisation to be granted at the EGM and the Class Meetings, subject to the then actual circumstances, and within maximum limit of the A Shares to be issued upon the approval from the SSE and the consent for registration from the CSRC.

(6) Lock-up arrangement:

Upon completion of the Issuance, the shares to be subscribed by XTC Company under the Issuance shall be refrained from being transferred within eighteen (18) months from the completion date of the Issuance, and the shares subscribed by the other Specific Targets under the Issuance shall be refrained from being transferred within six (6) months from the completion date of the Issuance. If relevant laws, regulations and regulatory documents have other regulations on the lock-up periods for the shares to be issued under the Issuance, such regulations shall be followed. Upon expiration of the lock-up period, the disposal of the shares by the Specific Targets shall be carried out in accordance with the Company Law, the Securities Law, the Rules Governing the Listing of Stocks on the SSE, other laws, regulations, departmental rules, regulatory documents and the Articles of Association.

Upon completion of the Issuance, any extra shares derived from events such as the grant of bonus shares, conversion of capital reserve into share capital, etc. by the Company for the shares obtained by the Specific Targets under the Issuance shall also comply with the above lock-up arrangement.

(7) Place of listing: The Company will apply to the SSE for the listing of, and permission to deal in, the A Shares to be issued pursuant to the Issuance.
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LETTER FROM THE BOARD

(8) Amount and use of proceeds:

The proceeds to be raised from the Issuance will be no more than RMB6.5 billion (inclusive). After deducting relevant issuance expenses, all of the net proceeds to be raised are intended to be used in the following projects:

Total outstanding investment Proposed (Kengzi to amount of Total project Dapeng net proceeds No. Name of project investment Section) to be applied (RMB100 (RMB100 (RMB100 million) million) million) 1 Outer Ring Expressway (Shenzhen Section) 294.04 84.47 46.00 2 Repayment of interest-bearing liabilities (Note) – – 19.00 Total 294.04 84.47 65.00

Note: At present, the interest-bearing liabilities of the Group maturing before the end of 2024 are approximately RMB18 billion with an annual interest rate of approximately 2.2% to 6%. According to the requirements of the CSRC, the proceeds from the Issuance to repay liabilities shall not exceed 30% of the total proceeds. The Company will arrange the repayment of debts according to the receiving time of the proceeds and the negotiation with creditor.

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LETTER FROM THE BOARD

To ensure the smooth implementation of the projects to be funded by the proceeds and safeguard the interests of all Shareholders of the Company, before receiving the proceeds of the Issuance, the Company may utilise its self-raised funds to advance investments in the projects to be funded by proceeds based on the implementation progress and actual circumstances of such projects, and replace such funds according to the relevant regulations and regulatory documents after receipt of the proceeds. If the actual amount of net proceeds (after deducting relevant issuance expenses) falls short of the proposed amount of proceeds to be applied to the aforesaid projects, the Board or its authorised person(s) will, based on circumstances such as the actual amount of net proceeds and the urgency of the projects, adjust and determine the application of the proceeds including determining the project to be invested with the proceeds, prioritise and determine specific amount of proceeds to be applied to each project. Principally speaking, the Company will allocate the actual proceeds to each project in accordance with the planned proportion as shown in the above table. The shortage of funds will be selffinanced by the Company.

(9) Arrangement of Both new Shareholders and existing Shareholders are entitled accumulated to the accumulated undistributed profits of the Company undistributed before the Issuance according to their respective profits before shareholdings. the Issuance:
(10) Validity of the The resolutions in relation to the Issuance shall remain valid resolutions: for twelve (12) months from the date on which relevant resolutions are considered and approved by the EGM and the Class meetings of the Company.
(11) Conditions Completion of the Issuance of A Shares to Specific Targets precedent of the is conditional upon satisfaction of the following conditions: Issuance of A Shares to (1) the relevant resolutions have been passed at the EGM Specific Targets: and the Class meetings of the Company;
(1) the relevant resolutions have been passed at the EGM and the Class meetings of the Company;
(2) the relevant resolution(s) has/have been passed at the SGM of Shenzhen International; and
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LETTER FROM THE BOARD

(3) the entity(ies) responsible supervising and managing State-owned assets of the Company having granted its approval, the SSE having passed its review, and the CSRC having provided its consent for the relevant registration.

As at the Latest Practicable Date, all the above conditions have not been satisfied.

(12) Principal terms of The Company has appointed CITIC Securities Co., Ltd. the underwriting (“ CITIC Securities ”) as the sponsor and lead underwriter and sponsor for the Issuance. The principal terms of the underwriting and arrangement: sponsor agreement to be entered into between the Company and CITIC Securities are as follows:

(1) Major rights and obligations of the Company

CITIC Securities will provide its underwriting and sponsor services to the Company, the Company should fully cooperate with CITIC Securities on its due diligence work; ensure the authenticity, accuracy, and completeness of information disclose to CITIC Securities; provide authentic, accurate, and complete financial accounting materials and other materials to CITIC Securities in a timely manner; and pay the underwriting and sponsor fees; and cooperate with CITIC Securities in its continuous supervision.

(2) Major rights and obligations of CITIC Securities

CITIC Securities will be responsible for recommending the Issuance by the Company and the listing of A Shares to be issued to the SSE and the CSRC; issue the sponsor letter and listing sponsor letter and other documents in relation to the Issuance; and appoint 2 sponsor representatives to be responsible for the sponsor work; assist the Company in formulating the proposal and organising works in relation to the Issuance; complete the underwriting work; assist the Company in the application for the Issuance and listing. It has the right to conduct due diligence and carry out prudent inspection on the Company, its subsidiaries, affiliated institutions, controlling shareholders, directors, supervisors and senior management, and to conduct further visits to the Company and inspect materials.

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LETTER FROM THE BOARD

The Board would like to provide further explanation on “(4) Issue price and pricing method” set out above:

According to the “Administrative Measures for the Registration of Securities Issuance by Listed Companies” issued by the CSRC, the issue price shall not be lower than 80% of the average trading price of A shares in 20 Trading Days prior to the pricing benchmark date (exclusive of the pricing benchmark date). This requirement is a mandatory requirement of the CSRC, and it is also the floor price generally adopted by listed companies which issue A shares to specific targets.

According to the “Administrative Measures for the Registration of Securities Issuance by Listed Companies” issued by the CSRC, when listed companies issue shares to specific targets, such shares subscribed by the specific target cannot be transferred within 6 months or 18 months (depending on whether the specific target is the de facto controller of the listed company or an enterprise controlled by the de facto controller). The specific target needs to bear the risk of share price fluctuations and liquidity restrictions during the above-mentioned period. As such, the Board believes that a certain discount to the issue price is reasonable.

The Board fully awares a higher Minimum Issue Price will increase the difficulty of the Issuance. However, in order to protect the rights and interests of the existing Shareholders, the Board further clarifies that the Minimum Issue Price should not be lower than the Company’s audited net assets per share attributable to the ordinary shareholders of the parent company as at the end of the most recent period (after adjustment of any ex-dividend and ex-rights conditions), in order to reduce the risk of dilution of the equity of the existing Shareholders (net assets per share) after the Issuance.

In order to help the Shareholders to further understand the relationship between the Minimum Issue Price and the Share price, the Company has adopted 30 June 2023 as the pricing benchmark date, and compared the Minimum Issue Price and the average trading prices of the A Shares and H Shares of the Company for the previous 20 Trading Days as follows:

				Net assets
				per share
				attributable to
			Average	the ordinary		Minimum Issue
			trading price	shareholders of		Price/average
			for the	the parent		price of the
			previous 20	company	Minimum	previous
			Trading Days	(ex-dividend)	Issue Price	20 days
A	Share	(RMB)	9.06	7.50	7.50	82.76%
H	Share	(HK$)	6.67	8.07	8.07	121.05%

Note: For reference only, the exchange rate between HK$ and RMB is converted at the exchange rate of HKD 1.00 to RMB0.929.

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LETTER FROM THE BOARD

Based on the statistics on above-mentioned Company’s share price, assuming the Company’s share price and valuation level will not have any significant change, and the Issuance will be completed in the near future, the Board estimates the Minimum Issue Price will be equivalent to 82.76% of the average trading price of the A Shares in the previous 20 Trading Days, or 121.05% of the average trading price of the H Shares in the previous 20 Trading Days. The above estimation is based on recent information. The future actual Minimum Issue Price may be affected by various factors such as macroeconomics, industry development, market fluctuations, and company operations. The Board would like to remind its Shareholders to pay attention to the possible deviation between the above estimation and the future actual Minimum Issue Price.

After the Minimum Issue Price is determined, the Company and the sponsor (the lead underwriter) will arrange the bidding of the Issuance in accordance with the provisions of relevant laws and regulations and the requirements of regulatory authorities. The final issue price shall be determined by negotiations between the Board or its authorised person(s) and the sponsor (the lead underwriter) according to the price bidding results, under the authorisation to be granted at the general meeting and the class meetings. The Company believes that a competitive determination of the final issue price is conducive to fully reflecting the long-term investment value of the Company.

In addition, the Company has, through Wind collected data from available market precedents regarding issuance of A shares to specific targets by listed companies in around the past 12 months, and reviewed the ratios of the actual issue price to the average trading price for the 20 trading days prior to the pricing benchmark date. The average ratio of the entire A-share market is approximately 86.43%, and the average ratio of the A-share Main Board market is approximately 86.53%, which is higher than the lower limit of the 80% stipulated in the “Administrative Measures for the Registration of Securities Issuance by Listed Companies” issued by the CSRC.

In light of the above, based on the actual performance of the Company’s share price, the implementation of the issuance of shares in the A-share market, and the Company’s additional conditions required for the Minimum Issue Price, the Board believes that the pricing mechanism of the Issuance has given reasonable protection to the rights and interests of the existing Shareholders.

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LETTER FROM THE BOARD

2. A SHARE SUBSCRIPTION AGREEMENT

According to the proposal for the Issuance of A Shares to Specific Targets, on 14 July 2023, XTC Company and the Company entered into the A Share Subscription Agreement, pursuant to which, the Company conditionally agreed to issue to XTC Company, and XTC Company conditionally agreed to subscribe for A Shares in the total amount of no more than RMB1.51 billion pursuant to the final issue price of the Issuance. Upon completion of the Issuance, Shenzhen International will hold no less than 45% (inclusive) of the total issued shares of the Company through its wholly-owned subsidiaries.

The principal terms of the A Share Subscription Agreement are identical to the terms of the proposal for the Issuance of A Shares to Specific Targets disclosed above. Other principal terms of the A Share Subscription Agreement are as follows:

(1) Parties: (i) the Company (as issuer); and (ii) XTC Company, a wholly-owned subsidiary of Shenzhen International (as subscriber). (2) Date: 14 July 2023.

(3) Subscription Price The subscription price and pricing principles are consistent and Payment: with the final issue price and pricing principles for the Issuance of A Shares to Specific Targets as described above.

XTC Company will not participate in the price bidding process, and will accept the price bidding results and subscribe the A Shares of the Issuance at the same issue price as other Specific Targets.

If there is no quotation for the Issuance or the final issue price cannot be determined through bidding, XTC Company will not participate in the subscription of the A Shares under the Issuance.

Upon receipt of the payment notice for the subscription, XTC Company shall promptly pay the full amount to the designated bank account.

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(4) Lock-up Period:
The shares subscribed by XTC Company under the Issuance are refrained from being transferred for a period of eighteen (18) months from the completion date of the Issuance. If relevant laws, regulations and regulatory documents have other regulations on the lock-up periods for the shares to be issued under the Issuance of A Shares to Specific Targets, such regulations shall be followed. During the period from the completion date of the Issuance until the lock-up release date of such Shares, any extra Shares derived from events such as the grant of bonus shares, conversion of capital reserve into share capital, etc. by the Company for the shares subscribed by XTC Company under the Issuance shall also subject to the above lock-up arrangement.
(5) Number of A XTC Company shall subscribe the A Shares to be issued Shares to be under the Issuance in the amount of not more than RMB1.51 subscribed for: billion. The number of A Shares to be subscribed is calculated by dividing the total subscription amount by the final issue price of the Issuance and rounded down to the nearest integer.

The final number of A Shares to be issued is subject to adjustment in the manner as set forth in the paragraph “ (5) Number of A Shares to be issued” under the section headed “1. Proposal for the Issuance of A Shares to Specific Targets” above.

Upon completion of the Issuance, Shenzhen International will hold no less than 45% (inclusive) of the total issued shares of the Company through its wholly-owned subsidiaries.

(6) Conditions precedent:
The A Share Subscription Agreement will become effective after having been executed and sealed by the legal representative or authorised representative of the parties and satisfaction of all the following conditions:
the A Share Subscription Agreement, the Issuance, the XTC Company A Share Subscription and all related matters have been approved by/at the Board, the EGM and the Class Meetings (if required) and the board of directors and general meeting (if required) of the controlling shareholder of The Company (i.e. Shenzhen International);
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the Issuance, the XTC Company A Share Subscription and the related matters have been approved by the entity(ies) supervising and managing State-owned assets in accordance with the requirements of the laws and regulations; and
the CSRC has provided its consent for registration in respect of the Issuance.

As at the Latest Practicable Date, all the above conditions have not been satisfied.

3. AUTHORISATION TO THE BOARD TO DEAL WITH MATTERS IN RELATION TO THE ISSUANCE

In order to implement the work in relation to the Issuance efficiently and orderly, the Board intended to proposed at the EGM and the Class Meetings to grant authorisation to the Board to deal with matters in relation to the Issuance, which included but not limited to:

(1) Subject to the laws, regulations, regulatory requirements and the Articles of Association, and taking into account the Company’s actual situation and the market conditions, to formulate, adjust, modify, supplement and implement specific plan of the Issuance, including but not limited to any fixing or adjustment to the Pricing Benchmark Price, actual Specific Targets, issue price, pricing policy, issue size, amount of proceeds to be raised, proposed use of proceeds, etc. caused by amendments or changes in laws, regulations and regulatory requirements, request by regulatory authorities, events such as ex-dividend or ex-rights event, joint negotiations with the subscribers or other reasons. And to confirm the specific issue terms and issue plan before the Issuance, formulate and implement the final plan of the Issuance, and to decide or adjust the timing and implementation schedule of the Issuance;
(2) Subject to the laws, regulations, requirements of relevant government or regulatory authorities, stock exchanges and securities registration and clearing institutions, and the actual circumstances of the Issuance, to prepare, sign, supplement, modify, submit, handover, complete, and issue relevant documents and materials related to the Issuance; handle the approval, registration, filing, confirmation, consent and other declaration matters related to the Issuance, go through relevant matters and implement other procedures related to the Issuance; handle matters related to the disclosure of the Issuance in accordance with relevant regulatory requirements;
(3) To review the qualifications of the investors who intend to subscribe in the Issuance pursuant to relevant laws and regulations and the requirements of regulatory authorities;
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(4) To amend, supplement, sign, execute, or terminate contracts, agreements and other documents related to the Issuance (including but not limited to share subscription agreements, fund-raising related agreements, intermediaries engagement agreements, etc) in accordance with relevant laws, regulations, regulatory requirements and the Articles of Association;
(5) Upon completion of the Issuance, deal with the registration, lock-up arrangement and listing with the SSE and China Securities Depository and Clearing Corporation Limited Shanghai Branch in respect of the shares to be issued under the Issuance;
(6) Upon completion of the Issuance, amend the articles related to the Company’s share capital, registered capital in the Articles of Association, and deal with the relevant reporting procedures, registration and filing for industrial and commercial change in accordance with the implementation status of the Issuance;
(7) To handle matters related to opening account for and the application of the proceeds to be raised from the Issuance, carry out specific application arrangement of the proceeds from the Issuance in the proposed investment project and repayment of interest-bearing liabilities in accordance with changes in market conditions, the actual circumstances of the Company, and under the scope of the resolutions passed in the general meeting and the class meetings of the Company. Prior to the receipt of the proceeds to be raised in the Issuance, to determine whether the Company should invest its self-owned funds first in the specific projects which proposed to be invested by the proceeds according to the implementation progress and actual situation of such investment project, and thereafter replace such fund with the proceeds received in compliance with relevant laws, regulations and regulatory documents;
(8) Subject to compliance with the applicable PRC laws and regulations at that time, if any laws, regulations or relevant regulatory authorities have new regulations on issuance of new shares by listed companies and securities companies; or there is any change in market conditions, to adjust the plan of the Issuance accordingly with the relevant laws, regulations, and requirements of the securities regulatory authorities (including he review feedback on the application for the Issuance) and the then market conditions, and continue to handle matters in relation to the Issuance with full power unless relevant laws, regulations and the Articles of Association require such matter has to be re-voted at the general meeting and class meetings or not allowed to be authorised to the Board;
(9) If relevant laws and regulations and the regulatory authorities have new regulations and requirements for paying current returns by refinancing, then the Company should comply with the relevant laws, regulations and requirements of the regulatory authorities at that time, further analysis, research and demonstrate the impact of the Issuance on the Company’s financial indicators and current returns; and formulate and revise relevant remedial measures and policies, and handle other related matters with full power;
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(10) To deal with other specific matters related to the Issuance, except for matters that require re-voting at the general meeting and class meetings of the Company as required by relevant laws and regulations, regulations of securities regulatory authorities and the Articles of Association;
(11) Each of the above authorisations shall be effective for a period of 12 months from the approval date of this resolution at the general meeting and class meetings of the Company. Prior to the expiry of the authorisation period, the Board will base on the then actual circumstances of the Issuance and propose to extend the effective period of the said authorisation at the general meeting and class meetings of the Company;
(12) To propose at the general meeting and class meetings of the Company and seek for approval for the Board to further authorise the chairman, president, or other persons authorised by the chairman or president, to decide, handle and deal with all the abovementioned matters in relation to the Issuance. The effective period of such authorisation shall be same as the authorisation to be granted to the Board at the general meeting and class meetings of the Company.

4. EFFECT OF ISSUANCE OF A SHARES TO SPECIFIC TARGETS ON THE COMPANY’S SHAREHOLDING STRUCTURE

As at the Latest Practicable Date, the total number of shares of the Company in issue was 2,180,770,326 shares, comprising 1,433,270,326 A Shares and 747,500,000 H Shares.

Assuming that (1) there is no other change in the number of shares in issue of the Company from the Latest Practicable Date to the completion of the Issuance of A Shares to Specific Targets; (2) the number of A Shares issued to the Specific Targets is the maximum number of shares proposed to be issued under the Issuance of A Shares to Specific Targets, i.e. 654,231,097 (inclusive) A Shares; (3) Upon completion of the Issuance, the percentage of the total number of shares of the Company held by Shenzhen International through its wholly-

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owned subsidiaries will be diluted to 45% of the total number of issued shares of the Company, the shareholding structure of the Company as at the Latest Practicable Date and immediately after completion of the Issuance of A Shares to Specific Targets is set out below:

A Shares Shenzhen International (Note) other Specific Targets (not more than 34) other A Shareholders Sub-total of A Shares H Shares Shenzhen International (Note) other H Shareholders Sub-total of H Shares Total	As at the Latest Practicable Date Number of shares Approximate percentage of the total number of shares of the Company in issue 1,066,239,887 48.89% – – 367,030,439 16.83% 1,433,270,326 65.72% 58,194,000 2.67% 689,306,000 31.61% 747,500,000 34.28% 2,180,770,326 100%	Immediately after completion of the Issuance of A Shares to Specific Targets Number of shares Approximate percentage of the total number of shares of the Company in issue 1,217,633,111 42.95% 502,837,873 17.74% 367,030,439 12.95% 2,087,501,423 73.63% 58,194,000 2.05% 689,306,000 24.31% 747,500,000 26.37% 2,835,001,423 100%	Immediately after completion of the Issuance of A Shares to Specific Targets Number of shares Approximate percentage of the total number of shares of the Company in issue 1,217,633,111 42.95% 502,837,873 17.74% 367,030,439 12.95% 2,087,501,423 73.63% 58,194,000 2.05% 689,306,000 24.31% 747,500,000 26.37% 2,835,001,423 100%
			73.63%
			2.05% 24.31%
			26.37%
			100%

Note: As at the Latest Practicable Date,(1) 654,780,000 A Shares were directly held by XTC Company as beneficial owner; (2) 411,459,887 A Shares were directly held by Shenzhen Shen Guang Hui Highway Development Company Limited as beneficial owner; and (3) 58,194,000 H Shares were directly held by Advance Great Limited as beneficial owner. All these companies are wholly-owned subsidiaries of Shenzhen International, therefore Shenzhen International indirectly owns approximately 51.56% interests of the Company.

Upon completion of the Issuance, the registered share capital and the shareholding structure of the Company will change and therefore the corresponding provisions in the Articles of Association will be required to be amended to reflect the relevant changes.

The Company expects that upon completion of the Issuance, it will continue to be able to comply with the requirement of minimum public float under Rules 8.08 and 13.32 of the Listing Rules.

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5. LISTING RULES IMPLICATIONS

Upon the Company having obtained the specific mandate for the Issuance from the EGM and Class Meetings, it will issue new A Shares pursuant to the proposal of the Issuance of A Shares to Specific Targets. Pursuant to Chapter 19A of the Listing Rules and the Articles of Association, the Company will seek for the specific mandate and approval for the Issuance from its Independent Shareholders by way of special resolutions at the EGM and Class Meetings. Thereafter, it will proceed with the Issuance of A Shares to Specific Targets.

As at the Latest Practicable Date, Shenzhen International indirectly holds 1,066,239,887 A Shares and 58,194,000 H Shares, representing approximately 51.56% of the issued shares of the Company, and is the controlling shareholder of the Company. Hence, Shenzhen International and its associates are connected persons of the Company, and the XTC Company A Share Subscription constitutes a connected transaction of the Company and is subject to the announcement, reporting and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

The Independent Board Committee comprising the independent non-executive directors of the Company has been formed to advise the Independent Shareholders on the terms of the XTC Company A Share Subscription. Lego has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders on the same.

6. REASONS FOR AND BENEFITS OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS

Reinforcing the advantages of toll highways as a principal business

Being dedicated to the transport infrastructure industry for over 20 years, the Company has accumulated extensive experience in areas such as highway investment, construction, operation and management. Up to currently, the Company invested and operated in a total of 16 toll highway projects. The mileage of the high-grade highways invested or operated by the Company (on equity basis) is approximately 643 km. They are mainly located in Shenzhen and the Guangdong-Hong Kong-Macao Greater Bay Area and economically developed regions with favourable geographical advantages.

The proceeds from the Issuance will be used mainly for the construction of Outer Ring Phase III. The Outer Ring Expressway (Shenzhen Section) is the densified line of the skeleton of the “12 vertical, 8 horizontal and 2 rings” expressway network in Guangdong Province, and an important component of the “8 horizontal and 13 vertical” trunk road network in Shenzhen. It is an important transportation infrastructure in the Guangdong-Hong Kong-Macau Greater Bay Area. The Outer Ring Expressway (Shenzhen Section) has obvious advantages in terms of road network. After completion of the Outer Ring Expressway (Shenzhen Section), it will be interconnected with 10 expressways and 8 first-class highways in Shenzhen region, making it a high-quality core asset of the Company. Since the opening to traffic of Outer Ring Phase I and Outer Ring Phase II, they have performed well in terms of operational performance, with rapid growth in traffic volume and toll revenue, and contributed approximately 10% and 15% to the

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revenue and profit (before interest and tax) of the Company in 2022, which is an important cornerstone for the sustainable development of the Company. Outer Ring Phase III passes through Pingshan District and Dapeng New District, and improving the infrastructure in these areas is in line with the government-led strategies of the Guangdong-Hong Kong-Macao Greater Bay Area and Shenzhen-Dongguan-Huizhou Integration, etc. The estimated total investment of Outer Ring Phase III is RMB8.447 billion. The Company intends to apply RMB4.6 billion of the proceed to invest in Outer Ring Phase III, and satisfy the remaining investment amount of Outer Ring Phase III by self-raised fund, including its own funds and external financing. Subject to possible adjustment due to then circumstances such as the actual amount of net proceeds and the urgency of the project, the Company will utilise RMB2.2 billion, RMB2.1 billion and RMB0.3 billion of the proceeds into Outer Ring Phase III in 2024, 2025 and 2026, respectively. Upon completion of Outer Ring Phase III, all the phases of Outer Ring Expressway (Shenzhen Section) will be completed and connected, which will bring about the overall benefits of the project on the one hand, and bring traffic flow to the other expressways of the Group by improving the layout of the road network on the other hand. Based on preliminary calculations, assuming that the Guangdong Provincial Government approves a 25-year concession period for the Outer Ring Project, being the longest concession period that the Company may apply for pursuant to “Regulations on the Management of Toll Highways”, the financial internal rate of return (after tax) on the entire Outer Ring Project will be approximately 6.76%, after taking into consideration factors including the toll standard of the toll highways in Guangdong Province, traffic volume and operation costs of Outer Ring Project, the investment scale and the investment and financing plan of Outer Ring Project. The Company has, through public information channels, reviewed the expected returns of expressway construction or renovation and expansion projects disclosed by listed companies in the PRC in the past three years. The return level of the entire line of the Outer Ring Project is significantly better than the average return level in the market. The Outer Ring Project is a rare high-quality toll highway project. Investing in Outer Ring Phase III is conducive for obtaining the best and overall economic and social benefits of the Outer Ring Project, which is in the best interests of the Company and its shareholders. Based on the geographical advantages, significant contributions and ideal returns of the Outer Ring Project, the Board believe the Outer Ring Project has important strategic significance for the sustainable development of the Company. Completion of the construction of Outer Ring Phase III can expand the scale of the Company’s high-quality highway assets, enhance the future development of the Company’s toll highway business and further consolidate the Company’s core advantages in the investment, construction and operation of toll highways.

Improving capital structure and enhancing long-term shareholders’ returns

As the business of the Company is capital-intensive, capital is an important foundation for its sustainable development. The use of external financing by the Company to promote the development of its core business and new growth businesses is of great significance in enhancing the overall strength of the enterprise and achieving higher returns to shareholders. The Company intends to raise funds for investment in the toll highway as a principal business and repayment of interest-bearing liabilities through the Issuance. The Directors of the Company are of the view that the Issuance will be beneficial to the Company in further enhancing its capital strength, optimising its capital structure, reducing its financial costs,

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strengthening its anti-risk capability and competitiveness, further expanding the Company’s future investment and financing scope, supporting its future business development and enhancing its sustainable profitability and market competitiveness, which is in line with the long-term development strategy of the Company and in the interests of the Company and all of its shareholders.

In January 2022, the State Council issued the “14th Five-Year Plan for the Development of Modern Comprehensive Transportation System” 《「十四五」現代綜合交通運輸體系發展規( 劃》), which provides the top-level design and systematic planning for the construction of a modern comprehensive transportation system during the 14th Five-Year Plan period. For the toll road and transportation industry, the structural functions of the road network will be improved, the quality of the national expressway network will be upgraded, the capacity of busy and congested sections of the national expressway will be expanded and renovated, and the construction of parallel lines, liaison lines and sections to be connected will be accelerated. By 2025, the mileage of the PRC’s expressways will reach 190,000 km. In terms of regional development, the construction of the Guangdong-Hong Kong-Macao Greater Bay Area and Shenzhen pilot demonstration area for socialism with Chinese characteristics will bring significant opportunities for the development of the Greater Bay Area. The Group will respond to the strategic layout of the country’s regional and industry development to serve the community and realise its own development.

As at the Latest Practicable Date, the capital expenditure of the Group approved by the Board mainly includes expenditure on construction projects such as Outer Ring Phase III and Coastal Phase II, as well as expenditure on equity investment such as mergers and acquisitions of highways and general-environmental protection projects, with a total amount of approximately RMB14.484 billion. In addition, the Group is also in the course of commencing the preliminary work for the reconstruction and expansion of Jihe Expressway and GS Expressway. Both the reconstruction and expansion of Jihe Expressway and GS Expressway have been included in the 14th Five-Year Plan for the development of the comprehensive transportation system of Guangdong Province and the construction thereof is expected to commence in near future. The aforesaid capital expenditure will continue to replenish the quality highway assets of the Group and effectively extend the combined concession period of the toll highway assets of the Company, thereby laying a solid foundation for sustainable development of the Company, and at the same time, the Group is required to raise a substantial amount of capital for this purpose.

The H Shares of the Company were listed in 1997. Since the listing of A Shares of the Company in 2001, except for the increase of 70,326 ordinary shares through the exercise of a small amount of conversion option attached to convertible bonds in 2009, its share capital has not been increased. Since 2017, in every annual general meeting, Shareholders of the Company have granted the general mandate to the Board to issue shares or issue A Share convertible bonds and H Shares. Having comprehensively considered various factors, the Company did not issue any shares under the general mandate and terminated the issuance of A Share convertible bonds and H Shares successively. Since the Company mainly relied on debt financing to raise funds in the past, its debt level has been rising. As at 31 December 2022, the Company’s total asset-liability ratio (calculated by total liabilities divided by total assets) was approximately

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60.46% (while the average ratio of listed companies in the same industry is approximately 46%), and the net asset interest-bearing debt ratio (calculated by total interest-bearing liabilities divided by total equity of shareholders) was approximately 122%. If the Company continues to rely solely on debt financing to raise funds, the level of debt of the Company is expected to rise further in the future. The ever-rising level of debt would lead to an increase in the cost of debt financing and increase the difficulty in financing, which may force the Company to forgo investment opportunities of high-quality projects and miss the development opportunity in the industry, which is not in the long-term interests of the Company and its shareholders. On the other hand, at present, the interest-bearing liabilities of the Group maturing before the end of 2024 are approximately RMB18 billion with an annual interest rate of approximately 2.2% to 6%. According to the requirements of the CSRC, the proceeds from the Issuance to repay liabilities shall not exceed 30% of the total proceeds. The Company intends to use no more than RMB1.9 billion of the proceeds from the Issuance to repay its interest-bearing liabilities, and will arrange the repayment of debts according to the receiving time of the proceeds and the negotiation with creditor. Repayment of interest-bearing liabilities will further improve its financial structure, reduce financial risks and enhance its overall antirisk capability, thereby providing strong protection for its subsequent development. Based on the audited financial results of the Company for the year ended 31 December 2022, assuming the proceeds raised from the Issuance amount to RMB6.5 billion and RMB1.9 billion of the proceeds has been applied for repayment of interest-bearing liabilities upon completion of the Issuance, the equity attributable to the owners of the Company will increase by RMB6.5 billion, while the Company’s liabilities will decrease by RMB1.9 billion and the total assets will increase by RMB4.6 billion. Accordingly, the Company’s total asset-liability ratio will be decreased to approximately 54.12%. Based on the reasons stated above, the Board believes that in addition to debt financing, the Company needs to raise funds through equity financing at this stage to promote a better development of the Company.

The Company has always been pursuing to providing returns to its Shareholders and has been distributing cash dividends for 26 consecutive years since its listing, with an accumulated cash dividend of approximately RMB13.2 billion. In the past five years, the Company’s cash dividend accounted for an average of about 50% of the net profit attributable to the ordinary shareholders of the parent company (on the basis of consolidated financial statements), and an average of 80% of the net profit of the parent company (on the basis of single financial statements). According to the Shareholders’ Return Proposal for 2021-2023 approved by the general meeting of the Company, if the conditions for cash dividend distribution are satisfied, the Company would endeavor to increase the proportion of cash dividend in 2021-2023. Besides, the profit intended for cash dividend will not be less than 55% of the net profits attributable to owners of the parent company in the consolidated financial statements for the same year, net of distribution payable to the holders of other equity instruments such as perpetual bonds (if any), provided that the financial and cash position of the Company is sound and there is no substantial investment plan or cash expenditure. In addition, the Company will also appropriately arrange the dividend ratio for the years following the Issuance according to the actual issuance situation, in order to minimise the dilution impact and strive to safeguard the interests of existing Shareholders. The Company will continue pursuing to providing returns to its Shareholders and develop a reasonable dividend policy after completion of the implementation of the Shareholders’ Return Proposal for 2021-2023.

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Although the Issuance will have a potential dilutive effect on the shareholding of the existing Shareholders (including minority Shareholders) of the Company, considering it will provide long-term capital and strengthen the investment and financing capability of the Company, the Outer Ring Project (where the proceeds will be invested) is a rare high-quality toll highway asset, and the Company’s long-standing and stable dividend policy will benefit all its shareholders (including its existing shareholders), the Company believes the benefits of the Issuance will outweigh the potential dilutive impact on the shareholding of its existing shareholders. Shenzhen International’s subscription for A Shares of not more than RMB1.51 billion through XTC Company which will maintain its controlling interest of not less than 45% demonstrates its good expectation of the future of the Company and its support for the longterm development of the Company. The Company will remain as a subsidiary of Shenzhen International upon completion of the Issuance.

In light of the above, the Board is of the view that the Issuance is in line with the long-term development strategy and the actual situation of the Company, and the use of the proceeds is in line with the relevant national policies and the overall future development direction of the Company, which is conducive to optimising the capital structure of the Company, reducing financial costs, enhancing sustainable profitability, further expanding the scope of investment and financing of the Company in the future and enhancing the core competitiveness of its principal business.

Since Mr. Dai Jing Ming is a director of both Shenzhen International and the Company, he has abstained from voting on the relevant resolutions in connection with the Issuance and the XTC Company A Share Subscription in the Board meeting of the Company. Save for Mr. Dai Jing Ming, none of the Directors of the Company has material interest in the Issuance or the XTC Company A Share Subscription and is required to abstain from voting in the relevant Board meeting.

In respect of the XTC Company A Share Subscription, the Board (excluding Mr. Dai Jing Ming) is of the view that the terms of the A Share Subscription Agreement are on normal commercial terms, fair and reasonable and in the interest of the Company and its Shareholders as a whole after having considered the reasons above.

7. FUND-RAISING ACTIVITIES IN THE PAST TWELVE MONTHS

The Company has not conducted any equity fund raising activities during the twelve months immediately before the Latest Practicable Date.

Since the Issuance does not result in a theoretical dilution effect of 25% or more on its own, the theoretical dilution effect of the Issuance is in compliance with the requirements under Rule 7.27B of the Listing Rules.

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8. GENERAL INFORMATION OF THE PARTIES

The Company

The Company and its subsidiaries are principally engaged in the investment, construction, operation and management of toll highways and general-environmental protection business. At present, the general-environmental protection business mainly includes solid waste resource treatment and clean energy power generation.

Shenzhen International

Shenzhen International and its subsidiaries are principally engaged in logistics, toll road, port and general-environmental protection businesses. Shenzhen International perceives the Guangdong-Hong Kong-Macao Greater Bay Area, the Yangtze River Delta, the BeijingTianjin-Hebei areas and major logistics gateway cities as key strategic regions. Through investment, mergers and acquisitions, restructuring and consolidation, it focuses on the investment, construction and operation of logistics infrastructure in the four major areas of “Inland Port Networking, Logistics Parks, Air Cargo and Railway Freight Logistics Infrastructure” (including inland ports, urban integrated logistics parks, air cargo terminals and railway logistics terminals) and toll roads. It provides its customers with value-added logistics services including intelligent warehouse and integrated cold chain warehousing, and also expanded its business segments to include the comprehensive development of land related to the “logistics + commerce” industries as well as the investment in and operation of generalenvironmental protection business.

XTC Company

XTC Company is a wholly-owned subsidiary of Shenzhen International and is principally engaged in the business of investment and development of logistics infrastructure.

9. EXEMPT FROM ISSUING THE REPORT ON USE OF PROCEEDS FROM PREVIOUS FUND-RAISING ACTIVITIES

Pursuant to the relevant requirements of the “Administrative Measures for the Registration of Securities Issuance by Listed Companies” and the “Guidelines for the Application of Regulatory Rules-Issuance Class No. 7” of the PRC, the previous fund-raising date of the Company falls on 15 October 2007. In view that the Company’s last raised funds have been credited to its account for more than 5 complete fiscal years, the Company is exempt from issuing the report on the use of proceeds from previous fund-raising activities and the Company’s accounting firm is not required to issue an authentication report on the use of the previous raised funds.

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(III) IMPLEMENTATION OF EXTERNAL DONATION FOR RURAL REVITALISATION STRATEGY

In order to carry out the decision and deployment of the Central Committee of the Communist Party of China and the State Council of the PRC in the implementation of the rural revitalisation strategy, and to implement the rural revitalisation missions by stationed in towns to help the towns and villages of Guangdong Provincial Committee of the Communist Party of China and Guangdong Provincial People’s Government; pursuant to the unified arrangement, the Company has participated in the pairing up assistance to Da’an Town, Lufeng City, Shanwei, the PRC. The Company intends to donate RMB3.6 million to the Shenzhen Charity Association (深圳市慈善會), which will be used for supporting the construction of the upgrading and renovation project of the tap water plant in Da’an Town, Lufeng City, Shanwei, the PRC.

The Board believes that supporting the construction of the upgrading and renovation project of the tap water plant in Da’an Town is an appropriate action of the Company to actively respond to the national rural revitalisation strategy, fulfill its corporate social responsibilities and perform its works for the pairing up assistance. It is also a specific action which reflects the Company’s service to the people’s livelihood and contribution to the society.

(IV) THE EGM AND THE HCM

The Company will consecutively convene the EGM and the Class Meetings at the conference room of the Company on 46th Floor, Hanking Center Tower, No. 9968 Shennan Avenue, Nanshan District, Shenzhen, the PRC at 10:00 a.m. on Wednesday, 20 September 2023, to consider and, if thought fit, approve the resolutions in relation to (1) the Issuance of A Shares to Specific Targets under the specific mandate (including the authorisation to the Board and its authorised person(s) to handle all matters relating to the Issuance and listing); (2) the XTC Company A Share Subscription; and (3) implementation of external donation for rural revitalisation strategy. The notices of the EGM and the HCM are set out on pages EGM-1 to EGM-7 and HCM-1 to HCM-7 of this circular. The respective proxy forms for the EGM and HCM are enclosed hereto. For the notice of the ACM, please refer to the notice separately published by the Company on 24 August 2023.

Whether or not you intend to attend the said meetings, you are requested to complete the relevant proxy forms in accordance with the instructions printed thereon and return the same to the registrar of H Shares of the Company, Hong Kong Registrars Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong (for H Shareholders) or to the Company on 46th Floor, Hanking Center Tower, No. 9968 Shennan Avenue, Nanshan District, Shenzhen, the PRC (for A Shareholders) as soon as possible and in any event not less than 24 hours before the time appointed for the holding of the relevant meetings. Completion and return of the proxy forms will not preclude you from attending and voting in at the EGM, Class Meetings or any adjourned meeting(s) thereof in person if you so wish.

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LETTER FROM THE BOARD

(V) CLOSURE OF REGISTER OF HOLDERS OF H SHARES

The register of holders of H Shares will be closed from Friday, 15 September 2023 to Wednesday, 20 September 2023, both days inclusive, during which period no transfer of H Shares will be effected. In order to qualify for attending the EGM and the Class Meetings, all transfer documents of H Shares accompanied by the relevant share certificates must be lodged with the Hong Kong Registrars Limited at Shops 1712-16, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not later than 4:30 p.m. on Thursday, 14 September 2023.

(VI) VOTING BY POLL

Pursuant to Rule 13.39(4) of the Listing Rules and the Articles of Association, the EGM and the Class Meetings shall vote by poll on the resolutions set out in the notices of the EGM and the Class Meetings. Therefore, all resolutions as set out in the notices of EGM and the Class Meetings will be voted by poll. The poll results will be published on the HKEXnews website of Hong Kong Exchanges and Clearing Limited at www.hkexnews.hk and the website of the Company at www.szexpressway.com upon the conclusion of the EGM and the Class Meetings.

As at the Latest Practicable Date, Shenzhen International and its associates indirectly hold 1,066,239,887 A Shares and 58,194,000 H Shares, representing approximately 51.56% of the issued shares of the Company. Since Shenzhen International has a material interest in the XTC Company A Share Subscription, Shenzhen International and its associates have to abstain from voting on the resolutions in relation to the XTC Company A Share Subscription and certain related resolutions in relation to the Issuance at the EGM and the Class Meetings, but do not have to abstain from voting on the resolution in relation to implementation of external donation for rural revitalisation strategy at the EGM, details of which are set out in the table below.

Save for the aforesaid, to the best of the knowledge, information and belief of the Directors and having made all reasonable enquiries, none of the other Shareholders has a material interest in any of the resolution(s) proposed at the EGM and the Class Meetings and is required to abstain from voting at the EGM or the Class Meetings.

No.	No.				Whether Shenzhen International and its associates have to abstain
	No.	Brief descriptions of the resolutions	Approving authorities	Type of resolution	Whether Shenzhen International and its associates have to abstain
	1	Satisfaction of the requirements of the Issuance of A Shares to Specific Targets	EGM	Ordinary resolution
	2	The proposal of the Issuance of A Shares to Specific Targets (to be considered by each item)	EGM and Class Meetings	Special resolution	�
3	3	The plan of the Issuance of A Shares to Specific Targets	EGM and Class Meetings	Special resolution	�

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LETTER FROM THE BOARD

No.	No.				Whether Shenzhen International and its associates have to abstain
	No.	Brief descriptions of the resolutions	Approving authorities	Type of resolution	Whether Shenzhen International and its associates have to abstain
	4	The demonstration and analysis report of the proposal of the Issuance of A Shares to Specific Targets	EGM	Special resolution	�
	5	The feasibility analysis report on the use of proceeds of the Issuance of A Shares to Specific Targets	EGM	Special resolution
	6	Being exempt from issuing report on use of proceeds from previous fund-raising activities	EGM	Ordinary resolution
	7	Entering into the conditional share subscription agreement with Specific Targets and the related/connected transaction	EGM and Class Meetings	Special resolution	�
	8	Grant of the authorisation to the Board to handle matters related to the Issuance of A Shares to Specific Targets	EGM and Class Meetings	Special resolution
	9	Dilution of current returns, remedial measures and the corresponding undertakings for the Issuance of A Shares to Specific Targets	EGM	Ordinary resolution
10	10	Implementation of external donation for rural revitalisation strategy	EGM	Ordinary resolution

In the event one or more of the resolutions in relation to the Issuance or the XTC Company A Share Subscription is not approved in the EGM and/or the Class Meetings, the Issuance will be suspended temporarily until the Company convenes another extraordinary general meeting and/or class meetings to approve such resolutions. The Company will timely announce the actual and final issue price, scale of issuance, period of issuance, total amount of gross proceeds and net proceeds, and other related matter in accordance with the development of the Issuance.

(VII) RECOMMENDATION

Information in relation to the Issuance of A Shares to Specific Targets under specific mandate (including the authoristion arrangement), the XTC Company A Share Subscription and implementation of external donation for rural revitalisation strategy which will be proposed for

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consideration and, if thought fit, approval at the EGM and/or the Class Meetings has been disclosed in this circular. In order to facilitate the Shareholders to locate the information in relation to the corresponding resolutions, the Company set out below an index for its Shareholders’ reference:

No.	No.		Reference
	No.	Brief descriptions of the resolutions	Reference
	1	Satisfaction of the requirements of the Issuance of A Shares to Specific Targets	Appendix I
	2	The proposal of the Issuance of A Shares to Specific Targets (to be considered by each item)	Letter from the Board – “ (II) Proposed Issuance of A Shares to Specific Targets under Specific Mandate” – “1. Proposal for the Issuance of A Shares to Specific Targets”
	3	The plan of the Issuance of A Shares to Specific Targets	Appendix II
	4	The demonstration and analysis report of the proposal of the Issuance of A Shares to Specific Targets	Appendix III
	5	The feasibility analysis report on the use of proceeds of the Issuance of A Shares to Specific Targets	Appendix II – Chapter 4 – “Feasibility analysis of the Board on the use of the Raised Capital”
	6	Being exempt from issuing report on use of proceeds from previous fund-raising activities	Letter from the Board – “ (II) Proposed Issuance of A Shares to Specific Targets under Specific Mandate” – “9. Exempt from Issuing the Report on Use of Proceeds from Previous Fund-Raising Activities”
	7	Entering into the conditional share subscription agreement with Specific Targets and the related/connected transaction	Letter from the Board – “ (II) Proposed Issuance of A Shares to Specific Targets under Specific Mandate” – “2. A Shares Subscription Agreement”; Letter from the Independent Board Committee; and Letter from the Independent Financial Adviser
	8	Grant of the authorisation to the Board to handle matters related to the Issuance of A Shares to Specific Targets	Letter from the Board – “ (II) Proposed Issuance of A Shares to Specific Targets under Specific Mandate” – “3. Authorisation to the Board to Deal with Matters in relation to the Issuance”
9	9	Dilution of current returns, remedial measures and the corresponding undertakings for the Issuance of A Shares to Specific Targets	Appendix II – Chapter 8 – “Description of the Company’s Make-up Measures for the Diluted Current Return of this Issuance”

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No. Brief descriptions of the resolutions Reference 10 Implementation of external donation for Letter from the Board – “(III) rural revitalisation strategy Implementation of external donation for rural revitalisation strategy”

In light of the factors and conclusion disclosed in this circular (including but not limited to Letter from the Board –“ (II) Proposed Issuance of A Shares to Specific Targets under Specific Mandate” – “6. Reasons for and Benefits of the Issuance of A Shares to Specific Targets”), the Board considers the Issuance, the A Share Subscription Agreement and the transactions contemplated thereunder are, respectively, conducted on normal commercial terms, fair and reasonable and in the interests of the Group and the Shareholders as a whole. Moreover, having considered the reasons disclosed in the Letter from the Board – “(III) implementation of external donation for rural revitalisation strategy”, the Board is of the view that implementation of external donation for rural revitalisation strategy allows the Company to actively respond to the national rural revitalisation strategy and fulfill its corporate social responsibilities. Accordingly, the Directors recommend that Shareholders to vote in favour of the resolutions to be proposed at the EGM and/or the Class Meetings in respect of the Issuance, the A Share Subscription Agreement and the transactions contemplated thereunder and implementation of external donation for rural revitalisation strategy.

Having taken into account the advice of Independent Financial Adviser, the Independent Board Committee considers that the terms of the A Share Subscription Agreement and the transactions contemplated thereunder are on normal commercial terms, fair and reasonable and in the interests of the Group and the Shareholders as a whole. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the resolutions to be proposed at the EGM and the Class Meetings in respect of the A Share Subscription Agreement.

(VIII) FURTHER INFORMATION

Your attention is drawn to (1) the letter from the Independent Board Committee set out on pages 33 to 34 of this circular, containing its recommendation in respect of the A Share Subscription Agreement and the transactions contemplated thereunder; and (2) the letter from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders set out on pages 35 to 67 of this circular, containing its recommendation in respect of the A Share Subscription Agreement and the transactions contemplated thereunder.

Your attention is drawn to the additional information set out in the appendices to this circular.

Yours faithfully,

By Order of the Board of Shenzhen Expressway Corporation Limited Liao Xiang Wen

Executive Director and President

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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(a joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock Code: 00548)

24 August 2023

To the Independent Shareholders

CONNECTED TRANSACTION – ENTERING INTO THE A SHARE SUBSCRIPTION AGREEMENT

Dear Sirs or Madams,

We refer to the circular of Shenzhen Expressway Corporation Limited (the “ Company ”) dated 24 August 2023 (the “ Circular ”), of which this letter forms a part. Unless otherwise defined, capitalised terms used herein shall have the same meanings as those defined in the Circular.

We have been appointed as members of the Independent Board Committee to advise the Independent Shareholders in respect of the A Share Subscription Agreement and the transactions contemplated thereunder, details of which are set out in the “Letter from the Board” in the Circular. Lego Corporate Finance Limited has been appointed as the Independent Financial Adviser with our approval to advise the Independent Board Committee and the Independent Shareholders in this regard.

We wish to draw your attention to the “Letter from the Board” on pages 5 to 32 of the Circular and the “Letter from the Independent Financial Adviser” on pages 35 to 67 of the Circular and the additional information contained in the appendix to this Circular.

Having taken into account, among other things, the principal factors and reasons considered by, and the advice of, the Independent Financial Adviser as set out in the “Letter from the Independent Financial Adviser” contained in the Circular, we concur with the view of the Independent Financial Adviser and consider that although the connected transaction under the A Share Subscription Agreement is not in the ordinary and usual course of business of the Group, the terms of the A Share Subscription Agreement are on normal commercial terms, and are fair and reasonable so far as the Independent Shareholders are concerned, and that the A Share Subscription Agreement and the transactions contemplated thereunder is in the interest

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

of the Company and the Shareholders as a whole. Accordingly, we recommend you to vote in favour of the resolutions to be proposed at the EGM and the Class Meetings for approving the A Share Subscription Agreement and the transactions contemplated thereunder.

Yours faithfully, Bai Hua Li Fei Long Miao Jun Xu Hua Xiang

Independent Board Committee

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the full text of a letter of advice from Lego Corporate Finance Limited to the Independent Board Committee and the Independent Shareholders in respect of the XTC Company A Share Subscription, which has been prepared for the purpose of inclusion in this circular.

==> picture [455 x 47] intentionally omitted <==

24 August 2023

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

Dear Sirs or Madams,

CONNECTED TRANSACTION IN RESPECT OF THE XTC COMPANY A SHARE SUBSCRIPTION

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the XTC Company A Share Subscription, details of which are set out in the letter from the Board (the “ Letter from the Board ”) contained in the circular issued by the Company to the Shareholders dated 24 August 2023 (the “ Circular ”), of which this letter forms part. Capitalised terms used in this letter shall have the same meanings as those defined in the Circular unless otherwise defined or the context requires otherwise.

On 14 July 2023, the board of directors of the Company (a subsidiary owned as to approximately 51.56% by Shenzhen International) approved the Issuance of A Shares to Specific Targets, pursuant to which the Company proposes to issue no more than 654,231,097 (inclusive) A Shares (representing not more than 30% of the total number of issued shares of the Company immediately prior to the Issuance of A Shares to Specific Targets) to no more than 35 (inclusive) Specific Targets (including XTC Company, a wholly-owned subsidiary of Shenzhen International) with an expected proceeds (before deducting relevant issuance expenses) of no more than RMB6.5 billion.

According to the proposal of the Issuance of A Shares to Specific Targets, on 14 July 2023, the Company and XTC Company entered into the A Share Subscription Agreement, pursuant to which, the Company conditionally agreed to issue to XTC Company, and XTC Company conditionally agreed to subscribe for A Shares in the total amount of not more than RMB1.51 billion pursuant to the final issue price of the Issuance. Upon completion of the Issuance, Shenzhen International will hold no less than 45% (inclusive) of the total issued shares of the Company through its wholly-owned subsidiaries.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

persons of the Company, and the XTC Company A Share Subscription constitutes a connected transaction of the Company and is subject to the announcement, reporting and the Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

INDEPENDENT BOARD COMMITTEE

The Independent Board Committee comprising all the independent non-executive Directors, namely, Mr. Bai Hua, Mr. Li Fei Long, Mr. Miao Jun and Mr. Xu Hua Xiang, has been established to advise the Independent Shareholders as to (i) whether the terms of the A Share Subscription Agreement are on normal commercial terms and fair and reasonable so far as the Independent Shareholders are concerned; and (ii) whether the XTC Company A Share Subscription is in the ordinary and usual course of business of the Group and in the interests of the Company and the Shareholders as a whole. We, Lego Corporate Finance Limited, have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.

OUR INDEPENDENCE

As at the Latest Practicable Date, we did not have any relationships or interests with the Company or any other parties that could reasonably be regarded as relevant to our independence. In the last two years prior to the Latest Practicable Date, there was no engagement between the Company and us. Apart from normal professional fees paid or payable to us in connection with this appointment, no arrangement exists whereby we had received or will receive any fees or benefits from the Company. Accordingly, we consider that we are eligible to give independent advice in respect of the XTC Company A Share Subscription.

BASIS OF OUR OPINION

In formulating our opinion and recommendations to the Independent Board Committee and the Independent Shareholders, we have relied on the information, facts and representations contained or referred to in the Circular and the information, opinions and representations provided or expressed to us by the Directors and/ or the management of the Company (the “ Management ”). We have assumed that all the information, facts and representations contained or referred to in the Circular, and all the information, opinions and representations provided or expressed by the Directors and/or the Management, were true, accurate and complete in all material respects at the time when they were provided and continue to be so as at the Latest Practicable Date and that they may be relied upon in formulating our opinion. We have also assumed that all such opinions and statements of intention or belief expressed by the Directors and/or the Management and those as set out or referred to in the Circular were reasonably made after due and careful enquiries.

The Directors have confirmed to us that no material facts have been withheld or omitted from the information provided, representations made or opinions expressed. We have no reason to suspect that any relevant information has been withheld or omitted, nor are we aware of any facts or circumstances which would render the information provided, representations made or opinions expressed to us untrue, inaccurate or misleading. We consider that we have been provided with, and have reviewed, sufficient information currently available, and that we have performed all the necessary steps to enable us to reach an informed view and to justify our reliance on the information provided so as to provide a reasonable basis for our opinion. We have not, however, carried out any independent verification of the information provided, representations made or opinions expressed by the Directors and/or the Management, nor have we conducted

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

any form of in-depth investigation into the businesses, affairs, operations, financial position or future prospects of the Group. Our opinion is necessarily based on the financial, economic, market and other conditions in effect, and the information made available to us, as at the Latest Practicable Date.

This letter is issued for the information of the Independent Board Committee and the Independent Shareholders solely in connection with their consideration of the XTC Company A Share Subscription. Except for its inclusion in the Circular, this letter is not to be quoted or referred to, in whole or in part, nor shall this letter be used for any other purposes without our prior written consent.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In formulating our opinion in respect of the XTC Company A Share Subscription, we have considered the following principal factors and reasons:

1. Information on the Company, Shenzhen International and XTC Company

1.1. The Company

The Company is a joint stock limited liability company incorporated in the PRC on 30 December 1996. The H Shares have been listed on the Stock Exchange since 12 March 1997 (stock code: 00548) and the A Shares have been listed on the Shanghai Stock Exchange since 25 December 2001 (stock code: 600548).

Headquartered in Shenzhen, the Group is principally engaged in the investment, construction, operation and management of toll highways and roads, as well as the general-environmental protection business. At present, the general-environmental protection business mainly includes solid waste resource treatment and clean energy power generation. According to the annual report of the Company for the year ended 31 December 2022 (the “ 2022 Annual Report ”), as of the date thereof, the Group operated and invested in a total of 16 toll highway projects and the total mileage of the high-grade highways invested in or operated by the Group (on equity basis) was approximately 643 km. The Group has also actively participated in various projects in the field of environmental protection, clean energy and finance.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Set out below is a summary of the financial results of the Group for the year ended 31 December 2021 (“ FY2021 ”) and the year ended 31 December 2022 (“ FY2022 ”) as extracted from the 2022 Annual Report:

	FY2021	FY2022	Change
	RMB million	RMB million	%
	(audited)	(audited)
Operating income	10,889.6	9,372.6	(13.9)
Operating profit	3,311.4	2,487.1	(24.9)
Profit for the year	3,357.1	2,484.5	(26.0)
Profit attributable to equity
shareholders of the Company	2,613.1	2,014.1	(22.9)

As disclosed in the 2022 Annual Report, the Group’s total operating income decreased by approximately 13.9% from approximately RMB10,889.6 million for FY2021 to approximately RMB9,372.6 million for FY2022. Such decrease was primarily attributable to (i) the decreased toll revenue from ancillary toll highways due to the decline in willingness to travel in the short term; (ii) the lower revenue resulting from road traffic diversion from the opening of Guanglian Expressway (the expressway between Guangzhou and Lianzhou in the PRC); and (iii) the lower revenue from construction services under concession arrangements due to project progress.

In FY2022, the Group recorded net profit attributable to its equity holders of approximately RMB2,014.1 million, representing a decrease of approximately RMB559.0 million, or 22.9%, as compared to approximately RMB2,613.1 million for FY2021. Such decrease was mainly attributable to (i) the decrease in operating income as mentioned above; and (ii) the increase in financial expenses, which was mainly due to the exchange losses of foreign currency liabilities resulting from the RMB depreciation and the increase in interest expenses resulting from the rise in the borrowing scale of the Group.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Set out below is a summary of the financial position of the Group as at 31 December 2021 and 2022 as extracted from the 2022 Annual Report, respectively:

	As at 31	As at 31
	December	December
	2021	2022	Change
	RMB million	RMB million	%
	(audited)	(audited)
Total assets	72,304.9	69,201.5	(4.3)
Non-current assets	61,022.7	59,904.3	(1.8)
Current assets	11,282.3	9,297.1	(17.6)
– Cash and cash equivalents	5,457.0	3,197.0	(41.4)
Total liabilities	40,772.4	41,840.6	2.6
Non-current liabilities	24,082.1	18,597.2	(22.8)
Current liabilities	16,690.3	23,243.4	39.3
Net current liabilities	5,408.0	13,946.3	157.9
Total equity	31,532.6	27,360.9	(13.2)
Total equity attributable to shareholders
of the parent company	25,560.6	21,346.3	(16.5)
Current ratio (times) Note 1	0.68	0.40	–
Debt-to-asset ratio Note 2	56.4%	60.5%	–
Net borrowings-to-equity ratio Note 3	79.1%	110.1%	–

Notes:

Calculated as current assets divided by current liabilities
Calculated as total liabilities divided by total assets
Calculated as total borrowings (excluding cash and cash equivalents) divided by total equity attributable to equity shareholders of the Group

As at 31 December 2022, the Group’s non-current assets amounted to approximately RMB59,904.3 million, which mainly comprised (i) intangible assets of approximately RMB26,847.6 million; (ii) long-term equity investments of approximately RMB17,749.1 million; (iii) fixed assets of approximately RMB7,209.5 million; (iv) other non-current assets of approximately RMB3,173.3 million; and (v) long-term receivables of approximately RMB2,152.2 million. Meanwhile, the Group’s current assets mainly consisted of (i) cash at banks and on hand of approximately RMB3,635.9 million; (ii) inventories of approximately

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RMB1,314.3 million; (iii) other receivables of approximately RMB1,121.6 million; (iv) transactional financial assets of approximately RMB1,112.2 million; and (v) accounts receivable of approximately RMB1,052.3 million.

As at 31 December 2022, the Group’s non-current liabilities amounted to approximately RMB18,597.2 million, which mainly comprised (i) long-term borrowings of approximately RMB9,573.2 million; (ii) bonds payable of approximately RMB5,769.5 million; (iii) deferred tax liabilities of approximately RMB1,281.0 million; and (iv) long-term payables of approximately RMB1,148.3 million. Meanwhile, the Group’s current liabilities mainly consisted of (i) short-term borrowings of approximately RMB9,396.2 million; (ii) noncurrent liabilities due within one year of approximately RMB6,380.3 million; (iii) accounts payable of approximately RMB2,813.0 million; (iv) other current liabilities of approximately RMB2,017.9 million; and (v) other payables of approximately RMB1,371.8 million.

The Group recorded net asset value of approximately RMB31,532.6 million and RMB27,360.9 million as at 31 December 2021 and 2022, respectively. Furthermore, the Group was in net current liabilities position of approximately RMB5,408.0 million and RMB13,946.3 million as at 31 December 2021 and 2022, respectively, with a current ratio of approximately 0.68 times and 0.40 times as at 31 December 2021 and 2022, respectively. As at 31 December 2022, the Group’s debt-to-asset ratio has reached approximately 60.5% and its net borrowings-to-equity ratio has reached approximately 110.1%.

1.2. Shenzhen International

Shenzhen International is a company incorporated in Bermuda with limited liability, the shares of which have been listed on the Stock Exchange since 25 September 1972 (stock code: 00152) and is ultimately controlled by State-owned Assets Supervision and Administration Commission of the People’s Government of Shenzhen Municipality.

Shenzhen International is the controlling shareholder of the Company which indirectly holds approximately 51.56% of the total issued shares of the Company as at the Latest Practicable Date.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

1.3. XTC Company

XTC Company is a company incorporated in the PRC with limited liability and is a whollyowned subsidiary of Shenzhen International. XTC Company is the largest shareholder of the Company which holds approximately 30.03% of the total issued shares of the Company as at the Latest Practicable Date, and is principally engaged in the business of investment and development of logistics infrastructure.

2. Reasons for and benefits of the Issuance (including the XTC Company A Share Subscription) and use of proceeds

2.1. Reinforcing the advantages of toll highways as a principal business

As disclosed in the Letter from the Board, the Company has dedicated to the transport infrastructure industry for over 20 years and has accumulated extensive experience in areas such as highway investment, construction, operation and management. Up to currently, the Company invested and operated in a total of 16 toll highway projects. The mileage of the highgrade highways invested or operated by the Company (on equity basis) is approximately 643 km. They are mainly located in Shenzhen and the Guangdong-Hong Kong-Macao Greater Bay Area and economically developed regions with favourable geographical advantages.

As further disclosed in the Letter from the Board, the proceeds from the Issuance will be used mainly for the construction of Outer Ring Phase III. The Outer Ring Project is the densified line of the skeleton of the “12 vertical, 8 horizontal and 2 rings” expressway network in Guangdong Province, and an important component of the “8 horizontal and 13 vertical” trunk road network in Shenzhen. It is an important transportation infrastructure in the Guangdong Hong Kong-Macau Greater Bay Area. The Outer Ring Project has obvious advantages in terms of road network. After completion of the Outer Ring Project, it will be interconnected with 10 expressways and 8 first-class highways in Shenzhen region, making it a high-quality core asset of the Company. Since the opening to traffic of the Outer Ring Phase I and Outer Ring Phase II, they have performed well in terms of operational performance, with rapid growth in traffic volume and toll revenue, and contributed approximately 10% and 15% to the revenue and profit (before interest and tax) of the Company in 2022, which is an important cornerstone for the sustainable development of the Company. Outer Ring Phase III passes through Pingshan District and Dapeng New District, and improving the infrastructure in these areas is in line with the government-led strategies of the Guangdong-Hong Kong-Macao Greater Bay Area and Shenzhen-Dongguan-Huizhou Integration, etc. Upon completion of Outer Ring Phase III, all the phases of Outer Ring Project will be completed and connected, which the Directors believe will bring about the overall benefits of the project on the one hand, and bring traffic flow to the other expressways of the Group by improving the layout of the road network on the other hand.

The Directors are of the view that the Outer Ring Project is a rare high-quality toll highway project. Investing in Outer Ring Phase III is conducive to obtaining the best overall economic and social benefits of the Outer Ring Project, which is in the best interests of the Company and its shareholders. Based on the geographical advantages, significant contributions and ideal

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returns of the Outer Ring Project, the Directors believe the Outer Ring Project has important strategic significance for the sustainable development of the Company. Completion of the construction of Outer Ring Phase III can expand the scale of the Company’s high-quality highway assets, enhance the future development of the Company’s toll highway business and further consolidate the Company’s core advantages in the investment, construction and operation of toll highways.

Based on our market research regarding the toll highway business in the PRC, it is noted that the National People’s Congress passed the Outline of the 14th Five-Year Plan for National Economic and Social Development (the “ 14[th] Five-Year Plan ”) and the Long-Term Goals for the Year 2035, which set out major goals of economic and social development for the period, in particular, to accelerate the establishment of China’s strength in transport and to promote the development of the Guangdong-Hong Kong-Macao Greater Bay Area. In January 2022, the State Council issued the “14[th] Five-Year Development Planning for Modern Integrated Transportation System” 《( “十四五”現代綜合交通運輸體系發展規劃》), which highlighted the development goal of the modern integrated transportation system during the 14[th] Five-Year Plan period. For the road transportation sector, it proposed to improve the structure and function of the road network and the national expressway network, to expand and reconstruct busy and congested sections of the main line of the national expressway, to accelerate the construction of parallel lines, connection lines and road sections to be connected, to strengthen infrastructure maintenance, develop and regulate road maintenance market, and gradually to increase the purchase of maintenance services from the society. By 2025, it is one of the goals of the 14[th] Five-Year Plan that China shall have realised integrated development in comprehensive transportation, where the total mileage of nationwide expressways shall be 190,000 km.

Based on the abovementioned factors, the Directors are of the view, and we concur with the Directors, that the Issuance is in line with the long-term development strategy and the actual situation of the Company, and the use of the proceeds is in line with the relevant national policies and the overall future development direction of the Company, which is conducive to optimising the capital structure of the Company, reducing financial costs, enhancing sustainable profitability, further expanding the scope of investment and financing of the Company in the future and enhancing the core competitiveness of its principal business.

2.2. Improving capital structure and enhancing long-term shareholders’ returns

As disclosed in the Letter from the Board, as the business of the Company is capital-intensive, capital is an important foundation for its sustainable development. The use of external financing by the Company to promote the development of its core business and new growth businesses is of great significance in enhancing the overall strength of the enterprise and achieving higher returns to shareholders.

Since the Company mainly relied on debt financing to raise funds in the past, its debt level has been rising. According to the 2022 Annual Report, it is noted that cash and cash equivalents of the Group amounted to approximately RMB3,197.0 million as at 31 December 2022. The Group had total borrowings of approximately RMB33,330.5 million as at 31 December 2022,

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approximately 53.4% of which shall be repayable within one year. The debt-to-asset ratio and the net borrowings-to-equity ratio of the Group have reached approximately 60.5% and 110.1%, respectively, as at 31 December 2022.

As at the Latest Practicable Date, the total capital expenditure of the Group of approximately RMB14.484 billion was approved by the Board to be allocated mainly to (i) Outer Ring Phase III; (ii) the project of the ramp bridge of airport interchange of the section from Nanshan, Shenzhen to Dongbao River (the boundary between Dongguan and Shenzhen) and facilities (referred to as “Coastal Phase II”); and (iii) the equity investments such as mergers and acquisitions of highways and general-environmental protection projects. Furthermore, as disclosed in the Letter from the Board, the Group is in the course of commencing the preliminary work for the reconstruction and expansion of Jihe Expressway and GS Expressway. Both the reconstruction and expansion of Jihe Expressway and GS Expressway have been included in the 14[th] Five-Year Plan for the development of the comprehensive transportation system of Guangdong Province and the construction thereof is expected to commence in near future. The aforesaid capital expenditure will continue to replenish the quality highway assets of the Group and effectively extend the combined concession period of the toll highway assets of the Company, thereby laying a solid foundation for sustainable development of the Company, and at the same time, the Group is required to raise a substantial amount of capital for this purpose.

In view of the aforementioned financial position and capital expenditure plan of the Group, the Directors consider that the Issuance offers a good opportunity for the Group to raise further capital by equity financing and to fulfil its working capital requirements for the capital expenditure plan and the repayment of interest-bearing liabilities of the Group. As disclosed in the Letter from the Board, the net proceeds expected to be raised upon the completion of the Issuance will improve the overall capital structure and debt repayment capability of the Group through the increase in its total assets and net assets. The net proceeds from the Issuance will provide funding to support the Outer Ring Phase III.

The Directors are of the view, and we concur, that the Issuance will be beneficial to the Company in further enhancing its capital strength, optimising its capital structure, reducing its financial costs, strengthening its anti-risk capability and competitiveness, further expanding the Company’s future investment and financing scope, supporting its future business development and enhancing its sustainable profitability and market competitiveness, which is in line with the long-term development strategy of the Company and in the interests of the Company and its shareholders. Furthermore, the intended subscription for the new A Shares under the Issuance by the controlling shareholder of the Company, Shenzhen International, through XTC Company demonstrates its confidence in and support for the long-term development of the Group. The Company will remain as a subsidiary of Shenzhen International upon completion of the Issuance.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

2.3. Use of Proceeds

As disclosed in the Letter from the Board, the total proceeds expected to be received from the Issuance would be no more than RMB6.5 billion (inclusive). The Company intends to apply the net proceeds from the Issuance for as to:

(i) not more than approximately RMB4.6 billion will be allocated to finance Outer Ring Phase III. The total amount of capital investment of the Outer Right Project is approximately RMB29.4 billion, of which approximately RMB8.45 billion is required for capital investment in relation to the construction of expressway that covers the 16.8 km section from Kengzi to Dapeng (referred to as Outer Ring Phase III); and
(ii) not more than approximately RMB1.9 billion will be allocated to repay the interestbearing liabilities of the Group.

As discussed with the Management and according to the 2022 Annual Report, we are given to understand that the Outer Ring Project has been approved by the Development and Reform Commission of Guangdong Province and has commenced since 2014. The Outer Ring Project is the densified line of the skeleton of the “12 vertical, 8 horizontal and 2 rings” expressway network in Guangdong Province, and an important component of the “8 horizontal and 13 vertical” trunk road network in Shenzhen. It is an important transportation infrastructure in the Guangdong- Hong Kong-Macau Greater Bay Area. The Outer Ring Project has obvious advantages in terms of road network. After completion of the Outer Ring Project, it will be interconnected with 10 expressways and 8 first-class highways in Shenzhen region, making it a high-quality core asset of the Company.

The Shenzhen section of the expressway of the Outer Ring Project consists of three phases of construction and development. Outer Ring Phase I and Outer Ring Phase II were invested by the Group together with the Shenzhen Municipal Government. Outer Ring Phase I and Outer Ring Phase II have commenced operation for traffic since the end of 2020 and 1 January 2022, respectively. As abovementioned, since the opening to traffic of Outer Ring Phase I and Outer Ring Phase II, they have performed well in terms of operational performance, with rapid growth in traffic volume and toll revenue, and contributed approximately 10% and 15% to the revenue and profit (before interest and tax) of the Company in 2022. According to the 2022 Annual Report, the average daily toll revenue generated by the Outer Ring Project amounted to approximately RMB2,520,000 and RMB2,610,000 for FY2021 and FY2022, respectively, which further increased to approximately RMB3,471,000 for the month of June 2023 as disclosed in the announcement of the Company dated 28 July 2023 regarding the Group’s unaudited toll revenue for the month of June 2023. The Directors believe that that Outer Ring Phase I and Outer Ring Phase II are important cornerstones of the sustainable development of the Group.

Outer Ring Phase III passes through Pingshan District and Dapeng New District, and improving the infrastructure in these areas is in line with the government-led strategies of the Guangdong-Hong Kong-Macao Greater Bay Area and Shenzhen-Dongguan- Huizhou Integration, etc. The estimated total investment of Outer Ring Phase III is approximately

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RMB8.45 billion, and the Company intends to apply RMB4.6 billion of the proceeds from the Issuance to invest in Outer Ring Phase III. The remaining investment of Outer Ring Phase III will be financed by internal resources and/or external financing of the Group. Subject to possible adjustment due to then circumstances such as the actual amount of net proceeds and the urgency of the project, the Company will utilise RMB2.2 billion, RMB2.1 billion and RMB0.3 billion of the proceeds into Outer Ring Phase III in 2024, 2025 and 2026, respectively. Upon completion of Outer Ring Phase III, all the phases of Outer Ring Expressway (Shenzhen Section) will be completed and connected, which will bring about the overall benefits of the project on the one hand, and bring traffic flow to the other expressways of the Group by improving the layout of the road network on the other hand.

For our due diligence purpose, we have obtained and reviewed the “Approval on the Adjustments of Construction and Investment Size of the Outer Ring Phase III” 《粵發改核准( [2023]7號:關於調整深圳外環高速公路深圳段三期（坑梓至大鵬段）工程建設和投資規模的批復》) issued by the Development and Reform Commission of Guangdong Province on 10 April 2023. It is noted from such document that the Development and Reform Commission of Guangdong Province has duly approved the construction of the Outer Ring Phase III to be conducted by the Company, with the estimated capital investment for the Outer Ring Phase III to be approximately RMB8.447 billion.

As understood from the Management, the Directors has approved the Company to commence the preliminary work of Outer Ring Phase III since May 2021, such as surveying and design of all included sections, and work such as construction and supervision of the first-stage section. Since FY2022, the preliminary work of all sections of Outer Ring Phase III have been in active progress. As disclosed in the 2022 Annual Report, the Group continues to position itself as an urban and transport infrastructure constructor and operator, which aims to consolidate and upgrade its core business of toll highways. The Directors are of the view that investing in Outer Ring Phase III is conducive to obtaining the best and overall economic and social benefits of the Outer Ring Project, which is in the best interests of the Company and its shareholders. Based on the geographical advantages of the Outer Ring Project, the Directors believe the Outer Ring Project has important strategic significance for the sustainable development of the Company, which will result in considerable revenue contribution, and thus enhance the business performance and profitability of the Group in the foreseeable future. Thus, the Directors are of the view, and we concur with the Directors, that the intended use of the major portion of the net proceeds from the Issuance to finance Outer Ring Phase III is in line with the principal business and strategic development plan of the Group.

As disclosed in the above sections, the current high debt-to-asset ratio and net borrowings-toequity ratio of the Group suggested there is an imminent need for the Group to alleviate its funding pressure to satisfy its capital expenditure plans and financial obligations in repaying its interest-bearing liabilities. The Directors are of the view, and we concur, that the utilisation of the remaining portion of the net proceeds from the Issuance to repay the interest-bearing liabilities of the Group will be beneficial to the Group to alleviate its liquidity pressure and to optimise its overall capital structure.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Having considered (i) the above reasons for and benefits of the Issuance; (ii) the intended use of proceeds from the Issuance being justifiable as discussed above; and (iii) the terms of the A Share Subscription Agreement being on normal commercial terms and fair and reasonable as discussed below, we are of the view that although the XTC Company A Share Subscription (which forms part of the Issuance) is not in the ordinary and usual course of business of the Group, it is in the interests of the Company and the Shareholders as a whole.

3. Other financing alternatives available to the Group

As disclosed in Letter from the Board, the Company has not conducted any fund-raising activities involving issue of equity securities in the past twelve months immediately preceding the Latest Practicable Date. As advised by the Management, apart from the Issuance, the Company has considered the feasibility of other financing alternatives such as debt financing and other means of equity financing.

In view of the current high gearing level of the Group, the key objectives of the fundraising exercise are to provide funding for investing the Group’s principal toll highway business, improve the liquidity position and to diversify the financing channels of the Group and to optimise the overall capital structure of the Group. However, debt financing by bank loans or other debt financing instruments will inevitably incur additional finance costs and increase the financial risks of the Group, which will contradict with the original intentions of the Company of fundraising as compared to the Issuance. According to the 2022 Annual Report, the Group had a total borrowings of approximately RMB33,330.5 million, for which approximately 53.4% of the total borrowings shall be repayable within one year as at 31 December 2022. The debt-to-asset ratio and the net borrowings-to-equity ratio of the Group have reached approximately 60.5% and 110.1%, respectively, as at 31 December 2022.

If the Company continues to rely solely on debt financing to raise funds, the level of debt of the Company is expected to rise further in the future. The ever-rising level of debt would lead to an increase in the cost of debt financing and increase the difficulty in financing, which may force the Company to forgo investment opportunities of high-quality projects and miss the development opportunity in the industry, which is not in the long-term interests of the Company and its shareholders. At present, the interest-bearing liabilities of the Group maturing before the end of 2024 are approximately RMB18 billion with an annual interest rate ranging from approximately 2.2% to 6%. According to the requirements of the CSRC, the proceeds from the Issuance to repay liabilities shall not exceed 30% of the total proceeds. The Company will arrange the repayment of debts according to the receiving time of the proceeds and the negotiation with creditor. On the other hand, the Company intends to use no more than RMB1.9 billion of the proceeds from the Issuance to repay its interest-bearing liabilities, and will arrange the repayment of debts according to the receiving time of the proceeds and negotiation with creditior. Repayment of interest-bearing liabilities will further improve its financial structure, reduce financial risks and enhance its overall anti-risk capability, thereby providing strong protection for its subsequent development. Based on the audited financial results of the Company for the year ended 31 December 2022, assuming the proceeds raised from the Issuance amount to RMB6.5 billion and RMB1.9 billion of the proceeds has been applied for repayment of interest-bearing liabilities upon completion of the Issuance, the equity attributable to the owners of the Company will increase by RMB6.5 billion, while the Company’s liabilities will

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

decrease by RMB1.9 billion and the total assets will increase by RMB4.6 billion. Accordingly, the Company’s total asset-liability ratio will be decreased to approximately 54.12%. Based on the reasons stated above, the Board believes that in addition to debt financing, the Company needs to raise funds through equity financing at this stage to promote a better development of the Company.

Based on the expected net proceeds of not more than approximately RMB6.5 billion from the Issuance, the Directors are of the view, and we concur with the Directors that, the gearing level would further climb and liquidity position would further be affected should the Group had opted for debt financing. Furthermore, debt financing from banks or financial institutions is generally subject to lengthy due diligence procedures and credit risk assessment by banks or financial institutions. Therefore, raising additional funds by debt financing is considered not favourable to the Group under the current circumstances.

The Management consider that equity financing is more in line with the long-term interests of the Company as compared to debt financing. For rights issue, the existing Shareholders are targeted, which the same price shall be implemented simultaneously to the equity holders of A Shares and H Shares. Given the A Shares trading on the Shanghai Stock Exchange have been trading at a significant premium over the share price of the H Shares being traded on the Stock Exchange, it is difficult for the Management to determine a suitable price for A Shares and H Shares. As a result, the Management did not consider rights issue to be an appropriate way of fund raising for the Group.

With the expected fund-raising size of the Issuance to be not more than approximately RMB6.5 billion, should the Company had conducted the fund raising by issuance of H Shares under the same pricing mechanism, a comparatively greater number of H Shares would be required to be issued, which in turn would lead to more substantial dilution effect to the shareholding of the existing Shareholders.

Furthermore, as substantial portion of business activities of the Group are conducted in the PRC, where RMB is the denominated currency being used in day-to-day transactions, additional administrative costs and procedures, approvals from authorities and foreign exchange risk may be resulted from the conversion of the proceeds to be received from the issuance of H Shares from Hong Kong dollars to RMB, if the Company decides to conduct fund raising activities by issuance of H Shares.

In light of the above, the Directors consider that the Issuance is comparatively more efficient and cost-effective, and we concur with the Directors’ view that the Issuance is the most preferred means of fundraising for the Group under the current circumstances.

4. A Share Subscription Agreement

4.1 Principal terms of the A Share Subscription Agreement

The principal terms of the A Share Subscription Agreement are identical to the terms of the proposal for the Issuance of A Shares to Specific Targets as disclosed in the Letter from the Board. Independent Shareholders’ attention is drawn to the details of such proposal which are

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set out in the section headed “(II) PROPOSED ISSUANCE OF A SHARES TO SPECIFIC TARGETS UNDER SPECIFIC MANDATE – 1. PROPOSAL FOR THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS” in the Letter from the Board.

The principal terms and conditions of the A Share Subscription Agreement (including certain applicable principal terms of the proposal for the Issuance of A Shares to Specific Targets) are summarised as follows:

(1) Parties:
(i) the Company (as issuer); and
(ii) XTC Company, a wholly-owned subsidiary of Shenzhen International (as subscriber).
(2) Date:
14 July 2023
(3) Subscription price and payment:
The subscription price and pricing principles are consistent with the final issue price and pricing principles for the Issuance of A Shares to Specific Targets as described in the paragraph headed “(10) Issue price and pricing method” below.

XTC Company will not participate in the price bidding process, and will accept the price bidding results and subscribe the A Shares of the Issuance at the same issue price as other Specific Targets.

If there is no quotation for the Issuance or the final issue price cannot be determined through bidding, XTC Company will not participate in the subscription of the A Shares under the Issuance.

Upon receipt of the payment notice for the subscription, XTC Company shall promptly pay the full amount to the designated bank account.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(4) Lock-up Period: The shares subscribed by XTC Company under the Issuance are refrained from being transferred for a period of eighteen (18) months from the completion date of the Issuance. If relevant laws, regulations and regulatory documents have other regulations on the lock-up periods for the shares to be issued under the Issuance of A Shares to Specific Targets, such regulations shall be followed. During the period from the completion date of the Issuance until the lock-up release date of such Shares, any extra Shares derived from events such as the grant of bonus shares, conversion of capital reserve into share capital, etc. by the Company for the shares subscribed by XTC Company under the Issuance shall also subject to the above lock-up arrangement.
(5) Number of XTC Company shall subscribe the A Shares to be issued under A Shares to be the Issuance in the amount of not more than RMB1.51 billion. subscribed for: The number of A Shares to be subscribed is calculated by dividing the total subscription amount by the final issue price of the Issuance and rounded down to the nearest integer.
The final number of A Shares to be issued is subject to adjustment in the manner as set forth in the paragraph headed “ (11) Number of A Shares to be issued” below.

Upon completion of the Issuance, Shenzhen International will hold no less than 45% (inclusive) of the total issued shares of the Company through its wholly-owned subsidiaries.

(6) Conditions The A Share Subscription Agreement will become effective precedent: after having been executed and sealed by the legal representative or authorized representative of the parties and satisfaction of all the following conditions:
the A Share Subscription Agreement, the Issuance, the XTC Company A Share Subscription and all related matters have been approved by/at the Board, the EGM and the Class Meetings (if required) and the board of directors and general meeting (if required) of the controlling shareholder of the Company (i.e. Shenzhen International);
the Issuance, the XTC Company A Share Subscription and the related matters have been approved by the entity(ies) supervising and managing State-owned assets in accordance with the requirements of the laws and regulations; and
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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

the CSRC has provided its consent for registration in respect of the Issuance.

As at the Latest Practicable Date, all the above conditions have not been satisfied.

(7) Class and nominal A Shares with nominal value of RMB1.00 each value of shares to be issued: The nominal value of the A Shares to

The aggregate nominal value of the A Shares to be issued to the Specific Targets will be no more than RMB654,231,097.

The new A Shares to be issued will rank pari passu with the existing A Shares in all respects.

(8) Method and timing The Issuance will be conducted by way of issuance of shares to of the issuance: Specific Targets.
The Company will issue A Shares to the Specific Targets at an appropriate time upon having obtained approval from the Shanghai Stock Exchange and within the effective registration period consent by the CSRC.
(9) Target subscribers and method of subscription:
The subscribers under the Issuance of A Shares to Specific Targets include no more than 35 (inclusive) Specific Targets (including XTC Company), which meet the criteria required by the CSRC. All Specific Targets shall subscribe the A Shares under the Issuance in cash, among which, XTC Company agreed to subscribe for A Shares under the Issuance in the amount of no more than RMB1.51 billion.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Upon the Company having obtained approval from the Shanghai Stock Exchange and the CSRC having provided its consent for the relevant registration, the board of directors of the Company or its authorised person(s) will identify the Specific Targets (other than XTC Company) upon negotiations with its sponsor (the lead underwriter) in accordance with the bidding results and pursuant to the authorisation granted at the EGM and the Class Meetings.

(10) Issue price and pricing method:
The pricing benchmark date shall be the first day of the issuance period of the Issuance.

The issue price of the Issuance shall not be lower than the higher of (the “ Minimum Issue Price ”):

The Company’s audited net assets per share attributable to the ordinary shareholders of the parent company as at the end of the most recent period prior to the Issuance.
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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

In the event that the Company carries out ex- dividend and exright activities such as distribution of dividend, bonus share issue, allotment of shares, conversion of capital reserve into share capital during the period from the balance sheet date of the latest audited financial report up to the issuance date, the value of the above net assets per share shall be adjusted accordingly.

As disclosed in the 2022 Annual Report of the Company, as at the Latest Practicable Date, the audited net assets value per share of the Company attributable to the ordinary shareholders of the parent company as at the end of the most recent period is RMB7.954 per share. The Company distributed dividend of RMB0.462 per share in 2023. Accordingly, the adjusted net asset value per share is RMB7.492 per share. The above information is for reference only.

80% of the average trading price of the Company’s A Shares in the 20 Trading Days prior to the Pricing Benchmark Date (excluding the Pricing Benchmark Date). The average trading price of the Company’s A Shares in the 20 Trading Days prior to the Pricing Benchmark Date = the total trading value of the Company’s A Shares in the 20 Trading Days prior to the Pricing Benchmark Date/the total trading volume of the Company’s A Shares in the 20 Trading Days prior to the Pricing Benchmark Date.

In the event that the Company carries out ex- dividend and exright activities such as distribution of dividend, bonus share issue, allotment of shares, conversion of capital reserve into share capital, which result in adjustment of its share price during the 20 Trading Days prior to the Pricing Benchmark Date, the trading prices of the Trading Days prior to such price adjustment shall be calculated according to the prices as adjusted by the relevant ex-dividend and ex- right activities.

On the basis of the aforementioned Minimum Issue Price, the final issue price shall be determined by negotiations between the board of directors of the Company or its authorised person(s) and the sponsor (the lead underwriter) according to the price bidding results, under the authorisation to be granted at the EGM and the Class meetings, and in compliance with the relevant laws and regulations and requirements of regulatory authority, after the Company having obtained approval from the Shanghai Stock Exchange and the CSRC having provided its consent for the relevant registration.

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In the case of distribution of cash dividends: P1=P0-D

In the case of grant of bonus shares or conversion of capital reserve into share capital: P1=P0/(l+N)

In case both of the above occur simultaneously: P1=(P0- D)/(1 +N)

(11) Number of A The number of A Shares to be issued under the Issuance shall be Shares to be no more than 30% of the total number of issued shares of the issued: Company immediately prior to the Issuance, i.e. not more than 654,231,097 shares (inclusive). Number of shares to be subscribed = subscription amount/final issue price per share, and the number of shares to be subscribed is rounded down to the nearest integer.

In the event the Company grants bonus shares, convert its capital reserve into share capital, or carries out any other activities leading to changes in its total share capital during the period from the approval date of its board resolutions in relation to the Issuance up to the issuance date, the maximum number of A Shares to be issued under the Issuance shall be adjusted accordingly.

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The final number of A Shares to be issued shall be determined by the negotiations between the board of directors of the Company or its authorised person(s) and its sponsor (the lead underwriter) pursuant to the authorisation to be granted at the EGM and the Class meetings, subject to the then actual circumstances, and within maximum limit of the A Shares to be issued upon the approval from the Shanghai Stock Exchange and the consent for registration from the CSRC.

(12) Amount and use of proceeds:

			Total outstanding
			investment	Proposed amount
		Total project	(Kengzi to Dapeng	of net proceeds to
No.	Name of project	investment	Section)	be applied
		(RMB100 million)	(RMB100 million)	(RMB100 million)
1	Outer Ring Expressway	294.04	84.47	46.00
	(Shenzhen Section)
2	Repayment of interest-bearing	–	–	19.00
	liabilities (Note)
	Total	294.04	84.47	65.00

Note: At present, the interest-bearing liabilities of the Group maturing before the end of 2024 are approximately RMB18 billion with an annual interest rate of approximately 2.2% to 6%. According to the requirements of the CSRC, the proceeds from the Issuance to repay liabilities shall not exceed 30% of the total proceeds. The Company will arrange the repayment of debts according to the receiving time of the proceeds and the negotiation with creditor.

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relevant regulations and regulatory documents after receipt of the proceeds. If the actual amount of net proceeds (after deducting relevant issuance expenses) falls short of the proposed amount of proceeds to be applied to the aforesaid projects, the board of directors of the Company or its authorised person(s) will, based on circumstances such as the actual amount of net proceeds and the urgency of the projects, adjust and determine the application of the proceeds including determining the project to be invested with the proceeds, prioritise and determine specific amount of proceeds to be applied to each project. Principally speaking, the Company will allocate the actual proceeds to each project in accordance with the planned proportion as shown in the above table. The shortage of funds will be self-financed by the Company.

(13) Arrangement of Both new shareholders and existing shareholders are entitled to accumulated the accumulated undistributed profits of the Company before the undistributed profits Issuance according to their respective shareholdings. before the Issuance:
(14) Validity of the resolutions:
The resolutions in relation to the Issuance shall remain valid for twelve (12) months from the date on which relevant resolutions are considered and approved by the EGM and the Class meetings of the Company.

4.2 Analysis of the principal terms of the A Share Subscription Agreement

In order to assess the fairness and reasonableness of the pricing mechanism under the A Share Subscription Agreement, we have performed an analysis by identifying an exhaustive list of comparable transactions in relation to (i) the issuance of A shares to specific targets by the companies listed on the main board of Shanghai Stock Exchange, which are not involved in risk caution raised by Shanghai Stock Exchange regarding delisting; and (ii) the price determination date shall be the first day of the issuance period of the respective A share issuance to specific targets, as first announced by the respective listed companies during the period from 1 February 2023 (being approximately six months prior to the Latest Practicable Date) and up to and including the Latest Practicable Date (the “ Review Period ”). Under the aforesaid criteria, we have identified 58 transactions (the “ Comparable Transactions ”).

Considering (i) the Review Period is able to illustrate the recent market practice regarding the issuance of A shares to specific targets by the companies listed on the main board of Shanghai Stock Exchange; and (ii) the number of Comparable Transactions represents a fair and representative sample size for the present comparison purpose in light of the similarity of transaction nature, we are of the view that the coverage of the Review Period is fair and reasonable for the selection of Comparable Transactions. Despite the fact that the principal businesses and scale of operations of the listed companies involved in the Comparable Transactions are not identical to that of the Group, the Comparable Transactions are considered

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sufficient and appropriate to demonstrate the recent market practices regarding the issuance of A shares to specific targets by the companies listed on the main board of the Shanghai Stock Exchange. The table below summarised the 58 identified Comparable Transactions under the abovementioned criteria:

	Date of publication			Bases for the determination of issue price of A
	of announcement	Company name	Stock code	share
1	4 February 2023	KEDE Numerical Control Co., Ltd.	SH688305	Not less than 80% of the 20-day average trading
		(科德數控股份有限公司)		price of the A-shares immediately preceding
				the pricing benchmark date (i.e. the first day
				of the issuance period)
2	7 February 2023	Kaili Catalyst & New Materials Co.,	SH688269	Not less than 80% of the 20-day average trading
		Ltd.		price of the A-shares immediately preceding
		(西安凱立新材料股份有限公司)		the pricing benchmark date (i.e. the first day
				of the issuance period)
3	16 February 2023	China Energy Engineering Corporation	SH601868	Not less than (i) 80% of the 20-day average
		Limited	HK3996	trading price of the A-shares immediately
		(中國能源建設股份有限公司)		preceding the pricing benchmark date (i.e. the
				first day of the issuance period); and (ii) the
				company’s latest audited net asset value per
				share attributable to ordinary shareholders of
				the listed company
4	17 February 2023	Anhui Ronds Science & Technology	SH688768	Not less than 80% of the 20-day average trading
		Incorporated Company (安徽容知日		price of the A-shares immediately preceding
		新科技股份有限公司)		the pricing benchmark date (i.e. the first day
				of the issuance period)
5	24 February 2023	QuMei Home Furnishings Group Co.,	SH603818	Not less than 80% of the 20-day average trading
		Ltd.		price of the A-shares immediately preceding
		(曲美家居集團股份有限公司)		the pricing benchmark date (i.e. the first day
				of the issuance period)
6	24 February 2023	Shandong Daye Co., Ltd.	SH603278	Not less than 80% of the 20-day average trading
		(山東大業股份有限公司)		price of the A-shares immediately preceding
				the pricing benchmark date (i.e. the first day
				of the issuance period)
7	4 March 2023	Shanghai Yuyuan Tourist Mart	SH600655	Not less than 80% of the 20-day average trading
		(Group) Co., Ltd		price of the A-shares immediately preceding
		(上海豫園旅遊商城（集團）股份		the pricing benchmark date (i.e. the first day
		有限公司)		of the issuance period)

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	Date of publication			Bases for the determination of issue price of A
	of announcement	Company name	Stock code	share
8	13 March 2023	Zhejiang Dongri Company Limited	SH600113	Not less than 80% of the 20-day average trading
		(浙江東日股份有限公司)		price of the A-shares immediately preceding
				the pricing benchmark date (i.e. the first day
				of the issuance period)
9	14 March 2023	Seazen Holdings Co., Ltd.	SH601155	Not less than 80% of the 20-day average trading
		(新城控股集團股份有限公司)		price of the A-shares immediately preceding
				the pricing benchmark date (i.e. the first day
				of the issuance period)
10	16 March 2023	Zhengping Road & Bridge	SH603843	Not less than 80% of the 20-day average trading
		Construction Co., Ltd.		price of the A-shares immediately preceding
		(正平路橋建設股份有限公司)		the pricing benchmark date (i.e. the first day
				of the issuance period)
11	18 March 2023	Shanxi Antai Group Co., Ltd	SH600408	Not less than 80% of the 20-day average trading
		(山西安泰集團股份有限公司)		price of the A-shares immediately preceding
				the pricing benchmark date (i.e. the first day
				of the issuance period)
12	21 March 2023	Tibet Urban Development and	SH600773	Not less than (i) 80% of the 20-day average
		Investment Co., Ltd.		trading price of the A-shares immediately
		(西藏城市發展投資股份有限公司)		preceding the pricing benchmark date (i.e. the
				first day of the issuance period); and (ii) the
				company’s latest audited net asset value per
				share attributable to the shareholders of the
				parent, whichever is higher
13	21 March 2023	Zhejiang Yonghe Refrigerant Co., Ltd.	SH605020	Not less than 80% of the 20-day average trading
		(浙江永和製冷股份有限公司)		price of the A-shares immediately preceding
				the pricing benchmark date (i.e. the first day
				of the issuance period)
14	23 March 2023	BEH-Property Co., Ltd.	SH600791	Not less than 80% of the 20-day average trading
		(京能置業股份有限公司)		price of the A-shares immediately preceding
				the pricing benchmark date (i.e. the first day
				of the issuance period)
15	25 March 2023	Zhejiang Shengda Bio-Pharm Co.,	SH603079	Not less than 80% of the 20-day average trading
		Ltd.		price of the A-shares immediately preceding
		(浙江聖達生物藥業股份有限公司)		the pricing benchmark date (i.e. the first day
				of the issuance period)

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

	Date of publication			Bases for the determination of issue price of A
	of announcement	Company name	Stock code	share
16	30 March 2023	COSCO SHIPPING Specialized	SH600428	Not less than (i) 80% of the 20-day average
		Carriers Co., Ltd.		trading price of the A-shares immediately
		(中遠海運特種運輸股份有限公司)		preceding the pricing benchmark date (i.e. the
				first day of the issuance period); and (ii) the
				company’s latest audited net asset value per
				share attributable to ordinary shareholders of
				the listed company
17	1 April 2023	Xingtong Shipping Co., Ltd.	SH603209	Not less than 80% of the 20-day average trading
		(興通海運股份有限公司)		price of the A-shares immediately preceding
				the pricing benchmark date (i.e. the first day
				of the issuance period)
18	4 April 2023	Ningbo Jifeng Auto Parts Co., Ltd.	SH603997	Not less than 80% of the 20-day average trading
		(寧波繼峰汽車零部件股份有限公		price of the A-shares immediately preceding
		司)		the pricing benchmark date (i.e. the first day
				of the issuance period)
19	5 April 2023	Dongfang Electric Corporation	SH600875	Not less than (i) 80% of the 20-day average
		Limited		trading price of the A-shares immediately
		(東方電氣股份有限公司)		preceding the pricing benchmark date (i.e. the
				first day of the issuance period); and (ii) the
				company’s latest audited net asset value per
				share attributable to ordinary shareholders of
				the listed company
20	10 April 2023	New East New Materials Co., Ltd	SH603110	Not less than 80% of the 20-day average trading
		(新東方新材料股份有限公司)		price of the A-shares immediately preceding
				the pricing benchmark date (i.e. the first day
				of the issuance period)
21	20 April 2023	Guangxi Liuyao Group Co., Ltd	SH603368	Not less than 80% of the 20-day average trading
		(廣西柳藥集團股份有限公司)		price of the A-shares immediately preceding
				the pricing benchmark date (i.e. the first day
				of the issuance period)
22	25 April 2023	Tongwei Co., Ltd.	SH600438	Not less than 80% of the 20-day average trading
		(通威股份有限公司)		price of the A-shares immediately preceding
				the pricing benchmark date (i.e. the first day
				of the issuance period)

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

	Date of publication			Bases for the determination of issue price of A
	of announcement	Company name	Stock code	share
23	26 April 2023	Long Yuan Construction Group Co.,	SH600491	Not less than 80% of the 20-day average trading
		Ltd		price of the A-shares immediately preceding
		(龍元建設集團股份有限公司)		the pricing benchmark date (i.e. the first day
				of the issuance period)
24	27 April 2023	Zhejiang China Light& Textile	SH600790	Not less than (i) 80% of the 20-day average
		Industrial City Group Co., Ltd		trading price of the A-shares immediately
		(浙江中國輕紡城集團股份有限公		preceding the pricing benchmark date (i.e. the
		司)		first day of the issuance period); and (ii) the
				company’s latest audited net asset value per
				share attributable to ordinary shareholders of
				the listed company
25	28 April 2023	IKD Co., Ltd.	SH600933	Not less than 80% of the 20-day average trading
		(愛柯迪股份有限公司)		price of the A-shares immediately preceding
				the pricing benchmark date (i.e. the first day
				of the issuance period)
26	29 April 2023	Nanjing Securities Co., Ltd.	SH601990	Not less than (i) 80% of the 20-day average
		(南京證券股份有限公司)		trading price of the A-shares immediately
				preceding the pricing benchmark date (i.e. the
				first day of the issuance period); and (ii) the
				company’s latest audited net asset value per
				share attributable to the shareholders of the
				parent, whichever is higher
27	11 May 2023	Yueyang Forest & Paper Co., Ltd.	SH600963	Not less than (i) 80% of the 20-day average
		(岳陽林紙股份有限公司)		trading price of the A-shares immediately
				preceding the pricing benchmark date (i.e. the
				first day of the issuance period); and (ii) the
				company’s latest audited net asset value per
				share attributable to ordinary shareholders of
				the listed company
28	16 May 2023	Veken Technology Co., Ltd.	SH600152	Not less than 80% of the 20-day average trading
		(維科技術股份有限公司)		price of the A-shares immediately preceding
				the pricing benchmark date (i.e. the first day
				of the issuance period)
29	18 May 2023	Suzhou New District Hi-Tech	SH600736	Not less than 80% of the 20-day average trading
		Industrial Co., Ltd.		price of the A-shares immediately preceding
		(蘇州新區高新技術產業股份有限公		the pricing benchmark date (i.e. the first day
		司)		of the issuance period)

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

	Date of publication			Bases for the determination of issue price of A
	of announcement	Company name	Stock code	share
30	19 May 2023	Hangzhou Youngsun Intelligent	SH603901	Not less than 80% of the 20-day average trading
		Equipment Co., Ltd		price of the A-shares immediately preceding
		(杭州永創智慧設備股份有限公司)		the pricing benchmark date (i.e. the first day
				of the issuance period)
31	19 May 2023	Xiamen Tungsten Co., Ltd.	SH600549	Not less than 80% of the 20-day average trading
		(廈門鎢業股份有限公司)		price of the A-shares immediately preceding
				the pricing benchmark date (i.e. the first day
				of the issuance period)
32	20 May 2023	Jiahe Foods Industry Co., Ltd.	SH605300	Not less than 80% of the 20-day average trading
		(佳禾食品工業股份有限公司)		price of the A-shares immediately preceding
				the pricing benchmark date (i.e. the first day
				of the issuance period)
33	25 May 2023	Shanghai Yanpu Metal Products Co.,	SH605128	Not less than 80% of the 20-day average trading
		Ltd.		price of the A-shares immediately preceding
		(上海沿浦金屬製品股份有限公司)		the pricing benchmark date (i.e. the first day
				of the issuance period)
34	26 May 2023	Nuode New MATERIALS Co., Ltd.	SH600110	Not less than 80% of the 20-day average trading
		(諾德新材料股份有限公司)		price of the A-shares immediately preceding
				the pricing benchmark date (i.e. the first day
				of the issuance period)
35	26 May 2023	Shanghai Zhenhua Heavy Industries	SH600320	Not less than (i) 80% of the 20-day average
		Co., Ltd.		trading price of the A-shares immediately
		(上海振華重工（集團）股份有限公		preceding the pricing benchmark date (i.e. the
		司)		first day of the issuance period); and (ii) the
				company’s latest audited net asset value per
				share attributable to the shareholders of the
				parent, whichever is higher
36	1 June 2023	Keystone Technology Co., Ltd.	SH605588	Not less than 80% of the 20-day average trading
		(南京冠石科技股份有限公司)		price of the A-shares immediately preceding
				the pricing benchmark date (i.e. the first day
				of the issuance period)

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

	Date of publication			Bases for the determination of issue price of A
	of announcement	Company name	Stock code	share
37	1 June 2023	China Southern Airlines Company	SH600029	Not less than (i) 80% of the 20-day average
		Limited		trading price of the A-shares immediately
		(中國南方航空股份有限公司)		preceding the pricing benchmark date (i.e. the
				first day of the issuance period); and (ii) the
				company’s latest audited net asset value per
				share attributable to the shareholders of the
				parent, whichever is higher
38	3 June 2023	China Enterprise Company Limited	SH600675	Not less than (i) 80% of the 20-day average
		(中華企業股份有限公司)		trading price of the A-shares immediately
				preceding the pricing benchmark date (i.e. the
				first day of the issuance period); and (ii) the
				company’s latest audited net asset value per
				share attributable to ordinary shareholders of
				the listed company
39	3 June 2023	Avic Heavy Machinery Co., Ltd.	SH600765	Not less than 80% of the 20-day average trading
		(中航重機股份有限公司)		price of the A-shares immediately preceding
				the pricing benchmark date (i.e. the first day
				of the issuance period)
40	6 June 2023	Jiangsu Zhenjiang New Energy	SH603507	Not less than 80% of the 20-day average trading
		Equipment Co., Ltd.		price of the A-shares immediately preceding
		(江蘇振江新能源裝備股份有限公		the pricing benchmark date (i.e. the first day
		司)		of the issuance period)
41	7 June 2023	Suli Co., Ltd.	SH603585	Not less than 80% of the 20-day average trading
		(江蘇蘇利精細化工股份有限公司)		price of the A-shares immediately preceding
				the pricing benchmark date (i.e. the first day
				of the issuance period)
42	27 June 2023	Super Telecom Co., Ltd.	SH603322	Not less than 80% of the 20-day average trading
		(超訊通信股份有限公司)		price of the A-shares immediately preceding
				the pricing benchmark date (i.e. the first day
				of the issuance period)
43	27 June 2023	Bank OF Hangzhou Co., Ltd.	SH600926	Not less than (i) 80% of the 20-day average
		(杭州銀行股份有限公司)		trading price of the A-shares immediately
				preceding the pricing benchmark date (i.e. the
				first day of the issuance period); and (ii) the
				company’s latest audited net asset value per
				share attributable to the shareholders of the
				parent, whichever is higher

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

	Date of publication			Bases for the determination of issue price of A
	of announcement	Company name	Stock code	share
44	28 June 2023	Shanghai Aiko Solar Energy Co., Ltd.	SH600732	Not less than 80% of the 20-day average trading
		(上海愛旭新能源股份有限公司)		price of the A-shares immediately preceding
				the pricing benchmark date (i.e. the first day
				of the issuance period)
45	01 July 2023	Tianjin Troila Information Technology	SH600225	Not less than (i) 80% of the 20-day average
		Co., Ltd.		trading price of the A-shares immediately
		(天津卓朗資訊科技股份有限公司)		preceding the pricing benchmark date (i.e. the
				first day of the issuance period); and (ii) the
				company’s latest audited net asset value per
				share attributable to ordinary shareholders of
				the listed company
46	01 July 2023	Zhongtai Securities Co., Ltd.	SH600918	Not less than 80% of the 20-day average trading
		(中泰證券股份有限公司)		price of the A-shares immediately preceding
				the pricing benchmark date (i.e. the first day
				of the issuance period)
47	11 July 2023	Shanghai MicuRx Pharmaceutical Co.,	SH688373	Not less than 80% of the 20-day average trading
		Ltd.		price of the A-shares immediately preceding
		(上海盟科藥業股份有限公司)		the pricing benchmark date (i.e. the first day
				of the issuance period)
48	15 July 2023	Fujian Tianma Science And	SH603668	Not less than 80% of the 20-day average trading
		Technology Group Co., Ltd.		price of the A-shares immediately preceding
		(福建天馬科技集團股份有限公司)		the pricing benchmark date (i.e. the first day
				of the issuance period)
49	18 July 2023	Unionman Technology Co., Ltd.	SH688609	Not less than 80% of the 20-day average trading
		(廣東九聯科技股份有限公司)		price of the A-shares immediately preceding
				the pricing benchmark date (i.e. the first day
				of the issuance period)
50	18 July 2023	WgTech (Jiang Xi) Co., Ltd.	SH603773	Not less than 80% of the 20-day average trading
		(江西沃格光電股份有限公司)		price of the A-shares immediately preceding
				the pricing benchmark date (i.e. the first day
				of the issuance period)
51	20 July 2023	Biwin Storage Technology Co., Ltd.	SH688525	Not less than 80% of the 20-day average trading
		(深圳佰維存儲科技股份有限公司)		price of the A-shares immediately preceding
				the pricing benchmark date (i.e. the first day
				of the issuance period)

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

	Date of publication			Bases for the determination of issue price of A
	of announcement	Company name	Stock code	share
52	21 July 2023	Ningbo Menovo Pharmaceutical Co.,	SH603538	Not less than 80% of the 20-day average trading
		Ltd.		price of the A-shares immediately preceding
		(寧波美諾華藥業股份有限公司)		the pricing benchmark date (i.e. the first day
				of the issuance period)
53	22 July 2023	Dahu Aquaculture Co., Ltd.	SH600257	Not less than 80% of the 20-day average trading
		(大湖水殖股份有限公司)		price of the A-shares immediately preceding
				the pricing benchmark date (i.e. the first day
				of the issuance period)
54	22 July 2023	Hunan Corun New Energy Co., Ltd.	SH600478	Not less than 80% of the 20-day average trading
		(湖南科力遠新能源股份有限公司)		price of the A-shares immediately preceding
				the pricing benchmark date (i.e. the first day
				of the issuance period)
55	26 July 2023	Kexing Biopharm Co. Ltd.	SH688136	Not less than 80% of the 20-day average trading
		(科興生物製藥股份有限公司)		price of the A-shares immediately preceding
				the pricing benchmark date (i.e. the first day
				of the issuance period)
56	27 July 2023	Rightway Holdings Co., Ltd.	SH600321	Not less than 80% of the 20-day average trading
		(正源控股股份有限公司)		price of the A-shares immediately preceding
				the pricing benchmark date (i.e. the first day
				of the issuance period)
57	10 August 2023	Ningbo Lehui International	SH603076	Not less than 80% of the 20-day average trading
		Engineering Equipment Co.,Ltd. (寧		price of the A-shares immediately preceding
		波樂惠國際工程裝備股份有限公司)		the pricing benchmark date (i.e. the first day
				of the issuance period)
58	11 August 2023	Jiangsu Rongtai Industry Co., Ltd. (江	SH605133	Not less than 80% of the 20-day average trading
		蘇嶸泰工業股份有限公司)		price of the A-shares immediately preceding
				the pricing benchmark date (i.e. the first day
				of the issuance period)

Source: cninfo.com.cn

Based on the identified results as presented in the table above, we are of the view that the pricing mechanism under the Issuance (including the XTC Company A Share Subscription) is consistent with that of the Comparable Transactions, and thus it is considered generally in line with recent market practice.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Based on our discussion with the Directors, we are given to understand that the pricing mechanism of the issue price under the Issuance are in compliance with the “Administrative Measures for the Registration of Securities Issuance by Listed Companies” 《上市公司證券發( 行註冊管理辦法》) issued by the CSRC on 17 February 2023 (the “ Administrative Measures ”), which requires (i) the issue price shall not be lower than 80% of the average trading price for the period of last 20 trading days preceding the pricing benchmark date; and (ii) the pricing benchmark date is defined as the first day of the issuance period of the issuance of A Shares to specific targets. In addition, the pricing mechanism has been further enhanced and restrained the issued price shall not be less than the Company’s latest audited net asset value per share attributable to ordinary shareholders of the listed company either.

Based on the abovementioned factors, it is noted that, in particular, (i) the pricing mechanism under the Issuance (including the XTC Company A Share Subscription) is generally in line with recent market practice; (ii) the pricing mechanism and the issue price are in compliance with the Administrative Measures; and (iii) the pricing mechanism has been further enhanced and the issue price has been restrained under the abovementioned basis, we are of the opinion that the terms of the A Share Subscription Agreement are on normal commercial terms and fair and reasonable so far as the Independent Shareholders are concerned.

As disclosed in the Letter from the Board, in the event that the Company carries out exdividend and ex-right activities such as distribution of dividend, bonus share issue, allotment of shares, conversion of capital reserve into share capital during the period from the balance sheet date of the latest audited financial report up to the issuance date, the value of the above net assets per share shall be adjusted accordingly. The formula for the adjustment was set out under the paragraph headed “ (4) Issue price and pricing method” under the section headed “(II) PROPOSED ISSUANCE OF A SHARES TO SPECIFIC TARGETS UNDER SPECIFIC MANDATE – 1. PROPOSAL FOR THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS” in the Letter from the Board. Such arrangements were also being adopted in the Comparable Transactions, with identical methodologies and formula of price adjustments. Considering the fact that the price adjustment mechanism will be applied to all Specific Investors, we are of the opinion that such price adjustment mechanism is on normal commercial terms.

According to the A Share Subscription Agreement, XTC Company will not participate in the price bidding process, and will accept the price bidding results and subscribe the A Shares of the Issuance at the same issue price as other Specific Targets. If there is no quotation for the Issuance or the final issue price cannot be determined through bidding, XTC Company will not participate in the subscription of the A Shares under the Issuance.

According to the A Share Subscription Agreement, the new A Shares to be subscribed by XTC Company shall not be traded or transferred within 18 months from the completion date of the Issuance. The same lock-up requirement is applicable for the A Shares XTC Company may subsequently obtain due to distribution of share dividend, transfer to share capital from capital reserve and rights issue by the Company during the lock-up period.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Pursuant to the requirements of the Administrative Measures, the share which will be subscribed by (i) the listed companies’ controlling shareholder, beneficial owner, or their controlled enterprise shall not be transferred for an 18-month period; and (ii) other investors shall not be transferred for a six-month period.

In view of the fact that (i) the lock-up arrangement for the XTC Company A Share Subscription will be no more favourable than that for the subscription of independent investors; and (ii) the lock-up arrangement is required by the Administrative Measures to comply with relevant laws and regulations in the PRC, we are of the view that the lock-up arrangement of the A Share Subscription Agreement is on normal commercial terms.

5. Possible financial effects of the Issuance (including the XTC Company A Share Subscription)

5.1 Liquidity

As at 31 December 2022, the Group had cash and bank balances of approximately RMB3,197.0 million and recorded a net current liabilities position of approximately RMB13,946.3 million. As the net proceeds to be raised from the Issuance will be utilised to finance Outer Ring Phase III and to repay interest-bearing borrowings of the Group, it is expected that the cash position and working capital of the Group will be improved upon completion of the Issuance, and thereby the liquidity pressure of the Group will be relieved.

5.2 Net asset value

As at 31 December 2022, the audited consolidated net asset value of the Group amounted to approximately RMB21,346.3 million. The Issuance is expected to bring a positive impact on the consolidated net asset value of the Group as a result of the availability of the net proceeds from the Issuance. Furthermore, as the issue price under the Issuance will not be lower than the net assets per ordinary share attributable to equity shareholders of the Company, the net assets per ordinary share attributable to equity shareholders of the Company will not be worse off.

5.3 Gearing level

As at 31 December 2022, the Group’s debt-to-asset ratio and the net borrowings-to-equity ratio have reached approximately 60.5% and 110.1%, respectively. Upon completion of the Issuance, the total assets and equity base of the Group will be increased and certain borrowings of the Group will be repaid by a portion of the net proceeds from the Issuance. Accordingly, the gearing level of the Group is expected to be reduced.

Based on the above, the Issuance (including the XTC Company A Share Subscription) would have an overall positive impact on the financial position of the Group in terms of cash flows, net asset value and gearing upon completion. On such basis, we are of the view that the XTC Company A Share Subscription as part of the Issuance is in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Shareholders are reminded that the above analysis is for illustrative purposes only and does not purport to represent how the financial position of the Group would be upon completion of the Issuance.

6. Potential dilution effect on the shareholding of the Company

As illustrated in the table under the section headed “(II) PROPOSED ISSUANCE OF A SHARES TO SPECIFIC TARGETS UNDER SPECIFIC MANDATE – 4. EFFECT OF ISSUANCE OF A SHARES TO SPECIFIC TARGETS ON THE COMPANY’S SHAREHOLDING STRUCTURE” contained in the Letter from the Board, assuming that (1) there is no other change in the number of shares in issue of the Company from the Latest Practicable Date to the completion of the Issuance of A Shares to Specific Targets; (2) the number of A Shares issued to the Specific Targets is the maximum number of shares proposed to be issued under the Issuance of A Shares to Specific Targets, i.e. 654,231,097 (inclusive) A Shares; (3) the percentage of the total number of shares of the Company held by Shenzhen International through its wholly-owned subsidiaries will be diluted to 45% of the total number of issued shares of the Company upon completion of the Issuance, the shareholding of the existing public A Shareholders will be decreased from approximately 16.83% to approximately 12.95% and the shareholding of the existing public H Shareholders will be decreased from approximately 31.61% to approximately 24.31%, with an overall dilution effect of approximately 11.18% immediately after completion of the Issuance of A Shares to Specific Targets.

Nevertheless, taking into account (i) the reasons for and benefits of the XTC Company A Share Subscription as discussed in the section headed “2. Reasons for and benefits of the Issuance (including the XTC Company A Share Subscription) and use of proceeds” above; (ii) the appropriateness of raising capital by way of the Issuance as discussed in the section headed “3. Other financing alternatives available to the Group” above; (iii) the fairness and reasonableness of the terms of the A Share Subscription Agreement as discussed in the section headed “4. A Share Subscription Agreement” above; and (iv) the overall positive impact on the financial position of the Group arising from the Issuance as discussed in the section headed “5. Possible financial effects of the Issuance (including the XTC Company A Share Subscription)” above, we are of the view that the aforementioned dilution effect on the shareholding of the existing public Shareholders as a result of the Issuance is acceptable so far as the Independent Shareholders are concerned.

RECOMMENDATION

Having considered the above principal factors and reasons, we are of the opinion that (i) the terms of the A Share Subscription Agreement are on normal commercial terms and fair and reasonable so far as the Independent Shareholders are concerned; and (ii) although the XTC Company A Share Subscription is not in the ordinary and usual course of business of the Group, it is in the interests of the Company and the Shareholders as a whole. Accordingly, we advise the Independent Board Committee to recommend, and we ourselves recommend, the Independent Shareholders to vote in favour of the relevant resolution(s) to be proposed at the EGM and the Class Meetings to approve the A Share Subscription Agreement and the XTC Company A Share Subscription.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Yours faithfully, For and on behalf of Lego Corporate Finance Limited

Kristie Ho

Managing Director

Ms. Kristie Ho is a licensed person registered with the Securities and Futures Commission and a responsible officer of Lego Corporate Finance Limited to carry out Type 6 (advising on corporate finance) regulated activity under the Securities Futures Ordinance. She has over 15 years of experience in the securities and investment banking industries.

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APPENDIX I RESOLUTION IN RELATION TO THE COMPANY'S SATISFACTION OF THE REQUIREMENTS OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS

RESOLUTION IN RELATION TO THE COMPANY'S SATISFACTION OF THE REQUIREMENTS OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS

Shenzhen Expressway Corporation Limited (hereinafter referred to as the “ Company ”) plans to issue renminbi ordinary shares (A-shares) to specific targets (hereinafter referred to as “ this issuance ”). The Company has carefully analysed the conditions of this issuance and checked them item by item, and thinks that it meets the substantial conditions for issuance of A-shares to specific targets in accordance with the Company Law of the People’s Republic of China 《中華人民共和國公司法》( , hereinafter referred to as the “ Company Law ”), the Securities Law of the People’s Republic of China 《中華人民共和國證券法》( , hereinafter referred to as the “ Securities Law ”), and the Administrative Measures for Securities Offering and Registration of Listed Companies (上市公司證券發行註冊管理辦法, hereinafter referred to as the “ Administrative Measures for Registration ”), the Applicable Opinions of Relevant Provisions in Articles 9, 10, 11, 13, 40, 57 and 60 of the Administrative Measures for Registration – Applicable Opinion No. 18 on of Securities and Futures Laws 《〈註冊管理辦法〉第九條、第十條、第十一條、第十三條、第四十條、第( 五十七條、第六十條有關規定的適用意見——證券期貨法律適用意見第18號》, hereinafter referred to as the “ Applicable Opinion No. 18 ”), the Applicable Guidelines under Regulatory Rules – Category Offering No. 7 《監管規則適用指引( ——發行類第7號》), and other applicable laws, regulations and normative documents. The specific analysis is as follows:

Each share issued this time has an equal amount, which complies with Article 125 of the Company Law.
All shares issued this time are domestically listed renminbi ordinary shares (A-shares) with a face value of RMB1.00 per share, and have the same issue conditions and price. The price of this issuance will not be less than the face value, which complies with Articles 126 and 127 of the Company Law.
The shares issued this time are registered shares, which complies with Article 129 of the Company Law.
This issuance will be conducted by issuing to specific targets without advertising, public inducement or disguised disclosure, and complies with paragraph 3 of Article 9 of the Securities Law.
Targets of this issuance are not more than 35 specific investors that meet the conditions stipulated by the CSRC, including Xin Tong Chan Development (Shenzhen) Company Limited (hereinafter referred to as “ XTC Company ”), a wholly-owned subsidiary of Shenzhen International Holdings Limited – the controlling shareholder of the Company (hereinafter referred to as “ Shenzhen International ”). Except XTC Company, other specific issuing targets will be submitted to the Company’s general meeting and class general meeting to authorise the Board and its authorised person to negotiate with the sponsor (lead underwriter) based on the bidding results after obtaining approval from the SSE and the consent from the CSRC for registration. Targets of this issuance comply with the Articles 55 and 58 of the Administrative Measures for Registration.
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APPENDIX I RESOLUTION IN RELATION TO THE COMPANY'S SATISFACTION OF THE REQUIREMENTS OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS

If there are new provisions in state laws and regulations regarding targets of this issuance of A-shares to specific targets, the Company will adjust to such new provisions. If the regulatory authorities have other provisions on the shareholder qualifications of issuing targets and the corresponding review procedure, such provisions will apply.

The pricing benchmark date for this issuance is the first day of the issuing period. The issue price will not be lower than the 80% of the average trading price of the Company’s A-shares in the 20 trading days preceding the pricing benchmark date (excluding such date, the same below) (the average trading price of the Company’s A-shares in the 20 trading days preceding the pricing benchmark date = the total trading amount of the Company’s A-shares in the 20 trading days preceding the pricing benchmark date/the total trading amount of the Company’s A-shares in the 20 trading days preceding the pricing benchmark date) or the audited net asset value per share attributable to ordinary shareholders of the parent company at the end of the most recent period before this issuance (hereinafter referred to as the “ minimum issue price ”), whichever is higher. If there is any adjustment to the stock price due to any ex-dividend or ex-right event such as dividend distribution, offering of bonus shares, share allotment or capital reserve conversion into the share capital in such 20 trading days, the trading price on the trading day before the adjustment will be calculated based on the price after the corresponding ex-dividend or ex-right adjustment. If the Company experiences any ex-dividend or ex-right event such as dividend distribution, offering of bonus shares, share allotment or capital reserve conversion into the share capital during the period from the balance sheet date of the most recent unaudited financial report before this issuance to the issuing date, the aforesaid net asset value per share will be adjusted accordingly. If the Company experiences any ex-dividend or exright event such as dividend distribution, offering of bonus shares, share allotment or capital reserve conversion into the share capital during the period from the pricing benchmark date to the issuing date, the issue price will be adjusted according to the following rules:

Assuming that the issue price before the adjustment is P0, the number of bonuses shares or shares to be converted into the share capital per share is N, the cash dividend to be distributed per share is D, and the adjusted issue price is P1, then:

When only cash dividends are distributed: P1=P0-D

When only offering of bonus shares or conversion into the share capital occurs: P1=P0/(l+N)

When cash dividends are distributed, and offering of bonus shares or conversion into the share capital also occurs: P1=(P0-D)/(1+N)

XTC Company will not participate in the market bidding process for the pricing of this issuance, but promises to subscribe at the same price as the other investors based on the market bidding results. If the issue price cannot be generated through bidding, XTC Company will not participate in this issuance. The pricing benchmark date, issue price and pricing principles of this issuance comply with Articles 56, 57 and 58 of the Administrative Measures for Registration.

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APPENDIX I RESOLUTION IN RELATION TO THE COMPANY'S SATISFACTION OF THE REQUIREMENTS OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS

After the completion of this issuance, the shares subscribed for by XTC Company in this issuance should not be transferred within 18 months from the end of this issuance, and the shares subscribed for by any other issuing target in this issuance should not be transferred within 6 months from the end of this issuance. If there are other provisions in the relevant regulations and normative documents regarding the trading restriction period of issuing shares to specific targets, such provisions will apply. The lockup period of this issuance complies with Article 59 of the Administrative Measures for Registration.
The total amount of the capital raised from this issuance will not exceed RMB6.5 billion. The net amount of the raised capital after deduction of issuance expenses will be fully used for projects related to the main business and the repayment of interest-bearing liabilities: In order to ensure the smooth progress of the investment projects of the raised capital and protect the interests of all shareholders of the Company, the Company can invest self-raised capital based on the implementation progress and actual situation of the investment projects before the raised capital is in place. After the raised capital is in place, the invested self-raised capital will be replaced in accordance with the relevant regulations and normative documents. If the actual amount of the raised capital (after deduction of issuance expenses) is less than the total amount of the raised capital to be invested in the above projects, the Board and its authorised person will adjust and ultimately decide on the specific projects, and their priority order and specific amounts based on the actual amount of the raised capital, the priority order of the projects, etc. Any shortfall of the raised capital will be self-raised by the Company. The use of the capital raised from this issuance complies with the national industrial policies, and the relevant laws and administrative regulations on environmental protection and land management; the raised capital will not be used for holding financial investments, nor will it be directly or indirectly invested in any company engaged mainly in buying and selling securities; after the investment projects are implemented, there will be no new horizontal competition with a material impact with the controlling shareholder, actual controller or any other enterprise under their control, any obviously unfair related / connected transaction or any material impact on the independence of the Company’s production and management; this issuance complies with Article 12 of the Administrative Measures for Registration, and the relevant provisions of the Applicable Guidelines under Regulatory Rules – Offering Category No. 7.
Based on the upper limit of the number of shares issued this time, after the completion of this issuance, it is expected that the control of the Company will not change, and none of the cases specified in Article 87 of the Administrative Measures for Registration exists.
Based on a self-check, the Company does not meet any of the following conditions of prohibition from issuing A-shares to specific targets stipulated in Article 11 of the Administrative Measures for Registration:
“1) It fails to correct any unauthorised change to the purpose of the raised capital last time, or get it approved by the general meeting;
2) The preparation and disclosure of the financial statements for the past year do not comply with the provisions of the Accounting Standards for Business Enterprises or relevant information disclosure rules in any material aspect; an audit report with a negative opinion or unable to
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APPENDIX I RESOLUTION IN RELATION TO THE COMPANY'S SATISFACTION OF THE REQUIREMENTS OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS

express an opinion is issued for the financial statements of the past year; an audit report with a qualified opinion is issued for the financial statements of the past year, and the significant adverse effect of the matter involved in the qualified opinion on the listed company has not been eliminated yet. Except that this issuance involves any significant asset restructuring;

3) Any of its incumbent directors, supervisors and senior management members received any administrative penalty from the CSRC in the past three years, or public censure from a stock exchange in the past year;
4) The listed company or any of its incumbent directors, supervisors and senior management members is under investigation in a case filed by judicial authorities on suspicion of committing a crime or under investigation in a case filed by the CSRC on suspicion of a violation of laws and regulations;
5) The controlling shareholder or actual controller committed any significant illegal activity that seriously damaged the interests of the listed company or the legitimate rights and interests of investors in the past three years;
6) There was a significant illegal activity that seriously damaged the legitimate rights and interests of investors or the public interests in the past three years.”
The number of shares issued this time does not exceed 654,231,097 (inclusive), not more than 30% of the total share capital of the Company before this issuance, meeting the relevant requirement of the Applicable Opinions No. 18.
The date of the Board resolution on this issuance is over 18 months from the date on which the capital raised last time was in place, namely 15 October 2007, meeting the relevant requirement of the Applicable Opinions No. 18.
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PLAN OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS FOR 2023

APPENDIX II

This plan is originally prepared in Chinese and the English version is for reference only. In the event of any inconsistency between the Chinese version and the English version, the Chinese version shall prevail.

SHENZHEN EXPRESSWAY CORPORATION LIMITED

PLAN OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS FOR 2023

JULY 2023

COMPANY STATEMENT

The Company and all members of the Board hereby warrant that the content of this plan is true, accurate and complete, and free from any false record, misleading representation or material omission, and are individually, and jointly and severally responsible for the trueness, accuracy and completeness of such content.
After the completion of this issuance of A-shares to specific targets, the Company will be responsible for any change in its operations and earnings; investment risks arising from this issuance of A-shares to specific targets are solely assumed by investors.
This plan is a statement by the Board of the Company regarding this issuance of A-shares to specific targets, and any statement to the contrary is a false statement.
Investors should consult their stock brokers, lawyers, professional accountants, or other professional advisors if they have any question.
The matters mentioned in this plan do not represent the substantive judgment, confirmation or approval of the approval authorities regarding this issuance of A-shares to specific targets. The effectiveness and completion of the matters related to this issuance of A-shares to specific targets mentioned in this plan still need to be approved or registered by the approval authorities.
This plan is prepared in accordance with the requirements of regulations and normative documents such as the Administrative Measures for Securities Offering and Registration of Listed Companies.

IMPORTANT NOTICE

The words or abbreviations referred to in this section have the same meanings as those defined in “Interpretations” of this plan.

The matters related to this issuance of A-shares to specific targets were considered and approved at the 32nd meeting of the ninth session of the Board of the Company held on 14 July 2023, and still need to be considered and approved by the Company’s general meeting and class meeting, approved by the entity performing state-owned asset supervision and management responsibilities, reviewed and approved by the SSE, and consented for registration by the CSRC before implementation.
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PLAN OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS FOR 2023

APPENDIX II

Targets of this issuance of A-shares to specific targets are not more than 35 (inclusive) specific investors that meet the conditions stipulated by the CSRC, including XTC Company, a wholly-owned subsidiary of Shenzhen International – the controlling shareholder of the Company. Except XTC Company, other specific issuing targets will be submitted to the Company’s general meeting and class meeting to authorise the Board and its authorised person for determination through negotiation with the sponsor (lead underwriter) based on the bidding results after obtaining approval from the SSE and consent for registration from the CSRC. All issuing targets will subscribe for the shares issued this time in cash.

If there are new provisions in state laws and regulations regarding this issuance of A-shares to specific targets, the Company will adjust to such new provisions. If the regulatory authorities have other provisions on the shareholder qualifications of issuing targets and the corresponding review procedure, such provisions will apply.

The pricing benchmark date for this issuance is the first day of the offering period. The issue price shall not be lower than the 80% of the average trading price of the Company’s A-shares in the 20 trading days preceding the pricing benchmark date (excluding such date, the same below) or the audited net asset value per share attributable to common shareholders of the parent company at the end of the most recent period before this issuance, whichever is higher (hereinafter referred to as the “ minimum issue price ”). If the Company experiences any ex-dividend or ex-right event such as dividend distribution, offering of bonus shares, share allotment or capital reserve conversion into the share capital during the period from the balance sheet date of the most recent unaudited financial report before this issuance to the issue date, the aforesaid net asset value per share will be adjusted accordingly.

The calculation formula for the average trading price of the Company’s A-shares in the 20 trading days preceding the pricing benchmark date is (the following parameters should use data officially announced by the SSE): the average trading price of the Company’s A-shares in the 20 trading days preceding the pricing benchmark date = the total trading amount of the Company’s A-shares in the 20 trading days preceding the pricing benchmark date/the total trading volume of the Company’s A- shares in the 20 trading days preceding the pricing benchmark date. If there is any adjustment to the stock price due to any ex-dividend or ex-right event such as dividend distribution, offering of bonus shares, share allotment or capital reserve conversion into the share capital in such 20 trading days, the trading price on the trading day before the adjustment will be calculated based on the price after the corresponding ex-dividend or ex-right adjustment.

On the basis of the aforesaid minimum issue price, the final issue price will be submitted to the Company’s general meeting and class meeting to authorise the Board and its authorised person for determination through negotiation with the sponsor (lead underwriter) based on the bidding results, and in accordance with the relevant laws, and regulations and the requirements of the regulatory authorities after obtaining approval from the SSE and consent for registration from the CSRC.

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PLAN OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS FOR 2023

APPENDIX II

If the Company experiences any ex-dividend or ex-right event such as dividend distribution, offering of bonus shares, share allotment or capital reserve conversion into the share capital during the period from the pricing benchmark date to the issue date, the issue price will be adjusted according to the following rules:

When only cash dividends are distributed: P1=P0-D

When only offering of bonus shares or conversion into the share capital occurs: P1=P0/(l+N)

When cash dividends are distributed, and offering of bonus shares or conversion into the share capital also occurs: P1=(P0-D)/(1+N).

The number of A-shares issued to specific targets this time will not exceed 30% of the total share capital of the Company before this issuance, namely 654,231,097 (inclusive) shares. Among them, the amount of the shares issued this time subscribed for by XTC Company will not exceed RMB1.51 billion, and the proportion of the Company’s shares indirectly held by Shenzhen International in total after this issuance will not be less than 45.00%. The final number of shares to be subscribed for by XTC Company will be determined through negotiation between XTC Company and the Company after the issue price is determined, and the remaining shares will be subscribed for by the other issuing targets. The number of shares subscribed for = the issued subscription amount/the final issue price per share, where the remaining number of shares subscribed for will be rounded off if less than 1.

If there is any change in the total share capital of the Company before this issuance due to offering of bonus shares, capital reserve conversion into the share capital, or any other matter during the period from the date of the Board resolution to the issue date, the upper limit of the number of shares issued will be adjusted accordingly.

The final number of shares issued will be submitted to the Company’s general meeting and class meeting to authorise the Board and its authorised person for determination through negotiation with the sponsor (lead underwriter) within the upper limit of the number of shares issued approved by the SSE and consented for registration by the CSRC based on the actual situation then.

According to relevant regulations such as the Administrative Measures for Securities Offering and Registration of Listed Companies, after the completion of this issuance, the shares subscribed for by XTC Company in this issuance should not be transferred within 18 months from the end of this
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PLAN OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS FOR 2023

APPENDIX II

issuance, and the shares subscribed for by any other offering target in this issuance should not be transferred within 6 months from the end of this issuance. If there are other provisions in the relevant regulations and normative documents regarding the trading restriction period of offering shares to specific targets, such provisions will apply. After the expiry of the trading restriction period of the aforesaid shares, shareholding reduction should also comply with the Company Law, the Securities Law, the Listing Rules of the SSE, and other laws, regulations, rules and normative documents, as well as the relevant provisions of the Articles of Association. After the end of this issuance, if the shares subscribed for by the issuing targets in this issuance are increased due to the Company’s offering of bonus shares, capital reserve conversion into the share capital, etc., they should also comply with the aforesaid trading restriction period arrangements.

The amount of the capital raised from this issuance of A-shares to specific targets will not exceed RMB6.5 billion (inclusive), and the net amount of the raised capital after deduction of issuance expenses will be used for the following projects:

Unit: RMB100 million

No.	No.				Amount of raised capital to be used
	No.	Name of project	Total planned investment	Remaining investment amount (Kengzi-Dapeng subsection)	Amount of raised capital to be used
	1	Shenzhen section of the Shenzhen Outer Ring Expressway	294.04	84.47	46.00
	2	Repayment of interest-bearing liabilities	–	–	19.00
Total	Total		294.04	84.47	65.00

In order to ensure the smooth progress of the investment projects of the raised capital and protect the interests of all shareholders of the Company, the Company can invest self-raised capital based on the implementation progress and actual situation of the investment projects before the raised capital is in place. After the raised capital is in place, the invested self-raised capital will be replaced in accordance with the relevant regulations and normative documents. If the actual amount of the raised capital (after deduction of issuance expenses) is less than the total amount of the raised capital to be invested in the above projects, the Board and its authorised person will adjust and ultimately decide on the specific projects, and their priority order and specific amounts based on the actual amount of the raised capital, the priority order of the projects, etc. Any shortfall of the raised capital will be selfraised by the Company.

This issuance of A-shares to specific targets will not lead to any change in the Company’s controlling shareholder or actual controller, nor will it render the Company’s equity distribution not conforming to the listing conditions.
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APPENDIX II

PLAN OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS FOR 2023

The effective period of the resolution on this issuance is within 12 months from the date of approval of the proposal related to this issuance by the Company’s general meeting and class meeting.
The accumulated undistributed profit before the completion of this issuance will be enjoyed by the new and old shareholders in proportion to their shareholdings after the completion of this issuance.
For details on the Company’s dividend distribution policy, cash dividends in the past three years, the use of undistributed profits, etc., please refer to Chapter 7 “Profit Distribution Policy of the Company and Implementation” of this plan.
According to the requirements of relevant documents such as the Guiding Opinions on Matters related to Diluted current returns of IPOs, Refinancing and Major Asset Restructurings, the Company has analysed whether the immediate return will be diluted by this issuance to specific targets and proposed specific return make-up measures. For details, please refer to the relevant content of Chapter 8 “Description of the Company’s Make-up Measures for the Diluted Immediate Return of this Issuance” of this plan. Developing return make-up measures is not a guarantee of the Company’s future profits.
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APPENDIX II

PLAN OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS FOR 2023

Company	Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-1
Important	Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-1
Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		II-6
Interpretations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		II-10
Chapter 1	Summary of the Plan of the Issuance of A Shares to Specific Targets . . . . . .	II-11
I.	Basic information of the issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-11
II.	Background and purpose of this issuance of A-shares to specific targets by the
	listed company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-12
III.	Issuing targets and their relationship with the Company . . . . . . . . . . . . . . . . .	II-14
IV.	Summary of the Plan of the Issuance of A Shares to Specific Targets . . . . . . . .	II-14
V.	Whether this issuance constitutes a related / connected transaction . . . . . . . . . .	II-18
VI.	Whether this issuance results in any change in the Company’s control . . . . . . . .	II-18
VII.	Approvals of this issuance plan by competent authorities and procedures that still
	need to be submitted for approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-19
Chapter 2	Basic Information of Issuing Targets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-20
I.	Basic information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-20
II.	Equity and control relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-21
III.	Main business and business performance in the past three years . . . . . . . . . . . .	II-21
IV.	Summary financial data in the past year . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-21
V.	Administrative penalties (excluding those clearly unrelated to the securities
	market), criminal penalties, and major civil litigations or arbitrations related to
	economic disputes imposed on the issuing targets, and their directors,
	supervisors and senior management members in the past five years . . . . . . . .	II-22

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APPENDIX II

PLAN OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS FOR 2023

VI.	Major transactions between the issuing targets, and their controlling shareholders
	and actual controllers, and the Company within the 24 months prior to the
	disclosure of the Plan of the Issuance of A Shares to Specific Targets . . . . . .	II-22
VII.	Horizontal competition and related / connected transactions after this issuance . .	II-22
VIII. Source of subscription funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		II-22
Chapter 3	Summary of the Agreement Related to this Issuance of A shares to Specific
Targets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		II-23
I.	Parties and date of execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-23
II.	Subscription price, number, amount and method of the target shares . . . . . . . . .	II-23
III.	Payment time and method of the subscription price . . . . . . . . . . . . . . . . . . . .	II-24
IV.	Trading restriction period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-25
V.	Effectiveness and termination of this Agreement . . . . . . . . . . . . . . . . . . . . . .	II-25
VI.	Liability for breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-26
Chapter 4	Feasibility Analysis of the Board on the Use of the Raised Capital . . . . . . . . .	II-27
I.	Plan to use of the capital raised this time . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-27
II.	Necessity and Feasibility Analysis of the Investment Projects of the Raised
	Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-28
III.	Feasibility analysis conclusion on the use of the raised capital . . . . . . . . . . . . .	II-34
Chapter 5	Discussion and Analysis of the Board on the Impacts of this Issuance on the
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		II-35
I.	Changes in the Company’s businesses and assets, Articles of Association,
	shareholder structure, senior management structure, and business structure after
	this issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-35
II.	Changes in the Company’s financial status, profitability and cash flows after this
	issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-36

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PLAN OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS FOR 2023

APPENDIX II

III.	Changes in business and management relationships, related /	connected
	transactions and horizontal competition between the Company,	and its
	controlling shareholder and its related parties / connected persons . . .	. . . . . .	II-37
IV.	After the completion of this issuance of A-shares to specific targets, will	any fund
	or asset of the Company be occupied by its controlling shareholder, actual
	controller and their related parties / connected persons, or will the	Company
	provide any guarantee to its controlling shareholder, actual controller	and their
	related parties / connected persons . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . .	II-37
V.	Impact of this issuance on the Company’s liabilities . . . . . . . . . . . . . .	. . . . . .	II-37
Chapter 6 Explanation of Risks Related to this Issuance of A-shares to Specific Targets .			II-38
I.	Industry risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		II-38
II.	Operational risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . .	II-38
III.	Financial risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . .	II-39
IV.	Risks related to this issuance of A-shares to specific targets . . . . . . . .	. . . . . .	II-40
V.	Risks of the investment projects of the raised capital . . . . . . . . . . . . .	. . . . . .	II-41
Chapter 7 Profit Distribution Policy of the Company and Implementation . . . . .		. . . . . .	II-42
I.	Profit distribution policy of the Company . . . . . . . . . . . . . . . . . . . . .	. . . . . .	II-42
II.	Distribution of cash dividends and utilisation of undistributed profits of the
	Company in the past three years . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . .	II-44
III.	Shareholder dividend payback plan for the next three years . . . . . . . . .	. . . . . .	II-45
Chapter 8 Description of the Company’s Make-up Measures for the Diluted Immediate
Return	of This Issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . .	II-48
I.	Impacts of the diluted immediate return of this issuance of A-shares to specific
	targets on the Company’s main financial indicators . . . . . . . . . . . . .	. . . . . .	II-48
II.	Special risk reminder regarding the diluted immediate return of this issuance of
	A-shares to specific targets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . .	II-51

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APPENDIX II

III.	Relationship between the investment projects of the raised capital and the
	Company’s existing businesses, as well as the Company’s reserves in personnel,
	technology, market and other aspects when implementing the investment
	projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-51
IV.	Specific measures taken by the Company to make up the diluted immediate
	return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-53
V.	Commitments made by the Company’s directors and senior management to the
	practical implementation of the return make-up measures . . . . . . . . . . . . . . .	II-55
VI.	Commitments made by the controlling shareholder of the Company . . . . . . . . .	II-56
VII.	Consideration procedure for make-up measures and commitments for the diluted
	immediate return of this issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-56

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APPENDIX II

PLAN OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS FOR 2023

INTERPRETATIONS

Unless otherwise stated, the following abbreviations used in this plan have the following meanings:

The Company/our company/the Shenzhen Expressway Corporation Limited listed company/the issuer/ Shenzhen Expressway

Shenzhen International/the controlling shareholder

Shenzhen International Holdings Limited.

XTC Company Xin Tong Chan Development (Shenzhen) Company Limited.

Shen Guang Hui Shenzhen Shen Guang Hui Highway Development Company Limited.

Outer Ring Company

Shenzhen Outer Ring Expressway Investment Company Limited.

The Shenzhen Municipal SASAC/ the State-owned Assets Supervision and Administration the actual controller Commission of the Shenzhen Municipal People’s Government. The CSRC the China Securities Regulatory Commission.

The Hong Kong Stock Exchange The Stock Exchange of Hong Kong Limited. The SSE the SSE.

This issuance/this issuance of the offering of A-shares by Shenzhen Expressway Corporation A-shares to specific targets Limited to specific targets in 2023.

This plan the Plan of Shenzhen Expressway Corporation Limited to Offer A- shares to Specific Targets for 2023.

The Conditional Subscription the conditional subscription agreement for this issuance of A-shares Agreement to specific targets between Shenzhen Expressway Corporation Limited and Xin Tong Chan Development (Shenzhen) Company Limited. The Company Law the Company Law of the People’s Republic of China 《中華人民共( 和國公司法》).

The Securities Law the Securities Law of the People’s Republic of China 《中華人民共( 和國證券法》).

The Articles of Association the Articles of Association of Shenzhen Expressway Corporation Limited. Yuan renminbi yuan.

The main numerical values in this plan are accurate to two decimal places. For rounding reasons, there may be discrepancies between aggregates and sums of broken-down data.

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APPENDIX II

PLAN OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS FOR 2023

CHAPTER 1 SUMMARY OF THE PLAN OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS

I. BASIC INFORMATION OF THE ISSUER

Company name: Shenzhen Expressway Corporation Limited English name: Shenzhen Expressway Corporation Limited Stock listing locations: SSE and Hong Kong Stock Exchange A-share abbreviation: Shenzhen Expressway A-share code: 600548 H-share abbreviation: Shenzhen Expressway Corporation Limited H-share code: 00548 Legal representative: Hu Wei Registered address: Fumin Toll Station, Fucheng Sub-district, Longhua District, Shenzhen City, Guangdong Province Postcode: 518057 Registered capital RMB2,180,770,326.00 Tel: 86-755-86698080, 86-755-86698068 Fax: 86-755-86698002 Website: www.sz-expressway.com Business scope: General operating items include investment, construction management and operation management of highways and roads; import and export operations (operated with qualification certificates).

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APPENDIX II

II. BACKGROUND AND PURPOSE OF THIS ISSUANCE OF A-SHARES TO SPECIFIC TARGETS BY THE LISTED COMPANY

(I) Background of this issuance of A-shares to specific targets

1. Rapid development of highways in recent years as important infrastructure

As a relatively direct and effective mode of transportation among regions, highway transportation is an important component of China’s comprehensive transportation system, and occupies an important position in national passenger and cargo transportation. With its advantages of high speed, safety, economy and comfort, it plays an important role in economic development. According to the Statistical Bulletin on the Development of the Transportation Sector 《交通運輸行業發展統計公報》( ) issued by the Ministry of Transport, by the end of 2022, the total length of highways open to traffic in China reached 5.3548 million kilometres, with a highway density of 55.78 kilometres per 100 square kilometres.

2. Road network effect shown gradually

Expressways are highly networked, and have significant transportation efficiency advantages when laid out rationally. After years of development, China’s expressways have reached a considerable level of networking nationwide, and the road network effect is increasingly evident, providing some support for the growth of vehicular traffic.

3. Requirements for the Company’s development raised by the Development Plan of the Modern Comprehensive Transportation System

The transportation sector is the foundation of the national economy as well as a piloting service industry, and expressways are an important component of the national fast transit network. In January 2022, the State Council offered the 14th Five-year Plan for the Development of the Modern Comprehensive Transportation System 《「十四五」現代( 綜合交通運輸體系發展規劃》) (hereinafter referred to as the “ Transportation Plan ”). The Transportation Plan points out that during the 14th Five-year Plan period, it is necessary to improve the structure, functions and quality of the national expressway network, implement the expansion and reconstruction of busy and congested sections of main national expressway lines, and accelerate the construction of parallel lines, connecting lines and unfinished sections; by 2025, China will have largely realised integrated development in comprehensive transportation, where the total length of the national expressways will be 190,000 kilometres. As a fundamental industry supporting economic and social development, the toll highway industry will be subject to new requirements and presented with new opportunities during the 14th Five-year Plan period.

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APPENDIX II

PLAN OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS FOR 2023

4. Implementing the strategy of establishing China’s strength in transportation and improving the Company’s ability to serve the construction of Shenzhen’s “two regions”

President Xi Jinping has stressed on multiple occasions that accelerating the establishment of China’s strength in transportation is a leading field in establishing a modern economic system and an important pillar for building a modern socialist country comprehensively.

As an important force in Shenzhen’s transportation construction, Shenzhen Expressway should strengthen services for the “two regions”, improve traffic efficiency, and build a convenient and efficient transportation network. Under the guideline of promoting traffic integration and optimising the road network layout, the Company will thoroughly implement the national strategy of “the two regions and the Guangdong-Hong KongMacao Greater Bay Area”, strengthen interactions with competent authorities, improve the service level and management capacity, and contribute to the construction of Shenzhen’s “two regions” and the establishment of China’s strength in transportation.

(II) Purpose of this issuance of A-shares to specific targets

1. Consolidating the advantages in the main business of toll highways

Being dedicated to the transport infrastructure industry for over 20 years, the Company has gained extensive experience in areas such as highway investment, construction, operation and management. Up to now, the Company has operated and invested in 16 highway projects, with an attributable length of about 643 kilometres, mainly located in Shenzhen, the Guangdong-Hong Kong-Macao Greater Bay Area and economically developed regions, providing a good geographic advantage. The Company will further consolidate the advantages of the main business of toll highways through this issuance.

2. Improving capital structure and financial stability

At the ends of 2020, 2021 and 2022, the Company’s debt-to-asset ratios were 52.35%, 56.39% and 60.46%, respectively; the Company’s s debt-to-asset ratio remains at high levels and shows a trend of increasing year by year. On the one hand, expressways are infrastructure with long service periods, high technical standards and huge investments, and the expressway industry is a capital intensive industry; on the other hand, compared to debt financing, the Company’s fundraising through this issuance is more conducive to controlling the scale of interest-bearing liabilities, thereby controlling financial expenses reasonably, improving profitability, strengthening financial stability, keeping up with policy trends, and seizing market opportunities.

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APPENDIX II

III. ISSUING TARGETS AND THEIR RELATIONSHIP WITH THE COMPANY

Targets of this issuance of A-shares to specific targets are not more than 35 (inclusive) specific investors, including XTC Company, a wholly-owned subsidiary of Shenzhen International – the controlling shareholder of the Company, including securities investment fund management companies, securities companies, trust investment companies, finance companies, insurance institutional investors, qualified overseas institutional investors and other institutional investors, natural persons or other lawful investors that comply with the regulations of the CSRC.

Shenzhen International indirectly holds 51.56% of the issuer’s shares through its wholly-owned subsidiaries XTC Company, Shen Guang Hui and Advance Great Limited, and is the controlling shareholder of the issuer. The subscription of A-shares issued to specific targets this time by XTC Company constitutes a related / connected transaction with the Company.

Except XTC Company, as of the date of issuance of this plan, other issuing targets for this issuance have not been determined, so it is impossible to determine their association relationship with the Company. The association relationship between the issuing targets and the Company will be disclosed in the Offering Report announced after the end of this issuance.

IV. SUMMARY OF THE PLAN OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS

(I) Type and face value of shares issued

The shares issued to specific targets this time are domestically listed renminbi ordinary shares (A-shares), with a face value of RMB1.00 per share.

(II) Offering method and time

All shares issued this time will be offered in the form of A-shares to specific targets, and the Company will choose to offer them within the effective period approved by the SSE and consented for registration by the CSRC.

(III) Issuing targets and subscription method

The A-shares issued this time will be offered to not more than 35 (inclusive) specific targets that meet the requirements of the CSRC, including XTC Company, a wholly-owned subsidiary of Shenzhen International – the controlling shareholder of the Company.

Except XTC Company, other specific issuing targets will be submitted to the Company’s general meeting and class meeting to authorise the Board and its authorised person for determination through negotiation with the sponsor (lead underwriter) based on the bidding results after obtaining approval from the SSE and consent for registration from the CSRC.

All issuing targets will subscribe for the shares issued this time in cash.

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APPENDIX II

(IV) Pricing benchmark date, issue price and pricing principles

The pricing benchmark date for this issuance is the first day of the offering period. The issue price will not be lower than the 80% of the average trading price of the Company’s A-shares in the 20 trading days preceding the pricing benchmark date (excluding such date, the same below) or the audited net asset value per share attributable to common shareholders of the parent company at the end of the most recent period before this issuance (hereinafter referred to as the “ Minimum Issue Price ”), whichever is higher. If the Company experiences any exdividend or ex-right event such as dividend distribution, offering of bonus shares, share allotment or capital reserve conversion into the share capital during the period from the balance sheet date of the most recent unaudited financial report before this issuance to the issue date, the aforesaid net asset value per share will be adjusted accordingly.

The calculation formula for the average trading price of the Company’s A-shares in the 20 trading days preceding the pricing benchmark date is (the following parameters should use data officially announced by the SSE): the average trading price of the Company’s A-shares in the 20 trading days preceding the pricing benchmark date = the total trading amount of the Company’s A-shares in the 20 trading days preceding the pricing benchmark date/the total trading amount of the Company’s A-shares in the 20 trading days preceding the pricing benchmark date. If there is any adjustment to the stock price due to any ex-dividend or ex-right event such as dividend distribution, offering of bonus shares, share allotment or capital reserve conversion into the share capital in such 20 trading days, the trading price on the trading day before the adjustment will be calculated based on the price after the corresponding ex-dividend or ex-right adjustment.

On the basis of the aforesaid Minimum Issue Price, the final issue price will be submitted to the Company’s general meeting and class meeting to authorise the Board and its authorised person for determination through negotiation with the sponsor (lead underwriter) based on the bidding results, and in accordance with the relevant laws, and regulations and the requirements of the regulatory authorities after obtaining approval from the SSE and consent for registration from the CSRC.

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APPENDIX II

When only cash dividends are distributed: P1=P0-D

When only offering of bonus shares or conversion into the share capital occurs: P1=P0/(l+N)

When cash dividends are distributed, and offering of bonus shares or conversion into the share capital also occurs: P1=(P0-D)/(1+N).

(V) Number of shares issued

The number of A-shares issued this time will not exceed 30% of the total share capital of the Company before this issuance, namely 654,231,097 (inclusive) shares. Among them, the amount of the shares issued this time subscribed for by XTC Company will not exceed RMB1.51 billion, and the proportion of the Company’s shares indirectly held by Shenzhen International in total after this issuance will not be less than 45.00%. The final number of shares to be subscribed for by XTC Company will be determined through negotiation between XTC Company and the Company after the issue price is determined, and the remaining shares will be subscribed for by the other issuing targets. The number of shares subscribed for = the issued subscription amount/the final issue price per share, where the remaining number of shares subscribed for will be rounded off if less than 1.

If there is any change in the total share capital of the Company before this issuance due to offering of bonus shares, capital reserve conversion into the share capital, or any other matter during the period from the date of the Board resolution and the issue date, the upper limit of the number of shares issued will be adjusted accordingly.

(VI) Trading restriction period

According to relevant regulations such as the Administrative Measures for Securities Offering and Registration of Listed Companies, after the completion of this issuance, the shares subscribed for by XTC Company in this issuance should not be transferred within 18 months from the end of this issuance, and the shares subscribed for by any other offering target in this issuance should not be transferred within 6 months from the end of this issuance. If there are other provisions in the relevant regulations and normative documents regarding the trading restriction period of offering shares to specific targets, such provisions will apply. After the

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PLAN OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS FOR 2023

APPENDIX II

expiry of the trading restriction period of the aforesaid shares, shareholding reduction should also comply with the Company Law, the Securities Law, the Listing Rules of the SSE, and other laws, regulations, rules and normative documents, as well as the relevant provisions of the Articles of Association. After the end of this issuance, if the shares subscribed for by the issuing targets in this issuance are increased due to the Company’s offering of bonus shares, capital reserve conversion into the share capital, etc., they should also comply with the aforesaid trading restriction period arrangements.

(VII) Listing location

An application for listing and trading on the SSE will be filed for the shares issued this time in accordance with the relevant regulations.

(VIII) Use and amount of the raised capital

The total amount of the capital raised from this issuance of A-shares to specific targets will not exceed RMB6.5 billion (inclusive). The net amount of the raised capital after deduction of issuance expenses will be fully used for the following projects:

Unit: RMB100 million

No.	No.				Amount of raised capital to be used
	No.	Name of project	Total planned investment	Remaining investment amount (Kengzi-Dapeng subsection)	Amount of raised capital to be used
	1	Shenzhen section of the Shenzhen Outer Ring Expressway	294.04	84.47	46.00
	2	Repayment of interest- bearing liabilities	--	--	19.00
Total	Total		294.04	84.47	65.00

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PLAN OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS FOR 2023

APPENDIX II

(IX) Disposal plan for accumulated undistributed profit

The accumulated undistributed profit before the completion of this issuance will be enjoyed by the new and old shareholders in proportion to their shareholdings after the completion of this issuance.

(X) Effective period of the resolution

The effective period of this issuance resolution is 12 months from the date of approval of the relevant proposal for this issuance by the Company’s general meeting and class meeting.

V. WHETHER THIS ISSUANCE CONSTITUTES A RELATED / CONNECTED TRANSACTION

Before this issuance, Shenzhen International indirectly held 51.56% of the issuer’s shares through its wholly-owned subsidiaries XTC Company, Shen Guang Hui and Advance Great Limited, and is the controlling shareholder of the issuer. The issuing targets of this issuance of A-shares to specific targets include XTC Company, and its participation in this issuance constitutes a related / connected transaction. When the Board of the Company considered this issuance of A-shares to specific targets, the affiliated directors avoided voting, and the Independent Directors expressed their prior approval and independent opinions on the related / connected transaction. When the Company’s general meeting and class meeting consider this issuance of A-shares to specific targets, the affiliated shareholders will avoid voting on the relevant proposal. The Company will perform the approval and disclosure procedures of related / connected transactions in strict conformity with the laws and regulations, as well as its internal provisions.

As of the date of issuance of this plan, there is no other confirmed offering target for this issuance of A-shares to specific targets, except XTC Company, so it is impossible to determine the relationship between the other issuing targets except XTC Company and the Company. The relationship between the other issuing targets except XTC Company and the Company will be disclosed in the Offering Report announced after the end of this issuance.

VI. WHETHER THIS ISSUANCE RESULTS IN ANY CHANGE IN THE COMPANY’S CONTROL

As of the date of issuance of this plan, Shenzhen International indirectly holds 51.56% of the Company’s shares through its wholly-owned subsidiaries XTC Company, Shen Guang Hui and Advance Great Limited, and is the controlling shareholder of the Company. The Shenzhen Municipal SASAC is the actual controller of the Company.

Before and after this issuance, the controlling shareholder of the Company is Shenzhen International, and the actual controller is the Shenzhen Municipal SASAC. This issuance will not result in a change in the Company’s control.

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APPENDIX II

PLAN OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS FOR 2023

VII. APPROVALS OF THIS ISSUANCE PLAN BY COMPETENT AUTHORITIES AND PROCEDURES THAT STILL NEED TO BE SUBMITTED FOR APPROVAL

The matters related to this issuance of A-shares to specific targets were considered and approved at the 32nd meeting of the ninth session of the Board of the Company held on 14 July 2023. The Plan of the Issuance of A Shares to Specific Targets still needs to be considered and approved by the Company’s general meeting and class meeting, approved by the entity performing state-owned asset supervision and management responsibilities, reviewed and approved by the SSE, and consented for registration by the CSRC before implementation.

The Company will apply for the offering, registration and listing of shares with the SSE and the CSDC Shanghai Branch, and complete the relevant procedures of this issuance after obtaining consent for registration from the CSRC.

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APPENDIX II

PLAN OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS FOR 2023

CHAPTER 2 BASIC INFORMATION OF ISSUING TARGETS

Targets of this issuance of A-shares to specific targets are not more than 35 specific investors that meet the conditions stipulated by the CSRC, including XTC Company. The basic information of XTC Company is as follows:

I. BASIC INFORMATION

Company name	Company name	Xin Tong Chan Development (Shenzhen) Company Limited	Xin Tong Chan Development (Shenzhen) Company Limited
	Company name	Xin Tong Chan Development (Shenzhen) Company Limited
	Date of establishment	8 September 1993
	Legal representative	Ge Fei
	Company type	Limited liability company (sole proprietorship of a legal entity in Hong Kong, Macao or Taiwan)
	Uniform social credit code	9144030019224376XA
	Registered address	Room 19B, Sky Park, No.8045 Hongli West Road, Donghai Community, Xiangmihu Sub-district, Futian District, Shenzhen
	Registered capital	RMB200 million
	Business scope	General operating items include transportation information consulting, development of specialised software for transportation platforms, and implementation of various industrial projects (specific projects will be applied for separately). Storage (limited to branch offices) Guesthouses, Chinese and Western catering, bowling, tennis, associated groceries, and sale of non-staple foods and beverages (The above business scope can only be operated after a branch office is established and a permit is obtained from the competent authority of the industry).

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APPENDIX II

II. EQUITY AND CONTROL RELATIONSHIPS

As at 30 June 2023, Shenzhen International is the controlling shareholder of XTC Company, and the Shenzhen Municipal SASAC is the actual controller of XTC Company. The control structure diagram is as follows:

==> picture [405 x 194] intentionally omitted <==

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

the State-owned Assets Supervision and Administration Commission of the Shenzhen Municipal People’s Government.
100%
Shenzhen Investment Holdings Company Limited
100%
Ultrarich International Limited
0.015%
44.240%
Shenzhen International Holdings Limited
100%
Xin Tong Chan Development
(Shenzhen) Company Limited
----- End of picture text -----

III. MAIN BUSINESS AND BUSINESS PERFORMANCE IN THE PAST THREE YEARS

XTC Company is a wholly-owned subsidiary of Shenzhen International. In the past three years, equity management was its main function and main business.

IV. SUMMARY FINANCIAL DATA IN THE PAST YEAR

	Unit: RMB10,000	Unit: RMB10,000
	Item	End of 2022/2022
	Total assets	2,170,952.85
	Total liabilities	1,676,062.10
	Owners’ equity attributable to owners of the Company	484,816.49
	Operating revenue	38,314.11
	Net profit attributable to owners of the Company	16,306.39

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APPENDIX II

V. ADMINISTRATIVE PENALTIES (EXCLUDING THOSE CLEARLY UNRELATED TO THE SECURITIES MARKET), CRIMINAL PENALTIES, AND MAJOR CIVIL LITIGATIONS OR ARBITRATIONS RELATED TO ECONOMIC DISPUTES IMPOSED ON THE ISSUING TARGETS, AND THEIR DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT MEMBERS IN THE PAST FIVE YEARS

In the past five years, XTC Company, and its directors, supervisors and senior management members were not subject to any administrative penalty (except for any penalty clearly unrelated to the securities market), criminal penalty, or major civil litigation or arbitration related to any economic dispute.

VI. MAJOR TRANSACTIONS BETWEEN THE ISSUING TARGETS, AND THEIR CONTROLLING SHAREHOLDERS AND ACTUAL CONTROLLERS, AND THE COMPANY WITHIN THE 24 MONTHS PRECEDING THE DISCLOSURE OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS

For details of the related / connected transactions between XTC Company, and its controlling shareholder and actual controller, and the Company within 24 months preceding the disclosure of this plan, please refer to the regular reports and interim announcements disclosed by the Company. Except those disclosed by the Company in its regular reports or interim announcements, there is no other major transaction between XTC Company, and its controlling shareholder and actual controller, and the Company.

VII. HORIZONTAL COMPETITION AND RELATED / CONNECTED TRANSACTIONS AFTER THIS ISSUANCE

Before this issuance, Shenzhen International indirectly holds 51.56% of the issuer’s shares through its wholly-owned subsidiaries XTC Company, Shen Guang Hui and Advance Great Limited, and is the controlling shareholder of the issuer. The issuing targets of this issuance of A-shares to specific targets include XTC Company, and its participation in this issuance constitutes a related / connected transaction. Except this case, after this issuance, there will be no new related / connected transaction or horizontal competition arising from this issuance between Shenzhen International or any other enterprise controlled by it, and the issuer.

VIII. SOURCE OF SUBSCRIPTION FUNDS

Funds for subscribing for this issuance of A-shares to specific targets are self-owned or self-raised funds of the issuing targets, and will not directly or indirectly come from financial support or compensation provided by the issuer, and its directors, supervisors and senior management members in any form. There is no situation of proxy holding or external fundraising, no structured arrangement such as tiered returns, and no leveraged structured financing.

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APPENDIX II

CHAPTER 3 SUMMARY OF THE AGREEMENT RELATED TO THIS ISSUANCE OF A SHARES TO SPECIFIC TARGETS

On 14 July 2023, the Company entered into the Conditional Share Subscription Agreement between Shenzhen Expressway Corporation Limited and Xin Tong Chan Development (Shenzhen) Company Limited 《深圳高速公路集團股份有限公司與新通產實業開發（深圳）有限公司之附條件生效的股份認購協議》( ) with XTC Company. A summary of the agreement is as follows:

I. PARTIES AND DATE OF EXECUTION

Party A (issuer): Shenzhen Expressway Corporation Limited

Party B (subscriber): Xin Tong Chan Development (Shenzhen) Company Limited

Date of execution: 14 July 2023

II. SUBSCRIPTION PRICE, NUMBER, AMOUNT AND METHOD OF THE TARGET SHARES

(I) Subscription price

Both Parties agree that, the issue price of Party A in this issuance shall not be lower than the 80% of the average trading price of Party A’s A-shares in the 20 trading days preceding the pricing benchmark date (excluding the pricing benchmark date, the same below) (the average trading price of Party A’s A-shares in the 20 trading days preceding the pricing benchmark date = the total trading amount of Party A’s A-shares in the 20 trading days preceding the pricing benchmark date/the total number of Party A’s A-shares in the 20 trading days preceding the pricing benchmark date), or the audited net asset value per share attributable to common shareholders of the parent company of Party A at the end of the most recent period before this issuance, whichever is higher (hereinafter referred to as the “ Minimum Issue Price ”). If Party A experiences any ex-dividend or ex-right event such as dividend distribution, offering of bonus shares, share allotment or capital reserve conversion into the share capital during the period from the balance sheet date to the issue date of the most recent audited financial report before this issuance, the aforesaid net asset value per share shall be adjusted accordingly.

If there is any adjustment to the stock price of Party A due to any ex-dividend or ex-right event such as dividend distribution, offering of bonus shares, share allotment or capital reserve conversion into the share capital in such 20 trading days, the trading price on the trading day before the adjustment shall be calculated based on the price after the corresponding exdividend or ex-right adjustment.

If Party A experiences any ex-dividend or ex-right event such as dividend distribution, offering of bonus shares, share allotment or capital reserve conversion into the share capital during the period from the pricing benchmark date to the issue date, the issue price of the target shares shall be adjusted according to the following rules:

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APPENDIX II

When only cash dividends are distributed: P1=P0-D

When only offering of bonus shares or conversion into the share capital occurs: P1=P0/(l+N)

When cash dividends are distributed, and offering of bonus shares or conversion into the share capital also occurs: P1=(P0-D)/(1+N)

(II) Subscription method

On the basis of the above Minimum Issue Price, the final issue price of this issuance will be determined by the board of directors of Party A and/or its authorised person with the sponsor (lead underwriter) within the scope of authorisation of the general meeting and class meeting based on the subscription offers of the issuing targets on such principles as price priority, and in accordance with the relevant laws, regulations and other normative documents after obtaining consent for registration from the CSRC. Party B undertakes not to participate in market bidding for this issuance, but undertakes to accept the market bidding results and subscribe at the same price as the other issuing targets. If there is no subscription offer or the issue price cannot be generated through bidding, Party B shall not participate in this issuance. The number of shares subscribed for shall be determined by dividing the subscription amount by the issue price, where the remaining number of shares subscribed for shall be rounded off if less than 1.

(III) Number of shares subscribed for

Both Parties agree that the number of shares issued by Party A this time shall not exceed 654,231,097 (inclusive), in which Party B shall subscribe for shares issued this time for an amount not more than RMB1.51 billion, and after this issuance, the proportion of shares of Party A indirectly held by Shenzhen International in total shall not be less than 45.00%. The subscription price shall be paid by Party B in cash. The final number of shares subscribed for by Party B shall be determined through negotiation between both Parties after the issue price is determined, and the remaining shares will be subscribed for by the other issuing targets.

III. PAYMENT TIME AND METHOD OF THE SUBSCRIPTION PRICE

Party B agrees that within the effective period after Party A obtains consent for registration from the CSRC for this issuance, the lead underwriter engaged by Party A shall issue a written payment notice to the subscriber according to the issuance plan finally approved by the CSRC. Party B shall promptly and fully transfer the subscription price for the shares issued this time to the bank account specially opened by the lead underwriter for this issuance of Party A as required in the payment notice. The above subscription price shall be transferred to Party A’s special deposit account for the raised capital

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APPENDIX II

after the accounting firm meeting the conditions stipulated in the Securities Law of the People’s Republic of China 《中華人民共和國證券法》( has completed capital verification and deducted relevant expenses.

IV. TRADING RESTRICTION PERIOD

The target shares shall not be transferred within 18 months from the end of this issuance, and the regulations of the CSRC and the SSE shall apply thereafter. If there are other provisions in the relevant regulations and normative documents regarding the trading restriction period of offering shares to specific targets, such provisions will apply. From the end of this issuance to the date of the lifting of the restriction on such shares, if the shares subscribed for by Party B in this issuance are increased due to Party A’s offering of bonus shares, capital reserve conversion into the share capital, etc., they shall also comply with the aforesaid trading restriction period arrangements. Party B shall handle the relevant share lockup matters after the end of this issuance, and Party A shall provide all necessary assistance in this regard.

V. EFFECTIVENESS AND TERMINATION OF THIS AGREEMENT

This Agreement shall be established on the date when it is executed by the legal representatives or authorised representatives of both Parties, and come into effect on the date when all the following conditions are met concurrently:

(1) The matters related to this Agreement, this issuance and Party B’s subscription for the shares issued this time have been considered and approved by Party A’s board of directors, general meeting and class meeting, as well as the board of directors and general meeting of the controlling shareholder of Party A (if necessary);
(2) The matters related to this issuance and Party B’s subscription for the shares issued this time have been approved by the entity performing state-owned asset supervision and management responsibilities in accordance with laws and regulations; and
(3) This issuance has been consented for registration by the CSRC.

If the validation conditions mentioned in the preceding paragraph are not met, so that this Agreement cannot take effect and be performed normally, this Agreement shall not take effect from the beginning, and both Parties shall bear the expenses paid for executing and preparing to perform this Agreement, and shall not hold each other legally liable.

This Agreement may be terminated if:

(1) Both Parties agree to terminate it;
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(2) A competent government authority issues a permanent injunction, law, regulation, bylaw or order that restricts, prohibits or makes it impossible to complete this issuance, or this issuance cannot be implemented because it is not approved/accepted by the approval authority (this restriction applies to whatever reason);
(3) A force majeure event lasts for over 30 days so that the purpose of this Agreement cannot be achieved, when either party may terminate this Agreement by giving a written notice to the other party; or
(4) If either party commits a material breach of the provisions hereof, the non-breaching party shall have the right to terminate this Agreement unilaterally by written notice if the breaching party fails to take any remedy within 15 days from the date when the non-breaching party gives a written notice to the breaching party requesting it to take immediate remedies for such breach; the breaching party shall bear the liability for such breach hereunder.

VI. LIABILITY FOR BREACH

Failure of either party to comply with or fulfil its covenants, obligations, responsibilities, representations or warranties hereunder shall constitute a breach hereof, and the breaching party shall compensate the other party for any losses so incurred, unless otherwise agreed on by both Parties.

If the offering and subscription matters hereunder do not meet the following conditions concurrently, this Agreement shall be terminated and neither party shall constitute a breach hereof: (1) The matters related to this issuance and Party B’s subscription for the shares issued this time are considered and approved by Party A’s board of directors, general meeting and class meeting, as well as the board of directors and general meeting of the controlling shareholder of Party A (if necessary); (2) The matters related to this issuance and Party B’s subscription for the shares issued this time are approved by the entity performing state-owned asset supervision and management responsibilities in accordance with laws and regulations; and (3) This issuance is consented for registration by the CSRC.

Any representation or warranty made by either party herein that is false or untrue, conceals any fact or has any material omission shall constitute a breach hereof; the breaching party shall compensate the other party for the losses so suffered. The non-breaching party shall have the right to ask the breaching party to continue to fulfil its obligations, and take remedies timely to ensure the continued performance hereof.

Either party hereto who is unable or partly unable to perform its obligations hereunder due to force majeure, such as natural disasters or adjustments to national policies, shall not be deemed to breach this Agreement. However, if conditions permit, it shall take all necessary remedies to reduce losses arising from force majeure. The party affected by force majeure shall promptly notify the other party in writing of the situation of the event, and submit the reason for and valid evidence of its inability or partial inability to perform its obligations hereunder, or delayed performance thereof to the other party within 15 days from the date of the event.

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APPENDIX II

CHAPTER 4 FEASIBILITY ANALYSIS OF THE BOARD ON THE USE OF THE RAISED CAPITAL

I. PLAN TO USE OF THE CAPITAL RAISED THIS TIME

Unit: RMB100 million

==> picture [414 x 167] intentionally omitted <==

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

Remaining
investment
amount Amount of
Total planned (Kengzi-Dapeng raised capital
No. Name of project investment subsection) to be used
1 Shenzhen section of the 294.04 84.47 46.00
Shenzhen Outer Ring
Expressway
2 Repayment of interest-bearing – – 19.00
liabilities
Total 294.04 84.47 65.00
----- End of picture text -----

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PLAN OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS FOR 2023

II. NECESSITY AND FEASIBILITY ANALYSIS OF THE INVESTMENT PROJECTS OF THE RAISED CAPITAL

(I) Shenzhen section of the Shenzhen Outer Ring Expressway

1. Basic information of this project

The Shenzhen Outer Ring Expressway starts from Guangzhou-Shenzhen Coastal Expressway in the west, passes through Bao’an District, Guangming District, Longhua District, Dongguan City, Longgang District, Pingshan District and Dapeng New Area to the east, and ends at Yanba Expressway, with a total length of about 94 kilometres, including 77 kilometres for the Shenzhen section and 17 kilometres for the Dongguan section. It is constructed according to the standard of dual six-lane expressways for the entire route, with a design speed of 80-100 kilometres per hour. In 2016, through application by Shenzhen City, the Guangdong Provincial Development and Reform Commission approved the segmented construction of the Shenzhen Outer Ring Expressway. It is divided into the Shajing-Guanlan, Longcheng-Pingdi, Pingdi-Kengzi and Kengzi-Dapeng subsections of the Shenzhen section, and the Dongguan section. The Shajing-Guanlan and Longcheng-Ping subsections of the Shenzhen section, and the Dongguan section were completed and opened to traffic on 29 December 2020; the Pingdi-Kengzi subsection was completed and opened to traffic on 1 January 2022; only the Kengzi-Dapeng subsection is remaining.

Location map of the Shenzhen Outer Ring Expressway

==> picture [370 x 162] intentionally omitted <==

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

Outer Ring Expressway in
Shenzhen City, full length 94.5km
Huiyan
Expressway
Kengzi-Kuichong section
Bao’an District Longhua District Dongguan Longgang District (optimized line) 13.06km
Guangming District Pingshan District
Kuichong-Dapeng section
(south extension line) 3.75km
Original approved line
Yanba Expressway
Dapeng New Area
Pingdi- Kengzi-
Kengzi Dapeng
Longcheng- section of section of
Shajing-Guanlan section Dongguan section Pingdi section Phase II Phase III
Shenshan
Expressway
----- End of picture text -----

The Kengzi-Dapeng subsection includes the Kengzi-Kuichong and Kuichong-Dapeng (south extension) subsections. Among them, the total route length of the KengziKuichong subsection is 13.07 kilometres, with a total of 10 bridges of 7,417 metres and one tunnel of 5,088 metres (assuming averaging for the left and right lines). The total length of bridges and tunnels is 12,505 metres, accounting for 95.67% of the total route length. There are 4 interchanges and 14 ramp toll stations. The Kuichong-Dapeng subsection has a total length of 3.74 kilometres, and is constructed according to the

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standard of dual six-lane expressways. It has one bridge of 195 metres, one tunnel of 3,280 metres, one interchange (Dapeng Interchange), one main route toll station and two ramp toll stations.

With the completion and opening of the preliminary works of the Shenzhen section and the Dongguan section of the Shenzhen Outer Ring Expressway, the expressway is gradually endowed with multiple functions to meet the demand of regional development and Shenzhen’s development: After the completion of the whole Shenzhen Outer Ring Expressway, it will be connected to 10 expressways and 8 Class 1 highways in Shenzhen, effectively strengthening connections within the main skeleton of the southnorth expressways in the Pearl River Delta, giving full play to the overall benefits of the expressway network, and improving the regional transportation conditions and investment environment; after the completion of the whole expressway, it will help to divert east-west traffic in the outer circles of Shenzhen, and alleviate the traffic pressure on transit corridors such as Jihe and Nanping Expressways.

2. Necessity of this project

(1) Improving the regional transportation network to meet the regional development planning and strategic demand

The Shenzhen Outer Ring Expressway is an important horizontal expressway among the “eight horizontal and 13 vertical” in the expressway/highway network of Shenzhen, an east-west outer ring expressway in Shenzhen, and an enhancement route in the main skeleton of the “12 vertical, eight horizontal and two ring” expressways in the expressway network of Guangdong Province. This expressway, as an east-west fast connection corridor in the third circle of Shenzhen, can effectively realise connections with the main skeleton of the north-south expressways, and fully leverage the overall benefits of the expressway network. In terms of overall social and economic benefits, the Outer Ring Expressway plays a supporting role in the development and construction of the periphery of the former core area of Shenzhen, especially several urban sub-centres such as Longgang and Pingshan New Area; second, this project is a cooperative construction project between Shenzhen and Dongguan, and will significantly improve the regional transportation conditions and investment environment, and be of great significance for promoting the common economic prosperity of Shenzhen, Dongguan, Huizhou and other places.

(2) Ensuring the overall integrity of the Shenzhen Outer Ring Expressway Project

The Shajing-Guanlan, Longcheng-Pingping and Pingdi-Kengzi subsections of the Shenzhen Outer Ring Expressway were completed and opened to traffic at the end of 2020 and in early 2022, respectively. After the completion of the preliminary works, the traffic connections within the Shenzhen metropolitan area have been strengthened, and the current situation of traffic congestion on the

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APPENDIX II

east-west trunk roads in the region has been alleviated. The remaining works of the Shenzhen section in this project are located in eastern Shenzhen, and are important infrastructure to promote Shenzhen’s in-depth implementation of the development strategy of “advancement in the east, coordination in the west, connection in the south, expansion in the north and optimisation in the centre”. After the completion of this project, the expressway network will be extended to eastern clusters such as Dapeng New Area, which is conducive to improving the traffic function of this project and ensuring its integrity.

3. Feasibility of this project

According to the Reply of the Guangdong Provincial Development and Reform Commission on the Approval of the Shenzhen Outer Ring Expressway Project (Yue Fa Gai Jiao Tong Han [2014] No.2020), the entire Shenzhen Outer Ring Expressway Project is approved, and it is stated that the Shenzhen section will be funded, constructed and operated by Outer Ring Company – a wholly-owned subsidiary of the Company. Since its establishment over 20 years ago, the Company has undertaken the construction of many major projects such as Jihe Expressway, Nanguang Expressway, Yanba Expressway, Yanpai Expressway, Qinglian Expressway, Yanjiang Expressway, and Outer Ring Expressway, and provided operation and management services for nearly 90% of expressway sections in Shenzhen. It has the strength to implement this project, and implementing this project is also an obligation and need of the Company to effectively perform its responsibilities as a state-owned enterprise.

4. Investment estimate of this project

The total planned investment in this project is RMB29,403,702,000, in which the remaining investment in the Kengzi-Dapeng subsection is RMB8,447,036,500. Not more than RMB4.6 billion in the capital raised from this issuance will be used for capital expenditures after the Board meeting. The specific composition is as follows:

Unit: RMB10,000

Name of work or cost		Proportion
Name of work or cost	Total investment (RMB10,000)	Proportion
Part 1 Construction and installation engineering costs	675,890.21	80.02%
1. Temporary works	10,576.85	1.25%
2. Roadbed works	760.56	0.09%
3. Pavement works	539.01	0.06%
4. Bridge and culvert works	90,189.42	10.68%

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APPENDIX II

PLAN OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS FOR 2023

Name of work or cost		Proportion
Name of work or cost	Total investment (RMB10,000)	Proportion
5. Flyover works	269,927.88	31.96%
6. Tunnel works	236,082.85	27.95%
7. Highway facilities and embedded pipeline works	35,828.80	4.24%
8. Landscaping and environmental protection works	10,487.60	1.24%
9. Other works	3,764.06	0.45%
10. Special costs	17,733.18	2.10%
Part 2 Compensation for land use and house demolition	53,861.08	6.38%
Part 3 Other project construction costs	32,003.83	3.79%
1. Construction project management fees	15,696.27	1.86%
2. Research and testing fees	150.86	0.02%
3. Construction project preparatory work costs	12,468.12	1.48%
4. Special assessment (appraisal) fees	390.14	0.05%
5. Joint trial run costs	231.80	0.03%
6. Production preparation costs	179.02	0.02%
7. Project communication management fees	222.94	0.03%
8. Project insurance premiums	2,664.68	0.32%
Part 4 Contingencies	38,087.76	4.51%
Sum of Parts 1, 2, 3 and 4	799,842.88	94.69%
Loan interests during the construction period	44,860.77	5.31%
Basic highway construction costs	844,703.65	100.00%

5. Economic benefits of this project

According to the Regulations on the Administration of Toll Highways 《收費公路管理( 條例》), and the toll collection period assessment policy of Guangdong Province, after the first date of completion and opening to traffic of a completed section of the Shenzhen Outer Ring Expressway Project, the Company is expected to have an operating period of not more than 25 years for this project, and the final operating period is subject to the approval of the competent authority. During the operation

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APPENDIX II

period, the Company has the right to collect vehicle tolls, manage advertisements in designated areas along the route, etc. The economic benefits of this project are calculated based on a 25-year operation period, starting from the first date of completion and opening to traffic of a completed section, based on the assumption that the unfinished and finished sections have the same toll collection deadline.

The Company has made reasonable estimates of the income, costs and expenses during the construction and operation periods of this project, and calculated the overall economic efficiency indicators of the Shenzhen Outer Ring Expressway based on reasonable assumptions. The expected internal rate of return is 6.76%, indicating good economic benefits.

6. Approval matters of this project

In June 2014, the Guangdong Provincial Development and Reform Commission issued the Reply of the Guangdong Provincial Development and Reform Commission on the Approval of the Shenzhen Outer Ring Expressway Project 《廣東省發展改革委關於深( 圳外環高速公路項目核准的批復》) (Yue Fa Gai Jiao Tong Han [2014] No. 2020), approving the filing of the Shenzhen Outer Ring Expressway Project. In April 2023, the Guangdong Provincial Development and Reform Commission issued the Reply of the Guangdong Provincial Development and Reform Commission on Adjusting the Construction and Investment Scale of the Shenzhen Section (Phase III) (KengziDapeng Subsection) of the Shenzhen Outer Ring Expressway 《廣東省發展改革委關於( 調整深圳外環高速公路深圳段三期（坑梓至大鵬段）工程建設和投資規模的批復》) (Yue Fa Gai He Zhun [2023] No. 7), approving the adjustment to the construction and investment scale of the Shenzhen section (Phase III) (Kengzi-Dapeng subsection) of the Shenzhen Outer Ring Expressway.

In August 2009, Shenzhen Expressway Corporation Limited received the Reply on the Environmental Impact Assessment Report of the Shenzhen Outer Ring Expressway Project 《關於深圳外環高速公路工程環境影響報告書的批復》( ) (Yue Huan Shen [2009] No. 414) issued by the Guangdong Provincial Environmental Protection Bureau. In April 2023, Shenzhen Outer Ring Expressway Investment Company Limited received the Reply on the Environmental Impact Assessment Report of the Shenzhen Section (Phase III) (Kengzi-Dapeng Subsection) of the Shenzhen Outer Ring Expressway 《關於深圳外環高速公路深圳段三期工程（坑梓至大鵬段）環境影響報告( 書的批復》) (Shen Huan Pi [2023] No. 000006) issued by the Shenzhen Municipal Ecology and Environment Bureau.

In November 2019, the Shenzhen Section of Outer Ring Expressway obtained the Construction Land Planning Permit of Shenzhen 《深圳市建設用地規劃許可證》( ) (Shen Gui Hua Zi Yuan Xu Shi Zheng Zi No. BA-2019-0035, Shen Gui Hua Zi Xu Zheng Zi No. LA-2019-0047, Shen Gui Hua Zi Xu Zheng Zi No. LG-2019-0078, Shen Gui Hua Zi Xu Zheng Zi No. PS-2019-0034, Shen Gui Hua Zi Xu Zheng Zi No. GM2019-0045) approved and issued by the competent department of the Planning and

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Natural Resources in Shenzhen. In September 2022, Shenzhen Outer Ring Expressway (Shenzhen Section 3) (Kengzi to Dapeng Section) obtained the Construction Project Land Pre-examination and Site Selection Opinion 《建設項目用地預審與選址意見書》( ) (Yong Zi No. 440307202210020 and Yong Zi No. 440310202200021) issued by the competent department of the Planning and Natural Resources in Shenzhen. The construction land planning permit for Shenzhen Outer Ring Expressway (Shenzhen Section 3) (Kengzi to Dapeng Section) is in progress.

(II) Repayment of interest-bearing liabilities

1. Basic information

The Company plans to use not more than RMB1.9 billion in the capital raised from this issuance to repay interest-bearing liabilities in order to enrich its capital strength, reduce capital costs and operational risks, meet its future business growth and investment needs, continually enhance market competitiveness, and improve its economic efficiency.

2. Necessity of this project

The expressway industry in which the Company operates is a capital intensive industry. Expressway projects involve large investments at the construction and operation stages, and long development and investment payback periods. The Company must have sufficient capital to maintain project operation and meet the demand for continual business development of the Company.

3. Feasibility of this project

As of 31 December 2022, the total assets of the Company were RMB69,201,468,300, the total liabilities were RMB41,840,560,300, and the debt-to-asset ratio was 60.46%, which was relatively high. Using the raised capital to repay interest-bearing liabilities is beneficial for improving the financial structure, reducing financial risks, enhancing the Company’s risk resistance, and ensuring the sustained and healthy business development of the Company.

After the implementation of this project, the Company’s financial status will be improved, and the financial structure will be effectively improved, and financial risks and capital costs will be reduced, providing strong support for the Company’s subsequent development, ensuring the smooth and healthy operation of the Company’s business activities, enhancing the Company’s market competitiveness, and generating significant comprehensive economic benefits.

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APPENDIX II

PLAN OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS FOR 2023

III. FEASIBILITY ANALYSIS CONCLUSION ON THE USE OF THE RAISED CAPITAL

In summary, the investment projects of the raised capital comply with the relevant national industrial policies and the overall future strategic development directions of the Company. It has good market prospects and economic benefits, and is conducive to further enhancing the competitiveness and subsequent development potential of the Company’s core business; in addition, this issuance will optimise the Company’s capital structure, and reduce the Company’s financial risks and capital costs. Therefore, the investment projects of the raised capital are necessary and feasible, and are in the best interest of the Company and all shareholders.

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APPENDIX II

CHAPTER 5 DISCUSSION AND ANALYSIS OF THE BOARD ON THE IMPACTS OF THIS ISSUANCE ON THE COMPANY

I. CHANGES IN THE COMPANY’S BUSINESSES AND ASSETS, ARTICLES OF ASSOCIATION, SHAREHOLDER STRUCTURE, SENIOR MANAGEMENT STRUCTURE, AND BUSINESS STRUCTURE AFTER THIS ISSUANCE

(I) Impact on the Company’s businesses and assets

The investment projects of the raised capital comply with the relevant national industrial policies and the overall future strategic development directions of the Company. The raised capital will be invested in the Company’s main business, which is conducive to expanding the Company’s asset scale, enhancing the Company’s future development space, and consolidating and improving the Company’s market share and position.

(II) Impact on the Company’s Articles of Association

After the completion of this issuance of A-shares to specific targets, the registered capital, total number of shares, capital structure, etc. of the Company will change. The Company will modify the relevant provisions of the Articles of Association based on the actual situation of this issuance, and handle change of business registration.

(III) Impact on the shareholder structure

(IV) Impact on senior management structure

This issuance of A-shares to specific targets does not involve any significant change in the Company’s senior management structure.

As of the date of issuance of this plan, the Company has no plan to adjust the senior management structure. If the Company plans to adjust the senior management structure in the future, it will handle the necessary procedure and perform the information disclosure obligation in accordance with the relevant regulations.

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(V) Impact on business structure

The capital raised from this issuance of A-shares to specific targets will mainly be used for the Shenzhen section of the Shenzhen Outer Ring Expressway and the repayment of interestbearing liabilities, and will not have any significant impact on the Company’s main business structure.

II. CHANGES IN THE COMPANY’S FINANCIAL STATUS, PROFITABILITY AND CASH FLOWS AFTER THIS ISSUANCE

(I) Impact on financial status

After the completion of this issuance, the total and net assets of the Company will increase, and the Company’s financial strength will be further improved, which is conducive to enhancing the Company’s financial risk resistance, optimising the Company’s capital structure, and providing excellent support for the Company’s sustainable development.

(II) Impact of this issuance on profitability

The capital raised from this issuance of A-shares to specific targets will be used for the Shenzhen section of the Shenzhen Outer Ring Expressway and the repayment of interestbearing liabilities, which will effectively expand the Company’s business scale and provide solid support for the sustained business growth of the Company; since the investment projects of the raised capital will not generate benefits in the short term, the Company’s earnings per share may be diluted and the return on equity may decrease in the short term. However, in the long run, the implementation of the investment projects of the raised capital will effectively expand the Company’s business scale, enhance its market competitiveness, and provide solid support for the Company’s future business growth.

(III) Impact of this issuance on the Company’s cash flows

After the capital raised from this issuance of A-shares to specific targets is in place, cash inflows generated by the Company’s fundraising activities will increase significantly, and with the gradual implementation of the investment projects of the raised capital, cash outflows from investment activities will also increase accordingly. After the investment projects of the raised capital begin to generate income, future cash inflows from operating activities will gradually increase, improving the quality of the Company’s cash flows, enhancing the Company’s capital strength and risk resistance, and laying a solid foundation for the Company’s long-term strategic development.

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APPENDIX II

III. CHANGES IN BUSINESS AND MANAGEMENT RELATIONSHIPS, RELATED / CONNECTED TRANSACTIONS AND HORIZONTAL COMPETITION BETWEEN THE COMPANY, AND ITS CONTROLLING SHAREHOLDER AND ITS RELATED PARTIES/ CONNECTED PERSONS

After the completion of this issuance of A-shares to specific targets, the business and management relationships between the Company, and its controlling shareholder and its related parties/connected persons will not change, nor will there be any horizontal competition arising from this issuance.

This issuance of A-shares to specific targets will not change the independence of the Company in business and management relationships with its controlling shareholder, actual controller and their related parties / connected persons. As the controlling shareholder of the Company, Shenzhen International will not add any related / connected transaction except subscribing for A-shares issued to specific targets this time through its subsidiaries.

IV. AFTER THE COMPLETION OF THIS ISSUANCE OF A-SHARES TO SPECIFIC TARGETS, WILL ANY FUND OR ASSET OF THE COMPANY BE OCCUPIED BY ITS CONTROLLING SHAREHOLDER, ACTUAL CONTROLLER AND THEIR RELATED PARTIES / CONNECTED PERSONS, OR WILL THE COMPANY PROVIDE ANY GUARANTEE TO ITS CONTROLLING SHAREHOLDER, ACTUAL CONTROLLER AND THEIR RELATED PARTIES / CONNECTED PERSONS

As of the date of issuance of this plan, no fund or asset of the Company is occupied illegally by its controlling shareholder and its related parties/connected persons, and the Company does not provide any illegal guarantee to its controlling shareholder and its related parties/connected persons.

After the completion of this issuance of A-shares to specific targets, no fund or asset of the Company will be occupied illegally by its controlling shareholder and its related parties/connected persons, and the Company will not provide any illegal guarantee to its controlling shareholder and its related parties/connected persons.

V. IMPACT OF THIS ISSUANCE ON THE COMPANY’S LIABILITIES

After the completion of this issuance of A-shares to specific targets, the Company’s net assets will increase significantly, its debt-to-asset ratio will decrease, its financial status and asset-liability structure will be effectively improved, and its solvency and risk resistance will be further enhanced.

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APPENDIX II

CHAPTER 6 EXPLANATION OF RISKS RELATED TO THIS ISSUANCE OF A-SHARES TO SPECIFIC TARGETS

When evaluating the Company’s Plan of the Issuance of A Shares to Specific Targets, investors should carefully consider the following risk factors in addition to the materials provided in this plan:

I. INDUSTRY RISKS

(1) Policy risks

The Company is currently mainly engaged in the investment, construction, operation and management of toll highways, and the general environmental protection business. The toll highway and general environmental protection industries are closely related to national industrial policies. Any adjustment to the national industrial policies or any change in the national macroeconomic situation in the future may affect the overall operation and development of the Company.

In the meanwhile, as a company with both A and H shares listed in two locations, changes in relevant regulations on securities supervision and management in the listing locations may also affect the Company’s equity structure and stock liquidity.

(II) Competition risks

The expressways operated by the Company vary in terms of transportation costs, time costs, and convenience from other transportation modes, such as railways and airlines, providing different choices to transportation demanders. However, there is a certain degree of direct or indirect competition among different transportation modes. In recent years, the rapid development of regional rail transportation, especially high-speed railway and urban rail, has changed the competitive environment facing the Company’s expressways. The further development of alternative transportation modes on a large scale in the future may have a partial replacement impact on the expressways operated by the Company, which will in turn affect the Company’s business performance. In addition, changes in the road network can also have a positive or negative impact on the traffic volume of the expressways operated by the Company. In terms of the general environmental protection industry, there are gradually more and more competitors, and market competition is exceptionally fierce, which may have a negative impact on the Company’s environmental protection business.

II. OPERATIONAL RISKS

(I) Highway maintenance and operational risks

After the implementation of national ETC networking, new requirements have been put forward for the performance of toll collection systems and facilities. Abnormalities in systems and management processes may affect the Company’s interests and market image. In addition, after the completion and opening of an expressway, it is necessary to perform daily and special

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APPENDIX II

maintenance to ensure good road conditions, and safe and fast traffic, and the corresponding maintenance demand will be elevated with the increase of expressway traffic volume. The Company actively performs preventive maintenance, and adopts new processes and technologies to improve maintenance effectiveness and reduce maintenance costs. However, road aging, major repairs, etc. in the future may affect normal vehicular traffic and lead to an increase in maintenance costs for the Company to some extent, which may have a negative impact on the Company’s overall business performance.

(II) Operational risks in the general environmental protection business

In respect of the general environmental protection business, new energy projects have been affected by such factors as local power grid policies, and the operation and maintenance of wind farms, which is expected to cause fluctuation in various parameters such as the power generation hours of wind farms, and will in turn exert certain impact on the revenue of wind farms. Factors such as volatile sales prices of oil and grease, and the lower-than-expected actual processing amount may cause the actual profitability of kitchen waste disposal projects to be lower than expected.

III. FINANCIAL RISKS

(I) Financing risks

Given increased efforts of the Company in expanding the main business in recent years, the overall scale of investment is increasing. In the next few years, the Company will be in a peak period of capital expenditure, and there will be large capital demand in all businesses. The toll highway business includes the acquisition of Bay Area Development, Coastal Expressway (Phase II), the Jihe Expressway Reconstruction and Expansion Project, etc., and the general environmental protection business includes the Guangming Environmental Park Project, the Bioland Kitchen Waste Project, etc. A large number of new projects are funded and constructed in a centralized manner, and some projects have a high debt financing ratio and a relatively high proportion of financial expenses. If there is a capital shortage or an increase in costs in the market in the future, the Company may be faced with financing risks, which may have an impact on its business performance. At the end of 2020, 2021 and 2022, the Company’s consolidated debt-to-asset ratios were 52.35%, 56.39% and 60.46%, respectively; showing an uptrend in general. The Company plans to further expand financing channels by offering A-shares to specific targets to enhance capital strength and effectively adjust the Company’s asset-liability structure. If this issuance of A-shares to specific targets is ultimately unsuccessful due to market and other influencing factors, the Company will continue to rely on debt financing to meet its capital expenditure demand, resulting in a corresponding increase in financial costs and ultimately affecting the Company’s operating performance level.

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APPENDIX II

(II) Risk of immediate return dilution

After the capital raised from this issuance of A-shares to specific targets is in place, the Company’s total share capital and net assets will increase. If the benefits of using the raised capital can hardly be fully shown in the short term, or the Company’s profit growth is lower than the growth of its net assets and share capital amount in the short term, there will be a risk of the Company’s earnings per share and return on net assets being diluted in the short term.

IV. RISKS RELATED TO THIS ISSUANCE OF A-SHARES TO SPECIFIC TARGETS

(I) Approval risks

The Issuance of A Shares to Specific Targets still needs to be considered and approved by the Company’s general meeting and class meeting, approved by the entity performing state-owned asset supervision and management responsibilities, reviewed and approved by the SSE, and consented for registration by the CSRC before implementation. There are uncertainties in whether it can pass consideration, and be approved and registered, and the timing of passing consideration, approval and registration.

(II) Offering risks

This issuance of A-shares to specific targets is subject to the combined influence of various factors such as overall fluctuations in the securities market, the price trend of the Company’s stock, and the level of acceptance of this plan by investors, posing a risk of being unable to raise the capital fully.

(III) Stock price fluctuation risks

The stock price is not only affected by the current performance and future development prospects of the Company, but also by changes in international politics, the macroeconomic situation, economic policies or laws, the development of the industry in which the Company operates, the stock supply and demand relationship, investor psychological expectations, and other unpredictable factors. The fluctuation of the stock price will bring risks to investors, and also have an impact on the pricing of this issuance of A-shares to specific targets, thereby affecting the fundraising amount of this issuance. In response to the above situation, the Company will disclose significant information that may affect the Company’s stock price to investors truthfully, accurately, timely, completely and fairly in accordance with the relevant laws and regulations such as the Company Law, the Securities Law, and the Administrative Measures for Securities Offering and Registration of Listed Companies, for investors to make investment judgments.

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V. RISKS OF THE INVESTMENT PROJECTS OF THE RAISED CAPITAL

The capital raised in this issuance will be mainly invested in the Shenzhen section of the Shenzhen Outer Ring Expressway Project. This project involves a large investment scale, a long construction period, complex construction technologies and processes, and high construction quality requirements. Other situations such as delays in construction in this project may affect the Company’s return on investment. In addition, during the implementation of this project, any change in the macroeconomic situation, market conditions or relevant national policies, or other unfavourable situation beyond human control may also delay the completion and acceptance of this project, or make the vehicular traffic after completion lower than expected, thereby having an adverse impact on the expected benefits of this project.

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CHAPTER 7 PROFIT DISTRIBUTION POLICY OF THE COMPANY AND IMPLEMENTATION

I. PROFIT DISTRIBUTION POLICY OF THE COMPANY

According to the Notice on Further Implementing Cash Dividends for Listed Companies issued by the CSRC, and the Regulatory Guidelines for Listed Companies No. 3 – Cash Dividends of Listed Companies, in order to standardise the Company’s profit distribution behaviour, promote the establishment of a scientific, sustainable and stable profit distribution mechanism, and protect the legitimate rights and interests of small and medium investors, the prevailing Articles of Association of the Company stipulate the following profit distribution policy:

“Article 174: When there is any profit available for distribution, the Company shall implement a positive cash dividend policy, and maintain the continuity and stability of such policy in accordance with the relevant provisions of laws and regulations, on the principle of attaching importance to reasonable return on investment for the shareholders, and taking into account the needs of the Company’s sustainable operation and development.

The profit of the Company after payment of relevant taxes shall be distributed in the following order:

Making up losses;
Contributing to the statutory surplus reserve;
Contributing to the discretionary surplus reserve; and
Paying common share dividends.

The Company shall contribute 10% of its after-tax profit to the statutory surplus reserve. If the accumulative amount of the Company’s statutory surplus reserve reaches 50% of the registered capital, no further contribution can be made. The discretionary surplus reserve shall be separately withdrawn from the Company’s profit after contribution to the statutory surplus reserve according to the resolution of the general meeting. The Company’s remaining after-tax profit after making up losses and contributing to the reserves shall be distributed to the shareholders in proportion to their shareholdings, unless otherwise stipulated in the Articles of Association.

If the general meeting distributes any profit to the shareholders before the Company makes up losses and contributes to the statutory reserve in violation of the preceding paragraph, the shareholders must return the profit so distributed to the Company.

The Company’s shares held by itself shall not be used for profit distribution.

Article 175: The Company may distribute dividends in cash, in shares, or both, or in any other method permitted by laws and regulations.

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The Company shall meet the following conditions when distributing dividends in cash:

The distributable profit realised by the Company in the year is positive, the Company has sufficient cash, and the distribution of cash dividends will not affect the Company’s subsequent normal operation;
The auditing firm has issued an unqualified audit report on the Company’s annual financial statements;

Provided that the cash dividend distribution conditions are met, the Company shall distribute cash dividends annually. The Company may conduct mid-term cash dividend distribution. The profit distributed in cash by the Company in each year shall not be less than 20% of the distributable profit for the year, and the profit distributed in cash by the Company for three consecutive years in aggregate shall not be less than 30% of the distributable profit for the three years. When the Company is in good financial and cash status, and there is no major investment plan or cash expenditure, it shall try to increase the cash dividend ratio.

Based on the profitability and performance growth of each year, and provided that the above cash dividend ratio is met, and the Company’s equity structure and scale are reasonable, the Company may distribute dividends in shares so as to make the Company’s share capital with its performance growth.

Article 176: The Board shall formulate a profit distribution plan in accordance with the Articles of Association, and taking into account such factors as the Company’s shareholder payback plan, business status, and development needs. After approval by the Board, the plan shall be submitted to the general meeting for consideration by an ordinary resolution. When formulating a profit distribution plan, the Board shall carefully study and demonstrate the timing, conditions, minimum ratio, adjustment conditions, decision-making procedure requirements, etc. for cash dividend distribution. When the Company experiences any special situation such as significant special gains without corresponding cash inflows in the year, the Board may propose a dividend distribution plan that is lower than the ratio specified in the Articles of Association after detailed demonstration and explanation, but it shall be submitted to the general meeting for consideration by a special resolution. The Independent Directors and the Supervisory Committee shall give review opinions on the profit distribution plan.

If the Company adjusts its profit distribution policy due to any significant change in laws and regulations, or its operating environment or conditions, the starting point shall be protecting the shareholders’ rights and interests. An adjustment plan shall be formulated and a corresponding amendment to the Articles of Association proposed after detailed demonstration by the Board, and submitted to the general meeting for consideration by a special resolution. The Independent Directors and the Supervisory Committee shall give review opinions on the adjustment to the profit distribution policy.

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When submitting a profit distribution plan or any matter related to adjusting the profit distribution policy to the general meeting for consideration, the Company shall actively communicate with the shareholders, especially the public shareholders, by various means, fully collect their opinions and needs, promptly respond to their concerns, and practically protect their right to attend the general meeting.

The Independent Directors and the Supervisory Committee shall supervise the implementation and decision-making process of the Company’s profit distribution policy and plan. If the Board fails to formulate a profit distribution plan in accordance with the Articles of Association, such plan violates the Company’s profit distribution policy, a decision is made in violation of the procedure, or such plan is not implemented according to the resolution of the general meeting, the Independent Directors and the Supervisory Committee shall give special opinions and explanations.”

II. DISTRIBUTION OF CASH DIVIDENDS AND UTILISATION OF UNDISTRIBUTED PROFITS OF THE COMPANY IN THE PAST THREE YEARS

(I) Profit distribution in the past three years

1. Profit distribution in 2020

The 2020 annual general meeting of the Company approved the Profit Distribution Plan for 2020, approving the distribution of cash ordinary dividends of 2020 at RMB0.43 per share (including tax) to all shareholders based on the total share capital of 2,180,770,326 shares at the end of 2020, with a total amount of RMB937,731,240.18. The balance after distribution is carried forward to the next year.

2. Profit distribution in 2021

The 2021 annual general meeting of the Company approved the Profit Distribution Plan for 2021, approving the distribution of cash ordinary dividends of 2021 at RMB0.62 per share (including tax) to all shareholders based on the total share capital of 2,180,770,326 shares at the end of 2021, with a total amount of RMB1,352,077,602.12. The profit balance after distribution is carried forward to the next year.

3. Profit distribution in 2022

The 2022 annual general meeting of the Company approved the Profit Distribution Plan for 2022, approving the distribution of cash ordinary dividends of 2022 at RMB0.462 per share (including tax) to all shareholders based on the total share capital of 2,180,770,326 shares at the end of 2022, with a total amount of RMB1,007,515,890.61. The profit balance after distribution is carried forward to the next year.

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PLAN OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS FOR 2023

(II) Cash dividends in the past three years

Year of dividend distribution			Proportion of net profit attributable to ordinary shareholders of the listed company in the consolidated statements of the year of cash dividend distribution
Year of dividend distribution	Cash dividend amount (RMB10,000, including tax)	Net profit attributable to ordinary shareholders of the listed company in the consolidated statements of the year of dividend distribution (RMB10,000)	Proportion of net profit attributable to ordinary shareholders of the listed company in the consolidated statements of the year of cash dividend distribution
2022	100,751.59	182,755.69	55.13%
2021	135,207.76	241,969.92	55.88%
2020	93,773.12	204,021.22	45.96%
Distributable profits realised in the past three years (RMB10,000)			628,746.83
Proportion of accumulated cash dividends in the past three years to the actual distributable profits in the past three years			52.44%

Note: The net profits attributable to ordinary shareholders of the listed company in the consolidated statements of the year of dividend distribution have excluded the return on investment payable to the holders of the perpetual bonds.

(III) Utilisation of undistributed profits in the past three years

In the past three years, the undistributed profit of the Company in each year has been carried forward to the next year, mainly to support the Company’s business development needs, in addition to contribution to the statutory surplus reserve and the distribution of cash dividends.

III. SHAREHOLDER DIVIDEND PAYBACK PLAN FOR THE NEXT THREE YEARS

In order to establish a scientific, sustainable and stable dividend mechanism, and actively pay back to investors, the first extraordinary general meeting in 2021 of the Company considered and approved the Shareholder Payback Plan for 2021-2023 in accordance with the Notice of the CSRC on Further Implementing Matters Related to Cash Dividends of Listed Companies (Zheng Jian Fa [2012] No. 37) and the relevant provisions of the Articles of Association, and based on the actual situation of the Company, mainly including the following:

“(I) Main considerations in the formulation of this plan

The Company has formulated this plan taking into account various factors such as the shareholder payback requirements and willingness, the Company’s strategic development plan and actual development stage, current and future profitability, financial and cash flow status,

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APPENDIX II

capital demand, social capital costs, and financing environment in order to establish a sustained, stable and positive payback plan and mechanism for investors, and ensure the continuity and stability of the profit distribution policy.

(II) Basic principles for formulating this plan

This plan is formulated taking into account the opinions of the shareholders (especially small and medium ones), the Independent Directors, and the Supervisory Committee, while complying with the relevant laws, regulations, normative documents, and the provisions on profit distribution in the Articles of Association. A sustained, stable and positive profit distribution policy is implemented based on the principle of attaching importance to reasonable return on investment for the shareholders, taking into account the Company’s long-term sustainable development and reasonable financial demand, and serving the overall interests of all shareholders.

(III) Shareholder payback plan of the Company for 2021-2023

1. Method of profit distribution

The Company distributes profits in cash, in shares, or both, or in any other method permitted by laws and regulations, and gives priority to distribution in cash.

2. Conditions and ratio of cash dividend distribution

Provided that the distributable profit realised by the Company in the year is positive, the Company has sufficient cash, the distribution of cash dividends will not affect the Company’s subsequent normal operation, the financial status is good, and the auditing firm has issued an unqualified audit report on the Company’s annual financial statements, the Company distributes cash dividends once a year in principle. The Company may conduct mid-term cash dividend distribution.

Provided that the conditions for cash dividend distribution are met, the Company will endeavour to increase the ratio of cash dividend distribution in 2021-2023. The profit to be distributed in cash will not be less than 55% of the net profit attributable to shareholders of the parent company in the consolidated statements for the year after deduction of the profit distributed to the holders (if any) of other equity instruments such as perpetual bonds (hereinafter refers to the “ distributable profit realised in current year ”).

3. Conditions for the Company to distribute dividends in shares

Based on the profitability and performance growth of each year, and provided that the above cash dividend ratio is met, and the Company’s equity structure and scale are reasonable, the Company may distribute dividends in shares so as to match the Company’s share capital with its performance growth.

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(IV) Decision-making mechanism for this plan and the annual profit distribution plan

This plan is drafted by the Company’s management, and will be submitted to the Supervisory Committee and the general meeting for consideration after approval by the Board. When reviewing the profit distribution plan every year, the Board should carefully study and demonstrate the form of profit distribution, the conditions and ratio of cash dividend distribution, and submit a resolution to the Supervisory Committee and the general meeting for consideration.

(V) Adjustment to the shareholder payback plan

If the Company needs to adjust its shareholder payback plan due to any significant change in laws and regulations, or its operating environment or conditions, the starting point should be protecting the shareholders’ rights and interests. An adjustment plan will be formulated after detailed demonstration by the Board, and submitted to the general meeting for consideration by a special resolution. The Independent Directors and the Supervisory Committee should give review opinions on the adjustment to the shareholder payback plan. When submitting any matter related to adjusting the shareholder payback policy to the general meeting for consideration, the Company should actively communicate with the shareholders, especially the public shareholders, by various means, fully collect their opinions and needs, timely respond to their concerns, and practically protect their right to attend the general meeting.

(VI) Validation mechanism for this plan

This plan will come into effect from the date of approval by the Company’s general meeting.
For anything unstated in this plan, the relevant laws, regulations, rules, the relevant provisions of the CSRC, and the Articles of Association will apply.
The Board of the Company is responsible for interpreting this plan.”
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PLAN OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS FOR 2023

CHAPTER 8 DESCRIPTION OF THE COMPANY’S MAKE-UP MEASURES FOR THE DILUTED IMMEDIATE RETURN OF THIS ISSUANCE

According to the requirements of the Opinions of the General Office of the State Council on Further Strengthening the Protection of the Lawful Rights and Interests of Small and Medium Investors in the Capital Market (Guo Ban Fa [2013] No. 110), Several Opinions of the State Council on Further Promoting the Healthy Development of the Capital Market (Guo Fa [2014] No. 17), the Guiding Opinions on Matters related to Diluted current returns of IPOs, Refinancing and Major Asset Restructurings (CSRC Announcement [2015] No. 31) issued by the CSRC, and other relevant documents. In order to protect the interests of small and medium investors, the Company has carefully analysed the impact of this issuance of A-shares to specific targets on the dilution of immediate return. The impacts of the diluted immediate return on the Company’s main financial indicators and the measures taken by the Company are explained as follows:

I. IMPACTS OF THE DILUTED IMMEDIATE RETURN OF THIS ISSUANCE OF A-SHARES TO SPECIFIC TARGETS ON THE COMPANY’S MAIN FINANCIAL INDICATORS

(I) Assumptions and prerequisites for calculation

The following assumptions are used to measure the impacts of the diluted immediate return of this issuance on the Company’s main financial indicators only, and do not represent the Company’s judgment on its future business status and trend, nor do they constitute a profit forecast. Investors should not make investment decisions on this basis. If investors make investment decisions on this basis and suffer losses, the Company will not be liable for compensation.

It is assumed that there is no significant change in the macroeconomic environment, industrial policies, industry development status, and product market conditions.
The number of A-shares to be offered to specific targets this time will not exceed 30% of the total share capital before this issuance. It is assumed that the calculation is based on an upper limit of 654,231,097 shares issued this time. (The final number of shares issued will be based on the actual number of shares issued after registration with the CSRC). If the Company experiences any ex-dividend event such as offering of bonus shares or capital reserve conversion into the share capital, or the Company’s total share capital changes due to stock repurchase, any employee equity incentive plan, etc. during the period from the pricing benchmark date to the date of this issuance of A-shares to specific targets, the number of A-shares issued to specific targets this time will be adjusted accordingly.
It is assumed that the Company will complete this issuance by the end of November 2023.
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APPENDIX II

Based on the Company’s business performance in the past three years and the prudence principle, it is assumed that the Company’s net profit attributable to ordinary shareholders of the listed company in 2023 will remain unchanged compared to the previous year, and increase by 10% and 20% year on year. It is also assumed that the growth of the net profit attributable to ordinary shareholders of the listed company will remain consistent after deduction of non-recurring gains and losses. This assumption is used to measure the impacts of the diluted immediate return of this issuance on the Company’s main financial indicators only, and does not represent the Company’s judgment on its future business status and trend, nor does it constitute a profit forecast of the Company.
The number of A-shares issued to specific targets, the amount of the raised capital, and the offering time are assumed for calculation purposes only. The actual number of shares issued, the offering results, and the actual date will prevail.
When the number of ordinary shares issued is calculated, only the impact of this issuance on the total share capital is considered, and any situation that leads to a change in the share capital such as share repurchase and cancellation, and reserve fund conversion into the share capital are not considered.
This calculation does not take into account the impact of the capital raised from this issuance on the Company’s production, management, financial status (such as financial expenses and return on investment), etc. after it is received.

(II) Impacts on main financial indicators

Based on the above assumptions, the impacts of this issuance of A-shares to specific targets on the Company’s main financial indicators such as diluted immediate return are calculated as follows:

Item		2023/31 December 2023	2023/31 December 2023
Item	2022/31 December 2022	2023/31 December 2023
		Before issuance	After issuance
Total share capital (shares)	2,180,770,326	2,180,770,326	2,835,001,423
Assumption 1:
The net profit attributable to ordinary shareholders of the parent company after deduction of non- recurring gains and losses realised in 2023 remains the same as in 2022.
Net profit attributable to ordinary shareholders of the parent company (10,000 yuan)	182,755.69	182,755.69	182,755.69
Net profit attributable to common shareholders of the parent company after deduction of non-recurring profits and losses (10,000 yuan)	103,929.13	103,929.13	103,929.13
Basic earnings per share (yuan/share)	0.8380	0.8380	0.8176

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APPENDIX II

	2022/31	2023/31 December 2023	2023/31 December 2023
Item
	December 2022	Before issuance	After issuance
Diluted earnings per share (yuan/share)	0.8380	0.8380	0.8176
Basic earnings per share less non-recurring	0.4766	0.4766	0.4649
gains and losses (yuan)
Diluted earnings per share less non-recurring	0.4766	0.4766	0.4649
gains and losses (yuan)
Assumption 2:

The net profit attributable to ordinary shareholders of the parent company after deduction of nonrecurring gains and losses realised in 2023 increases by 10% as compared to 2022.

Item	Item		2023/31 December 2023	2023/31 December 2023
	Item	2022/31 December 2022	2023/31 December 2023
			Before issuance	After issuance
	Diluted earnings per share (yuan/share)	0.8380	0.8380	0.8176
	Basic earnings per share less non-recurring gains and losses (yuan)	0.4766	0.4766	0.4649
	Diluted earnings per share less non-recurring gains and losses (yuan)	0.4766	0.4766	0.4649
	Assumption 2:
The net profit attributable to ordinary shareholders of the parent company after deduction of non- recurring gains and losses realised in 2023 increases by 10% as compared to 2022.
Net profit attributable to ordinary shareholders of the parent company (10,000 yuan)				201,031.26
	Net profit attributable to ordinary shareholders of the parent company (10,000 yuan)	182,755.69	201,031.26	201,031.26
	Net profit attributable to common shareholders of the parent company after deduction of non-recurring profits and losses (10,000 yuan)	103,929.13	114,322.04	114,322.04
	Basic earnings per share (yuan/share)	0.8380	0.9218	0.8994
	Diluted earnings per share (yuan/share)	0.8380	0.9218	0.8994
	Basic earnings per share less non-recurring gains and losses (yuan)	0.4766	0.5242	0.5114
	Diluted earnings per share less non-recurring gains and losses (yuan)	0.4766	0.5242	0.5114
	Assumption 3:
	The net profit attributable to ordinary shareholders of the parent company after deduction of non- recurring gains and losses realised in 2023 increases by 20% as compared to 2022.
	Net profit attributable to ordinary shareholders of the parent company	182,755.69	219,306.83	219,306.83
	Net profit attributable to common shareholders of the parent company after deduction of non-recurring profits and losses	103,929.13	124,714.95	124,714.95
	Basic earnings per share (RMB/share)	0.8380	1.0056	0.9811
	Diluted earnings per share (RMB/share)	0.8380	1.0056	0.9811
	Basic earnings per share less non-recurring gains and losses (yuan)	0.4766	0.5719	0.5579
	Diluted earnings per share less non-recurring gains and losses (yuan)	0.4766	0.5719	0.5579

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APPENDIX II

Note 1: Basic earnings per share and diluted earnings per share are calculated in accordance with the provisions of the Compilation Rules for Information Disclosure of Companies Offering Securities to the Public No. 9 – Calculation and Disclosure of Return on Net Assets and Earnings per Share 《公開發行證券的( 公司資訊披露編報規則第9號——淨資產收益率和每股收益的計算及披露》).
Note 2: The current perpetual bond interests have been deducted from the indicator of net profit attributable to common shareholders of the parent company for calculating earnings per share.

II. SPECIAL RISK REMINDER REGARDING THE DILUTED IMMEDIATE RETURN OF THIS ISSUANCE OF A-SHARES TO SPECIFIC TARGETS

After the completion of this issuance of A-shares to specific targets, the total share capital and net assets of the Company will increase, and the use of the raised capital and the generation of benefits will take some time. Provided that the Company’s total share capital and net assets both increase, if the Company’s profits have not yet increased by the corresponding magnitude, there is a risk of dilution of the Company’s immediate return for the year when this issuance of A-shares to specific targets is completed. In addition, once there is a significant change in the assumptions of the aforesaid analysis or the Company’s business status, the possibility that this issuance results in a change in the dilution of the immediate return cannot be ruled out.

Investors are specially reminded to invest rationally and pay attention to the potential risk of immediate return dilution by this issuance of A-shares to specific targets.

III. RELATIONSHIP BETWEEN THE INVESTMENT PROJECTS OF THE RAISED CAPITAL AND THE COMPANY’S EXISTING BUSINESSES, AS WELL AS THE COMPANY’S RESERVES IN PERSONNEL, TECHNOLOGY, MARKET AND OTHER ASPECTS WHEN IMPLEMENTING THE INVESTMENT PROJECTS

(I) Investment projects of the raised capital

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PLAN OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS FOR 2023

Unit: RMB100 million

No.	No.				Amount of raised capital to be used
	No.	Name of project	Total planned investment	Remaining investment amount (Kengzi-Dapeng subsection)	Amount of raised capital to be used
	1	Shenzhen section of the Shenzhen Outer Ring Expressway	294.04	84.47	46.00
	2	Repayment of interest- bearing liabilities	–	–	19.00
Total	Total		294.04	84.47	65.00

(II) Relationship between the investment projects of the raised capital and the Company’s existing businesses

The investment projects of the raised capital are implemented around the Company’s existing businesses. After the implementation of the investment projects, the Company’s development strategy will be implemented, and its profitability and risk resistance will be further improved, thereby enhancing the Company’s profitability and core competencies.

(III) The Company’s reserves in personnel, technology, resources, market and other aspects when implementing the investment projects

In terms of the personnel reserve, the Company has been operating in the relevant fields of the investment projects for many years, and has established a sound talent training system, a sound performance evaluation system, and a sound remuneration distribution management system. The talent quality and team structure meet the needs of business development. The Company has management and technical teams with years of industry experience, and rich management and operational skills, providing sufficient talent support for the conduct of its main business and the implementation of the investment projects.

In terms of the technical reserve, the Group has been dedicated to the transport infrastructure industry for 20 years, and gained extensive experience in such areas as highway investment, construction, operation and management. In recent years, the Company has been committed to promoting the digital transformation of operation and management. The Group capitalises on the electromechanical system of the Outer Ring Expressway to set up a comprehensive big data road network management platform, and a comprehensive traffic monitoring and management platform for the Outer Ring Expressway. This enables the dynamic and integrated monitoring and prediction of highway network conditions, real-time vehicle operation, and traffic incidents and environments. The Company has built a digital model for road infrastructure with BIM technology, and realised the smart asset operation and management of the Outer Ring

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APPENDIX II

Expressway through the BIM maintenance system. In addition, the Company’s road network monitoring and command dispatch system platform passed preliminary inspection at the end of 2021. Covering the toll highways in the Shenzhen region, it serves as an information application platform for businesses including the monitoring and management of road network operation, business synergy and emergency response.

In terms of the market, the toll highway projects funded and operated by the Group are mainly located in Shenzhen, the Guangdong-Hong Kong-Macao Greater Bay Area and economically developed regions. With its favourable geographical advantages and excellent asset conditions, the Company is leading in terms of the scale of road assets and profitability among the listed domestic expressway companies.

IV. SPECIFIC MEASURES TAKEN BY THE COMPANY TO MAKE UP THE DILUTED IMMEDIATE RETURN

In order to protect the interests of investors and reduce the impact of potential dilution of the immediate return by this issuance of A-shares to specific targets, the Company plans to take various measures to ensure the effective use of the capital raised from this issuance of A-shares to specific targets, lower the risk of immediate return dilution, and improve the immediate return for the shareholders. The specific measures to be taken by the Company are as follows:

(I) Strengthening business management and internal control, and improving operational efficiency and profitability

The Company will further expand resources, reduce costs and improve efficiency, continually optimise business processes and internal control systems, and conduct standardised management and control in all business aspects to ensure service quality and corporate reputation. In daily business management, the Company will strengthen the management of all aspects, including investment, procurement, construction, operation, finance, etc., comprehensively improve the Company’s operational efficiency and business performance, and reduce the Company’s operating costs.

(II) Strengthening the management and use of the raised capital to prevent risks in their use

In order to standardise the use and management of the Company’s raised capital, ensure the standardised, safe and efficient use of the raised capital, the Company has formulated the Raised Capital Management System and related internal control systems in accordance with the relevant laws and regulations such as the Company Law, the Securities Law, and the Regulatory Guidelines for Listed Companies No. 2 – Regulatory Requirements for the Management and Use of Raised Capital by Listed Companies 《上市公司監管指引第( 2號—— 上市公司募集資金管理和使用的監管要求》).

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standardised use of the raised capital, and prevent risks in the use of the raised capital. In the future, the Company will strive to improve the efficiency of fund utilisation, improve and strengthen investment decision-making procedures, enhance fund planning and management, make reasonable use of various financing tools and channels, control funding costs, save the Company’s various expenses, comprehensively and effectively control the Company’s operations and control risks, and improve operational efficiency and profitability.

(III) Continually improving corporate governance and providing institutional support for the Company’s development

The Company will strictly comply with the requirements of laws, regulations and normative documents such as the Company Law, the Securities Law, the Stock Listing Rules of the Shanghai Stock Exchange 《上海證券交易所股票上市規則》( ), etc., continually improve the corporate governance structure, ensure that the shareholders can fully exercise their rights, that the Board can exercise its powers in accordance with laws, regulations and the Articles of Association, make scientific, rapid and prudent decisions, and that the Independent Directors can earnestly perform their duties, protect the overall interests of the Company, especially the legitimate rights and interests of the small and medium shareholders, ensure that the Supervisory Committee can independently and effectively exercise its supervisory and inspection rights over directors, managers and other senior management members, as well as the Company’s finance, and provide institutional support for the Company’s development.

(IV) Continually improving the profit distribution system and strengthening the investor payback mechanism

According to the Notice on Further Implementing Cash Dividends for Listed Companies 《關( 於進一步落實上市公司現金分紅有關事項的通知》) issued by the CSRC, the Regulatory Guidelines for Listed Companies No. 3 – Cash Dividends of Listed Companies 《上市公司監( 管指引第3號——上市公司現金分紅》), and the relevant provisions of the profit distribution policy in the Articles of Association, the Company not only cares about its own development, but also attaches great importance to reasonable return on investment for the shareholders, and has formulated the Shareholder Payback Plan 2021-2023 《( 2021年-2023年股東回報規劃》). The Company will strictly implement the established dividend distribution policy and shareholder payback plan, and endeavour to improve the return on investment for the shareholders.

The Company reminds investors that developing return make-up measures is not a guarantee of the Company’s future profits. The Company will continue to disclose the completion progress of the immediate return make-up measures and the fulfilment progress of the relevant promisors’ commitments in its subsequent periodic reports.

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APPENDIX II

shareholders under the premise of meeting the conditions for profit distribution, in order to improve the Company’s ability to pay back to investors and effectively reduce the risk of immediate return dilution for the shareholders.

V. COMMITMENTS MADE BY THE COMPANY’S DIRECTORS AND SENIOR MANAGEMENT TO THE PRACTICAL IMPLEMENTATION OF THE RETURN MAKEUP MEASURES

All directors and senior management members of the Company have made the following commitments regarding the make-up measures for the diluted immediate return of this issuance:

“1. We promise not to deliver benefits to any other organisation or individual without compensation or under unfair conditions, and not to damage the interests of the Company by other means.
We promise to restrain our own position-related consumption behaviour.
We promise not to use company assets to engage in investment or consumption activities unrelated to the performance of our duties.
We promise to link up the remuneration system formulated by the Board or the Remuneration Committee with the implementation of the Company’s make-up measures for the diluted immediate return.
If the Company implements an equity incentive plan in the future, we promise to support the linkup of the exercise conditions of the proposed corporate equity incentive plan with the implementation of the Company’s make-up measures for the diluted immediate return.
Before the completion of this issuance, if the CSRC or the SSE promulgates other new regulatory provisions on return make-up measures, and related commitments, and the above commitments do not meet these provisions, we will make supplementary commitments in accordance with the prevailing provisions of the CSRC or the SSE.
We promise to implement the make-up measures for the diluted immediate return formulated by the Company and any commitment on the return make-up measures for the diluted immediate return effectively. If we break or refuse to fulfil the above commitments, and cause losses to the Company or the shareholders, we are willing to bear the corresponding liability according to law.”
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VI. COMMITMENTS MADE BY THE CONTROLLING SHAREHOLDER OF THE COMPANY

Shenzhen International, the controlling shareholder of the Company, has made the following commitments to the effective implementation of the Company’s return make-up measures in accordance with the relevant provisions of the CSRC:

“1. We promise not to interfere with the Company’s business management activities beyond our authorities.
We promise not to encroach on the interests of the Company.
Before the completion of this issuance, if the CSRC or the SSE promulgates other new regulatory provisions on return make-up measures, and related commitments, and the above commitments do not meet these provisions, we will make supplementary commitments in accordance with the prevailing provisions of the CSRC or the SSE.
We promise to implement the make-up measures for the diluted immediate return formulated by the Company and any commitment on the return make-up measures for the diluted immediate return effectively. If we break or refuse to fulfil the above commitments, and cause losses to the Company or the other shareholders, we are willing to bear the corresponding liability according to law.”

VII. CONSIDERATION PROCEDURE FOR MAKE-UP MEASURES AND COMMITMENTS FOR THE DILUTED IMMEDIATE RETURN OF THIS ISSUANCE

The make-up measures and commitments for the diluted immediate return of this issuance were considered and approved at the 32nd meeting of the ninth session of the Board of the Company, and will be submitted to the general meeting for consideration.

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APPENDIX III DEMONSTRATION AND ANALYSIS REPORT OF THE PROPOSAL OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS FOR 2023

This demonstration and analysis report is originally prepared in Chinese and the English version is for reference only. In the event of any inconsistency between the Chinese version and the English version, the Chinese version shall prevail.

SHENZHEN EXPRESSWAY CORPORATION LIMITED

DEMONSTRATION AND ANALYSIS REPORT OF THE PROPOSAL OF THE ISSUANCE OF A-SHARES TO SPECIFIC TARGETS FOR 2023

JULY 2023

(Unless otherwise specified in this report, the relevant terms have the same meanings as those in Shenzhen Expressway Corporation Limited the Plan of the Issuance of A Shares to Specific Targets for 2023 《深圳高( 速公路集團股份有限公司2023年度向特定對象發行A股股票預案》))

Shenzhen Expressway is a company listed on the main-board markets of the SSE and the Hong Kong Stock Exchange. In order to meet the capital demand of the Company’s business development, and improve the Company’s profitability and core competencies, the Company plans to issue A-shares to specific targets, with a total raised proceeds (including issuance expenses) of not more than RMB6.5 billion (inclusive) in accordance with the relevant laws, regulations and normative documents, such as the Company Law 《公司( 法》), the Securities Law 《證券法》( ), the Articles of Association, and the Administrative Measures for Securities Offering and Registration of Listed Companies 《上市公司證券發行註冊管理辦法》( ) (“ Administrative Measures for Registration ”) issued by the CSRC.

I. BACKGROUND AND PURPOSE OF THIS ISSUANCE TO SPECIFIC TARGETS

(I) Background of this issuance of A-shares to specific targets

1. Rapid development of highways in recent years as important infrastructure

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2. Road network effect shown gradually

3. Requirements for the Company’s development raised by the development plan of the modern comprehensive transportation system

The transportation sector is the foundation of the national economy as well as a piloting service industry, and expressways are an important component of the national fast transit network. In January 2022, the State Council offered the 14th Five-year Plan for the Development of the Modern Comprehensive Transportation System 《( “十四五”現代綜合交通運輸體系發展規劃》) (“ Transportation Plan ”). The Transportation Plan points out that during the 14th Five-year Plan period, it is necessary to improve the structure, functions and quality of the national expressway network, implement the expansion and reconstruction of busy and congested sections of main national expressway lines, and accelerate the construction of parallel lines, connecting lines and unfinished sections; by 2025, China will have largely realised integrated development in comprehensive transportation, where the total length of the national expressways will be 190,000 kilometres. As a fundamental industry supporting economic and social development, the toll highway industry will be subject to new requirements and presented with new opportunities during the 14th Five-year Plan period.

4. Implementing the strategy of establishing China’s strength in transportation and improving the Company’s ability to serve the construction of Shenzhen’s “two regions”

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APPENDIX III DEMONSTRATION AND ANALYSIS REPORT OF THE PROPOSAL OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS FOR 2023

(II) Purpose of this issuance of A-shares to specific targets

1. Consolidating the advantages in the main business of toll highways

Being dedicated to the transport infrastructure industry for over 20 years, the Company has gained extensive experience in areas such as highway investment, construction, operation and management. Up to now, the Company has operated and invested in 16 highway projects. The mileage of high-grade highways invested or operated is about 643 kilometers according to the proportion of controlling interest, mainly located in Shenzhen, the Guangdong-Hong Kong-Macao Greater Bay Area and economically developed regions, providing a good geographic advantage. The Company will further consolidate the advantages of the main business of toll highways through this issuance.

2. Improving capital structure and financial stability

II. SECURITIES ISSUED AND NECESSITY OF SELECTION

(I) Type and face value of shares issued

The shares issued to specific targets this time are domestically listed renminbi ordinary shares (A-shares), with a face value of RMB1.00 per share.

(II) Necessity of selecting securities issued

Through this issuance of A-shares to specific targets, the Company can raise long-term capital for business development. After the raised capital is in place and the investment projects are successfully implemented, the Company’s competitive advantages will be more prominent, its capital strength will be enhanced, and its long-term profitability will be significantly improved, as detailed below:

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1. Meeting the capital demand of the investment projects of the raised capital, and promoting the Company’s long-term sustainable development

The capital raised from this issuance of A-shares to specific targets will be used for the Shenzhen section of the Shenzhen Outer Ring Expressway and the repayment of interest-bearing liabilities, which is in line with the relevant national industrial policies and the Company’s strategic development directions. It is expected that after the implementation of the investment projects of the raised capital, the Company’s asset size and operational efficiency will be further improved, which will help to further enhance the Company’s capital strength, risk resistance and competitiveness, further protect the interests of the Company and all shareholders, and have important strategic significance in realising the long-term sustainable development of the Company.

2. Improving the Company’s financial status, capital strength and risk resistance

After the capital raised from this issuance of A-shares to specific targets is in place, the Company’s financial status will be further improved, the total and net assets of the Company will increase correspondingly, and the Company’s financial strength and risk resistance will be enhanced. After the completion of this issuance, the Company will receive large cash inflows from the raised capital, and its cash inflows from fundraising activities will increase significantly. In the future, with the gradual completion and commissioning of the investment projects, the Company’s main business revenue will rise substantially, profitability level will be improved, and cash inflows from operating activities will be increased, thereby improving the Company’s cash flow status accordingly. In the long run, the investment projects of the raised capital will provide strong support for the Company’s future development, and will further enhance the Company’s future sustainability.

3. Certain limitations in debt financing such as bank loans

Compared to equity financing, debt financing methods such as bank loans are relatively limited in financing amount. If the investment projects of the raised capital are implemented completely through debt financing, this will raise the Company’s debt-toasset ratio, affect the Company’s financial structure, and increase financial risks. On the other hand, higher financial expenses will lower the overall profit level of the Company, which is adverse to achieving the long-term development goal of stable operation.

In summary, it is necessary for the Company to issue A-shares to specific targets this time.

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APPENDIX III DEMONSTRATION AND ANALYSIS REPORT OF THE PROPOSAL OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS FOR 2023

III. APPROPRIATENESS OF THE SELECTION SCOPE, NUMBER AND CRITERIA OF TARGETS FOR THIS ISSUANCE

(I) Appropriateness of the selection scope of targets for this issuance

Targets of this issuance of A-shares to specific targets are not more than 35 (inclusive) specific investors, including XTC Company, including securities investment fund management companies, securities companies, trust investment companies, finance companies, insurance institutional investors, qualified overseas institutional investors and other institutional investors, natural persons or other lawful investors that comply with the regulations of the CSRC.

Except for XTC Company, other specific issuance targets will be submitted to the Company’s general meeting and class meeting to authorise the Board and its authorised person for determination through negotiation with the sponsor (lead underwriter) based on the bidding results after obtaining approval from the SSE and consent for registration from the CSRC.

In summary, the selection scope of targets for this issuance complies with the relevant laws and regulations such as the Administrative Measures for Registration, and is appropriate.

(II) Appropriateness of the number of targets for this issuance

The number of targets for this issuance will be not more than 35 (inclusive), and comply with the relevant laws and regulations, such as the Administrative Measures for Registration. The number of targets for this issuance is appropriate.

(III) Appropriateness of the criteria of targets for this issuance

Targets of this issuance should have a certain level of risk identification and tolerance, and have corresponding financial strength. The criteria of targets for this issuance comply with the relevant laws and regulations such as the Administrative Measures for Registration, and are appropriate.

In summary, the selection scope, number and criteria of targets for this issuance meet the requirements of the relevant laws and regulations, and are compliant and reasonable.

IV. REASONABLENESS OF THE PRICING PRINCIPLES, BASIS, METHOD AND PROCEDURE FOR THIS ISSUANCE

(I) The pricing principles and basis for this issuance are reasonable.

The pricing benchmark date for this issuance of A-shares to specific targets is the first day of the issuance period.

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The issuance price will not be lower than the 80% of the average trading price of the Company’s A-shares in the 20 trading days preceding the pricing benchmark date (excluding the pricing benchmark date, the same below) or the audited net asset value per share attributable to ordinary shareholders of the parent company at the end of the most recent period before this issuance (“ Minimum Issue Price ”), whichever is higher. If the Company experiences any ex-dividend or ex-right event such as dividend distribution, issuance of bonus shares, share allotment or capital reserve conversion into the share capital during the period from the balance sheet date of the most recent unaudited financial report before this issuance to the issue date, the aforesaid net asset value per share will be adjusted accordingly.

The calculation formula for the average trading price of the Company’s A-shares in the 20 trading days preceding the pricing benchmark date is (the following parameters should use data officially announced by the SSE): The average trading price of the Company’s A Shares in the 20 trading days preceding the pricing benchmark date = the total trading value of shenzhen expressway’s a shares in the 20 trading days preceding the pricing benchmark date/the total trading volume of the Company’s a shares in the 20 trading days preceding the pricing benchmark date. If there is any adjustment to the stock price due to any ex-dividend or ex-right event such as dividend distribution, offering of bonus shares, share allotment or capital reserve conversion into the share capital in such 20 trading days, the trading price on the trading day before the adjustment will be calculated based on the price after the corresponding ex-dividend or ex-right adjustment.

Assuming that the issuance price before the adjustment is P0, the number of bonuses shares or shares to be converted into the share capital per share is N, the cash dividend to be distributed per share is D, and the adjusted issue price is P1, then:

When only cash dividends are distributed: P1=P0-D

When only offering of bonus shares or conversion into the share capital occurs: P1=P0/(l+N)

When cash dividends are distributed, and offering of bonus shares or conversion into the share capital also occurs: P1= (P0-D)/(1+N)

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APPENDIX III DEMONSTRATION AND ANALYSIS REPORT OF THE PROPOSAL OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS FOR 2023

The pricing principles and basis for this issuance comply with the relevant laws and regulations such as the Administrative Measures for Registration, and are reasonable.

(II) The pricing method and procedure for this issuance are reasonable.

The pricing method and procedure for this issuance comply with the relevant laws and regulations, such as the Administrative Measures for Registration. They were approved at the 32nd meeting of the ninth session of the Board of the Company held on 14 July 2023, and disclosed on the website of the stock exchange and the designated information disclosure media. This issuance still needs to be considered and approved by the Company’s general meeting and class meeting, approved by the entity performing state-owned asset supervision and management responsibilities, reviewed and approved by the SSE, and consented for registration by the CSRC before implementation.

In summary, the pricing principles, basis, method and procedure for this issuance comply with the relevant laws and regulations, and are compliant and reasonable.

V. FEASIBILITY OF THE ISSUANCE METHOD

(I) The issuance method is lawful and compliant.

1. This issuance meets the issuance conditions stipulated in the Securities Law.

This issuance complies with the relevant provision of paragraph 3 of Article 9 of the Securities Law: The issuance of securities to specific targets shall not be conducted by advertising, public inducement or disguised disclosure.

This issuance complies with the relevant provision of Article 12 of the Securities Law: To offer any new shares, a listed company shall meet the conditions prescribed by the securities regulatory agency of the State Council with the approval of the State Council, and the specific administrative measures shall be developed by the securities regulatory agency of the State Council.

2. This issuance complies with the relevant provisions of the Administrative Measures for Registration.

(1) This issuance does not meet any of the conditions of prohibition from issuance securities stipulated in Article 11 of the Administrative Measures for Registration:
1) It fails to correct any unauthorised change to the purpose of the raised capital last time, or get it approved by the general meeting;
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DEMONSTRATION AND ANALYSIS REPORT OF THE PROPOSAL OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS FOR 2023

2) The preparation and disclosure of the financial statements for the past year do not comply with the provisions of the Accounting Standards for Business Enterprises or relevant information disclosure rules in any material aspect; an audit report with a negative opinion or unable to express an opinion is issued for the financial statements of the past year; an audit report with a qualified opinion is issued for the financial statements of the past year, and the significant adverse effect of the matter involved in the qualified opinion on the listed company has not been eliminated yet. Except that this issuance involves any significant asset restructuring;
3) Any of its incumbent directors, supervisors and senior management members received any administrative penalty from the CSRC in the past three years, or public censure from a stock exchange in the past year;
4) The listed company or any of its incumbent directors, supervisors and senior management members is under investigation in a case filed by judicial authorities on suspicion of committing a crime or under investigation in a case filed by the CSRC on suspicion of a violation of laws and regulations;
5) The controlling shareholder or actual controller committed any significant illegal activity that seriously damaged the interests of the listed company or the legitimate rights and interests of investors in the past three years;
6) There was a significant illegal activity that seriously damaged the legitimate rights and interests of investors or the public interests in the past three years.
(2) The use of the Company’s raised capital complies with the provisions of Article 12 of the Administrative Measures for Registration:
1) It complies with the national industrial policies, and the relevant laws and administrative regulations on environmental protection and land management;
2) Except financial enterprises, the raised capital will not be used for holding financial investments, nor will it be directly or indirectly invested in any company engaged mainly in buying and selling securities;
3) After the investment projects are implemented, there will be no new horizontal competition with a material impact with the controlling shareholder, actual controller or any other enterprise under their control, any obviously unfair connected transaction or any material impact on the independence of the Company’s production and management.
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DEMONSTRATION AND ANALYSIS REPORT OF THE PROPOSAL OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS FOR 2023

3. This issuance complies with the relevant provisions of the Applicable Opinions of the Relevant Provisions of Articles 9, 10, 11, 13, 40, 57 and 60 of the Administrative Measures for Registration – Applicable Opinion No. 18 of Securities and Futures Laws 《＜註冊管理辦法＞第九條、第十條、第十一條、第十三條、第四十條、第五 ( 十七條、第六十條有關規定的適用意見 —— 證券期貨法律適用意見第 18 號》 ), regarding the understanding and application of ‘rational financing, and reasonable determination of financing scale’ in Article 40, and the understanding and application of “how to apply ‘investing mainly in main businesses’ in Article 40 regarding the use of raised capital for supplementing working capital and repaying loans”.

(1) If a listed company applies for issue shares to specific targets, the number of shares to be issued shall not exceed 30% of the total share capital before this issuance in principle;

The number of shares issued to specific targets this time will not exceed 30% of the total share capital of the Company before this issuance, namely 654,231,097 (inclusive) A shares. The number will be finally subject to the approval of the SSE and the approval for registration of the CSRC.

(2) If a listed company applies for additional offering, share allotment, or offering of shares to specific targets, the date of the resolution of the board of directors for this issuance shall not be less than 18 months from the date on which the capital raised last time was in place. If the capital raised last time has been largely used up, or has not changed in investment direction but is invested as planned, the corresponding interval shall not be less than six months in principle. The capital raised last time shall include initial offering, additional offering, share allotment, offering of shares to specific targets, but the above provisions shall not apply to offering of convertible bonds or preferred shares, or offering of shares to purchase assets with associated fundraising by the listed company where summary procedures apply;

The Company has fulfilled the decision-making procedure of the Board regarding matters related to this issuance, and the date of the Board resolution is over 18 months from the date on which the capital raised last time was in place.

(3) If capital is raised through share allotment, offering of preferred shares, or offering of shares to specific targets determined by the board of directors, all raised capital can be used to supplement working capital and repay debts. If capital is raised by other means, the proportion used to supplement working capital and repay debts shall not exceed 30% of the total amount of the raised capital. For any enterprise characterized by light assets and high R&D investment, if the proportion used to supplement working capital and repay
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debts exceeds the above proportion, the reasonableness thereof shall be fully demonstrated, and the excess shall be used for R&D investment related to the main business in principle.

The Company plans to use not more than RMB190 million in the capital raised from this issuance to repay interest-bearing liabilities in order to enrich its capital strength, reduce capital costs and operational risks, meet its future business growth and investment needs, continually enhance market competitiveness, and improve its economic efficiency. This amount does not exceed 30% of the total amount of the raised capital.

(II) The procedure of this issuance is lawful and compliant.

The matters related to this issuance of A-shares to specific targets were considered and approved at the 32nd meeting of the ninth session of the Board of the Company held on 14 July 2023, and disclosed on the website of the stock exchange and the designated information disclosure media. The necessary consideration and information disclosure procedures have been performed. The plan to issue A-shares to specific targets needs to be considered and approved by the Company’s general meeting and class meeting, approved by the entity performing state-owned asset supervision and management responsibilities, reviewed and approved by the SSE, and consented for registration by the CSRC before implementation.

In summary, there is no situation that prohibits the Company from issuing securities. This issuance complies with the relevant laws and regulations such as the Administrative Measures for Registration, and the issuance method also meets the requirements of the relevant laws and regulations. The consideration procedure and the issuance method are legal, compliant and feasible.

VI. FAIRNESS AND REASONABLENESS OF THIS ISSUANCE PLAN

This issuance plan was considered and approved at the 32nd meeting of the ninth session of the Board of the Company held on 14 July 2023. The implementation of this issuance plan will be conducive to the sustained and stable development of the Company, increase the rights and interests of all shareholders, and be in the best interest of all shareholders.

This issuance plan and the related documents are disclosed on the website of the stock exchange and the designated information disclosure media, ensuring the right to know of all shareholders.

The Company will hold a general meeting and class meeting to consider this issuance plan, and the non-connected shareholders can vote on this issuance plan fairly. Any resolution made by the general meeting and class meeting on matters related to this issuance must be passed by more than two-thirds of the voting rights held by the attending shareholders.

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DEMONSTRATION AND ANALYSIS REPORT OF THE PROPOSAL OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS FOR 2023

In summary, this issuance plan was approved at the 32nd meeting of the ninth session of the Board on 14 July 2023, and is in the best interest of all shareholders; the relevant disclosure procedure has been performed for this issuance plan and the related documents, ensuring the right to know of the shareholders; this plan to issue A-shares will be subject to fair voting by the attending shareholders at the general meeting and class meeting, which is fair and reasonable; there is no situation that damages the interests of the Company and its shareholders, especially small and medium shareholders, in this issuance.

VII. IMPACTS OF THE DILUTED CURRENT RETURN OF THIS ISSUANCE OF A-SHARES TO SPECIFIC TARGETS, REMEDIAL MEASURES TAKEN, CORRESPONDING UNDERTAKINGS

In order to further implement the requirements of the Opinions of the General Office of the State Council on Further Strengthening the Protection of the Lawful Rights and Interests of Small and Medium Investors in the Capital Market 《國務院辦公廳關於進一步加強資本市場中小投資者合法( 權益保護工作的意見》) (Guo Ban Fa [2013] No. 110), Several Opinions of the State Council on Further Promoting the Healthy Development of the Capital Market 《國務院關於進一步促進資本市( 場健康發展的若干意見》) (Guo Fa [2014] No. 17), the Guiding Opinions on Matters related to Diluted Current Returns of IPOs, Refinancing and Major Asset Restructurings 《關於首發及再融( 資、重大資產重組攤薄即期回報有關事項的指導意見》) (CSRC Announcement [2015] No. 31) issued by the CSRC, and other relevant documents, protect the right to know and interests of small and medium investors, the Company has carefully analysed the impact of this issuance of A- shares to specific targets on the dilution of current return, and proposed specific return remedial measures. Relevant entities have made commitments to ensure that the Company’s return remedial measures are implemented practically. The specific provisions are as follows:

(I) Impacts of the diluted current return of this issuance of A-shares to specific targets on the Company’s main financial indicators

1. Main assumptions and prerequisites

The following assumptions are used to measure the impacts of the diluted current return of this issuance on the Company’s main financial indicators only, and do not represent the Company’s judgment on its future business status and trend, nor do they constitute a profit forecast. Investors should not make investment decisions on this basis. If investors make investment decisions on this basis and suffer losses, the Company will not be liable for compensation.

(1) It is assumed that there is no significant change in the macroeconomic environment, industrial policies, industry development status, and product market conditions.
(2) The number of A-shares to be issued to specific targets this time will not exceed 30% of the total share capital before this issuance. It is assumed that calculation is based on an upper limit of 654,231,097 shares issued this time (The final
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APPENDIX III

DEMONSTRATION AND ANALYSIS REPORT OF THE PROPOSAL OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS FOR 2023

number of shares issued will be based on the actual number of shares issued after registration with the CSRC.). If the Company experiences any ex-dividend event such as issuance of bonus shares or capital reserve conversion into the share capital, or the Company’s total share capital changes due to stock repurchase, any employee equity incentive plan, etc. during the period from the pricing benchmark date to the date of this issuance of A-shares to specific targets, the number of A-shares issued to specific targets this time will be adjusted accordingly.

(3) It is assumed that the Company will complete this issuance by the end of November 2023.
(4) Based on the Company’s business performance in the past three years and the prudence principle, it is assumed that the Company’s net profit attributable to ordinary shareholders of the listed company in 2023 will remain unchanged compared to the previous year, and increase by 10% and 20% year on year. It is also assumed that the growth of the net profit attributable to ordinary shareholders of the listed company will remain consistent after deduction of non-recurring gains and losses. This assumption is used to measure the impacts of the diluted current return of this issuance on the Company’s main financial indicators only, and does not represent the Company’s judgment on its future business status and trend, nor does it constitute a profit forecast of the Company.
(5) The number of A-shares issued to specific targets this time, the amount of the raised capital, and the issuance time are assumed for calculation purposes only. The actual number of shares issued, the issuance results, and the actual date will prevail.
(6) When the number of ordinary shares issued is calculated, only the impact of this issuance on the total share capital is considered, and any situation that leads to a change in the share capital such as share repurchase and cancellation, and reserve fund conversion into the share capital are not considered.
(7) This calculation does not take into account the impact of the capital raised from this issuance on the Company’s production, management, financial status (such as financial expenses and return on investment), etc. after it is received.

2. Impacts on the Company’s main financial indicators

Based on the above assumptions, the Company has calculated the impacts of this issuance of A-shares to specific targets on the Company’s main financial indicators such as earnings per share:

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DEMONSTRATION AND ANALYSIS REPORT OF THE PROPOSAL OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS FOR 2023

Item	Item		2023/31 December 2023	2023/31 December 2023
	Item	2022/31 December 2022	2023/31 December 2023
			Before issuance	After issuance
	Total share capital (shares)	2,180,770,326	2,180,770,326	2,835,001,423
	Assumption 1:
	The net profit attributable to ordinary shareholders of the parent company after deduction of non-recurring gains and losses realised in 2023 remains the same as in 2022.
	Net profit attributable to ordinary shareholders of the parent company	182,755.69	182,755.69	182,755.69
	Net profit attributable to ordinary shareholders of the parent company after deduction of non-recurring profits and losses	103,929.13	103,929.13	103,929.13
	Basic earnings per share (RMB/share)	0.8380	0.8380	0.8176
	Diluted earnings per share (RMB/share)	0.8380	0.8380	0.8176
	Basic earnings per share less non- recurring gains and losses (RMB)	0.4766	0.4766	0.4649
Diluted earnings per share less non- recurring gains and losses (RMB)	Diluted earnings per share less non- recurring gains and losses (RMB)	0.4766	0.4766	0.4649

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DEMONSTRATION AND ANALYSIS REPORT OF THE PROPOSAL OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS FOR 2023

2022/31	2023/31 December 2023
December 2022	Before issuance After issuance

Item Assumption 2:

The net profit attributable to ordinary shareholders of the parent company after deduction of non-recurring gains and losses realised in 2023 increases by 10% as compared to 2022.

Net profit attributable to ordinary	182,755.69	201,031.26	201,031.26
shareholders of the parent company
Net profit attributable to ordinary	103,929.13	114,322.04	114,322.04
shareholders of the parent company after
deduction of non-recurring profits and
losses
Basic earnings per share (RMB/share)	0.8380	0.9218	0.8994
Diluted earnings per share (RMB/share)	0.8380	0.9218	0.8994
Basic earnings per share less non-	0.4766	0.5242	0.5114
recurring gains and losses (RMB)
Diluted earnings per share less non-	0.4766	0.5242	0.5114
recurring gains and losses (RMB)
Assumption 3:

The net profit attributable to ordinary shareholders of the parent company after deduction of non-recurring gains and losses realised in 2023 increases by 20% as compared to 2022.

Net profit attributable to ordinary	182,755.69	219,306.83	219,306.83
shareholders of the parent company
Net profit attributable to ordinary	103,929.13	124,714.95	124,714.95
shareholders of the parent company after
deduction of non-recurring profits and
losses
Basic earnings per share (RMB/share)	0.8380	1.0056	0.9811
Diluted earnings per share (RMB/share)	0.8380	1.0056	0.9811
Basic earnings per share less non-	0.4766	0.5719	0.5579
recurring gains and losses (RMB)
Diluted earnings per share less non-	0.4766	0.5719	0.5579
recurring gains and losses (RMB)

III-14 -

DEMONSTRATION AND ANALYSIS REPORT OF THE PROPOSAL OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS FOR 2023

APPENDIX III

Note 1: Basic earnings per share and diluted earnings per share are calculated in accordance with the provisions of the Compilation Rule No. 9 for Information Disclosure of Companies Offering Securities to the Public – Calculation and Disclosure of Return on Net Assets and Earnings per Share 《公開發行證券的公司資訊披露編報規則第( 9號——淨資產收益率和每股收益的計算及披露》).

Note 2: The current perpetual bond interests have been deducted from the indicator of net profit attributable to ordinary shareholders of the parent company for calculating earnings per share.

(II) Special risk reminder regarding the diluted current return of this issuance of A-shares to specific targets

After the completion of this issuance of A-shares to specific targets, the total share capital and net assets of the Company will increase, and the use of the raised capital and the generation of benefits will take some time. Provided that the Company’s total share capital and net assets both increase, if the Company’s profits have not yet increased by the corresponding magnitude, there is a risk of dilution of the Company’s current return for the year when this issuance of A- shares to specific targets is completed. In addition, once there is a significant change in the assumptions of the aforesaid analysis or the Company’s business status, the possibility that this issuance results in a change in the dilution of the current return cannot be ruled out.

Investors are specially reminded to invest rationally and pay attention to the potential risk of current return dilution by this issuance of A-shares to specific targets.

(III) Necessity and reasonableness of the Board choosing this issuance

The investment projects of the raised capital are good for the Company to optimise its business structure, improve its industry position, and enhance its core competencies and profitability. The investment projects of the raised capital comply with the relevant national industrial policies, and are aligned with the development trends and future development strategy of the industry in which the Company operates. They have good market prospects and economic benefits, and are in the best interest of the Company and all shareholders.

(IV) Relationship between the investment projects of the raised capital and the Company’s existing businesses, as well as the Company’s reserves in personnel, technology, market and other aspects when implementing the investment projects

1. Investment projects of the raised capital

III-15 -

APPENDIX III

DEMONSTRATION AND ANALYSIS REPORT OF THE PROPOSAL OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS FOR 2023

Unit: RMB100 million

No.	No.				Amount of raised capital to be used
	No.	Name of project	Total planned investment	Remaining investment amount (Kengzi-Dapeng subsection)	Amount of raised capital to be used
	1	Shenzhen section of the Shenzhen Outer Ring Expressway	294.04	84.47	46.00
	2	Repayment of interest- bearing liabilities	–	–	19.00
Total	Total		294.04	84.47	65.00

2. Relationship between the investment projects of the raised capital and the Company’s existing businesses

3. The Company’s reserves in personnel, technology, resources, market and other aspects when implementing the investment projects

In terms of the personnel reserve, the Company has been operating in the relevant fields of the investment projects for many years, and has established sound talent training system, performance evaluation system, and remuneration distribution management system. The talent quality and team structure meet the needs of business development. The Company has management and technical teams with years of industry experience, and rich management and operational skills, providing sufficient talent support for the conduct of its main business and the implementation of the investment projects.

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DEMONSTRATION AND ANALYSIS REPORT OF THE PROPOSAL OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS FOR 2023

APPENDIX III

environments. The Company has built a digital model for road infrastructure with BIM technology, and realised the smart asset operation and management of the Outer Ring Expressway through the BIM maintenance system. In addition, the Company’s road network monitoring and command dispatch system platform passed preliminary inspection at the end of 2021. Covering the toll highways in the Shenzhen region, it serves as an information application platform for businesses including the monitoring and management of road network operation, business synergy and emergency response.

(V) Specific measures to make up the diluted current return

In order to protect the interests of investors and reduce the impact of potential dilution of the current return by this issuance of A-shares to specific targets, the Company plans to take various measures to ensure the effective use of the capital raised from this issuance of A- shares to specific targets, reduce the risk of current return dilution, and improve the current return for the shareholders. The specific measures to be taken by the Company are as follows:

1. Strengthening business management and internal control, and improving operational efficiency and profitability

2. Strengthening the management and use of the raised capital to prevent risks in their use

In order to standardise the use and management of the Company’s raised capital, ensure the standardised, safe and efficient use of the raised capital, the Company has formulated the Raised Capital Management System and related internal control systems in accordance with the relevant laws and regulations such as the Company Law, the Securities Law, and the Regulatory Guidelines for Listed Companies No. 2 – Regulatory Requirements for the Management and Use of Raised Capital by Listed Companies 《上( 市公司監管指引第2號——上市公司募集資金管理和使用的監管要求》).

III-17 -

APPENDIX III

DEMONSTRATION AND ANALYSIS REPORT OF THE PROPOSAL OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS FOR 2023

After the end of this issuance, the raised capital will be deposited to a special account designated by the Board in accordance with the institutional requirements. The special account and the raised capital will be used for designated purposes to ensure the reasonable and standardised use of the raised capital, and prevent risks in the use of the raised capital. In the future, the Company will strive to improve the efficiency of fund utilisation, improve and strengthen investment decision-making procedures, enhance fund planning and management, make reasonable use of various financing tools and channels, control funding costs, save the Company’s various expenses, comprehensively and effectively control the Company’s operations and control risks, and improve operational efficiency and profitability.

3. Continually improving corporate governance and providing institutional support for the Company’s development

4. Continually improving the profit distribution system and strengthening the investor payback mechanism

According to the Notice on Further Implementing Cash Dividends for Listed Companies 《關於進一步落實上市公司現金分紅有關事項的通知》( ) issued by the CSRC, the Regulatory Guidelines for Listed Companies No. 3 – Cash Dividends of Listed Companies 《上市公司監管指引第( 3號——上市公司現金分紅》), and the relevant provisions of the profit distribution policy in the Articles of Association, the Company not only cares about its own development, but also attaches great importance to reasonable return on investment for the shareholders, and has formulated the Shareholder Payback Plan 2021-2023 《( 2021年-2023年股東回報規劃》). The Company will strictly implement the established dividend distribution policy and shareholder payback plan, and endeavour to improve the return on investment for the shareholders.

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DEMONSTRATION AND ANALYSIS REPORT OF THE PROPOSAL OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS FOR 2023

APPENDIX III

The Company reminds investors that developing return make-up measures is not a guarantee of the Company’s future profits. The Company will continue to disclose the completion progress of the current return make-up measures and the fulfilment progress of the relevant promisors’ commitments in its subsequent periodic reports.

In summary, after the completion of this issuance of A-shares to specific targets, the Company will strengthen internal management, consolidate its main business, reasonably regulate the use of the raised capital, improve the efficiency of fund utilisation, take various measures to continually improve business performance, and strive to improve the profit distribution to the shareholders under the premise of meeting the conditions for profit distribution, in order to improve the Company’s ability to pay back to investors and effectively reduce the risk of current return dilution for the shareholders.

(VI) Commitments to ensure that the Company’s return make-up measures are implemented practically in this issuance of A-shares to specific targets

1. Commitments made by the Company’s directors and senior management

All directors and senior management members of the Company have made the following commitments regarding the make-up measures for the diluted current return of this issuance:

“1. We promise not to deliver benefits to any other organisation or individual without compensation or under unfair conditions, and not to damage the interests of the Company by other means.
We promise to restrain our own position-related consumption behaviour.
We promise not to use company assets to engage in investment or consumption activities unrelated to the performance of our duties.
We promise to link up the remuneration system formulated by the Board or the Remuneration Committee with the implementation of the Company’s make-up measures for the diluted current return.
If the Company implements an equity incentive plan in the future, we promise to support the linkup of the exercise conditions of the proposed corporate equity incentive plan with the implementation of the Company’s make-up measures for the diluted current return.
III-19 -

APPENDIX III

DEMONSTRATION AND ANALYSIS REPORT OF THE PROPOSAL OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS FOR 2023

Before the completion of this issuance, if the CSRC or the SSE promulgates other new regulatory provisions on return make-up measures, and related commitments, and the above commitments do not meet these provisions, we will make supplementary commitments in accordance with the prevailing provisions of the CSRC or the SSE.
We promise to implement the make-up measures for the diluted current return formulated by the Company and any commitment on the return make-up measures for the diluted current return effectively. If we break or refuse to fulfil the above commitments, and cause losses to the Company or the shareholders, we are willing to bear the corresponding liability according to law.”

2. Commitments made by the controlling shareholder of the Company

Shenzhen International, the controlling shareholder of the Company, has made the following commitments to the effective implementation of the Company’s return makeup measures in accordance with the relevant provisions of the CSRC:

“1. We promise not to interfere with the Company’s business management activities beyond our authorities.
We promise not to encroach on the interests of the Company.
Before the completion of this issuance, if the CSRC or the SSE promulgates other new regulatory provisions on return make-up measures, and related commitments, and the above commitments do not meet these provisions, we will make supplementary commitments in accordance with the prevailing provisions of the CSRC or the SSE.
We promise to implement the make-up measures for the diluted current return formulated by the Company and any commitment on the return make-up measures for the diluted current return effectively. If we break or refuse to fulfil the above commitments, and cause losses to the Company or the other shareholders, we are willing to bear the corresponding liability according to law.”

VIII. CONCLUSION

In summary, it is necessary and feasible for the Company to issue A-shares to specific targets. The plan to issue A-shares to specific targets is fair and reasonable, complies with the relevant laws and regulations, and will help to further improve the Company’s performance. It is aligned with the Company’s development strategy, and in the best interest of the Company and all shareholders.

III-20 -

GENERAL INFORMATION

APPENDIX IV

1. RESPONSIBILITY STATEMENT

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

2. DISCLOSURE OF INTERESTS

As at the Latest Practicable Date, the interests or short positions of the Directors, the supervisors or the chief executive of the Company 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 (i) notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which have been taken or deemed to have been taken under such provisions of the SFO); or (ii) entered into the register maintained by the Company under Section 352 of the SFO; or (iii) notified to the Company and the Stock Exchange pursuant to the “Model Code for Securities Transactions by Directors of Listed Issuers” (collectively, “interests or short positions”) were as follows:

Long positions in ordinary shares of Shenzhen International:

Approximate percentage of ordinary shares Number of in issued ordinary shares share capital held as at Latest of Shenzhen Nature of Name Practicable Date International interests Capacity Liao Xiang Wen 20,293 0.001% Family interests Beneficial owner

Saved as disclosed above, as of Latest Practicable Date, none of the Directors, the supervisors or the chief executive of the Company had interests or short positions defined above. As at the Latest Practicable Date, Mr. Dai Jing Ming is a director of Shenzhen International. Save as disclosed above, none of the Directors was a director or an employee of a company which has an interest or short position in the shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

3. COMPETING INTEREST

As at the Latest Practicable Date, none of the Directors and their respective close associates were interested in any business, apart from the Group’s business, which competes or is likely to compete, either directly or indirectly, with the Group’s business.

IV-1 -

GENERAL INFORMATION

APPENDIX IV

4. INTERESTS IN ASSETS, CONTRACT OR ARRANGEMENT

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

None of the Directors or supervisors of the Company has any direct or indirect interest in any assets which have been, since 31 December 2022, being the date to which the latest published audited accounts of the Group were made up, acquired or disposed of by, or leased to any members of the Group, or are proposed to be acquired or disposed of by, or leased to any members of the Group.

5. MATERIAL ADVERSE CHANGE

The Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2022, the date to which the latest published audited consolidated accounts of the Group have been made up.

6. LITIGATION

As at the Latest Practicable Date, no litigation or claim of material importance is known to the Directors to be pending or threatened against any member of the Group.

7. SERVICE CONTRACTS

No service contracts that cannot be terminated by the Group within one year without compensation (other than general statutory compensation) have been or proposed to be entered into between the Group and the Directors as at the Latest Practicable Date.

8. EXPERT

(a) The following is the qualification of the expert who has given opinion or advice contained in this circular:

Name

Qualification

Lego Corporate Finance Limited a corporation licensed by the SFC to carry out Type 6 (advising on corporate finance) regulated activities under the SFO

(b) As at the Latest Practicable Date, Lego had no shareholding interest in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.
IV-2 -

GENERAL INFORMATION

APPENDIX IV

(c) As at the Latest Practicable Date, Lego was not interested, directly or indirectly, in any assets which had since 31 December 2022 (being the date to which the latest published audited accounts of the Group were made up) been acquired or disposed of by or leased to any member of the Group or which are proposed to be acquired or disposed of by or leased to any member of the Group.
(d) Lego has given and has not withdrawn its written consent to the issue of this circular, with inclusion of its letter or report and references to its name in the form and context in which it is included.

9. DOCUMENTS ON DISPLAY

Copies of the following documents will be available on the websites of the Hong Kong Stock Exchange (www.hkexnews.hk) and the Company (www.sz-expressway.com) for 14 days from the date of this circular:

(a) the letter from the Independent Board Committee, the text of which is set out on pages 33 to 34 of this circular;
(b) the letter from the Independent Financial Adviser, the text of which is set out on pages 35 to 67 of this circular;
(c) the written consent referred to in paragraph headed “Expert” of this appendix;
(d) the A Share Subscription Agreement; and
(e) this circular.

10. LANGUAGE

In the event of inconsistency between the Chinese and the English version of this circular, the Chinese version shall prevail.

IV-3 -

NOTICE OF THE EGM

==> picture [314 x 96] intentionally omitted <==

(a joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock Code: 00548)

NOTICE OF THE FIRST EXTRAORDINARY GENERAL MEETING 2023

Notice is hereby given that the First Extraordinary General Meeting 2023 (the “ EGM ”) of Shenzhen Expressway Corporation Limited (the “ Company ”) will be held at the conference room of the Company on 46th Floor, Hanking Center Tower, No. 9968 Shennan Avenue, Nanshan District, Shenzhen, the PRC at 10:00 a.m. on Wednesday, 20 September 2023 to consider and, if thought fit, pass the following resolutions:

The following resolutions no. 1, 6, 9 and 10 are ORDINARY RESOLUTIONS, and resolutions no. 2-5, 7 and 8 are SPECIAL RESOLUTIONS

To consider and approve the resolution in relation to the Company’s satisfaction of the requirements of the Issuance of A Shares to Specific Targets;
To consider and approve the resolution in relation to the proposal of the Issuance of A Shares to Specific Targets by the Company individually:
2.01 Class and nominal value of shares to be issued

The class of shares to be issued under this issuance is domestic listed ordinary shares (A Shares) traded in RMB with nominal value of RMB1.00 per share.

2.02 Method and timing of the Issuance

The Issuance will be conducted by way of issuance of Shares to Specific Targets. The Company will issue A Shares to the Specific Targets at an appropriate time upon having obtained approval from the Shanghai Stock Exchange (“ SSE ”) and within the effective registration period consent by the CSRC (“ CSRC ”).

2.03 Target subscribers and method of subscription

The subscribers under the Issuance of A Shares to Specific Targets include no more than 35 (inclusive) Specific Targets (including Xin Tong Chan Development (Shenzhen) Co., Ltd. (新通產實業開發（深圳）有限公司) (“ XTC Company ”, a wholly-owned subsidiary of the controlling shareholder of the Company, Shenzhen International Holdings Limited (“ Shenzhen International* ”)), which meet the criteria required by the CSRC.

EGM-1 -

NOTICE OF THE EGM

After the Company having obtained approval from the SSE and the CSRC having provided its consent for the relevant registration, the Board or its authorised person(s) will identify the Specific Targets (other than XTC Company) upon negotiations with its sponsor (the lead underwriter) in accordance with the bidding results and under the authorisation to be granted at the general meeting and the class meetings of the Company.

All Specific Targets shall subscribe the Shares under the Issuance by cash.

If there are new requirements in the laws and regulations regarding the Specific Targets under the Issuance of A Shares to Specific Targets, the Company will make adjustment according to the new requirements. If the regulatory authorities have other new requirements on the qualifications of the Specific Targets or the corresponding review procedures, those requirements shall prevail.

2.04 Pricing Benchmark Date, issue price and pricing method

The Pricing Benchmark Date shall be the first day of the issuance period of the Issuance. The issue price of the Issuance shall not be lower than the higher of (“ Minimum Issue Price ”): 80% of the average trading price of Company’s A Shares in the 20 Trading Days prior to the Pricing Benchmark Date (excluding the Pricing Benchmark Date, and the same applied to below), and the Company’s audited net assets per share attributable to the ordinary shareholders of the parent company as at the end of the most recent period prior to the Issuance. In the event the Company carries out ex-dividend and ex-right activities such as distribution of dividend, bonus share issue, allotment of shares, conversion of capital reserve into share capital during the period from the balance sheet date of the latest audited financial report up to the issuance date, the value of the above net assets per Share shall be adjusted accordingly.

The formula for calculating the average trading price of Company’s A Shares in the 20 Trading Days prior to the Pricing Benchmark Date is as follows (The following parameters should use the data to be officially announced by the SSE): The average trading price of the Company’s A Shares in the 20 Trading Days prior to the Pricing Benchmark Date = the total trading value of the Company’s A Shares in the 20 Trading Days prior to the Pricing Benchmark Date/the total trading volume of the Company’s A Shares in the 20 Trading Days prior to the Pricing Benchmark Date. In the event the Company carries out ex-dividend and exright activities such as distribution of dividend, bonus share issue, allotment of shares, conversion of capital reserve into share capital, which result in adjustment of its share price during the 20 Trading Days prior to the Pricing Benchmark Date, the trading prices of the Trading Days prior to such price adjustment shall be calculated according to the prices as adjusted by the relevant ex-dividend and ex-right activities.

EGM-2 -

NOTICE OF THE EGM

relevant laws and regulations and requirements of regulatory authority, after the Company having obtained approval from the SSE and the CSRC having provided its consent for the relevant registration.

In the case of distribution of cash dividends: P1=P0-D

In the case of grant of bonus shares or conversion of capital reserve into share capital: P1=P0/ (l+N)

In case both of the above occur simultaneously: P1=(P0-D)/(1+N)

2.05 Number of A Shares to be issued

The number of A Shares to be issued under the Issuance shall be no more than 30% of the total number of issued shares of the Company immediately prior to the Issuance, i.e. not more than 654,231,097 Shares (inclusive). Among which, the amount of A Shares to be subscribed by XTC Company shall be no more than RMB1.51 billion, and Shenzhen International shall indirectly hold no less than 45.00% in the shareholding of the Company in total upon completion of the Issuance. The final number of Shares to be subscribed by XTC Company will be determined by negotiation between XTC Company and the Company after the issue price has been fixed, while the other Shares will be subscribed by the other Specific Targets. Number of Shares to be subscribed = subscription amount/final issue price per Share, and the number of Shares to be subscribed is rounded down to the nearest integer.

In the event the Company grants bonus shares, convert its capital reserve into share capital, or carries out any other activities leading to changes in its total share capital during the period from the approval date of its board resolutions in relation to the Issuance up to the issuance date, the maximum number of A Shares to be issued under the Issuance shall be adjusted accordingly.

EGM-3 -

NOTICE OF THE EGM

The final number of A Shares to be issued shall be determined by the negotiations between the Board or its authorised person(s) and its sponsor (the lead underwriter) pursuant to the authorisation to be granted at the general meeting and the class meetings of the Company, subject to the then actual circumstances and within maximum limit of the A Shares to be issued upon the approval from the SSE and the consent for registration from the CSRC.

2.06 Lock-up arrangement

Pursuant to the relevant regulations such as the “Administrative Measures for the Registration of Securities Issuance by Listed Companies”, upon completion of the Issuance, the Shares to be subscribed by XTC Company under the Issuance shall be refrained from being transferred within eighteen months from the completion date of the Issuance, and the Shares subscribed by the other Specific Targets under the Issuance shall be refrained from being transferred within six months from the completion date of the Issuance. If relevant laws, regulations and regulatory documents have other regulations on the lock-up periods for the Shares to be issued under the Issuance, such regulations shall be followed. Upon expiration of the lock-up period, the disposal of the aforesaid Shares shall be carried out in accordance with the Company Law of the People’s Republic of China, the Securities Law of the People’s Republic of China, the Rules Governing the Listing of Stocks on the Shanghai Stock Exchange, other laws, regulations, departmental rules, regulatory documents and the Articles of Association of Shenzhen Expressway Corporation Limited. Upon completion of the Issuance, any extra Shares derived from events such as the grant of bonus shares, conversion of capital reserve into share capital, etc. by the Company for the Shares obtained by the Specific Targets under the Issuance shall also comply with the above stated lock-up arrangement.

2.07 Place of Listing

The Shares to be issued under the Issuance will be applied for listing on the SSE pursuant to relevant requirements.

EGM-4 -

NOTICE OF THE EGM

2.08 Amount and use of proceeds

The proceeds to be raised from the Issuance of A Shares to Specific Targets will be no more than RMB6.5 billion (inclusive). After deducting relevant issuance expenses, all of the net proceeds to be raised are intended to be used in the following projects:

Unit: RMB100 million

			Total
			outstanding
			investment	Proposed
			(Kengzi to	amount of
		Total project	Dapeng	net proceeds
No.	Name of project	investment	Section)	to be applied
1	Outer Ring Expressway (Shenzhen Section)	294.04	84.47	46.00
2	Repayment of interest-bearing liabilities	–	–	19.00
	Total	294.04	84.47	65.00

To ensure the smooth implementation of the projects to be funded by the proceeds and safeguard the interests of all shareholders of the Company, before receiving the proceeds of the Issuance, the Company may utilise its self-raised funds to advance investments in the projects to be funded by proceeds based on the implementation progress and actual circumstances of such projects, and replace such funds according to the relevant regulations and regulatory documents after receipt of the proceeds. If the actual amount of net proceeds (after deducting relevant issuance expenses) falls short of the proposed amount of proceeds to be applied to the aforesaid projects, the Board or its authorised person(s) will, based on circumstances such as the actual amount of net proceeds and the urgency of the projects, adjust and determine the application of the proceeds including determining the project to be invested with the proceeds, prioritise and determine specific amount of proceeds to be applied to each project. The shortage of funds will be self-financed by the Company.

2.09 Arrangement of accumulated undistributed profits before the Issuance

Both new Shareholders and existing Shareholders are entitled to the accumulated undistributed profits of the Company before the Issuance according to their respective shareholdings.

2.10 Validity of the resolutions

The resolutions in relation to the Issuance shall remain valid for twelve months from the date on which relevant resolutions are considered and approved by the general meeting and the class meetings of the Company.

EGM-5 -

NOTICE OF THE EGM

To consider and approve the resolution in relation to the plan of the Issuance of A Shares to Specific Targets by the Company;
To consider and approve the resolution in relation to the demonstration and analysis report of the proposal of the Issuance of A Shares to Specific Targets by the Company;
To consider and approve the resolution in relation to the feasibility analysis report on the use of proceeds of the Issuance of A Shares to Specific Targets by the Company;
To consider and approve the resolution in relation to the Company being exempt from issuing the report on use of proceeds from previous fund-raising activities;
To consider and approve the resolution in relation to the Company’s entering into the conditional share subscription agreement with Specific Target and the related/connected transaction;
To consider and approve the resolution in relation to grant of the authorisation to the Board to handle matters related to the Issuance of A Shares to Specific Targets;
To consider and approve the resolution in relation to the dilution of current returns, remedial measures and the corresponding undertakings for the Issuance of A Shares to Specific Targets by the Company; and
To consider and approve the resolution in relation to the implementation of external donation for rural revitalisation strategy.

By Order of the Board Liao Xiang Wen Executive Director and President

Shenzhen, the PRC, 24 August 2023

Notes:

1. Capitalised terms used in this notice shall have the same meanings as those defined in the circular of the Company dated 24 August 2023.

2. Eligibility for attending the EGM

Shareholders of the Company whose names appear on the registers of shareholders of the Company at the close of business on 14 September 2023 shall have the right to attend the EGM after complying with the necessary registration procedures.

3. Registration procedures for attending the EGM

EGM-6 -

NOTICE OF THE EGM

instruments of transfer together with the relevant share certificates to Hong Kong Registrars Limited, the registrar of H shares of the Company, at Shops 1712-16, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, at or before 4:30 p.m. on 14 September 2023.

4. Proxy

i. Shareholders entitled to attend and vote at the EGM are entitled to appoint, in written form, one or more proxies (whether a shareholder or not) to attend and vote on his behalf.
ii. A proxy should be appointed by written instrument signed by the appointor or his attorney. If the written instrument is signed by the attorney of the appointor, the written authorisation or other authorisation documents of such attorney should be notarised. In order to be valid, for holders of A shares of the Company, the written authorisation or authorisation documents which have been notarised together with the completed proxy form must be delivered to the Company not less than 24 hours before the time of the holding of the EGM. In order to be valid, for holders of H shares of the Company, the above documents must be delivered to Hong Kong Registrars Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, within the same period.
iii. Shareholder or his proxy should produce identity proof when attending the EGM.

5. Poll

Pursuant to Rule 13.39(4) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and the Articles of Association of the Company, voting at the EGM on the resolutions set out in the notice of the EGM will be taken by poll.

6. Other matters

i. The duration of the EGM is expected not to exceed one day. Shareholders or proxies who attend the EGM shall arrange for transport, food, accommodation and other relevant expenses at their own cost.
ii. Address of Hong Kong Registrars Limited (for share transfer): Shops 1712-16, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong
iii. Address of the Company: 46th Floor, Hanking Center Tower, No. 9968 Shennan Avenue, Nanshan District, Shenzhen, the PRC Postal code: 518057
Tel: (86)755 – 8669 8061 Fax: (86)755 – 8669 8002
EGM-7 -

NOTICE OF THE HCM

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

(Stock Code: 00548)

NOTICE OF THE FIRST CLASS MEETING 2023 OF HOLDERS OF H SHARES

Notice is hereby given that the First Class Meeting 2023 of the Holders of H Shares (the “ HCM ”) of Shenzhen Expressway Corporation Limited (the “ Company ”) will be held at the conference room of the Company 46th Floor, Hanking Center Tower, No. 9968 Shennan Avenue, Nanshan District, Shenzhen, the PRC after 10:00 a.m. on Wednesday, 20 September 2023 (immediately after the conclusion of the First Class Meeting 2023 of the Holders of A Shares of the Company to be held on the same date or adjournment) to consider and, if thought fit, pass the following resolutions:

SPECIAL RESOLUTIONS

To consider and approve the resolution in relation to the proposal of the Issuance of A Shares to Specific Targets by the Company individually:
1.01 Class and nominal value of shares to be issued

The class of shares to be issued under this issuance is domestic listed ordinary shares (A Shares) traded in RMB with nominal value of RMB1.00 per share.

1.02 Method and timing of the Issuance

1.03 Target subscribers and method of subscription

HCM-1 -

NOTICE OF THE HCM

All Specific Targets shall subscribe the Shares under the Issuance by cash.

1.04 Pricing Benchmark Date, issue price and pricing method

HCM-2 -

NOTICE OF THE HCM

relevant laws and regulations and requirements of regulatory authority, after the Company having obtained approval from the SSE and the CSRC having provided its consent for the relevant registration.

In the case of distribution of cash dividends: P1=P0-D

In the case of grant of bonus shares or conversion of capital reserve into share capital: P1=P0/ (l+N)

In case both of the above occur simultaneously: P1=(P0-D)/(1+N)

1.05 Number of A Shares to be issued

The number of A Shares to be issued under the Issuance shall be no more than 30% of the total number of issued shares of the Company immediately prior to the Issuance, i.e. not more than 654,231,097 Shares (inclusive). Among which, the amount of A Shares to be subscribed by XTC Company shall be no more than RMB1.51 billion, and Shenzhen International shall indirectly hold no less than 45.00% in the shareholding of the Company in total upon completion of the Issuance. The final number of Shares to be subscribed by XTC Company will be determined by negotiation between XTC Company and the Company after the issue price has been fixed, while the other Shares will be subscribed by the other Specific Targets. Number of Shares to be subscribed = subscription amount/final issue price per Share, and the number of Shares to be subscribed is rounded down to the nearest integer.

In the event the Company grants bonus shares, convert its capital reserve into share capital, or carries out any other activities leading to changes in its total share capital during the period from the approval date of its board resolutions in relation to the Issuance up to the issuance date, the maximum number of A Shares to be issued under the Issuance shall be adjusted accordingly.

HCM-3 -

NOTICE OF THE HCM

The final number of A Shares to be issued shall be determined by the negotiations between the Board or its authorised person(s) and its sponsor (the lead underwriter) pursuant to the authorisation to be granted at the general meeting and the class meetings of the Company, subject to the then actual circumstances and within maximum limit of the A Shares to be issued upon the approval from the SSE and the consent for registration from the CSRC.

1.06 Lock-up arrangement

1.07 Place of Listing

The Shares to be issued under the Issuance will be applied for listing on the SSE pursuant to relevant requirements.

HCM-4 -

NOTICE OF THE HCM

1.08 Amount and use of proceeds

Unit: RMB100 million

			Total
			outstanding
			investment	Proposed
			(Kengzi to	amount of
		Total project	Dapeng	net proceeds
No.	Name of project	investment	Section)	to be applied
1	Outer Ring Expressway (Shenzhen Section)	294.04	84.47	46.00
2	Repayment of interest-bearing liabilities	–	–	19.00
	Total	294.04	84.47	65.00

1.09 Arrangement of accumulated undistributed profits before the Issuance

Both new Shareholders and existing Shareholders are entitled to the accumulated undistributed profits of the Company before the Issuance according to their respective shareholdings.

1.10 Validity of the resolutions

HCM-5 -

NOTICE OF THE HCM

To consider and approve the resolution in relation to the plan of the Issuance of A Shares to Specific Targets by the Company;
To consider and approve the resolution in relation to the Company’s entering into the conditional share subscription agreement with Specific Target and the related/connected transaction;
To consider and approve the resolution in relation to grant of the authorisation to the Board to handle matters related to the Issuance of A Shares to Specific Targets.

By Order of the Board Liao Xiang Wen Executive Director and President

Shenzhen, the PRC, 24 August 2023

Notes:

1. Capitalised terms used in this notice shall have the same meanings as those defined in the circular of the Company dated 24 August 2023.

2. Eligibility for attending the HCM

Shareholders of the Company whose names appear on the registers of holders of H shares of the Company at the close of business on 14 September 2023 shall have the right to attend the HCM after complying with the necessary registration procedures.

3. Registration procedures for attending the HCM

Holders of H shares of the Company please note that the register of holders of H shares of the Company will be closed from 15 September 2023 to 20 September 2023 (both days inclusive), during which period no transfer of H shares of the Company will be registered. Holders of H shares of the Company who intend to attend the HCM must deliver their instruments of transfer together with the relevant share certificates to Hong Kong Registrars Limited, the registrar of H shares of the Company, at Shops 1712-16, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, at or before 4:30 p.m. on 14 September 2023.

4. Proxy

i. Holders of H shares entitled to attend and vote at the HCM are entitled to appoint, in written form, one or more proxies (whether a shareholder or not) to attend and vote on his behalf.
ii. A proxy should be appointed by written instrument signed by the appointor or his attorney. If the written instrument is signed by the attorney of the appointor, the written authorisation or other authorisation documents of such attorney should be notarised. In order to be valid, for holders of H shares of the Company, the written authorisation or authorisation documents which have been notarised together with the completed proxy form must be delivered to Hong Kong Registrars Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, not less than 24 hours before the time of the holding of the HCM.
iii. Shareholder or his proxy should produce identity proof when attending the HCM.
HCM-6 -

NOTICE OF THE HCM

5. Poll

Pursuant to Rule 13.39(4) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and the Articles of Association of the Company, voting at the HCM on the resolutions set out in the notice of the HCM will be taken by poll.

6. Other matters

i. The duration of the HCM is expected not to exceed one day. Shareholders or proxies who attend the HCM shall arrange for transport, food, accommodation and other relevant expenses at their own cost.
ii. Address of Hong Kong Registrars Limited (for share transfer): Shops 1712-16, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong
HCM-7 -

AI assistant

Water Oasis Group Limited — Proxy Solicitation & Information Statement 2023

49733_rns_2023-08-23_7117656c-927c-4a11-99e4-d9d833b79f77.pdf

(1) PROPOSED ISSUANCE OF A SHARES TO SPECIFIC TARGETS UNDER SPECIFIC MANDATE;

(2) CONNECTED TRANSACTION: ENTERING INTO THE A SHARE SUBSCRIPTION AGREEMENT;

(3) IMPLEMENTATION OF EXTERNAL DONATION FOR RURAL REVITALISATION STRATEGY; AND

(4) NOTICES OF THE FIRST EXTRAORDINARY GENERAL MEETING 2023 AND THE CLASS MEETINGS

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

(1) PROPOSED ISSUANCE OF A SHARES TO SPECIFIC TARGETS UNDER SPECIFIC MANDATE;

(2) CONNECTED TRANSACTION: ENTERING INTO THE A SHARE SUBSCRIPTION AGREEMENT;

(3) IMPLEMENTATION OF EXTERNAL DONATION FOR RURAL REVITALISATION STRATEGY; AND

(4) NOTICES OF THE FIRST EXTRAORDINARY GENERAL MEETING 2023 AND THE CLASS MEETINGS

(I) INTRODUCTION

(II) PROPOSED ISSUANCE OF A SHARES TO SPECIFIC TARGETS UNDER SPECIFIC MANDATE

1. PROPOSAL FOR THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

(8) Amount and use of proceeds:

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

2. A SHARE SUBSCRIPTION AGREEMENT

LETTER FROM THE BOARD

LETTER FROM THE BOARD

3. AUTHORISATION TO THE BOARD TO DEAL WITH MATTERS IN RELATION TO THE ISSUANCE

LETTER FROM THE BOARD

LETTER FROM THE BOARD

4. EFFECT OF ISSUANCE OF A SHARES TO SPECIFIC TARGETS ON THE COMPANY’S SHAREHOLDING STRUCTURE

LETTER FROM THE BOARD

5. LISTING RULES IMPLICATIONS

6. REASONS FOR AND BENEFITS OF THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS

Reinforcing the advantages of toll highways as a principal business

LETTER FROM THE BOARD

Improving capital structure and enhancing long-term shareholders’ returns

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

7. FUND-RAISING ACTIVITIES IN THE PAST TWELVE MONTHS

8. GENERAL INFORMATION OF THE PARTIES

The Company

Shenzhen International

XTC Company

9. EXEMPT FROM ISSUING THE REPORT ON USE OF PROCEEDS FROM PREVIOUS FUND-RAISING ACTIVITIES

(III) IMPLEMENTATION OF EXTERNAL DONATION FOR RURAL REVITALISATION STRATEGY

(IV) THE EGM AND THE HCM

(V) CLOSURE OF REGISTER OF HOLDERS OF H SHARES

(VI) VOTING BY POLL

LETTER FROM THE BOARD

(VII) RECOMMENDATION

LETTER FROM THE BOARD

LETTER FROM THE BOARD

(VIII) FURTHER INFORMATION

CONNECTED TRANSACTION – ENTERING INTO THE A SHARE SUBSCRIPTION AGREEMENT

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

CONNECTED TRANSACTION IN RESPECT OF THE XTC COMPANY A SHARE SUBSCRIPTION

INTRODUCTION

INDEPENDENT BOARD COMMITTEE

OUR INDEPENDENCE

BASIS OF OUR OPINION

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Information on the Company, Shenzhen International and XTC Company

1.1. The Company

1.2. Shenzhen International

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

1.3. XTC Company

2. Reasons for and benefits of the Issuance (including the XTC Company A Share Subscription) and use of proceeds

2.1. Reinforcing the advantages of toll highways as a principal business

2.2. Improving capital structure and enhancing long-term shareholders’ returns

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

2.3. Use of Proceeds

Water Oasis Group Limited Proxy Solicitation & Information Statement 2023