Kong Limited takes no responsibility for the contents of this circular, makes
no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for
any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.
If you are in doubt as to any aspect of this circular or as to the action you should take, 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 Tianjin Development Holdings Limited, you should at
once hand this circular and the accompanying proxy form to the purchaser or to the bank, stockbroker or
other agent through whom the sale was effected for transmission to the purchaser or transferee.
This circular appears for information purposes only and does not constitute an invitation or offer to acquire,
purchase or subscribe securities.
(Incorporated in Hong Kong with limited liability under the Companies Ordinance)
(Stock Code: 882)
DISCLOSEABLE TRANSACTION

AND
CONNECTED TRANSACTION

Financial adviser
Independent financial adviser to the
Independent Board Committee and Independent Shareholders
South China Capital Limited
A letter from the Board is set out on pages 3 to 11 of this circular. A letter from the Independent Board
Committee is set out on page 12 of this circular. A letter from South China Capital containing its advice to
the Independent Board Committee and the Independent Shareholders is set out on pages 13 to 30 of this
circular. A notice convening an Extraordinary General Meeting of Tianjin Development Holdings Limited to
be held at Alexandra Room, 2nd Floor, Mandarin Oriental Hong Kong, 5 Connaught Road Central, Hong
Kong on 16 January 2008 at 3:00 p.m. is set out on pages 43 to 44 of this circular. A form of proxy for use
by Shareholders at the Extraordinary General Meeting (or any adjournment thereof) is also enclosed.
Whether or not you are able to attend the Extraordinary General Meeting, you are requested to complete the
enclosed proxy form in accordance with the instructions printed thereon and return the same to the
Company’s share registrar, Tricor Tengis Limited at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai,
Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for the
holding of the Extraordinary General Meeting or any adjournments thereof. Completion and return of the
proxy form will not preclude you from attending and voting at the Extraordinary General Meeting or any
adjournments thereof should you so desire.
THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMDEIATE ATTENTION

21 December 2007

Page
Definitions ......................................................... 1
Letter from the Board
Introduction .................................................... 3
Sale and Purchase Agreement ....................................... 4
Information of Tsinlien Realty and the Hotel ........................... 4
Consideration ................................................... 6
Shareholding Structure............................................. 7
Conditions Precedent .............................................. 8
Completion of the Acquisition ....................................... 9
Financial Effects on the Group ...................................... 9
Reasons for and Benefits of the Acquisition............................. 9
Extraordinary General Meeting....................................... 9
Procedures for Demanding a Poll by Shareholders ........................ 10
Recommendations ................................................ 10
Additional Information............................................. 11
Letter from the Independent Board Committee ............................ 12
Letter from South China Capital........................................ 13
Appendix I – Valuation Report ....................................... 31
Appendix II – General Information .................................... 36
Notice of Extraordinary General Meeting................................. 43
CONTENT

–i–

In this circular, unless the context requires otherwise, the following expressions have
the following meanings:
“Acquisition” the acquisition of 100% equity interest in Tsinlien
Realty by the Purchaser
“Board” the board of Directors
“Company” Tianjin Development Holdings Limited
“Consideration” consideration of the Acquisition under the Sale and
Purchase Agreement
“Consideration Shares” 31,850,000 Shares to be issued by the Company to
Tsinlien or its nominee(s) as part of the Consideration
“China” or “PRC” the People’s Republic of China and for the purpose of
this circular, excludes Hong Kong, the Macau Special
Administrative Region of the PRC and Taiwan
“Directors” the directors of the Company
“Extraordinary General Meeting” the extraordinary general meeting of the Company to
be convened on 16 January 2008 at 3:00 p.m. at
Alexandra Room, 2nd Floor, Mandarin Oriental Hong
Kong, 5 Connaught Road Central, Hong Kong at which
an ordinary resolution will be proposed to approve the
Sale and Purchase Agreement
“Group” the Company and its subsidiaries
“HK$” Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong” Hong Kong Special Administrative Region of the PRC
“Independent Board Committee” the independent board committee of the Board
consisting of Mr. Kwong Che Keung, Gordon, Mr. Lau
Wai Kit and Dr. Cheng Hon Kwan
“Independent Shareholder(s)” the Shareholders other than Tsinlien and its associates
“Knight Frank” Knight Frank Petty Limited, an independent property
valuer
“Latest Practicable Date” 18 December 2007, being the latest practicable date
prior to the printing of this circular for the purpose of
ascertaining certain information for inclusion in this
circular
DEFINITIONS

–1–

“Listing Rules” the Rules Governing the Listing of Securities on the
Stock Exchange
“Purchaser” Championwin Limited, a company incorporated in the
British Virgin Islands and an indirect wholly-owned
subsidiary of the Company
“Sale and Purchase Agreement” the sale and purchase agreement dated 3 December
2007 in respect of the Acquisition
“Share(s)” share(s) of HK$0.10 each in the share capital of the
Company
“Shareholder(s)” the registered holder(s) of the Shares
“SFO” the Securities and Future Ordinance (Chapter 571 of
the Laws of Hong Kong)
“South China Capital” South China Capital Limited, being a deemed licensed
corporation to carry out type 6 (advising on corporate
finance) regulated activity as set out in Schedule 5 to
the SFO, the independent financial adviser to the
Independent Board Committee and the Independent
Shareholders in respect of the Acquisition
“Stock Exchange” Ren Xuefeng (Chairman & General Manager)
Mr. Yu Rumin (Vice Chairman)
Mr. Nie Jiansheng
Mr. Dai Yan
Mr. Hu Chengli
Dr. Wang Jiandong
Mr. Bai Zhisheng
Mr. Zhang Wenli
Mr. Sun Zengyin
Dr. Zong Guoying
Mr. Zheng Daoquan
Non-executive Directors:
Mr. Wang Guanghao
Mr. Cheung Wing Yui
Independent Non-executive Directors:
Mr. Kwong Che Keung, Gordon
Mr. Lau Wai Kit
Dr. Cheng Hon Kwan
Registered Office:
Suites 7-13
36/F., China Merchants Tower
Shun Tak Centre
168-200 Connaught Road Central
Hong Kong
21 December 2007
To the Shareholders
Dear Sir or Madam,
DISCLOSEABLE TRANSACTION

AND
CONNECTED TRANSACTION
INTRODUCTION

On 3 December 2007, the Board announced that, the Purchaser, an indirect
wholly-owned subsidiary of the Company, entered into a Sale and Purchase Agreement with
Tsinlien to acquire the entire equity interests in, and all the shareholders’ loan advanced to
Tsinlien Realty at a total consideration of HK$825 million. The Consideration will be
satisfied by way of HK$560 million in cash and the balance of HK$265 million by issuance
of 31,850,000 new Shares at an issue price of approximately HK$8.32 per Consideration
Share.
LETTER FROM THE BOARD

–3–

As some of the applicable percentage ratios for the Acquisition exceeds 5% but are less
than 25%, the Acquisition constitutes a discloseable transaction for the Company under the
Listing Rules. Further, as Tsinlien is the controlling Shareholder of the Company together
with its associates interested in approximately 51.97% of the issued share capital of the
Company, the Acquisition with the allotment of Consideration Shares also constitutes a
connected transaction for the Company under the Listing Rules and is subject to the
reporting and announcement requirements and approval of the Independent Shareholders
requirements at the Extraordinary General Meeting with the vote to be taken by way of poll.
Tsinlien and its associates will abstain from voting in respect of the resolution for
approval of the Acquisition at the Extraordinary General Meeting. Save for Tsinlien and its
associates, no Shareholder has any interest in the Acquisition.
The purpose of this circular is to provide the Shareholders with, among other things, (i)
further details of the Acquisition; (ii) the letter of recommendation from the Independent
Board Committee to the Independent Shareholders in respect of the Acquisition; (iii) the
letter of advice from South China Capital to the Independent Board Committee and the
Independent Shareholders in respect of the Acquisition; and (iv) a notice of the
Extraordinary General Meeting.
SALE AND PURCHASE AGREEMENT

Date : 3 December 2007
Purchaser : Championwin Limited, an indirect wholly-owned subsidiary of the
Company
Vendor : Tsinlien, the controlling Shareholder of the Company interested, together
with its associates in approximately 51.97% of the issued share capital of
the Company as at Latest Practicable Date
Pursuant to the Sale and Purchase Agreement, the Purchaser shall acquire the entire
equity interests in Tsinlien Realty, being 200,000 issued shares of HK$1 each from Tsinlien
together with the benefit of all the shareholder’s loan advanced by Tsinlien to Tsinlien
Realty at the completion date, for a total consideration of HK$825 million. Based on the
unaudited management account of Tsinlien Realty, the shareholder’s loan amounted to
approximately HK$1,709 million as at 31 October 2007.
INFORMATION OF TSINLIEN REALTY AND THE HOTEL

Tsinlien Realty is a limited company incorporated in Hong Kong and an investment
holding company principally engaged in property holding and property management in Hong
Kong. Its principal asset is Courtyard by Marriott Hong Kong currently under development
located at No. 167 Connaught Road West, Western District, Hong Kong (the “Hotel”).
As set out in the map below, the Hotel is located at prime location of Western District,
Hong Kong. The Hotel is close to the Western Tunnel and the Hong Kong-Macau Ferry
Terminal located in Sheung Wan, Hong Kong. With the extension of rail service by the Mass
Transit Railway for Western District which is estimated to be completed in 2014, it is
LETTER FROM THE BOARD

–4–

expected the transportation in the Western District area will be improved further. The
proposed extension consists of three underground stations at Sai Ying Pun, University and
Kennedy Town and the Hotel is located near the proposed stations as shown on the map
below.
The Hotel is being developed to be a 4-star hotel which has a site area of
approximately 769.5 square meters and gross floor area of approximately 11,472 square
meters with 245 guest rooms. Facilities in the Hotel include conference rooms, business
centre, executive lounge, fitness centre, bar and restaurant. Target customers of the Hotel are
business travellers and corporate clients.
Tsinlien Realty has entered into an agreement with Marriott Hotels International B.V.
(“Marriott”), an independent third party, under which Marriott will provide hotel
management service in respect of the Hotel until 2027, subject to renewal for two successive
periods of five years each. Under the agreement Marriott will receive fees based on gross
revenue and operating profit of the Hotel. There are four other hotels in Hong Kong that are
currently under the management of Marriott. According to the information from Marriott,
there were nine hotels operated under the brand “Marriott Courtyard” in Asia as at 30
September 2007. There will be four other hotels under the same brand, including the Hotel,
expected to operate in Asia soon.
The Hotel was originally developed to be a 31-storey office building and Tsinlien
Realty bought the office building in 1997 for HK$847 million. Tsinlien Realty subsequently
undertook the conversion of the office building into a 4-star hotel. The conversion and
renovation work is substantially completed and it is expected the Hotel will start to admit
paying guests in the first quarter of 2008.
LETTER FROM THE BOARD

–5–

Prior to the conversion into the Hotel, the building was held by Tsinlien Realty as an
investment property. Based on the audited financial statement for the year ended 31
December 2006, the net deficit of Tsinlien Realty was approximately HK$1,160 million
(2005: approximately HK$1,034 million), including a loan due to Tsinlien of approximately
HK$1,517 million (2005: approximately HK$1,415 million). Turnover and net losses (both
before and after taxation and extraordinary items) for the year ended 31 December 2006
were approximately HK$0.9 million and HK$125.7 million, respectively (2005:
approximately HK$12.9 million and HK$71.2 million, respectively).
CONSIDERATION

Under the Sale and Purchase Agreement, Tsinlien will inject a further amount of
HK$38 million after 31 October 2007 but before the completion of the Acquisition as
contribution to settle the construction costs for the Hotel and any pre-opening and operating
expenses incurred before the completion of the Acquisition (the “Remaining Capital
Commitment”).
The Consideration of HK$825 million was determined after arm’s length negotiations
between the parties with reference to the Remaining Capital Commitment and the valuation
of the Hotel as at 30 September 2007 of HK$825 million, prepared by Knight Frank, an
independent third party to the Company using direct comparison approach.
Following the completion of the Acquisition, Tsinlien Realty will become an indirect
wholly-owned subsidiary of the Company. Based on the unaudited management account of
Tsinlien Realty for the ten months ended 31 October 2007, loss for the period was
approximately HK$46 million. The net liabilities of Tsinlien Realty as at 31 October 2007
were approximately HK$1,206 million with shareholder’s loan of approximately HK$1,709
million before taken into account of the revaluation surplus of approximately HK$328
million based on the valuation of Hotel as at 30 September 2007. After excluding the
shareholder’s loan of approximately HK$1,709 million, Tsinlien Realty would have net
assets of approximately HK$503 million as at 31 October 2007.
The full amount of the Consideration will be settled at the date of completion of the
Sale and Purchase Agreement. Among the cash consideration of HK$560 million,
approximately HK$200 million will be financed through internal resources of the Company
and approximately HK$360 million will be financed through bank facilities. The balance of
the Consideration of HK$265 million shall be settled upon the completion by way of the
Company issuing and allotting to Tsinlien or its nominees approximately 31,850,000 new
Shares at a price of approximately HK$8.32 per Consideration Share.
LETTER FROM THE BOARD

–6–

The issue price of approximately HK$8.32 per Consideration Share to be issued by the
Company represents:
(i) a discount of approximately 8.67% over the closing price of HK$9.11 per Share
as quoted on the Stock Exchange on the last trading day of the Shares
immediately before the date of the Sale and Purchase Agreement;
(ii) a discount of approximately 6.94% over the average closing price of HK$8.94 per
Share as quoted on the Stock Exchange for the last five trading days of the Shares
immediately before the date of the Sale and Purchase Agreement;
(iii) a discount of approximately 5.99% over the average closing price of HK$8.85 per
Share as quoted on the Stock Exchange for the last ten trading days of the Shares
immediately before the date of the Sale and Purchase Agreement; and
(iv) a premium of approximately 11.68% over the closing price of HK$7.45 per Share
as quoted on the Stock Exchange as at the Latest Practicable Date.
The Consideration Shares represent approximately 3.08% of the existing issued share
capital of the Company and approximately 2.98% of the issued share capital of the Company
as enlarged by the issue of the Consideration Shares. The Company will apply to the Listing
Committee of the Stock Exchange for the granting of listing of, and permission to deal in,
the Consideration Shares on the Stock Exchange. The Consideration Shares will be credited
as fully-paid and rank pari passu in all respects with the existing Shares in issue.
The terms of the Sale and Purchase Agreement were negotiated on an arm’s length
basis. The Directors consider the terms are fair and reasonable and are in the interest of the
Company and its Shareholders as a whole.
SHAREHOLDING STRUCTURE

As at the Latest
Practicable Date
Immediate after the issue
of Consideration Shares
Numbers of
Shares
Approximate
% of total
issued
Shares
Numbers of
Shares
Approximate
% of total
issued
Shares
Tsinlien 538,189,143 51.97 570,039,143 53.40
Public Shareholders 497,430,982 48.03 497,430,982 46.60
Total 1,035,620,125 100 1,067,470,125 100
LETTER FROM THE BOARD

–7–

CONDITIONS PRECEDENT
The completion of the Sale and Purchase Agreement shall be conditional upon, inter
alia, the following conditions precedent being fulfilled or waived:
(a) the passing of a resolution at the Extraordinary General Meeting of the Company
by a simple majority of the Independent Shareholders to approve the Sale and
Purchase Agreement and the transactions contemplated hereunder, including the
issue and allotment of the Consideration Shares to Tsinlien or its nominees
pursuant to the Sale and Purchase Agreement;
(b) the Listing Committee of the Stock Exchange granting or agreeing to grant (either
unconditionally or subject to conditions) the listing of, and permission to deal in,
the Consideration Shares;
(c) Tsinlien obtaining documents evidencing the absolute discharge and release of the
legal charge over the Hotel and the rental accounts of Tsinlien Realty;
(d) Tsinlien providing evidence in writing, showing that it has injected to Tsinlien
Realty or procured to be injected to Tsinlien Realty the Remaining Capital
Commitment, to the satisfaction of the Purchaser;
(e) Tsinlien providing evidence to the satisfaction of the Purchaser that all necessary
consents, permits, approvals, authorisations and waivers in respect of the existing
financing agreements and the operation of the Hotel has been obtained;
(f) Tsinlien providing evidence to the satisfaction of the Purchaser that the
redevelopment of the Hotel has been completed and that the Hotel has been in
full operation; and
(g) the parties to the Sale and Purchase Agreement having obtained any and all other
consents, permits, approvals, authorisations and waivers necessary or appropriate
for the entering into and consummation of the transactions contemplated by the
Sale and Purchase Agreement.
The parties shall procure that the conditions precedent be satisfied on or before 30 June
2008 or such later date as may be agreed between the parties to the Sale and Purchase
Agreement. In the event that not all the conditions have been fulfilled or waived (as the case
may be) by the Purchaser by no later than 5 p.m. on 30 June 2008, the Sale and Purchase
Agreement shall lapse and be of no further effect and no party to the Sale and Purchase
Agreement shall have any claim against or liability or obligation to the other party save in
respect of any antecedent breaches. As at the Latest Practicable Date, save for condition (d),
none of above-mentioned conditions precedent has been fulfilled.
LETTER FROM THE BOARD

–8–

COMPLETION OF THE ACQUISITION
The completion of the Sale and Purchase Agreement shall take place within five
business days from the fulfilment or waiver (as the case may be) of the conditions precedent
set out above or such other date as the parties may agree.
FINANCIAL EFFECTS ON THE GROUP

Upon completion, Tsinlien Realty will become an indirect wholly-owned subsidiary of
the Company with its financial statements to be consolidated under the Group. The gearing
of the Group may slightly increase if the Acquisition is to be financed by bank borrowings.
Given the size of the transaction and the fact that the Hotel has not commenced its
operation, the Acquisition is not expected to have any material financial effect on the
earnings and assets and liabilities of the Group.
REASONS FOR AND BENEFITS OF THE ACQUISITION

The principal activity of the Company is investment holding. The principal activities of
the Company’s subsidiaries and associated companies are (i) infrastructure operations
including toll road operations and port operations; (ii) utility operations including supply of
water, electricity and heat and thermal power; and (iii) strategic and other investments
including investments in the production, sale and distribution of winery products, gas fuel
operations and elevator and escalator operations. The principal activities of Tsinlien are
general trading and investment holding.
As disclosed in the latest annual report, the Group is actively exploring the
opportunities in property development business with focus to be put on hotel projects. In
addition to the current transaction, the Group is pursuing other opportunities in this sector in
the PRC. The Acquisition will provide diversification of the Group’s business into a selected
area and establish a position in tourism and hospitality sector in Hong Kong which the
Group considers to have favourable prospects. Based on the statistics from Hong Kong
Tourism Board, the total number of visitors arrived Hong Kong during the first half of 2007
was approximately 13 million, which represented a growth of 6.8% compared with same
period in 2006. Hotel occupancy rate in Hong Kong was at an average of about 87% in
2006, compared with 86% a year earlier.
EXTRAORDINARY GENERAL MEETING

A notice convening the Extraordinary General Meeting to be held at Alexandra Room,
2nd Floor, Mandarin Oriental Hong Kong, 5 Connaught Road Central, Hong Kong on 16
January 2008 at 3:00 p.m.. is set out on pages 43 to 44 of this circular for the purpose of
considering and, if thought fit, passing the ordinary resolution set out therein.
Tsinlien, being the controlling Shareholder of the Company, and its associates are
interested in approximately 51.97% of the issued share capital of the Company as at the
Latest Practicable Date, and will abstain from voting in respect of the resolution for
approval of the Acquisition at the Extraordinary General Meeting. Save for Tsinlien and its
associates, no Shareholder has any interest in the Acquisition.
LETTER FROM THE BOARD

–9–

Whether or not you are able to attend the meeting, you are requested to complete the
enclosed proxy form in accordance with the instructions printed thereon and return the same
to the Company’s share registrar, Tricor Tengis Limited at 26/F., Tesbury Centre, 28 Queen’s
Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours
before the time appointed for the holding of the Extraordinary General Meeting or any
adjournments thereof. Completion and return of the proxy form will not preclude you from
attending and voting at the Extraordinary General Meeting or any adjournments thereof
should you so desire.
PROCEDURES FOR DEMANDING A POLL BY SHAREHOLDERS

Pursuant to Article 73 of the articles of association of the Company, at any general
meeting a resolution put to the vote of a meeting shall be decided on a show of hands unless
a poll is taken as may from time to time be required under the Listing Rules or unless a poll
is (before or on the declaration of the results of the show of hands) demanded:
(a) by the Chairman; or
(b) by at least three Shareholders present in person or in the case of a Shareholder
being a corporation by its duly authorised representative or by proxy for the time
being entitled to vote at the meeting; or
(c) by any Shareholder or Shareholders present in person or in the case of a
Shareholder being a corporation by its duly authorised representative or by proxy
and representing not less than one-tenth of the total voting rights of all
Shareholders having the right to vote at the meeting; or
(d) by any Shareholder or Shareholders present in person or in the case of a
Shareholder being a corporation by its duly authorised representative or by proxy
and holding Shares in the Company conferring a right to vote at the meeting
being Shares on which an aggregate sum has been paid up equal to not less than
one-tenth of the total sum paid up on all the Shares conferring that right.
RECOMMENDATIONS

The Directors are of the view that the terms of the Acquisition are in the interests of
the Company and the Shareholders as a whole and are fair and reasonable so far as the
Independent Shareholders are concerned, and accordingly recommend the Independent
Shareholders to vote in favour of the ordinary resolution to approve the Acquisition, as set
out in the notice of Extraordinary General Meeting on pages 43 to 44 of this circular. Your
attention is drawn to (a) the letter from the Independent Board Committee set out on page
12 of this circular which contains the recommendation of the Independent Board Committee
to the Independent Shareholders regarding the Acquisition, and (b) the letter from South
China Capital containing its advice and the principal factors and reasons taken into
consideration by them in arriving at its advice regarding the Acquisition which is set out on
pages 13 to 30 of this circular.
LETTER FROM THE BOARD

–10–

The Independent Board Committee, having taken into account the advice of South
China Capital, considers that the terms of the Acquisition are fair and reasonable and in the
interests of the Company and the Independent Shareholders as a whole. Accordingly, the
Independent Board Committee recommends the Independent Shareholders to vote in favour
of the ordinary resolution to be proposed at the Extraordinary General Meeting to approve,
if thought fit, the Acquisition.
ADDITIONAL INFORMATION

Additional information is set out in the appendices of this circular for your
information.
Yours faithfully,
By Order of the Board
Tianjin Development Holdings Limited
Ren Xuefeng
Chairman
LETTER FROM THE BOARD

–11–

(Incorporated in Hong Kong with limited liability under the Companies Ordinance)
(Stock Code: 882)
21 December 2007
To the Independent Shareholders
Dear Sir or Madam,
DISCLOSEABLE TRANSACTION

AND
CONNECTED TRANSACTION

We have been appointed as members of the Independent Board Committee to advise
you in connection with the Acquisition, details of which are set out in the “Letter from the
Board” in the circular dated 21 December 2007 (the “Circular”), of which this letter forms
part. Terms used in this letter shall have the same meanings as given to them in the Circular
unless the context otherwise requires.
Your attention is also drawn to the “Letter from South China Capital” concerning its
advice to us regarding the Acquisition as set out on pages 13 to 30 of this Circular. Having
considered the advice given by South China Capital, and the principal factors and reasons
taken into consideration by them in arriving at its advice, we are of the opinion that the
terms of the Acquisition are on normal commercial terms, in the ordinary and usual course
of business of the Group and are fair and reasonable so far as the Independent Shareholders
are concerned and that the Acquisition is in the interests of the Company and the
Independent Shareholders as a whole. We, therefore, recommend the Independent
Shareholders to vote in favour of the ordinary resolution to be proposed at the Extraordinary
General Meeting as set out in the notice convening such meeting on pages 43 to 44 of this
Circular.
Yours faithfully,
Independent Board Committee
Kwong Che Keung, Gordon
Independent
non-executive Director
Lau Wai Kit
Independent
non-executive Director
Cheng Hon Kwan
Independent
non-executive Director
LETTER FROM THE INDEPENDENT BOARD COMMITTEE

–12–

Set out below is the text of a letter received from South China Capital, the Independent
Financial Adviser to the Independent Board Committee and the Independent Shareholders
regarding the Acquisition for the purpose of inclusion in this circular.
South China Capital Limited
28/F., Bank of China Tower
No. 1 Garden Road
Central
Hong Kong
21 December 2007
To: The independent board committee and the independent shareholders
of Tianjin Development Holdings Limited
Dear Sirs,
DISCLOSEABLE AND CONNECTED TRANSACTION
INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the
Independent Board Committee and the Independent Shareholders in connection with the
discloseable and connected transaction constituted by the Acquisition, details of which are
set out in the letter from the Board (the “Board Letter”) contained in the circular dated 21
December 2007 issued by the Company to the Shareholders (the “Circular”), of which this
letter forms part. Capitalised terms used in this letter shall have the same meanings as
defined in the Circular unless the context requires otherwise.
On 3 December 2007, Championwin Limited, being an indirect wholly-owned
subsidiary of the Company, entered into the Sale and Purchase Agreement with Tsinlien, the
controlling shareholder of the Company, pursuant to which Championwin Limited
conditionally agreed to acquire and Tsinlien conditionally agreed to dispose of its entire
equity interest in Tsinlien Realty, together with the benefit of all shareholders’ loan
advanced by Tsinlien to Tsinlien Realty at the completion date, for the Consideration of
HK$825 million. Under the Sale and Purchase Agreement, the Consideration shall be
satisfied as to (i) HK$560 million by way of cash; and (ii) HK$265 million by the issue of
31,850,000 new Shares to Tsinlien or its nominees at a price of approximately HK$8.32 per
Consideration Share.
In addition, under the Sale and Purchase Agreement, Tsinlien will inject the Remaining
Capital Commitment of HK$38 million after 31 October 2007 but before completion of the
Acquisition as contribution to settle the construction costs for the Hotel and any pre-opening
and operating expenses incurred before the completion of the Acquisition.
According to Rule 14.08 of the Listing Rules, the Acquisition constitutes a discloseable
transaction for the Company. In addition, since Tsinlien is the controlling shareholder of the
Company which was interested in approximately 51.97% of the Company’s total issued
share capital as at the date of the Sale and Purchase Agreement, the Acquisition also
LETTER FROM SOUTH CHINA CAPITAL

–13–

constitutes a connected transaction for the Company under Chapter 14A of the Listing Rules.
The Sale and Purchase Agreement is therefore subject to the approval of Independent
Shareholders at an Extraordinary General Meeting by way of poll whereby Tsinlien and its
associates shall be required to abstain from voting on the relevant resolution(s) in respect of
the Sale and Purchase Agreement and the transactions contemplated therein.
An independent board committee comprising Mr. Kwong Che Keung, Gordon, Mr. Lau
Wai Kit and Dr. Cheng Hon Kwan (all being independent non-executive Directors) (the
“Independent Board Committee”) has been established to advise the Independent
Shareholders on (i) whether the terms of the Sale and Purchase Agreement are on normal
commercial terms and are fair and reasonable so far as the Independent Shareholders are
concerned; (ii) whether the Acquisition is in the ordinary and usual course of business of the
Company and is in the interests of the Company and the Shareholders as a whole; and (iii)
how the Independent Shareholders should vote in respect of the ordinary resolution(s) to
approve the Sale and Purchase Agreement and the transactions contemplated therein at the
Extraordinary General Meeting. We, South China Capital, have been appointed as the
Independent Financial Adviser to advise the Independent Board Committee and the
Independent Shareholders in this respect.
BASIS OF OUR OPINION

In formulating our advice and recommendation to the Independent Board Committee,
we have relied on the statements, information, opinions and representations contained or
referred to in the Circular and the information and representations as provided to us by the
Directors. We have assumed that all information and representations that have been provided
by the Directors, for which they are solely and wholly responsible, are true, complete and
accurate in all material respects at the time when they were made and continue to be so as
at the date of the despatch of the Circular. We have also assumed that all statements of
belief, opinion, expectation and intention made by the Directors in the Circular were
reasonably made after due enquiries and careful considerations. We have no reason to
suspect that any material facts or information have been withheld or to doubt the truth,
accuracy and completeness of the information and facts contained in the Circular, or the
reasonableness of the opinions expressed by the Company, its advisers and/or Directors,
which have been provided to us. We consider that we have taken sufficient and necessary
steps on which to form a reasonable basis and an informed view for our opinion in
compliance with Rule 13.80 of the Listing Rules.
We have not made an independent evaluation or appraisal of the assets and liabilities of
neither the Group nor Tsinlien Realty and we have not been furnished with any such
evaluation or appraisal, save and except for the valuation report on the Hotel prepared by
Knight Frank (the “Valuation Report”) as contained in Appendix I to the Circular. We are
not experts in the valuation of properties in all businesses and therefore have relied solely
upon the Valuation Report for the market value of the Hotel as at 30 September 2007. In
early August 2007, we have also conducted a site visit to the Hotel in Hong Kong.
LETTER FROM SOUTH CHINA CAPITAL

–14–

The Directors have collectively and individually accepted full responsibility for the
accuracy of the information contained in the Circular and have confirmed, having made all
reasonable enquiries, which to the best of their knowledge and belief, there are no other
facts the omission of which would make any statement in the Circular misleading.
We consider that we have been provided with sufficient information to reach an
informed view and to provide a reasonable basis for our recommendation. We have not,
however, conducted any independent in-depth investigation into the business and affairs of
the Company, its subsidiaries or associates, nor have we considered the taxation implication
on the Group or the Shareholders as a result of the Acquisition. In addition, we have no
obligation to update this opinion to take into account events occurring after the issue of this
letter. Nothing contained in this letter should be construed as a recommendation to hold, sell
or buy any Shares or any other securities of the Company.
PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion regarding the Acquisition, we have taken into consideration
the following principal factors and reasons:
1. The Sale and Purchase Agreement
On 3 December 2007, Championwin Limited, being an indirect wholly-owned
subsidiary of the Company, entered into the Sale and Purchase Agreement with
Tsinlien, the controlling shareholder of the Company, pursuant to which Championwin
Limited conditionally agreed to acquire and Tsinlien conditionally agreed to dispose of
its entire equity interest in Tsinlien Realty, together with the benefit of all
shareholders’ loan advanced by Tsinlien to Tsinlien Realty at the completion date, for
the Consideration of HK$825 million.
In addition, under the Sale and Purchase Agreement, Tsinlien will inject the
Remaining Capital Commitment of HK$38 million after 31 October 2007 but before
completion of the Acquisition as contribution to settle the construction costs for the
Hotel and any pre-opening and operating expenses incurred before the completion of
the Acquisition.
As referred to in the Board Letter, completion of the Sale and Purchase
Agreement is conditional upon, inter alia, the following conditions having been
fulfilled or waived on or before 30 June 2008:
(a) the passing of a resolution at the Extraordinary General Meeting by a simple
majority of the Independent Shareholders to approve the Sale and Purchase
Agreement and the transactions contemplated thereunder including the issue
and allotment of the Consideration Shares to Tsinlien pursuant to the Sale
and Purchase Agreement;
LETTER FROM SOUTH CHINA CAPITAL

–15–

(b) the Listing Committee of the Stock Exchange granting or agreeing to grant
(either unconditionally or subject to conditions) the listing of, and
permission to deal in, the Consideration Shares;
(c) Tsinlien obtaining documents evidencing the absolute discharge and release
of the legal charge over the Hotel and the rental accounts of Tsinlien Realty;
(d) Tsinlien providing evidence in writing, showing that it has injected to
Tsinlien Realty or procured to inject to Tsinlien Realty the Remaining
Capital Commitment to the satisfaction of the Purchaser;
(e) Tsinlien providing evidence to the satisfaction of the Purchaser that all
necessary consents, permits, approvals, authorisations and waivers in respect
of the existing financing agreements and the operation of the Hotel have
been obtained;
(f) Tsinlien providing evidence to the satisfaction of the Purchaser that the
redevelopment of the Hotel has been completed and that the Hotel has been
in full operation; and
(g) the parties to the Sale and Purchase Agreement having been obtained any
and all other consents, permits, approvals, authorisations and waivers
necessary or appropriate for the entering into and consummation of the
transactions contemplated under the Sale and Purchase Agreement.
The parties shall procure that the conditions precedent be satisfied on or before 30
June 2008 or such later date as may be agreed between the parties to the Sale and
Purchase Agreement. In the event that not all the conditions have been fulfilled or
waived by the Purchaser (as the case may be) by no later than 5:00 p.m. on 30 June
2008, the Sale and Purchase Agreement shall lapse and be of no further effect and no
party to the Sale and Purchase Agreement shall have any claim against or liability or
obligation to the other party save in respect of any antecedent breaches.
As advised by the Directors, the Sale and Purchase Agreement was negotiated and
entered into on arm’s length basis between the parties thereto and the Directors are of
the view that the terms and conditions of the Sale and Purchase Agreement are fair and
reasonable so far as the Independent Shareholders are concerned and are in the
interests of the Company and the Shareholders as a whole.
LETTER FROM SOUTH CHINA CAPITAL

–16–

2. Background of the Acquisition
Business and financial information on the Group
The Company is an investment holding company and the principal activities of the
Group are (i) infrastructure operations including toll road operations and port
operations; (ii) utility operations including the supply of water, electricity and heat and
thermal power; and (iii) strategic and other investments including property
development, investments in the production, sale and distribution of winery products,
gas fuel operations and elevator and escalator operations.
Tabularised below is a summary of the audited and unaudited consolidated
financial results of the Group as extracted from the annual report of the Company for
the year ended 31 December 2006 (the “2006 Annual Report”) and the interim report
of the Company for the six months ended 30 June 2007 (the “2007 Interim Report”)
respectively:
Consolidated Income Statement
For the year
ended 31
December
2006

For the year
ended 31
December
2005

Year on year
change
For the six
months
ended 30
June 2007
(audited) (audited) (unaudited)
HK$’000 HK$’000 % HK$’000
Revenue 2,688,457 2,239,102 20.07 1,618,433
Gross profit 850,808 760,386 11.89 498,896
Gross profit margin 31.65% 33.96% 30.83%
Net profit attributable to the equity
holders of the Company 552,751 573,169 (3.56) 236,871
Consolidated Balance Sheet
As at 31
December
2006

As at 31
December
2005

Year on year
change
As at 30
June 2007
(audited) (audited) (unaudited)
HK$’000 HK$’000 % HK$’000
Net asset value (net of minority
interest) (“NAV”) 6,905,889 5,841,310 18.23 7,535,789
Cash and cash equivalents 3,304,278 2,505,315 31.89 3,090,064
Total borrowings 2,278,299 2,415,089 (5.66) 1,984,807
Gearing ratio (Total borrowings/
Shareholders’ fund) 32.99% 41.34% (20.21) 26.34%
As depicted from the above table, the Group had achieved a growth of
approximately 20.07% in its revenue for the year ended 31 December 2006. While the
gross profit of the Group had also grown by approximately 11.89% during the same
said year under review, there had been a slight drop in the net profit attributable to the
equity holders of the Company by approximately 3.56%. As stated in the 2006 Annual
Report and the 2007 Interim Report and further confirmed by the Directors, the Group
is actively exploring the opportunities in the property development business with focus
to be put on hotel projects.
LETTER FROM SOUTH CHINA CAPITAL

–17–

Regarding the assets and liabilities position of the Group, the consolidated NAV
of the Group mounted by approximately 18.23% from 31 December 2005 to 31
December 2006. As at 30 June 2007, the Group’s consolidated NAV was approximately
HK$7.54 billion. The gearing ratio of the Group, which is calculated as total
borrowings divided by Shareholders’ fund was approximately 32.99% as at 31
December 2006. We also noted from the 2007 Interim Report that the gearing level of
the Group had been improved to approximately 26.34% as at 30 June 2007.
Business and financial information on Tsinlien Realty and the Hotel
Tsinlien Realty is an investment holding company incorporated in Hong Kong and
is principally engaged in property holding and property management in Hong Kong.
The primary asset of Tsinlien Realty is the Hotel, which is located at No. 167
Connaught Road West, Western District, Hong Kong.
We understand from the Directors that the Hotel was used to be a 31-storey office
building and Tsinlien Realty bought the office building in 1997 with the cost of
HK$847 million. Tsinlien Realty subsequently converted the office building into a hotel
of 4-star equivalent standard with 31 storeys and a gross floor area of approximately
11,472 square meters. The conversion work and renovation which was started in March
2006 has been substantially completed and it is expected that the Hotel will start to
admit paying guests in the first quarter of 2008.
The Hotel has altogether 245 guest rooms, together with facilities such as
conference rooms, business centre, executive lounge, fitness centre, bar and a
restaurant. During our site visit to the Hotel in early August 2007, we also noted that
some of the guest rooms of the Hotel provide outstanding Victoria Harbour sea views.
As further advised by the Directors, the main stream of income of the Hotel will be
derived from the rental income of hotel rooms and the charges from the ancillary
business and leisure facilities since the Hotel will not include any retail shops which
may generate rental and/or other sources of income to the Hotel. In addition, the target
customers of the Hotel are mainly business traveller and corporate client.
On 4 May 2007, Tsinlien Realty entered into an agreement (the “Management
Agreement”) with Marriott, an independent third party to the Company, pursuant to
which Marriott agreed to provide hotel management services for the Hotel until 2027,
subject to renewal for two successive periods of five years each. We have further
enquired into the Directors regarding the Management Agreement and were given to
understand that Marriott will be solely responsible for the daily operation and
administration of the Hotel. The Company will not participate in managing the Hotel,
but instead has engaged Marriott for such service under fees which are based on gross
revenue and operating profits of the Hotel. As represented to the Directors by Marriott,
there were nine hotels operated under the brand “Marriott Courtyard” in Asia as at
September 2007, there are four other hotels under the same brand, including the Hotel,
which are expected to operate in Asia soon. Having considered the extensive
experience and well-known reputation of Marriott in hotel management, the Directors
believe that the Hotel can be operated smoothly after commencement of business.
LETTER FROM SOUTH CHINA CAPITAL

–18–

Upon completion of the Acquisition, Tsinlien Realty will become an indirect
wholly-owned subsidiary of the Company. As a result, the Group will be able to fully
consolidate the financial results of Tsinlien Realty into the financial statements of the
Company. Set out below are the audited financial information of Tsinlien Realty for the
two years ended 31 December 2006 and the unaudited financial information for the ten
months ended 31 October 2007 prepared in accordance with Hong Kong Accounting
Standards issued by the Hong Kong Institute of Certified Public Accountants:
Income Statement
For the ten
months ended
31 October
2007

For the
year ended
31 December
2006

For the
year ended
31 December
2005

HK$ HK$ HK$
Loss for the period/year 45,778,233 125,718,759 71,196,643
Balance Sheet
As at
31 October
2007

As at
31 December
2006

As at
31 December
2005

HK$ HK$ HK$
Net liabilities (including
shareholders’ loans) 1,205,715,837 1,159,937,604 1,034,218,845
Shareholders’ loans (Note) 1,709,065,426 1,517,169,486 1,414,899,710
Net assets (excluding
shareholders’ loans)
(Note) 503,349,589 357,231,882 380,680,865
Note: The shareholder’s loans as at 31 October 2007 of approximately 1,709 million were owed by
Tsinlien Realty to Tsinlien. Upon completion of the Acquisition, Tsinlien Realty will become
an indirect wholly-owned subsidiary of the Company and as confirmed by the Directors, the
said shareholders’ loans will become inter-company loans and thus will not appear in the
consolidated financial accounts of the Company.
We noted from the above table that the net losses of Tsinlien Realty had increased
from approximately HK$71.20 million for the year ended 31 December 2005 to
approximately HK$125.72 million for the year ended 31 December 2006. As advised
by the Directors, the net losses were mainly due to the substantial costs incurred for
the conversion work and renovation of the Hotel. Given that the Hotel has not yet
commenced business and no revenue has been generated so far, Tsinlien Realty suffered
from continual losses in its business operation from the year ended 31 December 2005
to 31 October 2007. Nevertheless, the Directors are confident that Tsinlien Realty will
be able to turn around its loss making position within a reasonable period of time after
the Hotel start admitting paying guests in the first quarter of 2008.
Regarding the assets and liabilities position of Tsinlien Realty, Tsinlien Realty had
net liabilities (including shareholders’ loans) of approximately HK$1,205.72 million as
at 30 June 2007. If the shareholders’ loans were excluded, Tsinlien Realty would
record net assets of approximately HK503.35 million as at 31 October 2007.
LETTER FROM SOUTH CHINA CAPITAL

–19–

3. Reasons for the Acquisition
According to the Board Letter, the Group is actively exploring investment
opportunities in the tourism industry and the hospitality sector within the greater China
region. As also mentioned under the paragraph headed “Business and financial
information on the Group” in this letter, we also noted from the 2006 Annual Report
and the 2007 Interim Report and the Directors also confirmed that the Group intends to
explore the opportunities in the property development business with focus to be put on
hotel projects and the Board considers that the Acquisition will enable the Group to
diversify its business and establish its presence in the hospitality sector.
Overview of the tourism industry in Hong Kong
Visitor’s arrivals to Hong Kong from 2002 to 2006
2002 2003 2004 2005 2006

Number of visitor 16,566,382 15,536,839 21,810,630 23,359,417 25,251,124
Source: Hong Kong Tourism Board
As referred to the statistics released by the Hong Kong Tourism Board, the annual
number of visitors arriving in Hong Kong had increased from approximately 16.57
million in 2002 to 25.25 million in 2006, representing a compound annual growth of
approximately 11.11% from 2002 to 2006. The number of visitors arriving in Hong
Kong had shown an increasing trend and according to Hong Kong Tourism Board, the
major contributing factors are the rapid growth of Mainland China visitors and the
successful implementation of the individual visit scheme. In addition, a number of
major attractions were also opened in 2006 to cater for visitors of all kinds, including
family and leisure visitors.
We noted from the website of the Hong Kong Tourism Board that the hotel
occupancy rate was at an average of 87% in 2006, being up slightly from 86% as in
2005. Moreover, the average number of room nights has also risen. Even though the
number of hotel rooms in Hong Kong is expected to expand in the near future, the
Hong Kong Tourism Board expected that the hotel occupancy rate will stay at a high
level due to the growing number of visitors travelling to Hong Kong.
In view of (i) the Group’s intention to tap into hotel projects in order to improve
its future profitability; (ii) the entering into of the Management Agreement between
Tsinlien Realty and Marriott pursuant to which Marriott agreed to provide hotel
management services for the Hotel; and (iii) the aforementioned favourable statistics
regarding the tourism industry in Hong Kong, we are of the view that the Acquisition,
which would enable the Group to penetrate into the tourism and hospitality sector in
Hong Kong, is in the ordinary and usual course of business of the Company and is in
the interests of the Company and the Shareholders as a whole.
LETTER FROM SOUTH CHINA CAPITAL

–20–

4. Basis of the Consideration
Pursuant to the Sale and Purchase Agreement, the Consideration shall be satisfied
at the date of its completion as to (i) HK$560 million by way of cash (the “Cash
Consideration”); and (ii) HK$265 million by the issue of 31,850,000 new Shares to
Tsinlien or its nominees at a price of approximately HK$8.32 per Consideration Share
(the “Issue Price”). As confirmed by the Directors, the Company intends to settle
approximately HK$200 million of the Cash Consideration through internal resources of
the Company and approximately HK$360 million financed by bank loan.
As referred to in the Board Letter, the Consideration was determined after arm’s
length negotiation between the parties to the Sale and Purchase Agreement with
reference to the Remaining Capital Commitment and the valuation of the Hotel as at 30
September 2007 of HK$825 million prepared by Knight Frank, an independent third
party to the Company using the direct comparison method under the market approach.
Valuation Methodology
We have reviewed the Valuation Report and enquired into Knight Frank on the
methodology adopted and the assumptions used in arriving at the valuation of the
Hotel. We understand that Knight Frank carried out site visits to the Hotel in early
August 2007 and December 2007 respectively to research for necessary information to
determine the market value of the Hotel.
Valuation of the Hotel
In estimating the market value of the Hotel, Knight Frank had adopted the market
approach. Under the market approach, Knight Frank had applied the direct comparison
method for the valuation of the Hotel. According to Knight Frank, the market approach
is the most common approach for valuation of hotels and this approach should be
adopted whenever comparable transactions are available. Further details of the
assumptions and bases of the valuation of the Hotel are included in Appendix I to the
Circular. During our discussions with Knight Frank, we have not identified any major
factors which cause us to doubt the fairness and reasonableness of the principal bases
and assumptions used in arriving at the valuation of the Hotel. Accordingly, we are of
the view that the valuation of the Hotel of approximately HK$825 million as at 30
September 2007 can form a valid basis for the calculation of the NAV of Tsinlien
Realty for the purpose of evaluation of the fairness and reasonableness of the
Consideration.
LETTER FROM SOUTH CHINA CAPITAL

–21–

The NAV of Tsinlien Realty for the purpose of evaluation of the fairness and
reasonableness of the Consideration was calculated as follows:
HK$’000
Unaudited net assets of Tsinlien Realty as at 31 October
2007

(excluding the shareholders’ loans as detailed under the
paragraph headed “Business and financial information on
Tsinlien Realty and the Hotel” in this letter) 503,349 (a)
Add back:
Revaluation surplus in relation to the Hotel as at 30
September 2007 (Note) 328,167 (b)
Sum of (a) and (b) 831,516 (c)
The Consideration 825,000
Discount of the Consideration to item (c) 0.78%
Note: The revaluation surplus = Market value of the Hotel as at 30 September 2007 as estimated by
Knight Frank less non-current assets of Tsinlien Realty (all of which were belonged to the
Hotel) as at 31 October 2007.
We noted from the above table that the Consideration represents a discount of
approximately 0.78% to the NAV of Tsinlien Realty based on the above calculations;
thus, we consider that the Consideration is in the interests of the Company and
Shareholders as a whole.
As part of our analysis, we have also considered other commonly adopted
valuation methodologies, namely (i) the price to earning analysis; and (ii) the price to
book analysis, to assess the fairness and reasonableness of the Consideration:
(i) Price to earning ratio analysis
Due to the fact that the principal asset of Tsinlien Realty, being the Hotel, has not
yet commenced business and Tsinlien Realty recorded losses for the year ended 31
December 2006 and the ten months ended 31 October 2007, the price to earning ratio
analysis is not applicable in this case.
LETTER FROM SOUTH CHINA CAPITAL

–22–

(ii) Price to book ratio (the “PBR”) analysis
We are of the view that the NAV of Tsinlien Realty based on the calculations
under the previous paragraph is suitable for performing the PBR analysis to assess the
fairness and reasonableness of the Consideration. We have therefore searched for
companies listed on the Stock Exchange which are principally engaged in the hotel
businesses with market capitalization of more than HK$825 million, being the
Consideration (the “Market Comparables”) for illustrative purpose. To the best of our
knowledge and as far as we are aware of, there are 8 companies which met these
criteria. Set out below are the PBRs of the Market Comparables based on their closing
prices on 30 November 2007, being the last trading day prior to the date of the Sale
and Purchase Agreement (the “Last Trading Day”), and their respective latest published
financial information:
Company name Stock code Principal business PBR
The Hongkong and Shanghai
Hotels Limited
45 Hotel investment, management services,
property investment and development,
restaurant operation, club management,
peak tramway operation and laundry, dry
clearing services.
1.03

Harbour Centre Development
Limited
51 Operation of hotels and restaurants,
property investment and investment
holdings.
1.04

Shangri-La Asia Limited 69 Ownership and operation of hotels and
the provision of hotel management and
related services, the leasing of office,
commercial, residential and exhibition
hall space.
2.54

(Note)
Miramar Hotel and
Investment Company,
Limited
71 Property rental, property sale, hotel and
related operation, food and beverage
operation, and travel operation.
1.15

Regal Hotels International
Holdings Limited
78 Hotel ownership and management,
property development and investments,
other investments including investment
and trading in financial instruments and
marketable securities.
1.08

Magnificent Estates Limited 201 Hotel and related operations, lease of
properties, property trading, securities
dealing, treasury operations and
investment holding.
0.77

Asia Standard Hotel Group
Limited.
292 Hotel and catering travel agency and
management services.
0.40

Sino Hotels (Holdings)
Limited
1221 Hotel, restaurant and club operation;
share investment and investment
holdings.
1.40

Maximum 2.54
LETTER FROM SOUTH CHINA CAPITAL

–23–

Company name Stock code Principal business PBR
Minimum 0.40
Average 1.17
The Acquisition 0.99
Note: assuming exchange rate = US$1: HK$7.8
Source: the Stock Exchange web-site (www.hkex.com.hk)
From the above table, we noted that the average PBR as represented by the
Market Comparables was approximately 1.17 times with a range of approximately 0.40
times to 2.54 times. Since the PBR of the Acquisition is approximately 0.99 times to
the NAV of Tsinlien Realty as at 31 October 2007 as detailed under the paragraph
headed “Valuation of the Hotel” in this letter, it falls within and is below the average
of the PBR range of the Market Comparables.
It should be noted that the businesses, operations and prospects of the Company
are not exactly the same as the Market Comparables as set out in the above table.
Accordingly, the Market Comparables are only being used to provide a general
reference for the common market practice of companies listed on the Stock Exchange
which are principally engaged in the hotel business.
Taking into account that (i) the Consideration represents a discount to the NAV of
Tsinlien Realty as detailed under the paragraph headed “Valuation of the Hotel” in this
letter; and (ii) the PBR as represented by the Consideration falls within the range of
the PBR of the Market Comparables, we concur with the Directors that the
Consideration is fair and reasonable so far as the Independent Shareholders are
concerned and is in the interests of the Company and Shareholders as a whole.
The Consideration Shares
Pursuant to the Sale and Purchase Agreement, part of the Consideration shall be
satisfied by the issue of 31,850,000 new Shares to Tsinlien and its nominees at the
Issue Price of approximately HK$8.32 per Consideration Share. Upon our further
enquiry, the Directors confirmed that the Issue Price was determined with reference to
a discount of approximately 6% to the closing price of the Shares on the last ten
trading days up to and including the Last Trading Day.
LETTER FROM SOUTH CHINA CAPITAL

–24–

The Issue Price represents a premium/(discount) over/to the closing price of the
Shares in the following manner:
Share price
Premium/
(Discount) of the
Issue Price over/to
the closing price of
the Shares
HK$ %
As at the Latest Practicable Date 7.45 11.68
As at the Last Trading Day 9.11 (8.67)
The average of the last five trading days
up to and including the Last Trading
Day 8.94 (6.94)
The average of the last ten trading days up
to and including the Last Trading Day 8.85 (5.99)
Furthermore, the highest and lowest closing prices and the average daily closing
prices of the Shares as quoted on the Stock Exchange in each of the 12 months during
the period commencing from 1 December 2006 up to and including the Last Trading
Day (the “Review Period”) are shown as follows:
Month
Highest
closing
price
Lowest
closing
price
Average daily
closing price
HK$ HK$ HK$
2006

December 5.76 5.00 5.35
2007

January 6.36 5.33 5.74
February 6.69 6.02 6.44
March 6.05 5.19 5.71
April 6.54 5.73 6.15
May 9.20 6.85 7.82
June 8.82 8.32 8.57
July 9.75 8.30 8.81
August 9.27 7.74 8.73
September 11.38 8.84 10.27
October 13.16 11.00 12.15
November (up to and including
the Last Trading Day) 12.48 8.10 9.99
Source: the Stock Exchange web-site (www.hkex.com.hk)
LETTER FROM SOUTH CHINA CAPITAL

–25–

The above table illustrates that the average daily closing prices of the Shares
during the Review Period ranged from HK$5.35 to HK$12.15 per Share. We noted that
the Issue Price of approximately HK$8.32 per Consideration Share was at premium
over the average daily closing prices of the Shares during the entire Review Period
save as and except for the period from June 2007 to December 2007. During the
Review Period, the Share price demonstrated a general increasing trend and the Share
price had risen relatively more significantly from September 2007 onwards. We have
enquired into the Directors for the reasons of the recent significant upsurge in the
Share price and the Directors confirmed that they are not aware of any particular
occurrence which would lead to such upsurge in the Share price and they consider that
the recent active sentiment of the investors in the stock market might have contributed
to the said upsurge.
To further evaluate the fairness and reasonableness of the Issue Price, we have
identified, to the best of our knowledge and as far as we are aware of, 13 connected
transactions by companies listed on the Stock Exchange which involved the issue of
shares from 1 September 2007 to the date of the Sale and Purchase Agreement (the
“Issue Price Comparables”). The table below summarises our relevant findings:
Company name Stock code Date of announcement
Premium/
(Discount) of
the issue price
over/to the
closing price
of the shares
as at the last
trading day
prior to the
release of the
announcement
Premium/
(Discount) of
the issue price
over/to the
average of the
closing price
of last ten
trading days
prior to the
release of the
announcement
%%
Kiu Hung International
Holdings Limited
381 4 September 2007 (44.88) (50.77)
Shougang Concord
Technology Holdings
Limited
521 5 September 2007 (23.60) (5.21)
Sino Union Petroleum &
Chemical International
Limited
346 12 September 2007 6.67 4.58
Henry Group Holdings
Limited
859 14 September 2007 0.00 1.30
Ko Yo Ecological
Agrotech (Group)
Limited
8042 21 September 2007 (4.42) 10.84
I.T Limited 999 17 October 2007 0.00 (4.35)
Zhong Hua International
Holdings Limited
1064 26 October 2007 (10.71) (10.87)
Yunnan Enterprises
Holdings Limited
455 30 October 2007 (61.00) (60.12)
Sino Union Petroleum &
Chemical International
Limited
346 9 November 2007 7.46 8.76
LETTER FROM SOUTH CHINA CAPITAL

–26–

Company name Stock code Date of announcement
Premium/
(Discount) of
the issue price
over/to the
closing price
of the shares
as at the last
trading day
prior to the
release of the
announcement
Premium/
(Discount) of
the issue price
over/to the
average of the
closing price
of last ten
trading days
prior to the
release of the
announcement
%%
Palmpay China
(Holdings) Limited
8047 12 November 2007 2.27 2.27
Wealthmark International
(Holdings) Limited
39 12 November 2007 4.17 3.65
Sino Haijing Holdings
Limited
8065 21 November 2007 5.71 0.73
Hualing Holdings
Limited
382 23 November 2007 (41.69) (42.74)
Maximum (61.00) (60.12)
Minimum 7.46 10.84
Average (12.31) (10.92)
The Company 882 3 December 2007 (8.67) (5.99)
Source: the Stock Exchange web-site (www.hkex.com.hk)
We noted from the above table that the issue prices of the shares of the 13 Issue
Price Comparables ranged from a discount of approximately 61.00% to a premium of
approximately 7.46% to/over the respective closing prices of their shares as at the last
trading days prior to the release of the relevant announcements. Out of the 13 Issue
Price Comparables, the issue prices of 6 of them represented discounts to the closing
prices of their shares as at the last trading days prior to the release of the
announcements. The Issue Price, which represents a discount of approximately 8.67%
to the closing price of the Shares as at the Last Trading Day, hence falls within the
said market range and is of a smaller discount than the average of the Issue Price
Comparables.
We also noted that the issue prices of the consideration shares of the 13 Issue
Price Comparables ranged from a discount of approximately 60.12% to a premium of
approximately 10.84% to/over the respective average 10-day closing prices of their
shares prior to the release of the relevant announcements. Out of the 13 Issue Price
Comparables, the issue prices of 6 of them represented discounts to the average 10-day
closing prices of their shares prior to the release of the announcements. The Issue
Price, which represents a discount of approximately 5.99% to the average closing price
of the Shares on the last ten trading days up to and including the Last Trading Day,
hence also falls within the said market range and is of a smaller discount than the
average of the Issue Price Comparables.
LETTER FROM SOUTH CHINA CAPITAL

–27–

It should be noted that the businesses, operations and prospects of the Company
are not the same as the Issue Price Comparables as set out in the above table.
Accordingly, the Issue Price Comparables are only being used to provide a general
reference for the common market practice of companies listed on the Stock Exchange
in connected transactions which involved the issue of shares.
Conclusion
Having taken into account that (i) the Issue Price is at premium over the average
closing prices of the Shares in most of the months during the Review Period; and (ii)
the discounts of the Issue Price fall within the respective market ranges and are of
smaller discounts than the respective averages of the Issue Price Comparables, we
concur with the Directors that the Issue Price is fair and reasonable so far as the
Independent Shareholders are concerned.
In addition, we have also reviewed the other terms of the Sale and Purchase
Agreement and are not aware of any terms which are uncommon to normal market
practice. Accordingly, we are of the view that the terms of the Sale and Purchase
Agreement are on normal commercial terms and are fair and reasonable so far as the
Independent Shareholders are concerned.
5. Dilution of the shareholding interests of the public Shareholders
As at the Latest Practicable Date, there were 1,035,620,125 Shares in issue. Upon
completion of the Sale and Purchase Agreement, a total of 31,850,000 Consideration
Shares will be issued, representing (i) approximately 3.08% of the issued share capital
of the Company as at the Latest Practicable Date; and (ii) approximately 2.98% of the
issued share capital of the Company as enlarged by the issue of the Consideration
Shares.
The table below demonstrates the shareholding structure of the Company (i) as at
Latest Practicable Date; and (ii) immediately after the issue of the Consideration
Shares:
Shareholder
As at the Latest
Practicable Date
Immediately after the issue
of the Consideration Shares
Number of Shares
%of
total
issued
Shares Number of Shares
%of
total
issued
Shares
Tsinlien 538,189,143 51.97 570,039,143 53.40
Public Shareholders 497,430,982 48.03 497,430,982 46.60
Total 1,035,620,125 100.00 1,067,470,125 100.00
LETTER FROM SOUTH CHINA CAPITAL

–28–

As shown by the above table, the shareholding interests of the public
Shareholders will be reduced from approximately 48.03% to 46.60% immediately after
the issue of the Consideration Shares, representing a minimal dilution of approximately
1.43 percent point.
Although the shareholding interests of the public Shareholders will be diluted in
the above listed extent as a result of the issue of the Consideration Shares, after taking
also into account that (i) the terms of the Sale and Purchase Agreement (including the
Issue Price) were fairly and reasonably set; and (ii) the shareholding interests of the
public Shareholders will be diluted in proportion to their respective shareholdings in
the Company, we are of the view that the aforementioned minimal dilution to the
shareholding interests of the public Shareholders is acceptable.
6. Possible financial effects of the Acquisition
Effect on NAV
As extracted from the 2007 Interim Report, the unaudited consolidated net assets
of Group were approximately HK$7,535.79 million as at 30 June 2007. As confirmed
by the Directors, the Acquisition would lead to an overall increase in the NAV of the
Group resulting from the issue of the Consideration Shares.
Effect on earnings
Upon completion of the Acquisition, Tsinlien Realty will become an indirect
wholly-owned subsidiary of the Company and the Group will fully consolidate the
financial results of Tsinlien Realty into the Company’s financial statements. As
mentioned under the section headed “Business and financial information on Tsinlien
Realty and the Hotel” in this letter, the unaudited loss of Tsinlien Realty for the ten
months ended 31 October 2007 was approximately HK$45.78 million. The Acquisition
would therefore result in an initial reduction in the Group’s earnings. Nevertheless, the
Directors are confident that Tsinlien Realty would be able to turn around its loss
making position within a reasonable period of time after the Hotel start admitting
paying guests in the first quarter of 2008 and thereby improving the future earnings of
the Group.
Effect on gearing and working capital
In accordance with the 2007 Interim Report, the Group’s gearing position (as
calculated as total borrowings divided by Shareholders’ fund) was approximately
26.34% as at 30 June 2007. As aforementioned, the Directors confirmed that the Group
intends to satisfy approximately HK$360 million of the Cash Consideration by bank
loan. The Group’s total borrowings would be increased by the same amount
consequently; whereas the Shareholders’ fund would also be increased by the principal
amount of the Consideration Shares, being HK$265 million. Accordingly, the Directors
confirmed that the gearing position of the Group would be slightly increased due to the
Acquisition.
LETTER FROM SOUTH CHINA CAPITAL

–29–

In addition, the working capital of the Group would also be reduced by
approximately HK$200 million at the date of completion of the Sale and Purchase
Agreement, being the portion of the Cash Consideration which will be financed by
internal resources of the Group.
It should be noted that the aforementioned analyses are for illustrative purpose
only and does not purport to represent how the financial position of the Company will
be upon completion of the Acquisition.
RECOMMENDATION

Having taken into consideration the above factors and reasons, we are of the opinion
that (i) the terms of the Sale and Purchase Agreement are on normal commercial terms and
are fair and reasonable so far as the Independent Shareholders are concerned; and (ii) the
Acquisition is in the ordinary and usual course of business of the Company and is in the
interests of the Company and Shareholders as a whole. Accordingly, we recommend the
Independent Board Committee to advise the Independent Shareholders to vote in favour of
the ordinary resolution(s) to be proposed at the Extraordinary General Meeting to approve
the Sale and Purchase Agreement and the transactions as contemplated therein and we
recommend the Independent Shareholders to vote in favour of the resolution(s) in this
regard.
Yours faithfully,
For and on behalf of
South China Capital Limited
Graham Lam
Director
LETTER FROM SOUTH CHINA CAPITAL

–30–

The following is the text of the letter and the valuation report received from Knight
Frank Petty Limited, an independent property valuer, prepared for the purpose for
incorporation in this circular, in connection with their valuation of the property held by the
Group as at 30 September 2007.
21 December 2007
The Directors
Tianjin Development Holdings Limited
Suites 07-13, 36/F
China Merchants Tower
Shun Tak Centre
168-200 Connaught Road Central
Hong Kong
Dear Sirs
167 Connaught Road West, Sai Ying Pun, Hong Kong
In accordance with your instructions for us to value the property held by Tsinlien
Realty Limited (“Tsinlien Realty”) in the Hong Kong Special
Administrative Region (the “HKSAR”), we confirm that we have carried out inspections,
made relevant enquiries and obtained such further information as we consider necessary for
the purpose of providing you with our opinion of the market value of the property as at 30
September 2007.
Basis of Valuation
Our valuation is our opinion of the market value of the property which we would
define as intended to mean “the estimated amount for which a property should exchange on
the date of valuation between a willing buyer and a willing seller in an arm’s-length
transaction after proper marketing wherein the parties had each acted knowledgeably,
prudently and without compulsion.”
The market value is the best price reasonably obtainable in the market by the seller and
the most advantageous price reasonably obtainable in the market by the buyer. This estimate
specifically excludes an estimated price inflated or deflated by special terms or
circumstances such as atypical financing, sale and leaseback arrangements, special
APPENDIX I VALUATION REPORT

–31–

considerations or concessions granted by anyone associated with the sale, or any element of
special value. The market value of a property is also estimated without regard to costs of
sale and purchase, and without offset for any associated taxes.
Valuation Methodology
We have valued the property by reference to sale evidence as available in the market.
Valuation Assumptions
We have prepared our valuation in its existing state based on the following
assumptions:
(i) The property will be developed in accordance with the development proposal and
development programme provided to us.
(ii) Modification of the non-offensive trade clause under government lease will be
approved by the government by the end of 2007.
(iii) The design and construction of the development are in compliance with all
relevant ordinances and regulations and have been approved by the relevant
authorities.
We have prepared our valuation on completion basis based on the following
assumptions:
(i) We have valued the market value of the property on completion basis and subject
to a Management Agreement and Memorandum of Understanding in favour of
Marriott Hotel International B.V. and Marriott International Management
Company B.V. respectively as well as the License and Royalty Agreement in
favour of International Hotel Licensing Company and assuming that it is fully
completed as at the date of valuation in accordance with the development
proposal provided to us. A major portion of our valuation attributable to the
business goodwill of the hotel operator. Our valuation is also based on the
assumption that the property is ready for immediate occupation and available for
sale in the market with the benefit of an Occupation Permit and all approvals,
permits and consents from all relevant Government authorities issued without
onerous conditions.
(ii) Modification of the non-offensive trade clause under the government lease has
been approved and the associated land premium and administrative costs have
been fully paid.
(iii) The property is readily available for the operation as a 4-star hotel under the
brand name of “Courtyard”, namely Courtyard by Marriott Hong Kong with
relevant documents, such as Occupation Permit, hotel operation License, duly
issued by the relevant departments as at the date of valuation.
APPENDIX I VALUATION REPORT

–32–

Limiting Conditions
In the course of our valuation, we have relied on a very considerable extent on the
information given by the Group. We have accepted advice given to us on such matters as
Memorandum of Understanding, Management Agreement, License and Royalty Agreement,
particulars of occupancy, development schemes, building plans, numbers of hotel rooms,
average room size, completion date and scheduled operation date of the hotel. Property
details, such as property description and proposed use included in the valuation report
attached are based on information provided to us and are therefore only approximations. We
have no reason to doubt the truth and accuracy of the information provided to us by the
Group which is material to the valuation. We were also advised by the Group that no
material facts have been omitted from the information provided.
We have inspected the exterior and, where possible, the interior of the property.
However, no structural survey has been made, but in the course of our inspection, we did
not note any serious defects. We are not, however, able to report that the property is free
from rot, infestation or any other structural defects. No tests has been carried out on any of
the services. Moreover, we have not carried out investigations on site to determine the
suitability of the ground conditions and services etc for any future development. Our
valuation is prepared on the assumption that these aspects are satisfactory. We have not been
able to carry out on-site measurements to verify the site and floor areas of the property and
we have assumed that the areas shown on the documents handed to us are correct.
No allowance has been made in our report for any charges, mortgages or amounts
owing on any property interest nor for any expenses or taxation which may be incurred in
affecting a sale. Unless otherwise stated, it is assumed that the property interest is free from
encumbrances, restrictions and outgoings of an onerous nature which could affect its value.
In preparing our valuation report, we have complied with the “First Edition of The
HKIS Valuation Standards on Properties” published by the Hong Kong Institute of Surveyors
and all the requirements contained in the provision of Chapter 5 of the Rules Governing the
Listing of Securities issued by The Stock Exchange of Hong Kong Limited.
Our valuation report is attached.
Yours faithfully
For and on behalf of
Knight Frank Petty Limited
Alex S L Ng
MRICS MHKIS RPS(GP)
Executive Director
Enc
Note: Alex S L Ng, M.R.I.C.S., M.H.K.I.S., R.P.S. (G.P.), has been a qualified valuer with Knight Frank Petty
Limited since November 1995 and has 22 years’ experience in the valuation of properties in Hong Kong.
APPENDIX I VALUATION REPORT

–33–

VALUATION REPORT
Property Description and Tenure Particulars of Occupancy
Market value in its
existing state as at
30 September 2007
Market value
on completion
basis as at
30 September 2007
167 Connaught
Road West,
Sai Ying Pun,
Hong Kong
The Remaining
Portion of Marine
Lot Nos 344 and
364
The property comprises a leveled site
with a total site area of approximately
769.51 sq m (8,283 sq ft).
Currently standing on the property is a
31-storey hotel converted from an
office building which was originally
built in 1993. The conversion work
has been completed by November
2007.

The hotel is planned to provide a total
of 245 rooms (including 5 suites, 170
king rooms and 70 twin rooms) with
gymnasium room, food & beverage
services and car parking spaces. The
total gross floor area of the building is
approximately 11,472.34 sq m
(123,488 sq ft.).
The proposed uses of the hotel is as
follows:–
The property was under
conversion works as at the
date of valuation. The
scheduled date of
commencement of hotel
operation is in the 1st quarter
of 2008.
The property is subject to a
Memorandum of
Understanding, Management
Agreement and License and
Royalty Agreement and is to
be operated under the brand
name of “Courtyard”, namely
Courtyard by Marriott Hong
Kong.
The initial term of the
Management Agreement and
related agreement is 20
years, subject to an agreed
management fee based on
percentage on gross receipt
or operating profit, and shall
be renewed on the same
terms and conditions for 2
renewal periods of 5 years
each upon mutual agreement
of the parties.
HK$772,000,000 HK$825,000,000
Floor Proposed Use
Ground : Reception,
drop-off area
1st, 3rd & 5th
(4th omitted
from floor
numbering)
: Carpark facilities
& back of house
2nd : Restaurant
6th : Executive lounge
& gymnasium
room
7th to 32nd
(13th omitted
from floor
numbering)
: Guest rooms
Marine Lot Nos 344 and 364 are held
under their respective Government
Leases each for a term of 999 years
commencing from 29 September 1897
at a total annual Government rent of
HK$152.
APPENDIX I VALUATION REPORT

–34–

Notes:
1. The registered owner of the property is Tsinlien Realty Limited, previously known as Total Union Limited
vide memorial no UB7594768 dated 8 May 1998.
2. The property is subject to a Legal Charge over Hong Kong Real Property in favour of Citic Capital Markets
Limited as security trustee for the benefit of the finance parties in consideration of all money vide
memorial no 05081600460059 dated 1 August 2005.
3. The property is subject to a Supplemental Legal Charge in favour of Citic Securities Corporate Finance
(HK) Ltd, formerly known as Citic Capital Markets Ltd in consideration of all money vide memorial no
07101502950017 dated 28 September 2007.
4. As per the Government Leases for Marine Lot Nos 344 and 364, users of the lots are generally unrestricted,
except the usual non-offensive trade clause.
5. The property lies within an area zoned “Commercial/Residential” under Sai Ying Pun & Sheung Wan
Outline Zoning Plan No S/H3/21 dated 17 March 2006.
6. The property is subject to the Memorandum of Understanding and Management Agreement (“MA”) between
Tsinlien Realty Limited (“Owner”) and Marriott International Management Company B.V. and its Affiliates
Marriott Hotels International B.V. (collectively known as “Marriott’) dated 27 February 2006 and 4 May
2007 respectively and the License and Royalty Agreement (“LRA”) between the Owner and International
Hotel Licensing Company (“IHLC”), all parties agreed to manage the hotel as a Courtyard System hotel.
Pursuant to the Management Agreement and the License and Royalty Agreement, the property shall be sold
subject to the said Agreements.
7. As advised, the Management Agreement in favour of Tsinlien Realty Limited and Marriott Hotels
International B.V. (“Assignor”) dated 4 May 2007 has been assigned by the Assignor to its Affiliates
Marriott Asia Pacific Management Company Limited (“Assignee”) with effective from 1 August 2007.
8. As per our inspection on 1 August 2007, the property was under conversion works.
9. As advised, modification of the non-offensive trade clause under Government Lease has principally been
approved but subject to administrative fee payment and formal consent letter.
10. As advised, the Occupation Permit of the hotel has been issued in November 2007 and the proposed date of
the commencement of hotel operation will be in about 1st quarter 2008.
11. As advised, the total estimated conversion cost of the property is approximately HK$202,000,000 and the
cost incurred as at 30 September 2007 was approximately HK$162,000,000.
APPENDIX I VALUATION REPORT

–35–

1. RESPONSIBILITY STATEMENT
This circular includes particulars given in compliance with the Listing Rules for the
purpose of giving information with regard to the Company. The Directors collectively and
individually accept full responsibility for the accuracy of the information contained in this
circular and confirm, having made all reasonable enquiries, that to the best of their
knowledge and belief, there are no other facts not contained in this circular, the omission of
which would make any statement herein misleading.
2. DISCLOSURE OF INTERESTS

As at the Latest Practicable Date, the interests and short positions of the Directors and
chief executive of the Company in the shares, underlying shares and debentures of the
Company and any of its associated corporations (within the meaning of Part XV of the SFO)
which (i) were required to be 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 they
were taken or deemed to have under such provisions of the SFO); or (ii) were required
pursuant to Section 352 of the SFO to be entered in the register referred to therein (the
“Register”); or (iii) were required, pursuant to the Model Code for Securities Transactions
by Directors of Listed Issuers contained in the Listing Rules, to be notified to the Company
and the Stock Exchange, were as follows:
(i) Long position in shares of associated corporation of the Company
Dynasty Fine Wines Group Limited
Name of Director Capacity
Nature of
interest
No. of
shares held
Approximate
percentage
of shares in
issued as at
the Latest
Practicable
Date
Wang Jiandong Beneficial
owner
Personal
interest
36,000 0.003

(ii) Share options in associated corporations of the Company
(a) Tianjin Port Development Holdings Limited
Name of Directors
No. of shares
over which
options are
exercisable
Exercise
price Grant date
Exercisable
from
Exercisable
until
Wang Guanghao 2,300,000 HK$2.28 1 August
2006

1 February
2007

1 August
2016
APPENDIX II GENERAL INFORMATION

–36–

Name of Directors
No. of shares
over which
options are
exercisable
Exercise
price Grant date
Exercisable
from
Exercisable
until
Yu Rumin 1,900,000 HK$2.74 3 February
2007

3 August
2007

3 February
2017

Nie Jiansheng 2,100,000 HK$2.28 1 August
2006

1 February
2007

1 August
2016

(b) Dynasty Fine Wines Group Limited
Name of Directors
No. of shares
over which
options are
exercisable
Exercise
price Grant date
Exercisable
from
Exercisable
until
Wang Guanghao 900,000 HK$3.00 27 January
2005

17 August
2005

26 January
2015

Nie Jiansheng 1,950,000 HK$3.00 27 January
2005

17 August
2005

26 January
2015

Bai Zhisheng 1,100,000 HK$3.00 27 January
2005

17 August
2005

26 January
2015

1,200,000 HK$3.00 1 November
2006

22 May
2007

31 October
2016

As at the Latest Practicable Date, none of the Directors had exercised any
share options in the above associated corporations of the Company.
Save as disclosed above, as at the Latest Practicable Date, none of the
Directors nor chief executive of the Company were interested, or were deemed to
have interests or short positions in the shares, underlying shares and debentures of
the Company or any of its associated corporations (within the meaning of Part XV
of the SFO) which (i) were required to be notified to the Company and the Stock
Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including
interests and short positions which they were taken or deemed to have under such
provisions of the SFO); or (ii) were required, pursuant to section 352 of the SFO,
to be entered in the Register referred to therein; or (iii) were required, pursuant to
the Model Code for Securities Transactions by Directors of Listed Issuers
contained in the Listing Rules, to be notified to the Company and the Stock
Exchange.
APPENDIX II GENERAL INFORMATION

–37–

3. DISCLOSURE OF INTERESTS BY SUBSTANTIAL SHAREHOLDER
As at the Latest Practicable Date, so far as was known to the Directors and chief
executive of the Company, the following person (not being Directors or chief executive of
the Company) had, or was deemed to have, interests or short positions 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 or who was, directly or
indirectly, interested in 10% or more of the nominal value of any class of share capital
carrying rights to vote in all circumstances at general meetings of any other member of the
Group or had any option in respect of such capital were as follows:
(a) Interests in the Company
Name of Shareholder Capacity
No. of Shares/
underlying
Shares held
Approximate
percentage of
total issued
Shares
Tsinlien Group Company
Limited (“Tsinlien”)
(Note)
Interest of
controlled
corporations
538,189,143

(Long Position)
51.97

Note: As at the Latest Practicable Date, Tianjin Investment Holdings Limited (“Tianjin Investment”)
and Tsinlien Venture Capital Company Limited (“Tsinlien Venture”), both being wholly-owned
subsidiaries of Tsinlien, held 536,167,143 Shares and 2,022,000 Shares respectively. By virtue
of the SFO, Tsinlien is taken to have interest in all the Shares held by Tianjin Investment and
Tsinlien Venture.
As at the Latest Practicable Date, Dr. Ren Xuefeng, Mr. Nie Jiansheng, Mr. Dai Yan, Mr. Hu
Chengli and Mr. Zheng Daoquan are directors of Tsinlien.
(b) Interests in other members of the Group
Name of subsidiaries of the
Company
Name of the other
shareholders
Approximate
percentage of
shareholding
Tianjin Jin Zheng Transportation
Development Co., Ltd.
Tianjin Eastern Outer
Ring Road Co., Ltd.
16.07

(Tianjin Port Tax Concession Zone
Chang Hao International Trade Co.,
Ltd.)
10.00

Tianjin Gangkai Container Service
Co., Ltd.
Sun Victory Enterprise
Company Limited
25.00
APPENDIX II GENERAL INFORMATION

–38–

Name of subsidiaries of the
Company
Name of the other
shareholders
Approximate
percentage of
shareholding
Tianjin Tai Kang Industrial Co., Ltd. Tianjin Tai Xin Industrial
Co., Ltd.
17.26

Tianjin Airfreight Port Equipment
Manufacturing Company Limited
Civil Aviation University
of China
10.47

Tianjin Gangjin Real Estate
Development Co., Ltd.
Tianjin Eastern Outer
Ring Road Co., Ltd.
16.07

(Tianjin Gangxin Container
Logistics Co., Ltd.)
Gold Prime Holdings
Limited
( )
25.00

(Tianjin Gangshi Container
Services Co., Ltd.)
(1) Singapore Pacific
Shipping Company
Limited
(
)
25.00

(2) Sinotrans Container
Shipping Company
Limited
(
)
20.00

(Tianjin Port Haifeng Bonded
Logistics Co., Ltd.)
Mapletree Tianjin Free
Port Development
(HKSAR) Limited
49.00

English names of the PRC incorporated companies in this circular are only direct translations
of their respective official Chinese names. In case of inconsistency, the Chinese names shall
prevail.
Save as disclosed above, as at the Latest Practicable Date, the Directors and chief
executive of the Company were not aware of any other person (other than Directors and
chief executive of the Company) who had, or were deemed to have, interests or short
positions in the shares and underlying shares (including any interests in options in respect of
such capital), which would fall to be disclosed to the Company and the Stock Exchange
under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was, directly or
indirectly, interested in 10% or more of the nominal value of any class of share capital
carrying rights to vote in all circumstances at general meetings of any other member of the
Group or had any option in respect of such capital.
APPENDIX II GENERAL INFORMATION

–39–

4. DIRECTORS’ SERVICE AGREEMENTS
As at the Latest Practicable Date, no Director has entered into any service contract
with any member of the Group which is not terminable within one year without payment of
compensation (other than statutory compensation).
5. COMPETING INTEREST

As at the Latest Practicable Date, in so far as the Directors are aware, none of the
Directors or their respective associates (as defined in the Listing Rules) have any interest in
a business which competes or is likely to compete, either directly or indirectly, with the
business of the Group.
6. INTEREST IN ASSETS AND/OR CONTRACTS AND OTHER INTERESTS
As at the Latest Practicable Date, none of the Directors had any direct or indirect
interest in any asset which had been, since 31 December 2006, being the date to which the
latest published audited financial statements of the Company were made up, acquired or
disposed of by or leased to, or are proposed to be acquired or disposed of by or leased to
any member of the Group.
Mr. Cheung Wing Yui, a non-executive Director, is a consultant of Woo, Kwan, Lee &
Lo, the Company’s legal advisers on Hong Kong law in relation to the Acquisition. Woo,
Kwan, Lee & Lo will receive normal fees for professional services rendered in connection
with such transaction.
As at the Latest Practicable Date, save as disclosed above, none of the Directors is
materially interested in any contract or arrangement which is significant in relation to the
business of the Company.
7. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse
change in the financial or trading position of the Group since 31 December 2006 (being the
date to which the latest published audited financial statements of the Company were made
up).
8. LITIGATION

So far as the Directors are aware, neither the Company nor any members of the Group
was engaged in any litigation or arbitration of material importance and no litigation or
arbitration of material importance was pending or threatened against the Company or any
members of the Group as at the Latest Practicable Date.
APPENDIX II GENERAL INFORMATION

–40–

9. QUALIFICATION OF EXPERTS
The followings are the qualifications of the experts who have given opinion or advice
contained in this circular:
Name Qualification
South China Capital a deemed licensed corporation to carry out type 6
(advising on corporate finance) regulated activity
as set out in Schedule 5 to the SFO
Knight Frank An independent qualified property valuer
10. EXPERTS’ INTERESTS IN ASSETS
As at the Latest Practicable Date, each of South China Capital and Knight Frank had
no shareholding interest in any member of the Group nor the right (whether legally
enforceable or not) to subscribe for or to nominate persons to subscribe for securities of any
member of the Group. As at the Latest Practicable Date, each of South China Capital and
Knight Frank had no direct or indirect interests in any assets which had since 31 December
2006 (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.
11. CONSENT OF EXPERTS

Each of South China Capital and Knight Frank has given and has not withdrawn its
written consent to the issue of this circular with the inclusion of its letter and/or reference to
its name included in this circular in the form and context in which it appears. The letter
from South China Capital is given as at the date of this circular for incorporation herein.
The valuation report from Knight Frank is given as at the date of this circular for
incorporation herein.
12. GENERAL

(a) The registered office of the Company is at Suites 7-13, 36/F., China Merchants
Tower, Shun Tak Centre, 168-200 Connaught Road Central, Hong Kong.
(b) The company secretary and qualified accountant of the Company is Mr. Tsang
Wai Yip, who holds a bachelor degree in accountancy and is an associate member
of The Institute of Chartered Accountants in England and Wales and the fellow
member of both the Hong Kong Institute of Certified Public Accountants and the
Association of Chartered Certified Accountants.
(c) The share registrar of the Company is Tricor Tengis Limited at 26/F., Tesbury
Centre, 28 Queen’s Road East, Wanchai, Hong Kong whose address is the address
of the transfer office of the Company.
APPENDIX II GENERAL INFORMATION

–41–

(d) The English text of this circular shall prevail over the Chinese text.
13. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the Sale and Purchase Agreement will be available for inspection at the
office of Messrs. Woo, Kwan, Lee & Lo at 26th Floor, Jardine House, 1 Connaught Place,
Central, Hong Kong during normal business hours on any weekday, except public holidays,
from the date of this circular up to and including 4 January 2008.
APPENDIX II GENERAL INFORMATION

–42–

(Incorporated in Hong Kong with limited liability under the Companies Ordinance)
(Stock Code: 882)
NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an extraordinary general meeting of Tianjin
Development Holdings Limited (the “Company”) will be held at Alexandra Room, 2nd
Floor, Mandarin Oriental Hong Kong, 5 Connaught Road Central, Hong Kong on 16 January
2008 at 3:00 p.m. for the purpose of considering and, if thought fit, passing with or without
amendments, the following resolution as ordinary resolution:
ORDINARY RESOLUTION

“THAT:
(i) the conditional sale and purchase agreement (the “Sale and Purchase
Agreement”) dated 3 December 2007 entered into among (i) the Company, (ii)
Championwin Limited (“Championwin”), an indirect wholly-owned subsidiary of
the Company, and (iii) Tsinlien Group Company Limited (“Tsinlien”) (a copy of
which is tabled at the meeting and marked “A” and initialed by the chairman of
the meeting for identification purposes), whereby Championwin agreed to
purchase and Tsinlien agreed to sell (i) the entire issued share capital of Tsinlien
Realty Limited (“Tsinlien Realty”) and (ii) all the shareholder’s loan advanced by
Tsinlien to Tsinlien Realty at the completion of the Sale and Purchase Agreement,
for a total consideration of HK$825,000,000 which will be satisfied as to
HK$560,000,000 paid in cash and as to the balance thereof, being
HK$265,000,000, by the allotment and issue of 31,850,000 new shares of
HK$0.10 each in the share capital of the Company (collectively the
“Consideration Shares”) at an issue price of approximately HK$8.32 per share to
Tsinlien or its nominee(s) be and are hereby approved, confirmed and ratified and
the directors (the “Directors”) of the Company be and are hereby authorized to
do all such acts and things and execute all such documents which they consider
necessary, desirable or expedient for the implementation of and giving effect to
the Sale and Purchase Agreement and the transactions contemplated thereunder;
and
(ii) conditional upon the Listing Committee of The Stock Exchange of Hong Kong
Limited granting the listing of, and the permission to deal in, the Consideration
Shares, the allotment and issue of the Consideration Shares of HK$0.10 each of
the Company credited as fully paid at an issue price of approximately HK$8.32
per Consideration Share to the Tsinlien or its nominee(s) pursuant to the Sale and
Purchase Agreement be and is hereby approved and any Director be and is hereby
authorised to allot and issue the Consideration Shares in accordance with the
NOTICE OF EXTRAORDINARY GENERAL MEETING

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terms of the Sale and Purchase Agreement and to take all steps necessary,
desirable or expedient in his opinion to implement or give effect to the allotment
and issue of the Consideration Shares.”
By Order of the Board
Tianjin Development Holdings Limited
Ren Xuefeng
Chairman
Hong Kong, 21 December 2007
Notes:
(1) Any member entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend
and, on a poll, to vote instead of him. A proxy need not be a member of the Company.
(2) To be valid, the form of proxy, together with the power of attorney or other authority, if any, under which it
is signed or a notarially certified copy of such power of attorney or authority, must be deposited at the
Company’s share registrar, Tricor Tengis Limited at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai,
Hong Kong not less than 48 hours before the time appointed for the holding of the meeting (or any
adjournment thereof, as the case may be).
(3) The ordinary resolution as set out above will be determined by way of poll.
(4) The translation into Chinese language of this notice is for reference only. In case of any inconsistency, the
English version shall prevail.
(5) As at the date of this notice, the Board consists of sixteen Directors, namely Dr. Ren Xuefeng, Mr. Yu
Rumin, Mr. Nie Jiansheng, Mr. Dai Yan, Mr. Hu Chengli, Dr. Wang Jiandong, Mr. Bai Zhisheng, Mr. Zhang
Wenli, Mr. Sun Zengyin, Dr. Zong Guoying and Mr. Zheng Daoquan as executive Directors; Mr. Wang
Guanghao and Mr. Cheung Wing Yui as non-executive Directors; and Mr. Kwong Che Keung, Gordon, Mr.
Lau Wai Kit and Dr. Cheng Hon Kwan as independent non-executive Directors.
NOTICE OF EXTRAORDINARY GENERAL MEETING

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