2021-11-10 Documents on Display (Multi-Files)-Letter from the Independent Financial Adviser

11 November 2021

To: the Independent Board Committee and

the Independent Shareholders of C&D International Investment Group Limited

Dear Sirs and Madams,

DISCLOSEABLE AND CONNECTED TRANSACTION

IN RELATION TO THE ACQUISITION OF

1. 90% EQUITY INTERESTS OF CHANGSHA ZHAOXIANG; AND
2. 100% EQUITY INTERESTS OF XIAMEN ZHAODINGLONG

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee and the independent Shareholders in relation to the Equity Transfer Agreements and the transactions contemplated thereunder (the ''Transactions''), details of which are set out in the letter from the Board (the ''Letter from the Board'') in the circular issued by the Company to the Shareholders dated 11 November 2021 (the ''Circular''), of which this letter forms part. Capitalised terms used in this letter shall have the same meanings as those defined in the Circular unless the context otherwise requires.

Reference is made to the announcement of the Company dated 9 September 2021.

BACKGROUND OF THE TRANSACTIONS

1. Changsha Zhaoxiang Equity Transfer Agreements

On 9 September 2021, Yi Yue and Xiamen Zhaoyirong, indirect wholly-owned subsidiaries of the Company, entered into the Changsha Zhaoxiang Equity Transfer Agreements with C&D Real Estate, pursuant to which, among other things, C&D Real Estate agreed to sell and Yi Yue and Xiamen Zhaoyirong agreed to purchase 85% and 5% equity interests in Changsha Zhaoxiang, respectively (the ''Changsha Acquisition''). The cash consideration under the Changsha Zhaoxiang Equity Transfer Agreements shall be RMBNil. Yi Yue and Xiamen Zhaoyirong shall repay the shareholder's loan (principal and interests) of approximately RMB1,667,211,000 (as at the Latest Practicable Date and subject to adjustment) previously advanced by C&D Real Estate to Changsha Zhaoxiang in accordance with the proportion of the equity interests in Changsha Zhaoxiang to be held by Yi Yue and Xiamen Zhaoyirong.

(ii) Xiamen Zhaodinglong Equity Transfer Agreements

On 9 September 2021, Shanghai Shenggao and Xiamen Zhaoyirong, indirect wholly- owned subsidiaries of the Company, entered into the Xiamen Zhaodinglong Equity Transfer Agreements with C&D Real Estate and Xiamen Liyuan, pursuant to which, among other things, C&D Real Estate and Xiamen Liyuan agreed to sell and Shanghai Shenggao and Xiamen Zhaoyirong agreed to purchase 95% and 5% equity interests in Xiamen Zhaodinglong, respectively (the ''Shanghai Acquisition''). The cash consideration under the Xiamen Zhaodinglong Equity Transfer Agreements shall be RMBNil. Shanghai Shenggao and Xiamen Zhaoyirong shall repay the shareholder's loan (principal and interests) of approximately RMB660,398,000 (as at the Latest Practicable Date and subject to adjustment) previously advanced by C&D Real Estate to Xiamen Zhaodinglong in accordance with the proportion of their respective equity interests in Xiamen Zhaodinglong to be held by Shanghai Shenggao and Xiamen Zhaoyirong.

With effect from completion of the transactions contemplated under (i) the Changsha Zhaoxiang Equity Transfer Agreements and (ii) Xiamen Zhaodinglong Equity Transfer Agreements, (i) Yi Yue and Xiamen Zhaoyirong will hold 85% and 5% equity interest in Changsha Zhaoxiang and (ii) Shanghai Shenggao and Xiamen Zhaoyirong will hold 95% and 5% equity interests in Xiamen Zhaodinglong, respectively. Accordingly, each of Changsha Zhaoxiang and Xiamen Zhaodinglong will become an indirect wholly-owned subsidiary of the Company and each of their financial results will be consolidated into the consolidated financial statements of the Company.

LISTING RULE IMPLICATION

As announced by the Company on 7 May 2021 and 13 August 2021 and 12 October 2021, whereby it was announced that (i) on 7 May 2021, Yi Yue and Xiamen Zhaoyirong entered into the Zhuzhou Yuefa Equity Transfer Agreements with C&D Real Estate, pursuant to which C&D Real Estate agreed to sell and Yi Yue and Xiamen Zhaoyirong agreed to purchase 95% and 5% equity interests in Zhuzhou Yuefa, respectively; and (ii) on 13 August 2021, Xiamen Zhaochengyao entered into the Cooperation Agreement (as amended by the Confirmation Letter) with Xiamen Guoji Xintuo, Fujian Zhaofeng, C&D Jiarun and Xiamen Liyuan, pursuant to which C&D Jiarun and Xiamen Liyuan agreed to sell and the joint venture agreed to purchase 100% equity interests in Fujian Zhaofeng; and on 12 October 2021, Xiamen Zhaochengyao, Fujian Zhaofeng, C&D Jiarun and Xiamen Liyuan executed, the Confirmation Letter, pursuant to which it is agreed among the parties that the rights and obligations of Xiamen Guoji Xintou under the Cooperation Agreement shall be passed to Xiamen Jiawoxin, in response to the request from Xiamen Guoji Xintuo and Xiamen Jiawoxin. Pursuant to Rule 14A.81 of the Listing Rules, the transactions contemplated under the Equity Transfer Agreements are required to be aggregated with the Previous Transactions.

As one or more of the applicable percentage ratios in respect of the Aggregated Transactions exceeds 5% but is less than 25%, the Aggregated Transactions constitute discloseable transactions under Chapter 14 of the Listing Rules and are subject to the reporting and announcement requirements.

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As (i) C&D Real Estate is a controlling shareholder of the Company and (ii) Xiamen Liyuan is a wholly-owned subsidiary of C&D Real Estate, C&D Real Estate and Xiamen Liyuan are connected persons of the Company. As such, the transactions contemplated under the Equity Transfer Agreements constitute connected transactions under Chapter 14A of the Listing Rules and are subject to reporting, announcement and independent Shareholders approval requirements.

To the best of the knowledge, information and belief of the Directors having made all reasonable enquiries, none of the Directors have material interest in the transactions contemplated under the Equity Transfer Agreements or was required to abstain from voting at the Board meeting.

Well Land (which held 834,008,697 issued Shares, representing approximately 60.53% of the issued share capital of the Company as at the Latest Practicable Date), a subsidiary of C&D Real Estate, shall abstain from voting on the proposed resolutions to approve the transactions contemplated under the Equity Transfer Agreements at the EGM. Save for the aforesaid and to the best of the knowledge, information and belief of the Directors after having made all reasonable enquiries, as at the Latest Practicable Date, no other Shareholder is interested in the transactions contemplated under the Equity Transfer Agreements.

INDEPENDENT BOARD COMMITTEE

An Independent Board Committee comprising all the independent non-executive Directors, namely Mr. Wong Chi Wai, Mr. Wong Tat Yan, Paul and Mr. Chan Chun Yee, has been established to consider and advise the Shareholders as to whether the terms of the Equity Transfer Agreements and the transactions contemplated thereunder are (i) fair and reasonable;

1. on normal commercial terms or better and in the ordinary and usual course of business of the Company; (iii) in the interests of the Company and its shareholders as a whole; and (iv) how the independent Shareholders should vote in favour of the Transactions. None of the members of the Independent Board Committee has any material interest in the Transactions.

In our capacity as the Independent Financial Adviser to the Independent Board Committee and the independent Shareholders for the purpose of the Listings Rules, our role is to give an independent opinion to advise the Independent Board Committee and the independent Shareholders as to whether the terms of the Equity Transfer Agreements and the transactions contemplated thereunder are (i) fair and reasonable; (ii) on normal commercial terms or better and in the ordinary and usual course of business of the Company; (iii) in the interests of the Company and its Shareholders as a whole; and (iv) how the independent Shareholders should vote in favour of the Transactions.

OUR INDEPENDENCE

As at the Latest Practicable Date, we, DL Securities (HK) Limited (''DL Securities''), are independent from and not connected with the Group or any of their respective associates pursuant Rule 13.84 of the Listing Rules. For the past two years up to the Latest Practicable Date, we have not acted as a financial adviser or independent financial adviser to the Group or any of their respective. In addition, we are not aware of the existence of or change in any circumstances that would affect our independence. Apart from normal professional fees

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payable to us for our service to the Company in connection with this appointment, no arrangement exists whereby we shall receive any other fees or benefits from the Group or any of their respective associates. We, therefore, considered ourselves eligible to give independent advice on the Changsha Acquisition and Shanghai Acquisition and the transactions contemplated under the Equity Transfer Agreements.

BASIS OF OUR OPINION

In formulating our opinion and recommendation to the Independent Board Committee and the independent Shareholders in relation to the terms of the Equity Transfer Agreements and the transactions contemplated thereunder, we have relied on the information, facts and representations contained or referred to in the Circular and the information, facts and representations provided by, and the opinions expressed by the Directors, management of the Company and its subsidiaries (the ''Management''). We have assumed that all information, facts, opinions and representations made or referred to in the Circular were true, accurate and complete at the time they were made and continued to be true and that all expectations and intentions of the Directors and the Management, will be met or carried out as the case may be. We have no reason to doubt the truth, accuracy and completeness of the information, facts, opinions and representations provided to us by the Directors, the Management and its subsidiaries. The Directors jointly and severally accept full responsibility for the accuracy of the information contained in the Circular and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in the Circular have been arrived at after due and careful consideration and there are no other facts not contained in the Circular, the omission of which would make any statement in the Circular misleading. We have also sought and received confirmation from the Directors that no material facts have been omitted from the information supplied and opinions expressed.

We consider that we have been provided with, and we have reviewed sufficient information to reach an informed view, to justify relying on the accuracy of the information contained in the Circular and to provide a reasonable basis for our opinion. We have no reason to doubt that any relevant material facts have been withheld or omitted from the information provided and referred to in the Circular or the reasonableness of the opinions and representations provided to us by the Directors and the Management. We have not, however, conducted any independent verification of the information provided, nor have we carried out any independent investigation into the business, financial conditions and affairs of the Company or its future prospects.

Based on the foregoing, we confirm that we have taken all reasonable steps, which are applicable to the Transactions, as referred to in Rule 13.80 of the Listing Rules (including the notes thereof) in formulating our opinion and recommendation. This letter is issued for the information for the Independent Board Committee and the independent Shareholders solely in connection with their consideration of the terms of the Equity Transfer Agreements and the transactions contemplated thereunder, except for its inclusion in the Circular, is not to be quoted or referred to, in whole or in part, nor shall this letter be used for any other purposes, without our prior written consent.

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PRINCIPAL FACTORS AND REASON CONSIDERED

In arriving at our opinion to the Independent Board Committee and the independent Shareholders, we have considered the following principal factors and reasons:

1. Background of the Transactions

1.1 Information of the Company and the Group

The Company is a company incorporated in the Cayman Islands with limited liability and the issued Shares of which have been listed on the Main board of the Stock Exchange. The Company is an investment holding company and the holding company of the Group.

The Group is principally engaged in the business of property development, real estate industrial chain investment services and emerging industry investment. During the Period, the main source of revenue for the Company derived from sales of properties.

Set out below is a summary of the consolidated financial information of the Company for the years ended 31 December 2019 and 2020 as extracted from the annual report of the Company for the year ended 31 December 2020 (''2020 Annual Report'') and the unaudited consolidated financial performance for the six months ended 30 June 2021 as extracted from the interim report of the Company for the six months ended 30 June 2021 (''2021 Interim Report'').

Consolidated income statement

	For the year ended	For the six months ended
	31 December	30 June
	2019		2020	2020		2021
	RMB'000	RMB'000	RMB'000	RMB'000
	(audited)	(audited)	(unaudited)	(unaudited)
	(restated)			(restated)
Revenue
- Sales of properties	17,105,290		42,460,248	2,377,133		8,216,069
- Others	213,974		284,230	85,620		180,206
	17,319,264		42,744,478	2,462,753		8,396,275
Profit for the period/year
attributable to:
- Equity holders
of the Company	1,717,993		2,321,625	151,105		303,188
- Non-controlling interests	279,578		446,214	(35,623)		26,089
	1,997,571		2,767,839	115,482		329,277

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