Huarong Investment Stock : DISCLOSEABLE TRANSACTION - FINANCE LEASING ARRANGEMENT WITH YOUHE DAOTONG AVIATION CO., LTD.

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(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2277) DISCLOSEABLE TRANSACTION FINANCE LEASING ARRANGEMENT WITH YOUHE DAOTONG AVIATION CO., LTD.

On 21 August 2017 (after trading hours), the Lessor, an indirect wholly-owned subsidiary of the Company, the Lessee and the Security Providers entered into the Credit Framework Agreement, pursuant to which the Lessor agreed to purchase two aircrafts, being the Leased Assets, from the Lessee up to a total consideration of not more than RMB400 million (equivalent to approximately HK$464 million), and following which, the Lessor has agreed to lease back such Leased Assets to the Lessee for a term of 5 years from the date of delivery of such Leased Assets at an estimated total lease payment of approximately RMB487 million (equivalent to approximately HK$565 million).

As one or more of the applicable percentage ratios as defined under the Listing Rules in relation to the transactions contemplated under the Credit Framework Agreement exceed 5% and are below 25%, the transactions contemplated under the Credit Framework Agreement constitute discloseable transactions for the Company and are subject to the notification and announcement requirements under Chapter 14 of the Listing Rules.

The Board is pleased to announce that, on 21 August 2017 (after trading hours), the Lessor, an indirect wholly-owned subsidiary of the Company, the Lessee and the Security Providers entered into the Credit Framework Agreement, pursuant to which the Lessor agreed to purchase two aircrafts, being the Leased Assets, from the Lessee up to a total consideration of not more then RMB400 million (equivalent to approximately HK$464 million), and following which, the Lessor has agreed to lease back such Leased Assets to the Lessee for a term of 5 years from the date of delivery of such Leased Assets at an estimated total lease payment of approximately RMB487 million (equivalent to approximately HK$565 million).

PRINCIPAL TERMS OF THE CREDIT FRAMEWORK AGREEMENT Date 21 August 2017 (after trading hours) Parties (1) Lessor;

1. Lessee; and

2. the Security Providers.

Subject matter The Lessor agreed to purchase two aircrafts, being the Leased Assets, from the Lessee and following which, to lease back the Leased Assets to the Lessee after each purchase, subject to the terms and conditions of the Agreements. Consideration The consideration payable by the Lessor to the Lessee will be set out in each separate Purchase Agreement for purchase of the Leased Assets, and in any event will not be more than RMB400 million in aggregate (equivalent to approximately HK$464 million).

The purchase price shall be paid by the Lessor to the Lessee in two installments after satisfaction of certain condition precedents, including, amongst others, (i) the Credit Framework Agreement having been signed and becoming unconditional; (ii) the Security Documents having been signed and becoming effective; and (iii) the Agreements having been signed and executed.

Under the Credit Framework Agreement, the carrying value of the Leased Assets was estimated to be approximately RMB400 million in aggregate (equivalent to approximately HK$464 million). The Lessor plans to fund the purchase price of the Leased Assets through its internal resources.

Lease period 5 years, commencing on the delivery date of each aircraft. Lease payment and other fees

Pursuant to each Finance Lease Agreement, during the relevant lease period, the Lessor is entitled to receive a lease payment, to be paid in quarterly installment throughout such lease period. The lease payment consists of:

1. the principal lease amount, which is equal to the total consideration paid for the Leased Assets under each Purchase Agreement, and in any event, will not be more than RMB400 million in aggregate (equivalent to approximately HK$464 million) under all Finance Lease Agreements; and

2. an interest, which is set at 305BP over five years or above benchmark loan interest rate by the People's Bank of China. Based on the current interest rate of the People's Bank of China, the total interest to be received by the Lessor under all Finance Lease Agreements will be approximately RMB87 million in aggergate (equivalent to approximately HK$101 million).

Ownership of the Leased Assets

The legal title of the Leased Assets shall vest in the Lessor throughout the lease period.

Buyback Upon expiry of the relevant lease period and subject to the settlement of all rental payment, interest, and amounts due to the Lessor, the Lessor will sell and the Lessee will purchase each aircraft at an agreed nominal consideration of RMB100 (equivalent to approximately HK$116), which shall be paid together with the final installment of the lease payment to the Lessor. Securities and guarantees

Obligations of the Lessee under the Agreements are secured and guaranteed by the Security Documents.

The terms of the Agreements, including the purchase price for the Leased Assets, principal lease amount and interest rate were determined after arm's length negotiations between the Lessor and the Lessee with reference to the prevailing market rates for the similar finance leasing arrangement.

REASONS AND BENEFITS FOR ENTERING INTO THE CREDIT FRAMEWORK AGREEMENT AND THE AGREEMENTS

Taking advantage of the rapid growth in the PRC's finance leasing industry, the Lessor has actively pursued investment opportunities with leading and fast growing companies whose business is in industry being encouraged by the PRC government and benefited by the State's "One Belt, One Road" strategy. Aviation industry is a focused area to be developed in order to aid the rapid development of the PRC and countries along The Belt and Road. The Board believes that the Lessee has great development prospects in the aviation industry in the PRC and by entering into of the Agreements, the Company will be able to capture investment opportunities in the aviation industry and potential investment returns in the transactions contemplated under the Credit Framework Agreement and generate stable income for the Group.

Having considered the above, the Directors are of the view that the transactions contemplated under the Credit Framework Agreement are entered into on normal commercial terms and the terms set out in the Credit Framework Agreement are fair and reasonable and in the interests of the Company and the shareholders of the Company as a whole.

INFORMATION OF THE PARTIES

The Lessor and the Group

The Lessor is a company incorporated in the PRC with limited liability and an indirect wholly-owned subsidiary of the Company. The Lessor is principally engaged in the provision of finance leasing business in the PRC.

The Group is principally engaged in the (i) direct investments; (ii) financial services and others; and (iii) foundation and substructure construction services.

The Lessee

The Lessee is a company incorporated in the PRC with limited liability and is principally engaged in the aviation related businesses.

To the best of the Directors' knowledge, information and belief having made all reasonable inquiry, the Lessee and its ultimate beneficial owner(s) are Independent Third Parties.

The Security Providers

Shenzhen Daotong is a company incorporated in the PRC with limited liability and is principally engaged in industrial investment and logistics. As at the date of the announcement, Shenzhen Daotong holds approximately 97.69% of the equity interest of the Lessee.