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I.ODICIDG LONKING HOLDINGS LIMITED Jft lllli mtfim*itJ*

(lncorporated in the Cayman Islands with limited liability)

(Stock code: 3339)

RENEWAL OF

CONTINUING CONNECTED TRANSACTIONS

WITH LONYAN CITY JINLONG MACHINERY COMPANY LIMITED

References are made to the announcements of the Company dated 7 December 2009, 28 March

2011 and 31 December 2012 in relation to the continuing connected transactions contemplated under the Existing Master Purchase Agreement.

As the Existing Master Purchase Agreement will expire on 31 December 2013, the Company and Jinlong on 31 December 2013 entered into the Renewed Master Purchase Agreement to renew the terms of the Existing Master Purchase Agreement for a period of three years commencing from l January 2014 to 31 December 2016.

As at the date of this announcement, Jinlong is owned as to 82.67% by Mr. Ngai. Mr. Ngai is the brother of Ms. Ngai Ngan Ying, the deputy chairman and a non-executive director of the Company, and thus is an associate of Ms. Ngai Ngan Ying. Accordingly, Jinlong is a connected person of the Company under the Listing Rules.

As each of the applicable percentage ratios (other than the profits ratio) in respect of the continuing connected transactions contemplated under the Renewed Master Purchase Agreement is on an annual basis expected to be more than 0.1% but less than 5%, such transactions constitute continuing connected transactions under Rule 14A.34 of the Listing Rules and are thus subject to the reporting and announcement requirements set out in Rules 14A.45 to 14A.47 of the Listing Rules, the annual review requirements set out in Rules 14A.37 to 14A.40 of the Listing Rules and the requirements set out in Rules 14A.35(1) and 14A.35(2) of the Listing Rules, but are exempt from the independent shareholders ' approvai requirements under Chapter 14A of the Listing Rules.

* Far identification purposes only

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References are made to the announcements of the Company dated 7 December 2009, 28 March 2011 and 31 December 2012 in relation to the continuing connected transactions contemplated under the Existing Master Purchase Agreement.

BACKGROUND

On 31 December 2012, the Company entered into the Existing Master Purchase Agreement with Jinlong pursuant to which the Group agreed to purchase the Parts from Jinlong from time to time for the period from 1 January 2013 to 31 December 2013.
The Existing Master Purchase Agreement will expire on 31 December 2013. RENEWAL OF THE EXISTING MASTER PURCHASE AGREEMENT The Renewed Master Purchase Agreement
Date : 31 December 2013
Parties : (1) the Company, as purchaser
(2) Jinlong, as supplier
Subject : Pursuant to the Renewed Master Purchase Agreement, the Company will purchase the Parts from Jinlong from time to time during the term of the Renewed Master Purchase Agreement.
Term : The Renewed Master Purchase Agreement will take effect from 1
January 2014 and expire on 31 December 2016.
Price : The Parts will be sold to the Group by Jinlong at a purchase price to be determined based on the estimated cost incurred by Jinlong in providing the Parts plus a profit which is agreed between Jinlong and the Company as being no more than 25% of the actual cost incurred by Jinlong. The purchase price of the Parts to be sold to the Group by Jinlong is determined based on arm's length negotiation between the Group and Jinlong and compares favourably with (i) the terms offered by Jinlong to independent third-party customers, and (ii) the terms offered to the Company by independent third-party suppliers.

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Historical transaction records

For the three years ended on 31 December 2012 and the eleven months ended on 30 November 2013, the aggregate purchase amount (including value added tax) paid by the Group to Jinlong for the purchase of the Parts amounted to approximately RMB48 million, RMB53 million, RMB23 million and RMB38 million (equivalent to approximately HK$62 million, HK$68 million, HK$29 million and HK$49 million), respectively.

Annual cap

The Directors estimate that the aggregate purchase amount of the Parts to be paid by the Group to Jinlong pursuant to the transactions under the Renewed Master Purchase Agreement for each of the three years ending 31 December 2016 will not exceed RMB55 million (including value added tax), RMB66million (including value added tax) and RMB75 million (including value added tax) (equivalent to approximately HK$70 million, HK$85 million and HK$96 million), respectively. The proposed annual caps were determined with reference to the historical values of such transactions and the estimated increase in the growth of the Group's business and thus the Group's demand for the Parts.
The consideration under the Renewed Master Purchase Agreement will be satisfied by internal funds of the Company. The Company will pay the relevant purchase amounts of the Parts to Jinlong in full by way of remittance or bank's acceptance bill within 60 days of the day when the Company recognises the purchase from Jinlong in its financial accounts, which shall be the 15th and 25th day of each month immediately after the Company receives the value-added tax invoices issued by Jinlong.

REASONS FOR THE PROPOSED CONTINUING CONNECTED TRANSACTIONS

The Group has been sourcing the Parts from Jinlong since November 2004. Given that both Longgong Fujian (being a member of the Group) and Jinlong are located in Longyan City in the Fujian Province and are located in close proximity to each other, the transactions contemplated under the Renewed Master Purchase Agreement will allow speedy transportation of the Parts from Jinlong to the Group. Besides, the price of the Parts offered by Jinlong to the Group is determined based on the cost of production plus an agreed range of margin based on arm's length negotiation between Jinlong and the Group. In view of the foregoing, the Directors therefore are of the view that the entering into of the Renewed Master Purchase Agreement will benefit the Company and its shareholders as a whole and allow the Group to enhance its operational efficiency.

IMPLICATIONS UNDER THE LISTING RULES

As at the date of this announcement, Jinlong is owned as to 82.67% by Mr. Ngai. Mr. Ngai is the brother of Ms. Ngai Ngan Ying, the deputy chairman and a non-executive director of the Company, and thus is an associate of Ms. Ngai Ngan Ying. Accordingly, Jinlong is a connected person of the Company under the Listing Rules. As each of the applicable percentage ratios (other than the profits

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ratio) in respect of the continuing connected transactions contemplated under the Renewed Master Purchase Agreement is on an annual basis expected to be more than 0.1 % but less than 5%, such transactions constitute continuing connected transactions under Rule 14A.34 of the Listing Rules and are thus subject to the reporting and announcement requirements set out in Rules 14A.45 to 14A.47 of the Listing Rules, the annual review requirements set out in Rules 14A.37 to 14A.40 of the Listing Rules and the requirements set out in rules 14A.35(1) and 14A.35(2) of the Listing Rules, but are exempt from the independent shareholders' approval requirements under Chapter 14A of the Listing Rules.
The Directors (including the independent non-executive Directors) consider that the transactions contemplated under the Renewed Master Purchase Agreement are entered into in the usual and ordinary course of business of the Group and the terms of the transactions have been negotiated and will be conducted on an arm's length basis and on normal commercial terms between Jinlong and the Company. The Directors (including the independent non-executive Directors) are of the view that as far as the Company and its shareholders are concerned, the transactions under the Renewed Master Purchase Agreement and the terms thereof are fair and reasonable and in the interests of the Company and its shareholders as a whole. Save for Ms. Ngai Ngan Ying, who is the sister of Mr. Ngai, and Mr. Li San Yim, who is the brother-in-law of Mr. Ngai, are considered to have a material interest in the transactions contemplated under the Renewed Master Purchase Agreement and have abstained from voting on the relevant board resolutions approving the same, the other Directors do not have any material interest in the transactions contemplated under the Renewed Master Purchase Agreement.

GENERAL

The Group is principally engaged in the manufacture of wheel loaders and other infrastructure machinery in the PRC. It also manufactures axles and transmission, which are critical components for wheel loaders. Jinlong is currently engaged in the business of manufacture and sale of the Parts.

DEFINITIONS

In this announcement, the following expressions shall have the following meanings unless the context otherwise requires:
"associate" has the same meaning as given to it under the Listing Rules
"Board" the board of Directors
"Company" Lonking Holdings Limited, a company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the main board of the Stock Exchange
"connected person" has the same meaning as given to it under the Listing Rules

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"Director(s)" the director(s) of the Company
"Existing Master Purchase
Agreement"
the master purchase agreement dated 31 December 2012 entered into between the Company and Jinlong, pursuant to which the Group agreed to purchase the Parts from Jinlong from time to time
for a period from 1 January 2013 to 31 December 2013
"Group" the Company and its subsidiaries
"HK$" Hong Kong dollar, the lawful currency of Hong Kong
"Hong Kong" the Hong Kong Special Administrative Region of the People's
Republic of China
"Jinlong"