Xiamen International Port : (1) DISCLOSEABLE TRANSACTIONS AND CONNECTED TRANSACTIONS IN RELATION TO THE PROPOSED CAPITAL INCREASE INTO A SUBSIDIARY (2) PROPOSED ADJUSTMENT TO THE REGISTERED AMOUNT OF THE NEW SUPER SHORT-TERM NOTES AND (3) NOTICE OF THE S (2025)

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Xiamen International Port Co., Ltd, you should at once hand this circular and the accompanying proxy form to the purchaser(s) or the transferee(s) or to the bank, the licensed securities dealer or registered institution or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or the transferee(s).

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

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

(Stock Code: 3378)

1. DISCLOSEABLE TRANSACTIONS AND CONNECTED TRANSACTIONS IN RELATION TO THE PROPOSED CAPITAL INCREASE INTO A SUBSIDIARY
2. 1. PROPOSED ADJUSTMENT TO THE REGISTERED AMOUNT

OF THE NEW SUPER SHORT-TERM NOTES

AND

(3) NOTICE OF THE SECOND EXTRAORDINARY GENERAL MEETING IN 2020

Independent Financial Adviser to the

Independent Board Committee and Independent Shareholders

Capitalised terms used in this cover page have the same meanings as those defined in this circular.

A letter from the Board is set out on pages 4 to 18 of this circular. A letter from the Independent Board Committee containing its recommendation to the Independent Shareholders is set out on pages 19 to 20 of this circular. A letter from the Independent Financial Adviser, First Shanghai, containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 21 to 39 of this circular.

A notice dated 31 August 2020 convening the EGM to be held at 9:00 a.m. on Wednesday, 16 September 2020 at 23rd Floor, Conference Room, No. 31 Donggang North Road, Xiamen, the PRC is set out on pages EGM-1 to EGM-3 in this circular.

The proxy form for use at the EGM is enclosed with this circular and is also published on the website of the Stock Exchange (www.hkexnews.hk) and the website of the Company (www.xipc.com.cn). Whether or not you are able to attend the EGM, you are requested to complete and return as soon as possible the proxy form in accordance with the instructions printed thereon in any event not less than 24 hours before the time fixed for holding the EGM or any adjournment thereof (as the case may be). Completion and return of the proxy form will not preclude you from attending and voting at the EGM or any adjournment thereof in person if you so wish.

31 August 2020

• For identification purpose only

DEFINITIONS

In this circular, the following expressions have the meanings as set out below unless the context requires otherwise:

LETTER FROM THE BOARD

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

Dear Sir or Madam,

1. DISCLOSEABLE TRANSACTIONS AND CONNECTED TRANSACTIONS IN RELATION TO THE PROPOSED CAPITAL INCREASE INTO A SUBSIDIARY

1. PROPOSED ADJUSTMENT TO THE REGISTERED AMOUNT OF THE NEW SUPER SHORT-TERM NOTES

AND

(3) NOTICE OF THE SECOND EXTRAORDINARY GENERAL MEETING IN 2020

INTRODUCTION

Reference is made to (i) the announcement of the Company dated 5 August 2020 in relation to, inter alia, the entering into of the Capital Increase Agreement in respect of the Capital Contribution Transactions for the contribution of additional capital into the Target Company by Xiamen Port Development and Xiamen Port Holding; and (ii) the announcement of the Company dated 5 August 2020 in relation to, inter alia, the proposed issue of the New Super Short-term Notes and the Proposed Adjustment.

* For identification purpose only

LETTER FROM THE BOARD

The purpose of this circular is to provide you with, among other things, (i) further information relating to the Capital Increase Agreement and the Capital Contribution Transactions contemplated thereunder, which includes (a) a letter of recommendation from the Independent Board Committee to the Independent Shareholders regarding the Capital Increase Agreement and the Capital Contribution Transactions contemplated thereunder; (b) a letter of advice by the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders regarding the Capital Increase Agreement and the Capital Contribution Transactions contemplated thereunder; and (c) other information as required to be disclosed under the Listing Rules; (ii) information relating to the proposed issue of the New Super Short-term Notes (including, without limitation, the Proposed Adjustment); and (iii) the notice of the EGM.

1. DISCLOSEABLE TRANSACTIONS AND CONNECTED TRANSACTIONS IN RELATION TO THE PROPOSED CAPITAL INCREASE INTO A SUBSIDIARY

Principal Terms and Conditions Precedent of the Capital Increase Agreement

LETTER FROM THE BOARD

1. the appraised value of Xiamen Haihong's entire equity interest of approximately RMB317,536,100 as at the Benchmark Assessment Date appraised by the PRC Qualified Valuer as approved by the Xiamen SASAC, by adopting an asset-based valuation approach;
2. the corresponding Target Equity Interest of approximately RMB215,423,538 as at the Benchmark Assessment Date immediately upon Completion; and
3. the actual financing needs for the Target Company's long-term business operation and development.

The valuation reports of the Target Company, Xiamen Hailong and Xiamen Haihong are set out in Appendix II, Appendix III and Appendix IV to this circular, respectively.

As part of the Capital Contribution Transactions, (i) the appraised value of the 34.92% effective equity interest in Xiamen Hailong as at the Benchmark Assessment Date deemed to be disposed of by Xiamen Port Development to Xiamen Port Holding amounts to approximately RMB422,079,145; and (ii) the appraised value of the 65.08% effective equity interest in Xiamen Haihong as at the Benchmark Assessment Date deemed to be acquired by Xiamen Port Development from Xiamen Port Holding amounts to approximately RMB206,655,607.

In accordance with the requirements under the Law of the PRC on the State-owned Assets of Enterprises (《中華人民共和國企業國有 資產法》), a minimum transfer price (or an equivalent monetary value) for each deemed transfer of equity interests pursuant to the Capital Increase Agreement shall be reasonably determined on the basis of the appraised values issued by the Xiamen SASAC as these transactions are regarded as transfers of State-owned Assets.

The respective capital contributions by Xiamen Port Development and Xiamen Port Holding are approximately RMB1,208,737,100 (equivalent to the appraised value of the entire equity interest of Xiamen Hailong as disclosed above) and approximately RMB317,536,100 (equivalent to the appraised value of the entire equity interest of Xiamen Haihong as disclosed above). Upon Completion, the respective additional capital contributed by Xiamen Port Development and Xiamen Port Holding will be split in the following manner:

1. Out of Xiamen Port Development's capital contribution at approximately RMB1,208,737,100, RMB597,869,300 and RMB610,867,800 will be applied to the registered capital and the capital reserve of the Target Company, respectively; and
2. Out of Xiamen Port Holding's capital contribution at approximately RMB317,536,100, RMB312,130,700 and RMB5,405,400 will be applied to the registered capital and the capital reserve of the Target Company, respectively.

In addition, any increase in or reduction of the corresponding owners' equity in the Target Company, Xiamen Hailong and Xiamen Haihong for the period between the Benchmark Assessment Date and the date on which their respective industrial and commercial registration changing procedures are completed (each "Relevant Registration Completion Date") (the "Relevant Period") shall belong to and be borne by the original shareholder(s). The parties have agreed that a special audit shall be conducted after each Relevant Registration Completion Date to ascertain any increase in or reduction of these owners' equity during the Relevant Period. In this regard, if a Relevant Registration Completion Date falls on a date which is on or before the 15th day of a calendar month, the audit benchmark date for the adjustment to the owners' equity during the Relevant Period shall end on the last day of the preceding month, and if a Relevant Registration Completion Date falls on a date which is on or after the 16th day of a calendar month, the audit benchmark date for the adjustment to the owners' equity during the Relevant Period shall end on the last day of that month. The parties shall within 10 working days from the issue of the last special audit report enter into a supplemental agreement in respect of any such adjustment and belonging to the owners' equity and carry out the settlements balance within 10 working days after the entering into of the said supplemental agreement in the following manner:

1. Xiamen Port Development should pay all increase in the corresponding owners' equity in the Target Company during the Relevant Period (if any) to Xiamen Port Holding, and Xiamen Port Holding shall pay all reduction in the corresponding owners' equity in the Target Company during the Relevant Period (if any) to Xiamen Port Development, such sum payable should be calculated as the amount of the increase in/reduction of the corresponding owners' equity in the Target Company during the Relevant Period, multiplied by 14.08% (being the percentage of the change of the equity interest in the Target Company before and after Completion as held by Xiamen Port Development or Xiamen Port Holding);
2. Xiamen Port Development should pay all increase in the corresponding owners' equity in Xiamen Haihong during the Relevant Period (if any) to Xiamen Port Holding, and Xiamen Port Holding shall pay all reduction in the corresponding owners' equity in Xiamen Haihong during the Relevant Period (if any) to Xiamen Port Development, such sum payable should be calculated as the amount of the increase in/reduction of the corresponding owners' equity in Xiamen Haihong during the Relevant Period, multiplied by 65.08% (being the percentage of the change of the effective equity interest in Xiamen Haihong before and after Completion as held by Xiamen Port Development or Xiamen Port Holding); and
3. Xiamen Port Holding should pay all increase in the corresponding owners' equity in Xiamen Hailong during the Relevant Period (if any) to Xiamen Port Development, and Xiamen Port Development shall pay all reduction in the corresponding owners' equity in Xiamen Hailong during the

LETTER FROM THE BOARD

LETTER FROM THE BOARD

(iv) the granting of approval by or filing record with the relevant state-owned assets supervision and administration departments regarding matters in respect of the Capital Contribution Transactions, and/or the permission, approval or consent by

Information of the Target Group

The Target Company was established in the PRC in January 2002 and the Target Group is principally engaged in the loading and unloading of bulk cargos, such as coal and iron sand, storage and transportation agent for domestic cargo. The operational assets of the Target Group are primarily located at (i) berths no. 18 and no. 19 at the Dongdu port area, Xiamen; and (ii) berth no. 7 at the Haicang port area, Xiamen. As at the Latest Practicable Date, the equity interest of the Target Company is owned by Xiamen Port Development as to 51% and Xiamen Port Holding as to 49%.

According to the audited consolidated financial statements of the Target Group which were prepared pursuant to the Chinese Enterprises Accounting Standards, (i) the net asset value of the Target Group as at 31 December 2019 amounted to approximately RMB843,743,119; and (ii) the profits (both before and after taxation) of the Target Group for the two years ended 31 December 2018 and 2019 are as follows:

Information of Xiamen Hailong

Xiamen Hailong was established in the PRC in September 2012 and is principally engaged in loading and unloading of bulk/general cargos and storage services (excluding storage and loading and unloading of dangerous chemical goods). As at the Latest Practicable Date, Xiamen Hailong is a wholly-owned subsidiary of Xiamen Port Development. The operational assets of Xiamen Hailong are primarily located at berth no. 20 and no. 21 at the Haicang port area, Xiamen.

According to the audited consolidated financial statements of Xiamen Hailong which were prepared pursuant to the Chinese Enterprises Accounting Standards, (i) the net asset value of Xiamen

LETTER FROM THE BOARD

Hailong as at 31 December 2019 amounted to approximately RMB783,205,842; and (ii) the losses (both before and after taxation) of Xiamen Hailong for the two years ended 31 December 2018 and

2019 are as follows:

Information of Xiamen Haihong

Xiamen Haihong was established in the PRC in December 2006 and is principally engaged in terminal and other port facilities services, loading and unloading of petrochemical products, storage services, vessels-related port services, as well as sewage treatment and recycling. As at the Latest Practicable Date, Xiamen Haihong is a wholly-owned subsidiary of Xiamen Port Holding. The operational assets of Xiamen Haihong are primarily located at berth no. 9 at the Haicang port area, Xiamen.

According to the audited consolidated financial statements of Xiamen Haihong which were prepared pursuant to the Chinese Enterprises Accounting Standards, (i) the net asset value of Xiamen Haihong as at 31 December 2019 amounted to approximately RMB211,293,324; and (ii) the losses (both before and after taxation) of Xiamen Haihong for the two years ended 31 December 2018 and

2019 are as follows:

The original cost of the Target Equity Interest amounts to 14.08% of the aggregate capital contributions made into the Target Group by Xiamen Port Holding since the establishment of the Target Company, which was approximately RMB76,304,505.

The original cost of the Xiamen Port Development's acquisition of the 65.08% effective equity interest in Xiamen Haihong as a result of the Capital Contribution Transactions amounts to 65.08% of the aggregate capital contributions made by Xiamen Port Holding since the establishment of Xiamen Haihong, which was approximately RMB151,249,255.

The Board is of the view that the original costs incurred by Xiamen Port Holding in respect of the Target Equity Interest and Xiamen Haihong have no relevancy to the determination of the Consideration.

Properties

The valuation of the properties held by or to be transferred to the Target Group (the "Enlarged Target Group Properties") as conducted by the PRC Qualified Valuer was approximately RMB3,500,000,000 as at 31 December 2019. Such valuation is different from the valuation of RMB3,453,400,000 as at 31 May 2020 conducted by Savills Valuation and Professional Services Limited ("Savills"), a qualified independent professional valuer, mainly as Savills has assigned no

LETTER FROM THE BOARD

commercial value to certain properties of the Enlarged Target Group with title defects with a total gross floor area of 27,572.65 square metre (the "Defective Enlarged Target Group Properties"), while, given the undertaking from Xiamen Port Holding to rectify the title defects on the Defective Enlarged Target Group Properties, the PRC Qualified Valuer assumed that the title defects of the Defective Enlarged Target Group Properties have been rectified or would have no material legal obstacle to be rectified.

Below is the ownership structure of the Defective Enlarged Target Group Properties. Further details of the Defective Enlarged Target Group Properties are contained in the Property Valuation Report as set out in Appendix I:

The reason for the difference in the assumptions between Savills and the PRC Qualified Valuer is that Savills prepared the property valuation report for the purpose of fulfilling the relevant requirements of the Listing Rules in which the definition of "Market Value" shall be strictly followed. Thus no commercial value was assigned to the Defective Enlarged Target Group Properties as these could not be freely disposed of in the market due to the lack of building ownership certificates as at the date of valuation (which is 31 May 2020). Such valuation approach adopted by Savills complies with the Listing Rules and market conventions in Hong Kong. However, solely for reference purposes, the

LETTER FROM THE BOARD

depreciated replacement cost of the Defective Enlarged Target Group Properties as at the valuation date (which is 31 May 2020) was RMB61,030,000. On the other hand, the PRC Qualified Valuer conducted its valuation on the Enlarged Target Group Properties in accordance with the relevant rules and regulations in the PRC regarding the valuation of state-owned assets, which are solely for the purpose of providing a reference for determining the Contribution. As a result, its valuation on the Enlarged Target Group Properties is made under the assumption that the Enlarged Target Group Properties are in good title to reflect their actual value.

Pursuant to the undertaking given by Xiamen Port Holding under the Capital Injection Agreement in relation to the rectification of the title defects of the Defective Enlarged Target Group Properties (see below), the PRC Qualified Valuer assumed that the Defective Enlarged Target Group Properties shall be treated with legal titles and hence, the PRC Qualified Valuer has assigned commercial values to the Defective Enlarged Target Group Properties and valued such Defective Enlarged Target Group Properties by assuming that the land grant formalities were completed and the land use right certificates and building ownership certificates were obtained.

In view of the above, despite the insignificant difference between the valuations conducted by the PRC Qualified Valuer and Savills, the Board considers that the assumption of "Perfect Title" and valuation methodology adopted by the PRC Qualified Valuer is appropriate as such approach (i) is able to provide a meaningful assessment and embodiment of the actual full functional value of the Defective Enlarged Target Group Properties which can precisely and objectively reflect the fact that these properties have been occupying and being in use during the course of the normal business operations of the Target Group or Xiamen Haihong (as the case may be) without any interruption regardless of the incompleteness of the title documents (see below) so that a reference price can be formed as a basis for determining the Consideration; and (ii) is in compliance with the relevant provisions set out in the Guiding Opinions on Legal Ownership of the Subjects of Valuation (Zhong Ping Xie [2017] No. 48)* (《資產評估對象法律權屬指導意見》(中評協 [2017] 48號)) and consistent with the current market practice in the PRC as to valuation of properties with title defects. In addition, the Consideration determined based on the valuation conducted by PRC Qualified Valuer is fair and reasonable and is in the interest of the Company and its Shareholders as a whole as the Board is of the view that (i) the abovementioned insignificant valuation difference is not material; and (ii) the property with title defects which carries the highest depreciated replacement cost (which is the warehouses nos. 4 and 5 at berths nos. 20 and 21 at the Haicang port area) of RMB42,700,000, representing approximately 70% of the total depreciated replacement cost of the Defective Enlarged Target Group Properties, is currently owned by Xiamen Hailong and therefore the inclusion of which in the valuations has been implicitly deemed as a greater capital contribution by Xiamen Port Development and accordingly is arithmetically beneficial to the Group as to the determination of the Consideration.

As disclosed above, the Defective Enlarged Target Group Properties have been occupying and using during the course of the normal business operations of the Target Group or Xiamen Haihong (as the case may be) without any interruption regardless of the incompleteness of the title documents. To the best of the Directors' knowledge, information and belief, having made all reasonable enquiries, as at the Latest Practicable Date, (i) there has not been any dispute with or any title claim by any third party due to the Defective Enlarged Target Group Properties to any material extent; and (ii) neither Xiamen Port Holding nor the Target Group has received from any governmental authorities any order of penalty, removal or dismantle relating to the Defective Enlarged Target Group Properties which may affect the de facto occupation and use of the Defective Enlarged Target Group Properties by the Enlarged Target Group. In this regard, substantive and continuing progress have been made before the

LETTER FROM THE BOARD

entering into of the Capital Increase Agreement in obtaining valid title documents for the Defective Enlarged Target Group Properties and the Group will, in joint effort with Xiamen Port Holding, continue to use all reasonable endeavours to liaise with the relevant government authorities and other stakeholders and take proactive actions as and when appropriate (i) to minimise and alleviate any material legal impediment that may arise when rectifying the title defects in respect of the Defective Enlarged Target Group Properties; and (ii) to identify, mediate and settle any potential, possible or threatened title dispute or claim by any third party in respect of the Defective Enlarged Target Group Properties which have been made known to the Group and/or Xiamen Port Holding as soon as practicable so as to ensure that the normal business operations of the Enlarged Target Group can be conducted smoothly after Completion. In fact, according to the Board's latest assessment, at present there is no realistic or foreseeable reasonable ground that any such third party title dispute or claim would arise as all of the Defective Enlarged Target Group Properties are merely ancillary infrastructure or fixtures which in effect can only be suitable and exclusively used for the business operations of the Enlarged Target Group at the various berths or port areas. In addition, Xiamen Port Holding has further undertaken to proactively take effective measures (including, without limitation, provision of properties in identical or substantial similar conditions for the operation of the Target Group and/or cash compensation) to compensate and indemnify Xiamen Port Development for any loss arising from or caused by any title defects on the Defective Enlarged Target Group Properties in order to procure that the Enlarged Target Group can continue to normally conduct its business operations. Furthermore, the Defective Enlarged Target Group Properties are only ancillary facilities and have no material effect on the Enlarged Target Group's business operations. Accordingly, in view of the above, the Board considers that the normal business operations of the Enlarged Target Group would not be affected without such land use right certificates and building ownership certificates in respect of the Defective Enlarged Target Group Properties.

Financial Effect of the Capital Contribution Transactions

Upon Completion, (i) the equity interest of the Target Company will be owned by Xiamen Port Development as to 65.08% and Xiamen Port Holding as to 34.92%; (ii) the Target Company will continue to be an indirect non-wholly owned subsidiary of the Company; (iii) Xiamen Hailong will become a direct wholly-owned subsidiary of the Target Company and continue to be an indirect subsidiary of the Company with its effective equity interest to be held by Xiamen Port Development as to 65.08% (which the Board has no intention to sell or dispose of as at the Latest Practicable Date) and Xiamen Port Holding as to 34.92%; and (iv) Xiamen Haihong will become a direct wholly-owned subsidiary of the Target Company and an indirect subsidiary of the Company with its effective equity interest to be held by Xiamen Port Development as to 65.08% and Xiamen Port Holding as to 34.92%.

LETTER FROM THE BOARD

The shareholding structure of the Target Group before and after the completion of the Capital Contribution Transactions is illustrated below:

Before completion of the Capital Contribution Transactions

Xiamen Port Holding

Xiamen Port Development

100%51%

After completion of the Capital Contribution Transactions

The Group does not expect to recognise any immediate disposal gain/loss as a result of its deemed disposal of 34.92% equity interest in Xiamen Hailong to Xiamen Port Holding pursuant to the

LETTER FROM THE BOARD

Capital Increase Agreement as the value of the additional capital to be contributed into the Target Company by Xiamen Port Development (which is the entire equity interest in Xiamen Hailong) is higher than that to be contributed by Xiamen Port Holding (which is the entire equity interest in Xiamen Haihong), which will be resulting in the Group's increase in the proportion of equity holding in the Target Company from 51% to 65.08% upon Completion and hence would eliminate the difference in the abovementioned additional capital contributions so that neither party thereto would record a gain nor suffer a loss in the Capital Contribution Transactions. In addition, no cash consideration will be received or receivable by Xiamen Port Development as a result of the Capital Increase Agreement.

Reasons for and benefits of the entering into of the Capital Increase Agreement

The Board is of the view that the entering into of the Capital Increase Agreement and the Capital Contribution Transactions contemplated thereunder are beneficial to the Group and the Shareholders as a whole as Xiamen Port Development and Xiamen Port Holding intend to utilise the Target Company as a unified platform to integrate their respective internal bulk/general cargo terminal resources for improving overall operating efficiency and for managing their business operation, in particular during the market cultivation period. The Group could (i) take advantage of the sound, valuable and local hands-on business operation experience of the Enlarged Target Group to fully promote synergy effects internally as the Enlarged Target Group will continue to be principally engaged in bulk/general cargo loading and unloading business in Xiamen after Completion, which could be tied up to the Group's existing principal business operation and its long-term development strategy and commercial interest; and (ii) enhance its overall competitiveness externally by solidifying its position as a leading port terminal operator in Xiamen through expansion of customer base, increase of market share and penetration, as well as optimisation of business and operation structure via reasonable resources integration and deployment among the various berths of the Enlarged Target Group to deliver efficient, cost-effective and quality services in the local market of Xiamen Port and the regional markets in the Southeast coastal regions. In addition, by developing Xiamen Port Development into the Group's bulk/general cargo terminal investment and operation platform, the Group is expected to further optimise its asset and business structure to enhance its overall business size and hence its level of revenue and profits by saving of management costs.

The Directors (including all the independent non-executive Directors) have approved the entering into of the Capital Increase Agreement and the Capital Contribution Transactions contemplated thereunder. They have considered the terms of the Capital Increase Agreement are on normal commercial terms, concluded in the ordinary and usual course of business of the Group, and fair and reasonable and are in the interests of the Group and the Shareholders as a whole.

Since (i) Mr. Cai Liqun and Mr. Chen Zhaohui, each being a deputy general manager of Xiamen Port Holding; (ii) Mr. Chen Zhiping, being the chairman of Xiamen Port Holding; (iii) Mr. Fu Chengjing, being a deputy general manager and the chief accountant of Xiamen Port Holding;

1. Mr. Huang Zirong, being the chief engineer of Xiamen Port Holding, and (v) Ms. Bai Xueqing, being a deputy general manager of Xiamen Port Holding, are considered to have a material interest in the Capital Increase Agreement, each of them is required to abstain, and has abstained, from voting on the resolutions passed by the Board for approving the Capital Increase Agreement and the Capital Contribution Transactions thereunder as required under the Listing Rules and the applicable rules and regulations.

LETTER FROM THE BOARD

Listing Rules implications

Since (i) Xiamen Port Holding is the controlling shareholder and a connected person of the Company under the Listing Rules; (ii) the Target Company is a connected subsidiary of the Company pursuant to Rule 14A.16 of the Listing Rules; and (iii) the highest applicable Relevant Ratio in respect of the Capital Contribution Transactions is more than 5% but less than 25%, the Capital Contribution Transactions constitute (i) discloseable transactions of the Company and are subject to the requirements for notification and announcement under Chapter 14 of the Listing Rules; and

1. connected transactions of the Company and are subject to the requirements for notification, announcement and approval by the Independent Shareholders at the EGM.

Information of the parties

The Group is the largest port terminal operator in Xiamen, the PRC, and is also the only group providing full-scale port integrated logistics services in Xiamen. The Group is principally engaged in, inter alia, (i) container loading and unloading and storage for international and domestic trade;

1. bulk/general cargo loading and unloading and storage for international and domestic trade; and
2. port integrated logistics services, which mainly include shipping agency, tallying, tugboat-assisted berthing and unberthing and port-related logistics in Xiamen.

Xiamen Port Development is principally engaged in the provision of the loading/unloading and storage of bulk/general cargo, port integrated logistics services (including shipping agency, tugboat services, transportation services, tallying services and other ancillary logistics services), trading services of commodities, as well as the sale of building materials in Xiamen.

Xiamen Port Holding is the controlling shareholder of the Company. It is principally engaged in, inter alia, (i) management and operation of certain state-owned assets; (ii) investment in different areas such as port, terminal, logistics, information, real estate, hotel, property, tourism and trading; (iii) providing financing; (iv) investment in financial institutions; (v) port development;

1. environmental consultancy services in respect of sea pollution; (vii) information products development; and (viii) providing other port-related services. To the best of the Board's knowledge, information and belief, having made all reasonable enquiries, the ultimate beneficial owner of Xiamen Port Holding is the Xiamen SASAC, which is the authority for supervision and administration of State- owned assets in Xiamen.

Independent Board Committee and the Independent Financial Adviser

The Board has established the Independent Board Committee comprising all the independent non-executive Directors to consider and advise the Independent Shareholders as to whether the Capital Contribution Transactions are conducted in the ordinary and usual course of business of the Company, and whether the terms of the Capital Increase Agreement and the Capital Contribution Transactions are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole. A letter from the Independent Board Committee containing its recommendation to the Independent Shareholders is set out on pages 19 to 20 of this circular.

The Board has appointed First Shanghai as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders as to whether the Capital Contribution Transactions are conducted in the ordinary and usual course of business of the Company, and whether the terms of the Capital Increase Agreement and the Capital Contribution Transactions are

LETTER FROM THE BOARD

on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole. A letter from First Shanghai containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 21 to 39 of this circular.

1. PROPOSED ADJUSTMENT TO THE REGISTERED AMOUNT OF THE NEW SUPER SHORT-TERM NOTES

The Board proposes to seek approval from the Shareholders by way of a special resolution at the EGM to authorise the Company to apply to the NAFMII for the registration of the issue of the New Super Short-term Notes of an aggregate registered maximum principal amount proposed to be adjusted from RMB4,000,000,000 to RMB8,000,000,000 on a rolling basis for a valid period of two years from completion of the registration at the NAFMII, with a view to optimise the debt capital structure, lower the financing cost and satisfy the working capital requirements of the Group in the foreseeable future.

Proposed revised principal terms of the proposed issue of the New Super Short-term Notes are as follows:

In addition to the approval of the Shareholders obtained at the EGM, the proposed issue of the New Super Short-term Notes based on the abovementioned revised principal terms (including, without limitation, the Proposed Adjustment) is also subject to, inter alia, (i) the approval of the NAFMII; and (ii) the completion of the relevant registration procedures with NAFMII.

Furthermore, in order to expedite the proposed issue of the New Super Short-term Notes and the Proposed Adjustment, the Board also proposes to seek approval from the Shareholders at the EGM

LETTER FROM THE BOARD

to authorise one or more of the Directors to, inter alia, determine the specific terms and conditions and other matters in relation to the proposed issue of the New Super Short-term Notes (including, without limitation, the timing of issue, the principal amount and interest rate of each tranche of issue, the underwriters as well as the number of tranches of issue).

EGM

A notice convening the EGM to be held at 9:00 a.m. on Wednesday, 16 September 2020 at 23rd Floor, Conference Room, No. 31 Donggang North Road, Xiamen, the PRC together with the proxy form were issued and despatched to the Shareholders in accordance with the Listing Rules. At the EGM, among other things, resolutions will be proposed to consider, and if thought fit, the Capital Increase Agreement and the Capital Contribution Transactions. Pursuant to Rule 13.39(4) of the Listing Rules, voting at the EGM will be conducted by poll. In addition, pursuant to Rule 14A.36 of the Listing Rules, Xiamen Port Holding and its close associates, which in aggregate hold approximately 68.32% of the total issued Shares as at the Latest Practicable Date, will abstain from voting on the relevant resolution(s) at the EGM.

A notice convening the EGM is set out in this circular.

The proxy form for use at the EGM is enclosed herewith. Whether or not you are able to attend the EGM, you are requested to complete and return as soon as possible the proxy form in accordance with the instructions printed thereon but in any event no later than 24 hours before the time fixed for holding the EGM or any adjournment thereof (as the case may be). Completion and return of the proxy form will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish and in such event, the instrument appointing a proxy shall be deemed to be revoked.

RECOMMENDATION

The Directors (including the independent non-executive Directors) consider that (i) the Capital Increase Agreement and the Capital Contribution Transactions contemplated thereunder, and (ii) the proposed issue of the New Super Short-term Notes and the Proposed Adjustment are in the best interest of the Company and the Shareholders as a whole. Accordingly, the Directors (including the independent non-executive Directors) recommend the Shareholders to vote in favour of the relevant resolutions as set out in the notice of the EGM.

ADDITIONAL INFORMATION

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

Yours faithfully,

By order of the Board

Xiamen International Port Co., Ltd

Cai Changzhen

Company Secretary

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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

(Stock Code: 3378)

31 August 2020

To the Independent Shareholders

Dear Sir or Madam,

DISCLOSEABLE TRANSACTIONS AND CONNECTED TRANSACTIONS

IN RELATION TO THE PROPOSED CAPITAL INCREASE INTO A SUBSIDIARY

We refer to the circular of the Company dated 31 August 2020 (the "Circular") of which this letter forms part. Capitalised terms defined in this letter shall have the same meaning as those defined in the Circular unless otherwise specified.

We have been appointed by the Board to form the Independent Board Committee to consider the terms of the Capital Increase Agreement and advise the Independent Shareholders whether, in our opinion, the terms of the Capital Increase Agreement are fair and reasonable and are in the interests of the Company and the Shareholders as a whole. First Shanghai has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.

We wish to draw your attention to (i) the "Letter from the Board" set out on pages 4 to 18 of the Circular which contains, among others, information about the Capital Increase Agreement; (ii) the letter from First Shanghai set out on pages 21 to 39 of the Circular to the Independent Board Committee and the Independent Shareholders which contains its advice to us in relation to the Capital Increase Agreement and the Capital Contribution Transactions; and (iii) additional information set out in the appendices to the Circular.

Having considered, among other matters, the advice of First Shanghai as stated in its letter of advice, we are of the view that (a) the Capital Contribution Transactions are conducted in the ordinary and usual course of business of the Group; and (b) the terms of the Capital Increase Agreement and the Capital Contribution Transactions are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolution(s) to be proposed at the EGM to approve the Capital Increase Agreement and the Capital Contribution Transactions.

Yours faithfully,

For and on behalf of

The Independent Board Committee

• For identification purpose only

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the full text of the letter to the Independent Board Committee and the Independent Shareholders from First Shanghai dated 31 August 2020 setting out their opinion regarding the proposed Capital Contribution Transactions pursuant to the Capital Increase Agreement for the purpose of inclusion in this circular.

First Shanghai Capital Limited

19th Floor

Wing On House

71 Des Voeux Road Central

Hong Kong

31 August 2020

To the Independent Board Committee and

the Independent Shareholders

Xiamen International Port Co., Ltd.

No. 439, Gangnan Road

Haicang District

Xiamen City

Fujian Province

China

Dear Sirs,

DISCLOSEABLE TRANSACTIONS AND CONNECTED TRANSACTIONS

IN RELATION TO THE PROPOSED CAPITAL INCREASE INTO A SUBSIDIARY

INTRODUCTION

We refer to our engagement as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the proposed Capital Contribution Transactions pursuant to the Capital Increase Agreement, details of which are set out in a circular dated 31 August 2020 (the "Circular") to the Shareholders, of which this letter forms part. Terms used in this letter shall have the same meanings as those defined in the Circular unless the context requires otherwise.

On 5 August 2020, Xiamen Port Development (a non-wholly owned subsidiary of the Company) has entered into the Capital Increase Agreement with Xiamen Port Holding, pursuant to which Xiamen Port Development and Xiamen Port Holding have agreed to contribute additional capital by the injection of the entire equity interest in (i) Xiamen Hailong by Xiamen Port Development; and (ii) Xiamen Haihong by Xiamen Port Holding, into the Target Company, respectively. The total value of the capital injection by Xiamen Port Development and Xiamen Port

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Holding amounts to approximately RMB1,526,273,200, of which the value of the entire equity interest of Xiamen Hailong and Xiamen Haihong amount to approximately RMB1,208,737,100 and RMB317,536,100, respectively.

As at the Latest Practicable Date, the equity interest of the Target Company is owned by Xiamen Port Development as to 51% and Xiamen Port Holding as to 49%. Upon Completion, the equity interest of the Enlarged Target Group will be owned by Xiamen Port Development as to 65.08% and Xiamen Port Holding as to 34.92%, comprising 100% equity interest of each of Xiamen Hailong and Xiamen Haihong thereunder.

LISTING RULES IMPLICATIONS

Since (i) Xiamen Port Holding is the controlling shareholder and a connected person of the Company under the Listing Rules; (ii) the Target Company is a connected subsidiary of the Company pursuant to Rule 14A.16 of the Listing Rules; and (iii) the highest applicable Relevant Ratio in respect of the Capital Contribution Transactions is more than 5% but less than 25%, the Capital Contribution Transactions constitute (a) discloseable transactions of the Company and are subject to the requirements for notification and announcement under Chapter 14 of the Listing Rules; and

1. connected transactions of the Company and are subject to the requirements for notification, announcement and approval by the Independent Shareholders at the EGM.

The Company is going to convene an EGM to consider and, if thought fit, to approve (by way of ordinary resolution(s) and voting will be by way of poll) the entering into of the Capital Increase Agreement and the Capital Contribution Transactions contemplated thereunder. Pursuant to Rule 14A.36 of the Listing Rules, Xiamen Port Holding and its associates, which in aggregate hold approximately 68.32% of the total issued Shares as at the Latest Practicable Date, will abstain from voting on the relevant resolution(s) at the EGM.

THE INDEPENDENT BOARD COMMITTEE

The Independent Board Committee, comprising the five independent non-executive Directors, namely Mr. Liu Feng, Mr. Lin Pengjiu, Mr. You Xianghua, Mr. Jin Tao and Mr. Ji Wenyuan, has been established to consider the Capital Increase Agreement and the transactions contemplated thereunder and to advise the Independent Shareholders on the fairness and reasonableness in relation to the terms of the Capital Contribution Transactions pursuant to the Capital Increase Agreement and the transactions contemplated thereunder.

As the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders, our role is to give an independent opinion to the Independent Board Committee and the Independent Shareholders as to (i) whether or not the Capital Contribution Transactions pursuant to the Capital Increase Agreement are conducted in the ordinary and usual course of business of the Group; (ii) whether or not the terms of the Capital Increase Agreement are on normal commercial terms, in the interests of the Company and the Shareholders as a whole, and fair and reasonable so far as the Independent Shareholders are concerned; and (iii) how the Independent Shareholders should vote in relation to the ordinary resolution(s) to be proposed for approving the Capital Increase Agreement and the transactions contemplated thereunder at the EGM.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

OUR INDEPENDENCE

Independent Shareholders should note that, within the past two years prior to the Latest Practicable Date, we were engaged as the independent financial adviser by the Company to provide independent financial advice to the then Independent Board Committee and the Independent Shareholders for one occasion regarding the renewal of continuing connected transactions of the Company as detailed in the circular of the Company dated 13 November 2018.

Given (i) our independent role in that previous engagement; (ii) none of the members of our parent group is a direct party to the Capital Increase Agreement; and (iii) our independent financial advisory fees for this present engagement in addition to the previous engagement represented an insignificant percentage of revenue of our parent group, we consider that the previous engagement would not affect our independence to form our opinion in respect of these discloseable transactions and connected transactions to be contemplated under the Capital Increase Agreement.

BASIS OF OUR ADVICE

In formulating our opinion, 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, the Company and the management of the Group (the "Management"). We have assumed that all statements, 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, accurate and complete as at the date of the Circular.

We consider that we have (i) obtained all information and documents of the Group, the Target Company, Xiamen Hailong and Xiamen Haihong relevant to an assessment of the fairness and reasonableness of the terms of the Capital Contribution Transactions ; (ii) researched the relevant market and other conditions and trends relevant to the pricing of the Capital Contribution Transactions;

1. reviewed the fairness, reasonableness and completeness of any assumptions or projections relevant to the Capital Contribution Transactions; and (iv) reviewed the opinions and valuations relevant to the Capital Contribution Transactions provided by (a) Savills Valuation and Professional Services Limited ("Savills"), who is a qualified and registered professional surveyor in Hong Kong, in respect of the land and properties held by the Enlarged Target Group as at 31 May 2020 (the "Valuation Report") as set out in Appendix I to the Circular, as well as (b) the PRC Qualified Valuer, namely 福建聯合中和資 產評估土地房地產估價有限公司 (Fujian United Assets Evaluation & Land and Real Estate Appraisal Co., Ltd.) (who being a qualified and independent expert to undertake the asset appraisal works in the PRC, in respect of the appraised value attributable to the Enlarged Target Group ("Appraisal Value") as at 31 December 2019 (the "Appraisal Report(s)"), the summary of which is set out in Appendices II to IV to the Circular, including reviewing the terms of engagement (having particular regard to the scope of work, whether the scope of work is appropriate to the opinion required to be given and any limitations on the scope of work which might adversely impact on the degree of assurance given by the experts' reports, opinions or statements). Based on the foregoing, we confirm that we have taken all reasonable steps, which are applicable to the Capital Contribution Transactions, as referred to in Rule 13.80 of the Listing Rules (including the notes thereto).

We consider that we have reviewed sufficient information, including financial information of the Target Company, Xiamen Hailong and Xiamen Haihong that is to be ultimately acquired by the Group, to reach an informed view and to justify reliance on the accuracy of the information contained in the Circular and to provide a reasonable basis for our recommendation. We have no reason to doubt

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

the truth, accuracy and completeness of the statements, information, facts, opinions and representations provided to us by the Directors, the Company and the Management. The Directors have confirmed to us that no material facts have been omitted from the information supplied and opinions expressed and 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 Group. All 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 that there are no other facts not contained in the Circular the omission of which would make any statement in the Circular misleading. We have relied on such information and opinions and have not however, conducted any independent investigation into the business, financial conditions and affairs or the future prospects of the Group, the Target Group, Xiamen Hailong, Xiamen Haihong and Xiamen Port Holding.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion and recommendation in relation to the Capital Contribution Transactions pursuant to the Capital Increase Agreement, we have considered the following principal factors and reasons:

1. Background of the Group

The Group is the largest port terminal operator in Xiamen City, Fujian Province, the PRC. It is also the only group providing full-scale port integrated logistics services in Xiamen City. The Group is principally engaged in, inter alia, (i) container loading and unloading and storage for international and domestic trade; (ii) bulk/ general cargo loading and unloading and storage for international and domestic trade; (iii) port integrated logistics services, including shipping agency, tallying, tugboat- assisted berthing and unberthing and port-related logistics; as well as (iv) the manufacturing, processing and selling of building materials and the trading of merchandise, in Xiamen City. The H Shares have been listed on the Main Board of the Stock Exchange since 19 December 2005.

Xiamen Port Development is a joint stock limited company established in the PRC, whose A shares are listed on the Shenzhen Stock Exchange since April 1999 and is currently held as to 61.89% by the Company as at the Latest Practicable Date. It is principally engaged in the provision of the loading/unloading and storage of bulk/general cargo, port integrated logistics services (including shipping agency, tugboat services, transportation services, tallying services and other ancillary extended services), trading services of commodities, as well as the sale of building materials in Xiamen City.

The Group currently operates (i) six container terminals, namely the Haitian Container Terminal, Xiamen International Container Terminal, Hairun Terminal, Xiamen Haicang International Container Terminal, Songyu Terminal and Xinhaida Terminal; as well as (ii) the ITG Terminal, Shihushan Terminal, Haiyi Terminal, Haiyu Terminal, Hailong Terminal and Huajin Terminal located at Quanzhou port, which operating bulk/general cargo business in respect of both international and domestic trade. The Group currently operates a total of 33 berths, the aforesaid terminal berths are capable of accommodating the largest container vessels in the world. Shipping routes can reach domestic major ports, as well as major ports including Europe, the United States of America, the Mediterranean Sea, Australia, Southeast Asia and Japan.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

In addition, the Group has leased (i) Haicang berth No. 8 and Songyu berths No. 4 to No. 6 in the Haicang port area of Xiamen port for operation; (ii) berths No. 6 to No. 8 in the Liuwudian southern port area of Xiamen port for operation; and (iii) berth No. 8 in the Qingzhou Operating Area of Mawei port area, Fuzhou City for operation, so as to meet the needs of its business development. The Group's container handling throughput has continuously been enhancing by a series of merger and acquisition activities over the years.

In respect of financial performance of the Group, the Group's revenue amounted to approximately RMB13,933.1 million for the financial year ended 31 December ("FY(s)") 2019, representing an increase of approximately 7.9% as compared to that of approximately RMB12,916.8 million in the FY 2018; while its net profit amounted to approximately RMB668.8 million for the FY 2019, representing an increase of approximately 20.6% as compared to that of approximately RMB554.4 million in the FY 2018. The profit attributable to owners of the Company amounted to approximately RMB279.7 million for the FY 2019, representing an increase of approximately 14.3% as compared to that of approximately RMB244.8 million in the FY 2018 mainly due to the increase in revenue from its merchandise trading business.

2. Background of Xiamen Port Holding

Xiamen Port Holding is a wholly State-owned enterprise established in the PRC, and the controlling shareholder of the Company holding approximately 68.32% shareholding interest in the Company.

It is principally engaged in, inter alia, (i) management and operation of certain State-owned assets; (ii) investment in different areas such as port, terminal, logistics, information, real estate, hotel, property, tourism and trading; (iii) providing financing; (iv) investment in financial institutions;

(v) port development; (vi) environmental consultancy services in respect of sea pollution; (vii) information products development; and (viii) providing other port-related services.

To the best of the Board's knowledge, information and belief, having made all reasonable enquiries, the ultimate beneficial owner of Xiamen Port Holding is the Xiamen SASAC, which is the authority for supervision and administration of State-owned assets in Xiamen City, Fujian Province, the PRC.

3. Overview of the port industry in the Fujian Province and Xiamen City

In 2019, Fujian Province actively responded to economic and trade frictions and accelerated the implementation of policies and measures to stabilize and promote foreign economic and trade development. Its economy continued to operate within a reasonable range, keeping its overall stable and progressive development trend. Its main economic indicators increased at a high rate in terms of China's overall level, and the scale of foreign trade imports ranked seventh in the country. According to the Fujian Provincial Government, the gross domestic product ("GDP") of Fujian Province in 2019 was approximately RMB4.2395 trillion (the audited GDP of Fujian Province in 2018 was RMB3.86878 trillion), representing a year-on-year growth of approximately 7.6%. The total export and import amount of foreign trade was approximately RMB1.3307 trillion, representing a year-on-year increase of approximately 7.8%, among which, the export of goods for the whole province was approximately RMB827.8 billion, representing a year-on-year increase of approximately 8.7%, while the import of goods was approximately RMB502.9 billion, representing a year-on-year increase of

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

approximately 6.3%. The port cargo throughput amounted to approximately 595 million tonnes, representing a year-on-year increase of approximately 6.6%, and the container throughput was approximately 17.26 million TEUs, representing a year-on-year increase of approximately 4.8%.

In 2019, Xiamen expanded economic and trade cooperation, actively deepened the China (Fujian) Pilot Free Trade Zone and other reform pilots, actively expanded the "Silk Road for Shipping" route and strengthened its collaboration with ports along the "One Belt, One Road" to accelerate the promotion of the construction of Xiamen port-type national logistics hub city, whose business environment ranked first in the assessment for nation's top ten shipping container ports. In 2019, the total import and export amount of foreign trade in Xiamen City was approximately RMB641.29 billion, representing a year-on-year increase of approximately 6.9%, of which the export of goods was approximately RMB352.87 billion and the import of goods was approximately RMB288.42 billion, representing a year-on-year increase of approximately 5.7% and 8.3%, respectively. The total container throughput of Xiamen port was approximately 11.122 million TEUs, representing an increase of approximately 3.9% over 2018, its container throughput continuously ranked seventh among the ports in Mainland China and fourteenth among container ports in the world, accounting for approximately 64.4% of the total container throughput in Fujian Province.

4. Reasons for and benefits of entering into the Capital Increase Agreement

As mentioned in the "Letter from the Board" of the Circular (the "Board Letter"), the Board is of the view that the entering into of the Capital Increase Agreement and the Capital Contribution Transactions contemplated thereunder are beneficial to the Group and the Shareholders as a whole, as Xiamen Port Development and Xiamen Port Holding intend to utilise the Target Company as a unified platform to integrate their respective internal bulk/ general cargo terminal resources for improving overall operating efficiency and for managing their business operation, in particular during the market cultivation period. The Group could (i) take advantage of the sound, valuable and local hands-on business operation experience of the Enlarged Target Group to fully promote synergy effects internally as the Enlarged Target Group will continue to be principally engaged in bulk/general cargo loading and unloading business in Xiamen after Completion, which could be tied up to the Group's existing principal business operation and its long-term development strategy and commercial interests; and

1. enhance its overall competitiveness externally by solidifying its position as a leading port terminal operator in Xiamen through expansion of customer base, increase of market share and penetration, as well as optimisation of business and operation structure via reasonable resources integration and deployment among the various berths of the Enlarged Target Group to deliver efficient, cost-effective and quality services in the local market of Xiamen Port and the regional markets in the Southeast coastal regions. In addition, by developing Xiamen Port Development into the Group's bulk/ general cargo terminal investment and operation platform, the Group is expected to further optimise its asset and business structure to enhance its overall business size and hence its level of revenue and profits by saving of management costs.

The Directors (including all the independent non-executive Directors) have approved the entering into of the Capital Increase Agreement and the Capital Contribution Transactions contemplated thereunder. They have considered that the terms of the Capital Increase Agreement are on normal commercial terms, conducted in the ordinary and usual course of business of the Group, and fair and reasonable and in the interests of the Group and the Shareholders as a whole.

Based on our independent review of the annual reports of the Company (the "Annual Report(s)") for the FYs 2017 to 2019, we noted that the Group's business segment of bulk/ general

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

cargo loading and unloading business in terms of revenue growth had generally well-performed than its other business segments, which amounted to approximately RMB598.8 million, RMB699.6 million and RMB788.1 million for each of the three FYs from 2017 to 2019, respectively, representing a compound annual growth rate of about 14.7% during the three FYs.

Based on the above background information, we are of the view that there is strong commercial rationale for conducting the Capital Contribution Transactions by way of corporate re-organisation among the Enlarged Target Group, which is in line with the business development strategy of the Group, and therefore ancillary to its ordinary and usual course of business by integrating their respective bulk/ general cargo terminal resources in order to promote synergy effects and competitiveness so as to enhance its operational management efficiency/ flexibility and operating capability for long-term business development, and in the interests of the Group and the Shareholders as a whole.

5. Background of the Enlarged Target Group comprising the Target Group, Xiamen Hailong and Xiamen Haihong

The Target Group

The Target Company, namely Xiamen Port Group Shihushan Terminal Company Limited* (廈 門港務集團石湖山碼頭有限公司), is established in the PRC and is a non-wholly-owned subsidiary of held by the Company and Xiamen Port Holding as to 51% and 49%, respectively, as at the Latest Practicable Date. There are three wholly-owned subsidiaries of the Target Company in operation, namely, Xiamen Port Haiyu Terminal Company Limited* (廈門港務海宇碼頭有限公司), Xiamen Port Haiyi Terminal Company Limited* (廈門港務海億碼頭有限公司) and Xiamen Shihushan Terminal Labour Service Company Limited* (廈門石湖山碼頭勞動服務有限公司).

Set out below is the background information of the each of the member companies comprising the Enlarged Target Group:

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

berth no. 9 at the Haicang port area, Xiamen

Audited profit/ (loss) before taxation

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As (i) Xiamen Port Holding is a wholly stated-owned enterprise established in the PRC;

1. Xiamen Port Development is stated-owned enterprise established in the PRC; and (iii) the transfers of the equity interests in each of the companies comprising the Enlarged Target Group pursuant to the Capital Increase Agreement have constituted transfers of state-owned assets, Xiamen Port Holding (as the transferor) and Xiamen Port Development (as the transferee), when transferring the Target Equity Interest, Xiamen Haihong's equity interest and Xiamen Hailong's equity interest are subject to the requirements under the Law of the PRC on the State-Owned Assets of Enterprises (《中華人民共和國 企業國有資產法》), pursuant to which, a minimum transfer price shall be reasonably determined on the basis that the consideration/ price shall be legally appraised for the transfer of state-owned assets. Given the Appraisal Report for each of the Target Group, Xiamen Hailong and Xiamen Haihong is legally and compulsorily required to be prepared for providing reference when determining Consideration for the proposed Capital Contribution Transactions between Xiamen Port Holding and Xiamen Port Development; while the PRC Qualified Valuer has the requisite professional qualifications and experience in valuing assets similar to that of the Enlarged Target Group, we consider that the basis for determination of the Consideration based on the three Appraisal Reports is fair and reasonable, even though the respective Appraisal Value/ Consideration of RMB1,529,890,200, RMB1,208,737,100 and RMB317,536,100 for the Enlarged Target Group are considerably higher than their respective net asset values as at 31 December 2019, mainly due to the greater appreciation of property market value (i.e. the land parcels and the ancillary building structures located at the six respective berth nos. 18 to 19 at Dongdu port area; and berth nos. 7, 9, 20 and 21 at Haicang port area) attributable to the Enlarged Target Group, but which had not yet been fairly reflected in their respective accounting records and/or financial statements prepared on historical cost basis.

6. Principal terms and conditions of the Capital Increase Agreement

On 5 August 2020, Xiamen Port Development (a non-wholly owned subsidiary of the Company) has entered into the Capital Increase Agreement with Xiamen Port Holding, pursuant to which Xiamen Port Development and Xiamen Port Holding have agreed to contribute additional capital by injection of the entire equity interest in (i) Xiamen Hailong by Xiamen Port Development; and (ii) Xiamen Haihong by Xiamen Port Holding, into the Target Company, respectively, pursuant to which, in operative terms, Xiamen Port Development will, by way of a deemed disposal of 34.92% effective equity interest in Xiamen Hailong to Xiamen Port Holding, in effect acquire from Xiamen Port Holding (i) 14.08% equity interest in the Target Company (i.e. the Target Equity Interest); and (ii) 65.08% effective equity interest in Xiamen Haihong.

Upon Completion, the equity interest of the Target Company will be held by Xiamen Port Development as to 65.08% and Xiamen Port Holding as to 34.92%.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Consideration under the Capital Increase Agreement

The total value of the additional capital agreed to be contributed by Xiamen Port Development and Xiamen Port Holding into the Target Company amounts to approximately RMB1,526,273,200. Such total value and the equity interest in the Target Company held by the parties after the Completion respectively was arrived at in good faith after arm's length negotiations with reference to the following factors:

1. the appraised value of the Target Company's entire equity interest of approximately RMB1,529,890,200 as at the Benchmark Assessment Date appraised by the PRC Qualified Valuer as approved by the Xiamen SASAC, by adopting an asset-based approach;
2. the appraised value of Xiamen Hailong's entire equity interest of approximately RMB1,208,737,100 as at the Benchmark Assessment Date appraised by the PRC Qualified Valuer as approved by the Xiamen SASAC, by adopting an asset-based approach;
3. the appraised value of Xiamen Haihong's entire equity interest of approximately RMB317,536,100 as at the Benchmark Assessment Date appraised by the PRC Qualified Valuer as approved by the Xiamen SASAC, by adopting an asset-based approach;
4. the corresponding value of the Target Equity Interest of approximately RMB215,423,538 as at the Benchmark Assessment Date immediately upon Completion; and
5. the actual financing needs for the Target Company's long-term business operation and development.

As part of the Capital Contribution Transactions, (i) the appraised value of the 34.92% effective equity interest in Xiamen Hailong as at the Benchmark Assessment Date deemed to be disposed of by Xiamen Port Development to Xiamen Port Holding amounts to approximately RMB422,079,145; and

1. the appraised value of the 65.08% effective equity interest in Xiamen Haihong as at the Benchmark Assessment Date deemed to be acquired by Xiamen Port Development from Xiamen Port Holding amounts to approximately RMB206,655,607.

In accordance with the requirements under the Law of the PRC on the State-owned Assets of Enterprises (《中華人民共和國企業國有資產法》), a minimum transfer price (or an equivalent monetary value) for each deemed transfer of equity interests pursuant to the Capital Increase Agreement shall be reasonably determined on the basis of the appraised values approved by the Xiamen SASAC as these transactions are regarded as transfers of State-owned Assets.

The respective capital contributions by Xiamen Port Development and Xiamen Port Holding are approximately RMB1,208,737,100 and RMB317,536,100, which is equivalent to the respective appraised value of the entire equity interest of Xiamen Haihong and Xiamen Haihong as disclosed above. Upon Completion, the respective additional capital contributed by Xiamen Port Development and Xiamen Port Holding will be split into the following manner:

1. out of Xiamen Port Development's capital contribution at approximately RMB1,208,737,100, RMB597,869,300 and RMB610,867,800 will be applied to the registered capital and the capital reserve of the Target Company, respectively; and
2. out of Xiamen Port Holding's capital contribution at approximately RMB317,536,100, RMB312,130,700 and RMB5,405,400 will be applied to the registered capital and the capital reserve of the Target Company, respectively.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

In addition, any increase in or reduction of the corresponding owners' equity in the Target Company, Xiamen Hailong and Xiamen Haihong for the period between the Benchmark Assessment Date and the date on which their respective industrial and commercial registration changing procedures are completed (each "Relevant Registration Completion Date") (the "Relevant Period") shall belong to and be borne by the original shareholder(s). The parties have agreed that a special audit shall be conducted after each Relevant Registration Completion Date to ascertain any increase in or reduction of these owners' equity during the Relevant Period. In this regard, if a Relevant Registration Completion Date falls on a date which is on or before the 15th day of a calendar month, the audit benchmark date for the adjustment to the owners' equity during the Relevant Period shall end on the last day of the preceding month, and if a Relevant Registration Completion Date falls on a date which is on or after the 16th day of a calendar month, the audit benchmark date for the adjustment to the owners' equity during the Relevant Period shall end on the last day of that month. The parties shall within 10 working days from the issue of the last special audit report enter into a supplemental agreement in respect of any such adjustment and belonging to the owners' equity and carry out the settlements balance within 10 working days after the entering into of the said supplemental agreement in the following manner:

1. Xiamen Port Development should pay all increase in the corresponding owners' equity in the Target Company during the Relevant Period (if any) to Xiamen Port Holding, and Xiamen Port Holding shall pay all reduction in the corresponding owners' equity in the Target Company during the Relevant Period (if any) to Xiamen Port Development, such sum payable should be calculated as the amount of the increase in/ reduction of the corresponding owners' equity in the Target Company during the Relevant Period, multiplied by 14.08% (being the percentage of the change of the equity interest in the Target Company before and after Completion as held by Xiamen Port Development or Xiamen Port Holding);
2. Xiamen Port Development should pay all increase in the corresponding owners' equity in Xiamen Haihong during the Relevant Period (if any) to Xiamen Port Holding, and Xiamen Port Holding shall pay all reduction in the corresponding owners' equity in Xiamen Haihong during the Relevant Period (if any) to Xiamen Port Development, such sum payable should be calculated as the amount of the increase in/ reduction of the corresponding owners' equity in Xiamen Haihong during the Relevant Period, multiplied by 65.08% (being the percentage of the change of the effective equity interest in Xiamen Haihong before and after Completion as held by Xiamen Port Development or Xiamen Port Holding); and
3. Xiamen Port Holding should pay all increase in the corresponding owners' equity in Xiamen Hailong during the Relevant Period (if any) to Xiamen Port Development, and Xiamen Port Development shall pay all reduction in the corresponding owners' equity in Xiamen Hailong during the Relevant Period (if any) to Xiamen Port Holding, such sum payable should be calculated as the amount of the increase in/ reduction of the corresponding owners' equity in Xiamen Hailong during the Relevant Period, multiplied by 34.92% (being the percentage of the change of the effective equity interest in Xiamen Hailong before and after Completion as held by Xiamen Port Development or Xiamen Port Holding).

We consider that the above arrangement is to set out a clear cut-off line to determine pre-acquisition and post-acquisition profit or loss to be enjoyed/ borne by Xiamen Port Holding and Xiamen Port Development, as the case maybe, which is a fair and equitable treatment in usual merger and acquisition activities, and therefore is fair and reasonable, in the interests of Group and the Shareholders as a whole.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Basis for determination of the Consideration

The Consideration contributed for the Capital Contribution Transactions by each of Xiamen Port Development and Xiamen Port Holding of approximately RMB1,208,737,100 and RMB317,536,100, respectively, was determined by the parties to the Capital Increase Agreement after arm-length's negotiations between Xiamen Port Development and Xiamen Port Holding with reference to, inter alia, the Appraised Value of each of the Target Group, Xiamen Hailong and Xiamen Haihong as at 31 December 2019 as shown in the respective Appraisal Reports thereon as prepared and issued by the PRC Qualified Valuer, a PRC qualified appraisal firm independent from each of the Group and Xiamen Port Holding. The respective Appraisal Reports for each of the Target Company, Xiamen Hailong and Xiamen Haihong had been verified and duly approved by the Xiamen SASAC on 4 August 2020 so as the respective Appraisal Values therein are finally determined. The following summary sets out the capital contributions to be made by, and resulting proportion of equity interest attributable to, each of the contracting parties pursuant to the Capital Increase Agreement:

As at the Latest Practicable Date, the equity interest of the Target Company is owned by Xiamen Port Development as to 51% and Xiamen Port Holding as to 49%. Upon the Completion, the structure of the Enlarged Target Group will be as follow:

1. the equity interest of the Target Company will be owned by Xiamen Port Development as to 65.08% and Xiamen Port Holding as to 34.92%;
2. the Target Company will continue to be an indirect non-wholly owned subsidiary of the Company;
3. Xiamen Hailong will become a direct wholly-owned subsidiary of the Target Company and continue to be an indirect non-wholly owned subsidiary of the Company with its effective equity interest to be held by Xiamen Port Development as to 65.08% and Xiamen Port Holding as to 34.92%; and
4. Xiamen Haihong will become a direct wholly-owned subsidiary of the Target Company and an indirect non-wholly owned subsidiary of the Company with its effective equity interest to be held by Xiamen Port Development as to 65.08% and Xiamen Port Holding as to 34.92%.

Based on our independent research from the public website of 中國證券監督管理委員會 (China Securities Regulatory Commission of the PRC) (the "CSRC") at http://www.csrc.gov.cn, we have noted that the PRC Qualified Valuer is one of the 70 qualified asset appraisal firms authorised by the CSRC and 中華人民共和國財政部 (the Ministry of Finance of the PRC) to perform asset appraisal works in the PRC. It has possessed sufficient qualifications and experience in valuing assets similar to that of the Enlarged Target Group for listed companies in the PRC and Hong Kong over the years.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Appraised Value was finally calculated and arrived at based on the asset-based approach and the general industry standards recognised and adopted nationally, which was further verified and approved by the 廈門市人民政府國有資產監督管理委員會 (State-owned Assets Supervision and Administration Commission of Xiamen City Government). The PRC Qualified Valuer has considered, but finally did not adopt, the market approach for evaluating the value of the Enlarged Target Group in view of its business nature and asset-based in company value of the Enlarged Target Group. As such, we consider that the asset-based approach is an appropriate methodology used in the appraisal for the Enlarged Target Group on the basis that the selection of appraisal technology is consistent with the Group's precedent cases for transfer of terminal assets completed over the years, and the PRC Qualified Valuer has the requisite experience and expertise to conduct the appraisal for the Enlarged Target Group.

We have independently reviewed each of the Appraisal Reports on the Enlarged Target Group and understood from the PRC Qualified Valuer regarding, among other things, the basis and assumptions made and the methodology adopted by the PRC Qualified Valuer in conducting the appraisal for the major assets and properties of the Enlarged Target Group. We understand that the PRC Qualified Valuer has finally adopted the asset-based approach for the appraisal of major assets of the Enlarged Target Group due to unavailability of relevant market comparables, in terms of the port infrastructure and its terminal assets. Under that approach, the major assets of the Enlarged Target Group, in particular the port infrastructure and its terminal assets, were valued on the basis of their depreciated replacement cost, which were then based on market value estimate for the existing use of such assets, plus the current cost of replacement (reproduction) for the improvements, less deductions for physical deterioration and all relevant forms of obsolescence and optimisation.

We have also reviewed the Valuation Report and made necessary enquiry with Savills. We understand that Savills carried out physical site inspection of the six major properties as listed in the Valuation Report in May 2020, and has obtained PRC legal opinion on the titles of the properties. In valuing the properties, which are mainly held for owner occupation by the Enlarged Target Group in the PRC, due to the specific purpose for which the properties have been constructed, there are no readily available market comparables and thus the properties cannot be valued on the basis of direct comparison. They have been valued by the depreciated replacement cost approach. Depreciated replacement cost approach is based on an estimate of the market value for the existing use of the land plus the current replacement costs of the buildings and structures, from which deductions are then made to allow for physical deterioration and all relevant forms of obsolescence and optimization. The depreciated replacement cost approach is subject to adequate potential profitability of the business. The Valuation applies to the whole of the complex or development as a unique interest, and no piecemeal transaction of the complex or development is assumed. We have reviewed and analysed Savills' working schedule with supporting documents of arriving at the Valuation of RMB3,453.4 million, where Savills has made reference to three comparable land sales transactions that were transacted during the past few months from January to April 2020 for the valuation of land portion, when was close to the benchmark valuation date as at 31 May 2020; and the average land value adopted in the Valuation was comparable to the transacted unit sales prices thereof which are now being used for determining the land value under the Valuation, which we consider to representative samples being referred to/ relied on for reaching the present Valuation. We have further independently (i) crossed referred to the relevant public website for ascertaining the relevant information including but not limited to site area, locations (i.e. at Jiangxi Province, Hainan Province and Zhejiang Province), transfer consideration (within a range of approximately RMB27.6 million, RMB60.9 million and RMB117.2 million respectively) and other relevant factors of such comparables so as arriving at their

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

estimated land value of a range of RMB909 to RMB1,427 per square metre (after making appropriate adjustments), which were then applied by Savills for consideration in determining the Valuation;

1. reviewed the calculation basis for the Valuation results; (iii) compared the bases and assumptions for reaching the end results between the asset appraisal and the Valuation; and (iv) reviewed and considered the appropriateness of adjustments made thereon, where we did not find any anomaly and therefore consider to be fair and reasonable. As confirmed by Savills, such valuation approach with comparable land price after making appropriate adjustment(s) is commonly adopted for valuation of properties in the PRC and is also consistent with the usual market practice.

Furthermore, as part of our due diligence concerning the competence of Savills, we have conducted independent research from the websites of Savills and the Stock Exchange regarding its professional qualifications, experience and expertise, we understand that Savills is a global real estate services provider with an international network of more than 650 offices and associates in 70 countries around the world. In fact, we also have past experience working with Savills, and accordingly consider that Savills is a well-qualified and renowned professional valuation firm in Hong Kong with extensive experience in the valuation of properties in Hong Kong and the PRC. Based on the above understanding and our due diligence enquiry with Savills, we have no reason to doubt the fairness and appropriateness of the valuation of the land use rights of the various land parcels and the ancillary buildings structures under the Capital Contribution Transactions prepared by Savills. Based on our further enquiry with the PRC Qualified Valuer and Savills, there was merely very slight deviation (i.e. 1.3%) of the end appraisal/ valuation results between that of the PRC Qualified Valuer and Savills on the land parcels and properties attributable to the Enlarged Target Group, mainly because Savills has assigned no commercial value to certain properties thereof with title defects which has a total gross floor area of 27,572.65 square metre, more details of which are set out in the Board Letter and the Valuation Report.

As mentioned in the Board Letter, the Board does not consider the relevant title defects that would adversely affect the Capital Contribution Transactions and subsequent operations after Completion in material respects on the basis that (i) there has not been any dispute with or any title claim by any third party due to the Defective Enlarged Target Group Properties (as defined in the Board Letter) to any material extent; and (ii) neither Xiamen Port Holding nor the Target Group has received from any governmental authorities any order of penalty, removal or dismantle relating to the Defective Enlarged Target Group Properties which may affect the de facto occupation and use of the Defective Enlarged Target Group Properties by the Enlarged Target Group. In this regard, substantive and continuing progress have been made before the entering into of the Capital Increase Agreement in obtaining valid title documents for the Defective Enlarged Target Group Properties and the Group will, in joint effort with Xiamen Port Holding, continue to use all reasonable endeavours to liaise with the relevant government authorities and other stakeholders and take proactive actions as and when appropriate (i) to minimise and alleviate any material legal impediment that may arise when rectifying the title defects in respect of the Defective Enlarged Target Group Properties; and (ii) to identify, mediate and settle any potential, possible or threatened title dispute or claim by any third party in respect of the Defective Enlarged Target Group Properties which have been made known to the Group and/or Xiamen Port Holding as soon as practicable so as to ensure that the normal business operations of the Enlarged Target Group can be conducted smoothly after Completion. In fact, according to the Board's latest assessment, at present there is no realistic or foreseeable reasonable ground that any such third party title dispute or claim would arise as all of the Defective Enlarged Target Group Properties are merely ancillary infrastructure or fixtures which in effect can only be suitable and exclusively used for the business operations of the Enlarged Target Group at the various berths or port

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

areas. In addition, Xiamen Port Holding has further undertaken to proactively take effective measures (including, without limitation, provision of properties in identical or substantial similar conditions for the operation of the Target Group and/ or cash compensation) to compensate and indemnify Xiamen Port Development for any loss arising from or caused by any title defects on the Defective Enlarged Target Group Properties in order to procure that the Enlarged Target Group can continue to normally conduct its business operations. Furthermore, the Defective Enlarged Target Group Properties are only ancillary facilities and have no material effect on the Enlarged Target Group's business operations. Accordingly, in view of the above, the Board considers that the normal business operations of the Enlarged Target Group would not be affected without such land use right certificates and building ownership certificates in respect of the Defective Enlarged Target Group Properties. Based on such consideration, we concur with the Directors' view in this regard. In addition, (i) as the Consideration determined based on the Appraisal Value concluded by PRC Qualified Valuer is fair and reasonable and is in the interests of the Company and the Shareholders as a whole despite of the immaterial valuation differences of end results between the Appraisal Reports and the Valuation Report; and

1. the property with title defects which carries the highest depreciated replacement cost (which is the warehouse nos. 4 and 5 at berths nos. 20 and 21 at the Haicang port area) of RMB42,700,000, representing approximately 70% of the total depreciated replacement cost of the Defective Enlarged Target Group Properties, is currently owned by Xiamen Hailong and therefore the inclusion of which in the valuations has been implicitly deemed as a greater capital contribution by Xiamen Port Development whilst they would have no material adverse impact to future business operation of the Enlarged Target Group after Completion, we consider that the immaterial property title defects are even arithmetically beneficial to the Group as to the determination of the Consideration.

During the course of our independent review on the Appraisal Reports as well as the Valuation Report and further understanding from/ enquiry with the PRC Qualified and/or Savills, we have not identified any major factors which cause us to doubt the fairness and reasonableness of the principal bases and assumptions adopted for the asset appraisal and property valuation works in relation to the Appraisal Reports and Valuation Report, respectively.

Comparison with other companies in the similar industry

Based on our understanding from the Management, the subject matter of the Capital Contribution Transactions, in substance, are to integrate their respective internal bulk/ general cargo terminal resources for improving overall operating efficiency and for managing their business operation for long-term business development so as to optimise the Enlarged Target Group's asset and business structure to enhance its overall business size and hence its level of revenue and profits by saving of management costs.

Since both Xiamen Hailong and Xiamen Haihong are principally operating the various berths in their respective port area and holding the land sites and their ancillary building structures; whilst the subject matter of the Capital Contribution Transactions, in substance, are the terminal assets themselves and their future development potential. Furthermore, both Xiamen Hailong and Xiamen Haihong's have been loss-making for a number of years, we accordingly consider that direct comparison in terms of price-to-earnings ratio and/or price-to-book ratio with other port-related operation companies listed on the Stock Exchange with much larger operating scale would not be meaningful, or even misleading, on the grounds that both Xiamen Hailong and Xiamen Haihong's scale of operation are relatively limited, which we consider them not directly comparable with other sizeable listed port-related operation companies with profitable track record. Based on such

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consideration, we are of the view that determination of the Consideration for the Capital Contribution Transactions by making reference to the Appraised Value is an appropriate and reliable appraisal basis for the Enlarged Target Group.

Conditions precedent and approvals

The Capital Increase Agreement shall be conditional upon the satisfaction of, among other things, the following conditions:

1. the approval by the internal decision making body of Xiamen Port Holding;
2. the approval by the board of directors and the shareholders of Xiamen Port Development at an extraordinary general meeting to be held by Xiamen Port Development;
3. the approval by the Board and the Independent Shareholders at the EGM; and
4. the granting of approval by or filing record with the relevant State-owned assets supervision and administration departments regarding the matters in respect of the Capital Contribution Transactions (in particular, the appraised value of the equity interest in the Target Company, Xiamen Hailong and Xiamen Haihong respectively), and/or the permission, approval or consent by other governmental departments with authority (if necessary).

In addition, between the date of the entering into of the Capital Increase Agreement and the Completion Date, the parties may separately enter into supplemental agreement(s) in accordance with the actual circumstances for the need of executing the Capital Increase Agreement. The Company will promptly issue further announcement(s) as and when required pursuant to the Listing Rules in this regard.

None of the above conditions precedent can be waived. As at the Latest Practicable Date, conditions numbered (i) and (iv) have been fulfilled.

Completion

The parties have agreed to procure and cooperate with the Target Company, Xiamen Hailong and Xiamen Haihong to carry out the necessary industrial and commercial registration changing procedures as a result of the implementation of the Capital Contribution Transactions within 30 days from the effective date of the Capital Increase Agreement. The Completion Date shall fall on the date of completion of the industrial and commercial registration changing procedures of the Target Company.

Post-Completion arrangements

Xiamen Port Holding should transfer (i) the land use rights of two agreed land parcels of berth no. 9 at the Haicang port area (the "Haicang Land Parcels"); and (ii) the right of use of the coastal basin thereof to Xiamen Haihong within six months from the date of the entering into of the Capital Increase Agreement. Xiamen Port Holding shall endeavour to procure and complete such assets transfer registration and confirmation procedures as soon as practicable, whilst Xiamen Port Development should proactively cooperate with Xiamen Port Holding.

In this connection, given that as at the Latest Practicable Date, Xiamen Port Holding does not hold the relevant housing use right certificates for certain building structures erected on the Haicang

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Land Parcels (the "Haicang Building Structures"), if Xiamen Port Holding is able to obtain, and transfer the abovementioned housing use right certificates to Xiamen Haihong within six months from the date of the entering into of the Capital Increase Agreement, Xiamen Port Development shall pay RMB2,082,115 in cash to Xiamen Port Holding, which is equivalent to the difference between the appraised values of the Haicang Building Structures with and without full housing use right certificates as at the Benchmark Assessment Date (i.e. RMB3,199,316) appraised by the PRC Qualified Valuer, multiplied by 65.08% (i.e. the effective equity interest in Xiamen Haihong to be held by Xiamen Port Development after Completion).

We consider that the above arrangement is to set out clear obligations between the parties to the Capital Increase Agreement that to be properly followed up and/or compensated by determining pre-acquisition and post-acquisition appraised asset value to be enjoyed/ borne by Xiamen Port Holding and Xiamen Port Development, as the case maybe, which is a fair and equitable treatment in usual merger and acquisition activities, and therefore is fair and reasonable, in the interests of Group and the Shareholders as a whole.

Based on the above analysis and consideration, we are of the view that the Capital Increase Agreement and the Capital Contribution Transactions contemplated thereunder are on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and is in the interests of the Company and the Shareholders as a whole.

7. Possible financial effects of the Capital Contribution Transactions on the Group

In operative terms, Xiamen Port Development will, by way of a deemed disposal of 34.92% effective equity interest in Xiamen Hailong to Xiamen Port Holding, in effect acquire from Xiamen Port Holding (i) 14.08% equity interest in the Target Company; and (ii) 65.08% effective equity interest in Xiamen Haihong.

Upon the Completion, 100% equity interest in both of Xiamen Hailong and Xiamen Haihong will be disposed of by Xiamen Port Development and Xiamen Port Holding, respectively, to the Target Company; while at the same time the Group's equity-holding in the Target Group will increase by 14.08% from 51% to 65.08%, and therefore the financial performance and position of the Target Group (with an additional member company of Xiamen Haihong thereunder) will continue to be consolidated into the Group under acquisition accounting method; whilst the non-controlling interests therein (including Xiamen Hailong) attributable to Xiamen Port Holding will correspondingly decrease by 14.08% from 49% to 34.92%.

Earnings

Upon the Completion, other than the immaterial legal and professional fees to be directly incurred in the Capital Contribution Transactions, there is no immediate material impact on earnings of the Group by the only reason of the Capital Contribution Transactions on the grounds that the greater amount of capital contribution (i.e. RMB1,208,737,100 in Xiamen Hailong) into the Target Company to be made by Xiamen Port Development than that (i.e. RMB317,536,100 in Xiamen Haihong) by Xiamen Port Holding will be resulting in the Group's increase in proportion of equity holding in the Target Group from original 51.0% to 65.08% (i.e. whilst Xiamen Port Holding's proportion of equity interest therein would correspondingly decrease from 49% to 34.92%) upon the Completion, which would totally eliminate the difference in amounts of capital contributions to the Target Company made

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

by them so as either party thereto would take/ suffer a gain/ loss in the Capital Contribution Transactions.

However, the Directors currently expect that the Capital Contribution Transactions can enhance the operational management efficiency/ flexibility and operating capability of the Enlarged Target Group, and then further contribute to its earnings base in the long run, but the quantification of such impact will depend on the future operating performance of the Enlarged Target Group thereafter.

Working capital

Based on the Annual Report, the Group's working capital deficiency (i.e. total current assets of approximately RMB6,136.3 million, less total current liabilities of approximately RMB6,478.2 million) and cash and cash equivalents as at 31 December 2019 amounted to approximately RMB341.9 million and RMB1,883.4 million respectively, representing a current ratio of about 94.7%. The working capital deficiency position as at 31 December 2019 showed that the Group's working capital requirement was relatively tight.

As the Capital Contribution Transactions do not involve any cash outlay from the Group, its present working capital deficiency position would not be adversely affected in material respect after the Completion.

Net asset value

According to the Annual Report, the net asset value (excluding non-controlling interests) of the Group was approximately RMB5,647.4 million as at 31 December 2019. It is currently expected that there will not be any significant impact of the net asset value of the Group following the Completion, as the net asset value of (i) the Target Group originally attributable to the 49% minority equity-holder (i.e. Xiamen Port Holding) would reduce to 34.92% so that an additional 14.08% share of net asset value thereof will belong to the Group; and (ii) Xiamen Haihong attributable to 65.08% equity interest holding under the Target Company would then be included in the consolidated financial statements of the Group; whilst (iii) the Group's original 100% direct equity interest holding in Xiamen Hailong will be reduced to 65.08% indirect equity interest therein through the Target Company, so as there will be new share of the net asset value of Xiamen Hailong as well as Xiamen Haihong attributable to the indirect 34.92% minority equity-holder. However, since the Appraisal Value of the Enlarged Target Group would be considerably higher than the net asset values recorded in their respective audited financial statements as at 31 December 2019, it is currently expected that there may be increase in the consolidated net asset value of the Group to be recognized upon Completion. There will also be no material impact on the income statement and reserves of the Group, so it could be inferred that the consolidated net asset value of the Group would not adversely change upon the Completion.

Gearing position

As at 31 December 2019, the Group had interest-bearing borrowings and net asset value (excluding non-controlling interests) of approximately RMB7,438.3 million and RMB5,647.4 million, respectively, representing a relatively higher gearing ratio (which is calculated as total interest-bearing borrowings divided by the net asset value of the Group) of approximately 131.7%.

As there would not involve any cash outlay and/or new interest-bearing borrowings to finance the Capital Contribution Transactions, it is currently anticipated that the gearing position of the Group

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would not deteriorate. In addition, the Target Group itself has strong capability to generate recurrent operating cash inflow from its ordinary and usual course of business operations for the past three FYs from 2017 to 2019. Subsequent to the Completion, upon the additional 14.08%, on top of the existing 51%, equity interest of the Target Group to be included in the Group, it could be sharing additional net profit and operating cash inflow that may be generated from the business operation of the Enlarged Target Group, and hence, it is anticipated that such relatively higher gearing position could gradually be improved in the longer-term future.

Conclusion

In light of the foregoing financial effects of the Capital Contribution Transactions on the earnings, working capital, net asset value and gearing position of the Group as a whole, we are of the view that the Capital Contribution Transactions would have no material adverse impact on the Group's financial performance and position as they would not involve any cash outlay and/or increase in liabilities. Therefore, we are of the view that the Capital Contribution Transactions will be an effective utilisation of their operational assets and management resources which are aimed at positioning the Group (comprising the Enlarged Target Group) for a better growth in the future which, in the long run, is expected to benefit the Group and the Shareholders as a whole.

RECOMMENDATION

Having taken into account the above principal factors and reasons, we are of the view that the Capital Contribution Transactions are corporate re-organisation activities to integrate their respective bulk/ general cargo terminal resources in order to promote synergy effects and competitiveness so as to enhance its operational management flexibility and operating capability for long-term business development, and therefore are ancillary and incidental to the ordinary and usual course of business of the Group; while the Capital Increase Agreement is on normal commercial terms or better, fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders, and the Independent Board Committee to advise the Independent Shareholders, to vote in favour of the ordinary resolution(s) to approve the Capital Contribution Transactions and the transactions contemplated under pursuant to the Capital Increase Agreement at the EGM.

Yours faithfully,

For and on behalf of

First Shanghai Capital Limited

Nicholas Cheng

Director

Note:

Mr. Nicholas Cheng has been the Responsible Officer of Type 6 (advising on corporate finance) regulated activity under the SFO, and has extensive experience in corporate finance industry. He has participated in the provision of independent financial advisory services for, and completed, numerous connected transactions involving companies listed in Hong Kong.

The following is the text of a letter, a summary of values and a valuation report prepared for the purpose of incorporation in this circular received from Savills Valuation and Professional Services Limited, an independent valuer, in connection with their opinion of values of the properties as at 31 May 2020.

31 August 2020

Dear Sirs,

INSTRUCTIONS

In accordance with the instructions from Xiamen International Port Co., Ltd. (the "Company") for us to value the properties situated in the People's Republic of China (the "PRC") on a 100% interest basis, 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 values of such properties as at 31 May 2020 (the "valuation date") for inclusion in the Company's circular dated 31 August 2020.

BASIS OF VALUATION

Our valuation of each of the properties is our opinion of its market value which we would define as intended to mean "the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm's-length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion".

Moreover, market value is understood as the value of an asset or liability estimated without regard to costs of sale or purchase (or transaction) and without offset for any associated taxes or potential taxes.

Our valuation has been undertaken in accordance with the HKIS Valuation Standards 2017 of The Hong Kong Institute of Surveyors ("HKIS"), which incorporates the International Valuation Standards ("IVS"), and (where applicable) the relevant HKIS or jurisdictional supplement. We have also complied with the requirements set out in Chapter 5 and Practice Note 12 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

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VALUATION ASSUMPTIONS

In valuing the properties in the PRC, unless otherwise stated, we have assumed that transferable land use rights of the properties for their specific terms at nominal annual land use fees have been granted and that any premium payable has already been fully paid. Unless otherwise stated, we have also assumed that the owners of the properties have good legal titles to the properties and have free and uninterrupted rights to occupy, use, transfer or lease the properties for the whole of the respective unexpired terms as granted.

No allowance has been made in our valuation for any charges, mortgages or amounts owing on any property nor for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the properties are free from encumbrances, restrictions and outgoings of an onerous nature which could affect their values.

SITE INSPECTION

We have inspected the exterior and where possible, the interior of the properties. During the course of our inspections, we did not note any serious defects. However, no structural survey has been made and we are therefore unable to report that the properties are free from rot, infestation and any other defects. No tests were carried out on any of the services. The site inspections were carried out during the period between 11 May 2020 and 15 May 2020 by the following professional valuers:

CURRENCY

Unless otherwise stated, all money amounts stated are in Renminbi ("RMB").

We enclose herewith our summary of values and valuation report.

Yours faithfully,

For and on behalf of

Savills Valuation and Professional Services Limited

Anthony C K Lau

MRICS MHKIS RPS(GP)

Director

Note: Mr. Anthony C.K. Lau is a professional surveyor who has over 27 years' experience in valuation of properties in Hong Kong and the PRC.

VALUATION REPORT

1. Pursuant to the State-owned Construction Land Use Rights Grant Contract - (2006) Xia Hai Di He (Xie) Zi No. 063 dated 4 December 2006 and its two supplementary contracts dated 5 March 2012 and 31 May 2016 respectively, the land use rights of various parcels of land of Berth No. 7 with a total site area of approximately 312,466.854 sq m have been agreed to be granted to Xiamen Port Haiyu Terminal Co., Ltd. (廈門港務海宇碼頭有限公司) ("Haiyu Terminal") for a term due to expire on 20 November 2056 for port, storage, railway route and ancillary road uses respectively.
   As advised by the Company, the property only comprises portion of the land parcels as stated in the State-owned Construction Land Use Rights Grant Contract and its two supplementary contracts as mentioned above.
2. Pursuant to the Xiamen Land and Building Ownership Certificate - Xia Guo Tu Fang Zheng Di No. Di 00011375 dated 30 November 2011, the land use rights of Land Plot A1 of Berth No. 7 with a site area of approximately 177,816.60 sq m have been granted to Haiyu Terminal for a term due to expire on 20 November 2056 for port use.
3. Pursuant to the Real Estate Title Certificate - Min (2016) Xia Men Shi Bu Dong Chan Quan Di No. 0141370 dated 21 November 2016, the land use rights of Land Plots A1 and A4 of Berth No. 7 with a total site area of approximately 126,503.57 sq m have been granted to Haiyu Terminal for a term due to expire on 20 November 2056 for storage (Land Plot A1) and railway route (Land Plot A4) uses respectively.

1. Pursuant to two Certificates of Completion of Works of Port - Xia Gang Jun [2011] No. 2 and Min Jiao Gang Hang Yan Zheng Zi [2014] No. 6 dated 30 March 2011 and 10 October 2014 respectively, the construction works of Berth No. 7 of Haicang Port were certified to be completed.
2. As advised by the Company, the building of the property does not have any ownership certificate.
3. In the course of our valuation, we have assigned no commercial value to the building of the property with no valid title document as mentioned in Note 5. For the Company's management reference purpose, the depreciated replacement cost of the said building was RMB530,000.
4. We have been provided with a legal opinion on the title to the property issued by the Company's PRC legal adviser, which contains, inter-alia, the following information:
5. 1. Haiyu Terminal is entitled to occupy, use, transfer, lease, mortgage or by other legal means to dispose of the property;
   2. in respect of the building as stated in Note 5, there exists legal risk of being punished by the relevant government departments. Shihushan Labour is entitled to occupy or use the building. Up to now, there exists no punishment from the relevant government departments for the building; and
   3. the property is free from mortgage.

1. Pursuant to the State-owned Land Use Rights Grant Contract - (2006) Xia Hai Di He (Xie) Zi No. 005 dated 2 March 2006 and its two supplementary contracts dated 22 April 2008 and 18 June 2008 respectively, the land use rights of various parcels of land of Berth No. 9 with a total site area of approximately 173,623.969 sq m have been agreed to be granted to Xiamen Port Holding Group Co., Ltd. (廈門港 務控股集團有限公司) ("Xiamen Port Holding") for a term due to expire on 18 January 2056 for storage and port uses respectively.
   As advised by the Company, the property only comprises portion of the land parcels as stated in the State-owned Land Use Rights Grant Contract and its two supplementary contracts as mentioned above.
2. Pursuant to the State-owned Land Use Rights Transfer Contract entered into between Xiamen Port Holding and Xiamen Haihong Petrochemical Terminal Co., Ltd. (廈門海鴻石化碼頭有限公司) ("Xiamen Haihong") on 25 June 2015, the land use rights of Land Plots B1 and B2 of Berth No. 9 with a total site area of approximately 49,673.27 sq m have been transferred to Xiamen Haihong at a consideration of RMB4,685,529.46.
3. Pursuant to two Real Estate Title Certificates - Min (2020) Xiamen Shi Bu Dong Chan Quan Di Nos. 0020742 and 0020743, the land use rights of Land Plots B1 and B2 of Berth No. 9 with a total site area of approximately 49,673.27 sq m have been granted to Xiamen Port Holding for a term due to expire on 18 January 2056 for storage and port (Land Plot B1) and port (Land Plot B2) uses respectively.
4. Pursuant to the Certificate of Completion of Works of the Port - Xia Gang Jun [2015] No. 1 dated 9 February 2015, the construction works of Berth No. 9 of Haicang Port were certified to be completed.
5. As advised by the Company, there are eight buildings of the property with a total gross floor area of approximately 8,124.80 sq m which do not have any ownership certificates.

1. In the course of our valuation, we have assigned no commercial value to the buildings of the property with no valid title documents as mentioned in Note 5. For the Company's management reference purpose, the depreciated replacement cost of the said buildings of the property was in the sum of RMB16,200,000 as at the valuation date.
2. We have been provided with a legal opinion on the title to the property issued by the Company's PRC legal adviser, which contains, inter-alia, the following information:
3. 1. in respect of the land parcels as mentioned in Note 3, the ownership has not been changed to Xiamen Haihong and also, the title ownership has not been obtained for the existing buildings. In this circumstance, Xiamen Haihong is entitled to occupy or use and will be entitled to occupy, use, transfer, lease or by other legal means to dispose of the property after the ownership has been obtained by them;
   2. up to now, there exist no dispute or claim by any other third parties and punishment from the relevant government departments for the property;
   3. given that Xiamen Port Holding will strictly fulfil the relevant legal obligations and commitments, there exist no foreseeable and substantial legal obstacles for changing the ownership of the land parcels of the property to Xiamen Haihong; and
   4. the property is free from mortgage.

2. Pursuant to the following Real Estate Title Certificates all dated 25 May 2018, the building ownership of portions of the buildings of the property with a total gross floor area of approximately 43,849.09 sq m together with their corresponding land use rights with a total site area of approximately 368,197.97 sq m are vested in Xiamen Hailong for a term due to expire on 1 December 2063 for port (storage) use. Details of the said certificates are as follows:

1. Pursuant to the Construction Works Planning Permit - Jian Zi Di No. 350205201813024 dated 21 May 2018, the total approved construction scale of Warehouse Nos. 4 and 5 of the property was approximately 17,966.60 sq m.
2. Pursuant to the Construction Works Commencement Permit - No. 350205201812200101 dated 20 December 2018, the construction works of Warehouse Nos. 4 and 5 with a total construction scale of approximately 17,966.60 sq m was approved for commencement.
3. Pursuant to the Certificate of Completion of Works of the Port - Xia Gang Jun [2016] No. 5 dated 6 December 2016, the construction works of Berth Nos. 20 and 21 of Haicang Port were certified to be completed.
4. Pursuant to the Completion Acceptance Report, the construction works of Warehouse Nos. 4 and 5 were certified to be completed.
5. As advised by the Company, there are two buildings of the property (namely Warehouse Nos. 4 and 5) with a total gross floor area of approximately 17,966.60 sq m which do not have any ownership certificates.
6. In the course of our valuation, we have assigned no commercial value to the buildings of the property with no valid title documents as mentioned in Note 7. For the Company's management reference purpose, the depreciated replacement cost of the said buildings of the property was in the sum of RMB42,700,000 as at the valuation date.
7. We have been provided with a legal opinion on the title to the property issued by the Company's PRC legal adviser, which contains, inter-alia, the following information:
8. 1. Xiamen Hailong is entitled to occupy, use, transfer, lease, mortgage or by other legal means to dispose of the property save for the portion referred to in Note 7 above;
   2. in respect of the buildings as mentioned in Note 7, Xiamen Hailong is entitled to occupy or use those buildings. Up to now, there exist no dispute or claim by any other third parties and punishment from the relevant government departments for those buildings; and
   3. the property is free from mortgage.

1. Pursuant to the State-owned Construction Land Use Rights Grant Contract-No. 35020020160706CX08 dated 4 August 2016, the land use rights of a parcel of land of Berth No. 18 with a site area of approximately 220,346.951 sq m have been agreed to be granted to Xiamen Port Haiyi Terminal Co., Ltd. (廈門港務海億碼頭有限公司) ("Haiyi Terminal") for a term due to expire on 3 December 2041 for port use at a consideration of RMB156,464,000.
2. Pursuant to the Real Estate Title Certificate-Min (2016) Xia Men Shi Bu Dong Chan Quan Di No. 0134161, the land use rights of a parcel of land of Berth No. 18 with a site area of approximately 220,346.95 sq m have been granted to Haiyi Terminal for a term due to expire on 3 December 2041 for port use.
   As advised by the Company, portion of the aforesaid land parcel with a total site area of approximately 1,278.684 sq m has been returned to the local government for drainage use.
3. Pursuant to the Certificate of Completion of Works of the Port-No. Xia Gang Jun [2012] No. 1 dated 10 February 2012, the construction works of Berth No. 18 of Dongdu Port were certified to be completed.
4. We have been provided with a legal opinion on the title to the property issued by the Company's PRC legal adviser, which contains, inter-alia, the following information:
5. 1. Haiyi Terminal is entitled to occupy, use, transfer, lease, mortgage or by other legal means to dispose of the property; and
   2. the property is free from mortgage.

1. Pursuant to two State-owned Land Use Rights Grant Contracts-(2005) Xia Di He (Xie) Zi Di Nos. 23 and 24 both dated 17 May 2005 and their supplementary contract dated 30 May 2016, the land use rights of two parcels of land with a total site area of approximately 235,193.131 sq m have been agreed to be granted to Xiamen Port Holding for a term due to expire on 30 June 2053 for storage and port uses respectively.
2. Pursuant to two Certificates of Completion of Works of the Port-Xia Gang Jun [2012] No. 2 and Min Jiao Gang Hang Yan Zheng Zi [2014] No. 3 dated 10 February 2012 and 10 October 2014 respectively, the construction works of Berth No. 19 of Dongdu Port were certified to be completed.

3. Pursuant to the following Real Estate Title Certificates all dated 25 January 2017, the building ownership of portions of the buildings of the property with a total gross floor area of approximately 15,166.06 sq m together with their corresponding land use rights with a total site area of approximately 235,193.14 sq m are vested in Xiamen Port Group Shihushan Terminal Co., Ltd. (廈門港務集團石湖山碼頭有 限公司) ("Shihushan Terminal") for a term due to expire on 30 June 2053 for storage and port uses respectively. Details of the said certificates are as follows:

1. As advised by the Company, there are two buildings (being the Parking Workshop No. 19 and Hoist Room No. 1) with a total gross floor area of approximately 939.69 sq m which do not have any ownership certificates.
2. In the course of our valuation, we have assigned no commercial value to the buildings of the property with no valid title documents as mentioned in Note 4. For the Company's management reference purpose, the depreciated replacement cost of the said buildings of the property was in the sum of RMB1,400,000 as at the valuation date.
3. We have been provided with a legal opinion on the title to the property issued by the Company's PRC legal adviser, which contains, inter-alia, the following information:
4. 1. Shihushan Terminal is entitled to occupy, use, transfer, lease, mortgage or by other legal means to dispose of the property save for the portion referred to in Note 4 above;
   2. in respect of the buildings as mentioned in Note 4, there exists risk of being punished by the relevant government departments. Shihushan Terminal is entitled to occupy or use those buildings. Up to now, there exists no punishment from the relevant government departments for those buildings; and
   3. the property is free from mortgage.

1. Pursuant to the Building Ownership Certificate-Min Fang Quan Zheng Zi Di No. 126063, the building ownership of the property with a total gross floor area of approximately 204.56 sq m is vested in Huaxia (Yongan) Real Estate Development Co., Ltd., an independent third party of the Company.
2. Pursuant to two Sale and Purchase Agreements entered into between Fujian Sanming Yongfu Real Estate Co., Ltd. (福建三明市永福房地 產有限公司) and Xiamen Port Group Co., Ltd. (廈門港務集團有限公司) ("Xiamen Port Group") on 18 June 1999 and 9 August 1999 respectively, the property was contracted to be sold to Xiamen Port Group at a total consideration of approximately RMB197,066.
3. We have been provided with a legal opinion on the title to the property issued by the Company's PRC legal adviser, which contains, inter-alia, the following information:
4. 1. the property is now under legal proceeding and the original purchaser Xiamen Port Holding may be unable to obtain the ownership of the property;
   2. Shihushan Terminal is entitled to occupy or use but cannot legally dispose of those building units. Up to now, there exists no punishment from the relevant government departments for those building units; and
   3. the property is free from mortgage.
5. In the course of our valuation, we have assigned no commercial value to the property because no valid Building Ownership Certificate was obtained by Xiamen Port Holding or Shihushan Terminal. For the Company's management reference purpose, the depreciated replacement cost of the building units was in the sum of RMB200,000, and the market value of the property was estimated to be RMB1,180,000 on the hypothetical assumption that a valid Building Ownership Certificate was obtained by Xiamen Port Holding or Shihushan Terminal as at the valuation date.

"Port Group") and Xiamen Port Logistics Co., Ltd., which was incorporated on 14 January 2002. It is formerly known as Xiamen Port Group Shihushan Terminal Branch Company. Pursuant to Xia Gang Ji Cai (2002) No. 8 of Port Group, known as "Notice on financial matters related to company-owned branch setting up a company with limited liability", the assets and liabilities of Xiamen Port Group Shihushan Terminal Branch Company as at 31 December 2001 were taken up by Shihushan Terminal since 1 January 2002.

Pursuant to Xia Gang Ji Cai (2003) No. 58 of Port Group, Port Group transferred the 5% equity interest in Shihushan Terminal held by Xiamen Port Logistics Co., Ltd. to Xiamen Port Shipping Company Limited according to its book value in 2003.

Pursuant to Xia Gang Ji Cai (2004) No. 93 of Xiamen Port Group, Port Group transferred the 5% equity interest in Shihushan Terminal held by Xiamen Port Shipping Company Limited to Xiamen Port Heping Tourism & Passenger Transport Co., Ltd. according to its book value in 2004.

In September 2004, Xiamen Urban Traffic State-owned Assets Investment Company (later renamed as Xiamen Port Holding Co., Ltd.) transferred the 100% equity interest in Port Group held by Xiamen Municipal Bureau of Finance to Xiamen Port Holding Co., Ltd., with equity interest in Shihushan Terminal held by Port Group being transferred to Port Holding and the relevant procedures have been completed. After the above change of shareholders, the current shareholders of Shihushan Terminal are Xiamen Port Holding Co., Ltd. (renamed as Xiamen Port Holding Group Co., Ltd. in 2006, and hereinafter referred to as "Port Holding", which held 95% equity of Shihushan Terminal) and Xiamen Port Heping Tourism & Passenger Transport Co., Ltd. (which held 5% equity interest in Shihushan Terminal, hereinafter referred to as "Heping Passenger Transport").

In 2015, Xiamen Port Heping Tourism & Passenger Transport Co., Ltd. transferred its 5% equity interest to Port Holding with nil consideration, with benchmark date as 31 December 2014. This equity transfer was completed on 23 December 2015 upon completion of procedures for the change of business registration.

In June 2016, Port Holding entered into an Equity Interest Transfer Agreement with Xiamen Port Development Co., Ltd. (hereinafter referred to as "Port Development") to transfer the 51% equity interest in Shihushan Terminal to Port Development with benchmark date of 31 December 2015. The equity transfer was completed on 21 November 2016 upon completion of procedures for the change of business registration.

As of the valuation benchmark date, the paid-up capital of Xiamen Port Group Shihushan Terminal Co., Ltd. was RMB40,000,000.00, among which Xiamen Port Development Co., Ltd. contributed RMB20,400,000.00, representing 51% of the total paid-up capital, and Xiamen Port Holding Group Co., Ltd. contributed RMB19,600,000.00, representing 49% of the total paid-up capital.

4. Assets, financial and business conditions in recent years

The main indicators of financial position of Xiamen Port Group Shihushan Terminal Co., Ltd. in the past three years are shown in the table below (monetary unit: RMB):

2. Notes receivable

Notes receivable are bank acceptance bills held by enterprises.

3. Accounts receivable

Accounts receivable mainly refer to port fees incurred in business operations.

4. Prepayment

Prepayment refers to the oil and premium paid in advance by the enterprise.

5. Other receivables

Other receivables are mainly internal current accounts and deposits, etc.

6. Inventory

Inventory is mainly turnover materials in stock.

7. Long-term equity investment

The scope of valuation of long-term equity investment is the foreign long-term equity investment of Xiamen Port Group Shihushan Terminal Co., Ltd.. As of the valuation benchmark date, the book value of long-term equity investment of Xiamen Port Group Shihushan Terminal Co., Ltd. is RMB968,101,556.18, and there are 5 foreign equity investment projects, including 3 equity investment projects of wholly-owned subsidiaries, 1 controlled project and 1 equity participation project. See the following table for specific investment:

Breakdown of Appraisal for Long-term Equity Investments

• Xiamen Lushenda Port Mechanical & Electronic Engineering

• Xiamen Port Domestic Shipping Agency Co., Ltd. (廈門港務國

• Xiamen Shihushan Terminal Labour Service Co., Ltd. (廈門石

• Xiamen Port Haiyu Terminal Co., Ltd. (廈門港務海宇碼頭有限

• Xiamen Port Haiyi Terminal Co., Ltd. (廈門港務海億碼頭有限公