SANY HEAVY EQUIPMENT INTERNATIONAL …down.sanygroup.com/files/20160506153810637.pdf“Company” Sany Heavy Equipment International Holdings Company Limited （三一重裝國際控股有限公司）,a

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

If you have sold or transferred all your shares in Sany Heavy Equipment International Holdings CompanyLimited, you should at once hand this circular, together with the enclosed form of proxy, to the purchaser ortransferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer waseffected for transmission to the purchaser or transferee.

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

SANY HEAVY EQUIPMENT INTERNATIONALHOLDINGS COMPANY LIMITED三一重裝國際控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 631)

CONNECTED TRANSACTIONINVESTMENT AGREEMENT

ANDNOTICE OF EXTRAORDINARY GENERAL MEETING

Independent Financial Advisor to the Independent Board Committeeand the Independent Shareholders

Grand Vinco Capital Limited(A wholly-owned subsidiary of Vinco Financial Group Limited)

A letter from the Board is set out on pages 4 to 16 of the circular. A letter from the Independent BoardCommittee containing its advice and recommendation to the Independent Shareholders is set out on pages17 to 18 of this circular. A letter from Vinco Capital, the Independent Financial Adviser to the IndependentBoard Committee and the Independent Shareholders, is set out on pages 19 to 38 of this circular.

A notice convening the EGM to be convened and held at Conference Room 103, Research and DevelopmentBuilding, Sany Heavy Equipment Co., Ltd., No. 25, 16 Kaifa Road, Shenyang Economic of TechnologicalDevelopment Zone, Shenyang, Liaoning Province, PRC on Monday, 23 May 2016 at 10:00 a.m. is set outon pages 43 to 44 of this circular. Whether or not you are able to attend the EGM, you are requested tocomplete the accompanying form of proxy for use at the EGM in accordance with the instructions printedthereon and return the same to the Company’s Hong Kong share registrar, Computershare Hong KongInvestor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong assoon as possible, and, in any event, not less than 48 hours before the time appointed for the holding of theEGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you fromattending and voting in person at the EGM or any adjourned meeting thereof should you so wish.

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

6 May 2016

Page

Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Letter from Vinco Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Appendix – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Notice of the EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

CONTENTS

– i –

In this circular, the following expressions shall have the following meanings unless thecontext otherwise requires:

“associate(s)” has the same meaning ascribed to it under the ListingRules;

“Board” the board of Directors;

“BVI” British Virgin Islands;

“Company” Sany Heavy Equipment International HoldingsCompany Limited （三一重裝國際控股有限公司）, acompany incorporated with limited liability on 23 July2009 under the laws of the Cayman Islands and theShares of which are listed on the Stock Exchange(stock code: 631);

“Companies Ordinance” the Companies Ordinance (Chapter 622 of the Laws ofHong Kong);

“connected person” has the same meaning ascribed to it under the ListingRules;

“controlling shareholder” has the same meaning ascribed to it under the ListingRules;

“Director(s)” the director(s) of the Company;

“EGM” an extraordinary general meeting of the Company to beconvened at Conference Room 103, Research andDevelopment Building, Sany Heavy Equipment Co.,Ltd., No. 25, 16 Kaifa Road, Shenyang Economic ofTechnological Development Zone, Shenyang, LiaoningProvince, PRC on Monday, 23 May 2016 at 10:00 a.m.for the purpose of considering and, if thought fit,approving the Investment Agreement;

“Group” the Company and its subsidiaries;

“HK$” Hong Kong dollar, the lawful currency of Hong Kong;

“Hong Kong” the Hong Kong Special Administrative Region of thePRC;

DEFINITIONS

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“Independent Board Committee” an independent board committee of the Boardcomprising all the independent non-executive Directors,who have no material interest in the InvestmentAgreement, namely, Mr. Xu Yaxiong, Mr. Ng YukKeung and Mr. Poon Chiu Kwok;

“Independent Shareholders” the Shareholders who are not interested in or involvedin the Investment Agreement;

“Independent Third Party(ies)” means an individual(s) or a company(ies) who or whichis/are independent of and not connected with (withinthe meaning of the Listing Rules) any Directors, chiefexecutive or substantial shareholders (within themeaning of the Listing Rules) of the Company, itssubsidiaries or any of their respective associates;

“Investment” the investment of RMB160 million by NationalDevelopment Fund in Sany Marine Heavy Industrypursuant to the Investment Agreement;

“Investment Agreement” the Investment Agreement dated 8 March 2016 enteredinto among Sany Marine Heavy Industry, Sany MarineIndustry, Sany Group and National Development Fund;

“Latest Practicable Date” 27 April 2016, being the latest practicable date prior tothe printing of this circular for the purpose ofascertaining certain information contained herein;

“Listing Rules” the Rules Governing the Listing of Securities on theStock Exchange;

“National Development Fund” 國開發展基金有限公司 (National Development Fund Co.,Ltd.*), a limited liability company established in thePRC on 25 August 2015;

“PRC” the People’s Republic of China;

“RMB” Renminbi, the lawful currency of the PRC;

“Sany BVI” Sany Heavy Equipment Investments Company Limited（三一重裝投資有限公司）, a company incorporated on 23

June 2009 with limited liability under the laws of BVI;

“Sany Group” 三一集團有限公司 (Sany Group Limited*), a companywith limited liability established on 18 October 2000under the laws of the PRC;

DEFINITIONS

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“Sany HK” Sany Hongkong Group Limited（三一香港集團有限公司）,a company incorporated in Hong Kong on 14 October2005 with limited liability under the CompaniesOrdinance;

“Sany Marine Heavy Industry” 三一海洋重工有限公司 (Sany Marine Heavy Industry Co.,Ltd.*), a limited liability company established in thePRC and a wholly-owned subsidiary of Sany MarineIndustry as at the Latest Practicable Date;

“Sany Marine Industry” Sany Marine Industry Holdings Company Ltd.,（三一海工國際控股有限公司）, a company incorporated in theCayman Islands with limited liability, a wholly-ownedsubsidiary of the Company;

“SFO” the Securities and Futures Ordinance (Chapter 571 ofthe Laws of Hong Kong);

“Share(s)” ordinary share(s) of HK$0.10 each in the share capitalof our Company;

“Shareholder(s)” the holder(s) of the Share(s) of the Company with anominal value of HK$0.10 each;

“Stock Exchange” The Stock Exchange of Hong Kong Limited;

“subsidiary(ies)” has the meaning ascribed to it in the Listing Rules;

“Vinco Capital” or “IndependentFinancial Adviser”

Grand Vinco Capital Limited, a wholly-ownedsubsidiary of Vinco Financial Group Limited (stockcode: 8340) and a licensed corporation to carry outType 1 (dealing in securities) and Type 6 (advising oncorporate finance) regulated activities under the SFO,being the independent financial adviser appointed toadvise the Independent Board Committee and theIndependent Shareholders on the terms of theInvestment Agreement; and

“%” per cent.

* for identification only

DEFINITIONS

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(Stock Code: 631)

Executive Directors:Mr. Qi Jian (Chairman)Mr. Fu WeizhongMr. Xiao Huishu

Non-executive Directors:Mr. Tang XiuguoMr. Xiang WenboMr. Mao Zhongwu

Independent Non-executive Directors:Mr. Xu YaxiongMr. Ng Yuk KeungMr. Poon Chiu Kwok

Registered Office:Cricket SquareHutchins DriveP.O. Box 2681Grand Cayman KY1-1111Cayman Islands

Place of Business in Hong Kong:Room 2023, Landmark NorthNo. 39 of Lung Sum AVSheung ShuiN.T. Hong Kong

6 May 2016

To the Shareholders

Dear Sir/Madam,

CONNECTED TRANSACTIONAND

INVESTMENT AGREEMENT

INTRODUCTION

Reference is made to the announcements of the Company dated 8 March 2016 and 21March 2016 (the “Announcements”). As set out in the Announcements, on 8 March 2016,Sany Marine Heavy Industry, Sany Marine Industry, Sany Group and National DevelopmentFund entered into the Investment Agreement, pursuant to which National Development Fundhas agreed to invest an amount of RMB160 million in Sany Marine Heavy Industry.According to the valuation report issued by an Independent Third Party valuer on 18 March2016, National Development Fund will subscribe for 14.56% of the enlarged registeredcapital of Sany Marine Heavy Industry.

LETTER FROM THE BOARD

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The purpose of this circular is to provide you with (i) further information regarding theInvestment Agreement, (ii) the recommendation from the Independent Board Committee tothe Independent Shareholders, (iii) the advice from Vinco Capital to the Independent BoardCommittee and the Independent Shareholders, and (iv) the notice convening the EGM.

CONNECTED TRANSACTION

INVESTMENT AGREEMENT

Background

On 8 March 2016, Sany Marine Heavy Industry, Sany Marine Industry, Sany Groupand National Development Fund entered into the Investment Agreement, pursuant to whichNational Development Fund has agreed to invest an amount of RMB160 million in SanyMarine Heavy Industry. According to the valuation report issued by an Independent ThirdParty valuer on 18 March 2016, National Development Fund will subscribe for 14.56% ofthe enlarged registered capital of Sany Marine Heavy Industry.

Principal Terms of the Investment Agreement

The following sets forth a summary of the principal terms of the InvestmentAgreement:–

Date: 8 March 2016

Parties: (a) Sany Marine Heavy Industry, as the target company;

(b) Sany Marine Industry, as the direct shareholder of SanyMarine Heavy Industry;

(c) National Development Fund, as the investor; and

(d) Sany Group.

Subject Matter: Pursuant to the Investment Agreement, National DevelopmentFund has agreed to invest an amount of RMB160 million in SanyMarine Heavy Industry. RMB160 million was determined basedon arm’s length negotiation with reference to the Company’sfeasibility study report of the construction of marine machineryprojects in Zhuhai Industrial Park including, among others, thecapital needed for the construction against the review of theGroup’s internal financial resources and its proposed allocation.According to the valuation report issued by an Independent ThirdParty valuer on 18 March 2016, National Development Fund willsubscribe for 14.56% of the enlarged registered capital of SanyMarine Heavy Industry according to the below mechanism.


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Shareholding (14.56%) = RMB160 million/(RMB160 million + thefinal valuation of Sany Marine Heavy Industry (RMB938,676,500))

Basis of theInvestmentAmount:

The amount of the Investment has been arrived after arm’slength negotiations among the parties with reference to thevaluation of Sany Marine Heavy Industry of approximatelyRMB938,676,500 as of 31 December 2015 in accordance withthe final valuation report issued by an Independent Third Partyvaluer on 18 March 2016. The valuation report was preparedbased on assets based method, mainly focusing on the review onthe valuation of the assets and liabilities as shown on the balancesheet of Sany Marine Heavy Industry as of 31 December 2015.

The assets based method was adopted in the valuation reportbecause the management was of the view that Sany MarineHeavy Industry had just completed its construction, therefore wasnot able to give a fair view on the earnings/profit/cash flowprojection of Sany Marine Heavy Industry. The valuer’s duediligence mainly covered review of the held-for-sale financialassets, trade receivables, inventories, fixed assets, construction inprocess, land use right and long-term equity investments of SanyMarine Heavy Industry as of 31 December 2015. The majorassumptions used in the valuation report, among others, are setout as below:

(a) The assets subject to valuation will continue to be put intonormal operation after the benchmark date, being 31December 2015;

(b) No material adjustments were and will be made to theaccounting policies, business operation or managementmodel of Sany Marine Heavy Industry after the benchmarkdate, being 31 December 2015;

(c) Potential extraordinary gains or losses in relation to thebusiness operation of Sany Marine Heavy Industry in theforeseeable future are not considered in the valuation;

(d) There will be no major changes to the laws, regulations andpolicies that might materially affect Sany Marine HeavyIndustry after the benchmark date, being 31 December2015; and

(e) The effect of the Investment by National Development Fundon the market value of Sany Marine Heavy Industry is notconsidered in the valuation.


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The book value of the total assets of Sany Marine HeavyIndustry was approximately RMB1,821.4 million as at 31December 2015 and the book value of the net liabilities of SanyMarine Heavy Industry was approximately RMB141.2 million asof 31 December 2015 while the valuation of the assets of SanyMarine Heavy Industry as shown on the valuation report wasapproximately RMB938.7 million as of 31 December 2015. Suchdifference between the net liabilities and the valuation wasmainly attributable to the valuation of the long-term equityinvestment in Hunan Sany Port Equipment Co., Ltd.* (湖南三一港口設備有限公司) (“Hunan Sany Port Equipment”) held by SanyMarine Heavy Industry pursuant to a share transfer agreementdated 7 November 2014, details of which were set forth in theannouncement of the Company dated 7 November 2014 and thecircular of the Company dated 30 November 2014. Themanagement accounts of Sany Marine Heavy Industry reviewedby the Independent Third Party valuer was prepared according toPRC accounting standards. In accordance with the PRCaccounting standards, the acquisition of all equity interest inHunan Sany Port Equipment by Sany Marine Heavy Industry wasrecognised as a business combination under common control,thus only the amount of owner’s equity, being approximatelyRMB33,280,000 as shown on the accounts of Hunan Sany PortEquipment was recognised as investment in a subsidiary in theaccounts of Sany Marine Heavy Industry while the differenceamounting to RMB1,006 million between the carrying amount ofnet assets of Hunan Sany Port Equipment and the totalinvestment value of RMB1,040 million was otherwise recordedin the undistributed profit of Sany Marine Heavy Industry. Forillustration purpose, for the accounts prepared according to theInternational Financial Reporting Standards, the carrying amountof the investment in Hunan Sany Port Equipment amounted toRMB1,040 million, and the difference between the investmentcost and the fair value of the net assets of Hunan Sany PortEquipment was recognised as goodwill in the consolidatedstatement of financial position of the Company. As discussedbetween the Company and such Independent Third Party valuer,there were no material adjustments between the book value ofthe net liabilities and the valuation of assets of Sany MarineHeavy Industry as of 31 December 2015.

Payment: National Development Fund agreed to settle the investment ofRMB160 million in cash on 14 March 2016.


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Conditions for thePayment:

National Development Fund agreed to pay the Investment,subject to the conditions, including:–

(a) the Investment Agreement and the Investment contemplatedthereunder being duly and validly approved by NationalDevelopment Fund;

(b) Each of Sany Marine Heavy Industry and Sany MarineIndustry having passed all necessary internal proceduresand obtained all necessary consents to the InvestmentAgreement and the Investment contemplated thereunder inaccordance with applicable laws and regulations and theirrespective articles of association;

(c) the statements, representations, warranties and undertakingsgiven by Sany Marine Heavy Industry and Sany MarineIndustry under the Investment Agreement remaining trueand accurate and not misleading as given as of the date ofthe Investment Agreement and as of the payment;

(d) there not having occurred any event which might lead to aprospective material adverse effect on the financialconditions, prospects, assets or operation of Sany MarineHeavy Industry;

(e) no laws, regulations, rules, orders or notices having beenpublished, promulgated or implemented by any governmentor administrative authorities to forbid or restrict theInvestment;

(f) neither Sany Marine Industry nor other shareholders ofSany Marine Heavy Industry (if any) having been involvedin any pending proceedings, arbitrations, disputes,investigations or any other legal proceedings or pendingissues which might forbid or have any material adverseeffect on the Investment or render the InvestmentAgreement void or not performable;

(g) any current PRC laws, regulations and policies and anychange to the interpretation and implementation thereof bythe relevant PRC government authorities (if any), to thereasonable expectation of National Development Fund,having not occurred any material adverse effect on theInvestment, other legitimate rights and interests of NationalDevelopment Fund in Sany Marine Heavy Industry or thefinancial conditions, business or operation of Sany MarineHeavy Industry; and


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(h) all necessary approvals from the government authoritieshaving been obtained.

Each of the above conditions for the payment has been satisfiedon or before 14 March 2016.

Completion: In addition to the above, the completion of the InvestmentAgreement is conditional upon the Investment Agreement and theInvestment contemplated thereunder being approved by theIndependent Shareholders at the EGM.

Sany Marine Heavy Industry shall complete the necessary filingswith the relevant competent authorities in the PRC to reflect itsshareholding change in relation to the Investment within threemonths after the Investment Agreement and the transactioncontemplated thereunder have been approved by the IndependentShareholders at the EGM.

Purpose of theInvestment:

The net proceeds from the Investment shall be used for theconstruction of the marine machinery projects in ZhuhaiIndustrial Park.

InvestmentReturn:

National Development Fund is entitled to the investment returnper annum by ways of (i) dividend distribution or (ii) premiumof the equity interest to be purchased by Sany Group against theoriginal investment amount, the details of which are set out in“Exit Alternatives – 1. Purchase by Sany Group” below. Theamount of the investment return shall be calculated inaccordance with the below formula:

Investment Return per Annum = (RMB160 million + additionalinvestment (if any) – reduced investment (if any)) * 1.2%

1.2% has been arrived based on arm’s length negotiationsbetween parties. The management considered (1) the investmentreturn rate of the funds in the market, (2) the investment returnrate of the other comparable investment projects of NationalDevelopment Fund and (3) the latest benchmark interest ratecharged on long-term bank loan for more than five yearspublished by the People’s Bank of China, being 4.9%, beforeaccepting the investment return required under the InvestmentAgreement.

Sany Marine Heavy Industry shall pay the investment return foreach financial year to National Development Fund no later than21 March of the subsequent financial year.


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BoardComposition:

Pursuant to the Investment Agreement, National DevelopmentFund will not appoint any director to Sany Marine HeavyIndustry.

Undertakings bySany Group:

The undertakings provided by Sany Group under the InvestmentAgreement, include but not limit to the following:

(a) Sany Group undertakes to compensate any differencebetween the actual investment return received by NationalDevelopment Fund and the expected investment return ifSany Marine Heavy Industry fails to pay the expectedinvestment return in full; and

(b) if required, Sany Group undertakes to purchase the equityinterest to be acquired by National Development Fundpursuant to the Investment Agreement;

National Development Fund was established under the leadershipof National Development and Reform Commission（國家發展和改革委員會） in order to support the development of the nationalinfrastructure projects. While the National Development Fund isable to offer investment return which is lower than thebenchmark bank interest rate in the long run, as one of the riskcontrol measures, the National Development Fund requires thatdomestic entities with substantial business, such as Sany Group,rather than Sany Marine Industry, the current shareholder ofSany Marine Heavy Industry, which is an offshore investmentholding company, should provide such undertakings.

Undertakings bySany MarineIndustry:

The undertakings provided by Sany Marine Industry under theInvestment Agreement, include but not limit to the following:

(a) Sany Marine Industry undertakes to procure Sany MarineHeavy Industry to amend its articles of association andcomplete the filing with the relevant competent authoritiesin the PRC to reflect the Investment;

(b) Sany Marine Industry undertakes to procure Sany MarineHeavy Industry to satisfy the conditions for the paymentpursuant to the Investment Agreement; and

(c) Sany Marine Industry undertakes to ensure the net proceedsof the Investment shall be used for the construction of themarine machinery projects of Zhuhai Industrial Park.


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Exit Alternatives: National Development Fund has the right to adopt any of thefollowing approaches of exit upon and after 13 March 2019:

1. Purchase by Sany Group

National Development Fund has the right to require SanyGroup to purchase all the equity interests it will subscribefor under the Investment Agreement according to thefollowing schedule:

Date

Amount to be paid bySany Group to National

Development Fund (subject tofurther adjustment)

20 March 2023 RMB 40 million20 March 2024 RMB 40 million20 March 2025 RMB 40 million13 March 2026 RMB 40 million

The consideration to be paid by Sany Group to NationalDevelopment Fund is subject to further adjustment tocompensate any differences between the actual investmentreturn received by National Development Fund and theexpected investment return if Sany Marine Heavy Industryfails to pay the expected investment return in full.

2. Reduction of registered capital

National Development Fund has the right to require SanyMarine Heavy Industry to reduce its registered capitalpursuant to the following schedule:

Date

Amount of reduced registeredcapital to be returned to

National Development Fund



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3. Others

National Development Fund may also exit the Investmentby way of public listing, mergers and acquisitions or assetsecuritization of Sany Marine Heavy Industry. Solely forthe purpose of clarification, as at the Latest PracticableDate, Sany Marine Heavy Industry is not pursuing orplanning any public listing, mergers and acquisitions orasset securitization.

Financial Impact of the Investment

The following table sets forth the shareholding structure of Sany Marine HeavyIndustry immediately before and after the completion of the Investment in accordance withthe final valuation report issued by an Independent Third Party valuer on 18 March 2016:

Shareholders of Sany Marine Heavy Industry

EquityInterest

immediatelybefore the

completion

EquityInterest

immediatelyafter the

completion

Sany Marine Industry 100.0% 85.44%National Development Fund – 14.56%

Total 100.0% 100.0%

Immediately after the completion of the Investment Agreement, Sany Marine HeavyIndustry will remain as a subsidiary of the Company and its operating results, assets andliabilities will continue to be consolidated in the financial statements of the Group. As theInvestment is an equity transaction, no gain/loss will be reflected in the Company’sconsolidated income statement.

Reasons for and Benefits of the Transactions under the Investment Agreement

The Directors believe that the marine machinery industry is expected to embrace stabledevelopment in the coming years, which requires further expansion of the currentmanufacturing capacities of marine machinery products of the Group in order to carry outthe Company’s strategic plan to further diversity its business. Since the operation of ZhuhaiIndustrial Park in May 2015, the Group has recorded a rapid growth in both themanufacturing capacities and sales volume of marine machinery equipment. The Boardbelieves that the Investment will provide sufficient working capital for Sany Marine HeavyIndustry to further expand the operation in Zhuhai Industrial Park, which will be beneficialto the Group and the Shareholders as a whole.


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The Directors, including the independent non-executive Directors, whose views are setout on pages 17 to 18 in the circular, consider that the Investment Agreement has beenentered into on normal commercial terms and the terms of the Investment Agreement are fairand reasonable and in the interests of the Shareholders as a whole.

As no Director has a material interest in the Investment Agreement, none of theDirectors has abstained from voting on the relevant board resolution approving theInvestment Agreement.

Listing Rule Implications

As at the Latest Practicable Date, Mr. Liang Wengen is a controlling shareholder of theCompany by virtue of his indirect 56.42% interests in Sany HK, which in turn holds2,134,580,188 ordinary shares and 479,781,034 Convertible Preference Shares, which, inaggregate, represents 85.97% of the issued share capital of the Company.

Sany Group, being held by Mr. Liang Wengen as to 56.42%, is therefore an associateof Mr. Liang Wengen under Rule 14A.12(1)(c) and hence a connected person of theCompany under the Listing Rules. As such, the Investment constitutes a connectedtransaction for the Company under Chapter 14A of the Listing Rules.

As one of the applicable percentage ratios of the Investment Agreement is more than5% but less than 25% and the consideration exceeds HK$10,000,000, the transactionthereunder constitutes a connected transaction of the Company and is subject to thereporting, announcement and Independent Shareholders’ approval requirements underChapter 14A of the Listing Rules.

Information about the Company

The Company is an investment holding company and its subsidiaries are principallyengaged in the design, manufacturing and sales of roadheaders, combined coal mining units,mining transportation vehicles, port machinery and marine heavy equipment products.

Information about Sany Marine Heavy Industry

As at the Latest Practicable Date, Sany Marine Heavy Industry is an indirectwholly-owned subsidiary of the Company. Sany Marine Heavy Industry is mainly engaged inthe research, development, manufacturing and sales of marine machinery products and thedesign of high and new tech vessels and marine engineering equipment.


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The following table sets forth the preliminary financial information of Sany MarineHeavy Industry for the years ended 31 December 2014 and 2015:

For the year ended31 December 2014


RMB’000 RMB’000

Profit before taxation 1,814 (audited) 125,335 (unaudited)Profit after taxation 1,354 (audited) 125,335 (unaudited)

The net liabilities of Sany Marine Heavy Industry as of 31 December 2014 and 2015amounted to RMB297.59 million (audited) and RMB141.21 million (unaudited), respectively.

Information about Sany Marine Industry

Sany Marine Industry is an investment holding company and its subsidiaries areprincipally engaged in the research, development, manufacturing and sales of marinemachinery products. It is the direct shareholder of Sany Marine Heavy Industry as at theLatest Practicable Date.

Information about Sany Group

Sany Group is principally engaged in the manufacturing and distribution of engineeringmachineries for construction purposes, machinery leasing, manufacturing of automobile andeducational businesses.

Information about National Development Fund

National Development Fund is a wholly-owned subsidiary of National DevelopmentBank and is principally engaged in non-securities investment and investment managementand consulting.

To the best knowledge of the Company and having made all reasonable enquiries, eachof National Development Fund and its ultimate beneficial owners is an Independent ThirdParty of the Company and its connected persons.

EXTRAORDINARY GENERAL MEETING

The EGM will be convened and held at Conference Room 103, Research andDevelopment Building, Sany Heavy Equipment Co., Ltd., No. 25, 16 Kaifa Road, ShenyangEconomic of Technological Development Zone, Shenyang, Liaoning Province, PRC onMonday, 23 May 2016 at 10:00 am at which ordinary resolutions will be proposed for theShareholders to consider, and, if thought fit, to approve the Investment Agreement.

Any connected persons or Shareholders with a material interest in the InvestmentAgreement or the transactions as contemplated thereunder or their respective associates shallabstain from voting at the EGM. The relevant interested Shareholder, namely, Sany HK, andits associates will abstain from voting on the resolution approving the Investment Agreement


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at the EGM. Other than Sany HK or its associates, as at the Latest Practicable Date, and tothe best knowledge, belief and information of the Directors having made all reasonableenquiries, no other Shareholder is required under the Listing Rules to abstain from voting atthe EGM.

A form of proxy for use at the EGM is enclosed with this circular. Whether or not youare able to attend the EGM, you are requested to complete and return the enclosed form ofproxy in accordance with the instructions printed thereon, and deposit it with the Company’sbranch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited,at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, as soon aspossible and in any event not less than 48 hours before the time appointed for the EGM orany adjournment thereof. Completion and return of the form of proxy shall not preclude youfrom attending and voting in person at the EGM or any adjournment of it if you so wish.

Pursuant to Rule 13.39(4) of the Listing Rules, any vote of the Shareholders at ageneral meeting of the Company must be taken by way of poll. Accordingly, the resolutionsto be considered and, if thought fit, approved at the EGM will be voted on by way of pollby the Independent Shareholders. After conclusion of the EGM, the poll resultsannouncement will be published on the respective websites of the Stock Exchange and theCompany.

CLOSURE OF REGISTER OF MEMBERS

The register of members of the Company will be closed from Saturday, 21 May 2016to Monday, 23 May 2016 (both days inclusive) during which period no transfer of shareswill be registered. In order to qualify for the entitlement to attend and vote at the EGM, alltransfers accompanied by the relevant share certificates must be lodged with the Company’sHong Kong branch share registrar, Computershare Hong Kong Investor Services Limited, atShops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, HongKong for registration not later than 4:30 p.m. on Friday, 20 May 2016.

RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept fullresponsibility, includes particulars given in compliance with the Listing Rules for thepurpose of giving information with regard to the Company. The Directors, having made allreasonable enquiries, confirm that to the best of their knowledge and belief the informationcontained in this circular is accurate and complete in all material respects and notmisleading or deceptive, and there are no other matters the omission of which would makeany statement herein or this circular misleading.

RECOMMENDATION

Your attention is drawn to the letter from the Independent Board Committee set out onpages 17 to 18 of this circular and the letter of Vinco Captial to the Independent BoardCommittee and the Independent Shareholders set out on pages 19 to 38 of this circular inconnection with the Investment Agreement and the transactions contemplated thereunder andthe principal factors and reasons considered by Vinco Capital in arriving at such advice.


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The Independent Board Committee, having taken into account the advice of VincoCapital, considers that the Investment Agreement were entered into in the ordinary and usualcourse of business on normal commercial terms and the terms thereof are fair and reasonableand in the interest of the Company and the Shareholders as a whole.

Accordingly, the Independent Board Committee recommends the IndependentShareholders to vote in favour of the resolutions to approve the Investment Agreement andthe transactions contemplated thereunder at the EGM as set out in the notice of the EGM.

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

By Order of the BoardSany Heavy Equipment International Holdings Company Limited

Qi JianChairman


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(Stock Code: 631)

6 May 2016

To the Independent Shareholders


Dear Sir or Madam,

We refer to the circular of the Company dated 6 May 2016 (the “Circular”) to theShareholders, of which this letter forms part. Unless the context otherwise requires, termsdefined in the Circular shall have the same meanings when used in this letter.

We have been appointed as members of the Independent Board Committee to adviseyou as to whether, in our opinion, the terms of the Investment Agreement are fair andreasonable so far as the Independent Shareholders are concerned. Vinco Capital has beenappointed by the Company as the Independent Financial Adviser to advise the IndependentBoard Committee and the Independent Shareholders in respect of the Investment Agreement.

Your attention is drawn to the “Letter from the Board” set out on pages 4 to 16 of theCircular which contains, inter alia, information about the terms of the InvestmentAgreement, and the “Letter from Vinco Capital” set out on pages 19 to 38 of the Circularwhich contains its advice in respect of the Investment Agreement together with the principalfactors taken into consideration in arriving at such.

Having considered the terms of the Investment Agreement and having taken intoaccount the factors and reasons considered by and the advice of Vinco Capital as stated intheir letter dated 6 May 2016, we consider that (i) the entering into of the InvestmentAgreement is on normal commercial terms; (ii) the terms of the Investment Agreement arefair and reasonable so far as the interests of the Independent Shareholders are concerned;

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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and (iii) the entering into of the Investment Agreement is in the interests of the Companyand the Independent Shareholders as a whole. Accordingly, we recommend the IndependentShareholders to vote in favour of the relevant resolutions to be proposed at the EGM toratify and approve and the Investment Agreement.

Yours faithfully,For and on behalf of the Independent Board Committee

Mr. Xu Yaxiong Mr. Ng Yuk Keung Mr. Poon Chiu KwokIndependent

Non-executive DirectorIndependent

Non-executive DirectorIndependent

Non-executive Director

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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The following is the text of a letter of advice from Vinco Capital to the IndependentBoard Committee and the Independent Shareholders in relation to the Investment Agreementwhich has been prepared for the purpose of incorporation in this circular:

Grand Vinco Capital LimitedUnits 4909-4910, 49/F., The Center

99 Queen’s Road Central, Hong Kong

6 May 2016

To the Independent Board Committee and the Independent Shareholders ofSany Heavy Equipment International Holdings Company Limited

Dear Sirs and Madams,


A. INTRODUCTION

We refer to our engagement as the independent financial adviser to advise theIndependent Board Committee and the Independent Shareholders in respect of theInvestment Agreement and the transactions contemplated thereunder, details of which are setout in the circular of the Company (the “Circular”) dated 6 May 2016 to the Shareholders,of which this letter forms part. Capitalised terms used in this letter shall have the samemeanings as defined in the Circular, unless the context requires otherwise.

Reference is made to the announcement of the Company dated 8 March 2016 and 21March 2016, Sany Marine Heavy Industry, Sany Marine Industry, Sany Group and NationalDevelopment Fund entered into the Investment Agreement, pursuant to which NationalDevelopment Fund has agreed to invest an amount of RMB160 million in Sany MarineHeavy Industry. According to the valuation report issued by an Independent Third Partyvaluer on 18 March 2016, National Development Fund will subscribe for 14.56% of theenlarged registered capital of Sany Marine Heavy Industry.

As at the Latest Practicable Date, Mr. Liang Wengen is a controlling shareholder of theCompany by virtue of his indirect 56.42% interests in Sany HK, which in turn holds2,134,580,188 Shares and 479,781,034 convertible preference shares, which, in aggregate,represents 85.97% of the issued share capital of the Company. Sany Group, being held byMr. Liang Wengen as to 56.42%, is therefore an associate of Mr. Liang Wengen under Rule14A.12(1)(c) and hence a connected person of the Company under the Listing Rules. Assuch, the Investment constitutes a connected transaction for the Company under Chapter 14Aof the Listing Rules.

LETTER FROM VINCO CAPITAL

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As one of the applicable percentage ratios of the Investment Agreement is more than5% but less than 25% and the consideration exceeds HK$10,000,000, the transactionthereunder constitutes a connected transaction of the Company and is subject to thereporting, announcement and Independent Shareholders’ approval requirements underChapter 14A of the Listing Rules.

Any connected persons or Shareholders with a material interest in the connectedtransaction or the transactions as contemplated thereunder or their respective associates shallabstain from voting at the EGM. The relevant interested Shareholder, namely, Sany HK andits associates will abstain from voting on the resolution approving the connected transactionat the EGM. Other than Sany HK and its associates, as at the Latest Practicable Date, and tothe best knowledge, belief and information of the Directors having made all reasonableenquiries, no other Shareholder is required under the Listing Rules to abstain from voting atthe EGM.

The Independent Board Committee, comprising all the independent non-executiveDirectors, namely Mr. Xu Yaxiong, Mr. Ng Yuk Keung and Mr. Poon Chiu Kwok, has beenestablished by the Board to consider and advise the Independent Shareholders in respect ofthe fairness and reasonableness of the terms of the Investment Agreement. We have beenappointed and have been approved by the Independent Board Committee, as an independentfinancial adviser to advise the Independent Board Committee and the IndependentShareholders in this regard.

In our capacity as the Independent Financial Adviser to the Independent BoardCommittee and the Independent Shareholders for the purposes of the Listing Rules, our roleis to give an independent opinion as to whether the terms of the Investment Agreement arefair and reasonable so far as the Shareholders are concerned, and the entering into of theInvestment Agreement is on normal commercial terms and is in the interests of the Companyand the Shareholders as a whole and whether the Independent Board Committee shouldrecommend the Independent Shareholders to vote in favour of the resolutions to be proposedat the EGM to approve the Investment Agreement.

As at the Latest Practicable Date, we are not connected with the directors, chiefexecutive and substantial shareholders of the Company or any of their respective subsidiariesor their respective associates and, as at the Latest Practicable Date, did not have anyshareholding, directly or indirectly, in any of their respective subsidiaries or their respectiveassociates and, as at the Latest Practicable Date, did not have any shareholding, directly orindirectly, in any member of the Group or any right, whether legally enforceable or not, tosubscribe for or to nominate persons to subscribe for securities in any member of the Group.We were not aware of any relationships or interest between us and the Company or anyother parties that could be reasonably be regarded as hindrance to our independence asdefined under Rule 13.84 of the Listing Rules to act as the Independent Financial Adviser tothe Independent Board Committee and the Independent Shareholders in respect of theInvestment Agreement. During the past two years, we have been appointed as theindependent financial adviser to the Company regarding to continuing connected transactionof which the circular dated 20 July 2015 and continuing connected transaction of which thecircular dated 3 February 2016. Apart from normal professional fees payable to us inconnection with these appointments as the independent financial adviser to the independent


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board committee and the independent shareholders of the Company, no arrangement existswhereby we will receive any fees from the Company, its subsidiaries, its associates or theirrespective substantial shareholders or associates. Accordingly, we consider that we areeligible to give independent advice on the Investment Agreement.

B. BASIS OF OUR OPINION AND RECOMMENDATION

In forming our opinion and recommendation, we have relied upon the information,facts and representations contained or referred to in the Circular and the information, factsand representations provided by, and the opinions expressed by the Directors, managementof the Company and its subsidiaries. We have assumed that all information, facts, opinionsand representations made or referred to in the Circular were true, accurate and complete atthe time they were made and continued to be true, accurate and complete up to andincluding the date of the EGM and that all expectations and intentions of the Directors,management of the Company and its subsidiaries, will be met or carried out as the case maybe. We have no reason to doubt the truth, accuracy and completeness of such information,facts, opinions and representations provided to us by the Directors, management of theCompany and its subsidiaries. The Directors have confirmed to us that no material factshave been omitted from the information supplied and opinions expressed. We have no reasonto doubt that any relevant material facts have been withheld or omitted from the informationprovided and referred to in the Circular or the reasonableness of the opinions andrepresentations provided to us by the Directors, management of the Company and itssubsidiaries.

The Directors jointly and severally accept full responsibility for the accuracy of theinformation 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 atafter due and careful consideration and there are no other facts not contained in the Circular,the omission of which would make any statement in the Circular misleading.

We have relied on such information and opinions and have not, however, conductedany independent verification of such information provided, nor have we carried out anyindependent investigation into the business, financial conditions and affairs of the Group orits future prospects.

We consider that we have reviewed all currently available information and documentsparticularly, (i) the annual report of the Company for the year ended 31 December 2015 (ii)the interim report of the Company for the six months ended 30 June 2015; (iii) theInvestment Agreement; (iv) the announcements of investment agreements offered byNational Development Fund to other target companies; (v) the background of NationalDevelopment Fund; (vi) the Company’s feasibility study report of the construction of marinemachinery projects in Zhuhai Industrial Park; (vii) the future plan in Zhuhai Industrial Park;and (viii) the valuation report issued by an Independent Third Party valuer on 18 March2016, which are made available to us and enable us to reach an informed view and to justifyour reliance on the information provided so as to provide a reasonable basis for our advice.Based on the foregoing, we confirm that we have taken all reasonable steps, which areapplicable to the Investment Agreement, as referred to in Rule 13.80 of the Listing Rules(including the notes thereto). This letter is issued for the information of the Independent


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Board Committee and the Independent Shareholders solely in connection with theirconsideration of the Investment Agreement except for its inclusion in the Circular for thepurpose of the EGM, is not to be quoted or referred to, in whole or in part, nor shall thisletter be used for any other purposes, without our prior written consent.

C. PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion and recommendation to the Independent Board Committeeand Independent Shareholders in relation to the Investment Agreement, we have consideredthe principal factors and reasons set out below:

I. Background of and reasons for entering into the Investment Agreement

Information about Sany Marine Heavy Industry

As at the Latest Practicable Date, Sany Marine Heavy Industry is an indirectwholly-owned subsidiary of the Company. Sany Marine Heavy Industry is mainlyengaged in the research, development, manufacturing and sales of marine machineryproducts and the design of high and new tech vessels and marine engineeringequipment.

The following table sets forth the preliminary financial information of SanyMarine Heavy Industry for the years ended 31 December 2014 and 2015:



RMB’000 RMB’000

Profit before taxation 1,814 (audited) 125,335 (unaudited)Profit after taxation 1,354 (audited) 125,335 (unaudited)

The net liabilities of Sany Marine Heavy Industry as of 31 December 2014 and2015 amounted to RMB297.59 million (audited) and RMB141.21 million (unaudited),respectively.

Information of the Company

The Company is an investment holding company and its subsidiaries areprincipally engaged in the design, manufacture and sales of roadheaders, combined coalmining units, mining transportation vehicles, port machinery and marine heavyequipment products.

Information about Sany Marine Industry

Sany Marine Industry is an investment holding company and its subsidiaries areprincipally engaged in the research, development, manufacturing and sales of marinemachinery products. It is the direct shareholder of Sany Marine Heavy Industry as atthe Latest Practicable Date.


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Information about National Development Fund

National Development Fund is a wholly-owned subsidiary of NationalDevelopment Bank and is principally engaged in non-securities investment andinvestment management and consulting.

To the best knowledge of the Company and having made all reasonable enquiries,each of National Development Fund and the ultimate beneficial owners thereof is anIndependent Third Party of the Company and its connected persons.

Information about Sany Group

Sany Group is principally engaged in the manufacturing and distribution ofengineering machineries for construction purposes, machinery leasing, manufacturing ofautomobile and educational businesses.

II. Reasons for the Investment Agreement and proposed use of proceeds

As stated in the Letter from the Board, the Directors believe that the marine machineryindustry is expected to embrace stable development in the coming years, which requiresfurther expansion of the current manufacturing capacities of marine machinery products ofthe Group in order to carry out the Company’s strategic plan to further diversify itsbusiness. Since the commencement of operation of Zhuhai Industrial Park in May 2015, theGroup has recorded a rapid growth in both the manufacturing capacities and sales volume ofmarine machinery equipment. The Board believes that the Investment will provide sufficientworking capital for Sany Marine Heavy Industry to further expand the operation in ZhuhaiIndustrial Park, which will be beneficial to the Group and the Shareholders as a whole.

According to the interim report of the Company for the six months ended 30 June2015, we noted that Zhuhai Industrial Park for large port machinery commenced operationon 6 May 2015 and the Group increased the self-manufacturing of key components to ensurethe manufacturing quality of products and shortening the production lead time.

For our due diligence purpose, we have searched on the website of Zhuhai government.According to the website of Zhuhai government, Zhuhai Industrial Park, operated by theGroup, encompasses port machinery, engineering ships and marine equipment. Taking Zhuhaias the headquarters of research & development and marine engineering, the Group aims forgreater development in Zhuhai Industrial Park. Reference is made to report dated on 18January 2016 from Hong Kong Trade Development Council, the Zhuhai port, consisting ofGaolan port and Jiuzhou port, offers frequent direct ferry service to Hong Kong. ZhuhaiSpecial Economic Zone is one of the five special economic zones in China that enjoysspecial economic policies from the PRC government. The Zhuhai Special Economic Zone,won approval from the state council of PRC to be a state-level development zone in 1992,covering an area of 9.8 square kilometer, it commenced official operation in 1993. Theindustry sector is the main economic driver of Zhuhai, accounting for 45% of its grossdomestic product in the year of 2014. Electronics, information technology and precisionmachinery are mainstream industries, other major industries include petrochemicals, energyand bio-pharmaceuticals. Based on the aforesaid, as Sany Marine Heavy Industry targets to


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further expand the operation in Zhuhai Industrial Park using the proceeds from theInvestment, we are of the view that entering into the Investment Agreement would furtherenhance the revenue stream of the Group and is in the interests of the Company andShareholders as a whole.

According to the historical financial amount of Sany Marine Heavy Industry, the profitafter taxation increased approximately to 9,500%, from approximately RMB1.35 million forthe year ended 31 December 2014 to approximately RMB125 million for the year ended 31December 2015. It was mainly due to rapid growth in both the manufacturing capacities andsales volume of marine machinery equipment. As discussed with the management of theCompany, the Investment will provide sufficient working capital for Sany Marine HeavyIndustry to further expand the operation in Zhuhai Industrial Park and the marine machineryindustry is expected to embrace stable development in the coming years, which requiresfurther expansion of the current manufacturing capacities of marine machinery products ofthe Group to carry out the Company’s strategic plan to further diversity its business.

As discussed with the management of the Company, we noted that NationalDevelopment Fund required the Company to provide the Company’s feasibility study reportof the construction of marine machinery projects and the future plan in Zhuhai IndustrialPark. With reference to the above, the sales volume of Sany Marine Heavy Industry willincrease in the coming years, and Sany Marine Heavy Industry’s products ranging from porttyre cranes, yard cranes, gantry cranes, overhead cranes to ship-to-shore cranes will continueto roll off the production lines of Zhuhai Industrial Park and enter the domestic and globalmarket in the coming years. In addition, we have reviewed the valuation report issued by anIndependent Third Party valuer on 18 March 2016 and the terms of the engagement letterbetween Sany Marine Heavy Industry and the Independent Third Party valuer, in compliancewith the Listing Rules 13.80 (2) Notes 1(d). According to the valuation report, the marketvalue of Sany Marine Heavy Industry was approximately RMB938,676,500 as of 31December 2015.

Based on the aforesaid and taking into consideration that (i) the Company’s feasibilitystudy report of the construction of marine machinery projects in Zhuhai Industrial Park, (ii)the future plan in Zhuhai Industrial Park, we are of the view that the purpose of theInvestment Agreement is fair and reasonable and in the interests of the Company and theShareholders as a whole.


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III. Principal Terms of the Investment Agreement

The following sets forth a summary of the principal terms of the InvestmentAgreement:

Date: 8 March 2016

Parties: (a) Sany Marine Heavy Industry, as the target company;

(b) Sany Marine Industry, as the direct shareholder of SanyMarine Heavy Industry;

(c) National Development Fund, as the investor; and

(d) Sany Group.

Subject Matter: Pursuant to the Investment Agreement, National DevelopmentFund has agreed to invest an amount of RMB160 million inSany Marine Heavy Industry. RMB160 million was determinedbased on arm’s length negotiation with reference to theCompany’s feasibility study report of the construction of marinemachinery projects in Zhuhai Industrial Park including, amongothers, the capital needed for the construction against thereview of the Group’s internal financial resources and itsproposed allocation. According to the valuation report issued byan Independent Third Party valuer on 18 March 2016, NationalDevelopment Fund will subscribe for 14.56% of the enlargedregistered capital of Sany Marine Heavy Industry according tothe below mechanism.

Shareholding (14.56%) = RMB160 million / (RMB160 million+ the final valuation of Sany Marine Heavy Industry(RMB938,676,500))

Basis of theInvestmentAmount:

The amount of the Investment has been arrived after arm’slength negotiations among the parties with reference to thevaluation of Sany Marine Heavy Industry of approximatelyRMB938,676,500 as of 31 December 2015, in accordance withthe final valuation report issued by an Independent Third Partyvaluer on 18 March 2016. The valuation report was preparedbased on asset based method, mainly focusing on the review onthe valuation of the assets and liabilities as shown on thebalances sheet of Sany Marine Heavy Industry as of 31December 2015.


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The assets based method was adopted in the valuation reportbecause the management was of the view that Sany MarineHeavy Industry had just completed its construction, thereforewas not able to give a fair value on the earnings / profit / cashflow projection of Sany Marine Heavy Industry. The valuer’sdue diligence mainly covers review of the held-for-salefinancial assets, trade receivables, inventories, fixed assets,construction in process, land use right and long-term equityinvestments of Sany Marine Heavy Industry as of 31 December2015. The major assumptions used in the valuation report,among others, are set out as below:

(a) The assets subject to valuation will continue to be put intonormal operation after the benchmark date, being 31December 2015;

(b) No material adjustments were and will be made to theaccounting policies, business operation or managementmodel of Sany Marine Heavy Industry after the benchmarkdate, being 31 December 2015;

(c) Potential extraordinary gains or losses in relation to thebusiness operation of Sany Marine Heavy Industry in theforeseeable future are not considered in the valuation;

(d) There will be no major changes to the laws, regulationsand policies that might materially affect Sany MarineHeavy Industry after the benchmark date, being 31December 2015; and

(e) The effect of the Investment by National DevelopmentFund on the market value of Sany Marine Heavy Industryis not considered in the valuation.


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The book value of the total assets of Sany Marine HeavyIndustry was approximately RMB1,821.4 million as at 31December 2015 and the book value of the net liabilities of SanyMarine Heavy Industry was approximately RMB141.2 millionas of 31 December 2015 while the valuation of the assets ofSany Marine Heavy Industry as shown on the valuation reportwas approximately RMB938.7 million as of 31 December 2015.Such difference between the net liabilities and the valuationwas mainly attributable to the valuation of the long-term equityinvestment in Hunan Sany Port Equipment Co., Ltd.* (湖南三一港口設備有限公司) (“Hunan Sany Port Equipment”) held by SanyMarine Heavy Industry pursuant to a share transfer agreementdated 7 November 2014, details of which were set forth in theannouncement of the Company dated 7 November 2014 and thecircular of the Company dated 30 November 2014. Themanagement accounts of Sany Marine Heavy Industry reviewedby the Independent Third Party valuer was prepared accordingto PRC accounting standards. In accordance with the PRCaccounting standards, the acquisition of all equity interest inHunan Sany Port Equipment by Sany Marine Heavy Industrywas recognised as a business combination under commoncontrol, thus only the amount of owner’s equity, beingapproximately RMB33,280,000 as shown on the accounts ofHunan Sany Port Equipment was recognised as investment in asubsidiary in the accounts of Sany Marine Heavy Industry whilethe difference amounting to RMB1,006 million between thecarrying amount of net assets of Hunan Sany Port Equipmentand the total investment value of RMB1,040 million wasotherwise recorded in the undistributed profit of Sany MarineHeavy Industry. For illustration purpose, for the accountsprepared according to the International Financial ReportingStandards, the carrying amount of the investment in HunanSany Port Equipment amounted to RMB1,040 million, and thedifference between the investment cost and the fair value of thenet assets of Hunan Sany Port Equipment was recognised asgoodwill in the consolidated statement of financial position ofthe Company. As discussed between the Company and suchIndependent Third Party valuer, there were no materialadjustments between the book value of the net liabilities andthe valuation of assets of Sany Marine Heavy Industry as of 31December 2015.

Payment: National Development Fund agreed to the investment ofRMB160 million in cash on 14 March 2016.


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Conditions for thePayment:

National Development Fund agreed to pay the Investment,subject to the conditions, including:–

(a) the Investment Agreement and the Investmentcontemplated thereunder being duly and validly approvedby National Development Fund;

(b) each of Sany Marine Heavy Industry and Sany MarineIndustry having passed all necessary internal proceduresand obtained all necessary consents to the InvestmentAgreement and the Investment contemplated thereunder inaccordance with applicable laws and regulations and theirrespective articles of association;

(c) the statements, representations, warranties andundertakings given by Sany Marine Heavy Industry andSany Marine Industry under the Investment Agreementremaining true and accurate and not misleading as givenas of the date of the Investment Agreement and as of thepayment;

(d) there not having occurred any event which might lead to aprospective material adverse effect on the financialconditions, prospects, assets or operation of Sany MarineHeavy Industry;

(e) no laws, regulations, rules, orders or notices having beenpublished, promulgated or implemented by anygovernment or administrative authorities to forbid orrestrict the Investment;

(f) neither Sany Marine Industry nor other shareholders ofSany Marine Heavy Industry (if any) having been involvedin any pending proceedings, arbitrations, disputes,investigations or any other legal proceedings or pendingissues which might forbid or have any material adverseeffect on the Investment or render the InvestmentAgreement void or not performable;

(g) any current PRC laws, regulations and policies and anychange to the interpretation and implementation thereof bythe relevant PRC government authorities (if any), to thereasonable expectation of National Development Fund,having not occurred any material adverse effect on theInvestment, other legitimate rights and interests ofNational Development Fund in Sany Marine HeavyIndustry or the financial conditions, business or operationof Sany Marine Heavy Industry; and


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(h) all necessary approvals from the government authoritieshaving been obtained.

Each of the above conditions for the payment has been satisfiedon or before 14 March 2016.

Completion: In addition to the above, the completion of the InvestmentAgreement is conditional upon, among others, the InvestmentAgreement and the Investment contemplated thereunder beingapproved by the Independent Shareholders at the EGM.

Sany Marine Heavy Industry shall complete the necessaryfilings with the relevant competent authorities in the PRC toreflect its shareholding change in relation to the Investmentwithin the three months after the Investment Agreement and thetransaction contemplated thereunder have been approved by theIndependent Shareholders at the EGM.

Purpose of theInvestment:

The net proceeds from the Investment shall be used for theconstruction of the marine machinery projects in ZhuhaiIndustrial Park.

Investment Return: National Development Fund is entitled to the investment returnper annum by ways of (i) dividend distribution or (ii) premiumof the equity interest to be purchased by Sany Group againstthe original investment amount, the details of which are set outin “Exit Alternatives – 1. Purchase by Sany Group” below. Theamount of the investment return shall be calculated inaccordance with the below formula:

Investment Return per Annum = (RMB160 million + additionalinvestment (if any) – reduced investment (if any)) * 1.2%

1.2% has been arrived based on arm’s length negotiationsbetween parties. The management considered (1) the investreturn rate of the funds in the market, (2) the investment returnrate of the other comparable investment projects of NationalDevelopment Fund and (3) the latest benchmark interest ratecharged on long-term bank loan for more than five yearspublished by the People’s Bank of China, being 4.9%, beforeaccepting the investment return under the InvestmentAgreement.

Sany Marine Heavy Industry shall pay the investment return foreach financial year to National Development Fund no later than21 March of the subsequent financial year.


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BoardComposition:

Pursuant to the Investment Agreement, National DevelopmentFund will not appoint any director to Sany Marine HeavyIndustry.

Undertakings bySany Group:

The undertakings provided by Sany Group under the InvestmentAgreement, include but not limit to the following:

(a) Sany Group undertakes to compensate any differencebetween the actual investment return received by NationalDevelopment Fund and the expected investment return ifSany Marine Heavy Industry fails to pay all or part of theexpected investment return; and

(b) if required, Sany Group undertakes to purchase the equityinterest to be acquired by National Development Fundpursuant to the Investment Agreement;

National Development Fund was established under theleadership of National Development and Reform Commission（國家發展和改革委員會）in order to support the development of

the national infrastructure projects. While the NationalDevelopment Fund is able to offer investment return which islower than the benchmark bank interest rate in the long run, asone of the risk control measures, the National DevelopmentFund requires that domestic entities with substantial business,such as Sany Group, rather than Sany Marine Industry, thecurrent shareholder of Sany Marine Heavy Industry, which is anoffshore investment holding company, should provide certainundertakings.

Undertakings bySany MarineIndustry:

The undertakings provided by Sany Marine Industry under theInvestment Agreement, include but not limit to the following:

(a) Sany Marine Industry undertakes to procure Sany MarineHeavy Industry to amend its articles of association andcomplete the filing with the relevant competent authoritiesin the PRC to reflect the Investment;

(b) Sany Marine Industry undertakes to procure Sany MarineHeavy Industry to satisfy the conditions for the paymentpursuant to the Investment Agreement; and

(c) Sany Marine Industry undertakes to ensure the netproceeds of the Investment shall be used for theconstruction of the marine machinery projects of ZhuhaiIndustrial Park.


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Exit Alternatives: National Development Fund has the right to adopt any of thefollowing approaches of exit upon and after 13 March 2019:

I. Purchase by Sany Group

National Development Fund has the right to require Sany Groupto purchase all the equity interests it will subscribe for underthe Investment Agreement according to the following schedule:

Date

Amount to be paid by Sany Groupto National Development Fund(subject to further adjustment)


The consideration to be paid by Sany Group to NationalDevelopment Fund is subject to further adjustment tocompensate any differences between the actual investmentreturn received by National Development Fund and theexpected investment return if Sany Marine Heavy Industry failsto pay all or part of the expected investment return in full.

II. Reduction of registered capital

National Development Fund has the right to require SanyMarine Heavy Industry to reduce its registered capital pursuantto the following schedule:

Date

Amount of reducedregistered capital to be

returned to NationalDevelopment Fund



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III. Others

National Development Fund may also exit the Investment byway of public listing, mergers and acquisitions or assetsecuritization of Sany Marine Heavy Industry. Solely for thepurpose of clarification, as at the Latest Practicable Date, SanyMarine Heavy Industry is not pursuing or planning any publiclisting, mergers and acquisitions or asset securitization.

IV. Comparison with similar investment agreements offered by National DevelopmentFund

To further assess the fairness and reasonableness of the terms of the InvestmentAgreement, we have selected and identified a list of 9 listed companies (the“Comparables”), which have entered into investment/loan agreements with NationalDevelopment Fund. The Comparables are listed on the Stock Exchange, the Shenzhen StockExchange and the Shanghai Stock Exchange. The review period is from 25 August 2015 to29 February 2016. We considered the list of the Comparables to be exhaustive forcomparison purpose. We are of the view that the Comparables would provide us with therecent relevant information, which play an important role in the determination of the fairnessand reasonableness on the terms of the Investment Agreement. Our relevant findings aresummarised in the table below:

Date ofannouncement

Company name, stockexchange and stock code Financing method

Investment/Loan

amount

Interestrate/

Investmentreturn rate Duration

27-Nov-2015 厦門厦工機械股份有限公司The Shenzhen StockExchange(Stock code: 600815)

Debt financing (NationalDevelopment Fundprovided long-term loan totarget company)

RMB160million

1.2% 10 years

4-Dec-2015 河南漢威電子股份有限公司The Shenzhen StockExchange(Stock code: 300007)

Equity financing (NationalDevelopment Fundsubscribed for 24.7% ofthe enlarged registeredcapital of target company)

RMB49million

1.2% 10 years

9-Dec-2015 京東方科技集團股份有限公司The Shenzhen StockExchange(Stock code: 000725)


RMB1,700million

1.2% 18 years

18-Dec-2015 TCL 集團股份有限公司The Shenzhen StockExchange(Stock code: 000100)

Equity financing (NationalDevelopment Fundsubscribed for 4.4% of theenlarged registered capitalof target company)

RMB1,000million

1.2% 12 years


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Date ofannouncement

Company name, stockexchange and stock code Financing method

Investment/Loan

amount

Interestrate/

Investmentreturn rate Duration

23-Dec-2015 Xiwang Specical Steelcompany LimitedThe Stock Exchange(Stock code: 1266)

Equity financing (ChinaDevelopment Fundsubscribed for 25.8% ofthe enlarged registeredcapital of target company)

RMB161million

1.2% 15 years

25-Dec-2015 Shandong Chenming PaperHoldings LimitedThe Stock Exchange(Stock code: 1812)


RMB150million

1.2% 7 years

26-Dec-2015 浙江新安化工集團股份有限公司The Shenzhen StockExchange(Stock code: 600596)


RMB41.8million

1.2% 8 years

29-Dec-2015 Honghua Group LimitedThe Stock Exchange(Stock code: 196)

Debt financing (ChinaDevelopment Fundprovided long-term loan totarget company)

RMB105million

1.2% 10 years

4-Jan-2016 Avic International HoldingsLimitedThe Stock Exchange(Stock code: 161)

Debt financing (NationalDevelopment Fundprovided long-term loan totarget company)

RMB906million

1.2% 12 years

Maximum RMB1,700million

1.2% 18 years

Minimum RMB41.8million

1.2% 7 years

Mean RMB474.8million

1.2% 11.3 years

The CompanyThe Stock Exchange(Stock code: 631)

Equity financing (NationalDevelopment Fundsubscribed for 14.7% ofthe enlarged registeredcapital of Sany MarineHeavy Industry)

RMB160million

1.2% 10 years

Source: the Stock Exchange, the Shenzhen Stock Exchange and the Shanghai Stock Exchange


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Based on the above table, we noted that the major terms of the investment agreementsoffered by the National Development Fund to the Comparables, including (i) financingmethod; (ii) interest rate or investment return rate; and (iii) duration, are similar to themajor terms of the Investment Agreement. According to our research on the background ofNational Development Fund, National Development Fund provides financial subsidy offeredby the PRC government to target companies, which principally engaged in infrastructureconstruction, new energy resources and high technology, the financing method is mainlydivided into two types, (i) capital investment or (ii) provision of long-term loan, we notedthat, pursuant to the Investment Agreement, National Development Fund has agreed to investan amount of RMB160 million in Sany Marine Heavy Industry. According to the valuationreport issued by an Independent Third Party valuer on 18 March 2016, NationalDevelopment Fund will subscribe for 14.56% of the enlarged registered capital of SanyMarine Heavy Industry. Based on the above table, National Development Fund subscribedfor particular amount of the enlarged registered capital of target companies, therefore, weconsidered that the financing method under the Investment Agreement is common marketpractice. As discussed with the management of the Company, the investment amount, beingRMB160 million, has been arrived after arm’s length negotiations among the parties withreference to the valuation of Sany Marine Heavy Industry of approximatelyRMB938,676,500 as of 31 December 2015, in accordance with the final valuation reportissued by an Independent Third Party valuer on 18 March 2016. We noted that RMB160million was determined based on arm’s length negotiation with reference to the Company’sfeasibility study report of the construction of marine machinery projects in Zhuhai IndustrialPark including, among others, the capital needed for the construction against the review ofthe Group’s internal financial resources and its proposed allocation. According to the abovetable, the investment amount of the Comparables ranged from RMB41.8 million toRMB1,700 million, the investment amount under the Investment Agreement is within therange of the Comparables and lower than mean of the Comparables. Based on the aforesaidand taking into consideration that (i) basis of the investment amount under the InvestmentAgreement, (ii) the Company’s feasibility study report of the construction of marinemachinery projects in Zhuhai Industrial Park and (iii) the future plan in Zhuhai IndustrialPark, we are of the view that the investment amount under the Investment Agreement is fairand reasonable so far as the Shareholders are concerned. Furthermore, the investment returnrate under the Investment Agreement is not more than 1.2% and lower than the benchmarkinterest rate published by the People’s Bank of China (“PBC”). With reference to the latestbenchmark interest rate published by website of the PBC dated on 24 October 2015, thebenchmark interest rate on long-term loan, over 5 years, is 4.9%. As confirmed by theCompany, the investment return rate under National Development Fund is lower than that ofthe benchmark interest rate mainly due to the financial subsidy offered by the PRCgovernment in order to boost economic growth in the PRC. As such, we are of the view thatthe major terms of the Investment Agreement are under normal commercial terms and arefair and reasonable so far as the Shareholders are concerned.


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V. Financial effects of the Investment

For exit alternatives under the Investment Agreement, National Development Fund hasthe right to adopt any of the following approaches of exit upon and after 13 March 2019:

1. Purchase by Sany Group

National Development Fund has the right to require Sany Group to purchase allthe equity interests it will subscribe for under the Investment Agreement under thefollowing schedule:

Date

Amount to be paid by Sany Groupto National Development Fund(subject to further adjustment)


The consideration to be paid by Sany Group to National Development Fund issubject to further adjustment to compensate any differences between the actualinvestment return received by National Development Fund and the expected investmentreturn if Sany Marine Heavy Industry fails to pay all or part of the expectedinvestment return. With reference to the investment terms of the Comparables, NationalDevelopment Fund requested the target companies to guarantee its repayment ofinvestment by various form of securities such as pledged assets or undertakings fromthe target group companies. Based on the aforesaid and taking into consideration thatthe net liabilities of Sany Marine Heavy Industry as of 31 December 2014 and 2015amounted to RMB297.59 million and RMB141.21 million respectively, we are of theview that the repayment of investment of RMB160 million by the connected person, isnot an uncommon market practice.

As discussed with the management of the Company, in order to facilitate theconstruction of the marine machinery projects in Zhuhai Industrial Park, the aboverepayment method will be paid by Sany Group to National Development Fund eachyear from the year of 2023 to the year of 2026. According to the Company’s feasibilitystudy report of the construction of marine machinery projects in Zhuhai Industrial Park,the Company will require large amount of working capital for Sany Marine HeavyIndustry to further expand the operation in Zhuhai Industrial Park and the marinemachinery industry is expected to embrace stable development in the first three years.

Immediately after completion of repayment by Sany Group, Sany Marine HeavyIndustry will become an indirect non-wholly owned subsidiary of the Company and itsoperating results, assets and liabilities will continue to be consolidated in the financialstatements of the Group. As the above repayment method is an equity transaction, nogain/loss will be reported in the Company’s consolidated income statement.


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2. Reduction of registered capital

National Development Fund has the right to require Sany Marine Heavy Industryto reduce its registered capital pursuant to the following schedule:

Date

Amount of reduced registered capitalto be returned to National

Development Fund


Pursuant to the Investment Agreement, National Development Fund has agreed toinvest an amount of RMB160 million in Sany Marine Heavy Industry to increase itsregistered capital. As discussed with the management of the Company, in order tofacilitate the construction of the marine machinery projects in Zhuhai Industrial Park,the above repayment method will reduce the registered capital of Sany Marine HeavyIndustry and repay to National Development Fund each year from the year of 2023 tothe year of 2026.

With reference to the Comparables, National Development Fund has the right torequire target companies to reduce registered capital and repay National DevelopmentFund in different periods. As a result, we are of the view that the above repaymentmethod under the Investment Agreement is not an uncommon market practice and isfair and reasonable.

3. Others

As discussed with the management of the Company, National Development Fundmay also exit the Investment by way of public listing, mergers and acquisitions or assetsecuritization of Sany Marine Heavy Industry. Solely for the purpose of clarification, asat the Latest Practicable Date, Sany Marine Heavy Industry is not pursuing or planningany public listing, mergers and acquisitions or asset securitization.

Based on the aforesaid and taking into consideration that (i) the repaymentmethods under the Investment Agreement, (ii) the repayment methods under similarinvestment agreements entered into by National Development Fund and targetcompanies, we are of the view that the all above repayment methods under theInvestment Agreement are fair and reasonable so far as the Shareholders are concerned.


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VI. Financial alternatives

As discussed with the management of the Company, they have also considered othermeans of fund raising, including alternative means of equity financing (such as rights issue/open offer, placement of shares) and debt financing. For the rights issue it would requiretrading arrangements of the nil-paid rights with the share registrar and additional time forsplitting and trading of nil-paid rights shares as well as reviewing relevant documents andliaising with other professional parties for such preparation and administration to be put inplace to facilitate and administrate such trading, which in turn would require longer time tocomplete. Open Offer would also require longer time to complete and would incur extrafund raising costs. In order to raise such large amount of proceeds, the management of theCompany are of the view that placement of shares will not be fair to existing Shareholdersas the potential Shareholders from the placement of shares will result in an immediatedilution of existing shareholding interests in the Company. Moreover, the management of theCompany considered that the recent low market price of the Shares is not suitable forplacement of shares or rights issue/open offer. Therefore, we noted that entering into theInvestment Agreement is more cost-effective and efficient as compared to the rights issue/open offer or placement of shares.

In addition to the equity financing, the management of the Company are also of theopinion that bank borrowing and/or debt financing will usually incur high interest burden onthe Group and may not be achievable on favourable terms on a timely basis, due topossibility of being subject to, including but not limited to, lengthy due diligence andnegotiations with banks as well as pledge of assets by the Group. Also, incurring additionaldebts will increase the Group’s liabilities and interest burden. Furthermore, as discussedwith management of the Company, the net liabilities of Sany Marine Heavy Industry as of31 December 2014 and 2015 amounted to RMB297.59 million (audited) and RMB141.21million (unaudited), which makes the Company difficult to obtain bank financing. Regardingthe combination of funding measures in the form of both consideration issue and/orpromissory note, we noted that the consideration issue will bring dilution effect to theexisting Shareholders while the issue of promissory notes or other means of debt instrumentwill incur liabilities and may have interest burden to the Group. As such, we considered that(i) the other means of equity financing, (ii) debt financing and (iii) combination of equityand debt financing are not fair and reasonable to the Shareholder, therefore, we are of theview that the Investment Agreement, is fair and reasonable and is in the interests of theCompany and the Shareholders as a whole.


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D. CONCLUSION

Having considered the above reasons, we are of the view that the terms of theInvestment Agreement are fair and reasonable so far as the interests of the Shareholders areconcerned, and the entering into the Investment Agreement is on normal commercial termsand is in the interests of the Company and the Shareholders as a whole. Accordingly, werecommend the Independent Board Committee to advise the Independent Shareholders tovote in favour of the relevant resolutions to be proposed at the EGM in this regard.

Yours faithfully,For and on behalf of

Grand Vinco Capital LimitedAlister Chung

Managing Director

Note: Mr. Alister Chung is a licensed person registered with the Securities and Future Commission of HongKong and a responsible officer of Grand Vinco Capital Limited to carry out type 1 (dealing in securities)and type 6 (advising on corporate finance) regulated activities under the SFO and has participated in theprovision of independent financial advisory services for various transactions involving companies listed inHong Kong for over 10 years.


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1. DISCLOSURE OF INTERESTS

(a) Interests and short positions of the Directors and the chief executives in theshare capital and associated corporations of the Company

As at the Latest Practicable Date, the interests or short positions of the Directorsand the chief executives in the Shares, underlying Shares or debentures of theCompany or any of its associated corporation (within the meaning of Part XV of theSFO) which will have to be notified to the Company and the Stock Exchange pursuantto Divisions 7 and 8 of Part XV of the SFO (including interests and short positionswhich he is taken or deemed to have under such provisions of the SFO) or which willbe required, pursuant to section 352 of the SFO, to be recorded in the register referredto therein or which will be required to be notified to the Company and the StockExchange pursuant to the Model Code for Securities Transactions by Directors ofListed Companies contained in the Listing Rules, will be as follows:

Long positions in shares of Sany BVI (being the ultimate holding company ofthe Company)

Name of DirectorNature ofinterest

Number ofshares held

Percentage ofissued share

capital

Mr. Tang Xiuguo(1) Beneficial owner 875 8.75%Mr. Mao Zhongwu(1) Beneficial owner 800 8.00%Mr. Xiang Wenbo(1) Beneficial owner 800 8.00%

Note:

(1) Each of Mr. Tang Xiuguo, Mr. Mao Zhongwu and Mr. Xiang Wenbo holds 8.75%, 8.00% and8.00% of the issued share capital of Sany BVI, respectively, which in turn holds the entireissued share capital of Sany HK.

Long Position in shares of the Company

Name of DirectorNature ofinterest

Number ofshares held

Percentage ofissued share

capital

Mr. Mao Zhongwu(1) Beneficial owner 222,200 0.01%

Note:

(1) Mr. Mao Zhongwu is deemed to be interest in 222,200 shares which may be issued to himupon exercise of the share options granted to him on 26 February 2013.

Save as disclosed above, as at the Latest Practicable Date, none of the Directorsand chief executive of the Company or any of their spouses or children under the ageof 18 were interested, or were deemed to be interested in the long and short positionsin the shares, underlying shares and debentures of the Company or any of its holding

APPENDIX GENERAL INFORMATION

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company, subsidiaries or other associated corporation (within the meaning of Part XVof the SFO) which were required, pursuant to Section 352 of the SFO, to be entered inthe register referred to therein; or were required pursuant to the Model Code to benotified to the Company and the Stock Exchange. At no time had the Company or anyof its holding company or subsidiaries been participated in any arrangements to enablethe directors or chief executive (including their spouses or children under the age ofeighteen) of the Company to acquire any interests and short positions of shares orunderlying shares or debentures of the Company or any of its associated corporation(within the meaning of Part XV of the SFO).

(b) Interests and short positions of substantial shareholders and other parties inthe Shares and underlying Shares of the Company

Name of Shareholder Capacity

Number ofshares/

underlyingshares held

Approximatepercentage of

issued sharecapital

Sany HK(1) Beneficial owner 2,614,361,222 85.97%Sany BVI(2) Interest in a controlled

corporation2,614,361,222 85.97%

Mr. Liang Wengen(3) Interest in a controlledcorporation

2,614,361,222 85.97%

Notes:

1. The 2,614,361,222 shares and underlying shares consist of 2,134,580,188 ordinary shares and479,781,034 underlying shares which may be issued pursuant to the conversion of the479,781,034 convertible preference shares issued to Sany HK.

2. Sany BVI owns 100% of the issued share capital of Sany HK. Sany BVI is therefore deemedto be interested in all the shares and underlying shares of the Company held by Sany HKunder the SFO.

3. Mr. Liang Wengen is interested in 56.42% of Sany BVI. Mr. Liang Wengen is thereforedeemed to be interested in all the shares and underlying shares of the Company held by SanyHK under the SFO.

2. SERVICE AGREEMENTS

As at the Latest Practicable Date, none of the Directors had entered or was proposingto enter into a service agreement with any member of the Group which is not determinableby the Group within one year without payment of compensation, other than statutorycompensation.


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3. QUALIFICATION AND CONSENT OF EXPERT

The following is the qualifications of the experts or professional advisers who havegiven opinion or advice contained in this circular:

Name Qualifications

Vinco Capital a licensed corporation to carry out Type 1 (dealing insecurities) and Type 6 (advising on corporate finance) regulatedactivities under the SFO.

Vinco Capital has given and has not withdrawn its written consent to the issue of thiscircular with the inclusion of its letter and references to its name in the form and context inwhich it appears.

The letter and recommendation given by Vinco Capital is given as of the date of thiscircular for incorporation herein.

As at the Latest Practicable Date, Vinco Capital does not have any shareholding in orany right (whether legally enforceable or not) to subscribe for or to nominate persons tosubscribe for securities in the Company.

As at the Latest Practicable Date, Vinco Capital did not have any interest, direct orindirect, in any assets since 31 December 2015, being the date to which the latest publishedaudited accounts of the Company were made up, have been acquired or disposed of by orleased to the Company, or are proposed to be acquired or disposed or by or leased to theCompany.

4. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors are not aware of any material adversechange in the financial or trading position of the Group since 31 December 2015, being thedate to which the latest published audited financial statements of the Company were madeup.

5. COMPETING INTEREST

As at the Latest Practicable Date, none of the Directors and their associates wasinterested in any business apart from the business of the Group, which competes or is likelyto compete, either directly or indirectly, with that of the Group.


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6. INTEREST OF DIRECTORS

As at the Latest Practicable Date, none of the Directors had any direct or indirectinterest in any assets which have been acquired or disposed of by, or leased to, or which areproposed to be acquired or disposed of by, or leased to, the Company or any of itssubsidiaries since 31 December 2015, being the date to which the latest published auditedaccounts of the Company were made up.

As at the Latest Practicable Date, there is no other contract or arrangement subsistingat the Latest Practicable Date in which any of the Directors is materially interested andwhich is significant in relation to the business of the Group.

7. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the Company’sprincipal place of business in Hong Kong at Room 2023, Landmark North, No. 39 of LungSum AV, Sheung Shui, N.T. Hong Kong during normal business hours from 6 May 2016 upto and including the date of the EGM:

(a) the Investment Agreement;

(b) the letter of advice from Grand Vinco Capital Limited, the text of which is set outon pages 19 to 38 of this circular; and

(c) the written consent from Grand Vinco Capital Limited referred in paragraph 3 ofthis appendix.

8. MISCELLANEOUS

(a) The Company’s share registrar and transfer office in Hong Kong is atComputershare Hong Kong Investor Services Limited at 17M Floor, HopewellCentre, 183 Queen’s Road East, Wanchai, Hong Kong.

(b) The joint company secretaries of the Company are Ms. Kam Mei Ha (Wendy), afellow member of both the Hong Kong Institute of Chartered Secretaries and theInstitute of Charted Secretaries and Administrators in the United Kingdom andMr. Xiao Huishu, who obtained the waiver from strict compliance with therequirements under Rule 3.28 of the Listing Rules form the Stock Exchange on 12August 2015.

(c) In the event of inconsistency, the English language text of this circular shallprevail over the Chinese language text.


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(Stock Code: 631)

NOTICE IS HEREBY GIVEN that the extraordinary general meeting (the “EGM”) ofSany Heavy Equipment International Holdings Company Limited (the “Company”) will beheld at Conference Room 103, Research and Development Building, Sany Heavy EquipmentCo., Ltd., No. 25, 16 Kaifa Road, Shenyang Economic of Technological Development Zone,Shenyang, Liaoning Province, PRC on Monday, 23 May 2016 at 10:00 a.m. for thefollowing purposes:

ORDINARY RESOLUTIONS

1. “THAT:

(a) the Investment Agreement (as defined in the circular of the Company dated 6May 2016) dated 8 March 2016 entered into among Sany Marine HeavyIndustry (as defined in the circular of the Company dated 6 May 2016),Sany Marine Industry (as defined in the circular of the Company dated 6May 2016), Sany Group (as defined in the circular of the Company dated 6May 2016) and National Development Fund (as defined in the circular of theCompany dated 6 May 2016) be and is hereby approved, confirmed andratified; and

(b) the transactions contemplated under the Investment Agreement be and arehereby approved, confirmed and ratified.”

By Order of the BoardMr. Qi Jian

Chairman

Hong Kong, 6 May 2016

Notes:

(1) A member entitled to attend and vote at the above meeting may appoint one or, if he holds two or moreshares, more proxies to attend and vote instead of him. A proxy need not be a member of the Company. Ona poll, votes may be given either personally or by proxy.

(2) Where there are joint holders of any Share, any one of such joint holder may vote, either in person or byproxy, in respect of such Share as if he were solely entitled thereto, but if more than one of such jointholders be present at the Meeting, the vote of the senior who tenders a vote, whether in person or by proxy,

NOTICE OF THE EGM

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shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shallbe determined by the order in which the names stand in the register of members of the Company in respectof the joint holding.

(3) In order to be valid, a form of proxy together with the power of attorney (if any) or other authority (if any)under which it is signed or a certified copy thereof shall be deposited at the Company’s Hong Kong branchshare registrar, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183Queen’s Road East, Wanchai, Hong Kong not less than 48 hours before the time appointed for the holdingof the meeting or any adjournment thereof. The proxy form will be published on the website of the StockExchange.

(4) The register of members of the Company will be closed from Saturday, 21 May 2016 to Monday, 23 May2016 (both days inclusive) during which period no transfer of shares will be registered. In order to qualifyfor the entitlement to attend and vote at the EGM, all transfers accompanied by the relevant sharecertificates must be lodged with the Company’s Hong Kong branch share registrar, Computershare HongKong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East,Wanchai, Hong Kong for registration not later than 4:30 p.m. on Friday, 20 May 2016.

(5) The completion of a form of proxy will not preclude you from attending and voting at the EGM in personshould you so wish. If you attend and vote at the EGM, the authority of your proxy will be revoked.

As at the date of this notice, the executive Directors are Mr. Qi Jian, Mr. Fu Weizhongand Mr. Xiao Huishu, the non-executive Directors are Mr. Tang Xiuguo, Mr. Xiang Wenboand Mr. Mao Zhongwu, and the independent non-executive Directors are Mr. Xu Yaxiong,Mr. Ng Yuk Keung and Mr. Poon Chiu Kwok.

NOTICE OF THE EGM

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Documents

SANY HEAVY EQUIPMENT INTERNATIONAL …down.sanygroup.com/files/20160506153810637.pdf“Company” Sany Heavy Equipment International Holdings Company Limited （三一重裝國際控股有限公司）,a