The “Company”) (Incorporated in the Cayman Islands with Limited Liability)

Home , Chengdong District

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

Application Proof of

Zhongyi Jiye Holding Company Limited 中億基業控股有限公司 (the “Company”) (Incorporated in the Cayman Islands with limited liability)

WARNING

The publication of this Application Proof is required by The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) and the Securities and Futures Commission (the “Commission”) solely for the purpose of providing information to the public in Hong Kong.

This Application Proof is in draft form. The information contained in it is incomplete and is subject to change which can be material. By viewing this document, you acknowledge, accept and agree with the Company, its sole sponsor, advisors or members of the underwriting syndicate that:

(a) this document is only for the purpose of providing information about the Company to the public in Hong Kong and not for any other purposes. No investment decision should be based on the information contained in this document;

(b) the publication of this document or supplemental, revised or replacement pages on the Stock Exchange’s website does not give rise to any obligation of the Company, its sole sponsor, advisors or members of the underwriting syndicate to proceed with an offering in Hong Kong or any other jurisdiction. There is no assurance that the Company will proceed with the offering;

(c) the contents of this document or supplemental, revised or replacement pages may or may not be replicated in full or in part in the actual final listing document;

(d) the Application Proof is not the final listing document and may be updated or revised by the Company from time to time in accordance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited;

(e) this document does not constitute a prospectus, offering circular, notice, circular, brochure or advertisement offering to sell any securities to the public in any jurisdiction, nor is it an invitation to the public to make offers to subscribe for or purchase any securities, nor is it calculated to invite offers by the public to subscribe for or purchase any securities;

(f) this document must not be regarded as an inducement to subscribe for or purchase any securities, and no such inducement is intended;

(g) neither the Company nor any of its affiliates, its sole sponsor, advisors or members of its underwriting syndicate is offering, or is soliciting offers to buy, any securities in any jurisdiction through the publication of this document;

(h) no application for the securities mentioned in this document should be made by any person nor would such application be accepted;

(i) the Company has not and will not register the securities referred to in this document under the United States Securities Act of 1933, as amended, or any state securities laws of the United States;

(j) as there may be legal restrictions on the distribution of this document or dissemination of any information contained in this document, you agree to inform yourself about and observe any such restrictions applicable to you; and

(k) the application to which this document relates has not been approved for listing and the Stock Exchange and the Commission may accept, return or reject the application for the subject public offering and/or listing.

If an offer or an invitation is made to the public in Hong Kong in due course, prospective investors are reminded to make their investment decisions solely based on the Company’s prospectus registered with the Registrar of Companies in Hong Kong, copies of which will be distributed to the public during the offer period. THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. IMPORTANT

IMPORTANT: If you are in any doubt about any of the contents of this document, you should seek independent professional advice. Zhongyi Jiye Holding Company Limited 中億基業控股有限公司 (Incorporated in the Cayman Islands with limited liability)

[REDACTED]

Number of [REDACTED] under the : [REDACTED] Shares (subject to the [REDACTED] [REDACTED]) Number of [REDACTED] : [REDACTED] Shares (subject to adjustment) Number of [REDACTED] : [REDACTED] Shares (subject to adjustment and the [REDACTED]) Maximum [REDACTED] : [REDACTED] per [REDACTED], plus brokerage fee of 1.0%, SFC transaction levy of 0.0027% and Stock Exchange trading fee of 0.005% (payable in full on application in Hong Kong dollars and subject to refund) Nominal value : US$0.01 per Share [REDACTED] :[●] Sole Sponsor

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Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsibility for the contents of this document, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document. A copy of this document, having attached thereto the documents specified in “Appendix VI—Documents Delivered to the Registrar of Companies and Available for Inspection—A. Documents Delivered to the Registrar of Companies” of this document, has been registered with the Registrar of Companies in Hong Kong as required by Section 342C of the Companies (Winding Up and Miscellaneous Provisions) Ordinance. The Securities and Futures Commission and the Registrar of Companies in Hong Kong take no responsibility for the contents of this document or any of the other documents referred to above. The [REDACTED] is expected to be fixed by agreement between the [REDACTED] (on behalf of the [REDACTED]) and our Company on the [REDACTED]. The [REDACTED] is expected to be on or around [REDACTED] and, in any event, no later than [REDACTED]. The [REDACTED] will be no more than [REDACTED] per [REDACTED] and is currently expected to be no less than [REDACTED] per [REDACTED] unless otherwise announced. Investors applying for [REDACTED] must pay, on application, the maximum [REDACTED] of [REDACTED] per [REDACTED], unless otherwise announced, together with brokerage fee of 1.0%, SFC transaction levy of 0.0027% and Stock Exchange trading fee of 0.005%, subject to refund if the [REDACTED] is less than [REDACTED] per [REDACTED]. The [REDACTED] (on behalf of the [REDACTED]) may, with the consent of our Company, reduce the number of [REDACTED] being offered under the [REDACTED] and/or the indicative [REDACTED] range below that stated in this document at any time on or prior to the morning of the last day for lodging applications under the [REDACTED]. In such a case, an announcement will be published in the [South China Morning Post] (in English), the [Hong Kong Economic Journal] (in Chinese), the Stock Exchange’s website at www.hkexnews.hk and on our Company’s website at www.nxzfjt.com no later than the morning of the day which is the last day for lodging applications under the [REDACTED]. Further details are set out in “[REDACTED]” and “[REDACTED].” If, for any reason, the [REDACTED] is not agreed between the [REDACTED] (on behalf of the [REDACTED]) and our Company on or before [REDACTED], the [REDACTED] will not proceed and will lapse. For more information, see “[REDACTED].” Prior to making an investment decision, prospective investors should consider all of the information set out in this document, including the risk factors set out in “Risk Factors.” The [REDACTED] have not been and will not be registered under the U.S. Securities Act or any state securities law in the United States and may not be offered, sold, pledged or transferred within the United States, except in transactions exempt from, or not subject to, the registration requirements of the U.S. Securities Act. The [REDACTED] may be offered, sold or delivered outside of the United States in accordance with Regulation S under the U.S. Securities Act.

[REDACTED]

[REDACTED] THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. IMPORTANT

[REDACTED]

–i– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. IMPORTANT

[REDACTED]

–ii– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. EXPECTED TIMETABLE(1)

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– iii – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. EXPECTED TIMETABLE(1)

[REDACTED]

–iv– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. EXPECTED TIMETABLE(1)

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–v– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. CONTENTS

This document is issued by Zhongyi Jiye Holding Company Limited solely in connection with the [REDACTED] and does not constitute an offer to sell or a solicitation of an offer to buy any securities other than the [REDACTED] offered by this document pursuant to the [REDACTED]. This document may not be used for the purpose of, and does not constitute, an offer or invitation in any other jurisdiction or in any other circumstances. No action has been taken to permit a [REDACTED] of the [REDACTED] or the distribution of this document in any jurisdiction other than Hong Kong. The distribution of this document and the [REDACTED] of the [REDACTED] in other jurisdictions are subject to restrictions and may not be made except as permitted under the applicable securities laws of such jurisdictions pursuant to registration with or authorization by the relevant securities regulatory authorities or an exemption therefrom.

You should rely only on the information contained in this document to make your investment decision. The Company has not authorized anyone to provide you with information that is different from what is contained in this document. Any information or representation not made in this document must not be relied on as having been authorized by our Company, the Sole Sponsor, the [REDACTED], the [REDACTED], the [REDACTED], the [REDACTED], any of their respective directors, officers, representatives, employees, agents or professional advisers or any other person or party involved in the [REDACTED].

Page

EXPECTED TIMETABLE...... iii

CONTENTS ...... vi

SUMMARY ...... 1

DEFINITIONS ...... 11

GLOSSARY ...... 28

FORWARD-LOOKING STATEMENTS ...... 31

RISK FACTORS ...... 33

WAIVERS FROM STRICT COMPLIANCE WITH THE REQUIREMENTS UNDER THE LISTING RULES ...... 85

INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED] ...... 88

DIRECTORS AND PARTIES INVOLVED IN THE [REDACTED] ...... 92

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CORPORATE INFORMATION ...... 96

INDUSTRY OVERVIEW ...... 99

REGULATORY OVERVIEW ...... 109

HISTORY, REORGANIZATION AND CORPORATE STRUCTURE ...... 134

BUSINESS ...... 154

RELATIONSHIP WITH CONTROLLING SHAREHOLDERS ...... 250

CONNECTED TRANSACTIONS ...... 254

DIRECTORS AND SENIOR MANAGEMENT ...... 263

SUBSTANTIAL SHAREHOLDERS ...... 281

SHARE CAPITAL ...... 283

FINANCIAL INFORMATION ...... 286

FUTURE PLANS AND [REDACTED] ...... 357

[REDACTED]...... 359

[REDACTED]...... 372

[REDACTED]...... 385

APPENDIX I — ACCOUNTANTS’ REPORT ...... I-1

APPENDIX II — UNAUDITED PRO FORMA FINANCIAL INFORMATION...... II-1

APPENDIX III — PROPERTY VALUATION...... III-1

APPENDIX IV — SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANY LAW ...... IV-1

APPENDIX V — STATUTORY AND GENERAL INFORMATION ...... V-1

APPENDIX VI — DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES AND AVAILABLE FOR INSPECTION ...... VI-1

– vii – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. SUMMARY

This summary aims to give you an overview of the information contained in this document which does not contain all the information that may be important to you. You should read this document in its entirety before you decide to invest in the [REDACTED].

There are risks associated with any investment. Some of the particular risks in investing in the [REDACTED] are set out in “Risk Factors.” You should read that section carefully before you decide to invest in the [REDACTED].

OVERVIEW

We are an expanding property developer with more than 27 years of comprehensive experience focusing on the development and sales of quality mid- to high-end residential properties in selected regions in China. We aim to be a leading provider of pleasurable living experience for our customers. Since our founding in 1994, we have become the market leader in Yinchuan and Xining and have expanded to other strategically selected areas in Northwest China. We were ranked among the “2020 Top 50 Brand of China Real Estate Companies” by the China Real Estate TOP 10 Research (中國房地產TOP10研究組) and ranked first in terms of contracted sales among all property developers in Yinchuan and Xining in 2020 according to CIA. As of March 31, 2021, we had 30 property development projects at various stages of development with a total GFA attributable to us of 6,516,722 sq.m., among which, 29 projects developed by our subsidiaries and one project developed by our associate. Over the years, we have accumulated in-depth knowledge and understanding of the property market, and developed comprehensive development capabilities. In addition to residential properties, we also develop and manage commercial properties, such as shopping malls and retail stores attached to our residential properties.

We position ourselves as a provider of pleasurable life experience (美好生活服務商). We strategically focus on providing quality and diversified residential properties that cater to the needs and preferences of our target customers, and designing properties that reflect our dedication to product quality and customer satisfaction. We aim to provide comfortable green habitat living environment for our customers. We generally use technologies and systems oriented on human living experience to provide green and healthy living conditions for residents with comfortable temperature, humidity, oxygen supply, purity and serenity and to provide intelligent home living experience in our residential properties equipped with smart home devices.

Our close cooperation with Vanke Group has been contributing to our success. By leveraging the brand recognition and industry expertise of Vanke Group, we have been able to solidify our position in our existing markets, as well as gradually expanding to different regions. In 2017, we established Zhongfang Vanke Industrial, a subsidiary of ours, as a platform for our strategic cooperation with Vanke Group. As of March 31, 2021, Zhongfang Vanke Industrial had 11 development projects with a total GFA attributable to us of 3,389,615 sq.m. encompassing two cities. We believe our business partnership with Vanke Group will continue to play a valuable role in our future development.

With our distinctive property designs, standardized property development process, multiple land acquisition methods, professional management team, industry recognized brand image and our business partnership with Vanke Group, we experienced business expansion during the Track Record Period. Our revenue grew at a CAGR of approximately 50.0% from RMB2,503.7 million in 2018 to RMB5,635.8 million in 2020. Our net profit grew at a CAGR of 52.0% from RMB364.6 million in 2018 to RMB842.7 million in 2020. As of March 31, 2021, our property development projects had a total GFA attributable to us of 6,516,722 sq.m., comprising (i) GFA available for sale, rentable GFA for completed projects of 182,839 sq.m.; (ii) planned GFA for properties under development of 4,704,514 sq.m.; and (iii) estimated GFA for properties held for future development of 1,629,369 sq.m.

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OUR BUSINESS MODEL

During the Track Record Period, we mainly derived our revenue from the development and sales of residential properties, commercial properties and carparks. We also derived revenue from the provision of property leasing services and management consulting and other services.

In 2018, 2019 and 2020, our revenue amounted to RMB2,503.7 million, RMB2,125.1 million and RMB5,635.8 million, respectively, representing a CAGR of 50.0%. The table below sets forth a breakdown of our revenue by business segment for the years indicated:

Year ended December 31, 2018 2019 2020 RMB’000 % RMB’000 % RMB’000 %

Property development and sales...... 2,479,208 99.0 2,074,469 97.7 5,538,514 98.3 Residential ...... 1,802,552 71.9 1,663,956 78.3 4,691,920 83.3 Commercial ...... 509,522 20.4 211,734 10.0 528,877 9.4 Carpark ...... 167,134 6.7 198,779 9.4 317,717 5.6 Property leasing service. . 17,915 0.7 26,252 1.2 27,919 0.5 Management consulting and other services .... 6,604 0.3 24,346 1.1 69,406 1.2

Total ...... 2,503,727 100.0 2,125,067 100.0 5,635,839 100.0

Property Development Projects

The total land bank attributable to us amounted to 6,516,722 sq.m. as of March 31, 2021, which include residential properties and commercial properties. The table below sets forth a breakdown of our land bank as of March 31, 2021 in terms of geographical location and by city tier:

Future Completed Under Development Development Total Percentage GFA Estimated Land Bank of Total Number of Available for Rentable Pre-sold GFA Under GFA for Future Attributable Land Projects Sale GFA GFA Development Development to Us Bank (in sq.m.) (in sq.m.) (in sq.m.) (in sq.m.) (in sq.m.) (in sq.m.) (%) In terms of geographical location: Property Projects Developed by Our Wholly Owned Subsidiaries Ningxia Hui Autonomous Region Yinchuan ...... 7 18,687 58,390 502,484 703,817 705,582 1,486,476 22.8%

Sub-total ...... 7 18,687 58,390 502,484 703,817 705,582 1,486,476 22.8% Qinghai Province Xining ...... 6 86,666 – 363,113 488,090 44,283 619,039 9.5% Haidong ...... 1 – – 159,604 214,530 – 214,530 3.3%

Sub-total ...... 7 86,666 – 522,717 702,620 44,283 833,569 12.8%

Total ...... 14 105,353 58,390 1,025,201 1,406,437 749,865 2,320,045 35.6%

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Property Projects Developed by Our Non-Wholly Owned Subsidiaries Ningxia Hui Autonomous Region Yinchuan ...... 8 12,854 – 537,071 1,016,453 5,813 1,035,120 15.9% Wuzhong ...... 1 – – – 15,589 231,399 246,989 3.8%

Sub-total ...... 9 12,854 – 537,071 1,032,042 237,212 1,282,109 19.7%

Qinghai Province Xining ...... 4 – – 988,824 1,855,193 596,892 2,452,084 37.6%

Sub-total ...... 4 – – 988,824 1,855,193 596,892 2,452,084 37.6%

Shaanxi Province Xianyang ...... 1 6,242 – 110,853 149,367 – 155,609 2.4%

Sub-total ...... 1 6,242 – 110,853 149,367 – 155,609 2.4%

Sichuan Province Chongzhou ...... 1 – – – 193,955 – 193,955 3.0%

Sub-total ...... 1 – – – 193,955 – 193,955 3.0%

Total ...... 15 19,096 – 1,636,748 3,230,557 834,104 4,083,757 62.7%

Property Project Developed by Our Associate Inner Mongolia Autonomous Region Baotou ...... 1 – – 119,400 168,800 113,500 112,920 1.7%

Sub-total ...... 1 – – 119,400 168,800 113,500 112,920 1.7%

Total ...... 1 – – 119,400 168,800 113,500 112,920 1.7%

Total Land Bank ... 30 124,449 58,390 2,781,349 4,805,794 1,697,469 6,516,722 100.0%

Our projects companies are classified into two types, namely, subsidiaries and associates in accordance with the level of involvement and power on the management and operation of these project companies, including our representation on their decision-making authorities, such as shareholders’ meeting and board of directors’ meetings, as well as other facts and circumstances. A project company is classified as our subsidiary if we have control over the operation activities of the entity. A project company is classified as our associate if we cannot control or jointly control the operation of the entity. Control is achieved when we are exposed, or have rights, to variable returns from our involvement with the investee and have the ability to affect those returns through our power over the investee. For further details, please see Note 3 to the Accountants’ Report in Appendix I to this document.

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Our Suppliers and Customers

Our suppliers primarily include construction contractors, decoration and landscaping contractors and materials and equipment suppliers. All of our five largest suppliers during the Track Record Period were construction contractors. In 2018, 2019 and 2020, purchases from our five largest suppliers amounted to RMB619.8 million, RMB1,904.7 million and RMB2,011.4 million, respectively, accounting for 43.6%, 45.5% and 32.3% of our total purchases, respectively. In 2018, 2019 and 2020, purchases from our single largest supplier amounted to RMB195.2 million, RMB680.8 million and RMB543.7 million, respectively, accounting for 13.7%, 16.3% and 8.7% of our total purchases, respectively.

Our customers are primarily individual purchasers, corporate entities and government entities. In 2018, 2019 and 2020, revenue from our five largest customers amounted to RMB55.3 million, RMB110.0 million and RMB211.0 million, respectively, accounting for 2.2%, 5.2% and 3.7% of our total revenue, respectively. In 2018, 2019 and 2020, revenue from our single largest customer amounted to RMB16.8 million, RMB66.1 million and RMB100.0 million, respectively, accounting for 0.7%, 3.1% and 1.8% of our total revenue, respectively. To the best knowledge of our Directors, other than one of the five largest customers, none of our Directors, their respective close associates or any shareholder who owns more than 5% of our issued share capital had any interest in any of our five largest suppliers or customers during the Track Record Period. For more details, see “Business—Suppliers and Customers” in this document.

COMPETITIVE STRENGTHS

We believe the following strengths contributed to our success during the Track Record Period and distinguish us from our competitors: (i) an expanding property developer with a market leading position in Yinchuan and Xining; (ii) products with distinctive designs and high quality standards that enhance our value proposition; (iii) quality land bank acquired through diversified channels to fuel our future development; (iv) well-established brand image and loyal customer base; and (v) visionary, professional, experienced management team and highly motivated employees.

BUSINESS STRATEGIES

Our goal is to become a leading real estate developer offering quality products in Northwest China as well as other high growth cities in China. To achieve our goal, we intend to implement the following strategies: (i) continue to strengthen our position in Ningxia Hui Autonomous Region and Qinghai Province and actively expand into cities with high potential in other regions; (ii) further improve our product design and quality to enhance the competitiveness of our products and our brand image; (iii) continue to implement prudent financial policies and optimize our capital structure; and (iv) continue to attract, retain and motivate talents and build a productive workforce.

CONTROLLING SHAREHOLDERS

Immediately following the completion of the [REDACTED] (assuming the [REDACTED] is not exercised and without taking into account any Shares which may be issued upon the exercise of any options which may be granted under the Share Option Scheme), MSmart International will directly hold [REDACTED]% of the issued share capital of our Company. MSmart International is wholly-owned by Mr. Fang. Accordingly, Mr. Fang and MSmart International will be our Controlling Shareholders upon [REDACTED]. See “Relationship with Controlling Shareholders.”

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[REDACTED] INVESTMENT

Jadeway Investments made a total investment of RMB8,349,750 in our Group, which was settled on March 2, 2021. Immediately following the completion of the [REDACTED] (assuming the [REDACTED] is not exercised and without taking into account any Shares which may be issued upon the exercise of any options which may be granted under the Share Option Scheme), Jadeway Investments will hold [REDACTED]% of the issued share capital of our Company. The total investment cost per Share of Jadeway Investments under the [REDACTED] Investment represents a discount of [REDACTED]% to the [REDACTED] per Share (based on the [REDACTED] of the indicative [REDACTED] range of HK$[REDACTED] per Share). The Shares held by Jadeway Investments will be subject to lock-up for a period of six months after [REDACTED]. See “History, Reorganization and Corporate Structure—[REDACTED] Investment” for details.

CONTINUING CONNECTED TRANSACTIONS

We have entered into certain transactions which will constitute continuing connected transactions for our Company under the Listing Rules after [REDACTED]. We have applied to the Stock Exchange for, and the Stock Exchange [has granted] us, waivers from strict compliance with the announcement requirement under Chapter 14A of the Listing Rules in respect of the continuing connected transactions as disclosed in “Connected Transactions—(B) Continuing Connected Transactions Subject to the Reporting, Annual Review and Announcement Requirements but Exempt from Independent Shareholders’ Approval Requirement.” See “Connected Transactions” for details.

SUMMARY KEY FINANCIAL INFORMATION

The summary historical data of financial information set forth below has been derived from, and should be read in conjunction with, our combined audited financial statements, including the accompanying notes, set forth in the Accountants’ Report attached as Appendix I to this document, as well as the information set forth in “Financial Information.” Our financial information was prepared in accordance with IFRS.

Selected Combined Statements of Profit or Loss Data

Year ended December 31, 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Revenue ...... 2,503,727 2,125,067 5,635,839 Cost of sales ...... (1,631,297) (1,294,920) (3,842,191) Gross profit ...... 872,430 830,147 1,793,648 Profit before tax from continuing operations...... 655,684 758,237 1,494,815 Profit for the year from continuing operations...... 372,632 436,688 870,812 Attributable to: Owners of the parent ...... 352,560 457,812 798,931 Non-controlling interests ...... 12,055 57,003 43,719 Profit for the year ...... 364,615 514,815 842,650

See “Financial Information—Description of Certain Combined Statements of Profit or Loss Items.”

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Selected Combined Statements of Financial Position Data

As of December 31 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Total non-current assets ...... 1,254,429 2,020,583 1,894,315 Total current assets ...... 13,747,719 24,191,067 32,245,275 Total current liabilities...... 12,314,060 23,008,615 29,845,284 Net current assets ...... 1,433,659 1,182,452 2,399,991 Total non-current liabilities ...... 986,339 1,022,291 1,509,771 Non-controlling interests ...... 75,913 143,516 452,922 Total equity ...... 1,701,749 2,180,744 2,784,535

See “Financial Information—Net Current Assets.”

Summary Combined Cash Flow Statements Data

Year ended December 31, 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Net cash flows from/(used in) operating activities ...... 3,337,719 2,178,637 (932,932) Net cash flows (used in)/from investing activities ...... (2,249,078) (2,453,190) 2,548,802 Net cash flows used in financing activities . . (157,811) (181,651) (281,780) Net increase/(decrease) in cash and cash equivalents ...... 930,830 (456,204) 1,334,090 Cash and cash equivalents at the beginning of the year ...... 528,447 1,459,277 1,003,073 Cash and cash equivalents at the end of the year ...... 1,459,277 1,003,073 2,337,163

See “Financial Information—Liquidity and Capital Resources—Cash Flow.”

Key Financial Ratios

The following table sets forth certain of our key financial ratios as of the dates and for the years indicated:

As of/for the year ended December 31, 2018 2019 2020

Current ratio ...... 1.1 1.1 1.1 Interest coverage ratio ...... 27.3 21.4 40.3 Debt to equity ratio (%)...... N/A 15.8 N/A Return on total assets (%) ...... 3.2 2.1 2.9 Return on equity (%) ...... 25.8 22.5 35.1

See “Financial Information—Summary of Key Financial Ratios.”

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PROPERTY VALUATION

JLL, an independent property valuer valued our properties based on the assumption that the seller sells the property interests in the market without the benefit of a deferred term contract, leaseback, joint venture, management agreement or any similar arrangement, which could serve to affect the values of the property interests.

In the valuation of property interests by using comparison method, JLL has identified and analyzed various relevant sales evidences in the locality which have similar characteristics as the subject properties such as nature, use, size, layout, accessibility, environmental quality of the properties. The selected comparables are basically located in the area close to the subject properties or within the same development. Appropriate adjustments and analysis are considered with regard to the differences in location, size and other characters between the comparable properties and the subject properties to arrive at an assumed unit rate for the subject properties.

In the valuation of property interests by using income approach, JLL has taken into account the rental income of the subject properties derived from their existing leases and/or achievable in the existing market with due allowance for the reversionary income potential of the leases, which have been then capitalized to determine the market value of the subject properties at an appropriate capitalization rate. Where appropriate, reference has also been made to the comparable sales transactions as available in the relevant market.

In the valuation of property interests which are construction in progress, JLL has assumed that they will be developed and completed in accordance with the latest development proposals provided by us. In arriving at its opinion of values, JLL has adopted the comparison approach by making reference to comparable sales evidence as available in the relevant market and have also taken into account the accrued construction cost and professional fees relevant to the stage of construction as of the valuation date and the remainder of the cost and fees expected to be incurred for completing the development. JLL has relied on the accrued construction cost and professional fees information provided by our Group according to the different stages of construction of the properties as of the valuation date, and did not find any material inconsistency from those of other similar developments.

JLL has valued the selected properties in which we had interests as of March 31, 2021 and is of the opinion that the aggregate market value of those properties as of such date was RMB27,736.3 million, and the value attributable to our Group was RMB16,713.7 million. The full text of the letter and summary disclosure of property valuation with regard to such property interests are set out in Appendix III to this document. For risks associated with assumptions made in the valuation of our properties, see “Risk Factors—Risks Relating to Our Business—The actual realizable value of our properties may be substantially lower than their appraisal value and is subject to change.”

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[REDACTED] STATISTICS

The statistics in the following table are based on the assumptions that: (i) the [REDACTED] is completed and [REDACTED] Shares are issued and sold in the [REDACTED]; (ii) the [REDACTED] is not exercised and without taking into account any Shares which may be issued upon exercise of any options which have been or may be granted under the Share Option Scheme; and (iii) [REDACTED] Shares are issued and outstanding upon completion of the [REDACTED].

Based on an Based on an [REDACTED] of [REDACTED] of HK$[REDACTED] HK$[REDACTED] per [REDACTED] per [REDACTED]

Market capitalization of our Shares ...... HK$[REDACTED] HK$[REDACTED] Unaudited pro forma adjusted net tangible asset value per Share(1) ...... HK$[REDACTED] HK$[REDACTED]

Note:

(1) The unaudited pro forma adjusted net tangible asset value per Share is calculated after making the adjustments referred to in “Appendix II—Unaudited Pro Forma Financial Information.”

DIVIDENDS

We declared dividends of RMB38.7 million, RMB17.9 million and RMB98.6 million in 2018, 2019 and 2020, respectively. The recommendation of the payment of dividend, if any, is subject to the absolute discretion of our Board, and, after the [REDACTED], any declaration of final dividend for the year will be subject to the approval of our Shareholders. The declaration and payment of future dividends will be subject to various factors, including but not limited to our results of operations, financial performance, profitability, business development, prospects, capital requirements and economic outlook. Any declaration and payment as well as the amount of the dividend will be subject to our constitutional documents and the Cayman Islands Companies Act, and the approval of our Shareholders. For more details, see “Financial Information—Dividend Policy and Distributable Reserves.”

[REDACTED]

We estimate that we will receive [REDACTED] of approximately HK$[REDACTED] from the [REDACTED], after deducting the [REDACTED] and other estimated expenses payable by us in connection with the [REDACTED], assuming that the [REDACTED]isnot exercised, without taking into account any Shares which may be issued upon exercise of any options which may be granted under the Share Option Scheme and assuming an [REDACTED] of HK$[REDACTED] per Share (being the [REDACTED] of the indicative [REDACTED] range). We intend to use such [REDACTED] from the [REDACTED] for the purposes and in the amounts set forth below:

• approximately [REDACTED]%, or approximately HK$[REDACTED], will be used to finance the construction of our existing projects;

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• approximately [REDACTED]%, or approximately HK$[REDACTED], will be used to finance our future projects, including land acquisition costs;

• approximately [REDACTED]%, or approximately HK$[REDACTED], will be used to repay a portion of our borrowings for our project development; and

• approximately [REDACTED]%, or approximately HK$[REDACTED], will be used for general business operations and working capital.

See “Future Plans and [REDACTED].”

RECENT DEVELOPMENTS AND NO MATERIAL ADVERSE CHANGE

Our business remained stable after the Track Record Period and up to the Latest Practicable Date as there were no material changes to our business models and regulatory environment in which we operate.

Subsequent to the Track Record Period and up to the Latest Practicable Date, we had obtained land use rights certificate with respect to one parcel of land with a total site area of approximately 95,149 sq.m., located in Yinchuan, Ningxia Hui Autonomous Region. During the same period, we had obtained the land use right certificates for two parcels of land with a total site area of approximately 86,326 sq.m, located in Xining, Qinghai Province.

Our business remained stable after the Track Record Period. Based on our unaudited management accounts, our revenue increased in the three months ended March 31, 2021 as compared to that in the three months ended March 31, 2020, primarily attributable to the delivery of certain properties of Vanke–City Light (萬科•城市之光) in the three months ended March 31, 2021 while there were less properties delivered in the three months ended March 31, 2020.

Our Directors confirmed that, since December 31, 2020, the latest date of our financial statements and as of the date of this document, there has been no material adverse change in our financial or trading position, indebtedness, mortgage, contingent liabilities, guarantees or prospects.

Co-investment Schemes

To align the interests of our employees with our business prospects and further incentivize our employees, we have implemented co-investment schemes with benefit- and risk-sharing features for our employees’ participation. We started to implement our co-investment schemes (the “Co-investment Schemes”) in March 2021, pursuant to which our employees participate by investing into the designated project companies held by our Group through the scheme’s investment platform. Distributable benefits and proceeds derived from the property projects are to be distributed to the participants on a pro rata basis when the invested project has achieved a pre-determined profit target, and where relevant, the participants may share losses on a pro rata basis. As of the Latest Practicable Date, we had not initiated any investment with our employees through Co-investment Schemes.

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NON-COMPLIANCE MATTERS

Except for the Pre-sale Proceeds Incidents, we were in compliance with the requirements of relevant PRC laws and regulations governing the business of property development and management in all material respects and we had obtained all material licenses, permits and certificates for the purpose of operating our business during the Track Record Period.

As of the Latest Practicable Date, there were no litigation or arbitration proceedings or administrative proceedings pending or threatened against us or any of our Directors which would have a material adverse effect on our business, financial position or results of operations.

See “Business—Legal Proceedings and Compliance—Compliance with Laws and Regulations” and “Business—Legal Proceedings and Compliance—Legal Proceedings.”

[REDACTED] EXPENSES

The total amount of [REDACTED] expenses that will be borne by us in connection with the [REDACTED], including [REDACTED], is estimated to be RMB[REDACTED] (HK$[REDACTED]), representing approximately [REDACTED]% of our [REDACTED] from the [REDACTED] (based on the [REDACTED] of the indicative [REDACTED] range), of which RMB[REDACTED] (HK$[REDACTED]) is expected to be accounted for as a deduction from equity in accordance with the relevant accounting standard. The remaining fees and expenses of RMB[REDACTED] (HK$[REDACTED]) were or are expected to be charged to our profit or loss account, of which approximately RMB[REDACTED] (HK$[REDACTED]) was charged for the year ended December 31, 2020, and approximately RMB[REDACTED] (HK$[REDACTED]) is expected to be charged upon [REDACTED]. The professional fees and/or other expenses related to the preparation of [REDACTED] subsequent to December 31, 2020 are currently in estimates for reference only and the actual amount to be recognized is subject to adjustment based on audit and the then changes in variables and assumptions. Our Directors do not expect that our [REDACTED] expenses will have a material adverse impact on our financial performance for the year ending December 31, 2021.

RISK FACTORS

Our operations are subject to certain risks, some of which are beyond our control. These risks can be broadly categorized into: (i) risks relating to our business; (ii) risks relating to our industry; (iii) risks relating to the PRC; and (iv) risks relating to the [REDACTED]. Some of the risks generally associated with our business and industry include the following: (i) our business and prospects are dependent on the economic conditions in the PRC and are susceptible to adverse movements in the PRC real estate market, particularly in Yinchuan, Xining and various major cities in Northwest China and other cities we operate and intend to operate; (ii) we may not be successful in managing our growth and expansion into new regions and cities; (iii) we may not be able to identify desirable locations or acquire land use rights for future property development on favorable terms, or at all; (iv) our business and prospects are dependent on and may be adversely affected by our non-wholly owned subsidiaries consolidated through voting right arrangements; and (v) we may not have adequate financing to fund our future land acquisition and property development projects, and capital resources may not be available on favorable terms, or at all.

These risks are not the only significant risks that may affect the value of our Shares. You should carefully consider all of the information set forth in this document and, in particular, should evaluate the specific risks set forth in “Risk Factors” in deciding whether to invest in our Shares.

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In this document, unless the context otherwise requires, the following words and expressions have the following meanings. Certain technical terms are explained in “Glossary.”

[REDACTED]

“Articles of Association” or the amended and restated articles of association of our “Articles” Company, conditionally adopted on [●], 2021 and which will come into effect upon [REDACTED], a summary of which is set out in Appendix IV of this document, as amended from time to time

“associate(s)” has the meaning ascribed thereto under the Listing Rules

“Audit Committee” the audit committee of the Board

“Board” or “Board of Directors” the board of Directors of our Company

“Boxy International” Boxy International Limited, a company incorporated in the BVI with limited liability on October 14, 2020 and wholly owned by Mr. Wang Xiaoping (王小平), our executive Director

“Boxy Space” Boxy Space Limited, a company incorporated in the BVI with limited liability on October 14, 2020 and wholly owned by Ms. Qiu Jianping (仇建萍), an employee of our Group

“business day” any day (other than a Saturday, Sunday or public holiday) on which banks in Hong Kong are generally open for business

“BVI” the British Virgin Islands

[REDACTED]

“Cayman Islands Companies Act” the Companies Act, Cap. 22 (Act 3 of 1961, as or “Companies Act” consolidated and revised) of the Cayman Islands

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“CBRC” or “CBIRC” the China Banking and Insurance Regulatory Commission (中國銀行保險監督管理委員會), established by consolidating the former China Banking Regulatory Commission (中國銀行業監督管理委員會) and the former China Insurance Regulatory Commission (中國保險監督管理委員會)

[REDACTED]

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“China” or “PRC” the People’s Republic of China, but for the purpose of this document and for geographical reference only and except where the context requires, references in this document to “China” or the “PRC” do not apply to Taiwan, Macau Special Administrative Region and Hong Kong

“CIA” China Index Academy, our industry consultant

“CIA Report” an independent market research report prepared by CIA, which was commissioned by our Company for the purpose of this document

“Circular 37” the Notice of the SAFE on Issues Concerning Foreign Exchange Administration of the Overseas Investment and Financing and the Round-Tripping Investment Made by Domestic Residents through Special-Purpose Companies which was promulgated by SAFE and became effective on 4 July 2014 (國家外匯管理局關於境內居民通過特殊目的公司境外投融資及返程投資外匯管理有關問題的通知)

“close associate(s)” has the meaning ascribed thereto under the Listing Rules

“Companies Ordinance” the Companies Ordinance (Chapter 622 of the Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time

“Companies (Winding Up and the Companies (Winding Up and Miscellaneous Miscellaneous Provisions) Provisions) Ordinance (Chapter 32 of the Laws of Hong Ordinance” Kong), as amended, supplemented or otherwise modified from time to time

“Company” or “our Company” Zhongyi Jiye Holding Company Limited (中億基業控股有限公司) (formerly known as Zhongxin Group Holdings Company Limited (中欣集團控股有限公司), a company incorporated in the Cayman Islands as an exempted company with limited liability on November 5, 2020

“connected person(s)” has the meaning ascribed thereto under the Listing Rules

“Controlling Shareholder(s)” has the meaning ascribed thereto under the Listing Rules and, unless the context requires otherwise, collectively refers to Mr. Fang and MSmart International

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“core connected person(s)” has the meaning ascribed thereto under the Listing Rules

“COVID-19” a viral respiratory disease caused by the severe acute respiratory syndrome coronavirus

“CSRC” the China Securities Regulatory Commission (中國證券監督管理委員會), a regulatory body responsible for the supervision and regulation of the Chinese national securities markets

“Deed of Indemnity” the deed of indemnity dated [●], 2021 entered into by our Controlling Shareholders with and in favor of our Company (for itself and as trustee for each of its subsidiaries) with particulars set out in “Appendix V—Statutory and General Information—E. Other Information—1. Tax and Other Indemnities”

“Director(s)” director(s) of our Company

“EIT” the PRC enterprise income tax

“EIT Law” the Enterprise Income Tax Law of the PRC (中華人民共和國企業所得稅法), enacted on March 16, 2007, effective from January 1, 2008 and amended on February 24, 2017 and December 29, 2018 by the NPC, and as amended, supplemented or otherwise modified from time to time

“EIT Rules” the Regulation on the Implementation of the Enterprise Income Tax Law of the PRC (中華人民共和國企業所得稅法實施條例) promulgated by the State Council on December 6, 2007 and effective from January 1, 2008 and amended on April 23, 2019

“Eminence Joy” Eminence Joy Limited, a company incorporated in the BVI with limited liability on October 26, 2020 and owned by 11 individual shareholders who are the employees or former employees of our Group, namely Mr. Zhang Yanbin (張彥斌) (a member of our senior management), Mr. Wei Bin (魏斌), Ms. Lei Haiyan (雷海燕), Mr. Qu Gengchang (瞿耿常), Ms. Yang Liu (楊柳), Ms. Cao Dianying (曹殿穎), Mr. Zhu Weixing (朱衛星), Mr. Lei Peng (雷鵬), Mr. Xu Changhao (徐長浩), Mr. Wang Liang (王亮) and Mr. Li Xingfu (李興富)

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“Foresea Investments” Foresea Investments Limited, a company incorporated in the BVI with limited liability on October 14, 2020 and wholly owned by Ms. Gong Fan (龔帆), an employee of our Group

“Fun Joy” Fun Joy Limited, a company incorporated in the BVI with limited liability on October 26, 2020 and owned by 11 individual shareholders who are the employees or former employees of our Group, namely Mr. He Bin (何斌)(a member of our senior management), Mr. Qi Xujun (祁旭俊), Mr. Xu Deqiang (徐德強), Mr. Chen Lei (陳雷), Ms. Gu Yingqin (古瑛琴), Mr. Dong Hongcheng (董洪成), Mr. Ding Chunwen (丁春文), Mr. Li Run (李潤), Mr. Yu Yuefeng (俞躍峰), Ms. Zhu Li’e (朱麗娥) and Ms. Wang Yanhong (王燕虹)

[REDACTED]

“Group,” “our Group,” “we,” our Company and its subsidiaries or, where the context so “our” or “us” requires, in respect of the period before our Company became the holding company of its present subsidiaries, such subsidiaries as if they were subsidiaries of our Company at that time

[REDACTED]

“HKICPA” Hong Kong Institute of Certified Public Accountants

[REDACTED]

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[REDACTED]

“Hong Kong” or “HK” the Hong Kong Special Administrative Region of the PRC

“Hong Kong dollars” or “HK$” Hong Kong dollars, the lawful currency of Hong Kong

[REDACTED]

“Hybrid Angel” Hybrid Angel Limited, a company incorporated in the BVI with limited liability on October 26, 2020 and owned by 18 individual shareholders who are the employees or former employees of our Group, namely Mr. Zuo Long (左龍), Mr. Wang Xiaopeng (王小鵬), Mr. Huang Xuejing (黃學經), Mr. Ma Cheng (馬騁), Mr. Tian Fulai (田福來), Mr. Shi Liansheng (史連昇), Mr. Li Chengliang (李承良), Ms. Dou Yanyan (竇衍艷), Mr. Qian Guangning (錢廣寧), Mr. Rong Fanqiao (榮范橋), Mr. Zhang Shijie (張世杰), Mr. Shi Yongwei (石永偉), Mr. Guo Jiaqi (郭佳琦), Ms. Ye Lina (葉麗娜), Mr. Zhang Liqing (張黎慶), Mr. Zhang Lei (張磊), Mr. Shi Yinren (時銀仁) and Mr. Zhang Yang (張洋)

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“IAS” the International Accounting Standards

“IFRS” International Financial Reporting Standards

“Independent Third Party(ies)” an individual(s) or company(ies) who or which is/are to the best of our Director’s knowledge, information and belief, having made all reasonable enquiries, is/are not our connected persons as defined under the Listing Rules

[REDACTED]

“Jadeway Investments” Jadeway Investments Limited, a company incorporated in the BVI with limited liability on November 16, 2020 and wholly owned by the [REDACTED] Investor

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“Joy Premium” Joy Premium Limited, a company incorporated in the BVI with limited liability on December 9, 2020 and a direct wholly-owned subsidiary of our Company

“Latest Practicable Date” May 7, 2021, being the latest practicable date for the purpose of ascertaining certain information in this document prior to its publication

[REDACTED]

“Listing Committee” the Listing Committee of the Stock Exchange

[REDACTED]

“Listing Rules” the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, as amended, supplemented or otherwise modified from time to time

“M&A Rules” the Rules on the Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (關於外國投資者併購境內企業的規定), jointly issued by the State-owned Assets Supervision and Administration Commission (國務院國有資產監督管理委員會), the MOFCOM, the SAT, the SAIC, the CSRC and the SAFE on August 8, 2006 and re-issued by MOFCOM on June 22, 2009

“Mac Light” Mac Light Limited, a company incorporated in the BVI with limited liability on November 17, 2020 and a direct wholly-owned subsidiary of our Company

“Main Board” the stock exchange (excluding the option market) operated by the Stock Exchange which is independent from and operated in parallel with the GEM of the Stock Exchange

“Memorandum” or the amended and restated memorandum of association of “Memorandum of Association” our Company, adopted on [●], 2021 with immediate effect, a summary of which is set out in Appendix IV of this document

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“MOF” the Ministry of Finance of the PRC (中華人民共和國財政部)

“MOFCOM” the Ministry of Commerce of the PRC (中華人民共和國商務部)

“MOHURD” or “Ministry of the Ministry of Housing and Urban-Rural Development Construction” of the PRC (中華人民共和國住房和城鄉建設部)orits predecessor, the Ministry of Construction of the PRC (中華人民共和國建設部)

“Mr. Fang” Mr. Fang Lu (方陸), one of our Controlling Shareholders and an executive Director

“MSmart International” MSmart International Limited, a company incorporated in the BVI with limited liability on October 15, 2020 and is wholly owned by Mr. Fang, one of our Controlling Shareholders

“NDRC” the National Development and Reform Commission of the PRC (中華人民共和國國家發展和改革委員會)

“Ningxia Wanyue” Ningxia Wanyue Real Estate Co., Ltd. (寧夏萬悅房地產有限公司), a company established in the PRC with limited liability on July 4, 2018 and an indirect non- wholly owned subsidiary of our Company which is owned as to 70% by Zhongfang Vanke Real Estate and 30% by Tokyo Tatemono Co., Ltd. (東京建物株式會社), an Independent Third Party (save for its shareholding in Ningxia Wanyue)

“Ningxia Yuejia” Ningxia Yuejia Real Estate Development Co., Ltd. (寧夏悅家房地產開發有限公司), a company established in the PRC with limited liability on December 26, 2017 and an indirect non-wholly owned subsidiary of our Company which is owned as to 70% by Zhongfang Vanke Real Estate and 30% by Zhuhai Taizhile Investment Co., Ltd. (珠海泰之和投資有限責任公司), an Independent Third Party (save for its shareholding in Ningxia Yuejia)

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“Ningxia Zhenghui” Ningxia Zhenghui Real Estate Development Co., Ltd. (寧夏正輝房地產開發有限公司), a company established in the PRC with limited liability on December 28, 2017 and an indirect non-wholly owned subsidiary of our Company which is wholly owned by Zhongfang Vanke Real Estate

“Ningxia Zhongfang Ningxia Zhongfang Development Group Co., Ltd. (寧夏 Development” 中房發展集團有限公司), a company established in the PRC with limited liability on December 1, 2020 , which is owned as to 42.96% by Mr. Fang (an executive Director), 9.15% by Ms. Gong Fan (龔帆) (an employee of our Group), 6.18% by Ms. Zhang Jun (張君) (an executive Director), 5.64% by Mr. Wang Xiaoping (王小平) (an executive Director), 5.42% by Ms. Qiu Jianping (仇建萍) (an employee of our Group), 2.95% by Mr. Zhang Yanbin (張彥斌) (a member of our senior management), 2.87% by Mr. He Bin (何斌) (a member of our senior management) and the remaining 24.83% equity interest is owned by 38 individuals who are employees or former employees of our Group

“Ningxia Zhongfang Industrial” Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) (formerly known as Zhongfang Group Yinchuan Real Estate Development Headquarters (中房集團銀川房地產開發有限責任總公司), Zhongfang Group Yinchuan Real Estate Development Co., Ltd. (中房集團銀川房地產開發有限責任公司) and Ningxia Zhongfang Industrial Group Stock Co., Ltd. (寧夏中房實業集團股份有限公司)), a company established in the PRC with limited liability on August 26, 1994 and an indirect wholly-owned subsidiary of our Company

“Ningxia Zhongfang Xining” Ningxia Zhongfang Group Xining Real Estate Development Co., Ltd. (寧夏中房集團西寧房地產開發有限責任公司) (formerly known as Qinghai Zhongfang Group Yinchuan Real Estate Development Co., Ltd. (青海省中房集團銀川房地產開發有限責任公司)), a company established in the PRC with limited liability on June 8, 2001 and an indirect wholly-owned subsidiary of our Company

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“Ningxia Zhongjin” Ningxia Zhongjin Real Estate Co., Ltd. (寧夏中錦置業有限公司), a company established in the PRC with limited liability on March 30, 2020 and an indirect non-wholly owned subsidiary of our Company which is owned as to 34.9979% by Ningxia Zhongfang Industrial and 65.0021% by Ningxia Yongning Shicheng Property Development Co., Ltd. (寧夏永寧實成房地產開發有限公司), an Independent Third Party (save for its shareholding in Ningxia Zhongjin)

“Ningxia Zhongqia” Ningxia Zhongqia Industrial Co., Ltd. (寧夏中洽實業有限公司), a company established in the PRC with limited liability on February 18, 2021 and an indirect wholly- owned subsidiary of our Company

“Ningxia Zhongxian” Ningxia Zhongxian Industrial Co., Ltd. (寧夏中賢實業有限公司), a company established in the PRC with limited liability on October 16, 2020 and an indirect wholly- owned subsidiary of our Company

“Nomination Committee” the nomination committee of the Board

“NPC” the National People’s Congress of the PRC (中華人民共和國全國人民代表大會)

[REDACTED]

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“PBOC” the People’s Bank of China (中國人民銀行), the central bank of the PRC

“PBOC Benchmark Rate” the exchange rate for foreign exchange transactions set daily by the PBOC based on the previous day’s PRC inter-bank foreign exchange rates and with reference to prevailing exchange rates on the world financial markets

“PRC Company Law” the PRC Company Law (中華人民共和國公司法), as amended and adopted by the Standing Committee of the Tenth National People’s Congress on October 27, 2005 and effective on January 1, 2006 and further amended on December 28, 2013 and effective on March 1, 2014, amended on October 26, 2018 as amended, supplemented and otherwise modified from time to time

“PRC GAAP” generally accepted accounting principles in the PRC

“PRC Government” the central government of the PRC and all governmental subdivisions (including provincial, municipal and other regional or local government entities) and organizations of such government or, as the context requires, any of them

“PRC Legal Advisors” Commerce & Finance Law Offices, legal advisers to our Company on PRC laws in connection with the [REDACTED]

“[REDACTED] Investor” Mr. Yang Hawk Ying, whose background is set out in “History, Reorganization and Corporate Structure—[REDACTED] Investment—Information regarding the [REDACTED] Investor”

[REDACTED]

“Province” or “province” each being a province or, where the context requires, a provincial level autonomous region or municipality under the direct supervision of the PRC Government

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“Regulation S” Regulation S under the U.S. Securities Act

“Remuneration Committee” the remuneration committee of the Board

“Renminbi” or “RMB” the lawful currency of the PRC

“Reorganization” the reorganization of our Group as described in “History, Reorganization and Corporate Structure—Reorganization”

“SAFE” the State Administration of Foreign Exchange of the PRC (中華人民共和國國家外匯管理局)

“SAIC” the State Administration for Industry and Commerce of the PRC (中國國家工商行政管理總局), including, as the context may require, its local counterparts, which was merged into the SAMR

“SAMR” the State Administration of Market Regulation (中國國家市場監督管理總局), including, as the context may require, its local counterparts

“SAT” the State Administration of Taxation of the PRC (中華人民共和國國家稅務總局)

“SCNPC” the Standing Committee of the NPC

“Securities and Futures the Securities and Futures Commission of Hong Kong Commission” or “SFC”

“SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time

“Share(s)” ordinary share(s) with nominal value of US$0.01 each in the share capital of our Company, which are to be traded in Hong Kong dollars and [REDACTED] on the Main Board

“Share Option Scheme” the share option scheme conditionally adopted by our Company on [●], 2021, the principal terms and conditions of which are set forth in “Appendix V—Statutory and General Information—D. Share Option Scheme”

“Shareholder(s)” holder(s) of the Share(s)

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“Shenzhen Huayin” Shenzhen Huayin Capital Management Co., Ltd. (深圳市花銀資本管理有限公司), a company established in the PRC with limited liability on January 6, 2016 and a shareholder holding 20% equity interest in Zhongfang Vanke Industrial

“Sherri International” Sherri International Limited, a company incorporated in the BVI with limited liability on October 14, 2020 and wholly owned by Ms. Zhang Jun (張君), our executive Director

[REDACTED]

“Sole Sponsor” Guotai Junan Capital Limited

[REDACTED]

“State Council” the State Council of the PRC (中華人民共和國國務院)

[REDACTED]

“Stock Exchange” The Stock Exchange of Hong Kong Limited

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

“Substantial Shareholder(s)” has the meaning ascribed to it under the Listing Rules

“Track Record Period” the period comprising the financial years ended December 31, 2018, 2019 and 2020

[REDACTED]

“United States,” “USA” or the United States of America, its territories, its “U.S.” possessions and all areas subject to its jurisdiction

–24– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DEFINITIONS

“U.S. Government” the federal government of the United States, including its executive, legislative and judicial branches

“U.S. Securities Act” the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder

“US$,” “USD” or “$” U.S. dollars, the lawful currency of the United States

“Vanke Group” China Vanke Co., Ltd. (萬科企業股份有限公司), a joint stock company incorporated in the PRC with limited liability on May 30, 1984, whose shares are listed on the Main Board of the Stock Exchange (stock code: 2202) and Shenzhen Stock Exchange (stock code: 000002.SZ), and its subsidiaries

“VAT” the PRC value-added tax

“Xianyang Yangguang Meiyu” Xianyang Yangguang Meiyu Real Estate Co., Ltd. (咸陽陽光美域置業有限公司), a company established in the PRC with limited liability on November 23, 2009 and an indirect non-wholly owned subsidiary of our Company which is owned as to 55% by Ningxia Zhongfang Industrial, 24% by Xianyang Real Estate Development Company (咸陽市房地產開發公司), an Independent Third Party (save for its shareholding in Xianyang Yangguang Meiyu), and 21% by Baoji Jian’an Group Co. Ltd. (寶雞建安集團股份有限公司), an Independent Third Party (save for its shareholding in Xianyang Yangguang Meiyu)

“Xining Wancan” Xining Wancan Real Estate Co., Ltd. (西寧萬燦房地產有限公司), a company established in the PRC with limited liability on September 4, 2018 and an indirect non-wholly owned subsidiary of our Company which is wholly owned by Xining Zhongfang Vanke

“Xining Wanlan” Xining Wanlan Real Estate Co., Ltd. (西寧萬瀾房地產有限公司), a company established in the PRC with limited liability on August 23, 2018 and an indirect non-wholly owned subsidiary of our Company which is wholly owned by Xining Zhongfang Vanke

–25– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DEFINITIONS

“Xining Wantang” Xining Wantang Real Estate Co., Ltd. (西寧萬唐房地產有限公司), a company established in the PRC with limited liability on June 25, 2019 and an indirect non- wholly owned subsidiary of our Company which is owned as to 51% by Xining Zhongfang Vanke and 49% by Xining Xintang Real Estate Development Co., Ltd. (西寧新唐房地產開發有限公司), an Independent Third Party (save for its shareholding in Xining Wantang)

“Xining Wanxian” Xining Wanxian Real Estate Co., Ltd. (西寧萬賢房地產有限公司), a company established in the PRC with limited liability on September 4, 2018 and an indirect non-wholly owned subsidiary of our Company which is wholly owned by Xining Zhongfang Vanke

“Xining Zhongfang Vanke” Xining Zhongfang Vanke Industrial Co., Ltd. (西寧中房萬科實業有限公司), a company established in the PRC with limited liability on August 16, 2018 and an indirect non-wholly owned subsidiary of our Company which is owned as to 99% by Zhongfang Vanke Industrial and 1% by Zhuhai Qingxun Investment Partnership (Limited Partnership) (珠海青汛投資合夥企業(有限合夥)), an Independent Third Party

“Yinchuan Zhongchen” Yinchuan Zhongchen Real Estate Co., Ltd. (銀川中宸置地有限責任公司), a company established in the PRC with limited liability on November 2, 2012 and an indirect wholly-owned subsidiary of our Company

“Zhongfang Vanke Industrial” Zhongfang Vanke Industrial Co., Ltd. (中房萬科實業有限公司), a company established in the PRC with limited liability on September 28, 2017 and an indirect non- wholly-owned subsidiary of our Company which is directly owned as to 40% by Ningxia Zhongfang Industrial, 40% by Vanke (Chengdu) Enterprise Co., Ltd. (萬科(成都)企業有限公司), an Independent Third Party (save for its shareholding in Zhongfang Vanke Industrial), and 20% by Shenzhen Huayin, an Independent Third Party (save for its shareholding in Zhongfang Vanke Industrial)

–26– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DEFINITIONS

“Zhongfang Vanke Real Estate” Ningxia Zhongfang Vanke Real Estate Co., Ltd. (寧夏中房萬科房地產有限公司), a company established in the PRC with limited liability on December 19, 2017 and an indirect non-wholly owned subsidiary of our Company which is owned as to 98% by Zhongfang Vanke Industrial, 1% by Zhuhai Ningjia Investment Partnership (Limited Partnership)(珠海寧嘉投資合夥企業(有限合夥)), an Independent Third Party, and 1% by Zhuhai Wanchuang Wanxiang Enterprise Management Center (Limited Partnership) (珠海萬創萬享企業管理中心(有限合夥)), an Independent Third Party

“Zhonghong HK” Zhong Hong (HK) Limited (中宏香港有限公司), a company incorporated in Hong Kong with limited liability on November 27, 2020 and an indirect wholly- owned subsidiary of our Company

“Zhongyu HK” Zhong Yu (HK) Limited (中譽香港有限公司), a company incorporated in Hong Kong with limited liability on December 31, 2020 and an indirect wholly-owned subsidiary of our Company

Unless the content otherwise requires, references to “2018”, “2019” and “2020” in this document refer to our financial year ended December 31 of such year.

Certain amounts and percentage figures included in this document were subjected to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures preceding them.

The English translation of PRC entities, enterprises, nationals, facilities and regulations in Chinese or another language in this document is for identification purposes only. To the extent that there is any inconsistency between the Chinese names of PRC entities, enterprises, nationals, facilities and regulations and their English translations, the Chinese names shall prevail.

–27– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. GLOSSARY

This glossary of technical terms contains terms used in this document in connection with us and our business. Some of these terms and their meanings may not correspond to standard industry meanings or usage of such terms.

“ASP” average selling price

“building ownership certificate” building ownership certificate (房屋所有權證), a certificate issued by relevant authorities with respect to building ownership rights

“CAGR” compound annual growth rate

“commercial property(ies)” for purposes of this document, property(ies) designated for commercial use

“completion certificate” the construction work completion inspection acceptance certificate (房屋建築工程竣工驗收備案表), issued by local urban construction bureaus or relevant authorities in China in connection with the completion of property development projects

“construction land planning the construction land planning permit (建設用地規劃許可 permit” 證), issued by local urban zoning and planning bureaus or relevant authorities in China in connection with the planning of construction land

“construction work the construction work commencement permit (建築工程 commencement permit” 施工許可證), issued by local construction bureaus or relevant authorities in China in connection with the commencement of construction work

“construction work planning the construction work planning permit (建設工程規劃許 permit” 可證), issued by local urban zoning and planning bureaus or relevant authorities in China in connection with the planning of construction work

“contracted sales” total contractual value of properties sold in the relevant period, i.e. the total contractual value determined in the formal sale and purchase contract signed by both parties; it includes completed properties sold and properties pre-sold prior to completion of construction; contracted sales in any given period is not equivalent to the revenue in the relevant period and shall not be deemed as an indication for the revenue to be recognized in any future period; contracted sales data is unaudited and is based on internal information of our Group, which is provided for investors’ reference only

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“first-tier cities” cities specified by the MOHURD as such, being Beijing, Shanghai, Shenzhen and Guangzhou

“GDP” gross domestic product

“GFA” gross floor area

“land grant contract” the state-owned land use right grant contract (國有土地使用權出讓合同), an agreement between a land user and the relevant PRC governmental land administrative authorities

“land use right certificate” the state-owned land use right certificate (國有土地使用證), a certificate (or certificates, as the case may be) concerning one’s right to use a parcel of land

“LAT” land appreciation tax (土地增值稅), as defined in the Provisional Regulations of the People’s Republic of China on Land Appreciation Tax (《中華人民共和國土地增值稅暫行條例》) and the Detailed Implementation Rules on the Provisional Regulations of the People’s Republic of China on Land Appreciation Tax (《中華人民共和國土地增值稅暫行條例實施細則》)

“Northwest China” for purposes of this document, the geographical region covering Ningxia Hui Autonomous Region, Xinjiang Uygur Autonomous Region, Shaanxi Province, Gansu Province and Qinghai Province

“plot ratio” the ratio of the gross floor area (excluding floor area below ground) of all buildings to their site area

“pre-sales permit” commodity property pre-sales permit (商品房預售許可證), a permit issued by local housing and building administrative bureaus or relevant authorities in China in connection with pre-sales of properties under construction

“residential property(ies)” for purposes of this document, property(ies) designated for residential use

–29– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. GLOSSARY

“second-tier cities” the 36 major cities in China defined by the PRC National Statistics Bureau that are either provincial capitals, direct-controlled municipalities or among the five other major cities designated as “municipalities with independent planning” (計劃單列市) by the PRC State Council and which are not first-tier cities

“sq.m.” square meter(s)

“%” per cent

–30– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FORWARD-LOOKING STATEMENTS

This document contains certain forward-looking statements and information relating to our Company and its subsidiaries that are based on the beliefs of our management as well as assumptions made by and information currently available to our management. When used in this document, the words “aim,” “anticipate,” “believe,” “can,” “continue,” “could,” “forecast,” “expect,” “going forward,” “intend,” “ought to,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “will,” “would” and the negative of these words and other similar expressions, as they relate to our Group or our management, are intended to identify forward-looking statements. Such statements reflect the current views of our management with respect to future events, operations, liquidity and capital resources, some of which may not materialize or may change. These statements are subject to certain risks, uncertainties and assumptions, including the other risk factors as described in this document. You are strongly cautioned that reliance on any forward-looking statements involves known and unknown risks and uncertainties. The risks and uncertainties facing our Company which could affect the accuracy of forward-looking statements include, but are not limited to, the following:

• our business prospects;

• future developments, trends and conditions in the industry and markets in which we operate;

• our business strategies and plans to achieve these strategies;

• our ability to identify and integrate suitable acquisition targets;

• general economic, political and business conditions in the markets in which we operate;

• changes to the regulatory environment and general outlook in the industry and markets in which we operate;

• the effects of the global financial markets and economic crisis;

• our ability to reduce costs;

• our dividend policy;

• the amount and nature of, and potential for, future development of our business;

• capital market developments;

• the actions and developments of our competitors;

• changes or volatility in interest rates, foreign exchange rates, equity prices or other rates or prices in the industry and markets in which we operate;

–31– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FORWARD-LOOKING STATEMENTS

• certain statements in “Financial Information” with respect to trends in prices, volumes, operations, margins, overall market trends, risk management and exchange rates; and

• other statements in this document that are not historical facts.

Subject to the requirements of applicable laws, rules and regulations, we do not have any and undertake no obligation to update or otherwise revise the forward-looking statements in this document, whether as a result of new information, future events or otherwise. As a result of these and other risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this document might not occur in the way we expect, or at all. Accordingly, you should not place undue reliance on any forward-looking information. All forward-looking statements in this document are qualified by reference to the cautionary statements in this section.

In this document, statements of or references to our intentions or those of the Directors are made as of the date of this document. Any such information may change in light of future developments.

–32– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS

Potential investors should carefully consider each of the risks described below and all of the other information contained in this document, including the Accountants’ Report included in Appendix I, before deciding to invest in the [REDACTED]. Our business, financial condition, results of operations or prospects may be materially and adversely affected by any of these risks. You should pay particular attention to the fact that our subsidiaries in China are located in a legal and regulatory environment that in some respects differs significantly from that of other countries. The trading price of the [REDACTED] could decline due to any of these risks, as well as additional risks and uncertainties not presently known to us, and you may lose all or part of your investment.

Our business and operations are subject to certain risks and uncertainties, many of which are beyond our control. These risks can be broadly categorized as (i) risks relating to our business; (ii) risks relating to our industry; (iii) risks relating to the PRC; and (iv) risks relating to the [REDACTED].

RISKS RELATING TO OUR BUSINESS

Our business and prospects are dependent on the economic conditions in the PRC and are susceptible to adverse movements in the PRC real estate market, particularly in Yinchuan, Xining and various major cities in Northwest China and other cities we operate and intend to operate.

Our business and prospects depend on the performance of the PRC real estate market, particularly in various major cities in Northwest China. As of March 31, 2021, we had a total of 30 property development projects at various stages of development in the PRC, covering seven cities across China. Out of the 30 projects we have, 28 projects were located in Northwest China. Our profitability is correlated to the performance of the PRC real estate market, which is sensitive to economic fluctuations and is closely monitored by the PRC Government. Any adverse movements in the prices of supply of or demand for properties in the PRC, particularly in the cities where we have or plan to have property development projects, may adversely affect our results of operations, financial condition and business prospects.

In 2018, 2019 and 2020, substantially all of our revenue from sales of properties were derived from Northwest China. As of March 31, 2021, we had a total land bank of 6,516,722 sq.m., of which 6,209,846 sq.m., or 95.3%, were located in Northwest China. As we expect our property projects located in Northwest China will continue to contribute a substantial proportion of our revenue in the near future, our business, financial condition and results of operations may be particularly subject to the market uncertainties, volatility and significant adverse change in the real estate market of Northwest China.

The real estate market possesses the characteristic of cyclicity as a result of the fluctuation in national economy and global economy. For example, the real estate market in the PRC historically displayed cyclicity in terms of GFA of residential properties completed. There

–33– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS were drops in GFA of residential properties completed in 2015 and 2017 which coincided with the global economic recession and the macro-control policies adopted by the PRC Government with the aim of regulating overheated speculative real estate investment and increasing the supply of affordable residential properties. The real estate market may be affected by local, regional, national and global factors which are beyond our control, such as economics and financial development, speculative activities, demand for and supply of properties, availability of alternative investment choices for property buyers, inflation, government policies, interest rates, the availability of capital, natural disasters, epidemics and hostilities, among others. Although demand for residential and commercial properties in China grew rapidly in recent years, we cannot assure you that the real estate market in provinces and cities where we have undertaken, or will undertake, property development projects will continue to grow or that market downturns will not occur. The PRC Government has sought to stabilize the real estate market by promulgating various control measures. Such measures may affect property price level, market demand and supply and our business performance. Recently, the real estate market in the PRC has witnessed signs of a slowdown, with some developers reported to have lowered prices in order to stimulate sales and some local governments reported to have relaxed property purchase restrictions previously imposed as cooling measures to help boost demand. Any continuing adverse development and the ensuing decline in property sales or decrease in property prices in China may adversely affect our business and financial condition.

We may not be successful in managing our growth and expansion into new regions and cities.

In order to achieve sustainable growth, we need to continue to seek development opportunities in selected regions and cities in the PRC with growth potential. As of March 31, 2021, we had established presence in seven cities in China with a total land bank attributable to us of 6,516,722 sq.m. We have expanded our business into Northwest China and plan to further increase our market shares in Northwest China.

Expanding into new geographical locations involves uncertainties and challenges, as we may not be familiar with local regulatory practices and customs, customer preferences and behavior, the reliability of local contractors and suppliers, business practices and business environments and municipal-planning policies in relevant sub-markets. In addition, expanding our business into new geographical locations would entail competition with developers who have more established local presence or greater access to local labor, expertise and knowledge than we do. Competitive pressures may compel us to reduce prices and increase our costs, thus lowering our profit margins. Furthermore, the construction, market and tax-related regulations in our target cities may be different from each other and we may face additional expenses or difficulties in complying with new procedural requirements and adapting to new environments. We may also be subject to higher land acquisition costs and longer acquisition time in certain regions and cities.

When we face new challenges, we may fail to recognize or properly assess risks or take full advantage of opportunities, or otherwise fail to adequately leverage our past experience to meet challenges encountered in these new markets. For example, we may have difficulty in

–34– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS accurately predicting market demand for our properties in the cities into which we expand. We may also have difficulty in promoting and maintaining high occupancy rates and/or rental rates of our investment properties in these new markets after these properties are completed and commence operations.

In addition, expanding into new regions and cities requires a significant amount of capital and management resources. We may not be able to manage the growth in our workforce to match the expansion of our business, and we, accordingly, experience issues such as capital constraints, construction delays, and lack of skillful and qualified personnel. Moreover, expanding our geographical reach will divert management attention from our existing operations. There is no assurance that we will be able to hire, train or retain sufficient talent to successfully implement our expansion plans. Our expansion plan may also be adversely affected as a result of any new tide of outbreak of COVID-19.

We may not be able to identify desirable locations or acquire land use rights for future property development on favorable terms, or at all.

We believe our ability to identify desirable locations and acquire suitable land use rights at commercially reasonable prices is key to the sustainable growth of our business. We need to replenish our land reserves periodically in order to sustain our business growth. However, our success in carrying out these business operations may be subject to factors beyond our control. The PRC Government may promulgate laws and regulations that may effectively reduce the availability of new land suitable for development and hinder our ability to obtain land use rights, thereby intensifying our competition with other property developers, and, as a result, increasing our land acquisition costs.

Moreover, there is no assurance that we will be able to consistently leverage our knowledge of and experience in the PRC real estate market to identify desirable locations for property development. We may incur significant costs in identifying, evaluating and acquiring suitable land for development. To the extent that we are unable to obtain land use rights on favorable terms, or at all, we may fail to achieve expected returns on the sale and lease of our properties.

Our business and prospects are dependent on and may be adversely affected by our non-wholly owned subsidiaries consolidated through voting right arrangements.

During the Track Record Period, we held no more than 50% of the equity interest in Zhongfang Vanke Industrial and Ningxia Zhongjin but we were able to consolidate them as subsidiaries into our Group by obtaining majority of the voting rights in those companies through voting right arrangements with our business partners. During the Track Record Period, out of the 15 project companies with voting right arrangements we entered into with our business partners, two of them recorded revenue, namely Ningxia Zhenghui and Ningxia Yuejia. The aggregate revenue during the Track Record Period from these two project companies amounted to nil, nil and RMB1,209.4 million in 2018, 2019 and 2020, respectively, accounting for nil, nil and 21.5%, respectively, of our total revenue during the respective year.

–35– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS

Since such voting right arrangements with our business partners were established through negotiation on the basis of business goodwill and mutual cooperation, we cannot assure you that we will be able to sustain such business relationship and all of our contractual obligations under such arrangements at all times. Conflicts and material disputes may arise between our business partners and us and there can be no assurance that we can maintain our current voting right arrangements with our existing business partners or that we will be able to successfully establish the same strategic relationships with new business partners in the future. Similarly, there can be no assurance that we can maintain our relationships with the new shareholders of our business partners or if they can continue to honor their contractual obligations under the voting right arrangements. In addition, under our typical voting right entrustment agreements, our business partner may demand in writing to terminate the agreement unilaterally if we are found to be in material violation of laws, rules and regulations, or that we have caused material harm or damage to the overall interests of the project companies.

Therefore, if our cooperation with our business partners in these projects deteriorates or terminates, our business, financial condition and results of operations might be materially and adversely affected. In particular, in the event that we cannot consolidate these project companies as our subsidiaries into our financial statements, our future consolidated financial performance, such as consolidated revenue and profit, may experience a significant decrease as compared to our historical financial performance during the Track Record Period, which may in turn materially affect the investment return to our Shareholders.

We may not have adequate financing to fund our future land acquisition and property development projects, and capital resources may not be available on favorable terms, or at all.

Property development is capital-intensive, with substantial capital investments during the land acquisition and construction period. During the Track Record Period, we funded our land acquisition and property development primarily through internal cash flows, including proceeds from the pre-sales of our properties, bank loans and other financing arrangements. However, we cannot assure you that our capital resources will be sufficient, or that we will be always able to obtain additional external financing on favorable terms, or at all. Our ability to obtain external financing may be subject to factors beyond our control, including, general economic conditions, changes to regulations, our financial performance and credit availability. In recent years, the PRC Government has taken a number of measures in the financial sector to further tighten lending requirements to property developers, which include:

• prohibit PRC commercial banks from extending loans to property developers to finance land premiums;

• prohibit PRC commercial banks from granting or extending revolving credit facilities to property developers that hold idle land;

• restrict PRC commercial banks from granting new property development loans to property developers that hold a large amount of vacant commodity properties;

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• prohibit PRC commercial banks from taking commodity properties that have been vacant for more than three years as security for mortgage loans;

• prohibit PRC commercial banks and trust financing companies from granting loans to develop projects that fail to meet capital ratio requirements or lack the required government permits or certificates;

• tighten the grant of trust financing to property developers to control the scale and growth of real estate financing; and

• prohibit property developers from using borrowings obtained from any local banks to fund property developments outside that local region.

The PBOC regulates the reserve requirement ratio for commercial banks in the PRC, which affects the availability and cost of financing that we may obtain from them. On December 28, 2020, the PBOC and CBRC jointly issued the Notice on Establishing the Centralization Management System for Real Estate Loans of Banking Financial Institutions (關於建立銀行業金融機構房地產貸款集中度管理制度的通知), which became effective on January 1, 2021. Pursuant to the notice, a PRC financial institution (excluding its overseas branches) is required to limit the amount of real estate loans and personal housing mortgage loans to a capped ratio of the total amount of RMB loans extended by such financial institution. The financial institution will have a transition period of two years or four years to comply with the requirements, subject to certain conditions. Pursuant to the notice, PBOC and CBRC will have the authority to take measures such as, among other things, imposing additional capital requirements on the financial institutions. We cannot assure you that the PRC Government will not introduce additional measures that may restrict our access to capital resources and external financing. Failure to secure sufficient external financing on favorable terms, or at all, may hinder our ability to implement and complete our property development projects.

Moreover, the PRC government has implemented a number of measures to manage money supply growth and credit availability. For example, according to the General Lending Provisions (《貸款通則》), a regulation promulgated by the PBOC in 1996, only financial institutions with the approval from the PBOC to provide loan services may legally engage in the business of extending loans and loans between companies that are not financial institutions with the approval from the PBOC to provide loan services are prohibited, which may not comply with the General Lending Provisions notwithstanding whether interests are charged or not. However, according to the Provisions of the Supreme People’s Court on Several Issues concerning the Application of Law in the Trial of Private Lending Cases (《最高人民法院關於審理民間借貸案件適用法律若干問題的規定》) promulgated on December 29, 2020 and effective on January 1, 2021, lending contracts among companies are valid if extended for purpose of financing production or business operations except for the circumstances resulting in a void contract as stipulated in the Civil Code and in the Provisions. This kind of restriction might limit our potential opportunities to seek external financing.

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In addition, the PRC Government has implemented restrictions on the ability of PRC property developers to obtain offshore financing which could affect our ability to deploy the funds raised outside of China in our business in the PRC. On May 23, 2007, and amended on October 28, 2015 the MOFCOM and the SAFE jointly promulgated the Notice on Further Strengthening and Regulating the Approval and Supervision of Foreign Direct Investment in the Real Estate Industry (關於進一步加強、規範外商直接投資房地產業審批和監管的通知), which provides that foreign-invested real estate enterprises approved to be incorporated by the competent local authority shall promptly complete required filings with the MOFCOM. These regulations effectively restrict our ability to fund our PRC subsidiaries by way of shareholder loans. Pursuant to the Guidelines for Administration over Foreign Debt Registration (外債登記管理操作指引) promulgated by SAFE on April 28, 2013 and effective from May 13, 2013 and amended on May 4, 2015, real estate enterprises with foreign investment approved by local MOFCOM branches and filed with the MOFCOM after (and including) June 1, 2007 are not allowed to register foreign debt contracts with the SAFE or its local branches. Under the guidance, if the foreign-invested real estate enterprise does not obtain the land use right certificate, or the project capital for project development does not reach 35% of total amount of project investment, such enterprise shall not incur foreign debt and the SAFE or its local branches shall not register foreign debt contracts for such enterprise. According to the Circular of the General Office of the National Development and Reform Commission on Requirements for Record-filing for Issuance of Foreign Debts by Real Estate Enterprises《國家發展改革委辦公廳關於對房地產企業發行外債申請備案登記有關要求的通知》(發改辦外資[2019]778號) promulgated by the NDRC and came into effect on July 9, 2019, foreign debts issued by real estate enterprises could only be used for repaying medium- and long-term offshore debts that will be due in the upcoming year.

Furthermore, equity contributions by us and our non-PRC subsidiaries to our PRC subsidiaries will require registration with industrial and commercial administration authorities as well as foreign exchange authorities, and submission of the investment information to competent departments of commerce through the enterprise registration system and the enterprise credit information publicity system, which may take considerable time and delay the actual contribution to the PRC subsidiaries. This may adversely affect the financial condition of the PRC subsidiaries and may cause delays to the development undertaken by such PRC subsidiaries. In addition, our PRC subsidiaries which are foreign-invested enterprises shall register with the foreign exchange authorities after established, and shall undergo modification registration in case of any subsequent capital modification, such as capital increase or decrease or equity transfer. We cannot assure you that we have completed or will complete in a timely manner all relevant necessary registration for all our operating subsidiaries in the PRC to comply with this regulation. Moreover, we cannot assure you that the PRC Government will not introduce any new policies that further restrict our ability to deploy, or that prevent us from deploying, in China the funds raised outside of China. Therefore, we may not be able to use all or any of the capital that we may raise outside China to finance our projects in a timely manner, or at all.

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We generated substantially all of our revenue from the sales of properties during the Track Record Period, and our results of operations may fluctuate due to factors such as the timing of our property sales and property delivery.

We generated substantially all of our revenue from the sales of properties during the Track Record Period. In 2018, 2019 and 2020, revenue from the sales of properties accounted for approximately 99.0%, 97.7% and 98.3%, respectively, of our total revenue during the same periods. Our results of operations may fluctuate due to factors such as the timing of our property sales and property delivery. We generally recognize revenue from the sales of our properties when or as the control of the asset is transferred to the customer. We would not be able to deliver the property to the customer or to recognize the related pre-sold proceeds as revenue until the completion certificate is issued. There is a time difference between pre-sales of projects under development and the completion of property construction. Because the timing of completion of our properties varies according to our construction timetable, our results of operations may vary significantly from period to period depending on the GFA sold or pre-sold, and the timing between our pre-sales, construction completion and the delivery of the properties to purchasers. Periods in which we pre-sell a large amount of aggregate GFA may not be the same periods in which we generate a correspondingly high level of revenue, if the properties pre-sold are not completed and delivered within the same period. The effect of timing of delivery on our operational results is accentuated by the fact that during any particular period of time we can only undertake a limited number of projects due to the substantial capital requirements for land acquisition and construction costs.

Our operating results may fluctuate as a result of various factors, including fluctuations in expenses, such as land grant premiums, development costs, administrative expenses, selling and marketing expenses, and changes in market demand for our properties. As a result, our period-to-period comparisons of results of operations and cash flow positions may not be indicative of our future results of operations and may not be taken as meaningful measures of our financial performance for any specific period. In addition, the cyclical property market of the PRC affects the optimal timing for the acquisition of land, the planning of development and the sales of properties. This cyclicality, together with the lead time required for the sales of properties and the completion of projects, means that our results of operations relating to property development activities may be susceptible to significant fluctuations from period to period. Furthermore, our property development projects may be delayed or adversely affected by a combination of factors beyond our control, which may in turn adversely affect our revenue recognition and consequently our cash flow and results of operations.

We may be unsuccessful in implementing our business strategies.

We formulate our business strategies based on, our judgment of market conditions and regulatory environment. For example, we intend to actively expand into cities with high potential in Northwest China and further improve our product design and quality to enhance the competitiveness of our products and our brand image. See “Business—Our Strategies.” However, we are subject to uncertainties in relation to implementing our business strategies and achieving the expected economic results. We may be hindered by factors beyond our

–39– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS control, such as competitive pressures from peer companies, lack of qualified and experienced personnel, natural disasters, epidemics, pandemics, difficulties in obtaining the required permits, licenses and certificates, delays in construction and logistical difficulties. Failure to successfully implement our business strategies may weaken our competitiveness in the long term and materially and adversely affect our business, financial condition and results of operations.

Our sales contracts are subject to termination and variation under certain circumstances and are not a guarantee of our current or future contracted sales.

We have included information relating to our contracted sales in this document. Contracted sales refer to the total contractual value of formal sales contracts we entered into with purchasers of our properties. We compile contracted sales information through our internal records. As these sales and purchases contracts are subject to termination or variation under certain circumstances pursuant to their contractual terms or otherwise, or subject to default by the relevant purchasers, they are not a guarantee of current or future operating performance. Contracted sales information included in this document should in no event be treated as an indication of our revenue or profitability. Our subsequent revenue recognized from such contracted sales may be materially different from such contracted sales. Accordingly, contracted sales information contained in this document should not be unduly relied upon as a measure or indication of our current or future operating performance.

Our sales may vary from period to period, and such fluctuations make it difficult to predict our future performance.

We rely on the cash flow generated from pre-sales and sales of our properties to fund our operations. Our property sales, however, may fluctuate from period to period due to a combination of various factors, including but not limited to general market conditions of property market in China and in the cities we operate, national and local government and bank policies, the overall development schedules of our projects, sales plans of our projects, mix in geographic locations, property series, and product types that we launch pre-sales in a particular period, and the timing and size of GFA approved by governmental authorities for our pre-sales. We cannot assure you that the GFA sold or pre-sold and selling prices of our properties and accordingly, the recognized GFA and recognized ASP of our properties, respectively, will continue to increase in the future. Because the timing of delivery of our properties varies according to our construction timetable, our results of operations may vary significantly from period to period depending on the GFA sold or pre-sold and the timing of completion of the properties we sell. Should our selling prices or recognized ASP decrease due to the change in mix in geographic locations, property series and product types for a particular period in the future or reasons beyond our control, our cash position and sales revenue will be materially adversely affected, which may adversely affect our ability to service our indebtedness as well.

In addition, there is no assurance that our selling prices or recognized ASP, as a whole, will always be consistent with the industry trends in the cities we operate. Although historically the fluctuations of the selling prices or recognized ASP for our residential and commercial

–40– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS properties were generally in line with the industry trend in the cities we operate, our selling prices or recognized ASP, as a whole, might deviate from the industry trends as a result of the changes in mix of property series and product types we launch, sale and pre-sale in a particular period and the timing of the completion of properties, making it difficult to evaluate our historical performance and to predict future trends.

The total GFA of some of our property developments may be different from the original authorized total GFA.

Government grants of land use rights for a parcel of land specify in the land grant contract the permitted total GFA that the developer may develop on the land. In addition, the total GFA is also set out in the relevant urban planning approvals and construction permits. However, the actual GFA constructed may be different from the total GFA authorized in the land grant contract or the relevant urban planning approvals or the construction permits due to factors such as subsequent planning and design adjustments. The actual GFA may be subject to approval when the relevant authorities inspect the properties after completion. The developer may be required to pay additional land premium and/or administrative fines or take corrective actions in respect of the adjusted land use and excess GFA before a completion certificate can be issued to the property developer. Until the completion certificate is issued, we would not be able to deliver individual units to purchasers or to recognize the related pre-sale proceeds as revenue. The methodology for calculating the additional land premium is generally the same as that as set out in the original land grant contract. If excess GFA causes delays in the delivery of our products, we may also incur liability to purchasers under our sales and purchase contracts. There can be no assurance that the constructed total GFA for each of our existing projects under development or any future property developments will not exceed permitted total GFA. Any of these factors may adversely affect our business.

We may fail to deliver our projects on time, on budget, or at all.

Property development typically requires significant capital resources, and a substantial amount of time may pass before they generate revenue. The progress of a property development project may be affected by various factors, which may include:

• natural disasters, adverse weather conditions, epidemics or pandemics;

• changes in market conditions, economic downturns and/or decline in customer interest;

• delays in obtaining requisite licenses, permits or approvals from relevant government authorities;

• changes in laws, rules, regulations and government policies;

• disputes with our joint venture partners;

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• availability and cost of financing;

• increases in the prices of raw materials and labor costs;

• shortages of materials, equipment, contractors and skilled labor;

• latent soil or subsurface conditions and latent environmental damage requiring remediation;

• unforeseen engineering, design, environmental or geographic problems;

• labor disputes and strikes;

• construction accidents; and

• other unforeseen problems or circumstances.

Before we are affected by one or more of the above factors, we may have already expended significant capital resources with little or no prospect of recovering or mitigating our losses. Substantial capital expenditures are generally incurred for business operations with land acquisition and construction. It may take a long time for construction to generate positive net cash flow through pre-sales, sales and leases. Our customers may be entitled to claim compensation for late delivery or terminate pre-sale contracts. We may suffer material and adverse effects on our reputation and access to future business opportunities in the long term. We are also unable to guarantee that any legal proceedings or renegotiations resulting from delays or failures to deliver will have a favorable outcome. See “—We may be involved in legal and other proceedings arising out of our operations from time to time” below.

We face risks related to the pre-sales of properties from any potential limitations or restrictions imposed by the PRC Government.

We make certain undertakings in our pre-sale contracts. These pre-sale contracts and the relevant PRC laws and regulations provide remedies for breach of these undertakings. For example, if we fail to complete a pre-sold property on time, we may be liable to the relevant purchasers for late delivery. If our delay extends beyond a specified period, the purchasers may terminate their pre-sale contracts and claim for damages. See “—We may fail to deliver our projects on time, on budget, or at all.” In addition, purchasers may also refuse to accept the delivery or even terminate the pre-sale contracts if the GFA of the relevant unit, as set out in the individual property ownership certificate, deviates by more than 3% from the GFA of that unit set out in the pre-sale contract. We cannot assure you that we will not experience any breach of undertakings, such as delays in the completion and delivery of our properties, or that the GFA for a delivered unit will not deviate more than 3% from the GFA set out in the relevant pre-sale contract. Any of the above could have a material adverse effect on our business, financial condition and results of operations.

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Under the applicable PRC laws, property developers must fulfill certain conditions before they can commence pre-sales of the relevant properties and the use and deposit of pre-sales proceeds are also restricted. If we fail to deposit certain of the pre-sales proceeds into the designated custodial accounts in accordance with the relevant PRC laws and any relevant local requirements, we may be subject to certain disciplinary measures, including suspending the allocation of supervisory funds, suspending the qualification of commercial housing online contracting for the project and recording it in the credit files of real estate development enterprises. According to the Notice of the MOHURD on Further Strengthening the Supervision of the Real Estate Market to Improve the Pre-sale System of Commodity Housing (住房和城鄉建設部關於進一步加強房地產市場監管完善商品住房預售制度有關問題的通知), the pre-sale proceeds of commercial housing shall be included in the supervision account, and the supervisory authority shall be responsible for the supervision and control to ensure that the pre-sale funds are used for the construction of commercial housing projects; the pre-sale funds may be appropriated according to the construction progress, but sufficient funds must be retained to ensure the completion and delivery of the construction projects. During the Track Record Period, three, one, one and one projects in Xining, Yinchuan, Haidong and Xianyang, respectively, were involved in the Pre-sale Proceeds Incident for failure to fully or directly deposit the required amounts of pre-sale proceeds into the designated escrow accounts in accordance with relevant regulatory requirements for a total amount of RMB246.5 million, RMB3,250.6 million and RMB2,999.4 million, respectively. See “Business—Our Property Development Management—Sales and Marketing—Pre-sales” and “Business—Legal Proceedings and Compliance—Compliance with Laws and Regulations—Pre-sale Proceeds Incidents” for more details on our pre-sale activities and compliance with the relevant pre-sale laws and regulations during the Track Record Period. During the Track Record Period, we had not been subject to any significant penalty by the PRC governmental authorities in relation to the use and deposit of our pre-sales proceeds. If we fail to comply with the relevant regulations and requirements, we may face fines which could have a material adverse effect on our financial condition and results of operations.

On September 21, 2018, Guangdong Real Estate Association issued an “Emergency Notice on the Relevant Opinions on Providing the Pre-sale Permit for Commodity Houses” (《關於請提供商品房預售許可有關意見的緊急通知》), asking for opinions on the cancelation of the pre-sale system of commodity residential properties. We cannot guarantee that the PRC Government will not adopt this recommendation or impose additional restrictions on pre-sales going forward. Under current PRC laws and regulations, we are required to fulfill certain conditions prior to commencing pre-sales. Additionally, we are also only able to use our proceeds to finance construction of properties to which individual pre-sales relate. In the event that the PRC Government imposes bans or further restrictions on the conduct of pre-sales, we may be forced to seek alternative sources of funding to finance our property development projects. Alternative sources of funding may not be available to us on favorable terms or at all, which could have a material adverse effect on our financial condition and results of operations.

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The actual realizable value of our properties may be substantially lower than their appraisal value and is subject to change.

The appraisal value of our properties as stated in Appendix III to this document was prepared by JLL based on multiple assumptions with subjective and uncertain elements. The assumptions, on which the appraised value of our properties and land reserves are based, include that we sell the property interests in the market without the benefit of a deferred term contract, leaseback, joint venture, management agreement or any similar arrangement, which could serve to affect the values of the property interests. In addition, no allowance has been made for any charges, mortgages or amounts owing either on any of the property interests valued or for any expenses or taxation which may be incurred in effecting a sale.

The appraisal value of our properties should not be taken as their actual realizable value or a forecast of their actual realizable value. The value of our properties may be affected by unforeseen occurrences stalling the progress of our property development projects as well as national and local economic conditions. The value of our properties may stagnate or decrease if the market for comparable properties in China experiences a downturn. See “—Our business and prospects are dependent on the economic conditions in the PRC and are susceptible to adverse movements in the PRC real estate market, particularly in Yinchuan, Xining and various major cities in Northwest China and other cities we operate and intend to operate.” In the event that any of the assumptions prove false, and therefore lower the actual realizable value of our properties, our business, financial condition and results of operations may be materially and adversely affected.

We have indebtedness and may incur additional indebtedness in the future.

We maintained a substantial level of borrowings to finance our operations during the Track Record Period. As of December 31, 2018, 2019 and 2020, our total borrowings, comprising interest-bearing bank loans, lease liabilities and borrowings from other financing institutions, amounted to RMB1,311.7 million, RMB1,350.5 million and RMB1,888.1 million, respectively. Our indebtedness and gearing level could have an adverse effect on us, for example, by (i) increasing our vulnerability to downturns of general economic or industry conditions; (ii) limiting our flexibility in planning for, or reacting to, changes in our business or the industry in which we operate; (iii) placing us at a competitive disadvantage compared to our competitors with lower levels of indebtedness; (iv) limiting our ability to borrow additional funds; and (v) increasing our cost of additional financing. In the future, we expect to incur additional indebtedness to complete our projects under development and projects held for future development and we may also utilize proceeds from additional debt financing to acquire land resources, which could intensify the risks we face as a result of our indebtedness.

Our ability to maintain sufficient cash to satisfy our outstanding and future debt obligations will depend upon our future operating performance, which will be subject to prevailing economic conditions, PRC governmental regulation, the demand for properties in the regions we operate and other factors, many of which are beyond our control. We may not generate sufficient cash flow to pay our anticipated operating expenses and to service our

–44– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS debts, in which case we will be forced to adopt an alternative strategy that may include actions such as reducing or delaying capital expenditures, disposing of our assets, restructuring or refinancing our indebtedness or seeking equity capital. If we are unable to fulfill our repayment obligations under our borrowings, or are otherwise unable to comply with the restrictions and covenants in our current or future bank loans and other financing agreements, there could be a default under the terms of these agreements. In the event of a default under these agreements, the lenders may accelerate the repayment of outstanding debt or, with respect to secured borrowings, enforce the security interest securing the loans. Any cross-default and acceleration clause may also be triggered as a result. If any of these events occur, we cannot assure you that our assets and cash flow would be sufficient to repay all of our indebtedness, or that we would be able to obtain alternative financing on terms that are favorable or acceptable to us. As a result, our cash flow, financial condition and results of operations may be materially and adversely affected.

We are subject to certain restrictive covenants in and risks associated with our bank borrowings and other borrowings.

We are subject to certain restrictive covenants under the terms of our bank borrowings and other borrowings, which may restrict or otherwise adversely affect our operations. These covenants may restrict, among others, our ability to incur additional debt or provide guarantees, create encumbrances, pay dividends or make distributions on one of our subsidiaries’ capital stock, prepay certain indebtedness, reduce our registered capital, sell, transfer, lease or otherwise dispose of property or assets, alter the nature or scope of business operations in material respect, make investments and engage in mergers, consolidation or other change-in-control transactions. In addition, some of our borrowings may have restrictive covenants linked to our financial performance, such as maintaining a prescribed maximum debt-asset ratio during the term of the loans. Moreover, many of our bank and other borrowings are secured by equity interests in the relevant project subsidiaries, land use rights of the relevant land parcels or other assets. From time to time, we may enter into financing arrangements with asset management companies, where such company may have veto right over some of our above-mentioned corporate actions, which may further limit our flexibility in operation and ability to raise additional funding. See “Financial Information—Indebtedness.” If we incur default and cannot repay all of such indebtedness, we may lose part or all of our equity interests in these project subsidiaries, our proportionate share of the asset value of the relevant property projects, land use rights or our development projects. See “Financial Information—Indebtedness.” The occurrence of any of the above events may materially and adversely affect our business, financial condition and results of operations.

We guarantee the mortgage loans provided by financial institutions to our customers and, consequently, we will be liable to the mortgagees if our customers default on their mortgage payments.

Our customers may apply for mortgage loans to purchase our properties. As consistent with market practice, we guarantee these mortgages for a period until the purchasers of our properties obtain the relevant “strata-title building ownership certificate (分戶產權證)” and

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“mortgage registration certificate (抵押登記證書)” registered in favor of the bank. These are contingent liabilities not reflected on our balance sheets. In the event that a customer defaults on the mortgage payment, the mortgage bank may deduct the payment due from the deposited sum and demand our immediate payment of the outstanding balance. Once we have satisfied our obligations under the guarantee, the bank would then assign its rights under the mortgage to us and we would have full recourse to the property.

As we generally rely on credit assessments on our customers conducted by banks in making our guarantees, we cannot assure you that such assessments are sufficient. There can also be no assurance that we will be able to estimate and make appropriate provision for defaults. Furthermore, any significant decline of the economic condition of the PRC or local markets in which we operate may lead to lowered income of our customers and, subsequently, an increased risk of default on loans. As of December 31, 2020, our outstanding guarantees in respect of the mortgages of our customers amounted to RMB1,351.4 million. In the event that significant amounts of guarantee payment obligations arise at a time, our business, financial condition and results of operations may be materially and adversely affected, especially if the market value of our properties depreciates substantially or the prevailing conditions prevent us from reselling our properties on favorable terms.

We are subject to risks of recoverability arising from certain arrangement we made with third-party property developer to expand the land bank.

We adopt various means to acquire land bank, including cooperation with third party primary land developer involved in city renovation projects. We plan to participate in a village renovation project and target to acquire certain parcels of land in a village located in Xi’an Shaanxi Province. In order to expedite the process of the demolition and resettlement work to be completed by the third-party property developer so as to fulfill the criteria of the land transfer of such parcels of land, from June 2020 to January 2021, we made an aggregate interest-bearing advance of RMB1,865 million to a third-party property developer, which has been commissioned by the local government to carry out the demolition and relocation matters in connection to the village renovation project, to cover its borrowings, fees and expenses related to renovation, demolition and relocation matters. For the security of such advance, the 99% equity interest of this third-party property developer was transferred to us (as a nominee shareholder), and the third-party property developer’s company chop together with the security devices (including the USB keys) and password of the bank account for receiving payment from the coming land transfer are kept by us. See “Business—Our Property Development Management—Site Selection and Land Acquisition—Land Acquisition” for details. In March 2021, in accordance with the agreements we entered into with Vanke Group through a project company, Vanke Group reimbursed RMB1,198.1 million to us, representing 60.0% of such advance plus fund possession fee, which was in proportion to its 60.0% equity interest in the project company.

However, we cannot assure you that we will be able to recover the remaining amount of the advance we made on time or at all, as the ability of this third-party property developer to repay us depends on a number of factors which might be beyond our control, such as the progress of the primary land development, changes in local government policies and

–46– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS regulations regarding village renovation projects, and changes in market conditions. The third-party property developer may delay or even default in its repayment obligation. Even though the 99% equity interest of this third-party property developer has been transferred to us, we cannot assure you that such collateral will be sufficient in value to settle the advance we made, or at all. Any delay or default in the repayment of the advance could materially and adversely affect our business, financial condition and results of operations.

We may be subject to fines or forfeit land to the PRC Government if we fail to pay land grant premiums or fail to develop properties within the time and in accordance with the terms set out in the relevant land grant contracts.

Under PRC laws, if we fail to develop a property project according to the terms of the land grant contract, including those relating to the designated use of the land and the time for commencement and completion of the property development, government authorities may issue a warning, impose a penalty and/or order us to forfeit the land. Specifically, under current PRC laws, if we fail to pay any outstanding land grant premium by the stipulated deadlines, we may be subject to late payment penalties or the repossession of the land by the PRC Government. If we fail to commence development after one year of the commencement date stipulated in the land grant contract, the relevant PRC land bureau may issue a warning to us and impose an idle land fee equivalent to 20% of the land premium. If we fail to commence development within two years from the commencement date stipulated in the land grant contract, the relevant PRC land bureau may confiscate our land use rights without compensation, except where the delay in the development is attributable to a force majeure event or the action of the relevant government department or delay in the requisite preliminary work preceding commencement of such development. Moreover, had a property developer commenced development of the property in accordance with the timeframe stipulated in the land grant contract, however, if such development was suspended for more than one year without government approval and falls under either of the following two situations: (i) the developed land area is less than one-third of the total land area, or (ii) the total invested capital is less than one-fourth of the total planned investment in the project, then the land may be treated as idle land and will be subject to the risk of forfeiture. During the Track Record Period and up to the Latest Practicable Date, we had not incurred any material delays in commencement and/or completion of construction. However, we cannot assure you that we will not experience any significant delays in commencement or completion of our projects in the future or that we will not be subject to any liabilities for any such delays.

In September 2007, the Ministry of Land and Resources issued a new notice to further enhance control of the land supply by requiring developers to develop land according to the terms of the land grant contracts and restricting or prohibiting any non-compliant developers from participating in future land auctions. In January 2008, the State Council issued a Notice of the State Council on Promoting Land Saving and Efficient Use (國務院關於促進節約集約用地的通知) to escalate the enforcement of existing rules on idle land management. Furthermore, the Ministry of Land and Resources issued a Notice on Restricting the Administration of Construction Land and Promoting the Use of Approved Land (關於嚴格建設用地管理促進批而未用土地利用的通知) in August 2009, which reiterated the applicable

–47– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS rules with regard to idle land management. On June 1, 2012, the Ministry of Land and Resources promulgated the revised Measures on the Disposal of Idle Land (閒置土地處置辦法), which went into effect on July 1, 2012. These further measures may prevent competent land authorities from accepting any application for new land use rights or processing any title transfer transaction, lease transaction, mortgage transaction or land registration application with respect to idle land prior to the completion of the required rectification procedures.

We cannot assure you that circumstances leading to the repossession of land or delays in the completion of a property development will not arise in the future. If our land is repossessed, we will not be able to continue our property development on the forfeited land, recover the costs incurred for the initial acquisition of the repossessed land or recover development costs and other costs incurred up to the date of the repossession. In addition, we cannot assure you that regulations relating to idle land or other aspects of land use rights grant contracts will not become more restrictive or punitive in the future. If we fail to comply with the terms of any land use rights grant contract as a result of delays in project development, or as a result of other factors, we may lose the opportunity to develop the project as well as our investments in the land, which could materially and adversely affect our business, financial condition and results of operations.

We are susceptible to the effects that interest rate hikes may have on our customers’ mortgage rates and our financing costs.

Changes in interest rates generally affect our customers’ mortgage rates and our financing costs. Subsequent to the financial crisis, the PBOC had adjusted the benchmark one-year bank lending rate several times since 2008. The PBOC may adjust benchmark interest rates upward. Any hike in benchmark interest rates is likely to increase our customers’ mortgage rates and our financing costs. Increases in mortgage rates may negatively affect growth in the real estate market, while increases in our financing costs may materially and adversely affect our results of operations.

Our results of operations have been affected, and will continue to be affected, by the performance of our associates. We may not be able to realize the anticipated economic and other benefits from our associates.

We have established associates with other property developers to develop property projects and may continue to do so in the future. As of March 31, 2021, we had one project developed by our associates. The performance of our associates has affected, and will continue to affect, our results of operations and financial position. Generally, we do not expect to record gains from such associates until they start to generate revenue by delivering properties they develop. Our share of profits and losses of associates in 2018 and 2019 was nil, and our share of losses of associates in 2020 was RMB5.2 million, respectively.

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The success of an associate depends on a number of factors, which might be beyond our control. As a result, we may not be able to realize the anticipated economic and other benefits from our associates. In addition, in accordance with PRC law, the agreements and the articles of association of our associates, certain matters relating to associates require the consent of all parties to the associates. Therefore, such business cooperation agreements involve a number of risks, including that:

• we may not be able to pass certain important board resolutions requiring unanimous consent of all of the directors of our project companies if there is a disagreement between us and our partners;

• we may disagree with our partners in connection with the scope or performance of our respective obligations under the business cooperation agreements;

• our partners may be unable or unwilling to perform their obligations under the business cooperation agreements with us, including their obligations to make required capital contributions and shareholder loans, whether as a result of financial difficulties or other reasons;

• our partners may have economic or business interests or goals and philosophies inconsistent with ours;

• our partners may take actions contrary to our requests, instructions, policies or objectives with respect to our property investments; or

• our partners may face financial or other difficulties affecting their ability to perform their obligations under the relevant business cooperation agreements with us.

In addition, since we do not have full control over the business and operations of our associates, we cannot assure that they have been, or will be in strict compliance with all applicable PRC laws and regulations. We cannot assure you that we will not encounter problems with respect to our associates or our associates will not violate applicable PRC laws and regulations, which may have an adverse effect on our business, results of operations and financial condition.

Our investments in associates and property projects are subject to liquidity risk.

Our investments in associates and property projects are subject to liquidity risk. Our investments in associates and property projects are not as liquid as other investments as there is no cash flow until such associates and/or property projects generate revenue from pre-sales or obtain financing arrangements. Furthermore, our ability to promptly sell our interests in the associates and property projects in response to changing economic, financial and investment conditions is limited. The market is affected by various factors, such as general economic conditions, availability of financing, interest rates and supply and demand, many of which are beyond our control. We cannot predict whether we will be able to sell any of our interests in

–49– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS the associates and property projects for the price or on the terms set by us, or whether any price or other terms offered by a prospective purchaser would be acceptable to us. We also cannot predict the length of time needed to find a purchaser and to complete the relevant transaction. Therefore, the illiquidity nature of our investments in associates and property projects may significantly limit our ability to respond to adverse changes in the performance of our associates.

Our operations are dependent on a limited number of major suppliers.

Our suppliers are mainly construction contractors, decoration and landscaping contractors, materials and equipment suppliers. During the Track Record Period, we were dependent on a limited number of major suppliers to operate our businesses. All of our five largest suppliers during the Track Record Period were construction contractors. In 2018, 2019 and 2020, purchases from our five largest suppliers accounted for approximately 43.6%, 45.5% and 32.3% of our total purchases, respectively. Purchases from our single largest supplier in 2018, 2019 and 2020 accounted for approximately 13.7%, 16.3% and 8.7% of our total purchases, respectively. See “Business—Suppliers and Customers—Suppliers.” If our current major suppliers decide to terminate business relationships with us or if the services, equipment or materials supplied by our current suppliers fail to meet our standards, or if our current services, equipment or raw material supplies are interrupted for any reason, we may not be able to easily switch to other qualified suppliers in a timely fashion or at all. In such events, our business, financial condition and results of operations may be materially and adversely affected.

We rely on third-party contractors during the construction and development stages of our property development projects, and these contractors may not perform in accordance with our expectations.

We engage third-party contractors to carry out various services relating to our property development projects. We may select third-party contractors through a tender process or a direct engagement, and we endeavor to engage companies with strong reputation and track record, high performance reliability and adequate financial resources. Our third-party contractors may fail to provide satisfactory services or within the time required by us. In addition, completion of our property developments may be delayed, and we may incur additional costs, due to the financial or other difficulties of our contractors. If the performance of any third-party contractor is unsatisfactory, we may need to replace such contractor or take other remedial actions, which could increase the costs and adversely affect the development schedules of our projects and materially and adversely affect our reputation, credibility, financial condition and business operations. Moreover, we cannot assure you that our employees will be able to consistently apply our quality standards in carrying out quality control, or will be able to detect all defects in the services rendered by third-party service providers or contractors. Furthermore, if our relationship with any of the third-party service providers or contractors deteriorates, a serious dispute with such third-party service provider or contractor may arise, which may in turn lead to legal proceedings. The occurrence of any of the above events may have a material adverse effect on our business, financial condition, results of operations and prospects.

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Fluctuations in the price of construction materials and our construction contractors’ labor costs could affect our business and financial performance.

The cost of construction materials such as steel and cement, as well as contractors’ labor costs, are subject to a high degree of volatility. The risk of fluctuations in construction material and labor costs during the terms of the contracts are absorbed by our construction contractors to a large extent, as they are responsible for purchasing most of the construction materials and bear relevant labor costs during the terms of the relevant contracts pursuant to the relevant contracts. However, our contracts entered with construction companies contain price adjustment mechanisms, pursuant to which contract prices would be adjusted if market prices of related materials fluctuate beyond a pre-determined range. In addition, if there is any significant increase in the cost of construction materials and labor costs, our construction contractors may require us to renegotiate construction fees. Furthermore, we typically pre-sell our properties prior to their completion and we will not be able to pass the increased costs on to our customers if the costs of construction materials and labor increase after the pre-sales. If any of these occur, our business, financial condition and results of operations may be adversely affected. Any increase in the cost of construction materials may lead to future increases in construction contract costs. Construction material costs experienced periods of fluctuation during the Track Record Period. Any increase in the cost of any major construction materials will adversely affect our overall construction costs, which is generally one of the key components of our cost of sales. If we cannot pass any or all of the additional costs on to our customers, our profitability will be adversely affected.

The illiquidity of investment properties and the lack of alternative uses of investment properties may significantly limit our ability to respond to adverse changes in the performance of our investment properties.

Because property investments in general are relatively illiquid, our ability to promptly sell one or more of our investment properties in response to changing economic, financial and investment conditions is limited. The property market is affected by various factors, such as general economic conditions, availability of financing, interest rates and supply and demand, many of which are beyond our control. We cannot predict whether we will be able to sell any of our investment properties for the price or on the terms set by us, or whether any price or other terms offered by a prospective purchaser would be acceptable to us. We also cannot predict the length of time needed for pre-sale and to complete the sales of a property. Moreover, we may also need to incur capital expenditure to manage and maintain our properties or to correct defects or make improvements to these properties before selling them. We cannot assure you that financing for such expenditures would be available when needed, or at all.

Furthermore, the aging of investment properties, changes in economic and financial condition or changes in the competitive landscape in the PRC property market may adversely affect the number of rentals and amount of revenue we generate from, as well as the fair value of, our investment properties. However, investment properties may not be readily converted to alternative uses, as such conversion requires extensive governmental approvals in the PRC and involves substantial capital expenditures for the purpose of renovation, reconfiguration and refurbishment. We cannot assure you that we will possess the necessary approvals and

–51– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS sufficient funds to carry out the required conversion. These factors and any others that would impede our ability to respond to adverse changes in the performance of our investment properties could affect our ability to compete against our competitors and our results of operations.

The fair value of our investment properties is likely to fluctuate from time to time and such fluctuations make it difficult to predict our future performance.

We are required to reassess the fair value of our investment properties at the end of each reporting period. Under IFRSs, gains or losses arising from changes in the fair value of our investment properties are included in our combined statements of comprehensive income for the period in which they arise. Our investment properties were valued by JLL, an independent property valuer, as of December 31, 2018, 2019 and 2020 and March 31, 2021, on an open market and existing use basis, which reflected market conditions on the respective dates. Based on such valuation, we recognized the aggregate fair value of our investment properties and relevant deferred tax on our combined statements of financial position and increases in fair value of investment properties and movements of the relevant deferred tax on our combined statement of comprehensive income. In 2018, 2019 and 2020, our fair value gains on investment properties were RMB3.7 million, RMB0.2 million and nil, respectively.

Fair value gains would not change our cash position as long as the relevant investment properties are held by us and thus would not increase our liquidity in spite of the increase in profit. The amount of revaluation adjustments has been, and will continue to be, subject to market fluctuations. As a result, we cannot assure you that changes in the market conditions will continue to create fair value gains on our investment properties or that the fair value of our investment properties will not decrease in the future. Such investment properties are measured at fair value with material unobservable inputs used in the valuation techniques. Accordingly, the valuation techniques adopted by the valuer involve uncertainties relating to the use of unobservable inputs. In addition, the fair value of our investment properties may materially differ from the amounts we would receive in actual sales of the investment properties. Any significant decreases in the fair value of our investment properties or any significant decreases in the amount we receive in actual sales of the investment properties as compared with the recorded fair value of such properties would materially and adversely affect our results of operations.

We may not be able to continue to attract and retain quality tenants for our investment properties.

Historically, we derived a small portion of revenue from property leasing. As we seek to selectively increase our portfolio of investment properties by adding investment properties with appreciation potential, revenue from property leasing may become an increasingly important contributor to our revenue in the future. However, we are subject to risks incidental to the ownership and leasing of investment properties, including volatility in market rental rates and occupancy levels, competition for tenants, costs resulting from ongoing maintenance and repair and inability to collect rent from tenants or renew leases with tenants due to

–52– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS bankruptcy, insolvency, financial difficulties or other reasons. We may not be able to identify new tenants or retain existing tenants for our commercial properties. In addition, an increase in the number of competing properties, particularly in close proximity to our properties, could increase competition for tenants and force us to reduce rent or incur additional costs in order to market our properties. If there is a significant downturn in the commercial property markets or in the cities where we have investment properties, we may not be able to maintain our current levels of revenue from the investment in and operations of commercial properties. Our inability to expand our portfolio of investment properties, to secure suitable tenants or otherwise to enhance the profitability of our investment properties or to maintain our current levels of rental income may have an adverse effect on our profitability and results of operations. All these factors could negatively affect the demand for our investment properties, and, as a result, reduce our rental income, which may have an adverse effect on our business, financial condition and results of operations.

Our results of operations, financial condition and prospects may be adversely affected by fair value changes in our financial assets at fair value through profit or loss.

Our financial assets at fair value through profit or loss were primarily wealth management products issued by banks in Mainland China that are mandatory classified as financial assets at fair value through profit or loss as their contractual cash flows are not solely payments of principal and interest. As of December 31, 2018, 2019 and 2020, financial assets at fair value through profit or loss was RMB104.9 million, RMB5.0 million and nil, respectively. We recorded investment income from financial assets at fair value through profit or loss of RMB5.7 million, RMB11.5 million and RMB35.5 million in 2018, 2019 and 2020, respectively. See “Financial Information—Description of Certain Combined Statements of Profit or Loss Items.” We may continue to incur fair value losses in the future. If we incur such fair value losses, our results of operations, financial condition and prospects may be adversely affected.

We made provision of impairment for properties under development and completed properties held for sale.

The real estate market volatility may subject us to risks in connection with possible provision of impairment for properties under development and completed properties held for sale, if we fail to complete the construction or sell the properties in time at our desired prices. Provision of impairment may arise when the carrying value of a property exceeds its recoverable amount in the market. In 2018, 2019 and 2020, we recorded impairment losses for properties under development in an amount of RMB15.7 million, nil and nil, respectively. We cannot assure you that we will not make any provision of impairment in the future or incur any impairment losses, if any or at similar level, during adverse market conditions in the future or as a result of relevant local government’s housing price control measures. If we make additional provision of impairment and incur such impairment losses, our results of operations, financial condition and prospects may be adversely affected.

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There are uncertainties about the recoverability of our amounts due from related companies and the payment of amounts due from non-controlling shareholders of the subsidiaries.

We had amounts due from related companies of RMB1.9 million, RMB1.1 million and RMB125.2 million as of December 31, 2018, 2019 and 2020, respectively. We also had amounts due from non-controlling shareholders in the amount of RMB60.0 million, RMB93.2 million and RMB139.3 million as of the same dates, respectively. Amounts due from related parties primarily represent cash advances to associates for the development of the relevant projects which are unsecured and will be settled upon completion of the relevant projects. Amounts due from non-controlling shareholders consist of unearned profit distribution made from our non-wholly owned subsidiaries to non-controlling shareholders from time to time before the final settlement and completion of our projects developed by such non-wholly owned subsidiaries, as well as registered capital to be contributed to our non-wholly owned subsidiaries. See “Financial Information—Related Party Transactions—Balances with Related Parties” and “Financial Information—Description of Certain Combined Statements of Financial Position Items—Prepayments, Other Receivables and Other Assets.” We conduct assessments on the recoverability of amounts due from related parties, as well as the unearned profit distribution made from our non-wholly owned subsidiaries to non-controlling shareholders based on, among others, our historical settlement records, past experiences, payment terms, current economic trends and to a certain extent, the larger economic and regulatory environment in which our related parties or the non-controlling shareholders of the subsidiaries operate, which involve the use of various judgments, assumptions and estimates by our management. However, there is no assurance that our expectations or estimates will be entirely accurate for the future, as we are not in control of all the underlying factors affecting the amounts due from related parties, as well as the unearned profit distribution made from our non-wholly owned subsidiaries to non-controlling shareholders. Accordingly, there are uncertainties about the recoverability of our amounts due from related parties and the recoverability of unearned profit distribution made from our non-wholly owned subsidiaries to non-controlling shareholders. Meanwhile, although our subsidiary’s registered capital due from non-controlling shareholders only need to be paid according to the relevant deadline as set out in the articles of association of the relevant subsidiary, we cannot assure you that such amount will be paid pursuant to such schedule. Therefore, if we are not able to recover the amounts due from related parties or unearned profit distribution made from our non-wholly owned subsidiaries to non-controlling shareholders, or if the amounts due from non-controlling shareholders of the subsidiaries are not paid pursuant to the relevant schedule, our financial position and results of operations may be adversely affected.

There are uncertainties about the recoverability of our prepayments for acquisition of land use rights, prepaid taxes and other tax recoverables and other prepayments.

There are uncertainties about the recoverability of our prepayments for acquisition of land use rights, prepaid taxes and other tax recoverables and prepayments for equity investments. Prepayments for acquisition of land use rights represent the land premium deposits we paid for land parcels acquired through public tenders, auctions and listing-for-sale. We recorded such

–54– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS land premium deposits as prepayments before we obtained land use right certificates for the respective land parcels. We had prepayments for acquisition of land use rights of RMB345.8 million, RMB930.9 million and RMB1,354.5 million as of December 31, 2018, 2019 and 2020, respectively. Prepaid taxes and other tax recoverables primarily represent prepaid turnover tax and other surcharges. We had prepaid taxes and other tax recoverables of RMB117.8 million, RMB433.8 million and RMB771.8 million as of December 31, 2018, 2019 and 2020, respectively. See “Financial Information—Descriptions of Certain Combined Statements of Financial Position Items—Prepayments, Other Receivables and Other Assets.” Other prepayments mainly represents cash advances we made to the Independent Third Parties for our participation in certain potential property projects in Shenzhen. We recorded prepayments of RMB2,250.0 million, RMB4,616.6 million and RMB888.0 million as of December 31, 2018, 2019 and 2020. As of the Latest Practicable Date, all prepayments we made had been returned and there was no prepayment outstanding. See “Financial Information—Descriptions of Certain Combined Statements of Financial Position Items—Prepayments, Other Receivables and Other Assets.” There is no guarantee that we will be able to proceed with our planned acquisitions, or that we would be able to recoup the prepayments under relevant equity acquisition agreements.

We conduct assessments on the recoverability of prepayments for acquisition of land use rights, prepaid taxes and other prepayments based on, among others, our historical settlement records, our relationship with relevant counterparties, payment terms, current economic trends and to a certain extent, the larger economic and regulatory environment, which involve the use of various judgments, assumptions and estimates by our management. However, there is no assurance that our expectations or estimates will be entirely accurate for the future, as we are not in control of all the underlying factors affecting such prepayments. Accordingly, there are uncertainties about the recoverability of our prepayments for acquisition of land use rights, prepaid taxes and other tax recoverables and prepayments for equity investments. Therefore, if we are not able to recover the prepayments for acquisition of land use rights, prepaid taxes and other tax recoverables and prepayments for equity investments, our financial position and results of operations may be adversely affected.

We incur contract liabilities from the pre-sales of properties and may not be able to settle such contract liabilities if we cannot complete and deliver the relevant projects.

Consistent with industry practice, we typically enter into pre-sales contracts with customers while the properties are still under development have satisfied the conditions for pre-sales in accordance with PRC laws and regulations. Such conditions for pre-sales generally include (i) the land premium for the relevant property project has been paid in full and the relevant land use rights certificate has been obtained; (ii) the relevant construction work planning permit and construction work commencement permit have been obtained; and (iii) the amount of funds used for construction accounts for at least 25% of the total investment of the property project, and the construction progress and the delivery date of properties have been determined. Then the property developer shall apply for a pre-sale permit by submitting supporting documents indicating the fulfilment of the above-mentioned requirements, and commence pre-sales upon receipt of the pre-sale permit. In general, there is a time difference

–55– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS between the time we commence the pre-sales of properties under development and the completion of the construction of such properties. We do not recognize any revenue from the pre-sales of the properties until such properties are completed and delivered to the customers. Proceeds from customers of pre-sold properties are recorded as “contract liabilities” under current liabilities before relevant revenue is recognized. Our contract liabilities amounted to RMB3,120.5 million, RMB9,902.8 million and RMB19,685.3 million as of December 31, 2018, 2019 and 2020, respectively. If we cannot complete and deliver our projects, we will not be able to recognize revenue and therefore cannot settle our contract liabilities. However, the completion and delivery of projects may be delayed due to various reasons, such as delays in obtaining requisite licenses, permits or approvals from relevant government authorities, increases in the prices of raw materials and labor costs, unavailability and increased cost of financing. If we encounter delays in the completion and delivery of our projects, or even cannot complete and deliver our projects, we may not settle our contract liabilities and our business, prospects and financial condition may be materially and adversely affected.

We may be subject to fines due to the absence of registration of some of our leases.

Pursuant to relevant PRC regulations, parties to a lease agreement are required to file the lease agreements for registration and obtain property leasing filing certificates for their leases. As of the Latest Practicable Date, we leased 11 properties from third-party landlords mainly for our office premises and failed to register ten lease agreements under which we are tenant. The failure to register the lease agreements does not affect the validity of the lease agreements under the relevant PRC laws and regulations, or our rights or entitlements to lease out the investment properties to tenants. However, we may be required by relevant government authorities to file the lease agreements to complete the registration formalities and may be subject to a fine for non-registration within the prescribed time limit, which may range from RMB1,000 to RMB10,000 per lease agreement. The imposition of the above fines could require us to make additional efforts and/or incur additional expenses, any of which could adversely affect our business, financial condition and results of operations. The registration of these lease agreements to which we are a party requires additional steps to be taken by the respective other parties to the lease agreement which are beyond our control. We cannot assure you that the other parties to our lease agreements will be cooperative or that we can complete the registration of these lease agreements and any other lease agreements that we may enter into in the future. See “Business—Leased Properties.”

We may be subject to fines or penalties if we fail to comply with any applicable laws, rules or regulations.

We are subject to a variety of laws, rules and regulations with respect to various aspects of our operations. We may be subject to fines or penalties if we fail to comply with applicable laws, rules and regulations. For example, during the Track Record Period, we commenced construction work for four projects before obtaining the requisite construction permit. We were subject to penalties or ordered to rectify such non-compliances, as the case may be. An aggregate monetary penalty of approximately RMB0.1 million was imposed on us for such incidents which had been paid in full as of the Latest Practicable Date. There is no assurance

–56– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS that our internal control measures adopted to prevent the occurrence of any non-compliance incidents in the future will be effective or that will be no non-compliance incidents in the future. In addition, PRC laws, rules or regulations governing our industry have been evolving rapidly, and we cannot assure you that we will not be subject to fines or penalties arising from non-compliance incidents if we fail to adapt to the new regulatory regime in a timely manner, or at all, which may have a material adverse effect on our business, financial condition and results of operations.

We are subject to housing price control measures, which may restrict the selling prices of the properties developed by us and lead to lower profit margins for the respective projects.

We are subject to housing price control measures that may be promulgated and implemented by government authorities from time to time. For example, on February 26, 2013, the General Office of the State Council announced the Notice on Further Regulation of the Real Estate Market (《國務院辦公廳關於繼續做好房地產市場調控工作的通知》). According to such notice, local governments shall increase the supply of housing properties and land, and set price control targets in cities with rapidly increasing property prices. In addition, the notice also requires the local governments to strictly implement existing purchase restrictions and differentiated credit policies with regard to the down payment ratios and interest rates for mortgage loans where a purchaser has more than one mortgage loan for properties. The tax, building and construction authorities are required to coordinate to ensure that the 20% individual income tax on the difference between the sales proceeds and the original purchase price for the sales of second-hand properties is strictly implemented. On September 29, 2020, Municipal Government of Yinchuan announced the Notice on Promoting the Health and Steady Development of the Real Estate Market (《關於促進房地產市場平穩健康發展的通知》), which imposes certain restrictions on the sale of the properties and housing price. These policies aim to restrain the rapid increase in housing prices.

Such price control measures may restrict the selling prices of the properties developed by us, leading to lower profits and profit margins for the respective projects. As such price control measures may be implemented after we acquire the land parcels and before the commencement of pre-sales, we may have incurred relatively high land acquisition costs and construction costs, but are unable to sell these properties at favorable prices due to the price control measures. As a result, we may not be able to realize the profits as we expected and our results of operations, financial condition and prospects may be adversely affected.

There are uncertainties about the recoverability of our deferred tax assets, which could adversely affect our results of operations.

We recorded deferred tax assets of RMB302.5 million, RMB585.9 million and RMB915.6 million, respectively, as of December 31, 2018, 2019 and 2020. Deferred tax assets can only be recognized to the extent that it is probable that future taxable profits will be available against which the unused tax credits can be utilized. However, there is no assurance that our expectation of future earnings will be accurate due to factors beyond our control, such as

–57– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS general economic conditions and negative development of the regulatory environment, in which case, we may not be able to recover our deferred tax assets, which thereby could have an adverse effect on our results of operations.

The LAT calculated by the relevant PRC tax authorities may be different from our calculation of LAT liabilities for provision purposes.

Pursuant to PRC regulations on LAT, both domestic and foreign investors in real estate development in the PRC are subject to LAT on income from the sale or transfer of land use rights, properties and their attached facilities, at progressive rates ranging from 30% to 60% on the appreciation of land value. In 2018, 2019 and 2020, we recorded LAT expenses of RMB150.9 million, RMB161.8 million and RMB309.5 million, respectively, in our combined statements of income. In accordance with a circular issued by the SAT, which became effective on February 1, 2007, LAT obligations are required to be settled with the relevant tax bureaus within a specified time after the completion of a property development project. We make provision for the estimated full amount of applicable LAT in accordance with relevant PRC tax laws and regulations. Our estimates are based on our own apportionment of deductible expenses, which is subject to final confirmation by the relevant tax authorities upon settlement of the LAT.

As of the Latest Practicable Date, we had made all prepayments and/or full provisions for LAT in compliance with the relevant LAT laws and regulations in China as interpreted and enforced by the relevant local tax authorities. LAT liabilities are subject to determination by the tax authorities upon the completion of the property development projects and may be different from the amounts that were initially provided for. Any such differences may impact our profit after tax and deferred tax provision in the periods in which such taxes are finalized with the relevant tax authorities. Our financial condition may be adversely and materially affected if our LAT liabilities as calculated by the relevant tax authorities are higher than our provisions. In addition, as we continue to expand our property developments, we cannot assure you that our provision for LAT obligations based on our estimates in new markets will be sufficient to cover our actual LAT obligations in future. As there are uncertainties as to when the tax authorities will enforce the LAT collection and whether it will apply the LAT collection retrospectively to properties sold before the enforcement, any payment as a result of the enforcement of LAT collection may significantly restrict our cash flow position, our ability to finance our land acquisitions and our ability to execute our business plans.

Potential liability for health and environmental problems could result in costs.

We are subject to a variety of laws and regulations concerning the protection of health and the environment. As required by PRC laws and regulations, property projects in environmentally sensitive regions are required to submit an environmental impact statement before the relevant authorities grant approval for the commencement of construction of the property development. If we fail to meet such requirements, local authorities may issue orders to stop construction and, based on the circumstances of the violation and the consequences thereof, impose on us a fine of between 1%-5% of the total investment amount of the project,

–58– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS and may also issue orders to restore the original conditions before the construction, and the persons directly in charge and other directly responsible persons of us shall be subject to administrative sanctions under the law. After the completion of construction, we are required to make an acceptance check of the environmental protection facilities and prepare an acceptance report according to the standards and procedures stipulated by the competent administrative department of environmental protection under the State Council. When making an acceptance check of environmental protection facilities, we are required not to commit fraud. We are also required to make the acceptance report publicly available in accordance with the law unless we are required to keep confidential according to national provisions. If we cannot make an acceptance check of environmental protection facilities in due course, the development of our projects may be delayed. As environmental awareness grows in China, we anticipate that the PRC Government will continue to promulgate increasingly stringent environmental laws and regulations. We anticipate that these developments will increase our project development costs in general.

We may fail to obtain or experience delays in obtaining the relevant PRC governmental approvals for our property development projects.

We are required to obtain various permits, licenses and certificates throughout multiple stages of our property development projects, including but not limited to land use right certificates, construction land planning permits, construction work planning permits, construction work commencement permits and pre-sale permits for commodity properties. In addition, entities engaging in real estate development are required to obtain a qualification certificate. Those who engage in real estate development without obtaining a qualification certificate will be ordered to cease development activities. Generally, these permits and qualification certificates are only issued or renewed after certain conditions have been satisfied. We cannot assure you that we will not encounter obstacles toward fulfilling such conditions that delay us in obtaining, or result in our failure to obtain, the required permits, licenses and certificates. Moreover, as the real estate industry is closely monitored by the PRC Government, we anticipate that new policies will be promulgated from time to time in relation to the conditions for issuance or renewal. We cannot guarantee that such new policies will not present unexpected obstacles toward our ability to obtain or renew the required permits, licenses and certificates or that we will be able to overcome these obstacles in a timely manner, or at all.

We may be involved in legal and other proceedings arising out of our operations from time to time.

We may be involved in claims, legal proceedings and other disputes with various parties involved in the development and sales of our properties, including contractors, suppliers, regulatory bodies, customers and business partners. These disputes may lead to protests or legal or other proceedings and may result in damage to our reputation, substantial costs and diversion of resources and management’s attention from our core business activities. Purchasers of our properties may take legal action against us if our developed properties are perceived to be inconsistent with our representations and warranties made to such purchasers.

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In addition, we may have compliance issues with regulatory bodies in the course of our operations, in respect of which we may face administrative proceedings and unfavorable decisions that may result in liabilities and cause delays to our property developments. We may be involved in other proceedings or disputes in the future that may have a material adverse effect on our business, financial condition and results of operations.

Any damage to our brand image and our intellectual property rights could adversely affect our brand value and our business.

We in general rely on our brand name, “Ningxia Zhongfang (寧夏中房) ”, in marketing our properties. Brand value is based largely on subjective public perception and can be damaged by isolated incidents. Any negative incident or negative publicity concerning us or our business could adversely affect our reputation and business. Our brand value and consumer demand for our properties could decline significantly if we fail to maintain the quality of our properties, offer consistently negative experience to our customers, or are perceived to have acted in an unethical or socially irresponsible manner.

Further, we may be subject to or associated with negative publicity, including on the Internet, with respect to our corporate affairs and conduct related to our personnel or the real estate market in which we operate or intend to operate. We may also be subject to negative reports or criticisms by various media. We make no representation as to the appropriateness, accuracy, completeness or reliability of any such information or publication. Nonetheless, any negative coverage, whether or not related to us or our related parties and regardless of truth or merit, may have an impact on our brand and reputation and, consequently, may undermine the confidence of our customers and investors in us, which may in turn materially and adversely affect our business, financial condition, results of operations and prospects.

In addition, our efforts to protect our brand name may not be adequate, and we may be unable to identify any unauthorized use of our brand name or to take appropriate steps to enforce our rights on a timely basis. Any unauthorized use or infringement of our brand name may impair our brand value, damage our reputation and materially and adversely affect our business and results of operations. Third parties may use our intellectual property in ways that damage our reputation in the real estate industry. Although we are not aware that any such instances occurred during the Track Record Period, we cannot guarantee that our measures to protect our intellectual property will be sufficient. We primarily rely on contracts with our employees and business partners under trademark and copyright laws and regulations to protect our intellectual property rights. Despite the precautions taken, there can be no assurance that we will be able to detect all misappropriation or unauthorized use of our trade name and trademarks in a timely manner, or at all. There is also no guarantee that we will be successful in any enforcement proceedings that we undertake. Litigation to protect our intellectual property may be time-consuming and costly and divert management attention from our operations. Our business and financial condition may be materially and adversely affected in the short term, while failures to protect our intellectual property rights may diminish our competitiveness and market share in the long term.

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False advertising of our properties may lead to penalties, undermine our sales and marketing efforts, deteriorate our brand name, and have a material adverse effect on our business.

As a property developer in the PRC, we are subject to a variety of laws and regulations concerning the marketing and promotion of our property development projects, our business and our brand image. If any of our advertisements are considered to be untruthful or any of the sales and marketing efforts by us or our agents are considered to be unlawful, we may be penalized and required to cease publishing the advertisements and eliminate adverse effects. In addition, any false advertising may cast doubt on our other disclosure, advertisements, filings and publications, deteriorate our brand name and reputation and consequently may materially and adversely affect our business, financial condition and results of operations.

The property development and sales business is subject to customer claims under statutory quality warranties.

All property developers in the PRC, including us, must provide certain quality warranties for the properties they construct or sell. We have received customer claims in relation to the quality of our projects in the past, such as water leakage, sinking and uneven floors and wall cracks, and we expect to continue to receive customer claims of this nature in the future. Generally, we coordinate with the relevant third-party contractors to respond to such customer claims as most of such complaints were mainly due to the customers’ dissatisfaction with the quality of properties they have purchased. Subject to the agreements we enter into with our third-party contractors, we typically receive quality warranties from our third-party contractors to cover claims that may be brought against us under our warranties. See “Business—Our Property Development Management—Delivery of Properties and After-sales Customer Service—Warranties and Returns.”

Although we believe that each of these claims is immaterial by nature or amount, we cannot assure you that we will not face any significant customer claims in the future, either individually or in aggregate. If a significant number of claims are brought against us under our warranties and if we are unable to obtain reimbursement for such claims from third-party contractors in a timely manner, or at all, or if the money retained by us to cover our payment obligations under the quality warranties is not sufficient, we could incur significant expenses to resolve such claims or face delays in correcting the related defects, which could in turn harm our reputation and could have a material adverse impact on our business, financial condition and results of operations.

We may fail to retain members of our senior management team and key personnel.

Our continuing and future success depends on the efforts of our senior management team. As they possess industry expertise, know-how or experience in key areas such as property development, construction and sales and marketing, losing their services may have a material and adverse effect on our ability to grow and sustain our business. Should any or all members of our senior management team join or form a competing business with their expertise,

–61– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS business relationships and full knowledge of our business operations, we may not be able to estimate the extent of and compensate for such damage. Unexpected resignations may also leave key operations without supervisors and materially and adversely affect the implementation of our business strategies. In addition, we rely on our key experienced employees, which include qualified design, construction management, quality control, marketing and on-site supervisory for our daily operation and business expansion. There can be no assurance that we will be able to recruit personnel with equivalent qualifications in a timely manner or at all, as competition for experienced management is intense in our industry.

We may be subject to fines for our failure to make adequate contribution to social insurance fund and housing provident fund on behalf of some of our employees.

During the Track Record Period, we did not fully contribute to social insurance and housing provident funds for some of our employees. We had made the provisions in the amount of RMB0.8 million, RMB1.1 million and RMB1.2 million, respectively, in 2018, 2019 and 2020.

According to the relevant laws and regulations, the relevant PRC authorities may demand that we pay the outstanding social insurance contributions within a stipulated deadline and we may be liable to a late payment fee equal to 0.05% of the outstanding amount for each day of delay; if we fail to make such payments, we may be liable to a fine of one to three times the amount of the outstanding contributions. Under the relevant PRC laws and regulations, we may be ordered to pay the outstanding housing provident fund contributions within a prescribed time period. For details, see “Business – Employees” in this document.

We may not have adequate insurance coverage to cover risks related to our business.

We do not maintain any insurance policies for our property development projects, and we do not maintain property insurance specifically for our properties held for investment. In addition, we require the general contractors of our development projects to maintain insurance policy in accordance with the contracting agreements. Furthermore, we do not maintain insurance covering construction-related property damage or personal injuries of third parties.

In addition, we do not maintain insurance against any liability arising from allegedly tortious acts committed on our work sites. We cannot assure you that we will not be sued or held liable for damage arising from, or in connection with, any such tortious acts. Moreover, there are certain losses for which insurance is not available on commercially practicable terms, such as those suffered due to earthquakes, typhoons, floods, wars, civil disorders and other events of force majeure. If we suffer any loss, damage or liability in the course of our business operations, we may not have sufficient funds to cover such loss, damage or liability or to replace any property development that has been destroyed. In addition, any payment we make to cover any loss, damage or liability could have a material adverse effect on our business, financial condition and results of operations.

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We may not be able to prevent or detect actions by our employees or agents which violate applicable anti-corruption laws and regulations.

Bribery and other misconduct by our employees or agents may be difficult to prevent or to detect on a timely basis, or at all. Although we have put in place relevant internal control measures aimed at preventing our employees and agents from engaging in conduct which would violate applicable anti-corruption laws and regulations, there can be no assurance that we will be able to prevent or detect such misconduct. Such misconduct by our employees or agents could subject us to financial losses and harm our business and operations. In addition to potential financial losses, such misconduct could subject us to third party claims and regulatory investigations. Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations and prospects.

Certain portions of our property development projects and investment properties are designated as civil air defense properties, and we may not be able to use these areas as planned in times of war.

Certain portions of our property development projects and investment properties are designated as civil air defense properties. According to the PRC laws and regulations, new buildings constructed in cities should contain basement areas that can be used for civil air defense purposes in times of war. Under the PRC Civil Air Defense Law (中華人民共和國人民防空法) promulgated by the NPC on October 29, 1996, as amended on August 27, 2009 and Management Measures for Peacetime Development and Usage of Civil Air Defense Properties (人民防空工程平時開發利用管理辦法) promulgated by the House Civil Air Defense Office on November 2001, after obtaining the approval from the civil air defense supervising authority, a developer can manage and use such areas designated as civil air defense properties at other time and generate profits from such use. During the Track Record Period, we had entered into contracts to transfer the right to use civil air defense properties in our property development projects to our customers as car parks and we intend to continue such transfer. However, in times of war, such areas may be used by the PRC Government at no cost. In the event of war and if the civil air defense area of our projects is used by the public, we may not able to use such area as car parks, and such area will no longer be a source of our revenue. In addition, while our business operations have complied with the laws and regulations on civil air defense property in all material aspects, we cannot assure you that such laws and regulations will not be amended in the future which may make it more burdensome for us to comply with and increase our compliance cost. As of March 31, 2021, we had civil air defense areas with an aggregate GFA of approximately 108,257 sq.m., which are primarily used or to be used for car parks, representing an insignificant portion of our property portfolio.

We may experience failures in or disruptions to our information technology systems.

We rely on our information technology systems to manage key operational functions such as processing financial data and coordinating business operations among the operational teams at the headquarter level and city level. However, we cannot assure you that damages or interruptions caused by power outages, computer viruses, hardware and software failures,

–63– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS telecommunication failures, fires, natural disasters, security breaches and other similar occurrences relating to our information systems will not occur going forward. We may incur significant costs in restoring any damaged information technology systems. Failures in or disruptions to our information technology systems and loss or leakage of confidential information could cause transaction errors, processing inefficiencies and the loss of customers and sales. Thus our business and results of operations may be materially and adversely affected.

We had borrowings during the Track Record Period from third-party companies.

Similar to many other property developers in the PRC, we enter into financing arrangements with trust companies, asset management companies and their financing vehicles, as well as other financial partners in the ordinary course of business to finance our property development and other related operations. As of March 31, 2021, we had two loans with third party companies which are not financial institutions: one of which had an annual interest rate of 9.0% with principal balance of RMB23.0 million outstanding, and the other loan had an annual interest rate of 5.0% with a principal balance of RMB46.7 million outstanding. Both loans are unsecured and will mature in June 2021.

Under the General Lending Provisions (《貸款通則》), only financial institutions may legally engage in the business of extending loans, and loans between companies that are not financial institutions are prohibited. The PBOC may impose penalties on the lender equivalent to one to five times of the income generated (being interests charged) from loan advancing activities. However, pursuant to the Provisions of the Supreme People’s Court on Several Issues concerning the Application of Law in the Trial of Private Lending Cases (《最高人民法院關於審理民間借貸案件適用法律若干問題的規定》) (the “Provisions”) promulgated on August 6, 2015, effective on September 1, 2015 and amended on August 20, 2020 and December 29, 2020, loans among companies are valid if extended for purposes of financing production or business operations, except for circumstances resulting in a void contract stipulated in the Civil Code of the PRC and the Provisions. The PRC courts will also support a company’s claim for interest in respect of such a loan as long as the annual interest rate does not exceed four times the one-year loan prime rate, at the time when the contract is entered into, published on the 20th of every month by National Interbank Funding Center (全國銀行間同業拆借中心) with the authorization from PBOC.

As confirmed by the Directors, all the borrowings that we borrowed during the Track Record Period under trust and other financing arrangements were for the purposes of business operations. Our PRC Legal Advisors are of the view that, given that our financing arrangements with the two third parties do not violate the applicable provisions of the Civil Code or the Provisions, the risk of the PBOC imposing any penalty on us is low.

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RISKS RELATING TO OUR INDUSTRY

The real estate industry is closely monitored by the PRC Government and we may fail to adapt to new laws and regulations in ways that are profitable to our business.

The PRC Government closely monitors the real estate industry and promulgates new laws and regulations that are relevant to our business from time to time. The PRC Government exerts considerable direct and indirect influence on the growth and development of the PRC property market through industry policies and other economic measures such as reducing the land available for property development, setting interest rate, setting pre-sale unit price, controlling the supply of credit by changing bank reserve ratios and implementing lending restrictions, increasing tax and duties on property transfers and imposing foreign exchange restrictions on foreign investment and financing. Such policies, which may be introduced to curb overheating in the real estate industry, may reduce market demand for our properties. Laws and regulations promulgated to regulate other sectors of the economy may also indirectly affect our industry. Since 2004, the PRC and local governments introduced a series of regulations and policies designed to generally control the growth of the property market, including:

• strictly enforcing the idle land-related laws and regulations;

• restricting the grant or extension of revolving credit facilities to property developers that hold a large amount of idle land and vacant commodity properties;

• prohibiting commercial banks from lending funds to property developers with an internal capital ratio lower than certain prescribed percentage;

• restricting PRC commercial banks from granting loans to property developers for the purpose of paying land grant premiums;

• controlling the supply of residential property sales by adopting lots drawing policy in certain cities such as Shanghai, Nanjing, Changsha and Chengdu;

• limiting the maximum amount of monthly mortgage and the maximum amount of total monthly debt service payments of an individual borrower;

• imposing a business tax levy on the sales proceeds for second-hand transfers subject to the length of holding period and type of properties;

• raising the minimum percentage of down payment of the purchase price of the residential property of a family;

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• restricting purchasers from acquiring second and more residential properties and imposing property purchase restrictions on non-local residents who cannot provide any proof of local tax or social security payments for more than a specified time period in certain cities; and

• restricting the availability of individual housing loans in the property market to individuals and their family members with more than one residential property, and raising interest rates of such loans.

These and other measures, including additional requirements for pre-sales and restricting the use of funds raised by pre-sales, made the properties we developed more costly, unattractive or even unavailable to certain of our customers. In addition, since January 2010, policies implemented by the PRC Government with regard to bank loans and trust financing arrangements for property development projects have had, and may continue to have, a dampening effect on the property markets in which we operate. These measures resulted in downward pressure on the PRC property market starting in the second half of 2011 and reduced transaction volumes in the first quarter of 2012.

Following the market fluctuations in the face of temporary easing of some restrictions by local governments in the second and third quarters of 2012, the property price and transaction volume increased in the last quarter of 2012 and the first quarter of 2013. On February 26, 2013, the General Office of the State Council announced the Notice on Further Regulation of the Real Estate Market (《國務院辦公廳關於繼續做好房地產市場調控工作的通知》). According to such notice, local governments shall increase the supply of housing properties and land, and set price control targets in cities with rapidly increasing property prices. In addition, the notice also requires the local government to strictly implement existing purchase restrictions and differentiated credit policies with regard to the down payment ratios and interest rates for mortgages for second and more residential property. If the property price increases too quickly, the local governments may further increase interest rates and down payment ratio for mortgages for second and more properties. For cities with existing purchase restrictions, the city municipals shall impose further restrictions. For cities with no purchase restrictions, the provincial governments must require these cities to promptly adopt purchase restrictions. The tax, building and construction authorities are required to coordinate to ensure that the 20% individual income tax on the difference between the sales proceeds and the original purchase price for the sales of second-hand properties is strictly implemented. These policies aim to serve to restrain the trend of excessive increase in housing prices. At the end of 2013, a new round of policies aiming at promoting affordable housing and discouraging speculative investments in residential properties were announced in a number of large cities in China, including Beijing, Shanghai, Guangzhou, Shenzhen, Zhengzhou, Nanchang, Fuzhou, Xiamen, Nanjing and Hangzhou.

The PRC Government has eased certain restrictive measures starting in the third quarter of 2014 to foster the growth of the residential property market in China, encourage transactions and reduce idle housing inventories. However, such measures have resulted signs of overheating in the property markets in first-tier cities and certain second-tier cities. As a

–66– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS response, in first-tier cities and certain second-tier cities including Shanghai, Shenzhen, and Suzhou, local governments have again enhanced restrictive measures such as raising the minimum percentage of down payment of the purchase price of the second and more residential property of a family, requiring longer social insurance records in such cities for citizens whose household registration were not in such cities, and restriction on the percentage of price increases by property developers during a year. In 2015, the PRC Government raised percentage of down payment and changed the calculation base of business tax concerning transfer of individual housing, pursuant to which, where an individual sells a property purchased within two years, business tax shall be levied on the full amount of the sales income; where an individual sells a non-ordinary property that was purchased more than two years ago, business tax shall be levied on the difference between the sales income and the original purchase price of the house; the sales of an ordinary residential property purchased by an individual more than two years ago is not subject to such business tax. In 2016, such tax policies have been further refined.

On February 13, 2017, the Asset Management Association of China issued Circular 4 of Regulation for Registration Management of Private Asset Management Plan by Securities and Future Institutions, or the Circular 4. The Circular 4 provides that any private equity and asset management plan that is adopted to make either direct or indirect investment into any ordinary residential property project located in certain PRC cities where the property price rises too fast shall not be filed for a record temporarily. Such cities currently comprise 16 major cities in the PRC, such as Shanghai, Hefei, Nanjing, Suzhou, Tianjin, Fuzhou, Wuhan and Zhengzhou, and the list of such cities may be updated from time to time in the future according to the relevant regulations of the MOHURD. According to the Circular 4, a private equity and asset management plan shall neither be used to finance any property developer, by means of bank entrusted loans, trust plans, or usufruct of transferee assets, for the purpose of paying the price of land grant or supplementing the working capital, nor be used to directly or indirectly facilitate any violation or illegality of various institutions’ granting of loans for down payments.

In recent years, governments in Shanghai, Shenzhen and certain other cities have introduced further policies to restrain property purchases for specialization purposes and prevent property prices from rising too quickly. Such policies include raising the minimum percentage of down payment of the purchase price, setting the minimum interest rate for personal mortgage loans, adopting lots drawing policy for the sales of residential properties, On April 1, 2017, the Ministry of Land and Resources and the MOHURD issued the Circular of the MOHURD and the Ministry of Land and Resources on Tightening the Management and Control over Intermediate Residential Properties and Land Supply (《住房城鄉建設部、國土資源部關於加強近期住房及用地供應管理和調控有關工作的通知》). To maintain a housing supply-demand balance, cities facing serious demand over supply and overheating market shall increase the supply of housing land, especially for ordinary commercial houses, and cities with excessive housing supply shall reduce or suspend the land supply for housing. All the local

–67– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS governments shall build inspection systems to monitor the source of funds for land acquisition to ensure that the property developers use their own legal funds to purchase land. These measures reduced the transaction volumes in certain major cities in the PRC in the second quarter of 2017.

There are no assurance that the PRC Government will relax existing restrictive measures, impose and enhance restrictive measures, or to impose other restrictive policies, regulations or measures in the future. The existing and other future restrictive measures may limit our access to capital, reduce market demand for our products and increase our finance costs, and any easing measures introduced may also not be sufficient. If we fail to adapt our operations to new policies, regulations and measures that may come into effect from time to time with respect to the real property industry, or such policy changes negatively impact our business, our financial condition, results of operations and prospects may be materially and adversely affected.

We face intense competition from other real estate developers.

Competition within the PRC real estate industry is intense. In recent years, many competitors, including large-scale nationwide property developers have entered the property development markets in cities of China where we have operations. Many of them may have more financial, marketing, technical or other resources than us. Competition among property developers may cause an increase in land premium and raw material costs, shortages in quality construction contractors, surplus in property supply leading to decreasing property prices, further delays in issuance of governmental approvals, and higher costs to attract or retain skilled employees. If we fail to compete effectively, our business, financial condition and results of operations may be materially and adversely affected.

The PRC Government may adopt more strict measures to regulate the property sector.

Investments in the PRC property sector have increased significantly in the past decade. In response to concerns over the rapid increase in property investments and property prices, from 2004 to the first half of 2008, the PRC Government introduced various policies and measures to curtail property developments. In the second half of 2008 and 2009, in order to reduce the impact of the global economic slowdown, the PRC Government adopted measures to encourage consumption in the residential property market and to support real estate development. However, since December 2009, the PRC Government has adjusted some of its policies in order to enhance regulation in the property market, restrain property purchases for investment or speculation purposes, and keep property prices from rising too quickly in certain cities. In August 2011, MOHURD urged provincial governments to implement home purchase restrictions to control property prices, and listed criteria for the implementation of restrictions. In the second half of 2011, in order to further cool down the property market, the PRC Government extended home purchase restrictions to certain second- and third-tier cities in addition to 40 first- and second-tier cities that had already adopted home purchase restriction measures. On February 26, 2013, the General Office of the State Council issued the Notice on Further Regulation of Real Estate Market (《關於繼續做好房地產市場調控工作的通知》), which provides that a 20% individual income tax should be levied on the difference between

–68– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS the sale proceeds and the purchase price for the owner’s transfer of residence. At the end of 2013, a new round of policies aimed at promoting affordable housing and discouraging speculative investments in residential properties was announced in a number of large Chinese cities, including Beijing, Shanghai, Guangzhou, Shenzhen, Zhengzhou, Nanchang, Fuzhou, Xiamen, Nanjing and Hangzhou.

On April 1, 2017, the MOHURD issued the Notice of the MOHURD and the Ministry of Land and Resources on Tightening the Management and Control over Intermediate Residential Properties and Land Supply (住房城鄉建設部、國土資源部關於加強近期住房及用地供應管理和調控有關工作的通知). According to the Notice, cities facing serious demand over supply and overheating market shall increase the supply of housing land to maintain a housing supply-demand balance, especially for ordinary commercial houses, and cities with excessive housing supply shall reduce or suspend the land supply for housing.

In July 2017, the NDRC, the CSRC, the MOF, the MOHURD, the Ministry of Public Security, the Ministry of Land and Resources, the SAT, the SAIC and the PBOC jointly issued the Notice on Accelerating the Development of Renting Market in Large and Medium-sized Cities with Influx Population (關於在人口淨流入的大中城市加快發展住房租賃市場的通知), promoting the development of renting market through multiple channels, such as increasing the land banks to be granted for renting houses, encouraging the ancillary renting houses in new commodity properties. The promotion on the renting market may adversely impact property sales.

We cannot assure you that the PRC Government, in particular local government where we have operations, will not adopt more stringent policies, regulations and measures in the future. Such policy changes may materially and negatively impact our business, results of operations, financial condition and prospects.

We are exposed to risks associated with operating in an industry yet in the adjustment and optimization stage.

As the real estate industry in China is yet in the adjustment and optimization stage, investors may be discouraged from acquiring properties, as there is a limited amount of accurate financial and regulatory information publicly available. Other factors that discourage investment in real estate may include the limited number of mortgage financing options available, legal uncertainties to do with enforcement of title and the lack of a liquid secondary market for residential properties. Though demand for private residential property has grown in recent years, the real estate market has experienced volatility and price fluctuations. The risk of over-supply has also surfaced as investments in real estate are increasingly made for speculative reasons. We are exposed to risks associated with operating in such a business environment. Any of the factors relating to the real estate industry may reduce demand for our properties. We may be forced to lower our prices, and the resulting decrease in our profit margins may materially and adversely affect our business and results of operations.

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RISKS RELATING TO THE PRC

Changes in economic, political and social conditions and government policies in China could have a material adverse effect on our business, financial condition, results of operations and prospects.

We manage and operate all of our business operations within the PRC. Accordingly, our business, financial condition, results of operations and prospects are, to a significant degree, subject to economic, political and social developments in China. The PRC economy differs from the economies of most developed countries in many respects, including the extent of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources.

The PRC economy is in the process of transitioning from a centrally planned economy to a more market-oriented economy. Before its adoption of reform and open-door policies beginning in 1978, China was primarily a planned economy. Since then, the PRC economy has been transitioning to become a market economy with socialist characteristics. For approximately four decades, the PRC Government has implemented economic reform measures to utilize market forces in the PRC economy. Many of the economic reforms carried out by the PRC Government are unprecedented or experimental and are expected to be refined from time to time. Other political, economic and social factors may also lead to further adjustments of the reform measures. This refining process and any changes in laws and regulations or the interpretation or implementation thereof in China may have a material impact on our operations or may adversely affect our financial condition and results of operations.

While the PRC economy has grown significantly in recent years, this growth has been geographically uneven among various sectors of the economy and during different periods. We cannot assure you that the PRC economy will continue to grow, or that if there is growth, such growth will be steady and uniform. Any economic slowdown may materially and adversely affect our business. In the past, the PRC Government has periodically implemented a number of measures intended to slow down certain segments of the economy that the PRC Government believed was overheating. We cannot assure you that the various macroeconomic measures and monetary policies adopted by the PRC Government to guide economic growth and allocate resources will be effective in improving the growth rate of the PRC economy. In addition, such measures, even if they benefit the overall PRC economy in the long term, may reduce demand for our properties and therefore materially and adversely affect our business, financial condition and results of operations.

China’s economic growth may also slow down due to weakened exports as a result of tariffs and trade tensions caused by the U.S.-China trade war. In 2018 and 2019, the U.S. government, under the administration of President Donald J. Trump, imposed several rounds of tariffs on cumulatively US$550 billion worth of Chinese products. In retaliation, the PRC Government responded with tariffs on cumulatively US$200 billion worth of U.S. products. In addition, in 2019, the U.S. government restricted certain Chinese technology firms from exporting certain sensitive U.S. goods. The PRC Government lodged a complaint in the World

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Trade Organization against the United States over the import tariffs in the same year. The trade war created substantial uncertainties and volatilities to global markets. On January 15, 2020, the U.S. and Chinese governments signed the U.S.-China Economic and Trade Agreement, or the Phase I Agreement. Under the Phase I Agreement, the United States agreed to cancel a portion of tariffs imposed on Chinese products, China promised additional purchases of U.S. goods and services, and both parties expressed a commitment to further improving various trade issues. Despite this reprieve, however, it remains to be seen whether the Phase I Agreement will be abided by both governments and successfully reduce trade tensions. If either government violates the Phase I Agreement, it is likely that enforcement actions will be taken and trade tensions will escalate. Furthermore, additional concessions are needed to reach a comprehensive resolution of the trade war. The roadmap to the comprehensive resolution remains unclear, and the lasting impact the trade war may have on China’s economy and the real estate industry remains uncertain.

We rely principally on dividends paid by our subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to pay dividends to us could have a material and adverse effect on our ability to conduct our business.

We are a holding company incorporated in the Cayman Islands and operate our core businesses through our operating subsidiaries in the PRC. Therefore, the availability of funds to pay dividends to our Shareholders largely depends upon dividends received from these subsidiaries. The ability of our subsidiaries to pay dividends or other distributions may be subject to their earnings, financial position, cash requirements and availability, applicable laws and regulations and restrictions on making payments to us contained in financing or other agreements. If any of our subsidiaries incurs indebtedness in its own name, the instruments governing the indebtedness may restrict dividends or other distributions on its equity interest to us. These restrictions could reduce the amount of dividends or other distributions that we receive from these entities, which might in turn restrict our ability to fund our business operations and pay dividends to our Shareholders. In addition, their declaration of dividends will be at the absolute discretion of the boards and shareholders of our subsidiaries.

Furthermore, restrictive covenants in bank credit facilities or other agreements that we or our subsidiaries may enter into in the future may also restrict the ability of our subsidiaries to provide capital or declare dividends to us and our ability to receive distributions. Therefore, these restrictions on the availability and usage of our major source of funding may impact our ability to pay dividends to our Shareholders. In addition, under the EIT Law and its implementation rules, if a foreign entity is deemed to be a “non-resident enterprise” as defined under the EIT Law, a withholding tax at the rate of 10% will be applicable to any dividends for earnings accumulated since January 1, 2008 payable to the foreign entity, unless it is entitled to reduction or elimination of such tax, including by tax treaties or agreements.

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Restrictions on currency exchange under PRC laws and regulations may limit our ability to satisfy obligations denominated in foreign currencies.

Currently, the Renminbi cannot be freely converted into foreign currencies, and the conversion and remittance of foreign currencies are subject to PRC foreign exchange regulations. All of our revenue is denominated in Renminbi. Under our current corporate structure, we derive our income primarily from dividend payments made by our PRC subsidiaries. Shortages in the availability of foreign currency may restrict the ability of our PRC subsidiaries to pay dividends or other payments to us or satisfy other foreign currency-denominated obligations, if any. Additionally, the PBOC has adjusted the Renminbi deposit reserve ratio for major banks several times since 2010, first upward to a peak of 21.5% and more recently downward to its present level of 12.5% for large institutions and 10.5% for smaller banks after adjustment as of January 1, 2020.

Under existing PRC foreign exchange regulations, the Renminbi is convertible without prior approval from SAFE for current account transactions, so long as certain procedures are complied with. Examples of such current account transactions include profit distributions and interest payments. However, prior approval and registration with SAFE is required for capital account transactions. Examples of capital account transactions include foreign direct investment and the repayment of loan principal. There can be no assurance that the PRC Government, in seeking to regulate the economy, will not restrict access to foreign currencies for current account transactions in the future. Such restrictions may limit our ability to convert cash from our operating activities into foreign currencies to make dividend payments or satisfy any foreign currency-denominated obligations we may have. Moreover, limitations on the flow of funds between us and our PRC subsidiaries may restrict our ability to provide financing to our PRC subsidiaries and take advantage of business opportunities in response to market conditions.

Our investment properties are located on land that is under long-term land use rights granted by the PRC Government. There is uncertainty about the amount of the land grant premium that we will have to pay and additional conditions that may be imposed if we decide to seek an extension of the land use rights for our investment properties.

Our investment properties are held by us under land use rights granted by the PRC Government. Under PRC laws, the maximum term of the land use rights is 40 years for commercial, tourism or recreational purposes and 50 years for industrial or other purposes. Upon expiration, the land use rights will be returned to the PRC Government unless the holder of the land use rights applies for and is granted an extension of the term of the land use rights. These land use rights do not have automatic rights of renewal and holders of land use rights are required to apply for extensions of the land use rights one year prior to the expiration of their terms. If an application for extension is granted (and such grant would usually be given by the PRC Government unless the land in issue is to be taken back for the purpose of public interests), the holder of the land use rights will be required to pay a land grant premium. If no application is made, or if such application is not granted, the properties under the land use rights will be returned to the PRC Government without any compensation. As none of the land

–72– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS use rights granted by the PRC Government which are similar to those granted for our investment properties had, as of the Latest Practicable Date, run its full term, there was no precedent to provide an indication of the amount of the land grant premium which we will have to pay and any additional conditions which may be imposed if we decide to seek an extension of the land use rights for our investment properties upon the expiry thereof.

In certain circumstances, the PRC Government may, where it considers in the public interest, terminate land use rights before the expiration of the term. In addition, the PRC Government has the right to terminate long-term land use rights and expropriate the land in the event the grantee fails to observe or perform certain terms and conditions pursuant to the land use rights grant contracts. If the PRC Government charges a high land grant premium, imposes additional conditions, or does not grant an extension of the term of the land use rights of any of our investment properties, our operations and business could be disrupted, and our business, financial condition and results of operations could be materially and adversely affected.

Fluctuations in exchange rates may have a material and adverse impact on your investment.

The exchange rate of the Renminbi fluctuates against the Hong Kong dollar, U.S. dollar and other foreign currencies and is affected by the policies of the PRC Government and changes in international and domestic political and economic conditions. From 1995 to July 20, 2005, the conversion of the Renminbi into foreign currencies was based on fixed rates set by the PBOC. However, effective from July 21, 2005, the PRC Government decided to permit the Renminbi to fluctuate within a regulated band based on market supply and demand and by reference to a basket of currencies. On November 30, 2015, the Executive Board of the International Monetary Fund completed a regular five-year review of the basket of currencies that make up the Special Drawing Right and determined that, effective from October 1, 2016, the Renminbi will be included in the Special Drawing Right basket as a fifth currency along with the U.S. dollar, the Euro, the Japanese yen and the British pound. It is difficult to predict how market forces and the PRC Government’s policies will continue to impact Renminbi exchange rates going forward. In light of the trend towards Renminbi internationalization, the PRC Government may announce further changes to the exchange rate system, and we cannot assure you that the Renminbi will not appreciate or depreciate significantly in value against the Hong Kong dollar, U.S. dollar or other foreign currencies.

Substantially all of our revenue, liabilities and assets are denominated in Renminbi, while our [REDACTED] from the [REDACTED] will be denominated in Hong Kong dollars. Material fluctuations in the exchange rate of the Renminbi against the Hong Kong dollar may negatively impact our financial results and the value and amount of any dividends payable on our Shares. For example, significant appreciation of the Renminbi against the Hong Kong dollar could reduce the amount of Renminbi received from converting [REDACTED]or proceeds from future financing efforts to fund our operations. Conversely, significant depreciation of the Renminbi may increase the cost of converting our Renminbi-denominated cash flow into Hong Kong dollars, thereby reducing the amount of cash available for paying dividends on our Shares or carrying out other business operations.

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Uncertainties with respect to the PRC legal system could have a material adverse effect on our business.

The legal system in China has inherent uncertainties that could limit the legal protection available to our Shareholders. Our business is conducted in China and our principal operating subsidiaries are located in China. Consequently, we are subject to PRC laws and regulations. The PRC legal system is based on the civil law system. Unlike the common law system, the civil law system is established on the written statutes and their interpretation by the Supreme People’s Court (最高人民法院), while prior legal decisions and judgments have limited significance as precedent. The PRC Government has been developing a commercial law system, and has made significant progress in promulgating laws and regulations related to economic affairs and matters, such as corporate organization and governance, foreign investments, commerce, taxation and trade.

However, many of these laws and regulations are often principle-oriented and require detailed interpretations by the enforcement bodies to further apply and enforce such laws. Moreover, these laws and regulations are relatively new and there is a limited volume of published decisions. Thus, there are uncertainties involved in their implementation and interpretation, which might not be as consistent and predictable as in other jurisdictions. In addition, the PRC legal system is based in part on government policies and administrative rules that may have a retroactive effect. Consequently, we may not be aware of any violation of these policies and rules until sometime after such violation has occurred. Furthermore, the legal protection available to you under these laws, rules and regulations may be limited. Any litigation or regulatory enforcement action in China may be protracted and result in substantial costs and diversion of resources and management attention.

You may experience difficulties in effecting service of process or enforcing foreign judgments against us, our Directors or senior management residing in China.

Our Company is incorporated in the Cayman Islands. Substantially all of our assets are located in China, and substantially all of our Directors and senior management reside in China. Therefore, it may not be possible to effect service of process within Hong Kong or elsewhere outside of China upon us or our Directors or senior management. Moreover, China has not entered into treaties for the reciprocal recognition and enforcement of court judgments with Japan, the United Kingdom, the United States and many other countries. As a result, recognition and enforcement in China of a court judgment obtained in other jurisdictions may be difficult or impossible.

In addition, on July 14, 2006, China and Hong Kong signed the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland and of the Hong Kong Special Administrative Region Pursuant to Choice of Court Agreements between Parties Concerned (關於內地與香港特別行政區法院相互認可和執行當事人協議管轄的民商事案件判決的安排), or the Arrangement. Pursuant to the Arrangement, a party with a final court judgment rendered by a Hong Kong court requiring payment of money in a civil and commercial case pursuant to a choice of court agreement in

–74– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS writing may apply for recognition and enforcement of the judgment in China. Similarly, a party with a final judgment rendered by a PRC court requiring payment of money in a civil and commercial case pursuant to a choice of court agreement in writing may apply for recognition and enforcement of such judgment in Hong Kong. A choice of court agreement in writing is defined as any agreement in writing entered into between the parties after the effective date of the arrangement in which a Hong Kong or PRC court is expressly designated as the court having sole jurisdiction for such dispute. Therefore, it may not be possible to enforce a judgment rendered by a Hong Kong court in China if the parties in dispute do not agree to enter into a choice of court agreement in writing. On January 18, 2019, the Supreme People’s Court of the PRC and Hong Kong entered into an agreement regarding the scope of judgments which may be enforced between China and Hong Kong (關於內地與香港特別行政區法院相互認可和執行民商案件判決的安排), or the New Arrangement. The New Arrangement will broaden the scope of judgments that may be enforced between China and Hong Kong under the Arrangement. Whereas a choice of jurisdiction need to be agreed in writing in the form of an agreement between the parties for the selected jurisdiction to have exclusive jurisdiction over a matter under the Arrangement, the New Arrangement provides that the court in which the judgment was sought could apply jurisdiction in accordance with the certain rules without the parties’ agreement. The New Arrangement will replace the Arrangement when the former becomes effective. However, as of the Latest Practicable Date, the New Arrangement has not become effective and no specific date has been determined as its effective date. The Arrangement continues to apply and, as such, it may be difficult or impossible for investors to enforce a Hong Kong court judgment against our assets or our Directors or senior management in China.

We may be deemed a PRC resident enterprise under the EIT Law and be subject to a tax rate of 25% on our global income.

Pursuant to the EIT Law, which came into effect on January 1, 2008, and was amended on February 24, 2017 and December 29, 2018, an enterprise established outside China whose “de facto management body” is located in China is considered a “PRC resident enterprise” and will generally be subject to the uniform EIT rate, of 25% on its global income. Under the implementation rules of the EIT Law, “de facto management body” is defined as the organizational body that effectively exercises management and control over such aspects as the business operations, personnel, accounting and properties of the enterprise.

On April 22, 2009, SAT released the Notice Regarding the Determination of Chinese- Controlled Offshore Incorporated Enterprises as PRC Tax Resident Enterprises on the Basis of De Facto Management Bodies (關於境外註冊中資控股企業依據實際管理機構標準認定為居民企業有關問題的通知), or the Circular 82, as amended on December 29, 2017, which sets out the standards and procedures for determining whether the “de facto management body” of an enterprise registered outside of China and controlled by PRC enterprises or PRC enterprise groups is located within China. Under Circular 82, a foreign enterprise controlled by a PRC enterprise or PRC enterprise group is considered a PRC resident enterprise if all of the following apply (i) the senior management and core management departments in charge of daily business operations are located mainly within China; (ii) financial and human resources

–75– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS decisions are subject to determination or approval by persons or bodies in China; (iii) major assets, accounting books, company seals and minutes and files of board and shareholders’ meetings are located or kept within China; and (iv) at least half of the enterprise’s directors with voting rights or senior management reside within China. In addition, Circular 82 also requires that the determination of “de facto management body” shall be based on the principle that substance is more important than form. Further to Circular 82, SAT issued the Chinese-Controlled Offshore Incorporated Resident Enterprises Income Tax Regulation (Trial Implementation) (境外註冊中資控股居民企業所得稅管理辦法(試行)), or the Bulletin 45, which took effect on September 1, 2011, and amended on April 17, 2015, June 28, 2016 and June 15, 2018, to provide more guidance on the implementation of Circular 82 and clarify the reporting and filing obligations of such “Chinese-controlled offshore incorporated resident enterprises.” Bulletin 45 provides procedures and administrative details for the determination of resident status and administration of post-determination matters. Although Circular 82 and Bulletin 45 explicitly provide that the above standards apply to enterprises which are registered outside of China and controlled by PRC enterprises or PRC enterprise groups, Circular 82 may reflect SAT’s criteria for determining the tax residence of foreign enterprises in general. Substantially all members of our senior management are currently based in China; if we are deemed a PRC resident enterprise, the EIT rate of 25% on our global taxable income may reduce capital we could otherwise divert to our business operations.

You may be subject to PRC income tax on dividends from us or on any gain realized on the transfer of our Shares under PRC law.

Under the EIT Law and its implementation rules, PRC withholding tax at the rate of 10% is normally applicable to dividends from PRC sources payable to investors that are non-PRC resident enterprises, which do not have an establishment or place of business in China, or which have such establishment or place of business if the relevant income is not effectively connected with the establishment or place of business, unless such foreign investors’ jurisdiction of incorporation has a tax treaty or similar arrangement with the PRC that provides for a different withholding tax arrangement. According to the Mainland and Hong Kong Special Administrative Region Arrangement on Avoiding Double Taxation or Evasion of Taxation on Income (內地和香港特別行政區關於對所得避免雙重徵稅和防止偷漏稅的安排) issued in August 2006, dividends paid by a foreign-invested enterprise in the PRC to its shareholders in Hong Kong will be subject to a withholding tax at a rate of 5% if such Hong Kong shareholder directly holds a 25% or more interest in the PRC enterprise. Any gains realized on the transfer of shares by such investors are subject to a 10% PRC income tax rate if such gains are regarded as income derived from sources within China unless a treaty or similar arrangement provides otherwise. Under the PRC Individual Income Tax Law (中華人民共和國個人所得稅法) and its implementation rules, dividends from sources within China paid to foreign individual investors who are not PRC residents are generally subject to a PRC withholding tax at a rate of 20% and gains from PRC sources realized by such investors on the transfer of shares are generally subject to a 20% PRC income tax rate, in each case, subject to any reduction or exemption set forth in applicable tax treaties and PRC laws.

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Although we conduct all of our business operations in China, it is unclear whether dividends we pay with respect to our Shares, or the gain realized from the transfer of our Shares, would be treated as income derived from sources within China, and as a result be subject to PRC income tax if we are considered a PRC resident enterprise. If PRC income tax is imposed on gains realized from the transfer of our Shares or on dividends paid to our non-PRC resident investors, the value of your investment in our Shares may be materially and adversely affected. Furthermore, our Shareholders whose jurisdictions of residence have tax treaties or arrangements with China may not qualify for benefits under such tax treaties or arrangements.

Regulations relating to offshore investment activities by PRC residents may subject us to fines or sanctions imposed by the PRC Government, including restrictions on the ability of our PRC subsidiaries to pay dividends or make distributions to us and our ability to increase our investment in our PRC subsidiaries.

The SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Administration for PRC Residents to Engage in Overseas Investment and Financing and Round Trip Investment via Overseas Special Purpose Vehicles (關於境內居民通過特殊目的公司境外投融資及返程投資外匯管理有關問題的通知), or the Circular 37, in July 2014. Pursuant to Circular 37, PRC residents, including PRC institutions and individuals, must register with local branches of SAFE in connection with their direct or indirect offshore investments in an overseas special purpose vehicle, or SPV, directly established or indirectly controlled by PRC residents for the purposes of offshore investment and financing with their legally owned assets or interests in domestic enterprises, or their legally owned offshore assets or interests or any inbound investment through SPVs. Such PRC residents are also required to amend their registrations with SAFE when there is change to the required information of the registered SPV, such as changes to its PRC resident individual shareholder, name, operation period or other basic information, or the PRC individual resident’s increase or decrease in its capital contribution in the SPV, or any share transfer or exchange, merger or division of the SPV. In accordance with Circular of the State Administration of Foreign Exchange on Further Simplifying and Improving the Direct Investment-related Foreign Exchange Administration Policies (關於進一步簡化和改進直接投資外匯管理政策的通知), or the Circular 13, the foreign exchange registration aforesaid has been directly reviewed and handled by banks since June 1, 2015, and SAFE and its branches perform indirect regulation over such foreign exchange registration through local banks. Under this regulation, failure to comply with the registration procedures set forth in Circular 37 may result in restrictions being imposed on the foreign exchange activities of our PRC subsidiaries, including the payment of dividends and other distributions to their offshore parent or affiliate, the capital inflow from the offshore entities and their settlement of foreign exchange capital, and may also subject the relevant onshore companies or PRC residents to penalties under PRC foreign exchange administration regulations.

We are committed to complying with and ensuring that our Shareholders who are subject to the regulations will comply with the relevant rules. Any future failure by any of our Shareholders who is a PRC resident, or controlled by a PRC resident, to comply with relevant

–77– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS requirements under this regulation could subject us to penalties or sanctions imposed by the PRC Government. However, we may not at all times be fully aware or informed of the identities of all of our Shareholders who are PRC residents, and we may not always be able to timely compel our Shareholders to comply with the requirements of Circular 37. Moreover, there is no assurance that the PRC Government will not have a different interpretation of the requirements of Circular 37 in the future.

PRC laws and regulations establish more complex procedures for some acquisitions of PRC companies by foreign investors, which could make it difficult for us to pursue growth through acquisitions in China.

We may grow our business in part by acquiring other companies operating in our industry. A number of PRC laws and regulations, including the M&A Rules, the Anti-Monopoly Law (反壟斷法) and the Rules of MOFCOM on Implementation of Security Review System of Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (商務部實施外國投資者併購境內企業安全審查制度的規定) promulgated by MOFCOM on August 25, 2011, and effective from September 1, 2011, or the Security Review Rules, have established procedures and requirements that are expected to make the review of certain merger and acquisition activities by foreign investors in China more time-consuming and complex. These include requirements in some instances to notify MOFCOM in advance of any transaction in which foreign investors take control of a PRC domestic enterprise, or to obtain approval from MOFCOM before overseas companies established or controlled by PRC enterprises or residents acquire affiliated domestic companies. PRC laws and regulations also require certain merger and acquisition transactions to be subject to merger control or security review.

The Security Review Rules prohibits foreign investors from bypassing the security review requirement by structuring transactions through proxies, trusts, indirect investments, leases, loans, control through contractual arrangements or offshore transactions. If we are found to be in violation of the Security Review Rules and other PRC laws and regulations with respect to merger and acquisition activities in China, or fail to obtain any of the required approvals, the relevant regulatory authorities would have broad discretion in dealing with such violations, including levying fines, revoking business and operating licenses, confiscating our income and requiring us to restructure or unwind our restructuring activities. Any of these actions could cause significant disruption to our business operations and may materially and adversely affect our business, financial condition and results of operations. Furthermore, if the business of any target company we plan to acquire falls into the ambit of security review, we may not be able to successfully acquire such company either by equity or asset acquisition, capital contribution or any contractual arrangement. Complying with the requirements of the relevant regulations to complete such transactions could be time-consuming, and any required approval processes, including approval from MOFCOM, may delay or inhibit our ability to complete such transactions, thus affecting our ability to expand our business or maintain our market share.

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The national and regional economies in China and our business may be adversely affected by factors beyond our control such as natural disasters, acts of war or terrorism, epidemics and pandemics.

Our business is subject to general economic and social conditions in China. Natural disasters, epidemics, pandemics and other acts of God which are beyond our control may adversely affect the economy, infrastructure and livelihood of the people in China. Some regions in China, including the cities where we operate, are under the threat of flood, earthquake, sandstorm, snowstorm, fire, drought, epidemics such as the Severe Acute Respiratory Syndrome, or SARS, the H5N1 avian flu, the human swine flu, also known as Influenza A (H1N1), or, most recently, pandemics such as the ongoing COVID-19 pandemic.

Past occurrences of pandemics, depending on their scale, have caused different degrees of damage to the national and local economies in China. Another public health crisis in China triggered by a recurrence of SARS or an outbreak of any other epidemics or pandemics, for example, the ongoing COVID-19 pandemic, especially in the cities where we have operations, may result in material disruptions to our property development and sales and the operation of commercial properties. In addition, the outbreak of communicable diseases, such as the coronavirus outbreak, on a global scale may affect investment sentiment and result in sporadic volatility in global capital markets or adversely affect China and other economies. Such outbreak has resulted in restrictions on travel and public transportation and prolonged closures of workplaces, which may have a material adverse effect on the global economy. Any material change in the financial markets, the PRC economy or regional economies as a result of these events or developments may materially and adversely affect our business, financial condition and results of operations.

The COVID-19 pandemic may adversely affect the PRC economy, the PRC real estate industry and our business operations.

Toward the end of 2019, a highly infectious novel coronavirus, was identified. The World Health Organization, or the WHO, later named it COVID-19. WHO is closely monitoring and evaluating the situation. On January 30, 2020, the WHO declared the outbreak of COVID-19 a Public Health Emergency of International Concern, or the PHEIC. In March 2020, the WHO characterized the outbreak of COVID-19 a pandemic. As of the date of this document, COVID-19 pandemic has spread to over 200 countries and territories globally with death toll and number of infected cases continued to rise. Many countries have imposed unprecedented measures to halt the spread of the COVID-19 pandemic, including strict city lockdowns and travel bans. Several cities in China where we have land bank and operations had been under a lockdown, and have imposed travel restrictions in an effort to curb the spread of COVID-19 pandemic.

According to the data released on January 18, 2021 by the National Bureau of Statistics of China, or the National Statistics Bureau, China’s GDP of 2020 increased by 2.3% compared with the 2019. According to CIA, the PRC real estate market in general is under pressure in early 2020 as the COVID-19 pandemic has curbed on-site sales,while the impact has gradually

–79– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS eased as China had substantially controlled the spread of COVID-19 as of the Latest Practicable Date. According to the data released by the National Statistics Bureau on January 18, 2021, China’s real estate investment in the 2020 amounted to RMB14,144.3 billion, representing an increase of approximately 7.0% compared with 2019.

As a result of the COVID-19 pandemic, since late January 2020 and up to late March 2020, we had suspended the construction activities for our property development projects in compliance with the governmental requirements. However, since most of all projects are located in Northwest China, due to the weather, we usually suspend the construction activities in winter. As a result, we do not expect to experience any delay in construction completion and property delivery for our current projects under development. However, given the uncertainties as to the development of the COVID-19 outbreak at the moment, particularly in view of the new rounds of COVID-19 outbreak recently, we cannot assure you that our construction activities will not be affected by the COVID-19 in the future. We also implemented appropriate rent reduction or exemption measures. As a result of such measures, the total amount of rent reduced and exempted since December 31, 2019 and up to the Latest Practicable Date was approximately RMB1.6 million. The supply chains in all industries had been disrupted to a certain extent by the COVID-19 pandemic due to the prolonged suspension of business operations in the PRC and the instability of workforce arising from the mandatory quarantine requirements. If our contractors or suppliers encounter any disruption in their business operations, our construction schedule may also be disrupted. In addition, our employees and site workers may be infected or subject to quarantine as a result of contact with infected persons. Our construction sites, sale offices and other workplaces may be forced to close as a result of such infections or contacts.

It also remains uncertain as to when the COVID-19 pandemic will be completely contained in China and globally. In the event that the COVID-19 pandemic is not completely controlled within a short timeframe, our business operations and financial condition may be materially and adversely affected as a result of the changes in the outlook of the PRC property market, slowdown in China’s economic growth, negative business sentiment or other factors that we cannot foresee. See “Business—Effects of the COVID-19 Pandemic.”

RISKS RELATING TO THE [REDACTED]

There has been no prior market for our Shares, and their liquidity and market price following the [REDACTED] may be volatile.

Prior to the [REDACTED], there was no public market for our Shares. The indicative [REDACTED] range and the [REDACTED] will be determined by negotiations between us and the [REDACTED] (for themselves and on behalf of the [REDACTED]), and they may differ significantly from the market price of our Shares following the [REDACTED].

We have applied to [REDACTED] and [REDACTED] our Shares on the Stock Exchange. However, even if approved, there can be no guarantee that: (i) an active or liquid trading market for our Shares will develop; or (ii) if such a trading market does develop, it will

–80– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS be sustained following completion of the [REDACTED]; or (iii) the market price of our Shares will not decline below the [REDACTED]. The trading volume and price of our Shares may be subject to significant volatility in response to factors including:

• variations in our financial condition and/or results of operations;

• changes in securities analysts’ estimates of our financial condition and/or results of operations, regardless of the accuracy of information on which their estimates are based;

• changes in investors’ perception of us and the investment environment generally;

• loss of visibility in the markets due to lack of regular coverage of our business;

• strategic alliances or acquisitions;

• industrial or environmental accidents, litigation or loss of key personnel;

• changes in laws and regulations that impose limitations on our industry;

• fluctuations in the market prices of our properties;

• announcements made by us or our competitors;

• changes in pricing adopted by us or our competitors;

• release or expiry of lock-up or other transfer restrictions on our Shares;

• the liquidity of the market for our Shares; and

• general economic and other factors.

Potential investors will experience immediate and substantial dilution as a result of the [REDACTED] and could face dilution as a result of future equity financings.

The [REDACTED] substantially exceeds the per Share value of our net tangible assets after subtracting our total liabilities, and therefore potential investors will experience immediate dilution when they purchase our Shares in the [REDACTED]. If we were to distribute our net tangible assets to our Shareholders immediately following the [REDACTED], potential investors would receive less than the amount they paid for their Shares.

We will comply with Rule 10.08 of the Listing Rules, which specifies that no further Shares or other securities of our Company (subject to certain exceptions) may be issued or form the subject of any agreement to such an issue within six months from the [REDACTED]. However, after six months from the [REDACTED], we may raise additional funds to finance

–81– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS future acquisitions or expansions of our business operations by issuing new Shares or other securities of our Company. As a result, the percentage shareholding of the then Shareholders may be diluted and such newly issued Shares or other securities may confer rights and privileges that have priority over those of the then Shareholders. In addition, if we issue additional Shares or equity-linked securities in the future and such Shares are issued at a price lower than the net tangible asset value per Share at the time of their issuance, you and other purchasers of our Shares may experience further dilution in the net tangible asset value per Share.

Future or perceived sales of substantial amounts of our Shares, in particular future or perceived sales of Shares by our existing Shareholders could affect our market price.

The market price of our Shares could decline as a result of future sales of substantial amounts of our Shares or other related securities, or the perception that such sales may occur. Our ability to raise future capital at favorable times and prices may also be materially and adversely affected. The Shares held by the Controlling Shareholders are currently subject to certain [REDACTED] undertakings, the details of which are set out in “[REDACTED]— [REDACTED].” However, there is no assurance that, following the expiration of the lock-up periods, these Shareholders will not dispose of any Shares. We cannot predict the effect of any future sales of the Shares by any of our Shareholders on the market price of our Shares.

We may not declare dividends on our Shares in the future.

Any declaration of dividends will be proposed by our Board of Directors, and the amount of any dividends will depend on various factors, including, without limitation, our results of operations, financial condition, capital requirements and surplus, contractual restrictions, future prospects and other factors which our Board of Directors may determine are important. See “Financial Information—Dividend Policy and Distributable Reserves.” We cannot guarantee when, if and in what form dividends will be paid.

Investors may experience difficulties in enforcing their Shareholder rights because we are incorporated in the Cayman Islands, and the protection afforded to minority Shareholders under Cayman Islands law may be different from that under the laws of Hong Kong or other jurisdictions.

Our Company is incorporated in the Cayman Islands and its affairs are governed by our Memorandum, Articles of Association, the Cayman Islands Companies Act and the common law of the Cayman Islands. The laws of the Cayman Islands may differ from those of Hong Kong or those of other jurisdictions where investors may be located. As a result, minority Shareholders may not enjoy the same rights as those afforded under the laws of Hong Kong or in other jurisdictions. A summary of our company law of the Cayman Islands on protection of minority shareholders is set out in “Appendix IV — Summary of the Constitution of our Company and Cayman Islands Company Law—Cayman Islands Company Law.”

–82– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS

Our Controlling Shareholders have substantial influence over our Company and their interests may not be aligned with the interests of Shareholders who subscribe for Shares in the [REDACTED].

Immediately after the [REDACTED], our Controlling Shareholders will directly or indirectly control the exercise of [REDACTED]% of voting rights in the general meeting of our Company. See “Relationship with Controlling Shareholders.” The interests of our Controlling Shareholders may differ from the interests of our other Shareholders. Our Controlling Shareholders will have significant influence on the outcome of any corporate transaction or other matters submitted to our Shareholders for approval, including mergers, consolidations, sales of all or substantially all of our assets, election of Directors and other significant corporate actions. This concentration of ownership may discourage, delay or prevent changes in control of our Company that would otherwise benefit our other Shareholders. To the extent that the interests of our Controlling Shareholders conflict with those of our other Shareholders, our other Shareholders may be deprived of opportunities to advance or protect their interests.

Since there will be a gap of several days between the [REDACTED] and [REDACTED] of our [REDACTED], the price of our [REDACTED] could fall below the [REDACTED] when [REDACTED] commences.

The [REDACTED] of our Shares will be determined on the [REDACTED], which is expected to be [REDACTED]. However, our Shares will not commence [REDACTED]onthe Stock Exchange until the [REDACTED], which is expected to be [REDACTED]. Accordingly, investors may not be able to sell or [REDACTED] our Shares during the period between the [REDACTED] and the [REDACTED]. Our Shareholders are subject to the risk that the [REDACTED] of our Shares could fall before [REDACTED] begins, as a result of adverse market conditions or other adverse developments that could occur between the [REDACTED] and the [REDACTED].

We cannot guarantee the accuracy of facts, forecasts and statistics with respect to China, the PRC economy and our relevant industries contained in this document.

Certain facts, forecasts and statistics in this document relating to China, the PRC economy and industries relevant to us have been derived from information provided or published by PRC Government agencies, industry associations, independent research institutions or other third-party sources, and we can guarantee neither the quality nor reliability of such source materials. They have not been prepared or independently verified by us, the Sole Sponsor, the [REDACTED], the [REDACTED], the [REDACTED] and the [REDACTED] or any of its or their respective affiliates or advisors. Therefore, we make no representation as to the accuracy of such facts, forecasts and statistics, which may not be consistent with other information compiled within or outside of China. Due to possibly flawed or ineffective collection methods or discrepancies between published information and market practice, the statistics herein may be inaccurate or incomparable to statistics produced for other economies and should not be relied upon. Furthermore, there can be no assurance that they are stated or

–83– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS compiled on the same basis, or with the same degree of accuracy, as similar statistics presented elsewhere. In all cases, investors should consider how much weight or importance they should attach to or place on such facts, forecasts or statistics.

Forward-looking statements contained in this document are subject to risks and uncertainties.

This document contains certain forward-looking statements and information relating to us that are based on the beliefs of our management as well as assumptions made by, and information currently available to, our management. When used in this document, the words “aim,” “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “going forward,” “intend,” “ought to,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “will,” “would” and similar expressions, as they relate to our Company or our management, are intended to identify forward-looking statements. Such statements reflect the current views of our management with respect to future events, business operations, liquidity and capital resources, some of which may not materialize or may change. These statements are subject to certain risks, uncertainties and assumptions, including the other risk factors as described in this document. Subject to the ongoing disclosure obligations of the Listing Rules or other requirements of the Stock Exchange, we do not intend publicly to update or otherwise revise the forward-looking statements in this document, whether as a result of new information, future events or otherwise. Investors should not place undue reliance on such forward-looking statements and information.

You should read this entire document carefully and not consider or rely on any particular statements in this document or in published media reports without carefully considering the risks and other information in this document.

Prior or subsequent to the publication of this document, there has been or may be press and media coverage regarding us and the [REDACTED], in addition to marketing materials we published in compliance with the Listing Rules. Such press and media coverage may include references to information that do not appear in this document or is inaccurate. We have not authorized the publication of any such information contained in unauthorized press and media coverage. Therefore, we make no representation as to the appropriateness, accuracy, completeness or reliability of any information disseminated in the media, and do not accept any responsibility for the accuracy or completeness of any financial information or forward- looking statements contained therein. To the extent that any of the information in the media is inconsistent or conflicts with the contents of this document, we expressly disclaim it. Accordingly, prospective investors should only rely on information included in this document and not on any of the information in press articles or other media coverage in deciding whether or not to purchase the [REDACTED].

–84– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. WAIVERS FROM STRICT COMPLIANCE WITH THE REQUIREMENTS UNDER THE LISTING RULES

In preparation for the [REDACTED], our Group has sought the following waivers from strict compliance with the relevant provisions of the Listing Rules.

MANAGEMENT PRESENCE IN HONG KONG

Pursuant to Rule 8.12 of the Listing Rules, an issuer must have a sufficient management presence in Hong Kong, which normally means that at least two of its executive directors must be ordinarily resident in Hong Kong. We do not have a sufficient management presence in Hong Kong for the purpose of satisfying the requirement under Rule 8.12 of the Listing Rules. We have applied for a waiver from strict compliance with Rule 8.12 of the Listing Rules primarily on the basis that, as our headquarters and principal business operations are located in the PRC, our management is best able to attend to its function by being based in the PRC. We have applied to the Stock Exchange for, and the Stock Exchange [has granted us] a waiver from strict compliance with Rule 8.12 of the Listing Rules subject to, among others, the following conditions:

(a) pursuant to Rule 3.05 of the Listing Rules, we have appointed two authorized representatives, Ms. Zhang Jun (張君)(“Ms. Zhang”), our executive Director, and Ms. Lam Wing Chi (林穎芝)(“Ms. Lam”), our joint company secretary, who will act as our Company’s principal channel of communication with the Stock Exchange. Ms. Lam is ordinary resident in Hong Kong and will be readily contactable by telephone, facsimile and/or email. Each of our authorized representatives is authorized to communicate on our behalf with the Stock Exchange. Our Company has been registered as a non-Hong Kong company under Part 16 of the Companies Ordinance and Ms. Lam has also been authorized to accept service of legal process and notices in Hong Kong on behalf of our Company;

(b) both our authorized representatives have means to contact all our Directors (including our non-executive Director and independent non-executive Directors) promptly at all times as and when the Stock Exchange wishes to contact our Directors for any matters. Our Directors who are not ordinarily resident in Hong Kong possess or can apply for valid travel documents to visit Hong Kong and will be able to meet with the Stock Exchange within a reasonable period of time, when required. Each of our Directors has provided his/her mobile phone number, residential phone number, fax number and/or email address to our authorized representatives. In the event that a Director expects to travel, he/she will endeavor to provide the phone number of the place of his/her accommodation to our authorized representatives or maintain an open line of communication via his/her mobile phone. Each of our Directors and the authorized representatives has also provided his/her mobile phone number, office phone number, fax number and/or email address to the Stock Exchange;

–85– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. WAIVERS FROM STRICT COMPLIANCE WITH THE REQUIREMENTS UNDER THE LISTING RULES

(c) pursuant to Rule 3A.19 of the Listing Rules, we have appointed Guotai Junan Capital Limited as our compliance adviser, which will have access at all times to our authorized representatives, Directors, senior management and other officers of our Company, and will act as an additional channel of communication between the Stock Exchange and us; and

(d) meetings between the Stock Exchange and our Directors could be arranged through our authorized representatives or the compliance adviser, or directly with our Directors within a reasonable time frame. Our Company will promptly inform the Stock Exchange of any changes of our authorized representatives and/or the compliance adviser.

JOINT COMPANY SECRETARIES

According to Rules 3.28 and 8.17 of the Listing Rules and the Stock Exchange’s guidance letter HKEX-GL108-20, the secretary of an issuer must be a person who has the requisite knowledge and experience to discharge the functions of the company secretary and is either (i) a member of the Hong Kong Institute of Chartered Secretaries, a solicitor or barrister as defined in the Legal Practitioners Ordinance (Chapter 159 of the Laws of Hong Kong) or a certified public accountant as defined in the Professional Accountants Ordinance (Chapter 50 of the Laws of Hong Kong); or (ii) an individual who, by virtue of his/her academic or professional qualifications or relevant experience, is, in the opinion of the Stock Exchange, capable of discharging the functions of company secretary.

We have appointed Ms. Guo Jiajia (郭佳佳)(“Ms. Guo”) and Ms. Lam as our joint company secretaries. Ms. Guo is primarily responsible for the management of financial and capital operation of our Group. Our Directors are of the view that, having regard to Ms. Guo’s experience as well as her thorough understanding of the financial operations and corporate governance matters of our Group, she is considered as a suitable person to act as a company secretary of our Company. In addition, as our headquarters and principal business operations are located in the Ningxia Hui Autonomous Region, the PRC, our Directors believe that it is necessary to appoint Ms. Guo as a company secretary whose presence in Ningxia Hui Autonomous Region enables her to attend to the day-to-day corporate secretarial matters concerning our Group. However, Ms. Guo does not possess a qualification stipulated in Rule 3.28 of the Listing Rules, she is not able to solely fulfill the requirements as a company secretary of a listed issuer stipulated under Rules 3.28 and 8.17 of the Listing Rules. Therefore, our Company has appointed Ms. Lam, an associate of both The Hong Kong Institute of Chartered Secretaries and The Chartered Governance Institute (formerly known as The Institute of Chartered Secretaries and Administrators) in the United Kingdom, who is qualified under Rules 3.28 and 8.17 of the Listing Rules to act as the other joint company secretary to work closely with and provide assistance to Ms. Guo.

–86– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. WAIVERS FROM STRICT COMPLIANCE WITH THE REQUIREMENTS UNDER THE LISTING RULES

Accordingly, we have applied to the Stock Exchange for, and the Stock Exchange [has granted us], a waiver from strict compliance with the requirements under Rules 3.28 and 8.17 of the Listing Rules in relation to the appointment of Ms. Guo as our joint company secretary. Being the company secretary executive of Tricor Investor Services Limited and by virtue of her experience in corporate secretarial practice, Ms. Lam is, in our Directors’ opinion, a person who is qualified and suitable to provide assistance to Ms. Guo, for a three-year period from the [REDACTED] so as to enable her to acquire the relevant experience (as required under Rule 3.28(2) of the Listing Rules) to duly discharge her duties. In addition, Ms. Guo will comply with the annual professional training requirement under Rule 3.29 of the Listing Rules and will enhance her knowledge of the Listing Rules during the three-year period from the [REDACTED]. Our Company will further ensure that Ms. Guo has access to the relevant training and support that would enhance her understanding of the Listing Rules and the duties of a company secretary of an issuer [REDACTED] on the Stock Exchange.

Such waiver will be revoked immediately if and when Ms. Lam ceases to provide such assistance or if there are material breaches of the Listing Rules by our Company. We will liaise with the Stock Exchange before the end of the three-year period to enable it to assess whether Ms. Guo, having had the benefit of Ms. Lam’s assistance for three years, will have acquired relevant experience within the meaning of Rule 3.28 of the Listing Rules so that a further waiver will not be necessary.

The biographical information of Ms. Guo and Ms. Lam is set out in “Directors and Senior Management.”

CONTINUING CONNECTED TRANSACTIONS

We have entered into certain transactions which will constitute continuing connected transactions for our Company under the Listing Rules after [REDACTED]. We have applied to the Stock Exchange for, and the Stock Exchange [has granted us], a waiver from strict compliance with (i) the the announcement requirement under Chapter 14A of the Listing Rules in respect of the continuing connected transactions as disclosed in “Connected Transactions—(B) Continuing connected transactions subject to the reporting, annual review and announcement requirements but exempt from the independent shareholders’ approval requirement.” See “Connected Transactions.”

–87– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED]

[REDACTED]

–88– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED]

[REDACTED]

–89– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED]

[REDACTED]

–90– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED]

[REDACTED]

–91– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DIRECTORS AND PARTIES INVOLVED IN THE [REDACTED]

DIRECTORS

Name Address Nationality

Executive Directors

Mr. Fang Lu (方陸) Room 2401, Building 18 Chinese South Xiyuntai, Xingqing District Yinchuan City Ningxia Hui Autonomous Region PRC

Ms. Zhang Jun (張君) Room 11-1-402 Chinese Golf Home Minzu North Street Yinchuan City Ningxia Hui Autonomous Region PRC

Mr. Wang Xiaoping (王小平) Room 35-2-101 Chinese Golf Home Minzu North Street Yinchuan City Ningxia Hui Autonomous Region PRC

Non-executive Director

Mr. Zhu Yu (朱瑜) Room 1503 Chinese No. 5 Lane 1698 Jinshajiang Road Shanghai PRC

–92– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DIRECTORS AND PARTIES INVOLVED IN THE [REDACTED]

Name Address Nationality

Independent Non-executive Directors

Mr. Feng Lun (馮侖) Room 3002, Building 22 Chinese Xincheng International Garden No. 6A Chaowai Street Chaoyang District Beijing PRC

Mr. Au Yeung Po Fung Flat F, 28/F, Block 2 Chinese (歐陽寶豐) Broadview Court 11 Shum Wan Road Wong Chuk Hang Hong Kong

Mr. Lu Lin (路林) Room 301, No. 58 Lane 1705 Chinese Yangnan Road Pudong New Area Shanghai PRC

For further information about our Directors, see “Directors and Senior Management.”

–93– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DIRECTORS AND PARTIES INVOLVED IN THE [REDACTED]

PARTIES INVOLVED IN THE [REDACTED]

Sole Sponsor Guotai Junan Capital Limited 27th Floor, Low Block Grand Millennium Plaza 181 Queen’s Road Central Hong Kong

[REDACTED]

Legal advisers to our Company As to Hong Kong law:

Sidley Austin 39/F, Two International Finance Center 8 Finance Street Central Hong Kong

As to PRC law:

Commerce & Finance Law Offices 6/F, NCI Tower A12 Jianguomenwai Avenue Chaoyang District, Beijing PRC

As to Cayman Islands law:

Conyers Dill & Pearman Cricket Square Hutchins Drive PO Box 2681 Grand Cayman KY1-1111 Cayman Islands

–94– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DIRECTORS AND PARTIES INVOLVED IN THE [REDACTED]

Legal advisers to the Sole Sponsor and As to Hong Kong law: the [REDACTED] William Ji & Co. LLP in Association with Tian Yuan Law Firm Hong Kong Office Suites 3304-3309, 33/F Jardine House One Connaught Place Central Hong Kong

As to PRC law:

Tian Yuan Law Firm 10/F, CPIC Plaza No. 28 Fengsheng Lane Xicheng District Beijing PRC

Auditor and reporting accountant Ernst & Young Certified Public Accountants Registered Public Interest Entity Auditor 22/F, CITIC Tower 1 Tim Mei Avenue Central, Hong Kong

Independent Property Valuer Jones Lang LaSalle Corporate Appraisal and Advisory Limited 7th Floor, One Taikoo Place 979 King’s Road Quarry Bay Hong Kong

Industry Consultant China Index Academy Tower A No. 20 Guogongzhuang Middle Street Fengtai District Beijing PRC

[REDACTED]

–95– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. CORPORATE INFORMATION

Registered office Cricket Square, Hutchins Drive P. O. Box 2681 Grand Cayman, KY1-1111 Cayman Islands

Principal place of business and No. 339 headquarters in the PRC Beijing East Road Yinchuan Ningxia Hui Autonomous Region PRC

Principal place of business in Hong Kong Level 54, Hopewell Centre 183 Queen’s Road East Hong Kong

Company’s website www.nxzfjt.com (The information on this website does not form part of this document)

Joint company secretaries Ms. Guo Jiajia (郭佳佳) Room 101, Unit 1, Building 18 South Great Wall Garden Yinchuan City Ningxia Hui Autonomous Region PRC

Ms. Lam Wing Chi (林穎芝) (ACS, ACIS) Level 54, Hopewell Centre 183 Queen’s Road East Hong Kong

Audit Committee Mr. Au Yeung Po Fung (Chairman) Mr. Lu Lin Mr. Zhu Yu

Remuneration Committee Mr. Feng Lun (Chairman) Mr. Lu Lin Mr. Wang Xiaoping

Nomination Committee Mr. Fang Lu (Chairman) Mr. Feng Lun Mr. Lu Lin

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Authorized representatives Ms. Zhang Jun (張君) Room 11-1-402, Golf Home Minzu North Street Yinchuan City Ningxia Hui Autonomous Region PRC

Ms. Lam Wing Chi (林穎芝) Level 54, Hopewell Centre 183 Queen’s Road East Hong Kong

Compliance adviser Guotai Junan Capital Limited 27th Floor, Low Block Grand Millennium Plaza 181 Queen’s Road Central Hong Kong

[REDACTED]

Principal banks Huaxia Bank Yinchuan Branch No. 168, Xinchang East Road Jinfeng District, Yinchuan Ningxia Hui Autonomous Region PRC

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China Merchants Bank Yinchuan Financial Street Branch No. 107-108, Hucheng Garden No. 501 Yinjiaqu North Street Jinfeng District, Yinchuan Ningxia Hui Autonomous Region PRC

Bank of China Xining Dashizi Branch 30 North Street Chengzhong District, Xining Qinghai Province PRC

Ningxia Bank Yinchuan Branch No. 157, Beijing Middle Road Yinchuan Ningxia Hui Autonomous Region PRC

–98– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. INDUSTRY OVERVIEW

The information and statistics set forth in this section and elsewhere in this document have been derived from various official and government publications, publicly available market research sources and an industry report commissioned by us and independently prepared by CIA in connection with the [REDACTED]. We believe that the sources of such information and statistics are appropriate and have taken reasonable care in extracting and reproducing such information. We have no reason to believe that such information and statistics are false or misleading in any material respect. None of our Company, the Sole Sponsor, the [REDACTED], the [REDACTED], the [REDACTED], the [REDACTED], any other party involved in the [REDACTED] or their respective directors, advisers and affiliates have independently verified such information and statistics, except for CIA. Accordingly, none of our Company, the Sole Sponsor, the [REDACTED], the [REDACTED], the [REDACTED], the [REDACTED], any other party involved in the [REDACTED] or their respective directors, advisors and affiliates makes any representation as to the correctness or accuracy of such information and the statistics contained in this document, which may be inaccurate, incomplete, out-of-date or inconsistent with other information complied within or outside the PRC, except for CIA. Certain information and statistics included, including those excerpted from official and government publications and sources in China, may not be consistent with other information and statistics compiled within or outside China by third parties. As such, the official and non-official sources contained herein should not be unduly relied upon. Furthermore, due to the inherent time-lag involved in collecting any industry and economic data, some of the data contained in this section may only represent the state of affairs at the time such data were collected. As such, you should also take into account subsequent movements in the industry and the PRC economy when you evaluate the information contained in this section.

SOURCES OF INFORMATION

In connection with the [REDACTED], we commissioned CIA, an independent third party and an experienced property research institution in the PRC, to prepare the CIA Report as to the real estate markets in China and the regions and cities in which we currently operate. We paid a total consideration of RMB428,000 for this report, which we believe is in line with the market rate. CIA is the leading independent property research institution with offices in major cities nationwide. Currently, CIA has more than 600 outstanding data researchers and professional analysts covering real-time property transaction data in more than 600 cities across China. CIA has prepared the industry report based on its self-developed database, CREIS China Index Database (“CREIS 中指數據庫”), the database of fdc.fang.com and various government publications. These databases and government publications have been widely used and relied upon in the PRC property market. While preparing the industry report and regional ranking information, CIA has relied on the assumptions that (i) all published data by the Statistics Bureaus are accurate; (ii) all collected information relating to residential sales transactions from the relevant local housing administrative bureaus are accurate; and (iii) where subscribed data is obtained from renowned public institutions, CIA has relied upon the expertise of such institutions. To provide a meaningful comparison of the economic and real estate market conditions of the regions and cities, CIA did not include the 2020 data for certain regions of which such data were available, as the 2020 data at the city level had not generally become available as of the Latest Practicable Date. OVERVIEW OF THE PRC ECONOMY

China has experienced significant economic growth over the last decade with an annual growth rate of approximately 10.0% which has accelerated fixed assets investment during the same periods. In recent years, the PRC economic development has transitioned from one that focused on scale and speed of its growth to one that focuses on the quality and efficiency of

–99– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. INDUSTRY OVERVIEW the development. Since 2014, the real GDP growth of the PRC has started to moderate and the real GDP growth rate decreased slightly. As of 2020, the GDP reached RMB101,598.6 billion and the CAGR of the past five years was 8.2%. Urbanization in the PRC has been accelerating and expanding in the past decade as evidenced by rapidly increasing urban population and urbanization rate, serving as a strong driver for domestic economic growth, particularly, for the real estate industry. As of 2019, the urban population reached 850.0 million, representing 60.6% of China’s total population. The robust growth of the PRC economy and the acceleration of urbanization process have contributed to the continuous increase in the per capita disposable income of urban households, with a CAGR over the past five years of approximately 7.0%. The following table sets forth selected economic indicators of the PRC for the periods indicated:

2015 2016 2017 2018 2019 2020 CAGR

Nominal GDP (RMB billion) ...... 68,599.3 74,006.1 82,075.4 90,031.0 99,086.5 101,598.6 8.2% Real GDP growth rate (%)...... 6.9 6.7 6.8 6.6 6.1 2.3 – Fixed asset investment (RMB billion) ...... 56,200.0 60,646.6 64,123.8 64,567.5 55,147.8 52,727.0 -1.3% Resident population (million) .... 1,374.6 1,382.7 1,390.1 1,395.4 1,400.1 – – Urban population (million) ..... 771.2 793.0 813.5 831.4 848.4 – – Urbanization rate (%) ...... 56.1 57.4 58.5 59.6 60.6 – – Per capita disposable income of urban households (RMB) ..... 31,195.0 33,616.0 36,396.0 39,251.0 42,359.0 43,834.0 7.0%

Source: National Bureau of Statistics, CREIS China Index Database

THE PRC REAL ESTATE MARKET Overview

In line with the growth of the PRC economy, the continual increase in per capital disposable income and the increase in urban population, real estate investment in the PRC has increased rapidly. The PRC government implemented a series of macro regulation policies in 2015 to put constraints on the property market. Despite the macro-control policy changes, total investment in the PRC property market increased from approximately RMB9,597.9 billion in 2015 to RMB14,144.3 billion in 2020, representing a CAGR of approximately 8.1%. There was an aggregate GFA of 2.2 billion sq.m. which commenced construction in 2020, representing a 1.2% decrease from 2019. The aggregate GFA of the commodity properties sold in 2020 amounted to 1.8 billion sq.m., representing an increase of 2.6% from 2019. The growth rate in terms of aggregate GFA that commenced construction decreased and the aggregate GFA of the commodity properties sold slightly decreased primarily as a result of the continuous macro-control policies over the real estate market in the PRC in 2020. The following table sets forth the relevant data relating to the real estate market in the PRC for the periods indicated:

2015 2016 2017 2018 2019 2020 CAGR

Total real estate investment (RMB billion) ...... 9,597.9 10,258.1 10,979.9 12,026.4 13,219.4 14,144.3 8.1% Total GFA of commodity properties sold (million sq.m.)...... 1,284.9 1,573.5 1,694.1 1,716.5 1,715.6 1,760.9 6.5% Total GFA of commodity properties completed (million sq.m.)...... 1,000.4 1,061.3 1,014.9 935.5 959.4 912.2 -1.8% ASP of commodity properties (RMB/per sq.m.) ...... 6,793 7,476 7,892 8,737 9,310 9,859.0 7.7%

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2015 2016 2017 2018 2019 2020 CAGR

Residential properties Investment in residential properties (RMB billion) ...... 6,459.5 6,870.4 7,514.8 8,519.2 9,707.1 10,444.6 10.1% GFA of residential properties sold (million sq.m.)...... 1,124.1 1,375.4 1,447.9 1,479.3 1,501.4 1,549.4 6.6% GFA of residential properties completed (million sq.m.) ..... 737.8 771.9 718.2 660.2 680.1 659.1 -2.2% ASP of residential properties (RMB/per sq.m.) ...... 6,472 7,203 7,614 8,544 9,287 9,972.0 9.0%

Commercial properties Office Investment in office properties (RMB billion) ...... 621.0 653.3 676.1 599.6 616.3 649.4 2.9% GFA of office properties sold (million sq.m.)...... 29.1 38.3 47.6 43.6 37.2 33.3 5.9% GFA of office properties completed (million sq.m.)...... 34.2 36.3 40.1 38.8 39.2 – – ASP of office properties (RMB/per sq.m.) ...... 12,914 14,334 13,532 14,387 14,325 1,513.8 3.2%

Retail Investment in retail properties (RMB billion) ...... 1,460.7 1,583.8 1,564.0 1,417.7 1,322.6 1,307.6 -2.2% GFA of retail properties sold (million sq.m.)...... 92.5 108.1 128.4 119.7 101.7 92.9 0.1% GFA of retail properties completed (million sq.m.)...... 120.3 125.2 126.7 112.6 108.1 – – ASP of retail properties (RMB/per sq.m.) ...... 9,561 9,786 10,322 11,151 10,955 1,064.6 2.2%

Source: National Bureau of Statistics, CREIS China Index Database

In 2020, total GFA of commodity properties sold in the PRC real estate market was 1.8 billion sq.m., representing an increase by 2.6% compared with the same period of 2019. According to the CIA, the projection of the 2021 PRC real estate market was that total GFA of commodity properties sold would likely decrease by 2.3% to 3.8% compared with 2020. Nonetheless, market demand will stabilize with the potential of increase in the upcoming three to five years, resulting from the on-going urbanization process and the anticipated increase in market demand for home upgrading. COVID-19 Pandemic’s Impact on PRC Macroeconomic Conditions and Real Estate Markets

China has seen its economy steadily recovering, as well as the resumption of work, production and market month by month since the outbreak of the COVID-19 pandemic. According to CIA, the pressure on economic development as a result of COVID-19 pandemic is expected to only appear in the short term. As the PRC government responded quickly and issued a series of policies to support the economy, the potential positive effect will subsequently bolster future economic development, PRC’s economy has recovered steadily from the GDP decline of 6.8% in the first quarter, flipping into an overall increase of 2.3% in the year of 2020, according to CIA. Recent Developments of Real Estate Policies in the PRC

The real estate market in the PRC is subject to extensive government regulation. In response to the national over-heating phenomenon in the PRC’s real estate market over the past few years, all regions and relevant government agencies in the PRC have released a variety of regulation policies strengthening control on the market. In 2020, the central government reiterated the policy keynote of “housing without speculation” and implemented the mechanism of “one city, one policy” to encourage a long-term healthy development of the real estate sector.

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Competition in the Real Estate Market in the PRC

According to CIA, the property market in the PRC is highly fragmented and competitive, with approximately 99,544 real estate developers operating in the industry in 2019. The property market in China is becoming increasingly concentrated. According to CIA, the market share of the China Top 100 Real Estate Developers was approximately 63.2% in terms of revenue from sales of properties in 2020, among which, the market share of the Top 10 Real Estate Developers with comprehensive strength was approximately 27.5%, accounting for approximately 43.5% of the total sales of the China Top 100 Real Estate Developers. Our existing and potential competitors are major domestic and overseas property developers which have a nationwide presence in China and compete with us in the regions where we operate, including the major competitors on the list of “China TOP 100 Real Estate Developers (中國房地產百強企業)” by China Real Estate TOP 10 Research in 2020. Most of our competitors are listed on the Stock Exchange, Shanghai Stock Exchange or Shenzhen Stock Exchange. We were ranked among the “2020 Top 50 Brand of China Real Estate Companies” by the China Real Estate TOP 10 Research (中國房地產TOP10研究組) and ranked first in terms of contracted sales among all property developers in Yinchuan and Xining in 2020 according to CIA. The tables below set forth the top five property developers in Yinchuan in terms of contracted sales and their respective market share in 2020:

Ranking in Percentage of China TOP 100 market share Real Estate in terms of Developers contacted sales Ranking Company Background in 2020 in 2020 (%)

1 Our Group ...... OurGroup N/A 20.2 2 Company A ..... Aproperty development company 6 9.9 established in Hong Kong in 1979 with spread of business in China and other countries and regions 3 Company B ..... Aproperty development company N/A 4.9 established Shanghai in 2000 with a nationwide operating coverage 4 Company C ..... Aproperty development company 5 4.6 established in 2003, focusing on development of residential and commercial properties 5 Company D ..... Aproperty development company N/A 4.6 established in 1998

Source: CIA

The tables below set forth the top five property developers in Xining in terms of contracted sales and their respective market share in 2020:

Ranking in Percentage of China TOP 100 market share Real Estate in terms of Developers contacted sales Ranking Company Background in 2020 in 2020 (%)

1 Our Group ...... OurGroup N/A 15.4 2 Company E ..... Aproperty development company 36 7.1 established in 2003 3 Company F ..... Aleading property development 2 3.9 company established in 1992, headquartered in Foshan 4 Company G ..... Aproperty development company N/A 2.5 established Xining in 2017 5 Company H ..... Acompany established in Xining in N/A 2.2 1995, focusing on property development, transportation and hotel services etc.

Source: CIA

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In recent years, real estate industry in China has witnessed an increase in project cooperation and cooperative development among property developers, which has become an industry norm. Among these joint venture projects, there are more cases that a property developer with minority equity interests in a project owns controlling rights. Such cooperation model requires property developers with minority equity interests to have strong management systems, financial health and brand name. This model leverages a mature management system to fulfil property developers’ aspiration on increasing sales and earning scale. Among the Top 100 property developers, Vanke Group was the first to try such cooperation model, followed by Landsea, CIFI, Sichuan Languang and Binjiang, among others.

China Real Estate TOP 10 Research was initiated in 2002 and officially established by China Enterprises Evaluation Association (中國企業評價協會), Property Research Institute of Tsinghua University (清華大學房地產研究所) and CIA on January 10, 2003. It is committed to the research of real estate enterprises with large scale and brand value in China. It has developed into a team of nearly one hundred researchers, focusing on China TOP 10 real estate research. Its research series, such as China TOP 100 Real Estate Developers, China TOP 10 Real Estate Listed Companies and China Real Estate Brand Value, have become important standards to assess the overall strength and industry position of a real estate developer.

China TOP 100 Real Estate Developers is an annual ranking of China-based property development companies published by China Real Estate TOP 10 Research Group accordingly to their overall strengths based on a number of key indicators in several aspects, including scale, profitability, growth, stability, financing capabilities and social responsibilities. The tables below set forth our major competitors who are major property developers in China who have business layout in Ningxia Hui Autonomous Region among “China TOP 100 Real Estate Developers” in 2020.

We compete with these major competitors in relation to a number of factors, including the ability to acquire land, brand recognition, financial resources, prices, product quality, service quality, ability to react to change in market condition and other factors. Some of these competitors may have better track records, greater financial, human and other resources, larger sales networks and greater brand recognition, and we may face challenges in maintaining our market position or further enhancing our market position as a result. Furthermore, there are certain barriers to enter into the PRC property development market, including the capital barrier, economy of scale barrier, and product barrier. Property developments require various resources and expertise including intensive capital investment and differentiated product offering. Major property developers also enjoy economies of scale based on their brand value, product, capital and geographic distribution.

Entry Barriers for the PRC Property Market

The entry barriers for the property market of the PRC include, among other things, intensive capital investment, in-depth industry knowledge about various local markets, deep understanding of the relevant government policies and regulations relating to property development, as well as operation and management capabilities, planning, design and other operational capabilities and experiences, and relationships with customers and suppliers. Early entrants normally may have certain competitive advantages over the later ones as the former may have, among others, built stronger management skills, customer bases and market reputations in the markets.

REAL ESTATE MARKET OF SELECTED CITIES IN THE PRC

We have mainly established our operation in Yinchuan, Ningxia Hui Autonomous Region, as well as other cities including Xining and Haidong, Qinhai Province, and Xianyang, Shaanxi Province. We expect to capitalize the flourishing economic development of these cities.

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Ningxia Hui Autonomous Region

Yinchuan

Yinchuan is the capital city of the Ningxia Hui Autonomous Region and an important central city in Northwest China. Yinchuan had an area of approximately 9,025.4 million sq.m., and a nominal GDP of approximately RMB196.4 billion as of December 31, 2020.

Yinchuan experienced continuous economic growth and its nominal GDP increased from RMB149.4 billion in 2015 to RMB196.4 billion in 2020, representing a CAGR of 5.6%. Disposable income of urban households per capita increased from RMB28,261 in 2015 to RMB39,416 in 2020, representing a CAGR of 6.9%.

The following table sets forth selected economic indicators relating to Yinchuan for the years indicated:

2015 2016 2017 2018 2019 2020 CAGR

Nominal GDP (RMB billion) ...... 149.4 161.8 180.3 190.2 189.7 1,964 5.6% Real GDP growth rate (%)...... 8.3 8.1 8.0 7.2 6.3 3.2 – Fixed asset investment (RMB billion) ...... 150.2 162.9 155.5 910.0 – – – Resident population (million) .... 2.2 2.2 2.2 2.3 2.3 – – Urbanization rate (%) ...... 75.8 75.7 77.1 77.6––– Per capita disposable income of urban households (RMB) ..... 28,261 30,478 32,981 35,586 38,217 39,416 6.9%

Source: Yinchuan Municipal Bureau of Statistics, National Bureau of Statistics, CREIS China Index Database

Real estate investment in Yinchuan has experienced an upward trend from 2014 to 2016, and decreased since 2016 to RMB31.1 billion in 2020, with the CAGR of 2015 to 2020 being -5.3%. The following table sets forth key figures relating to the real estate market in Yinchuan for the periods indicated:

2015 2016 2017 2018 2019 2020 CAGR

Residential properties GFA of residential properties sold (million sq.m.) ...... 4.5 4.9 5.2 5.3 6.8 6.7 8.4% ASP of residential properties (RMB/per sq.m.) ...... 4,498 4,448 4,892 5,590 6,440 7,355 10.3%

Commercial properties Office GFA of office properties sold (million sq.m.) ...... 0.1 – – 0.2 0.1 0.1 -7.4% ASP of office properties (RMB/per sq.m.) ...... 7,990 – – 8,433 6,459 6,382 -4.2%

Retail GFA of retail properties sold (million sq.m.) ...... 0.5 – – 0.4 0.3 0.3 -9.9% ASP of retail properties (RMB/per sq.m.) ...... 8,450 – – 9,483 9,309 9,433 2.2%

Source: Yinchuan Municipal Bureau of Statistics, National Bureau of Statistics, CREIS China Index Database

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Qinhai Province

Xining

Xining is the capital city, as well as the political, economic, technological, cultural, medical, and transportation center of Qinghai Province, and is the only central city on the Qinghai-Tibet Plateau with a population of over one million. Xining occupies a total land area of approximately 7,660 million sq.m., had a resident population of approximately 2.4 million and an urbanization rate of 72.9% as of December 31, 2019. Xining experienced rapid economic growth and its nominal GDP increased to RMB137.3 billion in 2020, with the CAGR of 2015 to 2020 amounting to 3.9%. Disposable income of urban households per capita increased from RMB25,202 in 2015 to RMB36,959 in 2020, representing a CAGR of 8.0%. The following table sets forth selected economic indicators relating to Xining for the years indicated:

2015 2016 2017 2018 2019 2020 CAGR

Nominal GDP (RMB billion) ...... 113.2 124.8 128.5 128.6 132.8 1,373 3.9% Real GDP growth rate (%)...... 10.9 9.8 9.5 9.0 7.5 1.8% – Fixed asset investment (RMB billion) ...... 129.6 139.9 160.0 174.4 178.9 – – Resident population (million) .... 2.3 2.3 2.4 2.4 2.4 – – Urbanization rate (%) ...... 68.9 70.0 71.1 72.1 72.9 – – Per capita disposable income of urban households (RMB) ..... 25,202 27,505 30,007 32,460 34,846 36,959 8.0%

Source: Xining Municipal Bureau of Statistics, Qinghai Provincial Bureau of Statistics, National Bureau of Statistics, CREIS China Index Database

Real estate investment in Xining has experienced an upward trend from 2014 to 2017, and decreased since 2017 to RMB27.0 billion in 2020, with the CAGR of 2015 to 2020 being -0.7%. The following table sets forth key figures relating to the real estate market in Xining for the years indicated:

2015 2016 2017 2018 2019 2020 CAGR

Residential properties GFA of residential properties sold (million sq.m.) ...... 2.6 2.9 3.1 2.7 2.6 2.6 -0.1% ASP of residential properties (RMB/per sq.m.) ...... 4,602 5,007 5,890 6,733 8,731 9,847.0 16.4%

Commercial properties Office GFA of office properties sold (million sq.m.) ...... 0.23 0.19 0.27 0.08 0.08 0.005 -54.0% ASP of office properties (RMB/per sq.m.) ...... 9,730 6,852 8,089 8,419 9,479 8,584.0 -2.5%

Retail GFA of retail properties sold (million sq.m.) ...... 0.22 0.31 0.48 0.42 0.31 0.24 2.5% ASP of retail properties (RMB/per sq.m.) ...... 16,318 14,173 11,069 11,241 14,922 10,309.0 -8.8%

Source: Xining Municipal Bureau of Statistics, Qinghai Provincial Bureau of Statistics, National Bureau of Statistics, CREIS China Index Database

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Haidong

Haidong is located at the northeast of Qinghai province. As of December 31, 2020, Haidong occupies a total land area of approximately 13,200 million sq.m.,. The nominal GDP of Haidong has increased from RMB38.4 billion in 2015 to RMB51.5 billion in 2020, representing a CAGR of 6.0%. The following table sets forth selected economic indicators relating to Haidong for the years indicated:

2015 2016 2017 2018 2019 2020 CAGR

Nominal GDP (RMB billion) ...... 38.4 42.3 43.6 45.2 48.8 514.6 6.0% Real GDP growth rate (%)...... 11.2 10 8.4 8.0 7.0 4.7 – Fixed asset investment (RMB billion) ...... 61.1 63.5 71.4 78.3 86.4 – – Resident population (million) .... 1.5 1.5 1.5 1.5 1.5 – – Urbanization rate (%) ...... 34.0 35.7 37.6 38.5 50.0 – – Per capita disposable income of urban households (RMB) ..... 23,361 25,480 27,724 29,857 31,962 33,509 7.5%

Source: Haidong Municipal Bureau of Statistics, National Bureau of Statistics, CREIS China Index Database

In recent years, the total investment in real estate development in Haidong has gradually stabilized. After reaching a high level in 2016, it began to fall back. In 2019, the investment rebounded to RMB9.3 billion, with the CAGR of 2014 to 2019 being 15.1%. Sale of properties in Haidong market also increased rapidly to RMB7.0 billion in 2019 at an annual growth rate of 21.0%, with the GFA of commodity properties sold increased by 79.5% to 138.0 million sq.m. in 2019. The following table sets forth key figures relating to the real estate market in Haidong for the years indicated:

2014 2015 2016 2017 2018 2019 CAGR

Residential properties Real estate investment (in RMB billions, except percentages)...... 3.1 3.3 4.2 2.6 3.2 7.7 15.1% ASP of residential properties (RMB/per sq.m.) ...... 2,997 2,918 3,204 3,437 4,112 4,843 10.1% GFA of residential properties sold (million sq.m..)...... 0.7 0.7 0.7 0.8 0.8 1.3 13.2%

Commercial Office Real estate investment (in RMB billions, except percentages)...... 0.030 0.025 0.090 0.016 0.013 0.043 7.4% ASP of office properties (RMB/per sq.m.) ...... 3,870 3,023 3,733 3,053 – 4,982 – GFA of office properties sold (thousand sq.m..) ...... 2423–514.4%

Retail Real estate investment (in RMB millions, except percentages)...... 1.3 0.9 1.6 0.5 1.1 0.9 -8.2% ASP of retail properties (RMB/per sq.m.) ...... 6,560 5,735 5,806 6,918 7,526 8,877 6.2% GFA of retail properties sold (million sq.m..)...... 0.07 0.10 0.03 0.08 0.07 0.10 7.2%

Source: Haidong Municipal Bureau of Statistics, National Bureau of Statistics, CREIS China Index Database

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Shaanxi Province Xianyang

Xianyang is an important city of Shaanxi Province. It is adjacent to the provincial capital Xi’an in the east, Yangling National Agricultural High-tech Industry Demonstration Zone in the west, and Gansu in the northwest. Xianyang occupies a total land area of approximately 10,189.4 million sq.m., and a nominal GDP of RMB220.5 billion as of December 31, 2020. The following table sets forth selected economic indicators relating to Xianyang for the years indicated:

2015 2016 2017 2018 2019 2020 CAGR

Nominal GDP (RMB billion) ...... 215.3 239.1 229.3 237.7 219.5 2,204.8 0.50% Real GDP growth rate (%)...... 8.7 7.7 8.1 7.0 1.9 0.1 – Fixed asset investment (RMB billion) ...... 306.3 364.4 238.3 196.9 194.0 – – Resident population (million) .... 5.0 5.0 4.4 4.4 4.4 – – Urbanization rate (%) ...... 49.1 50.8 50.3 51.3 52.1 – – Per capita disposable income of urban households (RMB) ..... 29,425 31,662 30,874 33,364 36,187 37,975 5.2%

Source: Xianyang Municipal Bureau of Statistics, National Bureau of Statistics, CREIS China Index Database

Real estate investment in Xianyang has experienced a downward trend from 2014 to 2016, and then rebounded since 2016 to RMB25.9 billion in 2020, with the CAGR of 2015 to 2020 being 7.3%. The following table sets forth key figures relating to the real estate market in Xianyang for the years indicated:

2015 2016 2017 2018 2019 2020 CAGR

Residential properties GFA of residential properties sold (million sq.m.)...... 2.2 1.8 1.7 1.5 2.0 2.2 0.4%

Commercial Office GFA of residential properties sold (thousand sq.m.) ...... 2.0 4.0 10 6.0 2.0 18 55.2% Retail GFA of residential properties sold (million sq.m.)...... 0.09 0.1 0.04 0.02 0.05 0.04 -17.2%

Source: Xianyang Municipal Bureau of Statistics, National Bureau of Statistics, CREIS China Index Database

PRICES OF KEY CONSTRUCTION MATERIALS

Construction material cost is an important factor for real estate developers, and steel and cement make up a major part of the cost of construction materials. According to CIA, the annual average market price of steel rebar 25mm, a major raw material in building construction, increased from RMB2,521.9 per ton in 2016 to RMB4,059.6 per ton in 2019. Average price of coking coal, a major component in the production of cement, increased from RMB580.5 per ton in 2015 to RMB1,274.0 per ton in 2019 according to CIA. Average price of 42.5 grade cement, a major construction material, increased from RMB262.1 per ton in 2016 to RMB458.7 per ton in 2019. In 2020, the average market price of steel rebar 25mm and 42.5 grade cement slightly decreased to RMB3,907.9 per ton and RMB433.5 per ton, whereas the average price of coking coal increased by 4.6% to RMB 1,332.6 per ton.

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In the upcoming few years, the market anticipates decreases in the price of steel and coking coal, and an increase in cement price. The steel price will continue to be driven downward primarily due to the slowdown of the real economy and the reduction in demand. With respect to coking coal, since the beginning of 2020, downstream demand has declined significantly year-on-year, and there has been an oversupply in the industry, which has lead to a decrease in the price of coking coal. However, as the industrial associations have successively issued notices calling for stabilizing the market price, the price of coking coal is expected to bottom out and stabilize in the long run. Since 2018, the cement price in the PRC has been increasing, and it is expected to rise slowly in the medium and long term, as cement inventories continue to decrease and cement demand continues to increase due to the commencement or resumption of many major domestic construction projects. OVERVIEW OF THE CITY RENOVATION MARKET

With the progression of urbanization and further development of city clusters, more emphasis is laid on urban renewal of cities in the PRC. The city renovation market is regarded as the new engine for city development and the new opportunity for real estate developers. According to the Upgrading Plan for the Comprehensive Renovation Work for Old Communities in Xi’an (《西安市老舊小區綜合改造工作升級方案》) issued by General Office of the People’s Government of Xi’an in 2019, the city targeted to achieve the completion of the renovation for old communities that were built prior to 2000 within three to five years. According to the Three-year Action Plan of Facilitating “Three-old” transformation (2019-2021) (《廣東省深入推進“三舊”改造三年行動方案(2019-2021年)》) issued by the Department of Natural Resources of Guangdong Province, the market size of newly implemented “three-old transformation” projects will exceed 230,000 mu (approx. 153.3 million sq.m.) in Guangdong Province, and the market size of newly implemented “three-old transformation” projects in Guangzhou, Shenzhen and Dongguan will be about 54,000 mu (approximately 36.0 million sq.m.), 27,000 mu (approximately 18.0 million sq.m.) and 21,000 mu (approximately 14.0 million sq.m.), respectively. In respect of governments and cities, urban renewal can help to enhance city image and living quality, achieve a balance between land supply and demand, while securing sustainable economic development and government income. For real estate developers, urban renewal has provided an attractive and effective way to increase land reserves and expand businesses through participating city renovation projects. With such strategy, real estate developers are able to obtain projects at a relatively lower expected costs while enjoying preferential policies provided by the government. Besides, real estate developers could also seize the opportunity to negotiate with local villagers and governments in order to establish a positive brand image and reputation. In general, real estate developers face certain challenges in the urban renewal process for city renovation projects, including, among other things, (i) intensive capital investment at early stage prior to obtaining the land reserves; (ii) negotiation regarding compensation for demolition and relocation of buildings between land owners and real estate developers; (iii) residents or land owners that refuse to cooperate in the demolition and relocation phase; and (iv) conflicts between short-term interest of the developers and long-term goals on the government level. DIRECTORS’ CONFIRMATION

Our Directors confirm that, after making reasonable inquires, there is no material adverse change in the market information since the date of the CIA Report which may qualify, contradict, misrepresent or otherwise adversely affect the accuracy and completeness of the information in this section in material aspects.

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This section sets forth a summary of the most significant PRC laws and regulations that affect our business and the industry in which we operate.

LAWS AND REGULATIONS CONCERNING THE ESTABLISHMENT OF REAL ESTATE ENTERPRISES

General Provisions

According to the Urban Real Estate Administration Law of the People’s Republic of China (《中華人民共和國城市房地產管理法》) (the “Urban Real Estate Law”) promulgated by the Standing Committee of the National People’s Congress (the “SCNPC”), effective on January 1, 1995, amended on August 30, 2007, August 27, 2009, and August 26, 2019, and took effect on January 1, 2020, a real estate development enterprise is defined as an enterprise which engages in development and operation of real estate for the purpose of profit. Under the Regulation on the Administration of Development and Operation of Urban Real Estate (《城市房地產開發經營管理條例》) (the “Development Regulations”) promulgated and implemented by the State Council of the People’s Republic of China (the “State Council”) on July 20, 1998 and latest amended on November 29, 2020, the establishment of a real estate development enterprise shall, in addition to the conditions for the enterprise establishment prescribed by relevant laws and administrative regulations, fulfill the following requirements (i) its registered capital shall be RMB1 million or more; and (ii) it shall have four or more full-time technical personnel in the fields of real estate and construction engineering, who have obtained certificate of qualifications, and two full-time accounting personnel with certificate of qualifications. People’s governments of provinces, autonomous regions and centrally administered municipalities may, based on the actual conditions of the locality, set out more stringent requirements in respect of registered capital and technical professionals.

Foreign Investment in Real Estate Development

On June 23, 2020, the Ministry of Commerce of the People’s Republic of China (the “MOFCOM”) and the National Development and Reform Commission (the “NDRC”) promulgated the Special Administrative Measures for Access of Foreign Investment (Negative List) (2020 Edition) (《外商投資准入特別管理措施(負面清單)(2020年版)》) (the “Negative List 2020”), which took effect on July 23, 2020. Pursuant to the Negative List 2020, the real estate development that we operate is neither restricted nor prohibited.

On March 15, 2019, the National People’s Congress of China (the “NPC”) promulgated the Foreign Investment Law of the People’s Republic of China (《中華人民共和國外商投資法》) (the “Foreign Investment Law”), which came into effect on January 1, 2020, and became the legal foundation for foreign investment in the PRC. According to the Foreign Investment Law, a foreign investor may not invest in a field which is prohibited by the Negative List 2020 from investment. For fields outside of the Negative List 2020, investment administration shall be conducted under the principle of equal treatment to domestic and foreign investment.

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On July 11, 2006, the Ministry of Construction (the “MOC”), the MOFCOM, the NDRC, the People’s Bank of China (the “PBOC”), the State Administration for Industry and Commerce (the “SAIC”) and the State Administration of Foreign Exchange (the “SAFE”) jointly promulgated the Opinions on Regulating the Access to and Administration of Foreign Investment in the Real Estate Market (《關於規範房地產市場外資准入和管理的意見》) (the “Opinions”), which provides that: (i) foreign organizations and individuals who have established foreign-invested enterprises are allowed to invest in and purchase non-owner- occupied real estate in China; while branches of foreign organizations established in China are eligible to purchase commercial houses which match their actual needs for self-use under their names; (ii) the registered capital of foreign-invested real estate enterprises with the total investment amount exceeding or equal to US$10 million shall be no less than 50% of their total investment amount; (iii) foreign-invested real estate enterprises can apply for renewing the official foreign-invested enterprise approval certificate and business license with an operation term of one year only after they have paid back all the land premium and obtained the state-owned land-use rights certificate; (iv) with respect to the transfer of equity and project in a foreign-invested real estate enterprise and the merger and acquisition of a domestic real estate enterprise by an overseas investor, the department in charge of commerce and other departments shall conduct examination and approval in strict compliance with the provisions of the relevant laws, regulations, and policies.

On August 19, 2015, the Ministry of Housing and Urban-Rural Development of the People’s Republic of China (the “MOHURD”), the MOFCOM, the NDRC, the PBOC, the SAIC, and the SAFE jointly promulgated the Notice on Adjusting the Policies on the Market Access and Administration of Foreign Investment in the Real Estate Market (《關於調整房地產市場外資准入和管理有關政策的通知》) (the “Notice”). Pursuant to the Notice, the proportion of registered capital to the total investment of foreign-invested real estate enterprises shall be subject to the Provisional Regulations of the State Administration for Industry and Commerce on the Proportion of the Registered Capital to the Total Amount of Investment of Sino-foreign Equity Joint Ventures (《國家工商行政管理局關於中外合資經營企業註冊資本與投資總額比例的暫行規定》). Furthermore, the requirement on full payment of registered capital of the foreign-invested real estate enterprises before applying for domestic or foreign loans or foreign exchange loan settlement has been canceled.

Qualification of Real Estate Developers

Under the Development Regulations, a real estate developer must file its establishment to the competent department of real estate development of the place where the registration authority is located within 30 days from the date of obtaining a business license. The real estate development authorities shall examine applications for the classification of a real estate developer’s qualification by considering its assets, professional personnel, and industrial achievements. A real estate enterprise shall only engage in real estate development projects in compliance with its approved class of qualification. Relevant detailed rules shall be formulated by the department of the construction administrative of the State Council.

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Pursuant to the Regulations on Administration of Qualification of Real Estate Development Enterprises (《房地產開發企業資質管理規定》) (the “Circular 77”) promulgated on November 16, 1993 and amended on March 29, 2000, May 4, 2015 and December 22, 2018, an enterprise engaged in real estate development shall apply for the approval in accordance with the provisions of application for the enterprise qualification classification. Enterprises that fail to obtain real estate investment certificates shall not engage in the real estate development business.

In accordance with the Circular 77, qualifications of a real estate enterprise are classified into four classes: class 1, class 2, class 3, and class 4. Different classes of qualification should be examined and approved by corresponding authorities. The class 1 qualification shall be subject to preliminary examination by the construction authority under the government of the relevant province, autonomous region, or municipality directly under the central government and then final approval of the construction authority under the State Council. Procedures for approval of developers of class 2 or lower classes shall be formulated by the construction authority under the people’s government of the relevant province, autonomous region, or municipality directly under the central government. A developer examined qualified will be issued a qualification certificate of the relevant class by the qualification examination authority.

A newly-established real estate development enterprise shall, within 30 days from the date of issuance of the business license, file the relevant documents with the competent department of real estate development for the record. The competent departments of real estate development shall, within 30 days after accepting the applications, approve and issue the Provisional Qualification Certificate (暫定資質證書) to the eligible enterprise if relevant conditions are achieved. The Provisional Qualification Certificate is effective for 1 year from its issuance while the real estate development authority may extend the validity to a period of no longer than 2 years considering the actual business situation of the enterprise. The real estate developer shall apply for qualification classification to the real estate development authority within 1 month before the expiry of the Provisional Qualification Certificate.

LAWS AND REGULATIONS CONCERNING LAND USE RIGHTS FOR REAL ESTATE DEVELOPMENT

Land Grants

On April 12, 1988, the NPC passed an amendment to the Constitution of the People’s Republic of China (《中華人民共和國憲法》). The amendment allowed the compensable transfer of land-use rights to prepare for reforms of the legal regime governing the use of land and transfer of land-use rights. On December 29, 1988, the SCNPC also amended the Land Administration Law of the People’s Republic of China (《中華人民共和國土地管理法》)to permit the compensable transfer of land-use rights.

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Under the Provisional Regulations of the People’s Republic of China on Assignment and Transfer of the Land-Use Rights of State-owned Urban Land (《中華人民共和國城鎮國有土地使用權出讓和轉讓暫行條例》) (the “Provisional Regulations on Assignment and Transfer”) promulgated by the State Council on May 19, 1990 and amended on November 29, 2020, a system of assignment and transfer of the right to use state-owned land is adopted. A land user shall pay the land premium to the State as consideration for the grant of the right to use a land site within a certain term, and the land user may transfer, lease out, mortgage, or otherwise commercially exploit the land-use rights within the term of use. Under the Provisional Regulations on Assignment and Transfer and the Urban Real Estate Law, the land administration authority under the local government of the relevant city or county shall enter into an assignment contract with the land user to provide for the grant of land-use rights. The land user shall pay the land premium as provided by the assignment contract. After full payment of the land premium, the land user shall register with the land administration authority and obtain a land-use right certificate which evidences the acquisition of land-use right. The Development Regulations provide that the land-use right for a land parcel intended for real estate development shall be obtained through assignment except for land-use rights which may be obtained through appropriation pursuant to the PRC laws or the stipulations of the State Council.

In accordance with the People’s Republic of China Civil Code (《中華人民共和國民法典》) (the “PRC Civil Code”), which was issued on May 28, 2020 by the NPC and became effective on January 1, 2021, the term of land use rights for land of residential property shall be automatically be renewed upon expiry. The payment, reduction of or exemption from the renewal fee shall be handled in accordance with the provisions of laws and administrative regulations. The renewal of the term of land use rights for non-residential property shall be renewed upon expiry pursuant to the provisions of the law. In case there exists any agreement on the ownership of houses and other realties on the aforesaid land, such agreement shall prevail; in the case of no or unclear such agreement, the ownership shall be determined in accordance with the provisions in the laws and administrative regulations.

Methods of Land Grant

Under the Regulations on the Assignment of State-Owned Construction Land-Use Rights through Tender, Auction and Listing-for-sale (《招標拍賣掛牌出讓國有建設用地使用權規定》) promulgated by the Ministry of Land and Resources (the “MLR”) and effective on November 1, 2007 (the “Land Assignment Regulations”), land to be used for industrial, commercial, tourism, entertainment or commodity residential purposes, or where there are two or more intended users for the certain piece of land, shall be granted by way of competitive processes. A number of measures are provided by the Land Assignment Regulations to ensure such assignment of land-use rights for commercial purposes is conducted openly and fairly.

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On May 13, 2011, the MLR promulgated the Opinions on Upholding and Improving the System for the Transfer of Land through Tender, Auction, and Listing-for-sale (關於堅持和完善土地招標拍賣掛牌出讓制度的意見), which provides stipulations to improve policies on the supply of land through public tender, auction, and listing-for-sale, and to strengthen the active role of land transfer policy in the control of the real estate market.

On June 11, 2003, the MLR promulgated the Regulations on the Assignment of State-owned Land-Use Rights by Agreement (《協議出讓國有土地使用權規定》). According to this regulation, if there is only one intended-user for the certain parcel of land, the land-use rights (excluding profit-oriented land for commercial use, tourism, entertainment, and commodity residential purposes) may be assigned by way of agreement. If there are two or more intended-users for the certain parcel of land, such land-use rights shall be granted by means of tender, auction, and listing-for-sale.

According to the Circular on Issuing and Implementing of the Catalog for Restricted Land Use Projects (2012 Edition) and the Catalog for Prohibited Land Use Project (2012 Edition) (《關於印發<限制用地項目目錄(2012年本)>和<禁止用地項目目錄(2012年本)>的通知》) promulgated by the MLR and the NDRC on May 23, 2012, the granted area of the residential housing projects should not exceed (i) 7 hectares for small cities and towns, (ii) 14 hectares for medium-sized cities, or (iii) 20 hectares for large cities, and the plot ratio shall not be lower than 1.0.

The Measures on the Administration of Reserved Land (《土地儲備管理辦法》), promulgated by the MLR, the Ministry of Finance (the “MOF”), the PBOC and the China Banking Regulatory Commission (the “CBRC”) on January 3, 2018, defined “reserved land” and stipulated the administrative, regulatory and implementing procedures involved with the planning, standard, development, management and protection, supply and capital expenditure of reserved land.

Land Transfer from Current Land Users

In addition to a direct grant from the government, an investor may also acquire land use rights from land users that have already obtained the land use rights by entering into an assignment contract with such land users.

For real estate development projects, the Urban Real Estate Law requires that at least 25% of total amount of investment or development must have been made or completed before assignment can take place. All rights and obligations of the current holder under a land grant contract will be transferred contemporaneously to the assignee. Relevant local governments may acquire the land use rights from a land user in the event of a readjustment of the use of land for renovating the old urban area according to city planning. The land user will then be compensated for the loss of land use rights.

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Judicial Auction by the People’s Courts in Civil Execution Process

An investor could also obtain land use right by way of judicial auction by the people’s court during the execution process. In accordance with the PRC Civil Code, where a real right is created, altered, alienated, or extinguished as a result of a legal document issued by the people’s court or an arbitration institution, or based on an expropriation decision made by the people’s government, the creation, alteration, alienation, or extinguishment of the real right becomes effective at the time when the legal document or expropriation decision enters into effect.

According to the Provisions of the Supreme People’s Court on Auctioning or Selling off Property by People’s Courts in Civil Execution (《最高人民法院關於人民法院民事執行中拍賣、變賣財產的規定》) promulgated by the Supreme People’s Court on November 15, 2004 and amended on December 29, 2020, during the execution process, after the property of the person subject to execution is sealed up, distrained or frozen, the people’s court shall timely auction it, sell it off or take other execution measures. After an immovable property or registered special movable property or any other property right is auctioned successfully or offsets debt, these property right shall be transferred as of the success of the auction or as of the delivery of the ruling on offsetting debts to the successful bidder or priority creditor.

Under the Provisions of the Supreme People’s Court on Several Issues concerning Online Judicial Sale by People’s Courts (《最高人民法院關於人民法院網絡司法拍賣若干問題的規定》), the people’s court that disposes of property by auction shall take the way of online judicial sale, except under the circumstance for which other disposal methods shall be taken as prescribed by any law, administrative regulation, or judicial interpretation or whereby online auction is inappropriate.

LAWS AND REGULATIONS CONCERNING DEVELOPMENT OF REAL ESTATE PROJECTS

Commencement of Real Estate Projects

Under the Urban Real Estate Law, those who have been granted the land-use rights by way of assignment for real estate development must develop the land in accordance with the use and construction period as prescribed in the land use right assignment contracts. When the land user fails to commence development after one year since the date of starting the development as prescribed by the grant contract, an idle land fee equal to 20% of the land grant premium may be collected and when the land user fails to commence development after two years, the right to use the land may be confiscated without any compensation, except where the delays are caused by force majeure, the activities of government, or the delay in the necessary preliminary work for starting the development.

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Pursuant to the Measures on Disposal of Idle Land (《閒置土地處置辦法》), which was promulgated by the MLR on April 28, 1999, amended on June 1, 2012, and implemented on July 1, 2012, land can be defined as idle land under any of the following circumstances:

(i) the state-owned construction land that is not commenced development and construction after one year of the prescribed time limit in the land use right assignment contract or allocation decision; or

(ii) the state-owned construction land that has been commenced development and construction but the area of the development and construction that has been commenced is less than one-third of the total area to be developed and constructed or the invested amount is less than 25% of the total amount of investment, and the development and construction have been continuously suspended for one year or more without an approval.

Where the delay of commencement of development is caused by the government’s behavior or due to the force majeure of natural disasters, the land administrative authorities shall discuss with the holder of state-owned construction land-use rights and choose the methods for disposal in accordance with the Measures on Disposal of Idle Land.

Planning of a Real Estate Project

Under the Regulation on Planning Administration regarding Assignment and Transfer of State-Owned Land-Use Right in Urban Area (《城市國有土地使用權出讓轉讓規劃管理辦法》) promulgated by the MOC on December 4, 1992, and amended on January 26, 2011, a real estate developer shall apply for a Construction Land Planning Permit (建設用地規劃許可證) from the municipal planning authority. The SCNPC promulgated the Urban and Rural Planning Law of the People’s Republic of China (《中華人民共和國城鄉規劃法》) on October 28, 2007, and amended on April 24, 2015, and April 23, 2019, pursuant to which, a Construction Work Planning Permit (建設工程規劃許可證) must be obtained from relevant urban and rural planning government authorities for building any structure, fixture, road, pipeline or other engineering projects within an urban or rural planning area.

Construction Work Commencement Permit

After obtaining the Construction Work Planning Permit, a real estate developer shall apply for a Construction Work Commencement Permit (建築工程施工許可證) from the construction authority under the local people’s government at the county level or above in accordance with the Measures for the Administration of Construction Permits for Construction Projects (《建築工程施工許可管理辦法》), which was promulgated by the MOC on October 15, 1999, and amended on July 4, 2001, June 25, 2014, September 28, 2018 and March 30, 2021 by MOHURD.

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Acceptance and Examination upon Completion of Real Estate Projects

Pursuant to Administrative Regulations on the Quality Management of Construction Engineering (《建設工程質量管理條例》) promulgated on January 30, 2000 by State Council and late amended on October 7, 2017 and on April 23, 2019, the owners of construction engineering shall, within fifteen days of the date on which the construction project in question passes a completion-based check and acceptance, submit an acceptance report, recognition documents or use approval documents issued by planning, public security and firefighting, environmental protection and other departments to the competent construction administrative departments or other relevant departments for the record. In accordance with the Regulation on Administration of Development and Operation of Urban Real Estate (《城市房地產開發經營管理條例》), which was promulgated by State Council on July 20, 1998, and amended on January 8, 2011, March 19, 2018, March 24, 2019, March 27, 2020, and November 29, 2020, the Administrative Measures for Filing of Acceptance Examination Upon Completion of Buildings and Municipal Infrastructure Projects (《房屋建築和市政基礎設施工程竣工驗收備案管理辦法》), which was promulgated by MOHURD on April 4, 2000, and amended on October 19, 2009, and the Rules for the Confirmation of the Completion of Building Construction and Municipal Infrastructure Projects (《房屋建築和市政基礎設施工程竣工驗收規定》), which was promulgated by the MOHURD implemented on December 2, 2013, upon the completion of a real estate development project, the real estate development enterprise shall submit an application to the competent department of real estate development of local government at or above the county level, where the project is located, for examination upon completion of building and for filing purposes; and to obtain the Filing Form for Acceptance and Examination upon Completion of Construction Project (建設工程竣工驗收備案表). A real estate project shall not be delivered before passing the acceptance examination.

INSURANCE OF REAL ESTATE PROJECTS

There are no nationwide mandatory requirements in the PRC laws, regulations and government rules requiring a real estate developer to maintain insurance for its real estate projects. According to the Construction Law of the People’s Republic of China (《中華人民共和國建築法》) promulgated by the SCNPC on November 1, 1997 and amended on April 22, 2011 and April 23, 2019, construction enterprises shall maintain work injury insurance and pay the insurance premium, while enterprises are encouraged to take up accident liability insurance for employees engaged in dangerous operations and pay the insurance premium. In the Opinions of the Ministry of Construction on Strengthening the Insurance of Accidental Injury in the Construction Work (《建設部關於加強建築意外傷害保險工作的指導意見》) promulgated by the MOC on May 23, 2003, the MOC further emphasized the importance of the insurance of accidental injury in the construction work and put forward the detailed opinions of guidance.

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MARKETING AND PROMOTION OF REAL ESTATE PROJECTS

Real Estate Advertisements

Pursuant to the Advertising Law of the People’s Republic of China (《中華人民共和國廣告法》), promulgated by the SCNPC on October 27, 1994 and amended on April 24, 2015 and October 26, 2018 and the Provisions on Distribution of Real Estate Advertisements (《房地產廣告發佈規定》) promulgated by the SAIC on December 24, 2015, real estate advertisements and information of housing sources shall be authentic. The area shall be stated as floor area or indoor floor space, and shall not contain any of the following contents: (i) commitment on appreciation or investment returns; (ii) using the time required to travel from the project to a specific location to indicate the location of the project; (iii) violation of state provisions on pricing administration; or (iv) using transport, commercial, cultural and education facilities and other municipal conditions, which are the planning or under construction, as misleading promotion. For publishing of false advertisements to deceive, mislead consumers, and caused harm to the legitimate rights and interests of consumers who purchase the goods or accept the services, the advertiser shall bear civil liability pursuant to the law.

LAWS AND REGULATIONS CONCERNING REAL ESTATE TRANSACTIONS

Sale of Commodity Buildings

Under the Regulatory Measures on the Sale of Commodity Buildings (《商品房銷售管理辦法》) (the “Regulatory Measures”), which was promulgated by the MOC on April 4, 2001, and implemented on June 1, 2001, sale of commodity buildings can include both pre-completion sales (pre-sale) and post-completion sales. According to the Regulatory Measures, the property developers shall report for record to the property developing administrations of the local government before any sales of completed properties.

Pre-Sale of Commodity Buildings

According to the Measures for Administration of Pre-sale of Urban Commodity Buildings (《城市商品房預售管理辦法》) (the “Pre-sale Measures”), which was promulgated on November 15, 1994, and amended on August 15, 2001, and July 20, 2004, respectively, any pre-sale of commodity buildings is subject to specified procedures. If a real estate development enterprise intends to conduct pre-sale of commodity buildings, it shall apply to the real estate administrative authority to obtain a Pre-sale Permit of Commodity Building (商品房預售許可證). Development enterprises should sign the pre-sale contract with the purchaser of commodity house, and file the pre-sale contract with both real estate administrative department and land administration department at the city and/or county level for the registration within 30 days from the date of signing the contract. Under the Pre-sale Measures and the Urban Real Estate Law, the pre-sale proceeds of commodity buildings may only be used to fund the property development costs of the relevant projects.

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Furthermore, under the Circular on Issues Concerning Further Strengthening the Supervision and Administration of the Real Estate Market and Improving the Pre-sale System of Commodity Properties (《關於進一步加強房地產市場監管完善商品住房預售制度有關問題的通知》) issued by the MOHURD on April 13, 2010, all localities shall speed up the improvement of the regulatory system of pre-sales proceeds of commodity building. All the pre-sales proceeds of commodity building shall be deposited in the regulatory account, and the regulatory agencies shall be responsible for supervision to ensure that the pre-sales proceeds are used for the construction of commodity building projects; the pre-sales proceeds may be approved and allocated according to the progress of construction, but sufficient proceeds shall be left to ensure the completion and delivery of the construction project.

Ningxia Autonomous Region (Yinchuan and Yongning)

According to the Interim Measures for the Administration of Commercial Housing Sales in Ningxia Hui Autonomous Region (《寧夏回族自治區商品房銷售管理暫行辦法》) jointly promulgated by Housing and Urban-Rural Development Department of Ningxia Hui Autonomous Region (寧夏回族自治區住房和城鄉建設廳), Administration for Industry and Commerce of Ningxia Hui Autonomous Region, Price Bureau of Ningxia Hui Autonomous Region and Yinchuan Central Sub-branch of the PBOC on November 23, 2009, and implemented from December 1, 2009, real estate development enterprise should set up a supervised bank account for commercial housing pre-sale proceeds in the bank where the commercial housing is located before applying for the pre-sale permit. The pre-purchaser shall directly deposit the pre-sale payment of the commercial housing into the aforesaid account. Before the completion of the pre-sale construction, the pre-sale proceeds of commercial housing can only be used for project construction cost, including necessary construction materials and equipment, payment of construction and tax expenses of the projects, and shall not be misused for other purposes.

In accordance with the Administration Measures for the Pre-sales of Commodity Buildings of Yinchuan (《銀川市商品房預售管理辦法》), which was promulgated by People’s Government of Yinchuan on January 15, 2003 and amended on March 13, 2020, the proceeds from the pre-sale of commodity properties by real estate development enterprises must be used for the construction of the corresponding projects.

Based on the Administration Measures for the Proceeds from Pre-sales of Newly-built Commodity Buildings of Yinchuan (Trial) (《銀川市新建商品房預售資金監管辦法(試行)》), which was jointly promulgated by Administration of Housing and Urban-Rural Development of Yinchuan, Yinchuan Municipal Approval Service Administration Bureau, Yinchuan Municipal Natural Resources Bureau and Yinchuan Housing Provident Fund Management Center on September 17, 2020, and became effective on December 1, 2020, before applying for the pre-sales permit, the real estate developer shall sign an agreement on the management and control of proceeds from pre-sales of commodity buildings with the local supervised bank and the relevant governmental authority, and shall set up supervised bank account for the pre-sales proceeds of each of its per-sale real estate projects. Furthermore, proceeds from pre-sales of commodity buildings shall be directly deposited in the said account. The standard of key

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Yongning is a county of Yinchuan city. According to the Implementation Rules for the Supervision of Pre-sale Proceeds of Commercial Housing of Yongning (《永寧縣商品房預售資金監管實施細則》) promulgated by People’s Government of Yongning, and implemented on November 17, 2019, the proceeds from pre-sales of commodity properties shall be directly deposited into the specific supervised bank account, the pre-sale fund shall be withdraw proportionally in accordance with the construction progress of the pre-sale projects. In the case of normal construction, the accumulative application for the use of regulatory funds shall not exceed 80%, which means the regulatory threshold of supervised funds to be maintained is not less than 20%. Furthermore, the supervised pre-sale funds shall be used for the purchase of necessary construction materials and equipment, payment of construction costs and tax expenses of the projects. If the real estate developers fail to comply with the above provisions, the regulatory agency may impose regulatory measures such as order it to make corrections within a time limit, suspend the online signing and contract filing of the pre-sale contracts, suspend the pre-sale permit application for the follow-up projects, and record the illegal behaviors of the real estate developer in the enterprise credit information system.

Qinghai Province (Xining and Haidong)

In accordance with the Administration Measures for Real Estate Development and Management of Qinghai Province (《青海省房地產開發經營管理辦法》) promulgated by People’s Government of Qinghai Province on June 26, 2014 and repealed on June 30, 2019, real estate development enterprises should set up supervised bank account of pre-sale proceeds in commercial banks before applying for the pre-sale permit, and the proceeds from pre-sales of commodity buildings shall be deposited into the said account. The pre-sale proceeds should be used for necessary construction materials and equipment, payment of construction costs(including salary and social insurance of employees) and tax expenses of the projects before the completion of the pre-sale projects. The provincial regulation is also applicable to Haidong, a city in Qinghai Province.

According to the Implementation Opinions on Supervising the Proceeds from Pre-sales of Commodity Buildings of Xining (Trial) (《西寧市商品房預售資金監管工作實施意見(試行)》) (the “Xining Opinions”) promulgated by Xining Housing Security and House Administrative Bureau on July 19, 2012, Xining adopts a general idea of full process and full amount supervision principle of the pre-sale proceeds. The government authorities shall timely allocate construction funds according to the needs of the project construction to ensure the development and operation of the projects. In addition, real estate development enterprises can apply for a certain amount of the supervised fund to pay regular and small amount of management and marketing expenses, the amount of which shall not exceed 10% of the supervised funds already deposited. Where the real estate developers violated the provisions in terms of collection of proceeds from pre-sales of commodity properties, they may be imposed regulatory measures by the local real estate administrative departments under the Xining Opinions.

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Besides, according to the Administration Measures for Credit Evaluation of Real Estate Development Enterprises of Qinghai Province (《青海省房地產開發企業信用評價管理辦法》) promulgated by Department of Housing and Urban-Rural Development of Qinghai Province on March 22, 2017 and the Notice on Reduction or Exemption of Proceeds from Pre-sales of Commodity Buildings Supervision and Property Warranty of the Developer above 2A Credit Rating Level (《關於對取得2A級及以上信用評價等級開發企業減免預售資金監管和物業保修金的通知》) promulgated by Xining Housing Security and House Administrative Bureau on April 14, 2016, a credit assessment method for real estate development enterprises has been set up in Qinghai province. The pre-sale projects developed by the real estate development enterprises with the 4A credit rating level are not concluded in the scope of supervision of pre-sales funds.

Shaanxi Province (Xianyang)

Based on the Notice on Strengthening the Proceeds from Pre-sales of Commodity Buildings and the Transaction Proceeds of Second-hand Housing (《關於加強商品房預售資金、二手房交易資金監管的通知》), which was jointly announced by Department of Housing and Urban-Rural Development of Shaanxi Province, PBOC Xian Branch, and CBRC Shanxi Bureau on May 3, 2016, and the Administration Measures for the Proceeds from Pre-sales of Commodity Buildings of Xianyang (咸陽市商品房預售資金監管辦法) (the “Xianyang Measures”) effected on July 1, 2016, the pre-sale proceeds of commercial housing construction projects (including affordable housing and price-limited housing) approved for pre-sale in Shanxi Province must be included in the scope of supervision. All the pre-sale proceeds of the supervision project shall be directly deposited into the supervised bank account. Before the completion of the projects, the pre-sale proceeds shall only be used for the payment of the project funds, construction materials, supporting facilities, equipment, tax expenses and bank loans. Real estate development enterprises are allowed to withdraw 10% of the advanced payment to pay for project management and office expenses. Furthermore, according to the Xianyang Measures, the real estate developers could withdraw the excess part when the pre-sale fund in the supervised bank account exceeds the target amount agreed upon the supervision project, Regulatory measures shall be imposed by the local real estate administrative departments if the property developers violate the above provisions.

Sales of Post-Completion Commodity Buildings

Under the Regulatory Measures, commodity buildings may be put to post-completion sale only when the following preconditions have been satisfied: (i) the real estate development enterprise shall have a business license and a qualification certificate of a real estate developer; (ii) the enterprise shall obtain a land-use right certificate or other approval documents for land use; (iii) the enterprise shall have the Construction Work Planning Permit and Construction Work Commencement Permit; (iv) the building shall have been completed, inspected and accepted as qualified; (v) the relocation of the original residents shall have been well completed; (vi) the supplementary essential facilities for supplying water, electricity, heating, gas, communication, etc. shall have been made ready for use, and other supplementary essential facilities and public facilities shall have been made ready for use, or the schedule of

– 120 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. REGULATORY OVERVIEW construction and delivery date shall have been specified; (vii) the real property management plan shall have been completed. Before the post-completion sale of a commodity building, a real estate developer shall submit the Real Estate Development Project Manual and other documents evidencing the satisfaction of preconditions for post-completion sale to the real estate development authority.

According to the Provisions on Sales of Commodity Properties at Clearly Marked Price (《商品房銷售明碼標價規定》) which was promulgated by the NDRC on March 16, 2011 and became effective on May 1, 2011, any real estate developer or real estate agency is required to mark the selling price explicitly and clearly for both newly-built and second-hand commercial properties.

On February 26, 2013, the General Office of the State Council issued the Notice on Continuing the Regulation of Real Estate Market (《關於繼續做好房地產市場調控工作的通知》) which is intended to cool down the property market and emphasize the government’s determination to strictly enforce regulatory and macro-economic measures, which include, among other things, (i) restrictions on purchasing the real estate, (ii) increased down payment requirement for second residential properties purchase, (iii) suspending mortgage financing for second or more residential-properties purchase and (iv) 20% individual income tax rate applied to the gain from the sales of properties.

Mortgage on Real Estate

Under the PRC Civil Code, the Urban Real Estate Law, and the Measures on the Administration of Mortgages of Real Estate in Urban Areas (《城市房地產抵押管理辦法》), which was issued by the MOC on May 9, 1997, effective on June 1, 1997, and amended on March 30, 2021, when a mortgage is created on a building legally obtained, a mortgage shall be simultaneously created on the land-use rights of the land on which the building is situated. When the land-use rights of state-owned land acquired through means of assignment are mortgaged, the buildings on the land shall also be mortgaged at the same time. The land-use rights of town or village enterprises cannot be individually mortgaged. When buildings owned by town or village enterprises are mortgaged, the land-use rights occupied by the buildings shall also be mortgaged at the same time. If a mortgage is created on the real estate in respect of which a property ownership certificate has been obtained legally, the registration authority shall make an entry under the “third party rights” item on the original property ownership certificate and issue a Certificate of Third Party Rights to a Building (房屋他項權證)tothe mortgagee.

Lease of Buildings

Pursuant to the Administrative Measures for Commodity Housing Leasing (《商品房屋租賃管理辦法》), which was promulgated on December 1, 2010, and effective as of February 1, 2011, the parties to a real estate lease shall apply for lease registration with the competent construction departments of the municipalities directly under the Central Government, cities and counties where the housing is located within 30 days after the lease contract is signed.

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There will be a fine below RMB1,000 on individuals who fail to make corrections within the specified time limit, and a fine between RMB1,000 and RMB10,000 on entities which fail to make corrections within the specified time limit. Under the PRC Civil Code, the term of a leasing contract shall not exceed 20 years.

LAWS AND REGULATIONS CONCERNING REAL ESTATE REGISTRATION

The Interim Regulations on Real Estate Registration (《不動產登記暫行條例》), which was promulgated by the State Council on November 24, 2014, and enforced on March 1, 2015, and amended on March 24, 2019, and the Implementing Rules of the Interim Regulations on Real Estate Registration (《不動產登記暫行條例實施細則》), which was promulgated by the MLR on January 1, 2016, and amended on July 24, 2019, provide that, among other things, the State implements a uniform real estate registration system and the registration of real estate shall be strictly managed and shall be carried out in a stable and continuous manner that provides convenience for people.

LAWS AND REGULATIONS CONCERNING REAL ESTATE FINANCING

Loans to Real Estate Development Enterprises

Pursuant to the Guidance on Risk Management of Real Estate Loans of Commercial Banks (《商業銀行房地產貸款風險管理指引》) issued by the CBRC on August 30, 2004, any real estate developer applying for real estate development loans shall have at least 35% of capital required for the project and no loans shall be granted to projects which fail to obtain requisite land use right certificates, Construction Land Planning Permit, Construction Work Planning Permit and Construction Work Commencement Permit.

On July 29, 2008, the PBOC and the CBRC jointly issued the Notice on Promoting Economical and Intensive Use of Land through Finance (《關於金融促進節約集約用地的通知》). Banks must provide financial support preferentially to land saving real estate development projects, such as the development of low-rent housing, economically affordable housing, price-capped housing, and small to medium-sized ordinary commercial housing with a total GFA of less than 90 sq.m.

The Notice emphasizes tightening the policy requirements and management of loans to certain projects, including:

(i) the management of loans for construction projects. The banks are prohibited from providing loans to the projects which fail to meet the relevant planning and control requirements, the projects which have illegal land use, and the projects for which the relevant land falls into the catalog of banned land use projects. Where a loan has already been granted to such a project, it must be gradually recovered provided that necessary protection measures have been taken. A financial institution must exercise caution in granting a loan to the projects which fall into the catalog of restricted land use projects.

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(ii) the examination of loans for municipal infrastructures and industrial land use projects.

(iii) the management of loans for rural collective construction land use projects. The banks are prohibited from providing loans to commercial projects which use rural collective land.

(iv) the management of credit for commercial property development projects. The banks are prohibited from granting loans to the property developers for payment of land premium. With respect to loans provided for land reservation in the form of mortgage, a land-use rights certificate must be obtained. In addition, the maximum mortgage ratio must not exceed 70% of the appraised value of the underlying collateral and, in principle, the term of loan must not exceed two years. When the relevant land and resource authority confirms that an enterprise has developed less than 1/3 of the site area of land or has invested less than 1/4 of the total investment for the project or hasn’t commenced the project after one year from the date of construction commencement as stipulated in the land assignment contract, the banks must exercise caution in granting loans to the enterprise and strictly control extended loans or rolling credits to it.

On September 29, 2010, the PBOC and the CBRC jointly issued the Notice on Relevant Issues Regarding the Improvement of Differential Mortgage Loan Policies (《關於完善差別化住房信貸政策有關問題的通知》), which restricts the grant of new project bank loans or extension of credit facilities for all property companies with non-compliance records regarding, among other things, holding idle land, changing land use and nature of the land, postponing construction commencement or completion, or hoarding properties.

Trust Loan

On March 1, 2007, the Measures for Administration of Trust Companies (《信託公司管理辦法》), which was promulgated by the CBRC on January 23, 2007, came into effect. For the purposes of these measures, “Trust Company” shall mean any financial institution established pursuant to the PRC Company Law (《中華人民共和國公司法》) and these Measures, and that primarily engages in trust activities.

From October 2008 to November 2010, the CBRC issued several regulatory notices in relation to real estate activities conducted by trust financing companies, including the Circular on Relevant Matters Regarding Strengthening the Supervision of the Real Estate and Securities Businesses of Trust Companies (《關於加強信託公司房地產、證券業務監管有關問題的通知》), which was promulgated by the CBRC on October 28, 2008, and became effective on the same date, pursuant to which trust companies are prohibited from providing trust loans, in form or in nature, to property projects that have not obtained the requisite land-use rights certificates, Construction Land Planning Permits, Construction Work Planning Permits, or Construction Work Commencement Permits. To apply for trust loans from the trust companies, a real estate development enterprise shall obtain qualification of class 2 or class 1 and the

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LAWS AND REGULATIONS CONCERNING FIRE PREVENTION MANAGEMENT

According to the Fire Prevention Law of the People’s Republic of China (《中華人民共和國消防法》), which was promulgated by the SCNPC on April 29, 1998, and implemented on September 1, 1998, later amended on October 28, 2008, and April 23, 2019, the design and construction of the fire prevention facilities for construction projects shall conform to the state’s fire prevention technical standards for engineering construction.

LAWS AND REGULATIONS CONCERNING CIVIL AIR DEFENSE PROPERTY

Pursuant to the People’s Republic of China Law on National Defense (中華人民共和國國防法), which was promulgated by the NPC on March 14, 1997, amended on August 27, 2009 and December 26, 2020, national defense assets are owned by the state. Pursuant to the People’s Republic of China Law on Civil Air Defense (《中華人民共和國人民防空法》) (the “Civil Air Defense Law”), promulgated by the SCNPC on October 29, 1996, as amended on August 27, 2009, civil air defense is an integral part of national defense. The Civil Air Defense Law encourages the use of civil air defense property for economic development and daily lives of people in time of peace. However, such use may not impair their functions as air defense property. The design, construction, and quality of the civil air defense properties must conform to the protection and quality standards established by the State. On November 1, 2001, the National Civil Air Defense Office issued the Administrative Measures for Developing and Using the Civil Air Defense Property at Ordinary Times (《人民防空工程平時開發利用管理辦法》) and the Administrative Measures for Maintaining the Civil Air Defense Property (《人民防空工程維護管理辦法》), which specify how to use, manage and maintain the civil air defense property.

LAWS AND REGULATIONS CONCERNING ENVIRONMENTAL PROTECTION

The laws and regulations governing the environmental requirements for real estate development in the PRC include the Environmental Protection Law of the People’s Republic of China (《中華人民共和國環境保護法》), the Prevention and Control of Noise Pollution Law of the People’s Republic of China (《中華人民共和國環境噪聲污染防治法》), the Environmental Impact Assessment Law of Peoples Republic of China (《中華人民共和國環境影響評價法》), the Administrative Regulations on Environmental Protection of Construction Projects (2017 revision) (《建設項目環境保護管理條例)(2017年修訂)》), and the Administrative Regulations on Environmental Protection for Acceptance Examination Upon Completion of Buildings (《建設項目竣工環境保護驗收管理辦法》) (implemented on February 1, 2002 and repealed on January 4, 2021) and the Category-based Management Directory on the Environmental Impact Assessment for Construction Projects (2021) (《建設

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項目環境影響評價分類管理名錄(2021)》) (implemented on January 1, 2021). Pursuant to these laws and regulations, property projects in environmentally sensitive regions are required to submit an environmental impact statement before the relevant authorities grant approval for the commencement of construction of the property development. In addition, upon completion of the property development, the relevant environmental authorities will also inspect the property to ensure compliance with the applicable environmental standards and regulations before the property can be delivered to the purchasers.

However, according to the Interim Measures on Environmental Protection Inspection of Completion of Construction Projects (《建設項目竣工環境保護驗收暫行辦法》) promulgated by the Ministry of Environmental Protection on November 20, 2017, except those facilities for prevention and control of water pollution and noise pollution, which are still subject to acceptance by the environmental authorities, for other construction projects the developers may carry out the acceptance inspection upon completion by themselves.

LAWS AND REGULATIONS CONCERNING TAXATION

Enterprise Income Tax

According to the Enterprise Income Tax Law of the People’s Republic of China (《中華人民共和國企業所得稅法》) (the “EIT Law”) enacted by the NPC on March 16, 2007, and amended on February 24, 2017, and December 29, 2018, a unified income tax rate of 25% will be applied towards foreign investment and foreign enterprises which have set up institutions or facilities in the PRC as well as PRC enterprises. Under the EIT Law, enterprises established outside of the PRC whose “de facto management bodies” are located in the PRC are considered “resident enterprises” and will generally be subject to the unified 25% enterprise income tax rate as to their global income.

Furthermore, pursuant to the EIT Law and the Implementation Regulation on the Enterprise Income Tax (《企業所得稅法實施條例》), which was promulgated by the State Council on December 6, 2007, and effective on January 1, 2008, and amended on April 23, 2019, a withholding tax rate of 10% will be applicable to any dividend payable by foreign-invested enterprises to their non-PRC enterprise investors. In addition, pursuant to the Arrangement between Mainland China and Hong Kong for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income (《內地和香港特別行政區關於對所得避免雙重徵稅和防止偷漏稅的安排》), which was signed on August 21, 2006, and applicable in Hong Kong to income derived in any year of assessment commencing on or after April 1, 2007, and in mainland China to any year commencing on or after January 1, 2007, a company incorporated in Hong Kong will be subject to withholding income tax at a rate of 5% on dividends it receives from its PRC subsidiaries if it holds a 25% or more of equity interest in each such PRC subsidiary at the time of the distribution, or 10% if it holds less than a 25% equity interest in that subsidiary.

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According to the Notice of the State Administration of Taxation on issues regarding the Administration of Dividend Provisions in Tax Treaties (《國家稅務總局關於執行稅收協定股息條款有關問題的通知》), which was promulgated on February 20, 2009, recipients of dividends paid by PRC enterprises must satisfy certain requirements in order to obtain a preferential income tax rate pursuant to a tax treaty. One such requirement is that the taxpayer must be the “beneficiary owner” (受益所有人) of relevant dividends. In order for a corporate recipient of dividends paid by a PRC enterprise to enjoy preferential tax treatment pursuant to a tax treaty, such recipient must be the direct owner of a certain proportion of the share capital of the PRC enterprise at all times during the 12 months preceding its receipt of the dividends. In addition, the Announcement on Issues Concerning “Beneficial Owners” in Tax Treaties (《國家稅務總局關於稅收協定中“受益所有人”有關問題的公告》) (the “Announcement”), which was promulgated by the State Administration of Taxation (the “SAT”) on February 3, 2018, “beneficiary owners”, means a person who owns and has the right to dispose of the income and the rights or property generated from the said income. The Announcement further introduced various factors to adversely impact the recognition of such “beneficiary owners”. On October 14, 2019, the SAT issued the Announcement of the State Administration of Taxation on Issuing the Administrative Measures on Entitlement of Non-residents Taxpayers to Treatment under Tax Treaties (《國家稅務總局關於發佈<非居民納稅人享受協定待遇管理辦法>的公告》) (the “Administrative Measures”), effective on January 1, 2020, which applies to entitlement to tax treaty benefits by non-resident taxpayers incurring tax payment obligation in the PRC. According to the Administrative Measures, non-resident taxpayers who make their own declaration shall make self-assessment regarding whether they are entitled to tax treaty benefits and submit the relevant reports, statements, and materials stipulated in Article 7 of the Measures. Also, all levels of tax authorities shall, through strengthening follow-up administration for non-resident taxpayers’ entitlement to tax treaty benefits, implement tax treaties and international transport agreements accurately, and prevent abuse of tax treaties and tax evasion and tax avoidance risks.

According to the Notice on Widening the Scope of Application of Temporary Waiver for Withholding Income Tax for Overseas Investors Using Distributed Profits for Direct Investments (《關於擴大境外投資者以分配利潤直接投資暫不徵收預提所得稅政策適用範圍的通知》) jointly issued by MOF, SAT, the NDRC and the MOFCOM on September 29, 2018, which became effective on January 1, 2018, for the profits distributed by overseas investors from domestic resident enterprises in China, the scope of application of withholding income tax policy for domestic direct investment shall be extended from the foreign investment encouraged projects to cover all non-prohibited foreign investment projects and fields.

Value-Added Tax

Pursuant to the Provisional Regulation on Value-added Tax of the People’s Republic of China (《中華人民共和國增值稅暫行條例》), which was promulgated on December 13, 1993, and last amended on November 19, 2017, and the Detailed Implementation Rules of the Provisional Regulation of the People’s Republic of China on Value-added Tax (《中華人民共和國增值稅暫行條例實施細則》), all entities or individuals in the PRC engaging in the sale of goods, the provision of processing services, repairs and replacement services, and the importation of goods are required to pay value-added tax. On April 4, 2018, the MOF and the SAT promulgated the Notice on Adjusting Value-added Tax Rates (《關於調整增值稅稅率的通知》), which reduced the tax rates for sale, import, and export of goods.

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According to the Interim Administrative Measures on the Management of Levying and Collection of Value-Added Tax on sale of Self-developed Real Estate Project by the Real Estate Developers (《房地產開發企業銷售自行開發的房地產項目增值稅徵收管理暫行辦法》), which was issued by the SAT on March 31, 2016, and implemented on May 1, 2016, and amended on June 15, 2018, a real estate developer shall pay value-added tax for the sales of its self-developed real estate project.

On March 20, 2019, the MOF, the SAT and the General Administration of Customs promulgated the Announcement of Polices for Deepening the VAT Reform (《關於深化增值稅改革有關政策的公告》), which became effective on April 1, 2019. For general VAT payers’ sales activities or imports that are subject to VAT at an existing applicable rate of 16% or 10%, the applicable VAT rate is adjusted to 13% or 9% respectively.

Land Value-added Tax

In accordance with the requirements of the Provisional Regulation of the People’s Republic of China on Land Value-added Tax (《中華人民共和國土地增值稅暫行條例》), promulgated on December 13, 1993, implemented on January 1, 1994, and amended on January 8, 2011, as well as its implementation rules, land value-added tax is payable on the added value derived from the transfer of state-owned land use rights and buildings or other facilities on such land, after deducting the deductible items.

Deed Tax

Pursuant to the Interim Regulation of the People’s Republic of China on Deed Tax (《中華人民共和國契稅暫行條例》), which was promulgated by the State Council on July 7, 1997, and implemented on October 1, 1997, and amended on March 2, 2019, the transferee, whether an individual or otherwise, of the title to a land site or building in the PRC shall be subject to the payment of deed tax. The rate of deed tax is 3% to 5%. The governments of provinces, autonomous regions, and municipalities directly under the central government may, within the aforesaid range, determine and report their effective tax rates to the MOF and the SAT for the record.

Urban Land Use Tax

Pursuant to the Provisional Regulations of the People’s Republic of China Governing Land Use Tax in Urban Areas (《中華人民共和國城鎮土地使用稅暫行條例》), which was promulgated by the State Council on September 27, 1988, implemented on November 1, 1988, and last amended on March 2, 2019, land use tax in respect of urban land is levied according to the area of relevant land.

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Building Tax

In accordance with the Provisional Rules on Real Estate Tax of the People’s Republic of China (《中華人民共和國房產稅暫行條例》),which was promulgated by the State Council on September 15, 1986, and amended on January 8, 2011, and the People’s Republic of China State Council Order No. 546 (《中華人民共和國國務院令2008第546號》), for enterprises in the PRC, no matter domestic or foreign-invested, the building tax is calculated at the rate of 1.2% on the value of self-owned real estate or at the rate of 12% on rental income derived from real estate.

Stamp Duty

Under the Interim Regulations of the People’s Republic of China on Stamp Duty (《中華人民共和國印花稅暫行條例》), which was promulgated by the State Council on August 6, 1988, and implemented on October 1, 1988, and amended on January 8, 2011, for real estate transfer instruments, including those in respect of real estate ownership transfer, the stamp duty rate shall be 0.05% of the amount stated therein; for permit and certificates relating to rights, including building ownership certificates and land-use rights certificates, stamp duty shall be levied on an item basis of RMB5 per item.

Municipal Maintenance Tax and Education Surcharge

On October 18, 2010, the State Council issued the Notice Issued by the State Council to Unify the Collection of Municipal Maintenance Tax and Education Surcharges on Domestic and Foreign-Invested Enterprises and Individuals (《國務院關於統一內外資企業和個人城市維護建設稅和教育費附加制度的通知》) to resume the collection of surtaxes from foreign-invested enterprises, foreign enterprises and individuals, effective from December 1, 2010. Similar to the rate applicable to the domestic enterprises, the applicable municipal maintenance tax rate for foreign-invested enterprises and foreign enterprises and individuals is 7% for a taxpayer whose domicile is in an urban area, 5% for a taxpayer whose domicile is in a county or a town, and 1% for a taxpayer whose domicile is not in any urban area or county or town; the unified applicable education surcharge rate for foreign-invested enterprises and foreign enterprises and individuals is 3%.

LAWS AND REGULATIONS CONCERNING FOREIGN CURRENCY EXCHANGE

Under the Foreign Currency Administration Rules of the People’s Republic of China (《中華人民共和國外匯管理條例》), which was promulgated on January 29, 1996, and revised on January 14, 1997, and August 5, 2008, and various regulations issued by the SAFE and other relevant PRC government authorities, RMB is convertible into other currencies for the purpose of current account items, such as trade-related receipts and payments and the payment interest and dividend. The conversion of RMB into other currencies and remittance of the converted foreign currency outside China for the purpose of capital account items, such as direct equity investments, loans, and repatriation of investment, requires prior approval from the SAFE or its local offices. Payments for transactions that take place within China must be made in RMB.

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Unless otherwise approved, PRC companies may repatriate foreign currency payments received from abroad or retain the same abroad. Foreign-invested enterprises may retain foreign exchange in accounts with designated foreign exchange banks subject to a cap set by the SAFE or its local offices. Foreign exchange proceeds under the current accounts may be either retained or sold to a financial institution engaging in settlement and sale of foreign exchange pursuant to relevant rules and regulations of the State. For foreign exchange proceeds under the capital accounts, approval from the SAFE is required for its retention or sale to a financial institution engaging in settlement and sale of foreign exchange, except where such approval is not required under the rules and regulations of the State.

The Circular of the SAFE on Reforming the Administration Measures on Conversion of Foreign Exchange Registered Capital of Foreign-invested Enterprises (《國家外匯管理局關於改革外商投資企業外匯資本金結匯管理方式的通知》) (the “SAFE Circular No. 19”) was promulgated on March 30, 2015 and became effective on June 1, 2015, and was amended on June 9, 2016, December 30, 2019 respectively. According to the SAFE Circular No. 19, a foreign-invested enterprise may settle with a bank the portion of the foreign exchange capital in its capital account for which the relevant foreign exchange bureau has confirmed monetary contribution rights and interests (or for which the bank has registered the account-crediting of monetary contribution).

The Notice of the SAFE on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts (《國家外匯管理局關於改革和規範資本項目結匯管理政策的通知》) (the “SAFE Notice No. 16”) was promulgated and became effective on June 9, 2016. According to the SAFE Notice No. 16, enterprises registered in mainland China may also convert their foreign debts from foreign currency into RMB on self-discretionary basis. The SAFE Notice No. 16 provides an integrated standard for conversion of foreign exchange under capital account items (including but not limited to foreign currency capital and foreign debts) on self-discretionary basis, which applies to all enterprises registered in mainland China. The SAFE Notice No. 16 reiterates the principle that RMB converted from foreign currency-denominated capital of a company may not be directly or indirectly used for purposes beyond its business scope and may not be used for investments in securities or other investment with the exception of bank financial products that can guarantee the principal within mainland China unless otherwise specifically provided. Besides, the converted RMB shall not be used to make loans for unrelated enterprises unless it is within the business scope or to build or to purchase any real estate that is not for the enterprise own use with the exception for the real estate enterprise.

Pursuant to the Notice on Relevant Issues Relating to Foreign Exchange Control on Offshore Investment, Financing and Round-trip Investments by Domestic Residents Through Special Purpose Vehicles (the “Circular 37”) (《國家外匯管理局關於境內居民通過特殊目的公司境外投融資及返程投資外匯管理有關問題的通知》), which was promulgated on July 4, 2014, before the PRC residents or entities contributing capital to offshore special purpose companies with their legitimate onshore and offshore assets or equities, they must register with local SAFE branches with respect to their investments. Furthermore, after the initial registration, PRC residents or entities must update their registrations when the offshore special

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According to the Notice on Further Simplifying and Improving the Direct Investment- related Foreign Exchange Administration Policies (《關於進一步簡化和改進直接投資外匯管理政策的通知》) (the “Circular 13”) which was promulgated on February 13, 2015, and became effective on June 1, 2015, the above-mentioned registration will be handled directly by the bank that has obtained the financial institution identification codes issued by the foreign exchange regulatory authorities and has opened the capital account information system at the foreign exchange regulatory authorities in the place where it is located and the foreign exchange regulatory authorities shall perform indirect regulation over the direct investment-related foreign exchange registration via banks.

LAWS AND REGULATIONS CONCERNING LABOR PROTECTION

General Regulations

On June 29, 2007, the SCNPC promulgated the Labor Contract Law of the People’s Republic of China (《中華人民共和國勞動合同法》), which became effective on January 1, 2008, amended on December 28, 2012, and became effective on July 1, 2013. Pursuant to the Labor Law of the People’s Republic of China (《中華人民共和國勞動法》), which became effective on January 1, 1995, and amended on August 27, 2009, and December 29, 2018, provides that (i) employers must execute written labor contracts with full-time employees; (ii) employers are prohibited from forcing employees to work overtime unless they pay overtime payment to the employees and the hours worked beyond the standard working hours are within the statutory limits; (iii) employers are required to pay salaries to employees on time and the salaries paid to employees shall not be lower than the local minimum salary standard; and (iv) employers shall establish its work safety and sanitation system, and provide employees with workplace safety training. In addition, employers in the PRC are required to make contributions to various social insurances (including medical, pension, unemployment, work-related injury, and maternity insurance) and the housing fund on behalf of its employees.

Pursuant to the Social Insurance Law of the PRC (《中華人民共和國社會保險法》) which was promulgated on October 28, 2010 and with effect from July 1, 2011, as amended on December 29, 2018, employees shall participate in basic pension insurance, basic medical insurance and unemployment insurance. Basic pension, medical and unemployment insurance contributions shall be paid by both employers and employees. Employees shall also participate in work-related injury insurance and maternity insurance. Work-related injury insurance and maternity insurance contributions shall be paid by employers rather than employees. An employer shall make registration with the local social insurance agency in accordance with the

– 130 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. REGULATORY OVERVIEW provisions of the Social Insurance Law of PRC. Moreover, an employer shall declare and make social insurance contributions in full and on time. Pursuant to the Regulations on Management of Housing Provident Fund (《住房公積金管理條例》) which was promulgated on April 3, 1999 and further amended on March 24, 2002 and March 24, 2019, employers shall undertake registration at the competent administrative center of housing provident fund and then, upon the examination by such administrative center of housing provident fund, undergo the procedures of opening the account of housing provident fund for their employees at the relevant bank. Enterprises are also obliged to timely pay and deposit housing provident fund for their employees in full amount.

Preferential Policies

In order to relieve enterprise difficulties caused by the COVID-19 epidemic, Ministry of Human Resources and Social Security(the “MHRSS”), the MOF and the SAT jointly promulgated the Notice on Reduction of Enterprise Social Security Premium Contribution in Phases (《關於階段性減免企業社會保險費的通知》). With effect from February 2020, based on the epidemic impact and the fund threshold, the relative authorities may exempt medium, small and micro enterprises premium contribution for the three social security items, the exemption period shall not exceed five months; and may halve the premium contribution for the three social security items by other social security participating organizations (excluding State agencies and institutions), the reduction period shall not exceed three months.

Furthermore, the MHRSS, the MOF and the SAT issued the Circular on Issues concerning Extending the Applicable Period of the Policy for Provisional Reduction and Exemption of the Social Insurance Contributions Borne by Enterprises (《關於延長階段性減免企業社會保險費政策實施期限等問題的通知》) on June 22, 2020, according to which, for the policy that the partial exemption of the three social insurance items contributions shall be applied for small, medium and micro enterprises, the exemption period will be extended until the end of December 2020. Pursuant to this Circular, the policy implement period for all provinces (except for Hubei Province) of halving the levy of three social insurance items on other organizations (excluding State agencies and institution) such as large enterprises shall be extended to the end of June 2020.

Notice on Implementing the Phased Support Policies Involving Housing Provident Fund to Properly Cope with the Novel Coronavirus-infected Pneumonia Epidemic(《關於妥善應對新冠肺炎疫情實施住房公積金階段性支持政策的通知》) was issued by MOHURD, MOF, and PBOC, enterprises affected by the novel coronavirus-infected pneumonia epidemic may apply for postponing contribution to the housing provident fund by June 30, 2020, and in regions with identified serious novel coronavirus-infected pneumonia epidemic, enterprises may voluntarily contribute to the housing provident fund by June 30, 2020 on the premise of full consultation with their employees.

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LAWS AND REGULATIONS CONCERNING INTELLECTUAL PROPERTY RIGHTS

Trademarks

Trademarks are protected by the Trademark Law of the People’s Republic of China (《中華人民共和國商標法》) (the “Trademark Law”) which was promulgated on August 23, 1982, which was subsequently amended on February 22, 1993, October 27, 2001, August 30, 2013 and April 23, 2019 respectively and became effective on November 11, 2019 as well as the Implementation Regulation of the Trademark Law of the People’s Republic of China (Revised in 2014) (《中華人民共和國商標法實施條例(2014年修訂)》) adopted by the State Council on April 29, 2014. According to the Trademark Law, registered trademarks include commodity trademarks, service trademarks, collective marks and certification marks.

The Trademark Office under the SAIC handles trademark registrations and grants a term of ten years to registered trademarks. Trademarks are renewable every ten years where a registered trademark needs to be used after the expiration of its validity term. A registration renewal application shall be filed within twelve months prior to the expiration of the term. A trademark registrant may license its registered trademark to another party by entering into a trademark license contract. Trademark license agreements must be filed with the Trademark Office to be recorded. The licensor shall supervise the quality of the commodities on which the trademark is used, and the licensee shall guarantee the quality of such commodities.

Domain Names

Internet domain name registration and related matters are primarily regulated by Implementing Rules of National Top Level Domain Name Registration (《國家頂級域名註冊實施細則》) issued by China Internet Network Information Center (“CNNIC”), which became effective on June 18, 2019, the Administrative Measures for Internet Domain Names (《互聯網域名管理辦法》), issued by the Ministry of Industry and Information Technology on August 24, 2017 and effective as of November 1, 2017, and the Measures of National Top Level Domain Name Dispute Resolution (《國家頂級域名爭議解決辦法》) became effective on June 18, 2019. Domain name registrations are handled through domain name service agencies established under the relevant regulations, and the applicants become domain name holders upon successful registration.

LAWS AND REGULATIONS CONCERNING PRC MERGER & ACQUISITION

Pursuant to Provisions on the Merger and Acquisition of Domestic Enterprises by Foreign Investors (《關於外國投資者併購境內企業的規定》), which was promulgated by the MOFCOM, the State-owned Assets Supervision and Administration Commission of the State Council, the SAT, the SAIC, China Securities Regulatory Commission and the SAFE on August 8, 2006, and subsequently amended by the MOFCOM on June 22, 2009, which provided that the scenarios qualify as an acquisition of a domestic enterprise by a foreign investor.

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On December 30, 2019, the MOFCOM and the State Administration for Market Regulation jointly promulgated the Measures for the Reporting of Foreign Investment Information (《外商投資信息報告辦法》) (the “Measures”), which took effect on January 1, 2020. Pursuant to the Measures, where foreign investors carry out investment activities directly or indirectly in the PRC, foreign investors or foreign-invested enterprises shall report investment information, by means of the initial report, report of changes, report of deregistration, and annual report, to commerce departments in accordance with the Measures.

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HISTORY AND DEVELOPMENT

Overview

Our history can be traced back to the establishment of Zhongfang Group Yinchuan Real Estate Development Corporation (中房集團銀川房地產開發總公司)(“Zhongfang Yinchuan Corporation”) in 1991, the predecessor of Ningxia Zhongfang Industrial, one of our major operating subsidiaries in the PRC to principally engage in, among others, property development, property management and provision of elderly care and education services.

Under the approval from the relevant PRC authorities, Zhongfang Yinchuan Corporation underwent a corporate reform and was converted into Ningxia Zhongfang Industrial as a limited liability company in 1994. Since then, Ningxia Zhongfang Industrial has commenced to develop residential properties in Yinchuan, Ningxia Hui Autonomous Region and established our brand recognition in Ningxia Hui Autonomous Region and further expanded our residential property development business into different cities across the PRC. In addition to residential properties development, we also engage in the development of commercial properties, which include shopping malls and retail stores attached to our residential properties and we retain ownership of a portion of such commercial properties for leasing.

As of March 31, 2021, we had a total of 30 property development projects at various stages of development in the PRC, covering seven cities in Ningxia Hui Autonomous Regions, Qinghai Province, Shaanxi Province, Inner Mongolia Autonomous Regions and Sichuan Province across China. Out of the 30 projects, 28 projects were located in Northwest China.

In preparation for the [REDACTED] and in order to focus our resources on our core business of property development, Ningxia Zhongfang Industrial underwent and completed its corporate division (公司分立) in December 2020. Pursuant to such corporate division, the property development business was separated from the other businesses which were originally carried out by Ningxia Zhongfang Industrial including, among others, property management, facility installation, elderly care and education services businesses (the “Other Businesses”), and the Other Businesses was transferred to and assumed by Ningxia Zhongfang Development. As a result, Ningxia Zhongfang Industrial became focused on the property development business. See “Relationship with Controlling Shareholders—Delineation of Business” for further details.

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Key Business Milestone

The following table sets out a summary of our Company’s key business development milestones:

Year Milestone Event

1994 . . . Ningxia Zhongfang Industrial was established after the corporate reform of Zhongfang Yinchuan Corporation from a state-owned enterprise

1999 . . . We strategically expanded into Xining, Qinghai Province

2007 . . . Our Zhongfang • Golf Home (中房 • 高爾夫家園) project was awarded “Guangxia award” (廣廈獎), the top award in the PRC property development industry

2012 . . . We strategically expanded into Xianyang, Shaanxi Province

2017 . . . Zhongfang Vanke Industrial was established as a platform for our strategic cooperation with Vanke Group

2018 . . . We were granted the “2017 Quality Award of the Autonomous Region” (2017年度自治區質量獎) by the people’s government of Ningxia Hui Autonomous Region

2019 . . . We were granted an Encouragement Award in “18th China Quality Award” (第十八屆全國質量獎) by China Association for Quality (中國質量協會)

2020 . . . We were recognized as the 2020 Top 50 Real Estate Companies in China in terms of Brand Value (2020中國房地產公司品牌價值TOP50) by China Top 10 Real Estate Research Group (中國房地產TOP10研究組)

2020 . . . Our Medium Residence • Xiyue Lake (璽悅灣) project was granted Platinum Grade for the HiH Health (Residential) Recognition Program (HiH健康標識(住宅)項目鉑金級認定) by China National Engineering Research Center of Residence and Housing Environment (國家住宅與居住環境工程技術研究中心)

OUR CORPORATE DEVELOPMENT

Our Company was incorporated in the Cayman Islands under the Cayman Islands Companies Act as an exempted company with limited liability on November 5, 2020, and became the holding company and [REDACTED] vehicle of our Group upon completion of the Reorganization. See “—Reorganization” below for details.

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Our Principal Operating Subsidiaries in the PRC

As of the Latest Practicable Date, our business operations had been carried out by our operating subsidiaries established or acquired by our Group in the PRC. Our principal operating subsidiaries comprise major holding companies and/or subsidiaries which had substantial financial contributions to our Group during the Track Record Period. Set out below are the major corporate developments including major changes in the equity interests in our principal operating subsidiaries.

Ningxia Zhongfang Industrial

Ningxia Zhongfang Industrial is the centralized management platform of our property development projects and an indirect wholly-owned subsidiary of our Company. It was established in the PRC as a limited liability company on August 26, 1994 with an initial registered and paid up capital of RMB17,821,556.06, under the approval from the relevant PRC authorities for the corporate reform and conversion of Zhongfang Yinchuan Corporation from a state-owned enterprise to a limited liability company. As of the date of its establishment, Ningxia Zhongfang Industrial was owned as to 69.54% by the government representatives of Yinchuan State-owned Asset Management Bureau (銀川市國有資產管理局), 0.76% by Mr. Wang Aiquan (王愛全) (the former chairman of Ningxia Zhongfang Industrial prior to his retirement), 0.42% by Ms. Gong Fan (龔帆) (an employee of our Group), 0.34% by Ms. Qiu Jianping (仇建萍) (an employee of our Group), 0.23% by Mr. Wang Xiaoping (王小平) (our executive Director), and 28.71% by the then employees of our Group. We had also obtained the consent from China National Real Estate Development Group Co., Ltd. (中國房地產開發集團有限公司)touse“中房” as part of our corporate name since the corporate reform.

On January 7, 1998, pursuant to an agreement entered into between Yinchuan Asset Trade Center (銀川市產權交易中心) and Ningxia Zhongfang Industrial, the state-owned portion of the equity interest in Ningxia Zhongfang Industrial was transferred to the rest of the shareholders at a consideration of approximately RMB8.9 million, which was determined with reference to the valuation of the state-owned net asset of Ningxia Zhongfang Industrial.

After a series of capital increases, on January 12, 2011, Ningxia Zhongfang Industrial was converted from a limited liability company to a joint stock company with limited liability. Upon the completion of such conversion, Ningxia Zhongfang Industrial was owned as to 11.58% by Mr. Wang Aiquan, 7.60% by Mr. Fang, 1.38% by Mr. Wang Xiaoping and 0.89% by Ms. Zhang Jun (張君) (the latter three being our executive Directors), 0.66% by Mr. Zhang Yanbin (張彥斌) and 0.57% by Mr. He Bin (何斌) (both being our senior management members), 2.21% by Ms. Gong Fan, 1.37% by Ms. Qiu Jianping, and the remaining 73.74% equity interest was owned by then employees or former employees of our Group.

Subsequent to a series of capital increases and shareholding changes, as of May 1, 2015, Ningxia Zhongfang Industrial was owned as to 19.28% by Mr. Fang, 2.80% by Mr. Wang Xiaoping, 1.42% by Ms. Zhang Jun, 1.44% by Mr. Zhang Yanbin, 0.74% by Mr. He Bin, 7.92% by Mr. Wang Aiquan, 3.92% by Ms. Gong Fan, 2.29% by Ms. Qiu Jianping and the remaining 60.19% equity interest was owned by then employees or former employees of our Group.

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Following a series of capital and shareholding changes, as of January 1, 2018, Ningxia Zhongfang Industrial was owned as to 34.66% by Mr. Fang, 4.62% by Mr. Wang Xiaoping, 5.12% by Ms. Zhang Jun, 2.45% by Mr. Zhang Yanbin, 2.64% by Mr. He Bin, 6.68% by Ms. Gong Fan, 3.90% by Ms. Qiu Jianping, and the remaining 39.93% equity interest was owned by then employees or former employees of our Group.

From January 2018 to October 2020, as a result of the withdrawal of certain shareholders, Ningxia Zhongfang Industrial underwent a number of capital reductions, and the consideration of which was determined based on the net asset value of Ningxia Zhongfang Industrial at the time of such capital reductions. On October 14, 2020, Ningxia Zhongfang Industrial converted from a joint stock company with limited liability to a limited liability company. Upon completion of such conversion, the registered capital was then further increased from RMB52.57 million to RMB55.0 million. Upon completion of the capital reductions and conversion, Ningxia Zhongfang Industrial became owned as to 42.57% by Mr. Fang, 6.12% by Ms. Zhang Jun, 5.59% by Mr. Wang Xiaoping, 2.92% by Mr. Zhang Yangbin, 2.84% by Mr. He Bin, 9.07% by Ms. Gong Fan, 5.37% by Ms. Qiu Jianping, and the remaining 25.52% equity interest were owned by employees or former employees of our Group.

With an aim to realizing his investments in Ningxia Zhongfang Industrial, one of the individual shareholders, Mr. Wu Wenzhuo (武文卓), an Independent Third Party, transferred 0.91% of his equity interest in Ningxia Zhongfang Industrial to the rest of the individual shareholders on a pro rata basis on October 15, 2020 at a total consideration of approximately RMB7.6 million, which was determined based on the net asset value of Ningxia Zhongfang Industrial at the time of such transfer. Upon completion of such equity transfer, Ningxia Zhongfang Industrial was owned as to 42.96% by Mr. Fang, 6.18% by Ms. Zhang Jun, 5.64% by Mr. Wang Xiaoping, as to 2.95% by Mr. Zhang Yanbin, 2.87% by Mr. He Bin, 9.15% by Ms. Gong Fan, 5.42% by Ms. Qiu Jianping, and the remaining 24.83% equity interest was owned by employees or former employees of our Group.

As part of the Reorganization and in order to focus on our core business of property development, on December 1, 2020, Ningxia Zhongfang Industrial completed its corporate division. See “—Reorganization—Corporate Division of Ningxia Zhongfang Industrial” below for details of the corporate division.

Upon completion of the Reorganization, Ningxia Zhongfang Industrial became wholly- owned by Ningxia Zhongxian. There has been no change in the equity interest in Ningxia Zhongfang Industrial since then.

During the Track Record Period, several of our property projects were developed by Ningxia Zhongfang Industrial, including Xi Yun Tai (璽雲台), Eastern Joy (東方悅), Eastern Ode (東方賦), Eastern Rhyme Park (東方韻園), Xi Yue Bay (璽悅灣) and Eastern Home (東城人家).

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Yinchuan Zhongchen

Yinchuan Zhongchen is the project company for our property development project, namely Suhe Yangguang (蘇荷陽光), and an indirect wholly-owned subsidiary of our Company. It was established in the PRC as a limited liability company on November 2, 2012 with an initial registered and paid-up capital of RMB14 million. As of the date of its establishment, Yinchuan Zhongchen was owned as to 60% by Ningxia Tianyuanda Industrial Group Co., Ltd. (寧夏天源達實業集團有限公司)(“Ningxia Tianyuanda”), an Independent Third Party, 35% by Ningxia Zhongfang Industrial and 5% by Mr. Zhang Hailong (張海龍), an Independent Third Party.

On August 12, 2016, Ningxia Tianyuanda and Mr. Zhang Hailong transferred their respective interest in Yinchuan Zhongchen to Ningxia Zhongfang Industrial at a consideration of RMB8.4 million and RMB0.7 million, respectively, which was determined based on the then paid-up registered capital of Yinchuan Zhongchen at the time of such equity transfers. Upon the completion of such equity transfers, Yinchuan Zhongchen became wholly owned by Ningxia Zhongfang Industrial. There has been no change in the equity interest in Yinchuan Zhongchen since then.

Ningxia Zhongfang Xining

Ningxia Zhongfang Xining is a regional holding company for certain of our project companies in the cities of Xining, Chengdu and Haidong. It was established in the PRC as a limited liability company on June 8, 2001 with an initial registered and paid-up capital of RMB20 million. As of the date of its establishment, Ningxia Zhongfang Xining was owned as to 95% by Ningxia Zhongfang Industrial, 3% by Mr. Fang and 2% by Mr. Chen Zhiyuan (陳志遠), the then general manager of Ningxia Zhongfang Xining and an Independent Third Party.

Subsequent to a series of increase in registered capital and equity transfers as of January 1, 2018, Ningxia Zhongfang Xining became wholly owned by Ningxia Zhongfang Industrial with a registered capital of RMB67 million.

On July 22, 2019, the registered capital of Ningxia Zhongfang Xining was further increased to RMB200 million through a capital injection of RMB133 million by Ningxia Zhongfang Industrial. Upon completion of such capital injection, Ningxia Zhongfang Xining was wholly owned by Ningxia Zhongfang Industrial and there has been no change in the equity interest since then.

Xianyang Yangguang Meiyu

Xianyang Yangguang Meiyu is the project company for our property development projects, namely Yangguang Meiyu (陽光美域) and Meiyu Xihu (美域熙湖) and an indirect non-wholly owned subsidiary of our Company. It was established in the PRC as a limited liability company on November 23, 2009 with an initial registered and paid-up capital of RMB10 million. As of the date of its establishment, Xianyang Yangguang Meiyu was owned as to 55% by Xianyang Property Development Company (咸陽市房地產開發公司)(“Xianyang Property”), an Independent Third Party, and 45% by Shaanxi Huada Shengyu Real Estate Co., Ltd. (陝西華達盛譽置業有限公司)(“Shaanxi Huada”), an Independent Third Party.

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Subsequent to a series of equity transfers and changes in registered capital, as of January 1, 2018, Xianyang Yangguang Meiyu became owned as to 45% by Xianyang Property and 55% by Ningxia Zhongfang Industrial with paid-up registered capital of RMB12 million.

On June 2, 2020, Xianyang Property was ordered by the People’s Court of Weibin District of Baoji to transfer 21% of its equity interest in Xianyang Yangguang Meiyu to Baoji Jian’an Group Co. Ltd. (寶雞建安集團股份有限公司)(“Baoji Jian’an”), an Independent Third Party (save for its shareholding in Xianyang Yangguang Meiyu) as a mean for the expiation of debts owed by Xianyang Property to Baoji Jian’an. Our Directors confirmed that such court order does not have any material impact on the business operations and financial results our Group. Upon the completion of such equity transfer, Xianyang Yangguang Meiyu became owned as to 55% by Ningxia Zhongfang Industrial, 24% by Xianyang Property and 21% by Baoji Jian’an. There has been no change in the equity interest in Xianyang Yangguang Meiyu since then.

Zhongfang Vanke Industrial

Zhongfang Vanke Industrial is a platform for our strategical cooperation with Vanke Group. It was established in the PRC as a limited liability company on September 28, 2017 with an initial registered and paid up capital of RMB100 million. As of the date of its establishment, Zhongfang Vanke Industrial was owned as to 40% by Vanke (Chengdu) Enterprise Co., Ltd. (萬科(成都)企業有限公司) (a member of Vanke Group), 40% by Ningxia Zhongfang Industrial and 20% by Shenzhen Huayin, an Independent Third Party (save for its shareholding in Zhongfang Vanke Industrial). There has been no change of shareholding of Zhongfang Vanke Industrial since then.

Zhongfang Vanke Industrial is accounted for as a subsidiary of our Company because Ningxia Zhongfang Industrial is entitled to exercise 60% of the voting rights in Zhongfang Vanke Industrial pursuant to a voting rights entrustment agreement entered into between Ningxia Zhongfang Industrial and Shenzhen Huayin. Under the voting right entrustment agreement, Shenzhen Huayin agreed to entrust to Ningxia Zhonfang Industrial its 20% of the voting rights in Zhongfang Vanke Industrial. As a result, Ningxia Zhongfang Industrial is entitled to exercise 60% of the voting rights in the shareholders’ meeting of Zhongfang Vanke Industrial, and is able to exercise control over financial and business decisions and daily operations of Zhongfang Vanke Industrial. For details of the voting right arrangement, see “Business—Our Property Development Business—Voting Right Arrangements.”

Ningxia Zhenghui

Ningxia Zhenghui is the project company for our property development project, namely Vanke–City Light (萬科•城市之光). It was established in the PRC as a limited liability company on December 28, 2017 with an initial registered capital of RMB13 million. As of the date of its establishment, Ningxia Zhenghui was wholly-owned by Ningxia Zhongfang Industrial.

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On April 17, 2018, Ningxia Zhongfang Industrial transferred its entire equity interest in Ningxia Zhenghui to Zhongfang Vanke Real Estate at nil consideration, given that the registered capital of Ningxia Zhenghui was not paid up at the time of such equity transfer. Upon the completion of such equity transfer, Ningxia Zhenghui became wholly-owned by Zhongfang Vanke Real Estate and there has been no change in the equity interest in Ningxia Zhenghui since then.

Ningxia Yuejia

Ningxia Yuejia is the project company for our property development project, namely Vanke–Chu Xin Garden (萬科•初昕苑). It was established in the PRC as a limited liability company on December 26, 2017 with an initial registered capital of RMB13 million. As of the date of its establishment, Ningxia Yuejia was wholly-owned by Ningxia Zhongfang Industrial.

On April 17, 2018, Ningxia Zhongfang Industrial transferred 70% of equity interest in Ningxia Yuejia to Zhongfang Vanke Real Estate at nil consideration, given that the registered capital of Ningxia Yuejia was not paid up at the time of such equity transfer. Upon the completion of such equity transfer, Ningxia Yuejia became owned as to 70% by Zhongfang Vanke Real Estate and 30% by Ningxia Zhongfang Industrial.

On September 14, 2018, Ningxia Zhongfang Industrial transferred its remaining 30% equity interest in Ningxia Yuejia to Zhuhai Taizhihe Investment Co., Ltd. (珠海泰之和投資有限責任公司), an Independent Third Party (save for its shareholding in Ningxia Yuejia), at nil consideration, given that the registered capital of Ningxia Yuejia was not paid up at the time of such equity transfer. Upon the completion of such equity transfer, Ningxia Yuejia became owned as to 70% by Zhongfang Vanke Real Estate and 30% by Zhuhai Taizhihe Investment Co., Ltd. and there has been no change in the equity interest in Ningxia Yuejia since then.

Ningxia Wanyue

Ningxia Wanyue is the project company for our property development project, namely Vanke–Dream Town (萬科•理想城). It was established in the PRC as a limited liability company on July 4, 2018 with an initial registered capital of RMB13 million. As of the date of its establishment, Ningxia Wanyue was wholly-owned by Ningxia Yuejia.

On September 14, 2018, Ningxia Yuejia transferred its entire equity interest in Ningxia Wanyue to Zhongfang Vanke Real Estate at nil consideration, given that the registered capital of Ningxia Wanyue was not paid up at the time of such equity transfer. Upon completion of such equity transfer, Ningxia Wanyue became wholly owned by Zhongfang Vanke Real Estate.

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On December 4, 2018, the registered capital of Ningxia Wanyue was increased to RMB400 million through the capital injection of RMB267 million by Zhongfang Vanke Real Estate and RMB120 million by Tokyo Tatemono Co., Ltd. (東京建物株式會社) and it was subsequently owned as to 70% by Zhongfang Vanke Real Estate and 30% by Tokyo Tatemono Co., Ltd., an Independent Third Party (save for its shareholding in Ningxia Wanyue). There has been no change in the equity interest in Ningxia Wanyue since then.

Xining Wanlan

Xining Wanlan is one of the project companies for our property development project, namely Vanke–Vanke Town (萬科•萬科城). It was established in the PRC as a limited liability company on August 23, 2018 with an initial registered capital of RMB20 million. As of the date of its establishment, Xining Wanlan was owned as to 60% by Xining Vanke Enterprise Co., Ltd. (西寧萬科企業有限公司)(“Xining Vanke”), a subsidiary of Vanke Group, and 40% by Ningxia Zhongfang Xining.

On October 23, 2018, Xining Vanke and Ningxia Zhongfang Xining transferred their respective equity interest in Xining Wanlan to Xining Zhongfang Vanke at a consideration of RMB12 million and RMB8 million, respectively. The consideration was determined after arm’s length negotiation and with reference to the registered capital of Xining Wanlan. Upon completion of such equity transfers, Xining Wanlan became wholly owned by Xining Zhongfang Vanke and there has been no change in the equity interest in Xining Wanlan since then.

Xining Wancan

Xining Wancan is one of the project companies for our property development project, namely Vanke–Vanke Town (萬科•萬科城). It was established in the PRC as a limited liability company on September 4, 2018 with an initial registered capital of RMB20 million. As of the date of its establishment, Xining Wancan was owned as to 60% by Xining Vanke, a subsidiary of Vanke Group, and 40% by Ningxia Zhongfang Xining.

On October 23, 2018, Xining Vanke and Ningxia Zhongfang Xining transferred their respective equity interest in Xining Wancan to Xining Zhongfang Vanke at a consideration of RMB12 million and RMB8 million, respectively. The consideration was determined after arm’s length negotiation and with reference to the registered capital of Xining Wancan. Upon completion of such equity transfers, Xining Wancan became wholly owned by Xining Zhongfang Vanke and there has been no change in the equity interest in Xining Wancan since then.

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Xining Wanxian

Xining Wanxian is one of the project companies for our property development project, namely Vanke–Vanke Town (萬科•萬科城). It was established in the PRC as a limited liability company on September 4, 2018 with an initial registered capital of RMB20 million. As of the date of its establishment, Xining Wanxian was owned as to 60% by Xining Vanke, a subsidiary of Vanke Group and 40% by Ningxia Zhongfang Xining.

On October 23, 2018, Xining Vanke and Ningxia Zhongfang Xining transferred their respective equity interest in Xining Wanxian to Xining Zhongfang Vanke at a consideration of RMB12 million and RMB8 million, respectively. The consideration was determined after arm’s length negotiation and with reference to the registered capital of Xining Wanxian. Upon completion of such equity transfers, Xining Wanxian became wholly owned by Xining Zhongfang Vanke and there has been no change in the equity interest in Xining Wanxian since then.

Xining Wantang

Xining Wantang is the project company for our property development project, namely Vanke–Times Metropolis (萬科•時代都會). It was established in the PRC as a limited liability company on June 25, 2019 with an initial registered capital of RMB20 million. As of the date of its establishment, Xining Wantang was wholly owned by Xining Zhongfang Vanke.

On November 14, 2019, Xining Zhongfang Vanke transferred its 49% equity interest in Xining Wantang to Xining Xintang Real Estate Development Co., Ltd. (西寧新唐房地產開發有限公司)(“Xining Xintang”), an Independent Third Party (save for its shareholding in Xining Wantang), at nil consideration given that the registered capital of Xining Wantang was not paid up at the time of such equity transfer. Upon completion of such equity transfer, Xining Wantang became owned as to 51% by Xining Zhongfang Vanke and 49% by Xining Xintang and there has been no change in the equity interest in Xining Wantang since then.

REORGANIZATION

In preparation of the [REDACTED], we undertook a reorganization whereupon our Company became the holding company and [REDACTED] vehicle of our Group.

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The following chart sets forth the simplified corporate structure(1) of our Group before the Reorganization:

Other individual Mr. Fang Ms. Gong Fan Ms. Zhang Jun Mr. Wang Xiaoping Ms. Qiu Jianping shareholders(2)

42.96% 9.15% 6.18% 5.64% 5.42% 30.64%

Ningxia Zhongfang Industrial (PRC)

100%100% 55% 40%

Ningxia Zhongfang Xianyang Zhongfang Vanke Other subsidiaries of Yinchuan Zhongchen Xining Yangguang Meiyu(3) Industrial(4) Ningxia Zhongfang (PRC) (PRC) (PRC) (PRC) Industrial(1)

98% 99%

Zhongfang Vanke Xining Zhongfang Vanke(6) (5) Real Estate (PRC) (PRC)

100% 70% 70% 100% 51%

Ningxia Zhenghui Ningxia Yuejia(7) Ningxia Wanyue(8) Xining Wancan Xining Wantang(9) (PRC) (PRC) (PRC) (PRC) (PRC)

100% 100%

Xining Wanlan Xining Wanxian (PRC) (PRC)

Notes:

(1) The above chart only includes shareholding information relating to our principal operating subsidiaries. For details of our subsidiaries, please refer to Note 1 of the Accountants’ Report in Appendix I to this document.

(2) Include 40 individual shareholders who are the employees or former employees of our Group, among which Mr. Zhang Yanbin and Mr. He Bin, our senior management members, held 2.95% and 2.87% equity interest, respectively.

(3) The remaining 45% equity interest in Xianyang Yangguang Meiyu was held as to 24% by Xianyang Property Development Company (咸陽市房地產開發公司), an Independent Third Party (save for its shareholding in Xianyang Yangguang Meiyu), and 21% by Baoji Jian’an Group Co., Ltd. (寶雞建安集團股份有限公司), an Independent Third Party (save for its shareholding in Xianyang Yangguang Meiyu).

(4) Zhongfang Vanke Industrial is owned as to 40% by Vanke (Chengdu) Enterprise Co., Ltd. (萬科(成都)企業有限公司), 40% by Ningxia Zhongfang Industrial and 20% by Shenzhen Huayin, and is accounted for as a subsidiary of our Company because Ningxia Zhongfang Industrial is entitled to exercise 60% of the voting rights in Zhongfang Vanke Industrial pursuant to a voting rights entrustment agreement entered into between Ningxia Zhongfang Industrial and Shenzhen Huayin.

(5) The remaining 2% equity interest in Zhongfang Vanke Real Estate was held as to 1% by Zhuhai Ningjia Investment Partnership (Limited Partnership) (珠海寧嘉投資合夥企業(有限合夥)), an Independent Third Party, and 1% by Zhuhai Wanchuang Wanxiang Enterprise Management Center (Limited Partnership) (珠海萬創萬享企業管理中心(有限合夥)), an Independent Third Party.

(6) The remaining 1% equity interest in Xining Zhongfang Vanke was held by Zhuhai Qingxun Investment Partnership (Limited Partnership) (珠海青汛投資合夥企業(有限合夥)), an Independent Third Party.

(7) The remaining 30% equity interest in Ningxia Yuejia was held by Zhuhai Taizhihe Investment Co., Ltd. (珠海泰之和投資有限責任公司), an Independent Third Party (save for its shareholding in Ningxia Yuejia).

(8) The remaining 30% equity interest in Ningxia Wanyue was held by Tokyo Tatemono Co., Ltd. (東京建物株式會社), an Independent Third Party (save for its shareholding in Ningxia Wanyue).

(9) The remaining 49% equity interest in Xining Wantang was held by Xining Xintang Real Estate Development Co., Ltd. (西寧新唐房地產開發有限公司), an Independent Third Party (save for its shareholding in Xining Wantang).

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In preparation for the [REDACTED], the following Reorganization steps were implemented to establish our Group:

Corporate Division of Ningxia Zhongfang Industrial

On December 1, 2020, Ningxia Zhongfang Industrial underwent a corporate division pursuant to which Ningxia Zhongfang Development was established to carry out the Other Businesses, which include, among others, property management, facility installation, elderly care and education services businesses, previously conducted by Ningxia Zhongfang Industrial prior to the corporate division. The assets and the liabilities of Ningxia Zhongfang Industrial prior to the corporate division, with the consents from the relevant creditors, were allocated and borne by Ningxia Zhongfang Industrial as to RMB12,805.2 million and RMB12,264.3 million, respectively, and allocated and borne by Ningxia Zhongfang Development as to RMB535.1 million and RMB45.7 million, respectively, based on the nature of the liability and in accordance with the PRC laws and regulations. As part of the corporate division, the registered capital of Ningxia Zhongfang Industrial was reduced from RMB55 million to RMB30 million. The shareholding in Ningxia Zhongfang Industrial remained unchanged upon completion of the corporate division.

To the best of our Directors’ knowledge, information and belief, having made all reasonable enquiries, our Directors are not aware of any non-compliance with any applicable PRC laws and regulations of the Other Businesses during the Track Record Period and up to the date of the completion of the corporate division which would have a material adverse effect on our Group’s business operation and financial performance.

Establishment of Ningxia Zhongxian and Acquisition of Ningxia Zhongfang Industrial

On October 16, 2020, Ningxia Zhongxian was established in the PRC with limited liability with an initial registered capital of RMB10 million, and was wholly-owned by Ningxia Junben Information Consulting Co., Ltd. (寧夏君本信息諮詢有限公司)(“Ningxia Junben”), an investment holding company established in the PRC with limited liability by the shareholders of Ningxia Zhongfang Industrial under the same shareholding. On January 4, 2021, Ningxia Zhongxian made a capital injection of RMB970 million to the registered capital of Ningxia Zhongfang Industrial. Upon completion of the capital injection, the registered capital of Ningxia Zhongfang Industrial was increased to RMB1 billion and Ningxia Zhongfang Industrial became owned as to 97% by Ningxia Zhongxian and 3% by the individual shareholders.

On January 7, 2021, Ningxia Zhongxian acquired the remaining 3% of the equity interest in Ningxia Zhongfang Industrial from the individual shareholders at a total consideration of approximately RMB42.8 million, which was determined after arm’s length negotiation and with reference to the net asset value of Ningxia Zhongfang Industrial as of November 30, 2020 as appraised by an independent valuer. Upon completion of such equity transfer, Ningxia Zhongfang Industrial became wholly-owned by Ningxia Zhongxian.

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Incorporation of our Company

Our Company was incorporated in the Cayman Islands as an exempted company with limited liability on November 5, 2020. The initial authorized share capital of our Company was US$50,000 divided into 5,000,000 Shares of US$0.01 each. Upon incorporation, one share was issued to an initial subscriber, an Independent Third Party, and such share was transferred to MSmart International, a company incorporated in the BVI and wholly-owned by Mr. Fang on the same date. On the same date, 12,888 Shares, 5,008 Shares, 3,306 Shares, 2,746 Shares, 1,853 Shares, 1,692 Shares, 1,626 Shares and 880 Shares were allotted and issued at par to MSmart International, Fun Joy, Eminence Joy, Foresea Investments, Sherri International, Boxy International, Boxy Space and Hybrid Angel. Upon completion of such issues and allotments, the shareholding of our Company was as follows:

Number of Percentage of Shareholders shares shareholding

MSmart International ...... 12,889 42.96% Fun Joy(1) ...... 5,008 16.69% Eminence Joy(2) ...... 3,306 11.02% Foresea Investments(3) ...... 2,746 9.15% Sherri International(4)...... 1,853 6.18% Boxy International(5) ...... 1,692 5.64% Boxy Space(6) ...... 1,626 5.42% Hybrid Angel(7) ...... 880 2.93%

Total ...... 30,000 100%

Notes:

1. Fun Joy is owned by 11 individual shareholders who are the employees or former employees of our Group and held equity interests in Ningxia Zhongfang Industrial prior to the Reorganization. These shareholders include Mr. He Bin, who is one of our senior management, and Mr. Qi Xujun (祁旭俊), Mr. Xu Deqiang (徐德強), Mr. Chen Lei (陳雷), Ms. Gu Yingqin (古瑛琴), Mr. Dong Hongcheng (董洪成), Mr. Ding Chunwen (丁春文), Mr. Li Run (李潤), Mr. Yu Yuefeng (俞躍峰), Ms. Zhu Li’e (朱麗娥) and Ms. Wang Yenhong (王燕虹). None of them hold more than 5% interest in our Company.

2. Eminence Joy is owned by 11 individual shareholders who are the employees or former employees of our Group and held equity interests in Ningxia Zhongfang Industrial prior to the Reorganization. These shareholders include Mr. Zhang Yanbin, who is one of our senior management, and Mr. Wei Bin (魏斌), Ms. Lei Haiyan (雷海燕), Mr. Qu Gengchang (瞿耿常), Ms. Yang Liu (楊柳), Ms. Cao Dianying (曹殿穎), Mr. Zhu Weixing (朱衛星), Mr. Lei Peng (雷鵬), Mr. Xu Changhao (徐長浩), Mr. Wang Liang (王亮) and Mr. Li Xingfu (李興富). None of them hold more than 5% interest in our Company.

3. Foresea Investments is wholly-owned by Ms. Gong Fan.

4. Sherri International is wholly-owned by Ms. Zhang Jun, our executive Director.

5. Boxy International is wholly-owned by Mr. Wang Xiaoping, our executive Director.

6. Boxy Space is wholly-owned by Ms. Qiu Jianping.

7. Hybrid Angel is owned by 18 individual shareholders who are the employees or former employees of our Group, all of whom are Independent Third Parties. These shareholders are Mr. Zuo Long (左龍), Mr. Wang Xiaopeng (王小鵬), Mr. Huang Xuejing (黃學經), Mr. Ma Cheng (馬騁), Mr. Tian Fulai (田福來), Mr. Shi Liansheng (史連昇), Mr. Li Chengliang (李承良), Ms. Dou Yanyan (竇衍艷), Mr. Qian Guangning (錢廣寧), Mr. Rong Fanqiao (榮范橋), Mr. Zhang Shijie (張世傑), Mr. Shi Yongwei (石永偉), Mr. Guo Jiaqi (郭佳琦), Ms. Ye Lina (葉麗娜), Mr. Zhang Liqing (張黎慶), Mr. Zhang Lei (張磊), Mr. Shi Yinren (時銀仁) and Mr. Zhang Yang (張洋). None of them hold more than 5% interest in our Company.

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Incorporation of Joy Premium

On December 9, 2020, Joy Premium was incorporated in the BVI with limited liability and is authorised to issue 50,000 ordinary shares of a single class with a par value of US$1.00 each. Upon incorporation, one share of Joy Premium was allotted and issued to our Company at par and Joy Premium then became wholly owned by our Company.

Incorporation of Zhongyu HK

On December 31, 2020, Zhongyu HK was incorporated in Hong Kong with limited liability. Upon incorporation, 10,000 shares were allotted and issued to Joy Premium at a subscription price of HK$10,000 and Zhongyu HK then became wholly-owned by Joy Premium.

Capital injections in Ningxia Zhongxian by Zhonghong HK

See “—[REDACTED] Investment—Investment by the [REDACTED] Investor” below for details. Upon the completion of the capital injections by Zhonghong HK, Ningxia Zhongxian became owned as to 99.5% by Ningxia Junben and 0.5% by Zhonghong HK.

Establishment of Ningxia Zhongqia and Acquisition of Equity Interest in Ningxia Zhongxian

Ningxia Zhongqia was established in the PRC with limited liability as a wholly foreign-owned enterprise on February 18, 2021 with a registered capital of RMB10 million. Since its establishment, Ningxia Zhongqia has been wholly-owned by Zhongyu HK.

On March 1, 2021, Ningxia Zhongqia contributed RMB988.7 million by way of capital injection to the registered capital of Ningxia Zhongxian and thus acquired 98.87% of the equity interest in Ningxia Zhongxian. Upon the completion of such capital injection, Ningxia Zhongxian was owned as to 98.87% by Ningxia Zhongqia, 1% by Ningxia Junben and 0.13% by Zhonghong HK. On March 3, 2021, Ningxia Zhongqia further acquired 1% equity interest in Ningxia Zhongxian from Ningxia Junben at a consideration of RMB14.2 million, which was determined after arm’s length negotiations among the parties and with reference to net asset value of Ningxia Zhongxian as of December 31, 2020 as appraised by an independent valuer. Upon completion of such capital injection and equity transfer, Ningxia Zhongxian has been owned as to 99.87% by Ningxia Zhongqia and 0.13% by Zhonghong HK since then.

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Acquisition of Mac Light by our Company

On March 12, 2021, Jadeway Investments transferred 1 share of Mac Light, representing the entire issue share capital of Mac Light, to our Company, which was settled by way of allotment and issue of 39 Shares to Jadeway Investments. Upon completion of such share transfer and share allotment, each of Mac Light, Zhonghong HK and Ningxia Zhongxian became our wholly-owned subsidiary and the shareholding of our Company became as follows:

Number of Percentage of Shareholders shares shareholding

MSmart International ...... 12,889 42.91% FunJoy...... 5,008 16.67% Eminence Joy ...... 3,306 11.01% Foresea Investments...... 2,746 9.14% Sherri International ...... 1,853 6.17% Boxy International ...... 1,692 5.63% Boxy Space ...... 1,626 5.41% Hybrid Angel ...... 880 2.93% Jadeway Investments ...... 39 0.13%

Total ...... 30,039 100%

See “—Corporate structure immediately after the completion of the Reorganization and the [REDACTED] Investment” below for our corporate structure upon the completion of the Reorganization and the [REDACTED] Investment.

[REDACTED] INVESTMENT

Investment by the [REDACTED] Investor

On February 2, 2021, Zhonghong HK entered into an capital injection agreement with Ningxia Junben, pursuant to which Zhonghong HK agreed to invest in Ningxia Zhongxian by way of capital injection of RMB7,100,000, of which RMB50,250 was credited to the registered capital and RMB7,049,750 was credited to the capital surplus of Ningxia Zhongxian, which was determined with reference to the net asset value of Ningxia Zhongxian as of December 31, 2020 as appraised by an independent valuer and the consideration was fully settled by cash on February 26, 2021.

On February 25, 2021, Zhonghong HK entered into a further capital injection agreement with Ningxia Junben and Ningxia Zhongqia, pursuant to which Zhonghong HK agreed to invest in Ningxia Zhongxian by way of capital injection of RMB1,249,750, all credited to the registered capital of Ningxia Zhongxian, which was determined with reference to the then registered capital of Ningxia Zhongxian, and the consideration was fully settled by cash on March 2, 2021.

Following the capital injections, Zhonghong HK became interested in 0.13% equity interest in Ningxia Zhongxian.

Zhonghong HK was a direct wholly-owned subsidiary of Mac Light, which was in turn wholly-owned by Jadeway Investments. Jadeway Investments was directly wholly-owned by Mr. Yang Hawk Ying.

As part of the Reorganization, Jadeway Investments transferred all its shares in Mac Light to our Company, which was settled by way of the allotment and issue of 39 Shares in our Company to Jadeway Investments.

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Details of the investment by Jadeway Investments (the “[REDACTED] Investment”) are set forth below:

Name of [REDACTED] Jadeway Investments, which is Investor:...... wholly owned by Mr. Yang Hawk Ying

Amount of investment: ..... RMB8,349,750

Basis of determination of the With reference to the net asset value of Ningxia consideration:...... Zhongxian as of December 31, 2020 as appraised by an independent valuer and the registered capital of Ningxia Zhongxian.

Date of settlement of the March 2, 2021 consideration ......

Cost per Share(1):...... HK$[REDACTED]

Discount to [REDACTED] [REDACTED]% of the [REDACTED] range(1):......

Use of proceeds ...... Forgeneral working capital of our Group

Shareholding in our Company 0.13% immediately after the completion of the [REDACTED] Investments(1):......

Shareholding in our Company [REDACTED]% immediately after the completion of the [REDACTED](1)(2):......

Strategic benefits: ...... OurDirectors are of the view that our Group can be benefited from the [REDACTED] Investment as it demonstrates the [REDACTED] investor’s confidence in the operations of our Group and serves as an endorsement of our Group’s performance, strength and prospects, which can assist us in broadening our shareholder base. In addition, Mr. Yang Hawk Ying’s positioning as an investor of our Company, coupled with his entrepreneurial experience and network, will add value to the profile of our Company

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Special rights: ...... None of Mr. Yang Hawk Ying and Jadeway Investments is entitled to any special rights under the [REDACTED] Investment

Notes:

(1) Calculated on the basis of the number of Shares to be held by Jadeway Investments immediately after the completion of the [REDACTED]. (2) Without taking into account any Shares which may be issued pursuant to the exercise of the [REDACTED] or any options that may be granted under the Share Option Scheme.

Information regarding the [REDACTED] investor

Jadeway Investments is an investment holding company incorporated in the BVI and wholly owned by Mr. Yang Hawk Ying. Mr. Yang is an entrepreneur with years of experience in various industries including, among others, health supplement, telecommunication and education in the United States. He also had personal real estate investment experience in the PRC and the United States. Mr. Yang became acquainted with the senior management of our Group through past business cooperation in the education industry before our corporate division. Through regular contact with our senior management members, Mr. Yang became interested in the PRC real estate industry and developed confidence in the performance and prospect of our Group, which led to his investment in our Group as described above. With Mr. Yang’s background and experience as an entrepreneur, our Directors believe that Mr. Yang could provide our Group with business insights and strategic advice on our development expansion plan. Other than the shareholding in our Group, Jadeway Investments and Mr. Yang are independent from our Group.

Lock-up and Public Float

As the [REDACTED] Investor is not a core connected person of our Company and the [REDACTED] Investment was not financed directly or indirectly by any core connected persons of our Company, Shares held by the [REDACTED] Investor will be counted towards the public float after the [REDACTED].

The [REDACTED] Investor has agreed that, it will not, at any time up to the date falling six months following the [REDACTED], dispose of any of the Shares directly or indirectly held by it.

Compliance with Interim Guidance

The Sole Sponsor is of the view that the terms of the [REDACTED] Investments by the [REDACTED] Investor are in compliance with (i) the Guidance Letter HKEx-GL-29-12 issued by the Stock Exchange in January 2012 and as updated in March 2017; and (ii) the Guidance Letter HKEx-GL43-12 issued by the Stock Exchange in October 2012 and as updated in July 2013 and March 2017.

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CORPORATE STRUCTURE IMMEDIATELY AFTER THE COMPLETION OF THE REORGANIZATION AND THE [REDACTED] INVESTMENT

The following chart sets forth our simplified corporate and shareholding structure(1) immediately after the completion of the Reorganization and the [REDACTED] Investment, but before completion of the [REDACTED] and the [REDACTED]:

Mr. Wang Shareholder Shareholder Shareholder Mr. Yang Hawk Mr. Fang Ms. Gong Fan Ms. Zhang Jun Ms. Qiu Jianping Xiaoping Group 1(2) Group 2(3) Group 3(4) Ying 100% 100% 100% 100% 100% 100% 100% 100% 100% MSmart Foresea Sherri Boxy Jadeway Boxy Space Fun Joy Eminence Joy Hybrid Angel International Investments International International Investments (BVI) (BVI) (BVI) (BVI) (BVI) (BVI) (BVI) (BVI) (BVI) 42.91% 9.14% 6.17% 5.63% 5.41% 16.67% 11.01% 2.93% 0.13%

Our Company (Cayman Island)

100% 100% Joy Premium Mac Light (BVI) (BVI)

100% 100% Zhongyu HK Zhonghong HK (Hong Kong) (Hong Kong) Offshore Onshore 100% Ningxia Zhongqia (PRC) 99.87% 0.13%

Ningxia Zhongxian (PRC) 100% Ningxia Zhongfang Industrial (PRC)

100% 100% 55% 40% Ningxia Zhongfang Xianyang Zhongfang Vanke Other subsidiaries of Yinchuan Zhongchen Xining Yangguang Meiyu(5) Industrial(6) Ningxia Zhongfang (PRC) (PRC) (PRC) (PRC) Industrial(1)

98% 99% Zhongfang Vanke Xining Zhongfang Vanke(8) Real Estate(7) (PRC) (PRC)

100%70% 70% 100% 51%

Ningxia Zhenghui Ningxia Yuejia(9) Ningxia Wanyue(10) Xining Wancan Xining Wantang(11) (PRC) (PRC) (PRC) (PRC) (PRC)

100% 100%

Xining Wanlan Xining Wanxian (PRC) (PRC)

Notes:

(2) Shareholder Group 1 includes 11 individual shareholders who are the employees or former employees of our Group who held equity interest in Ningxia Zhongfang Industrial, our principal operating subsidiary in the PRC, prior to the Reorganization. These shareholders include Mr. He Bin, who is one of our senior management, and Mr. Qi Xujun, Mr. Xu Deqiang, Mr. Chen Lei, Ms. Gu Yingqin, Mr. Dong Hongcheng, Mr. Ding Chunwen, Mr. Li Run, Mr. Yu Yuefeng, Ms. Zhu Li’e and Ms. Wang Yenhong. None of them hold more than 5% interest in our Company.

(3) Shareholder Group 2 includes 11 individual shareholders who are the employees or former employees of our Group who held equity interest in Ningxia Zhongfang Industrial, our principal operating subsidiary in the PRC, prior to the Reorganization. These shareholders include Mr. Zhang Yanbin, who is one of our senior management, and Mr. Wei Bin, Ms. Lei Haiyan, Mr. Qu Gengchang, Ms. Yang Liu, Ms. Cao Dianying, Mr. Zhu Weixing, Mr. Lei Peng, Mr. Xu Changhao, Mr. Wang Liang and Mr. Li Xingfu. None of them hold more than 5% interest in our Company.

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(4) Shareholder Group 3 includes 18 individual shareholders who are the employees or former employees of our Group and held equity interest in Ningxia Zhongfang Industrial, our principal operating subsidiary in the PRC, prior to the Reorganization. These shareholders are Mr. Zuo Long, Mr. Wang Xiaopeng, Mr. Huang Xuejing, Mr. Ma Cheng, Mr. Tian Fulai, Mr. Shi Liansheng, Mr. Li Chengliang, Ms. Dou Yanyan, Mr. Qian Guangning, Mr. Rong Fanqiao, Mr. Zhang Shijie, Mr. Shi Yongwei, Mr. Guo Jiaqi, Ms. Ye Lina, Mr. Zhang Liqing, Mr. Zhang Lei, Mr. Shi Yinren and Mr. Zhang Yang. None of them hold more than 5% interest in our Company.

(5) The remaining 45% equity interest in Xianyang Yangguang Meiyu was held as to 24% by Xianyang Property Development Company (咸陽市房地產開發公司), an Independent Third Party (save for its shareholding in Xianyang Yangguang Meiyu), and 21% by Baoji Jian’an Group Co., Ltd. (寶雞建安集團股份有限公司), an Independent Third Party (save for its shareholding in Xianyang Yangguang Meiyu).

(6) Zhongfang Vanke Industrial is owned as to 40% by Vanke (Chengdu) Enterprise Co., Ltd. (萬科(成都)企業有限公司), 40% by Ningxia Zhongfang Industrial and 20% by Shenzhen Huayin, and is accounted for as a subsidiary of our Company because Ningxia Zhongfang Industrial is entitled to exercise 60% of the voting rights in Zhongfang Vanke Industrial pursuant to a voting rights entrustment agreement entered into between Ningxia Zhongfang Industrial and Shenzhen Huayin.

(7) The remaining 2% equity interest in Zhongfang Vanke Real Estate was held as to 1% by Zhuhai Ningjia Investment Partnership (Limited Partnership) (珠海寧嘉投資合夥企業(有限合夥)), an Independent Third Party, and 1% by Zhuhai Wanchuang Wanxiang Enterprise Management Center (Limited Partnership) (珠海萬創萬享企業管理中心(有限合夥)), an Independent Third Party.

(8) The remaining 1% equity interest in Xining Zhongfang Vanke was held by Zhuhai Qingxun Investment Partnership (Limited Partnership) (珠海青汛投資合夥企業(有限合夥)), an Independent Third Party.

(9) The remaining 30% equity interest in Ningxia Yuejia was held by Zhuhai Taizhihe Investment Co., Ltd. (珠海泰之和投資有限責任公司), an Independent Third Party (save for its shareholding in Ningxia Yuejia).

(10) The remaining 30% equity interest in Ningxia Wanyue was held by Tokyo Tatemono Co., Ltd. (東京建物株式會社), an Independent Third Party (save for its shareholding in Ningxia Wanyue).

(11) The remaining 49% equity interest in Xining Wantang was held by Xining Xintang Real Estate Development Co., Ltd. (西寧新唐房地產開發有限公司), an Independent Third Party (save for its shareholding in Xining Wantang).

INCREASE IN AUTHORIZED SHARE CAPITAL

On [●], 2021, our authorized share capital was increased from US$50,000 to US$100,000,000 by the creation of additional 9,995,000,000 Shares, such that following the increase in authorized share capital, the authorized share capital of our Company was US$100,000,000 divided into 10,000,000,000 Shares of US$0.01 each.

[REDACTED]

Pursuant to the written resolutions of our Shareholders passed on [●], 2021, conditional on the share premium account of our Company being credited as a result of the [REDACTED], our Directors are authorized to capitalize an amount of US$[REDACTED] standing to the credit of the share premium account of our Company by applying such sum towards the paying up in full at par a total of [REDACTED] Shares for allotment and issue to holders of Shares whose names appear on the register of members of our Company on the date of passing such resolutions in proportion (as near as possible without involving fractions so that no fraction of a share shall be issued and allotted) to their then existing respective shareholding in our Company.

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CORPORATE STRUCTURE IMMEDIATELY AFTER THE COMPLETION OF THE [REDACTED] AND THE [REDACTED]

The following chart sets forth our simplified corporate and shareholding structure(1) immediately after completion of the [REDACTED] and the [REDACTED] (without taking into account any Shares which may be issued pursuant to the exercise of the [REDACTED] or any options that may be granted under the Share Option Scheme):

Mr. Wang Shareholder Shareholder Shareholder Mr. Yang Hawk Mr. Fang Ms. Gong Fan Ms. Zhang Jun Ms. Qiu Jianping Xiaoping Group 1(2) Group 2(3) Group 3(4) Ying 100% 100% 100% 100% 100% 100% 100% 100% 100% MSmart Foresea Sherri Boxy Jadeway Boxy Space Fun Joy Eminence Joy Hybrid Angel Public International Investments International International Investments (BVI) (BVI) (BVI) (BVI) Shareholders (BVI) (BVI) (BVI) (BVI) (BVI) [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]

Our Company (Cayman Island)

100% 100% Joy Premium Mac Light (BVI) (BVI)

100% 100% Zhongyu HK Zhonghong HK (Hong Kong) (Hong Kong) Offshore Onshore 100% Ningxia Zhongqia (PRC) 99.87% 0.13%

Ningxia Zhongxian (PRC) 100% Ningxia Zhongfang Industrial (PRC)

100% 100% 55% 40% Ningxia Zhongfang Xianyang Zhongfang Vanke Other subsidiaries of Yinchuan Zhongchen Xining Yangguang Meiyu(5) Industrial(6) Ningxia Zhongfang (PRC) (PRC) (PRC) (PRC) Industrial(1)

98% 99% Zhongfang Vanke Xining Zhongfang Vanke(8) Real Estate(7) (PRC) (PRC)

100%70% 70% 100% 51%

Ningxia Zhenghui Ningxia Yuejia(9) Ningxia Wanyue(10) Xining Wancan Xining Wantang(11) (PRC) (PRC) (PRC) (PRC) (PRC)

100% 100%

Xining Wanlan Xining Wanxian (PRC) (PRC)

Notes: See the respective notes to the corporate structure of our Group immediately after the completion of the Reorganization and the [REDACTED] Investment.

PRC REGULATORY REQUIREMENT

As advised by our PRC Legal Advisors, we have obtained all necessary approvals from relevant PRC regulatory authorities required for the implementation of the Reorganization.

The Rules on the Mergers and Acquisitions of Domestic Enterprises by Foreign Investors in the PRC

According to the M&A Rules, where a domestic company, enterprise or natural person intends to acquire its or his/her related domestic company in the name of an offshore company which it or he/she lawfully established or controls, the acquisition shall be subject to the examination and approval of the MOFCOM, and where a domestic company or natural person holds an equity interest in a domestic company through an offshore special purpose company by paying the acquisition price with equity interests, the overseas listing of that special purpose company shall be subject to approval by the CSRC.

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Pursuant to the Measures for the Reporting of Foreign Investment Information (《外商投資信息報告辦法》) (the “Foreign Investment Information Measures”), since January 1, 2020, for foreign investors carrying out investment activities directly or indirectly in China, the foreign investors or foreign-invested enterprises shall submit investment information to the commerce authorities pursuant to these measures. As advised by our PRC Legal Advisors, Ningxia Zhongxian has completed the required reporting and registration procedure for the capital injection of RMB7,100,000 by Zhonghong HK (the “First Capital Injection”) according to the Foreign Investment Information Measures in February 2021.

Upon the completion of the First Capital Injection, Ningxia Zhongxian became a foreign-invested enterprise. For the capital injection of RMB988,700,000 million and RMB1,249,750 million by Ningxia Zhongqia and Zhonghong HK, respectively (the “Second Capital Injection”), and the acquisition by Ningxia Zhongqia of 1% equity interest in Ningxia Zhongxian held by Ningxia Junben (the “Acquisition”), which happened after Ningxia Zhongxian was converted into a foreign-invested enterprise, was deemed as having caused changes in shareholders due to the acquisition of equity interests of a foreign-invested enterprise. As advised by our PRC Legal Advisors, the M&A Rules do not apply to equity transfers of an established foreign-invested enterprise by the domestic party to foreign parties and accordingly, the M&A Rules are not applicable to the Second Capital Injection and the Acquisition. Instead, the Second Capital Injection and the Acquisition shall comply with the Foreign Investment Information Measures. Ningxia Zhongxian has completed the required reporting and registration procedure in March 2021.

SAFE Registration in the PRC

Pursuant to the Circular on the Administration of Foreign Exchange Involved in the Investment and Financing and Round-trip Investment Conducted by PRC Residents via Special Purpose Vehicles 《(關於境內居民通過特殊目的公司境外投融資及返程投資外匯管理有關問題的通知》)(“SAFE Circular No. 37”) issued by SAFE on July 4, 2014 and Circular on Further Simplifying and Improving the Direct Investment-related Foreign Exchange Administration Policies (關於進一步簡化和改進直接投資外匯管理政策的通知)(“SAFE Circular No. 13”), where the PRC individual residents conduct investment in offshore special purpose vehicles with their legitimate onshore and offshore assets or equities, they must register with local SAFE branches with respect to their investments. SAFE Circular No. 37 also requires the PRC residents to file changes to their registration where their offshore special purpose vehicles undergo material events such as the change of basic information including PRC residence, name and operation period, as well as capital increase or decrease, share transfer or exchange, merger or division.

As advised by our PRC Legal Advisors, each of Mr. Fang, Ms. Gong Fan, Ms. Zhang Jun, Mr. Wang Xiaoping, Ms. Qu Jianping and the individual shareholders in Shareholder Group 1, Shareholder Group 2 and Shareholder Group 3 has completed the registration as required by SAFE Circular No. 37 and SAFE Circular No. 13.

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OVERVIEW

We are an expanding property developer with more than 27 years of comprehensive experience focusing on the development and sales of quality mid-to high-end residential properties in selected regions in China. We aim to be a leading provider of pleasurable living experience for our customers. Since our founding in 1994, we have become the market leader in Yinchuan and Xining and have expanded to other strategically selected areas in Northwest China. We were ranked among the “2020 Top 50 Brand of China Real Estate Companies” by the China Real Estate TOP 10 Research (中國房地產TOP10研究組) and ranked first in terms of contracted sales among all property developers in Yinchuan and Xining in 2020 according to CIA. As of March 31, 2021, we had 30 property development projects at various stages of development with a total GFA attributable to us of 6,516,722 sq.m., among which, 29 projects were developed by our subsidiaries and one project was developed by our associate. Over the years, we have accumulated in-depth knowledge and understanding of the property market, and developed comprehensive development capabilities. In addition to residential properties, we also develop and manage commercial properties, such as shopping malls and retail stores attached to our residential properties.

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OUR STRENGTHS

We believe the following rising strengths contributed to our success during the Track Record Period and distinguish us from our competitors.

An expanding property developer with a market leading position in Yinchuan and Xining

We are an expanding property developer with comprehensive experience focusing on the development of quality mid-to high-end residential properties in selected regions in China. Since our founding in 1994, we have become the market leader in Yinchuan and Xining and have expanded to other strategically selected areas in Northwest China. We were ranked among the “2020 Top 50 Brand of China Real Estate Companies” by the China Real Estate TOP 10 Research (中國房地產TOP10研究組) and ranked first in terms of contracted sales among all property developers in Yinchuan and Xining in 2020 according to CIA.

Over the years, we have accumulated in-depth knowledge and understanding of the property market, and developed comprehensive development capabilities. In addition to residential properties, we also develop and manage commercial properties, such as shopping malls and retail stores attached to our residential properties.

As of March 31, 2021, we had 30 property development projects at various stages of development, among which, 29 projects were developed by our subsidiaries and one project was developed by our associate. As of March 31, 2021, our property development projects had a total GFA attributable to us of 6,516,722 sq.m., comprising (i) GFA available for sale, rentable GFA for completed projects of 182,839 sq.m.; (ii) planned GFA for properties under development of 4,704,514 sq.m.; and (iii) estimated GFA for properties held for future development of 1,629,369 sq.m.

With our distinctive property designs, standardized property development process, multiple land acquisition methods, professional management team and industry recognized brand image, we experienced business expansion during the Track Record Period. Our revenue grew at a CAGR of approximately 50.0% from RMB2,503.7 million in 2018 to RMB5,635.8 million in 2020. Our net profit grew at a CAGR of 52.0% from RMB364.6 million in 2018 to RMB842.7 million in 2020. We believe that our strong market positions in selected markets, comprehensive development capabilities and large-scale operation will help us capture future growth opportunities.

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Products with distinctive designs and high quality standards that enhance our value proposition

We position ourselves as a provider of pleasurable life experience (美好生活服務商). We emphasize our focuses on developing products that cater to the needs and preferences of our target customers, and designing properties that reflect our dedication to product quality and customer satisfaction. We believe the following property development philosophies have differentiated us from other property developers and help us achieve economic success.

Product Design

We have adopted a philosophy of incorporating different cultural elements into our property designs based on the location and characteristics of each project, so that each project has its own theme and tells a story of its own. We conduct in-depth studies about the local area of the development project and infuse each functional space with appropriate design elements according to the positioning and cultural theme of the projects. In addition, we strive to provide a healthy environment through landscape design that is consistent with the cultural theme of the project and the local climate. We also endeavor to design our floor plans with comfort and practicality, and provide customers with detail-oriented decoration and furnishing services. Through our product design, we provide and bring customers a pleasurable living environment with comfort and practicality.

Ancillary Facilities

We acquire land for development only after conducting detailed analysis of the available facilities in the area and provide additional amenities such as swimming pools and movie theaters for our residents depending on the positioning of the project to make sure that our residents’ daily needs are met. We also integrate available resources and collaborate with other parties to provide our residents with access to K-12 education, elderly care services, sporting ground and other facilities.

Green Technology Application

We are dedicated to provide a green and healthy environment to our customers and the application of green technology. We are among the earliest developers in the region to adopt technologies such as fresh air ventilation systems, rubber seismic technology, sewage source heat pump technology, floor rubber mat sound insulation technology and building-integrated photovoltaics technology.

As a result of our efforts in green technology, we are in first in the PRC to receive a “Platinum Grade for the HiH Health (Residential) Recognition Program” (HiH健康標識(住宅) 項目鉑金級認定) awarded by China National Engineering Research Center for Human Settlements (國家住宅與居住環境工程技術研究中心). We are also the only property developer in Ningxia Hui Autonomous Region to be awarded the “Certificate of Green Building Label (Two-Star)” (“綠色建築”二星級運行標識) by Ningxia Academy of Building Research Co., Ltd. (寧夏建築科學研究院股份有限公司), the “Innovation Award for Green Building” by Ministry of Housing and Urban-Rural Development of the PRC (中華人民共和國住房和城鄉建設部) and the “Guangsha Prize” (廣廈獎) by China Real Estate Industry Association (中國房地產業協會) and the MOHURD Residential Industrialization Promotion Center (住房和城鄉建設部住宅產業化促進中心) for multiple times.

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We believe these technologies have allowed us to offer attractive products that combine comfort, environmental sustainability and low energy consumption to our customers.

Quality Control

We maintain the quality of our projects through strict quality control measures. For raw materials, we generally prefer low-carbon, environmentally friendly, energy-saving, renewable materials, and we generally select suppliers through a centralized open bidding process to ensure the quality and cost-efficiency of our procurement of raw materials. We also conduct spot check on the materials and conduct periodic reviews of our material suppliers, and will only keep suppliers who have a long term satisfactory track record. For construction subcontractors, we inspect construction quality at weekly, monthly and yearly intervals, and we engage third party experts to conduct quality checks no less than three times a year. Similar to material suppliers, we generally work with quality construction subcontractors with whom we have established long term satisfactory business relationship. As a result, more than 90% of our projects in Yinchuan and Xining have been recognized by the relevant authorities in terms of their excellent quality, and we have garnered a reputation of high product quality in Yinchuan and Xining according to CIA.

Customer Service

Our customer service efforts are entered on our philosophy of “13456”: (a) we act as “one” provider to offer products and services throughout the lifecycle of our customers’ residential experience; (b) we aim to offer “three” levels of services that aim to satisfy, excite and move our customers from the initial property sales process to the eventual move-in and living experience; (c) we provide “four” major types of ancillary faculties that respond to customers’ convenience, education, elderly care and environmental needs; (d) we promote “five” community values, namely “respect the elderly, love your spouse, endear your children, befriend your neighbors, and cherish yourself” (敬老、愛妻、親子、睦鄰、惜己), in order to encourage the development of harmonious neighborhood; and (e) we strive to achieve “six” betterment, namely better growth, better convenience, better neighborhood, better home living, better heath, and better value. We believe our continuous effort in providing quality customer service has enhanced our value and improved customer satisfaction.

Quality land bank acquired through diversified channels to fuel our future development

We have been in the property development market in Ningxia Hui Autonomous Region for more than 28 years and Qinghai Province for more than 23 years. As a result of our deep understanding of and brand recognition in these markets, we have been able to acquire land through diversified channels, including public tender, auction or listing-for-sale, cooperation with third-party business partners through associates, acquiring equity interests in companies that possess land use rights, and participating in government-led urban renewal projects. For example, we had been able to obtain a land bank of 1.2 million sq.m. through city renovation projects by cooperating with the local government authorities as of Latest Practicable Date.

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Leveraging our market insights and in-depth understanding of the real estate industry and property development market dynamics, we have been able to identify and acquire quality land bank at reasonable costs, seize the opportunities from the regional market cycles and achieve a high rate of return on our land acquisition. As a result of our brand reputation and regional land resources, we have established long-term business partnerships with a number of quality property developers in Northwest China. We have also expanded our business partnerships in other regions, which in turn enhances awareness of our brand and reputation. In addition, by gradually expanding to different regions, we are able to reduce our risk exposure to any particular region by diversifying our land bank portfolio. Particularly, our close cooperation with Vanke Group has been contributing to our success. By leveraging the brand recognition and industry expertise of Vanke Group, we solidify our position in our existing markets further, as well as gradually expand to different regions. In 2017, we established Zhongfang Vanke Industrial as a platform for our strategic cooperation with Vanke Group. As of March 31, 2021, Zhongfang Vanke Industrial had 11 development projects with a total GFA attributable to us of 3,389,615 sq.m. encompassing two cities. We believe our business partnership with Vanke Group will continue to play a valuable role in our future development.

As of March 31, 2021, we had a total land bank of approximately 6.8 million sq.m. and an aggregate GFA attributable to us of approximately 6.5 million sq.m that was strategically located in seven cities in five provinces and municipalities across Northwest China and other regions. As of March 31, 2021, we had completed properties available for sale or leasable with an aggregate GFA attributable to us of approximately 0.2 million sq.m., properties under development with an aggregate GFA attributable to us of approximately 4.7 million sq.m. and properties held for future development with an aggregate GFA attributable to us of 1.6 million sq.m. We believe that our ability in acquiring future projects, our property projects’ quality and our strategic positioning will provide us with a strong foundation and support for our long-term sustainable growth.

Well-established brand image and loyal customer base

Through the quality of our products and services, we have built a distinguished brand in the markets where we operate, which is a valuable asset for our expansion and sustainable growth. We have also adopted a series of policies to help maintain and enhance our brand image. According to CIA, our brand value increased from RMB1.3 billion in 2011 to RMB3.3 billion in 2020.

We maintain “customer first, integrity, product quality, and healthy corporate culture” as our brand’s core characteristics, with a focus on healthy, green, high-tech and earthquake- isolated residences and our “13456” service culture. We also actively engage in charity works for the elderly and children of migrant workers to further enhance our brand image.

As a homegrown brand in Ningxia Hui Autonomous Region, we position ourselves as a “Sunshine Boy” (暖男) who will stay with our customers forever and provide for our customers’ residential living needs throughout the lifecycle. As a result, we have developed a loyal customer base, and many buyers of our properties are repeat customers. We believe our brand image and loyal customer base are key foundations to the sustainability of our growth and success.

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Visionary, professional, experienced management team and highly motivated employees

Our success has been, and will continue to be, dependent on the continuous service of our visionary, professional and experienced management team with an in-depth understanding of the real estate industry in China, and strong execution capabilities. Our senior management members have on average over 26 years in the real estate industry in China with extensive experience and expertise in their respective fields, which covers all the key aspects of our operation, including property development, construction engineering and designing, finance, accounting and management. Moreover, we benefit from the stability of our senior management team, who have spent on average more than 15 years with us. In particular, our chairman, Mr. Fang, has over 20 years of experience in the real estate industry in China. He oversees our business and is responsible for overall strategic planning, corporate management and business development. He was recognized as one of the “Top 100 Socially Responsible Real Estate Entrepreneurs in China” (中國房地產百位最具社會責任感企業家) by China Real Estate Industry Association (中國房地產產業協會) in 2015, one of the “Top 10 Leading Persons of Enterprise Independent Innovation in Ningxia” (寧夏企業自主創新十大領軍人物) by Ningxia Enterprise Independent Innovation Achievement Release Committee (寧夏企業自主創新成果發佈委員會) and Entrepreneurs Association of Ningxia Hui Autonomous Region (寧夏回族自治區企業協會) in 2015, awarded the “2016 Quality Contribution Award of Autonomous Region” (自治區質量貢獻獎) by People’s Government of Ningxia Hui Autonomous Region (寧夏回族自治區人民政府) and the “The Most Influential Entrepreneur” (最具影響力企業家) by Entrepreneurs Association of Ningxia Hui Autonomous Region (寧夏回族自治區企業家協會) in 2017. Under the leadership of our dedicated management team with their diversity of knowledge and expertise, we are able to execute our strategies to drive our continued growth in the highly competitive real estate industry in China.

Our employees are also essential to the success of our business and we are committed to attracting, cultivating and retaining talents with substantial expertise in property development, product design, sales and marketing and other relevant industries. To attract and retain quality talent, we offer competitive compensation packages and employee benefits as well as merit-based promotion tracks to award outstanding performance. We also offer comprehensive training programs to talents at different levels to enhance their abilities and expand their experiences. As a result, we have cultivated a loyal workforce – our mid-level managers have on average spent more than 10 years with us, and our junior staff have on average spent more than five years with us. We believe our competitive compensation and comprehensive training programs contribute to a team of professional, capable and loyal employees, which sets us apart from our competitors.

OUR STRATEGIES

Continue to strengthen our position in Ningxia Hui Autonomous Region and Qinghai Province and actively expand into cities with high potential in other regions

We plan to further solidify our market leading position in Ningxia Hui Autonomous Region and Qinghai Province. We expect Ningxia Hui Autonomous Region and Qinghai Province will continue to play an important role in our business development, and we plan to further increase our market shares therein to capture the opportunities created by population

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We plan to continue to diversify our land acquisition strategies by working closely with our local partners, regional and project companies and government agencies. In selecting property developers as our business partners, particularly in new markets where we have limited experience, we plan to work with those who are well-established in the respective local markets and share common business concepts with us. We believe that, by leveraging our strengths and experiences in property development and adopting localized land acquisition strategies, we can further expand our business by acquiring land located at desirable locations at reasonable costs, which we believe will help us solidify our position in Ningxia Hui Autonomous Region and Qinghai Province as well as expand into other regions in China.

Further improve our product design and quality to enhance the competitiveness of our products and our brand image

We plan to continue to fulfill our mission as a provider of pleasurable life experience and provide customer-oriented products and services. We plan to continue to monitor market trends and our customers’ evolving needs to diversify our products and upgrade our services. We intend to refine our analysis of customer profiles such as customers’ purchasing power and preferences based on which we plan to update our property series targeting more well-defined demographics. We will continue to uphold our commitments to product and service quality, which we believe will help enhance brand image and loyalty. We plan to further enhance the quality, functionality and safety of our products, and promote healthy and eco-friendly lifestyle through our product offerings, in order to maintain the premium quality of our property projects. We also plan to enhance our competitiveness and brand image through continuous marketing and increasing our brand’s market recognition.

Continue to implement prudent financial policies and optimize our capital structure

We will continue to adhere to our prudent financial policies. We plan to continue to improve our capital management system and closely monitor our capital structure and liquidity position. We will continue to maintain our established cooperation relationships with reputable banks and financial institutions. Furthermore, we will continue to explore various financing opportunities to improve our capital structure and reduce our cost of capital. We will also continue to actively explore business opportunities with other reputable property developers to help us reduce the capital commitments in connection with land acquisitions and other property development costs. We believe the abovementioned initiatives will enable our business to continue to grow in a healthy and sustainable manner.

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Continue to attract, retain and motivate talents and build a productive workforce

We intend to continue to attract and retain skilled and talented employees from various channels, including recruiting from reputable universities, competitive peer companies and leading enterprises in various fields, by providing competitive compensation packages and performance based promotion and incentive system to reinforce our corporate values and foster greater loyalty. We also intend to further develop our internal training programs and provide our employees with solid vocational training. In addition, we plan to broaden the scope of our employee co-investment program to further incentivize our employees so as to align their goals with our success. We are confident that the aforementioned measures will enable us to attract, retain, motivate and foster skilled and talented employees to contribute to our continuing success.

OUR BUSINESS

Year ended December 31, 2018 2019 2020 RMB’000 % RMB’000 % RMB’000 %

Total ...... 2,503,727 100.0 2,125,067 100.0 5,635,839 100.0

OUR PROPERTY DEVELOPMENT BUSINESS

Overview

We develop a variety of quality residential properties, mainly including mid-to high-end residential properties,with first-time homebuyers, home upgraders and high-end customers as our main target customers. Our residential properties are categorized into the following series:

• for residential properties mainly targeting first-time homebuyers, we had the Joyful Living series (樂享系) (also known as “Yue series”) and/or the Dream series (理想系) (also known as “Li Xiang series”). The design of properties of the two series focuses on the efficient utilization of interior spaces and aims to provide basic

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functional spaces to the residents. Children’s playground, recreation facilities and sports equipment are provided in the community common areas. Properties belonging to the Joyful Living series and the Dream series generally aim to provide a comfortable living environment to our customers;

• for residential properties mainly targeting home upgraders, we had the Refined Living series (優享系) (also known as “You series”) and/or the Park series (公園系) (also known as “Gong Yuan series”). We offered upgraded services such as concierge services, housekeeping services, elderly care services, health management services, fitness training services to the residents and provided extensive gardening and greening area in communities. Properties belong to the Refined Living series and the Park series generally aim to provide an upgraded living environment to our customers; and

• for residential properties targeting high-end customers, we had the Premium Living series (尊享系) (also known as “Zun series”) and/or the Splendid series (錦繡系) (also known as “Jin Xiu series”). We applied fine art design under two series and offered additional value-added facilities such as wellness center, community clinic and day care center and focused on providing high-quality ancillary facilities. Properties belong to the Premium Living series and/or the Splendid series generally aim to provide a luxurious living environment to our customers.

We aim to provide comfortable green habitat living environment for our customers. We generally use technologies and systems oriented on human living experience to provide green and healthy living conditions for residents with comfortable temperature, humidity, oxygen supply, purity and serenity and to provide intelligent home living experience in our residential properties equipped with smart home devices. Our technology features generally include:

• Technology Residence: We apply the technologies of fresh air system, oxygen supply system, advanced air conditioning system and water purification system to create comfortable temperature, humidity and oxygen level in our residential properties. We also use advanced and eco-friendly techniques to supply energy for our residential properties, such as solar water heating system and heat recycle system, to increase energy efficiency and conserve energy;

• Green and Healthy Community: We aim to provide green and healthy living communities to our customers. We design our properties under the scheme of “sponge community”, which primarily entail a modern water management system that address drainage problems, and may involve techniques such as low-impact development technology. We install humidification system in the common community areas that mimics the fog in the forest. The humidification system could clear the dust off the air and improve the humidity around the area, providing a comfortable environment in the community; and

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• Smart Home: We offer to install smart home devices in our decorated and furnished residential properties to improve the living quality of our customers. The smart devices may include password-operated doorlocks and smoke detectors, among other things. We also provided rooms for the installation of other smart devices so that our customers can customize according to their needs.

Along with our residential property projects, we also developed commercial properties and retain ownership of a portion of our commercial properties for leasing. Our commercial properties mainly include a school and a shopping mall. See “—Property Leasing.”

As of March 31, 2021, we had 30 property development projects at various stages of development, among which, 29 projects developed by our subsidiaries and one project developed by our associate. As of March 31, 2021, our property development projects had a total GFA attributable to us of 6,516,722 sq.m., comprising (i) GFA available for sale, rentable GFA for completed projects of 182,839 sq.m.; (ii) planned GFA for properties under development of 4,704,514 sq.m.; and (iii) estimated GFA for properties held for future development of 1,629,369 sq.m.

The map below shows the geographical locations and our projects as of March 31, 2021:

Yinchuan Haidong ■ Xi Yun Tai (璽雲台) ■ Haidong Salzburg Palace ■ Eastern Joy Xining (海東薩爾斯堡) (東方悅) ■ Xining Salzburg Palace ■ Eastern Ode (西寧薩爾斯堡) Baotou (東方賦) ■ Chengbei International Village ■ Xi Yue Bay ■ Shi Mao—Yun Jin* (城北國際村) (世貿•雲錦) (璽悅灣) ■ Blue Coast ■ Yong Yue Mansion II (藍岸） (永悅府二期) ■ Blue Fragrance ■ Xi Yue Mansion Xining (藍韻) Haidong (西悅府) ■ Nan Yue Mansion Baotou ■ Su He Sunshine (南樂府) (蘇荷陽光) ■ Eastern Cloud Yinchuan ■ Vanke—Emerald Lake View (東方雲舒) Wuzhong (萬科•翡翠湖望) ■ Vanke—Park Avenue ■ Vanke—Metropolis (萬科•公園里) (萬科•大都會) ■ Vanke—Vanke Town ■ Vanke—City Light (萬科•萬科城) (萬科•城市之光) ■ Vanke—Times Metropolis ■ Vanke—Dream Town (萬科•時代都會) (萬科•理想城) ■ Vanke—Starlight Metropolis ■ Vanke—Jin Chen (萬科•時代星光) (萬科•錦宸) ■ Vanke—Chu Xin Garden (萬科•初昕苑) Chengdu Chengdu ■ Vanke—Beishida Project

■ Xi Jiang Yue (萬科•北師大項目） (西江悅) ■ Flora Garden (花語軒)

Xianyang Wuzhong

■ Jin Li (錦里) Xianyang

■ Sunshine Meiyu * Represents a project developed by our associate. (陽光美域)

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Classification of Our Property Projects

Our classification of properties reflects the basis on which we operate our business and may differ from classifications employed by other developers. The table below sets forth our classification of properties and the corresponding classification of properties in the Property Valuation Report set out in Appendix III and the Accountants’ Report set out in Appendix I to this document:

Our Classification Property Valuation Report Accountants’ Report

Completed properties, comprising • Group I: Properties held • Completed properties held properties with certificates of for sale by our Group in for sale completion (including completed the PRC properties that have been sold).... • Investment properties • Group IV: Properties held for investment by our Group in the PRC

• Group V: Properties held and occupied by our Group in the PRC

Properties under development, • Group II: Properties held • Properties under comprising properties for which we under development by our development have obtained the construction work Group in the PRC commencement permits but not yet obtained the certificates of completion ......

Properties held for future • Group III: Properties held • Properties under development, comprising properties for future development by development for which we have obtained the our Group in the PRC land use right certificates and • Prepayments for intend to hold for future acquisition of land use development and properties for rights which we have not obtained the land use right certificates, but have entered into land grant contracts. . .

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Site Area and GFA

The site area information in this document is calculated on the following basis:

• when we have received the land use right certificates, as specified in such land use right certificates; and

• before we have received the land use right certificates, as specified in the relevant land grant contracts related to the projects.

The GFA information in this document is calculated on the following basis:

• for completed projects and phases, if we have obtained records of acceptance examination upon project completion, as specified in certificates of completion or, where such records are not yet available, based on our internal records and estimates;

• for projects and phases under development or held for future development,

(a) if we have obtained the construction work planning permits or the construction work commencement permits, as specified in such permits; and

(b) if we have not yet obtained the construction work planning permits or the construction work commencement permits, as specified in land grant contracts or based on our internal records and estimates; and

• if we have obtained the pre-sale permits for the projects, the GFA available for sale information refers to the GFA available for sale in these permits.

Non-saleable GFA as used in this document comprises rentable GFA as well as the GFA for certain ancillary facilities, such as greenery area and spaces designed as civil air defense properties, for which pre-sale permits will not be issued. GFA available for sale as used in this document refers to the GFA exclusive of non-saleable GFA. GFA available for sale is further divided into GFA pre-sold but yet to be delivered and GFA unsold and available for sale. A property is pre-sold when we have executed the purchase contract but yet delivered the property to the customer. A property is considered sold after we have executed the purchase contract with a customer and have delivered the property to the customer.

Total GFA available for sale is calculated as follows:

• for properties and phases that are completed, refers to GFA pre-sold but yet to be delivered, GFA unsold and available for sale;

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• for properties and phases under development, based on the relevant pre-sale permit, or based on the construction work planning permits or the construction work commencement permit if the pre-sale permit is not available, or based on other documentation issued by the relevant governmental authorities if such permits are not available; and

• for properties and phases that are held for future development, based on our internal records and development plans, the total GFA we intend to sell does not exceed the multiple of site area and the maximum permissible plot ratio as specified in the relevant land grant contracts or other approval documents from the local governments relating to the project.

As some of our projects comprise multiple-phase developments on a rolling basis, these projects may comprise different phases that are at various stages of completion, under development or held for future development.

Land Bank and Property Portfolio

Our land bank represents the sum of (i) GFA available for sale, total rentable GFA for completed properties, which also includes completed GFA that have been pre-sold but not yet delivered; (ii) total planned GFA for properties under development; and (iii) total estimated GFA for properties held for future development. Total land bank represents the total land bank of projects developed by our subsidiaries and the land bank attributable to us of projects developed by associates.

We assess the level of involvement and cooperation with third-party business partners in our project companies on a case-by-case basis. Typically, our involvement at different stages of project development and sales process in each of such project companies would commensurate with the proportion of our equity interests or investment in the project company and is subject to the terms and conditions we entered into with our third-party business partners. See “—Voting Right Arrangements” below for further details of our cooperation with third-party business partners. We generally consider to cooperate with third-party business partners when the opportunity arises and such opportunity is expected to be mutually beneficial. In each of such project companies, our cooperation arrangement with the third-party business partners usually specifies the primary responsible party of the project company, our roles in the day-to-day management of the project company, which mainly comprise of the representation in shareholders’ meeting and board of directors’ meetings and the assignment of staff and personnel to manage one or more aspects of the operation of the relevant project companies including but not limited to budget control, operation management, cost control, marketing, financial management, human resource management and administrative management, and our profit and loss sharing arrangement, at different levels.

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Our total land bank attributable to us amounted to 6,516,722 sq.m. as of March 31, 2021, which include residential properties and commercial properties. The table below sets forth a breakdown of our land bank as of March 31, 2021 in terms of geographical location and by city tier:

In terms of geographical location: Property Projects Developed by Our Wholly Owned Subsidiaries Ningxia Hui Autonomous Region Yinchuan ...... 7 18,687 58,390 502,484 703,817 705,582 1,486,476 22.8%

Sub-total ...... 7 18,687 58,390 502,484 703,817 705,582 1,486,476 22.8%

Qinghai Province Xining ...... 6 86,666 – 363,113 488,090 44,283 619,039 9.5% Haidong ...... 1 – – 159,604 214,530 – 214,530 3.3%

Sub-total ...... 7 86,666 – 522,717 702,620 44,283 833,569 12.8%

Total...... 14 105,353 58,390 1,025,201 1,406,437 749,865 2,320,045 35.6%

Sub-total ...... 9 12,854 – 537,071 1,032,042 237,212 1,282,109 19.7

Qinghai Province Xining ...... 4 – – 988,824 1,855,193 596,892 2,452,084 37.6%

Sub-total ...... 4 – – 988,824 1,855,193 596,892 2,452,084 37.6%

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Shaanxi Province Xianyang ...... 1 6,242 – 110,853 149,367 – 155,609 2.4%

Sub-total ...... 1 6,242 – 110,853 149,367 – 155,609 2.4%

Sichuan Province Chongzhou ...... 1 – – – 193,955 – 193,955 3.0%

Sub-total ...... 1 – – – 193,955 – 193,955 3.0%

Total...... 15 19,096 – 1,636,748 3,230,557 834,104 4,083,757 62.7%

Property Project Developed by Our Associate Inner Mongolia Autonomous Region Baotou ...... 1 – – 119,400 168,800 113,500 112,920 1.7%

Sub-total ...... 1 – – 119,400 168,800 113,500 112,920 1.7%

Total...... 1 – – 119,400 168,800 113,500 112,920 1.7%

Total Land Bank ... 30 124,449 58,390 2,781,349 4,805,794 1,697,469 6,516,722 100.0%

Notes:

(1) Refers to (i) GFA pre-sold but yet to be delivered; and (ii) GFA unsold and available for sale.

(2) Refers to GFA of the property available to generate income and held for investment.

(3) Refers to (i) GFA for which we have signed a land grant contract but have not obtained the relevant land use right certificates; and (ii) GFA for which we have obtained the land use right certificates but have not obtained the requisite construction work commencement permits.

(4) Total land bank equals to the sum of (i) total GFA available for sale and total rentable GFA for completed properties; (ii) total planned GFA for properties under development; and (iii) total estimated GFA for properties held for future development.

(5) For project held by our associate, total GFA will be adjusted by our equity interest in the respective project.

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The table below sets forth the details of our property development projects as of March 31, 2021:

Completed Under Development Future Development

EstimatedGroup’s

Percentage Actual/ Actual/ Actual/ DevelopmentFutureInterest inMarketReference EstimatedEstimatedEstimated Percentage of Total ConstructionPre-sale Construction Cost Developmentthe ProjectValue to CommencementCommencementCompletion UnsaleableGFA of Total Total PlannedSaleableGFA withTotal Land EstimatedDate Date Date Incurred asCost as ofas ofAttributableProperty

Site GFA/GFAAvailableRentableTotal GFASaleableSaleablePre-sold GFA UnderGFA Use RightGFA Not for Future of March 31,MarchMarch 31, 31,to ourValuation (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) Projects Area Sold for Sale GFA completedGFA SoldGFA GFADevelopmentPre-soldYet ObtainedDevelopment 2021 2021 2021 Group Report

(RMB in (RMB in

(in sq.m.) (in sq.m.) (in sq.m.)(%) (in sq.m.) (in sq.m.) (in(in (in sq.m.) sq.m.) sq.m.)(%) (in sq.m.) (in sq.m.) million) (RMB in(%) million)million)

Property Projects Developed by Our Wholly Owned Subsidiaries Ningxia Hui Autonomous Region Yinchuan Xi Yun Tai (璽雲台289,687).... 692,309 9,66099 12,649 87,738 701,969121,237 79,405 91 – 32,554 September 2012 May 20133,739.1 500.9 June 2023100 742 2 and 3

Eastern Joy (東方悅) . . . 173,177– 182,811 188,63798 5,826 94,871118,499 90,083 95 – 8,734 December 2018 December 2018 September402.8 100 2022681 4 1,209.9 BUSINESS

Eastern Ode (東方賦) . .– .– 100,092 – – – 183,423233,951 176,948 96 – – August 2019 December 2019572.4 April461.0 2022100 948 5 6 – 169 – Xi Yue Bay (璽悅灣) . .– .– 155,583 – – – 166,263230,130 156,048 94 – – June 2019 September 2019960.7 September525.4 100 2022 1,3966

Su He Sunshine 183,868 251,313 3,201100 45,741– – 254,514– – – – October 2013 July 2016466.4 July570.9 2019 100 236 17

(蘇荷陽光)......

Flora Garden (花語軒) . .– .– 95,149 – – – – – – – – 209,328 May 2021 September– 2021 December– 100 2023736 30

Xi Yue Mansion 204,953 – – – – – – – – – – 454,966 April 2021 July 2021665.2 1,873.4 October100 2022 689 15

(西悅府)......

Qinghai Province Xining Xining Salzburg Palace270,315 580,781– 36,058 616,83992 133,634156,202 118,409 89 – – November 2012 July 20132,977.1 May315.4 2022 100 1,214 7 and 8

(西寧薩爾斯堡)....

Chengbei International140,203 Village 321,003– 16,095 337,09890 108,939117,079 96,933 89 – – September 2014 October 20142,187.3 May67.0 2022 100 928 11

(城北國際村).....

Blue Coast (藍岸)....15,256 7,231– 34,513 41,745100 – – – – – – September 2018 April 2019213.3 September41.4 100 2020 314 12

Blue Fragrance (藍韻) . .– .– 34,951 – – – 42,86963,574 40,313 94 – 44,283 April 2019 July 2019420.8 330.5 June 2021100 510 13 ERA NCNUCINWT H ETO EDD“ANN”O H OE FTI DOCUMENT. THIS OF COVER MUST THE INFORMATION ON THE “WARNING” THAT HEADED AND CHANGE SECTION TO THE SUBJECT WITH AND CONJUNCTION INCOMPLETE IN FORM, READ DRAFT BE IN IS DOCUMENT THIS Completed Under Development Future Development

EstimatedGroup’s

(RMB in (RMB in

(in sq.m.) (in sq.m.) (in sq.m.)(%) (in sq.m.) (in sq.m.) (in(in (in sq.m.) sq.m.) sq.m.)(%) (in sq.m.) (in sq.m.) million) (RMB in(%) million)million)

Nan Yue Mansion 31,045 – – – – – 37,27249,227 33,162 89 – – August 2020 September 2020149.1 May132.4 2022 100 200 10

(南樂府)......

Eastern Cloud 32,685 – – – – – 81,219102,008 74,296 91 – – July 2020 September 202079.6 June696.3 2022 100 574 9

(東方雲舒)......

Haidong Haidong Salzburg海 Palace79,249 ( – – – – – 175,403214,530 159,604 91 – – April 2019 May 2019490.2 September448.4 100 2022 749 19 東薩爾斯堡).....

Property Projects Developed by Our Non-wholly Owned Subsidiaries Ningxia Hui Autonomous Region Yinchuan BUSINESS Vanke—Emerald Lake67,591 View – – – – – 103,596136,696 102,712 99 – – November 2018 June 2019551.3 June233.5 2021 40 335 26

(萬科翡翠湖望• ).... 7 – 170 – Vanke—Metropolis 95,936 – – – – – 209,368254,895 104,275 50 – – June 2020 November 2020551.5 April1,112.0 2023 28 198 29

(萬科大都會• ).....

Vanke—City Light 106,121 71,017– 1,220 72,23798 113,794160,351 69,471 61 – – June 2018 October 2018465.9 October672.2 202240 268 25

(萬科城市之光• )....

Vanke—Dream Town98,215 – – – – – 182,325239,703 178,689 98 – – April 2019 November 2019833.4 September475.1 202128 314 28

(萬科理想城• ).....

Vanke—Jin Chen 56,556 – – – – – 87,903111,198 65,044 74 – – March 2019 June 2019579.4 June188.5 2021 21 152 27

(萬科錦宸• ).....

Vanke—Chu Xin萬科 Garden89,837 ( 161,433– 11,634 173,06791 21,99321,833 4,415 20 – – June 2018 September 2018850.5 April126.2 2021 28 74 24

•初昕苑)......

Yong Yue Mansion66,667 II – – – – – 73,11991,777 12,465 17 – 5,813 July 2020 November114.0 2020 May225.8 202245 77 14

(永悅府二期).....

Vanke—Beishida Project115,809 – – – – – – – – – 223,517 – May 2021 September 2021– December– 202440 – 32

(萬科北師大項目• )...

Wuzhong Jin Li (錦里)...... 149,690 – – – – – – – 15,589 – – 231,399 March 2021 June 2021215.9 1,308.6 April 202356 128 16 ERA NCNUCINWT H ETO EDD“ANN”O H OE FTI DOCUMENT. THIS OF COVER MUST THE INFORMATION ON THE “WARNING” THAT HEADED AND CHANGE SECTION TO THE SUBJECT WITH AND CONJUNCTION INCOMPLETE IN FORM, READ DRAFT BE IN IS DOCUMENT THIS Completed Under Development Future Development

EstimatedGroup’s

(RMB in (RMB in

(in sq.m.) (in sq.m.) (in sq.m.)(%) (in sq.m.) (in sq.m.) (in(in (in sq.m.) sq.m.) sq.m.)(%) (in sq.m.) (in sq.m.) million) (RMB in(%) million)million)

Qinghai Province Xining Vanke—Park Avenue110,939 – – – – – 265,067348,082 113,589 43 – 11,119 July 2020 July 20201,537.5 1,250.5 June 202240 650 20

(萬科公園里• ).....

Vanke—Vanke Town272,414 – – – – – 712,734935,281 621,949 87 – – March 2019 June 20194,763.9 June1,527.9 2023 40 2,19823

(萬科萬科城• ).....

Vanke—Times萬 Metropolis137,739 ( – – – – – 422,035571,830 253,286 60 – 140,440 February 2020 July 20201,463.4 September20 2022551 21 2,394.4

科時代都會• ).....

Vanke—Starlight Metropolis129,607 – – – – – – – – – – 445,333 March 2021 March 2021– December– 40 2023723 22

(萬科時代星光• ).... BUSINESS 7 – 171 – Shaanxi Province Xianyang Sunshine Meiyu 110,308 396,565– 6,242 402,80798 129,529149,367 110,853 86 – – February 2016 March 20161,990.1 July333.8 2022 55 394 1

(陽光美域)......

Sichuan Province Chongzhou Xi Jiang Yue (西江悅) . .– .– 69,857 – – – 152,759– 193,955 – – – October 2020 April 2021523.8 June563.7 2022 538 97.3 18

Property Projects Developed by Our Associate Inner Mongolia Autonomous Region Baotou Shi Mao—Yun Jin 111,501 – – – – – 163,700168,800 119,400 73 113,500 113,500 May 2020 June 2020– August– 202340 – –

(世貿雲錦• )..... Notes: DOCUMENT. THIS OF COVER MUST THE INFORMATION ON THE “WARNING” THAT HEADED AND CHANGE SECTION TO THE SUBJECT WITH AND CONJUNCTION INCOMPLETE IN FORM, READ DRAFT BE IN IS DOCUMENT THIS

(1) For projects or project phases for which we have obtained land use right, based on the relevant land use right certificates (國有土地使用證); for projects or project phases for which we have not obtained land use right, based on the relevant land grant contracts (國有土地使用權出讓合同).

(2) Unsaleable GFA refers to certain communal facilities and ancillary facilities, such as certain underground GFA, spaces for security office, civil air defense areas etc., for which pre-sale permits will not be issued; GFA sold refers to completed GFA sold and delivered.

(3) GFA available for sale is divided into (i) GFA pre-sold but yet to be delivered; and (ii) GFA unsold and available for sale.

(4) Refers to GFA of the property available to generate rental income and held for investment.

(5) Refers to total GFA completed, as set out in the completed construction work certified reports (建築工程竣工驗收報告). Total GFA completed equals to the sum of (i) unsaleable GFA/GFA sold; and (ii) GFA available for sale.

(6) Refers to (i) GFA as set out in the pre-sale permits (預售許可證); (ii) GFA available for sale as set out in the construction work commencement permits (建築工程施工許可

證); or (iii) the construction work planning permits (建設工程規劃許可證). BUSINESS 7 – 172 – (7) Refers to total GFA under development as set out in the construction work commencement permits (建築工程施工許可證) or the construction work planning permits (建設工程規劃許可證).

(8) Refers to GFA for which our Group has signed a land grant contract but have not obtained the relevant land use right certificates.

(9) Refers to (i) GFA for which we have signed a land grant contract but have not obtained the relevant land use right certificates; and (ii) GFA for which we have obtained the land use right certificates but have not obtained the requisite construction work commencement permits.

(10) Refers to the date as set out in the construction work commencement permits or its estimated by our Group.

(11) Refers to the date our Group obtained or its estimated to obtain a pre-sale permit for the project based on our Group’s internal records. Where there was more than one pre-sale permit, the pre-sale commencement date refers to the date of the earliest pre-sale permit.

(12) For completed projects, refers to the date of the records of completion certificates (房屋建築工程竣工驗收備案表); for projects under development or for future development, refers to our Group’s current estimation with reference to construction working plans.

(13) Refers to direct (unaudited) costs incurred for the relevant projects, including paid land premium of relevant land use permits, construction costs, capitalized interest and other development costs as of March 31, 2021. (14) Refers to the budgeted costs estimated to be incurred based on the development costs incurred as of March 31, 2021. DOCUMENT. THIS OF COVER MUST THE INFORMATION ON THE “WARNING” THAT HEADED AND CHANGE SECTION TO THE SUBJECT WITH AND CONJUNCTION INCOMPLETE IN FORM, READ DRAFT BE IN IS DOCUMENT THIS

(15) Refers to the effective equity interest in the respective city/project companies contained in the property valuation report as of March 31, 2021. The effective equity interest is based on the actual effective equity interest in the respective city/project company in accordance with the relevant investment arrangement and applicable accounting standards under IFRSs and may not be the same as the registered shareholding.

(16) Refers to the market value of the project in proportion to our Group’s interest in the projects as of March 31, 2021.

(17) Refers to the project number stated in “Summary of Value” in the property valuation report set out in Appendix III to this document. BUSINESS 7 – 173 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

Voting Right Arrangements

Zhongfang Vanke Industrial is a platform company for our strategical cooperation with Vanke Group. It had 15 project companies as of the Latest Practicable Date. Zhongfang Vanke Industrial was established in the PRC as a limited liability company on September 28, 2017, whose equity interest is owned 40% by us, 40% by Vanke Group and 20% by Shenzhen Huayin. On the same date, we entered into a voting right entrustment agreement with Shenzhen Huayin, pursuant to which Shenzhen Huayin agreed to entrust us its 20% of the voting rights in Zhongfang Vanke Industrial. As a result, we have obtained majority of voting rights in Zhongfang Vanke Industrial and are entitled to exercise an aggregate 60% of the voting rights in the shareholders’ meeting of Zhongfang Vanke Industrial, and therefore are able to exercise control over financial and business decisions and daily operations of Zhongfang Vanke Industrial. Accordingly, we are able to consolidate Zhongfang Vanke Industrial and project companies held by Zhongfang Vanke Industrial as subsidiaries into our Group in accordance with the IFRSs. See “History, Reorganization and Corporate Structure—Our Corporate Development—Our Principal Operating Subsidiaries in the PRC—Zhongfang Vanke Industrial” for details and “—Our Property Development Business—Our Property Projects” for details on our Group’s interest in each of the projects developed by Zhongfang Vanke Industrial and its project companies.

Apart from Zhongfang Vanke Industrial, we cooperate with another business partner and established Ningxia Zhongjin, which operates Yong Yue Mansion II (永悅府二期). We hold 35% equity interest in Ningxia Zhongjin but are entitled to exercise an aggregate 51% of the voting rights in the shareholders’ meeting as stipulated in the articles of association of Ningxia Zhongjin. We are also able to consolidate Ningxia Zhongjin as a subsidiary into our Group by obtaining a majority of voting right in the shareholders’ meeting in accordance with the IFRSs. See “—Our Property Development Business—Our Property Projects” for details on our Group’s interest in the project developed by Ningxia Zhongjin.

The business partners which had the voting right arrangements with us are Independent Third Parties (other than their interests in the relevant companies). We have such arrangements with our business partners so that we can leverage their network, market reputation, financial strength and industry experience for the purpose of acquiring large parcels of land or expanding into new markets while we can maintain a better control for the property projects. Our business partners can receive desired return by leveraging our brand name, industry expertise and experience and other property development resources. Although we held no more than 50% of the equity interest in the platform company and the project company, through the above voting rights arrangements, we still obtain control of the property development to ensure consistent quality of our products and services and to enlarge our market penetration and further increase our market recognition. We believe that such cooperation strategy was mutually beneficial for both our business partners and us.

Our voting right entrustment agreement and articles of association of relevant platform company and project company set out the general rights and obligations of the board of directors, the shareholders’ meeting, and the duties and responsibilities of the management to

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In case that our business partners breach their contractual obligations under the voting right arrangements, we may lose our control in the platform company and project company since we may not be able to maintain a majority in voting rights. However, since we have carefully selected our business partners, during the Track Record Period and up to the Latest Practicable Date, we did not encounter any incident where our business partners breached their contractual obligations under the voting right arrangements nor they transferred any of their equity interests in the companies under voting right arrangement. See “Risk Factors—Risks Relating to Our Business—Our business and prospects are dependent on and may be adversely affected by our non-wholly owned subsidiaries consolidated through voting right arrangements” for details.

In addition, such voting right arrangements do not affect the equity profit sharing between our business partners and us. Our PRC Legal Advisors are of the view that such arrangements do not violate the applicable PRC laws and regulations. Given that we can exercise control over Zhongfang Vanke Industrial and Ningxia Zhongjin under the voting right arrangements, in accordance with the IFRSs, Zhongfang Vanke Industrial and its project companies and Ningxia Zhongjin were accounted for as our subsidiaries and consolidated into our financial statements using the same accounting policies applicable to our other subsidiaries during the Track Record Period. For details, please refer to Note 1(d) of the Accountants’ Report in Appendix I to this document. As of March 31, 2021, 12 of our property projects involve such voting right arrangements. These property projects were at various stages of development as of March 31, 2021, including nil completed projects; ten projects under development with a total GFA attributable to us of 3,041,871 sq.m. and two projects held for future development with a total GFA attributable to us of 445,333 sq.m. The methodologies and basis of the assumptions adopted in the valuation of the property interests are the same for those of properties held by our subsidiaries (irrespective of whether they are under voting right arrangements or not) and those held by our associates. See “—Our Property Projects” for more details on each of these ten property projects and the property valuation report in Appendix III to this document for more details on the valuation methodologies of our properties.

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During the Track Record Period, out of the 15 project companies with voting right arrangements we entered into with our business partners, two of them recorded revenue. The aggregate revenue from these two project companies amounted to nil, nil and RMB1,209.4 million in 2018, 2019 and 2020, respectively, accounting for nil, nil and 21.5%, respectively, of our total revenue during the respective period.

According to CIA, the real estate industry is capital intensive, highly competitive and highly fragmented, and cooperation with business partners for property development, which can reduce investment and operational risks, has become increasingly prevalent in the market. In the future, we will continue with our flexible but cautious approach towards business cooperation with other parties taking into account prevailing market conditions, our development goals and financial conditions.

Co-investment Schemes

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Description of Projects

Properties Projects Developed by Our Wholly Owned Subsidiaries

Description of certain of the key projects developed by our wholly owned subsidiaries is set out below.

Yinchuan

(1) Xi Yun Tai (璽雲台)

Xi Yun Tai (璽雲台) is a residential property project located in Xingqing district, Yinchuan, Ningxia Hui Autonomous Region. Developments in the vicinity comprise mainly residential and commercial developments and in close proximity to schools and commercial plaza. The project occupies a total site area of 289,687 sq.m. and comprise of multi-story and high-rise residential properties, retail stores attached to residential properties and carparks. The project is divided into 12 phases of development in both southern and northern districts. As of March 31, 2021, the project has an aggregate GFA of 855,760 sq.m.

We entered into two relevant land grant contracts on November 25, 2009, and had paid the land premium of RMB1,023 million in full for the entire project as of March 31, 2021.

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We obtained the completion certificate of Southern District Phase I to VI, Northern District Phase I to III and Unit 32# of this project on July 30, 2020. Other phases of this project are scheduled to be completed in June 2023.

Below are details of this project as of March 31, 2021:

Interest attributable to our Group ...... 100% Construction Period Actual commencement date ...... September 2012 Estimated completion date ...... June 2023 Total GFA completed ...... 701,969 sq.m. Percentage of total saleable GFA sold...... 99% Total planned GFA under development ...... 121,237 sq.m. Total estimated GFA for future development...... 32,554 sq.m.

See Property No. 2 and 3 of the Property Valuation Report in Appendix III to this document.

(2) Eastern Joy (東方悅)

Eastern Joy (東方悅) is a residential project located in Xingqing district, Yinchuan, Ningxia Hui Autonomous Region. Developments in the vicinity comprise mainly residential and commercial developments and in close proximity to Oil City and our another project Eastern Home. The project occupies a total site area of 173,177 sq.m. and comprise of multi-story and high-rise residential properties, retail stores attached to residential properties and carparks. The project is divided into 4 phases of development. As of March 31, 2021, the project has an aggregated GFA of 315,870 sq.m.

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We entered into the relevant land grant contract on August 13, 2007 and had paid the land premium of RMB124.5 million in full for the entire project as of March 31, 2021.

We obtained the completion certificate of all properties of Phase I and all multi-story and high-rise residential properties of Phase II of this project in October 2020. Other phases of this project are scheduled to be completed in September 2022.

Below are details of this project as of March 31, 2021:

Interest attributable to our Group ...... 100% Construction Period Actual commencement date ...... December 2018 Estimated completion date ...... September 2022 Total GFA completed ...... 188,637 sq.m. Percentage of total saleable GFA sold...... 98% Total planned GFA under development ...... 118,499 sq.m. Total estimated GFA for future development...... 8,734 sq.m.

See Property No. 4 of the Property Valuation Report in Appendix III to this document.

(3) Eastern Ode (東方賦)

Eastern Ode (東方賦) is a residential project located in Xingqing district, Yinchuan, Ningxia Hui Autonomous Region. Developments in the vicinity comprise mainly residential and commercial developments and in close proximity to schools and commercial complex. The project occupies a total site area of 100,092 sq.m. and comprise of medium- and high-rise residential properties, retail stores attached to residential properties and carparks. The project is divided into two phases of development. As of March 31, 2021, the project was under development and is expected, upon completion, to have an aggregated GFA of 233,951 sq.m.

We entered into two relevant land grant contracts on December 26, 2017 and had paid the land premium of RMB216.9 million in full for the entire project as of the March 31, 2021.

We did not obtain the completion certificate of this project as of March 31, 2021. This project is scheduled to be completed in April 2022.

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Below are details of this project as of March 31, 2021:

Interest attributable to our Group ...... 100% Construction Period Actual commencement date ...... August 2019 Estimated completion date ...... April 2022 Total GFA completed ...... nil Percentage of total saleable GFA sold...... nil Total planned GFA under development ...... 233,951 sq.m. Total estimated GFA for future development...... nil

See Property No. 5 of the Property Valuation Report in Appendix III to this document.

(4) Xi Yue Bay (璽悅灣)

Xi Yue Bay (璽悅灣) is a residential project located in Jinfeng district, Yinchuan, Ningxia Hui Autonomous Region. Developments in the vicinity comprise mainly residential and commercial developments and in close proximity to schools and conference center. The project occupies a total site area of 155,583 sq.m. and comprise of multi-story and high-rise residential properties, retail stores attached to residential properties and carparks. As of March 31, 2021, the project was under development and is expected, upon completion, to have an aggregated GFA of 230,130 sq.m.

We entered into the relevant land grant contract on November 20, 2018 and had paid the land premium of RMB466.7 million in full for the entire project as of March 31, 2021.

We did not obtain the completion certificate of this project as of March 31, 2021. This project is scheduled to be completed in September 2022.

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Below are details of this project as of March 31, 2021:

Interest attributable to our Group ...... 100% Construction Period Actual commencement date ...... June 2019 Estimated completion date...... September 2022 Total GFA completed ...... nil Percentage of total saleable GFA sold...... nil Total planned GFA under development ...... 230,130 sq.m. Total estimated GFA for future development...... nil

See Property No. 6 of the Property Valuation Report in Appendix III to this document.

(5) Su He Sunshine (蘇荷陽光)

Su He Sunshine (蘇荷陽光) is a residential project located in Helan County, Yinchuan, Ningxia Hui Autonomous Region. Developments in the vicinity comprise mainly residential and commercial developments and schools, and in close proximity to residential area. The project occupies a total site area of 183,868 sq.m. and comprise of medium- and high-rise residential properties, retail stores attached to residential properties, ancillary facilities and carparks. The project is divided into two phases of development. As of March 31, 2021, the project has an aggregated GFA of 254,514 sq.m.

We entered into three relevant land grant contracts, each on October 11, 2002, October 25, 2002 and March 1, 2013, respectively, and had paid the land premium of RMB14.8 million in full for the entire project as of March 31, 2021.

We obtained the completion certificate of all phases of this project on July 1, 2019.

Below are details of this project as of March 31, 2021:

Interest attributable to our Group...... 100% Construction Period Actual commencement date ...... October 2013 Actual completion date...... July 2019 Total GFA completed ...... 254,514 sq.m. Percentage of total saleable GFA sold ...... 100% Total planned GFA under development...... nil Total estimated GFA for future development ...... nil

See Property No. 17 of the Property Valuation Report in Appendix III to this document.

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(6) Flora Garden (花語軒)

Flora Garden (花語軒) is located at Qinshui Avenue East, Harbin Road North, Jinfeng District, Yinchuan City. Developments in the vicinity comprise mainly residential developments, and in close proximity to public transport and other public facilities to be future developed. The property occupies a parcel of land with a site area of approximately 95,149 sq.m. As of March 31, 2021, developing plan for this project had not been commenced.

We entered into the relevant land grant contract on December 4, 2020, and had paid the land premium of RMB711.0 million in full for the entire project as of March 31, 2021.

Below are details of this project as of March 31, 2021:

Interest attributable to our Group...... 100%(1) Construction Period Estimated commencement date ...... May2021 Estimated completion date ...... December 2023 Total GFA completed ...... nil Percentage of total saleable GFA sold ...... nil Total planned GFA under development...... nil Total estimated GFA for future development ...... 209,328 sq.m.

(1) The project company of Flora Garden is Ningxia Zhonghan Real Estate Co., Ltd. (寧夏中翰置業有限公司) (“Ningxia Zhonghan”), a non-wholly owned subsidiary of Ningxia Zhongfang Industrial. Under the cooperation agreement among the shareholders of Ningxia Zhonghan, the minority shareholder holds 30% of the equity interest in Ningxia Zhonghan as part of the trust financing arrangement. The minority shareholder’ 30% of the equity interest in Ningxia Zhonghan is not reflected in our Group’ interest according to the IFRSs. See “Financial Information—Financial Liabilities at Fair Value Through Profit or Loss” and “Financial Information—Indebtedness.”

See Property No. 30 of the Property Valuation Report in Appendix III to this document.

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(7) Xi Yue Mansion (西悅府)

Xi Yue Mansion (西悅府) is a residential and commercial project located in Xixia district, Yinchuan, Ningxia Hui Autonomous Region. Developments in the vicinity comprise mainly residential and commercial developments and in close proximity to schools, hospitals and commercial plaza. The project occupies a total site area of 204,953 sq.m. and comprise of high-rise residential properties, retail stores attached to residential properties, nursing center, kindergarten and underground car parking spaces. As of March 31, 2021, portions of the project was under development and the remaining portion was held for future development and is expected, upon completion, to have an aggregated GFA of 454,966 sq.m.

We entered into the relevant land grant contract on August 11, 2020 at a price of RMB289.1 million and had paid the land premium in full for the entire project as of March 31, 2021.

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We did not obtain the completion certificate of this project as of March 31, 2021. This project is scheduled to be completed in October 2022.

Below are details of this project as of March 31, 2021:

Interest attributable to our Group ...... 100%(1) Construction Period Estimated commencement date ...... April 2021 Estimated completion date...... October 2022 Total – GFA completed...... nil Percentage of total saleable GFA sold...... nil Total planned GFA under development ...... nil Total estimated GFA for future development...... 454,966 sq.m.

Note:

(1) The project company of Xi Yue Mansion is Ningxia Zhongyue Real Estate Co., Ltd.(寧夏中悅置業有限公司) (“Ningxia Zhongyue”), a non-wholly owned subsidiary of Ningxia Zhongfang Industrial. Under the cooperation agreement among the shareholders of Ningxia Zhongyue, the minority shareholder holds 30% of the equity interest in Ningxia Zhongyue as part of the trust financing arrangement. The minority shareholder’s 30% of the equity interest in Ningxia Zhongyue is not reflected in our Group’s interest according to the IFRSs. See “Financial Information—Financial Liabilities at Fair Value Through Profit or Loss” and “Financial Information—Indebtedness.”

See Property No. 15 of the Property Valuation Report in Appendix III to this document.

Xining

(1) Xining Salzburg Palace (西寧薩爾斯堡)

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Xining Salzburg Palace (西寧薩爾斯堡) is a residential and commercial project located in Chengbei district, Xining, Qinghai Province. Developments in the vicinity comprise mainly residential and commercial developments and in close proximity to schools and commercial plaza. The project occupies a total site area of 270,315 sq.m. and comprise of multi-story and high-rise residential properties, retail stores attached to residential properties and carparks. The project is divided into 10 phases of development in eastern, central and western districts. As of March 31, 2021, the project has an aggregated GFA of 773,041 sq.m.

We entered into the relevant land grant contracts on January 7, 2011, April 2, 2011 and had paid the land premium of RMB770.7 million in full for the entire project as of March 31, 2021.

We obtained the completion certificate of Eastern District Phase I to IV as of March 31, 2021. Eastern District Phase V was under development. Western District Phase I to III was completed, but we did not yet obtain the completion certificate as of March 31, 2021.

Below are details of this project as of March 31, 2021:

Interest attributable to our Group ...... 100% Construction Period Actual commencement date ...... November 2012 Estimated completion date...... May2022 Total GFA completed ...... 616,839 sq.m. Percentage of total saleable GFA sold...... 92% Total planned GFA under development ...... 156,202 sq.m. Total estimated GFA for future development...... nil

See Property No. 7 and 8 of the Property Valuation Report in Appendix III to this document.

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(2) Chengbei International Village (城北國際村)

Chengbei International Village (城北國際村) is a residential project located in Chengbei district, Xining, Qinghai Province. Developments in the vicinity comprise mainly residential and commercial developments and in close proximity to schools and commercial plaza. The project occupies a total site area of 140,203 sq.m. and comprise of multi-story and high-rise residential properties, retail stores attached to residential properties and carparks. The project is divided into four phases of development. As of March 31, 2021, the project has an aggregated GFA of 454,177 sq.m.

We entered into the relevant land grant contract on February 17, 2014 and had paid the land premium of RMB847.7 million in full for the entire project as of March 31, 2021.

We obtained the completion certificate of Phase I to III as of March 31, 2021, though Unit 11# of Phase I has commenced construction on April 25, 2020, and was under development. Phase IV was completed, but we did not yet obtain the completion certificate as of March 31, 2021.

Below are details of this project as of March 31, 2021:

Interest attributable to our Group ...... 100% Construction Period Actual commencement date ...... September 2014 Actual completion date ...... May2022 Total GFA completed ...... 337,098 sq.m. Percentage of total saleable GFA sold...... 90% Total planned GFA under development ...... 117,079 sq.m. Total estimated GFA for future development...... nil

See Property No. 11 of the Property Valuation Report in Appendix III to this document.

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(3) Blue Coast (藍岸)

Blue Coast (藍岸) is a residential project located in Chengbei district, Xining, Qinghai Province. Developments in the vicinity comprise mainly residential and commercial developments and in close proximity to schools and commercial plaza. The project occupies a total site area of 15,256 sq.m. and comprise of multi-story and high-rise residential properties, retail stores attached to residential properties and carparks. As of March 31, 2021, the project has an aggregated GFA of 41,745 sq.m.

We entered into the relevant land grant contract on May 15, 2018 and had paid the land premium of RMB100 million in full for the entire project as of March 31, 2021.

We did not obtain the completion certificate of this project, though the project was completed as of March 31, 2021.

Below are details of this project as of March 31, 2021:

Interest attributable to our Group ...... 100% Construction Period Actual commencement date ...... September 2018 Actual completion date ...... September 2020 Total GFA completed ...... 41,745 sq.m. Percentage of total saleable GFA sold...... 100% Total planned GFA under development ...... nil Total estimated GFA for future development...... nil

See Property No. 12 of the Property Valuation Report in Appendix III to this document.

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(4) Blue Fragrance (藍韻)

Blue Fragrance (藍韻) is a residential project located in Chengxi district, Xining, Qinghai Province. Developments in the vicinity comprise mainly residential and commercial developments and in close proximity to schools and commercial plaza. The project occupies a total site area of 34,951 sq.m. and comprise of multi-story and high-rise residential properties, retail stores attached to residential properties and carparks. The project is divided into 2 phases of development. As of March 31, 2021, portions of the project was under development and the remaining portion was held for future development and is expected, upon completion, to have an aggregated GFA of 107,857 sq.m.

We entered into the relevant land grant contract on May 15, 2018 and had paid the land premium of RMB266.8 million in full for the entire project as of March 31, 2021.

This project is scheduled to be completed in June 2021.

Below are details of this project as of March 31, 2021:

Interest attributable to our Group ...... 100% Construction Period Actual commencement date ...... April 2019 Estimated completion date...... June 2021 Total GFA completed ...... nil Percentage of total saleable GFA sold ...... nil Total planned GFA under development ...... 63,574 sq.m. Total estimated GFA for future development...... 44,283 sq.m.

See Property No. 13 of the Property Valuation Report in Appendix III to this document.

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(5) Nan Yue Mansion (南樂府)

Nan Yue Mansion (南樂府) is a residential project located in Chengzhong district, Xining, Qinghai Province. Developments in the vicinity comprise mainly residential and commercial developments and in close proximity to schools and commercial plaza. The project occupies a total site area of 31,045 sq.m. and comprise of multi-story and high-rise residential properties, retail stores attached to residential properties and carparks. As of March 31, 2021, the project was under development and is expected, upon completion, to have an aggregated GFA of 49,227 sq.m.

We obtained the parcel through court auction on August 30, 2019 and had paid the bid price of RMB64.2 million in full for the entire project as of March 31, 2021.

This project is scheduled to be completed in May 2022.

Below are details of this project as of March 31, 2021:

Interest attributable to our Group ...... 100% Construction Period Actual commencement date ...... August 2020 Estimated completion date...... May2022 Total GFA completed ...... nil Percentage of total saleable GFA sold...... nil Total planned GFA under development ...... 49,227 sq.m. Total estimated GFA for future development...... nil

See Property No. 10 of the Property Valuation Report in Appendix III to this document.

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(6) Eastern Cloud (東方雲舒)

Eastern Cloud (東方雲舒) is a residential project located in Chengdong district, Xining, Qinghai Province. Developments in the vicinity comprise mainly residential and commercial developments and in close proximity to schools and commercial plaza. The project occupies a total site area of 32,685 sq.m. and comprise of high-rise residential properties, retail stores attached to residential properties and carparks. As of March 31, 2021, the project was under development and is expected, upon completion, to have an aggregated GFA of 102,008 sq.m.

We entered into the relevant land grant contract on December 11, 2019 and had paid the land premium of RMB382.4 million in full for the entire project as of April 16, 2021.

Below are details of this project as of March 31, 2021:

Interest attributable to our Group ...... 100% Construction Period Actual commencement date ...... July 2020 Estimated completion date...... June 2022 Total GFA completed ...... nil Percentage of total saleable GFA sold...... nil Total planned GFA under development ...... 102,008 sq.m. Total estimated GFA for future development...... nil

See Property No. 9 of the Property Valuation Report in Appendix III to this document.

Haidong

(1) Haidong Salzburg Palace (海東薩爾斯堡)

Haidong Salzburg Palace (海東薩爾斯堡) is a residential project located in Ledu district, Haidong, Qinghai Province. Developments in the vicinity comprise mainly residential and commercial developments and in close proximity to schools and commercial plaza. The project occupies a total site area of 79,249 sq.m. and comprise of multi-story and high-rise residential properties, retail stores attached to residential properties and carparks. As of March 31, 2021, the project has an aggregated GFA of 214,530 sq.m.

We entered into two relevant land grant contracts on March 1, 2019 and had paid the land premium of RMB154.7 million in full for the entire project as of March 31, 2021.

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Below are details of this project as of March 31, 2021:

Interest attributable to our Group ...... 100% Construction Period Actual commencement date ...... April 2019 Estimated completion date...... September 2022 Total GFA completed ...... nil Percentage of total saleable GFA sold...... nil Total planned GFA under development ...... 214,530 sq.m. Total estimated GFA for future development...... nil

See Property No. 19 of the Property Valuation Report in Appendix III to this document.

Property Projects Developed by Our Non-Wholly Owned Subsidiaries

Description of certain of the key projects developed by our non-wholly owned subsidiaries is set out below.

Yinchuan

(1) Vanke—Emerald Lake View (萬科•翡翠湖望)

Vanke—Emerald Lake View (萬科•翡翠湖望) is a residential property project located in Helan County, Yinchuan, Ningxia Hui Autonomous Region. Developments in the vicinity comprise mainly residential developments and in close proximity to schools. The project occupies a total site area of 67,591 sq.m. and comprise of high-rise residential properties, townhouses, commercial units and carparks. As of March 31, 2021, the project was under development and is expected, upon completion, to have an aggregated GFA of 136,696 sq.m.

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We entered into the relevant land grant contract on October 25, 2002 and had paid the land premium of RMB5.5 million in full for the entire project as of March 31, 2021.

Below are details of this project as of March 31, 2021:

Interest attributable to our Group ...... 40%(1) Construction Period Actual commencement date ...... November 2018 Estimated completion date...... June 2021 Total GFA completed ...... nil Percentage of total saleable GFA sold...... nil Total planned GFA under development ...... 136,696 sq.m. Total estimated GFA for future development...... nil

Note:

(1) The project company of Vanke—Emerald Lake View is Ningxia Wanpeng Real Estate Development Co. Ltd. (寧夏萬鵬房地產開發有限公司) (“Ningxia Wanpeng”), an indirect non- wholly owned subsidiary of Zhongfang Vanke Industrial. Under the the voting rights entrustment agreement among the shareholders of Zhongfang Vanke Industrial, our Group is entitled to exercise majority of the voting rights at the shareholders’ meeting and control the decisions of the board of Zhongfang Vanke Industrial. Accordingly, Ningxia Wanpeng was accounted for and consolidated in the audited accounts of our Company and considered as a subsidiary of our Company. The profit sharing and capital commitment were determined based on the equity shareholding of Ningxia Wanpeng. See “—Voting Right Arrangements” for details.

See Property No. 26 of the Property Valuation Report in Appendix III to this document.

(2) Vanke—Metropolis (萬科•大都會)

Vanke—Metropolis (萬科•大都會) is a residential property project located in Jinfeng district, Yinchuan, Ningxia Hui Autonomous Region. Developments in the vicinity comprise mainly residential developments and in close proximity to culture park, hospital and commercial plaza. The project occupies a total site area of 95,936 sq.m. and comprise of high-rise residential properties, townhouses, commercial units and carparks. As of March 31, 2021, the project was under development and is expected, upon completion, to have an aggregated GFA of 254,895 sq.m.

We entered into the relevant land grant contract on December 18, 2019 and had paid the land premium of RMB309.2 million in full for the entire project as of March 31, 2021.

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Below are details of this project as of March 31, 2021:

Interest attributable to our Group ...... 28%(1) Construction Period Actual commencement date ...... June 2020 Estimated completion date...... April 2023 Total GFA completed ...... nil Percentage of total saleable GFA sold...... nil Total planned GFA under development ...... 254,895 sq.m. Total estimated GFA for future development...... nil

Note:

(1) The project company of Vanke—Metropolis is Yinchuan Wanbo Zhongtai Real Estate Development Co. Ltd. (銀川萬博中泰房地產有限公司) (“Wanbo Zhongtai”), an indirect non- wholly-owned subsidiary of Zhongfang Vanke Industrial. Under the the voting rights entrustment agreement among the shareholders of Zhongfang Vanke Industrial, our Group is entitled to exercise majority of the voting rights at the shareholders’ meeting and control the decisions of the board of Zhongfang Vanke Industrial. Accordingly, Wanbo Zhongtai was accounted for and consolidated in the audited accounts of our Company and considered as a subsidiary of our Company. The profit sharing and capital commitment were determined based on the equity shareholding of Wanbo Zhongtai. See “—Voting Right Arrangements” for details.

See Property No. 29 of the Property Valuation Report in Appendix III to this document.

(3) Vanke—City Light (萬科•城市之光)

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Vanke—City Light (萬科•城市之光) is a residential property project located in Xingqing district, Yinchuan, Ningxia Hui Autonomous Region. Developments in the vicinity comprise mainly residential developments and in close proximity to bus terminal, schools and commercial plaza. The project occupies a total site area of 106,121 sq.m. and comprise of high-rise residential properties, townhouses, commercial units and carparks. As of March 31, 2021, the project has an aggregated GFA of 232,588 sq.m.

We entered into the relevant land grant contract on December 28, 2017 and had paid the land premium of RMB249.8 million in full for the entire project as of March 31, 2021.

We obtained the completion certificate of this project in August 2020.

Below are details of this project as of March 31, 2021:

Interest attributable to our Group ...... 40%(1) Construction Period Actual commencement date ...... June 2018 Estimated completion date...... October 2022 Total GFA completed ...... 72,237 sq.m. Percentage of total saleable GFA sold...... 98% Total planned GFA under development ...... 160,351 sq.m. Total estimated GFA for future development...... nil

Note:

(1) The project company of Vanke—City Light is Ningxia Zhenghui Real Estate Development Co. Ltd. (寧夏正輝房地產開發有限公司) (“Ningxia Zhenghui”), an indirect non-wholly owned subsidiary of Zhongfang Vanke Industrial. Under the the voting rights entrustment agreement among the shareholders of Zhongfang Vanke Industrial, our Group is entitled to exercise majority of the voting rights at the shareholders’ meeting and control the decisions of the board of Zhongfang Vanke Industrial. Accordingly, Ningxia Zhenghui was accounted for and consolidated in the audited accounts of our Company and considered as a subsidiary of our Company. The profit sharing and capital commitment were determined based on the equity shareholding of Ningxia Zhenghui. See “—Voting Right Arrangements” for details.

See Property No. 25 of the Property Valuation Report in Appendix III to this document.

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(4) Vanke—Dream Town (萬科•理想城)

Vanke—Dream Town (萬科•理想城) is a residential property project located in Jinfeng district, Yinchuan, Ningxia Hui Autonomous Region. Developments in the vicinity comprise mainly residential developments and in close proximity to culture park, hospital and commercial plaza. The project occupies a total site area of 98,215 sq.m. and comprise of high-rise residential properties, townhouses, commercial units and carparks. As of March 31, 2021, the project was under development and is expected, upon completion, to have an aggregated GFA of 239,703 sq.m.

We entered into the relevant land grant contract on August 3, 2018 and had paid the land premium of RMB294.7 million in full for the entire project as of March 31, 2021.

Below are details of this project as of March 31, 2021:

Interest attributable to our Group ...... 28%(1) Construction Period Actual commencement date ...... April 2019 Estimated completion date...... September 2021 Total GFA completed ...... nil Percentage of total saleable GFA sold...... nil Total planned GFA under development ...... 239,703 sq.m. Total estimated GFA for future development...... nil

Note:

(1) The project company of Vanke—Dream Town is Ningxia Wanyue Real Estate Development Co. Ltd. (寧夏萬悅房地產有限公司) (“Ningxia Wanyue”), an indirect non-wholly owned subsidiary of Zhongfang Vanke Industrial. Under the the voting rights entrustment agreement among the shareholders of Zhongfang Vanke Industrial, our Group is entitled to exercise majority of the voting rights at the shareholders’ meeting and control the decisions of the board of Zhongfang Vanke Industrial. Accordingly, Ningxia Wanyue was accounted for and consolidated in the audited accounts of our Company and considered as a subsidiary of our Company. The profit sharing and capital commitment were determined based on the equity shareholding of Ningxia Wanyue. See “—Voting Right Arrangements” for details.

See Property No. 28 of the Property Valuation Report in Appendix III to this document.

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(5) Vanke—Jin Chen (萬科•錦宸)

Vanke—Jin Chen (萬科•錦宸) is a residential property project located in Jinfeng district, Yinchuan, Ningxia Hui Autonomous Region. Developments in the vicinity comprise mainly residential developments and in close proximity to hospital and commercial plaza. The project occupies a total site area of 56,556 sq.m. and comprise of high-rise residential properties, townhouses, commercial units and carparks. As of March 31, 2021, the project was under development and is expected, upon completion, to have an aggregated GFA of 111,198 sq.m.

We entered into the relevant land grant contract on July 26, 2018 and had paid the land premium of RMB183.1 million in full for the entire project as of March 31, 2021.

Below are details of this project as of March 31, 2021:

Interest attributable to our Group ...... 21%(1) Construction Period Actual commencement date ...... March 2019 Estimated completion date...... June 2021 Total GFA completed ...... nil Percentage of total saleable GFA sold...... nil Total planned GFA under development ...... 111,198 sq.m. Total estimated GFA for future development...... nil

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Note:

(1) The project company of Vanke—Jin Chen is Ningxia Wanjin Real Estate Development Co. Ltd. (寧夏萬錦房地產有限公司) (“Ningxia Wanjin”), an indirect non-wholly owned subsidiary of Zhongfang Vanke Industrial. Under the the voting rights entrustment agreement among the shareholders of Zhongfang Vanke Industrial, our Group is entitled to exercise majority of the voting rights at the shareholders’ meeting and control the decisions of the board of Zhongfang Vanke Industrial. Accordingly, Ningxia Wanjin was accounted for and consolidated in the audited accounts of our Company and considered as a subsidiary of our Company. The profit sharing and capital commitment were determined based on the equity shareholding of Ningxia Wanjin. See “—Voting Right Arrangements” for details.

See Property No. 27 of the Property Valuation Report in Appendix III to this document.

(6) Vanke—Chu Xin Garden (萬科•初昕苑)

Vanke—Chu Xin Garden (萬科•初昕苑) is a residential property project located in Xingqing district, Yinchuan, Ningxia Hui Autonomous Region. Developments in the vicinity comprise mainly residential developments and in close proximity to bus terminal, schools and commercial plaza. The project occupies a total site area of 89,837 sq.m. and comprise of high-rise residential properties, townhouses, commercial units and carparks. As of March 31, 2021, the project has an aggregated GFA of 194,900 sq.m.

We entered into the relevant land grant contract on December 27, 2017 and had paid the land premium of RMB223.0 million in full for the entire project as of March 31, 2021.

We obtained the completion certificate of this project in August 2020.

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Below are details of this project as of March 31, 2021:

Interest attributable to our Group ...... 28%(1) Construction Period Actual commencement date ...... June 2018 Estimated completion date...... April 2021 Total GFA completed ...... 173,067 sq.m. Percentage of total saleable GFA sold...... 91% Total planned GFA under development ...... 21,833 sq.m. Total estimated GFA for future development...... nil

Note:

(1) The project company of Vanke—Chu Xin Garden is Ningxia Yuejia Real Estate Development Co. Ltd. (寧夏悅家房地產開發有限公司) (“Ningxia Yuejia”), a direct non-wholly owned subsidiary of Zhongfang Vanke Industrial. Under the the voting rights entrustment agreement among the shareholders of Zhongfang Vanke Industrial, our Group is entitled to exercise majority of the voting rights at the shareholders’ meeting and control the decisions of the board of Zhongfang Vanke Industrial. Accordingly, Ningxia Yuejia was accounted for and consolidated in the audited accounts of our Company and considered as a subsidiary of our Company. The profit sharing and capital commitment were determined based on the equity shareholding of Ningxia Yuejia. See “—Voting Right Arrangements” for details.

See Property No. 24 of the Property Valuation Report in Appendix III to this document.

(7) Yong Yue Mansion II (永悅府二期)

Yong Yue Mansion II (永悅府二期) is a residential and commercial project located in the center of Yongning County, Yinchuan, Ningxia Hui Autonomous Region. Developments in the vicinity comprise mainly residential and commercial developments and in close proximity to schools, hospitals and commercial plaza. The project occupies a total site area of 66,667 sq.m. and comprise of multi-story and high-rise residential properties, retail stores attached to residential properties, kindergarten and underground car parking spaces. As of March 31, 2021, portions of the project was under development and the remaining portion was held for future development and is expected, upon completion, to have an aggregated GFA of 97,590 sq.m.

We entered into the relevant land grant contract on April 23, 2014 and had paid the land premium of RMB61.3 million in full for the entire project as of March 31, 2021.

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We did not obtain the completion certificate of this project as of March 31, 2021. The entire project is scheduled to be completed in May 2022.

Below are details of this project as of March 31, 2021:

Interest attributable to our Group ...... 45%(1) Construction Period Actual commencement date ...... July 2020 Estimated completion date...... May2022 Total GFA completed ...... nil Percentage of total saleable GFA sold...... nil Total planned GFA under development ...... 91,777 sq.m. Total estimated GFA for future development...... 5,813 sq.m.

Note:

(1) The project company of Yong Yue Mansion II is Ningxia Zhongjin. Pursuant to the articles of association of Ningxia Zhongjin, our Group is entitled to exercise majority of the voting rights at the shareholders’ meeting and control the decisions of the board of Ningxia Zhongjin. Accordingly, Ningxia Zhongjin was accounted for and consolidated in the audited accounts of our Company and considered as a subsidiary of our Company. The profit sharing and capital commitment were determined based on the equity shareholding of Ningxia Zhongjin. See “—Voting Right Arrangements” for details.

See Property No. 14 of the Property Valuation Report in Appendix III to this document.

(8) Vanke—Beishida Project (萬科‧北師大項目)

Vanke—Beishida Project (萬科‧北師大項目) is a residential and commercial project located at South of Tuanjie Road, Jinfeng District, Yinchuan City. Developments in the vicinity comprise mainly residential and commercial developments, and in close proximity to public transports and other public facilities. The property occupies two parcels of land with a total site area of approximately 115,809 sq.m. As of March 31, 2021, developing plan for this project had not been commenced.

We entered into two relevant land grant contracts on November 10, 2020, and had paid the land premium of RMB1,449.7 million in full for the entire project as of March 31, 2021.

Interest attributable to our Group ...... 40% Construction Period Estimated commencement date ...... May2021 Estimated completion date...... December 2024 Total GFA completed ...... nil Percentage of total saleable GFA sold...... nil Total planned GFA under development ...... nil Total estimated GFA for future development...... 223,517 sq.m.

See Property No. 32 of the Property Valuation Report in Appendix III to this document.

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Wuzhong

(1) Jin Li (錦里)

Jin Li (錦里) is a residential project located in Litong district, Wuzhong, Ningxia Hui Autonomous Region. Developments in the vicinity comprise mainly residential and commercial developments and in close proximity to schools and commercial plaza. The project occupies a total site area of 149,690 sq.m. and comprise of multi-story and high-rise residential properties, retail stores attached to residential properties and carparks. The project is divided into 2 phases of development in both eastern and western districts. As of March 31, 2021, portions of the project was under development and the remaining portion was held for future development and is expected, upon completion, to have an aggregated GFA of 246,988 sq.m.

We entered into the relevant land grant contract on September 7, 2020 and had paid the land premium of RMB208.3 million in full for the entire project as of March 31, 2021.

This project is scheduled to be completed in April 2023.

Below are details of this project as of March 31, 2021:

Interest attributable to our Group ...... 56% Construction Period Actual commencement date ...... March 2021 Estimated completion date...... April 2023 Total GFA completed ...... nil Percentage of total saleable GFA sold...... nil Total planned GFA under development ...... 15,589 sq.m. Total estimated GFA for future development...... 231,399 sq.m.

See Property No. 16 of the Property Valuation Report in Appendix III to this document.

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Xining

(1) Vanke—Park Avenue (萬科•公園里)

Vanke—Park Avenue (萬科•公園里) is a residential property project located in Chengbei district, Xining, Qinghai Province. Developments in the vicinity comprise mainly residential developments and in close proximity to commercial plaza. The project occupies a total site area of 110,939 sq.m. and comprise of high-rise residential properties, townhouses, commercial units and carparks. As of March 31, 2021, portions of the project was under development and the remaining portion was held for future development and is expected, upon completion, to have an aggregated GFA of 359,201 sq.m.

We entered into the relevant land grant contract on March 6, 2020 and had paid the land premium of RMB1,298 million in full for the entire project as of March 31, 2021.

Below are details of this project as of March 31, 2021:

Interest attributable to our Group ...... 40%(1) Construction Period Actual commencement date ...... July 2020 Estimated completion date...... June 2022 Total GFA completed ...... nil Percentage of total saleable GFA sold...... nil Total planned GFA under development ...... 348,082 sq.m. Total estimated GFA for future development...... 11,119sq.m.

Note:

(1) The project company of Vanke—Park Avenue is Xining Ningcan Industrial Co. Ltd. (西寧寧燦實業有限公司) (“Xining Ningcan”), an indirect non-wholly owned subsidiary of Zhongfang Vanke Industrial. Under the the voting rights entrustment agreement among the shareholders of Zhongfang Vanke Industrial, our Group is entitled to exercise majority of the voting rights at the shareholders’ meeting and control the decisions of the board of Zhongfang Vanke Industrial. Accordingly, Xining Ningcan was accounted for and consolidated in the audited accounts of our Company and considered as a subsidiary of our Company. The profit sharing and capital commitment were determined based on the equity shareholding of Xining Ningcan. See “—Voting Right Arrangements” for details.

See Property No. 20 of the Property Valuation Report in Appendix III to this document.

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(2) Vanke—Vanke Town (萬科•萬科城)

Vanke—Vanke Town (萬科•萬科城) is a residential property project located in Xining, Qinghai Province. Developments in the vicinity comprise mainly residential developments and in close proximity to civic center and schools. The project occupies a total site area of 272,414 sq.m. and comprise of high-rise residential properties, townhouses, commercial units and carparks. As of March 31, 2021, the project was under development and is expected, upon completion, to have an aggregated GFA of 935,281 sq.m.

We entered into three relevant land grant contracts on October 11, 2018 and had paid the land premium of RMB2,375.7 million in full for the entire project as of March 31, 2021.

Below are details of this project as of March 31, 2021:

Interest attributable to our Group ...... 40%(1) Construction Period Actual commencement date ...... March 2019 Estimated completion date...... June 2023 Total GFA completed ...... nil Percentage of total saleable GFA sold...... nil Total planned GFA under development ...... 935,281 sq.m. Total estimated GFA for future development...... nil

Note:

(1) The project companies of Vanke-Vanke Town are Xining Wanlan Real Estate Co. Ltd. (西寧萬瀾房地產有限公司) (“Xining Wanlan”), Xining Wancan Real Estate Co. Ltd. (西寧萬燦房地產有限公司) (“Xining Wancan”) and Xining Wanxian Real Estate Co. Ltd. (西寧萬賢房地產有限公司) (“Xining Wanxian”), wholly-owned subsidiaries of Zhongfang Vanke Industrial, developing section A, B and C of Vanke-Vanke Town, respectively. Under the the voting rights entrustment agreement among the shareholders of Zhongfang Vanke Industrial, our Group is entitled to exercise majority of the voting rights at the shareholders’ meeting and control the decisions of the board of Zhongfang Vanke Industrial. Accordingly, Xining Wanlan, Xining Wancan and Xining Wanxian were accounted for and consolidated in the audited accounts of our Company and considered as a subsidiaries of our Company. The profit sharing and capital commitment were determined based on the equity shareholding of Zhongfang Vanke. See “—Voting Right Arrangements” for details.

See Property No. 23 of the Property Valuation Report in Appendix III to this document.

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(3) Vanke—Times Metropolis(萬科•時代都會)

Vanke—Times Metropolis (萬科•時代都會) is a residential property project located in Chengzhong district, Xining, Qinghai Province. Developments in the vicinity comprise mainly residential developments and in close proximity to civic center and schools. The project occupies a total site area of 137,739 sq.m. and comprise of high-rise residential properties, townhouses, commercial units and carparks. As of March 31, 2021, portions of the project was under development and the remaining portion was held for future development and is expected, upon completion, to have an aggregated GFA of 712,270 sq.m.

We entered into the relevant land grant contract on June 26, 2019 and had paid the land premium of RMB1,938.3 million in full for the entire project as of March 31, 2021.

Below are details of this project as of March 31, 2021:

Interest attributable to our Group ...... 20%(1) Construction Period Actual commencement date ...... February 2020 Estimated completion date...... September 2022 Total GFA completed ...... nil Percentage of total saleable GFA sold...... nil Total planned GFA under development ...... 571,830 sq.m. Total estimated GFA for future development...... 140,440 sq.m.

Note:

(1) The project company of Vanke—Times Metropolis is Xining Wantang Real Estate Co. Ltd. (西寧萬唐房地產有限公司) (“Xining Wantang”), an indirect non-wholly owned subsidiary of Zhongfang Vanke Industrial. Under the the voting rights entrustment agreement among the shareholders of Zhongfang Vanke Industrial, our Group is entitled to exercise majority of the voting rights at the shareholders’ meeting and control the decisions of the board of Zhongfang Vanke Industrial. Accordingly, Xining Wantang was accounted for and consolidated in the audited accounts of our Company and considered as a subsidiary of our Company. The profit sharing and capital commitment were determined based on the equity shareholding of Xining Wantang. See “—Voting Right Arrangements” for details.

See Property No. 21 of the Property Valuation Report in Appendix III to this document.

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(4) Vanke—Starlight Metropolis (萬科•時代星光)

Vanke—Starlight Metropolis (萬科•時代星光) is a residential property project located in Chengzhong district, Xining, Qinghai Province. Developments in the vicinity comprise mainly residential developments and in close proximity to civic center and schools. The project occupies a total site area of 129,607 sq.m. and comprise of high-rise residential properties, townhouses, commercial units and carparks. As of March 31, 2021, portions of the project was under development and the remaining portion was held for future development and is expected, upon completion, to have an aggregated GFA of 445,333 sq.m.

We entered into two relevant land grant contracts on November 12, 2020 and had paid the land premium of RMB1,889.7 million in full for the entire project as of March 31, 2021.

Below are details of this project as of March 31, 2021:

Interest attributable to our Group ...... 40%(1) Construction Period Actual commencement date ...... March 2021 Estimated completion date...... December 2023 Total GFA completed ...... nil Percentage of total saleable GFA sold...... nil Total planned GFA under development ...... nil Total estimated GFA for future development...... 445,333 sq.m.

Note:

(1) The project company of Vanke—Starlight Metropolis is Xining Wanhan Real Estate Co. Ltd. (西寧萬涵房地產有限公司) (“Xining Wanhan”), an indirect non-wholly owned subsidiary of Zhongfang Vanke Industrial. Under the the voting rights entrustment agreement among the shareholders of Zhongfang Vanke Industrial, our Group is entitled to exercise majority of the voting rights at the shareholders’ meeting and control the decisions of the board of Zhongfang Vanke Industrial. Accordingly, Xining Wanhan was accounted for and consolidated in the audited accounts of our Company and considered as a subsidiary of our Company. The profit sharing and capital commitment were determined based on the equity shareholding of Xining Wanhan. See “—Voting Right Arrangements” for details.

See Property No. 22 of the Property Valuation Report in Appendix III to this document.

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Xianyang

(1) Sunshine Meiyu (陽光美域)

Sunshine Meiyu (陽光美域) is a residential project located in Qindu district, Xianyang, Shaanxi Province. Developments in the vicinity comprise mainly residential and commercial developments and in close proximity to schools and commercial complex. The project occupies a total site area of 110,308 sq.m. and comprise of multi-story and high-rise residential properties, retail stores attached to residential properties and carparks. As of March 31, 2021, the project has an aggregated GFA of 552,174 sq.m.

We entered into the relevant land grant contract on November 9, 2015 and had paid the land premium of RMB118.0 million in full for the entire project as of March 31, 2021.

We obtained the completion certificate of this project in February 2019.

Below are details of this project as of March 31, 2021:

Interest attributable to our Group ...... 55% Construction Period Actual commencement date ...... February 2016 Estimated completion date...... July 2022 Total GFA completed ...... 402,806 sq.m. Percentage of total saleable GFA sold...... 98% Total planned GFA under development ...... 149,367 sq.m. Total estimated GFA for future development...... nil

See Property No. 1 of the Property Valuation Report in Appendix III to this document.

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Chongzhou

(1) Xi Jiang Yue (西江悅)

Xi Jiang Yue (西江悅) is a residential project located in Chongzhou, Chengdu, Sichuan Province. Developments in the vicinity comprise mainly residential developments and in close proximity to hospitals and riverbank. The project occupies a total site area of 69,857 sq.m. and comprise of multi-story and high-rise residential properties, retail stores attached to residential properties and carparks. As of March 31, 2021, the project was under development and is expected, upon completion, to have an aggregated GFA of 193,955 sq.m.

We entered into the relevant land grant contract on September 29, 2018 and had paid the land premium of RMB381.4 million in full for the entire project as of March 31, 2021.

Below are details of this project as of March 31, 2021:

Interest attributable to our Group ...... 97% Construction Period Actual commencement date ...... October 2020 Estimated completion date...... June 2022 Total GFA completed ...... nil Percentage of total saleable GFA sold...... nil Total planned GFA under development ...... 193,955 sq.m. Total estimated GFA for future development...... nil

See Property No. 18 of the Property Valuation Report in Appendix III to this document.

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Key Project Developed by Our Associate

Description of certain of the key project developed by our associate is set out below.

Baotou

(1) Shi Mao—Yun Jin (世貿•雲錦)

Shi Mao—Yun Jin (世貿•雲錦) is a residential project located in Baotou, Inner Mongolia Autonomous Region. Developments in the vicinity comprise mainly residential and commercial developments and in close proximity to parks. The project occupies a total site area of 111,501 sq.m. and comprise of medium- and high-rise residential properties, retail stores attached to residential properties and carparks. As of March 31, 2021, portions of the project was under development and the remaining portion was held for future development and is expected, upon completion, to have an aggregated GFA of 282,300 sq.m.

We entered into the relevant land grant contract on November 8, 2019 and had paid the land premium of RMB535.0 million in full for the entire project as of March 31, 2021.

We did not obtain the completion certificate of this project as of March 31, 2021. The entire project is scheduled to be completed on August 30, 2023.

Below are details of this project as of March 31, 2021:

Interest attributable to our Group ...... 40% Construction Period Actual commencement date ...... May2020 Estimated completion date...... August 2023 Total GFA completed ...... nil Percentage of total saleable GFA sold...... nil Total planned GFA under development ...... 168,800 sq.m. Total estimated GFA for future development...... 113,500 sq.m.

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OUR PROPERTY DEVELOPMENT MANAGEMENT

Property Development Process

Our success in property development is attributable to our standardized operating procedures, which enable us to plan relevant operations and execute such plans within the required time frame for each development stage after acquiring the land and improve our overall operational efficiency. Through the utilization of our standardized operating procedures, we have been able to complete our property projects within approximately eight to ten months on average from acquiring the relevant land parcel to commencing pre-sales. We formulate the procedures based on our operational experience and needs and modify the procedures on a case-by-case basis. Such procedures set out the guidelines for our employees in managing and developing our property projects, and provide detailed timing and evaluation targets and checklists.

The diagram below summarizes the major stages of our property development process(1):

Site Project Delivery Contractors Pre-sale Selection Project Constructions and Aftersales Financing and and and Land Design and Quality Customer Procurement Marketing Acquisition Control Services

Note:

(1) The required time for each property development stage may vary among projects depending on the geographical location, the size of the projects and number of phases of the projects. The sequence of specific planning and execution activities may also vary among projects due to the requirement of local laws and regulations.

Site Selection and Land Acquisition

Site Selection

We undergo a careful examination and selection process for our property sites. We focus on suitable locations in selected cities surrounding Yinchuan, Ningxia Hui Autonomous Region, and selected cities in Qinghai Province, Shaanxi Province, Sichuan Province and Inner Mongolia Autonomous Region. Our market research efforts cover general studies on selected cities where we have operations or plan to expand into, and will include information and analysis on potential customers, customer demands, ratio of land price to housing price, market experience and potential cooperation opportunities, and the availability and estimated cost of suitable land parcels in such cities.

The site selection process is led by personnel from our preliminary selection and investment department of each subsidiary and our operational management center at our headquarters. Our preliminary selection and investment department is in charge of the site

– 208 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS selection process in cities where we have operations and our operational management center is in charge of the site selection process in cities where we plan to expand into. For cities where we have operations, our preliminary selection and investment department personnel generally collects information of land parcels available and carries out the screening process. After the screening process, they would prepare a preliminary project proposal and submit to operational management center at our headquarters for review. The operational management center at our headquarters reviews the project proposal and updates the project proposal with inputs from other professional teams. Thereafter, the updated project proposal would be submitted to the board for final review and approval. For cities which we plan to expand into, the operational management center personnel generally collect information of land parcels available and carry out the screening process and prepare a preliminary project proposal together with other professional teams. Thereafter, the updated project proposal would be submitted to the board for final review and approval.

We carry out site selection process in all projects with focus on the growth potential, marketability and profitability. The key factors we consider in assessing whether a site is suitable for development include, but not limited to:

• prospects of the area and relevant cities’ economic development and population growth;

• prospects of financial returns, indicated by factors such as estimated return on investment, internal rate of return, profit margin and payback period for front-end investments and construction costs;

• scale and price of land in the relevant area;

• manageable geographic scope of and potential synergies with our city companies;

• number of our existing projects in the relevant area, such as Yinchuan and Xining;

• sufficiency of cash flow from our operations in the relevant area;

• land planning prospects and the relevant laws and regulations applicable to the surrounding area; and

• potential risk factors involved in the area and available precautions.

Land Acquisition

We strive to identify high-quality land with development potential by:

• participation in public tenders, auctions and listings-for-sale organized by the relevant government authorities;

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• establishing associates with other property developers and participating in public tenders, auctions and listings-for-sale;

• acquisition of equity interests in, or land parcels from third parties which possess land parcels or projects under construction;

• participating in primary land development, such as city renovation, as commissioned by the relevant government authorities; and

• obtaining collectively-owned construction land though land use right transfer.

During the Track Record Period, we primarily acquired land through public tenders, auctions and listings-for-sale from the PRC Government in accordance with relevant PRC laws and regulations. Usually, in a public tender, an evaluation committee (including a representative of the grantor and other experts) evaluates and selects the tenders that have been submitted. In addition to the bidding price, consideration may be given to each bidder’s property development experience and track record, credit history, qualifications and development proposals. Public auctions are normally held by local land bureaus, and the land use rights are usually granted to the highest bidders. In a listing-for-sale process, conditions for granting the land use rights are generally specified by the relevant local land bureaus before bids are submitted and the land use rights are granted to the bidder with the highest bid at the end of the listing-for-sale period. See “Regulatory Overview—Laws and Regulations Concerning Land Use Rights for Real Estate Development—Methods of Land Grant.”

In addition, we acquired land through establishing associates with leading third-party property developers and participating in public tenders, auctions and listings-for-sale. Such cooperation helps us expand into new markets where we have limited experience. We believe sharing of common business concepts and leveraging our respective strengths and experiences in project development can bring mutual benefits to us as well as our partners.

Further, we acquired equity interests in, or land parcels, to a lesser extent, from companies that possess or have the rights to possess land use right for certain land parcels. For example, we acquired 100% equity interest of a property development company in Yinchuan and obtained land parcels occupying an aggregate site area of approximately 204,900 sq.m. This method allows us to obtain targeted land at competitive prices as it allows us to negotiate the terms and conditions directly with the targeted companies or the counter parties. This method also allows us to consolidate our strengths and competitiveness with resources of the target companies.

We are able to identify high-quality land with development potential by participating in primary land development, such as city renovation, as commissioned by the relevant government authorities. We usually cooperate with third parties engaged in primary land development to obtain better access to future land bank. We plan to participate in a village renovation project and target to acquire certain parcels of land in a village located at Xi’an, Shaanxi Province. In order to be involved at a very early stage and have better access to the

– 210 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS renovation and demolition work of such parcels of land before the future land transfer, we entered into cooperation agreements with a third-party property developer, who has been commissioned by the local government to carry out the demolition and relocation matters in connection to such parcels of land. In addition, in order to expedite the process of the demolition and resettlement work to be completed by the third-party property developer so as to fulfill the criteria of the land transfer of such parcels of land, from June 2020 to January 2021, we made an aggregate advance of RMB1,865 million to such third-party property developer to cover its borrowings, fees and expenses related to renovation, demolition and relocation matters. The successful bidder during the public tenders, auctions and listings-for- sale of such parcels of land shall reimburse the estimated borrowings, fees and expenses related to demolition, relocation and resettlement matters to the third-party property developer, and the third-party property developer will in return repay our advance. For the security of such advance, 99% equity interest of this third-party property developer was transferred to us (we acts as nominee shareholder of the third-party property developer), and the third-party property developer’s company chop together with the security devices (including the USB keys) and password of the bank account receiving the payment from the coming land transfer are kept by us. We shall transfer the 99% equity interest back to the entity or person designated by the third-party property developer within two days upon its repayment of our advance. As such, the third-party property developer is not considered as a subsidiary of our Company in accordance with the IFRSs. For potential risks involved in the recoverability of such advance, please see “Risk Factors—Risks Relating to Our Business—We are subject to risks of recoverability arising from certain arrangement we made with third-party property developer to expand our land bank.” We are not responsible for any demolition, relocation and resettlement operations in connection with this project or such affected residents. In March 2021, in accordance with the agreements we entered into with Vanke Group through a project company, Vanke Group reimbursed RMB1,198.1 million to us, representing 60% of such advance plus fund possession fee, in proportion to its 60% equity interest in the project company, which shall participate in the land transfer to acquire such parcels of land.

We believe our sufficient land bank, together with our diversified land acquisition strategies, provide us with a stable development pipeline and will contribute to our long-term growth.

Financing

We finance our projects primarily through internal cash flows generated from our operating activities, including proceeds from the pre-sales and sales of properties, and bank loans.

Internal Financing

We use the proceeds from the pre-sales and sales of our properties to fund our business operation and repay debt obligations. Pre-sale proceeds form an integral source of our operating cash inflows during project development. According to the applicable PRC laws and regulations, there are certain criteria which must be met before we may commence any

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External Financing

Bank borrowings are our primary source of external financing. As of December 31, 2018, 2019 and 2020, our bank and other borrowings amounted to RMB1,310.1 million, RMB1,347.3 million, and RMB1,887.1 million, respectively. See “Financial Information—Indebtedness.” Our ability to obtain financing from banks for our projects depends on various economic measures introduced by the central and local governments. According to a guideline issued by the CBRC on August 30, 2004, no bank loans may be granted with respect to projects for which the land use right certificates, construction land planning permits, construction work planning permits or construction work commencement permits have not been obtained. On May 25, 2009, the State Council issued a Notice on Adjusting the Capital Ratios for Fixed Asset Investment Projects (關於調整固定資產投資項目資本金比例的通知), which stipulates a minimum capital requirement of 20% for ordinary commodity apartments and indemnificatory housing and a minimum capital requirement of 30% for other property development projects. On September 9, 2015, the State Council promulgated the Notice on Adjusting and Improving the Capital Fund Principle for Fixed Assets Investment (關於調整和完善固定資產投資項目資本金制度的通知), according to which the minimum capital ratio for other property development projects is adjusted from 30% to 25%. See “Regulatory Overview—Laws and Regulations Concerning Real Estate Financing—Trust Loan.”

Project Design

In order to provide our customers with quality designs and to achieve operational efficiency, we outsource the design of all of our property development projects to independent third-party domestic or international architecture and design firms. We have worked closely with leading domestic and international architecture and design firms, such as Shanghai PT Architects Design Consulting Co., LTD (上海柏濤建築設計諮詢有限公司), Arch-Age-Design Architects Design (Chongqing) Limited Company (重慶長廈安基建築設計有限公司), and Hong Kong L&P Architects Design Consulting Co., LTD (香港領柏國際設計顧問有限公司). We generally select architecture and design firms through tenders, or select from our database of firms that we had worked with. In selecting architecture and design firms, we consider the firms’ track record, prior cooperation with other property developers, industry recognition, design proposals, fee quotes and their past working relationships with us.

Our research and technology center coordinates, supervises and provides the third-party architecture and design firms with scheme design, construction criteria, and product development on which we aim to market our property development projects. Our research and technology center and the relevant project companies closely monitor work quality and design delivery schedule of the design firms to ensure that the project designs meet our specifications and relevant governmental regulations.

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Contractors and Procurement

Appointment of Construction Contractors

We do not maintain full construction capacity, and we engage qualified independent third-party general construction contractors to carry out construction works for all of our property development projects. We engaged general contractors to assemble a full construction team to carry out the construction work. Such construction works include foundation construction and installation of equipment. The general contractors of our property developments are primarily selected through an invite-only tender process, which is managed by our engineering department and cost management department. We conduct due diligence procedures on our potential contractors, such as inspecting their credentials, verifying their prior experience, and visiting their offices and property projects on-site, and only those contractors who have passed such due diligence procedures are invited to participate in the tender. In selecting the winning bid, we typically consider the contractors’ professional qualifications, technical capabilities, industry reputation, track record and prices tendered. We also engage specialized contractors in specific areas, such as decoration and landscaping. Specialized contractors are selected through tender processes and direct engagements. During the Track Record Period, we had engaged and maintained stable business relationships with a number of general construction contractors and specialized contractors.

In 2018, 2019 and 2020, we engaged 11, 13 and 15 general contractors, respectively. According to the Regulations on the Scope of Infrastructure and Public Utility Projects Subject to Bidding (《必須招標的基礎設施和公用事業項目範圍規定》) issued by the NDRC on June 6, 2018, the general contractors for property developments are not within the specific scope which should be selected through a tender process since June 6, 2018.

We require our contractors to purchase the relevant insurances covering any labor issues of our contractors or accidents and injuries that may occur during construction in accordance with the contracting agreements. We are not required under the applicable PRC laws and regulations to maintain such insurance. Our strict quality control measures require our contractors to comply with the relevant rules and regulations including environmental, labor, social and safety regulations to minimize our risks and liabilities. During the Track Record Period, we were not involved in any material dispute with our contractors nor were there any case of material personal injury or death involving our contractors that had a material and adverse effect on our business.

Under typical agreements with our contractors, we make payments to contractors in installments according to progress of construction work. The percentage and schedule of each installment varies from project to project according to the terms stipulated in the relevant contract. In general, we pay the construction companies 70% to 85% of the full contract amount when the construction is completed and 95% to 100% of the total contract amount upon the final inspection and delivery of the project. We also retain 3% to 5% of the contract amount, as quality warranty deposit. See “—Delivery of Properties and After-sales Customer Service—Warranties and Returns.”

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The agreements with our contractors also set forth the respective rights and obligations of us and the contractors. We have both the right and obligation to supervise and evaluate the work of our contractors. The agreements set forth the performance standards for the construction work and the methods of our inspections and supervisions. We are entitled to seek damages for breach of contract or deduct the service fees if a contractor fails to adhere to our performance standards or unduly delays the construction progress.

During the Track Record Period, none of our suppliers or contractors provided any advances, financing, allowances or rebates to us, and we did not enter into any payment-on- behalf-of arrangements with any supplier or contractor.

Procurement

Our construction contractors are primarily responsible for procuring raw materials, such steel, concrete and sandstone. We also procure certain materials, equipment and fixtures through our centralized procurement system, such as elevators, cabinet, air conditioners, wall paint, water-proof materials, entrance doors, door and window hardware, floors, sanitary wares, electrical appliances, lamps, cable and password operated doorlocks and air circulating and cleaning equipment.

With respect to construction contracts of substantial value and long duration, we typically engage in discussions with our contractors and adjust construction fees if fluctuations in the market prices of such construction raw materials exceed a certain threshold, and we, as a result, bear most of the risks associated with such commodity price movements. During the Track Record Period, fluctuations in the construction raw materials did not exceed the relevant materiality threshold in the relevant contracts we had with our construction contractors and we therefore did not incur additional costs to compensate our construction contractors. Nonetheless, as we typically pre-sell our properties prior to their completion, we will not be able to pass the increased costs on to our customers if construction costs increase subsequent to the pre-sale. See “Risk Factors—Risks Relating to Our Business—Fluctuations in the price of construction materials and our construction contractors’ labor costs could affect our business and financial performance.”

Project Construction and Quality Control

We place significant emphasis on quality control in the construction and management of our projects. As of December 31, 2020, we had a team of 68 employees engaged in quality control. The following are certain important measures or procedures we have adopted in furtherance of this goal:

• our quality control teams of our project department inspect each project on a daily basis and our city-level companies inspect each project on a weekly basis. In addition, the project management department at the group-level and independent third parties we engaged perform on-site inspections on a quarterly basis to help

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monitor construction progress and quality, and conduct follow-ups on any quality issues that have been previously identified from time to time and ensure the quality issues have been properly and timely tackled;

• we retain qualified independent third-party construction supervision companies to oversee the construction of our projects and we also continuously check the qualification of such supervision companies;

• we compile a set of standardized technical guidelines for construction management of each project, such as inspecting construction materials before construction commences and evaluating and confirming sample unit. Our quality control team conduct random check on the materials before construction commences and the random check coverage of materials in general reaches 30%;

• we prepare a set of standardized quality control procedures, such as requiring project technical disclosure before tender, conducting on-site material inspection, and reviewing sample product. In 2020, the on-site inspection coverage of material reached 100%;

• we implement a bonus incentive scheme for general subcontractors and have discretion to award cash bonus ranging from RMB2.0 to RMB8.0 per sq.m. to the project that wins the designated regional or national certificates or awards or receive high customer satisfaction rate and less quality complaints during the year after delivery; and

• we carry out quality control in accordance with the relevant laws, regulations, and other compulsory standards promulgated by the relevant PRC governmental authorities and other industry associations.

We are required to develop a property project according to the terms of the land grant contract, including those relating to the designated use of the land and the time for commencement and completion of the property development. See “Risk Factors—Risks Relating to Our Business—We may be subject to fines or forfeit land to the PRC Government if we fail to pay land grant premiums or fail to develop properties within the time and in accordance with the terms set out in the relevant land grant contracts.” We are also required to commence construction of our projects within the time prescribed by the relevant PRC laws and regulations. Otherwise our land may be regarded as “idle land” and as a result we may be subject to certain penalties and the idle land might be resumed without any compensation. Under the Measures on Disposing of Idle Land (《閒置土地處置辦法》) promulgated by the Ministry of Land and Resources on April 28, 1999, as amended on June 1, 2012, a land parcel may be defined as idle land under any of the following circumstances: (i) development and construction of the state-owned land is not commenced after one year of the prescribed time limit in the land use right grant contract or allocation decision; or (ii) the development and construction of the state-owned land has been commenced but the area of the development and construction that has been commenced is less than one-third of the total area to be developed

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During the Track Record Period and up to the Latest Practicable Date, we had not incurred any material delays in commencement and/or completion of construction. During the Track Record Period and up to the Latest Practicable Date, none of our land was deemed as idle land by the relevant government, nor had we been subject to any idle land fees or monetary penalties or forfeited any land use rights for all such delays. During the Track Record Period, we commenced construction work for four projects before obtaining the requisite construction permit. An aggregate monetary penalty of approximately RMB0.1 million was imposed on us for such incidents, all of which had been settled as of the Latest Practicable Date. Our Directors consider that such incidents would not have a material operational or financial impact on us. In addition, we have adopted various measures to prevent recurrence of such incidents, including designating a team responsible for the construction activities and applying for the relevant procedures in due course and preparing periodic reports regarding the status of procedures for applying construction procedures and building ownership certificate, for review by our Board.

Cost Control

We have established a comprehensive cost management system to set the relevant budget for our projects. For each project, the responsible city company or project company shall prepare a proposed budget plan, which will be submitted to our cost management center at headquarters for approval. We take into account the potential risks involved in each project and ensure the accuracy of the proposed budget plan to the extent possible.

We implemented full-circle cost management measures during the development of projects, which enables us to actively monitor actual cost’s deviation from the budget. The cost measures include conducting (i) continuous estimation and assessment on the budget and balance from the land acquisition stage to the property delivery stage to make sure the cost does not exceed the initially approved budget; and (ii) stringent review of payment settlement. We believe such cost control procedures enable our management to identify and anticipate situations where actual cost may exceed the initially approved budget and to make appropriate adjustment in a timely manner.

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Sales and Marketing

Pricing

We determine our per unit sales price with reference to development cost, our expected return, the prices of comparable properties in the market and features of the respective project, such as location, design, and availability of transportation and ancillary facilities. Our sales and marketing teams study local market information and formulate pre-marketing, sales and pricing plans and of procedures for approval by the sales management department at our headquarters. In addition, within the given limit of price adjustment in compliance with relevant PRC laws and regulations, we may also adjust the prices of our for-sale properties during the sales process based on market responses we receive.

Sales and Marketing Plan

We primarily sell our properties by our sales and marketing personnel. Our sales management department is responsible for formulating marketing and sales strategies and managing the overall marketing and sales process We carefully analyze the preferences of our target customers and design localized marketing campaigns for our property projects based on our market studies. We also adjust our marketing plans based on the market feedback we collect throughout the project development process. With respect to each property project, we design and launch various marketing activities that we believe are best suitable for the respective project.

In addition to traditional marketing channels such as television, broadcasting and billboards, we also organize various on-site marketing campaigns in cities we have projects. We organize media conferences and new product launch events to promote our new products and introduce our product development process. We also conduct sales and marketing activities through online channels. We carefully analyze our target customers’ preferences in the popular entertainment media and distribute our advertisements in websites and we-media platforms favored by our target customers. Since the COVID-19 outbreak in March 2020, we had operated an online sales office that allowed our customers to review our property projects and chat with our sales personnel online.

Although we primarily rely on our own sales and marketing personnel and our property agents within our group, we also work with external property agents to facilitate the sales of certain projects. The number of major external property agents that we engaged in 2018, 2019 and 2020 was six, ten and eight, respectively. All of such external property agents were Independent Third Parties. As we continue to strengthen our own sales and marketing teams, the proportion of contracted sales by external property agents consistently declined during the Track Record Period. Our agreements with external property agents usually include key terms such as the scope of retention, duration of services, and fees and payment method. The agreements usually also require external property agents not to conduct unauthorized

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Throughout and subsequent to the project development and pre-sale period, we provide comprehensive assistance to our customers, coordinate internally to address queries raised by, and collect feedback from, our customers and potential customers. Such feedbacks help us to evaluate our products and modify the designs of our future properties in order to address changes in market demand.

Pre-sales

In line with industry practice in the PRC, we normally commence pre-sales of our property development project before completion of the entire project. Our pre-sales typically comprise multiple phases in accordance with our marketing strategies and plans which are drawn up as early as the acquisition of the relevant parcel of land. Relevant PRC laws and regulations require property developers to fulfill certain conditions, including but not limited to payment of the land grant premium and obtaining the relevant land use right certificate, construction work planning permit, construction work commencement permit and pre-sale permit before the commencement of pre-sales. See “Regulatory Overview—Laws and Regulations Concerning Real Estate Transactions—Pre-Sale of Commodity Buildings.” We generally schedule the launch of our pre-sale campaigns according to the progress of construction and market conditions.

Our pre-sale contracts are prepared in accordance with applicable PRC laws and regulations. Purchasers are typically required to make a down payment according to the schedule stipulated in the sales contract. The amount of down payments and the circumstances in which default penalties may be incurred are stipulated in relevant pre-sale contracts. In accordance with the requirements of applicable PRC laws and regulations, we register such pre-sale contracts with the relevant local authorities.

During the Track Record Period and up to the Latest Practicable Date, except as disclosed in this document, all of our subsidiaries commenced pre-sales for the relevant property projects and entered into pre-sales contracts in compliance with the relevant PRC laws and regulations. See “—Legal Proceedings and Compliance—Compliance with Laws and Regulations—Non- compliance Incidents.” We have also obtained confirmation letters from the competent local governmental authorities, confirming that the relevant subsidiaries had complied with the relevant laws and regulations in relation to pre-sales or had not been penalized for violating the relevant laws and regulations in relation to pre-sales.

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Cancelled contracted sales are sales transactions cancelled after customers sign pre-sale contracts and make down payments. Such incidents are rare. Our Directors confirm that no cancelled contracted sales had a material adverse effect on our financial condition during the Track Record Period. During the Track Record Period, we had complied with all relevant and applicable PRC laws and regulations governing property pre-sales in the PRC in all material respects.

Pre-sale Proceeds

Under the current PRC laws, deposit and use of pre-sale proceeds are restricted. See “Regulatory Overview—Laws and Regulations Concerning Real Estate Transactions—Pre- Sale of Commodity Buildings”and “Risk Factors—Risks Relating to Our Business—We face risks related to the pre-sales of properties from any potential limitations or restrictions imposed by the PRC Government.” We understand that the main purpose of applicable laws and regulations in relation to the pre-sale proceeds is to ensure sufficient fund will be retained by property developers for the completion of projects.

Applicable Laws and Regulations in Relation to Pre-Sale Proceeds Management at National and Local Levels

The legal regime in relation to the pre-sale proceeds management in the PRC is twofold, including (i) the applicable laws and regulations at the national level which set out the general principles and requirements; and (ii) the applicable regulations at provincial, municipal and other local levels which set out more detailed requirements.

Applicable Laws and Regulations at National Level

Pursuant to the Measures for Administration of Pre-sale of Urban Commodity Properties (《城市商品房預售管理辦法》) (the “Pre-sale Measures”), and the Law on the Administration of Urban Real Estate (《城市房地產管理法》) (the “Urban Real Estate Law”), the pre-sale proceeds of commodity properties shall be used to fund the property development of the relevant projects with the approval of the relevant supervising authorities or banks. In addition, the Notice on Relevant Issues Concerning Strengthening the Supervision and Improvement of Pre-sales of Commodity House (《關於進一步加強房地產市場監管完善商品住房預售制度有關問題的通知》) (the “Pre-sale Notice”) promulgated by the MOHURD on April 13, 2010, provides that proceeds from pre-sales of commodity properties shall be deposited into a bank account supervised by the competent regulatory authorities to ensure that the proceeds would be used to fund the development of such property projects. In addition, under the Pre-sale Measures and the Pre-sale Notice, provincial, municipal and other local governments are delegated and granted the authority to formulate, and supervise the implementation of detailed requirements for the management of pre-sale proceeds.

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Applicable Regulations at Local Levels

The provincial or municipal governments typically formulate provisional or municipal measures with respect to the supervision of pre-sale proceeds. The city or county governments within such provinces or municipalities, pursuant to provincial or municipal measures, usually formulate their respective detailed implementation measures, which may slightly vary, but have common purpose and requirements with respect to the supervision of pre-sale proceeds and in accordance with the provincial or municipal governments’ measures.

(i) generally, all pre-sale proceeds shall be deposited in full into the designated escrow accounts in most cities. In addition, sufficient balance of pre-sale proceeds, which is generally determined by referring to the construction progress, is required to be maintained in a designated escrow account.

(ii) applicable local regulations of certain cities, such as Xining, where we have property projects, provides that (i) the pre-sale proceeds of commodity house shall be deposited in the escrow account; (ii) the pre-sale proceeds in the escrow account must be used for the follow-up construction of projects and may not be used for other purposes; and (iii) there is a credit assessment mechanism for real estate development enterprises in Qinghai province, and the pre-sale projects developed by the real estate development enterprises with a 4A credit rating level are exempted from the supervision of pre-sale proceeds.

Payment Arrangement

Our customers may choose to pay the purchase price of our properties by a lump-sum payment or by mortgage financing. Customers choosing to settle the purchase price by one lump-sum payment will be required to fully settle the purchase price shortly after the execution of the sales contract. Customers choosing to settle the purchase price by mortgage financing shall, according to the terms stipulated in the relevant sales contract, normally make a down payment of 30% to 40% of the purchase price upon the execution of the sales contract in accordance with the applicable PRC laws and regulations. Depending on the processing time required by mortgagee banks, the balance of the purchase prices will typically be paid by the mortgagee banks shortly after the date of execution of the sales contracts.

In line with market practice in the PRC, we have arrangements with various banks for the provision of mortgage financing and where required, provide our customers with guarantees as security for mortgage loans. The terms of such guarantees typically last until the transfer of the ownership certificate to the purchaser and the certificate is registered in favor of the bank. As a guarantor, if a purchaser defaults in payment, we are obligated to repay all outstanding amounts owed by the purchaser to the mortgagee bank. We will be entitled to terminate the relevant sales contract, and seek liquidated damages per the contract term, after settling such outstanding balances. In accordance with industry practice, we do not conduct credit checks on our customers but carefully review the results of credit checks conducted by relevant banks.

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As of December 31, 2018, 2019 and 2020, our outstanding guarantees in respect of the mortgages for purchasers of our properties amounted to RMB1,323.7 million, RMB1,726.7 million and RMB1,351.4 million, respectively. See “Financial Information—Commitments and Contingent Liabilities” and “Risk Factors—Risks Relating to Our Business—We guarantee the mortgage loans provided by financial institutions to our customers and, consequently, we will be liable to the mortgagees if our customers default on their mortgage payments.”

Delivery of Properties and After-sales Customer Service

Delivery of Completed Properties

We endeavor to deliver completed properties to our customers on a timely basis in accordance with the terms of the sales contracts. We closely monitor the progress of construction work at our projects under development. If we fail to deliver the completed properties within the stipulated timeframe due to our default, we may be liable to pay a late-delivery compensation to our customers in accordance with the terms of the relevant sales contracts. Under the relevant PRC laws and regulations, we are required to obtain completion certificates before delivering properties to our customers. See “Regulatory Overview—Laws and Regulations Concerning Development of Real Estate Projects—Acceptance and Examination upon Completion of Real Estate Projects” for further information. After a property development project has passed the requisite completion and acceptance inspections, we will notify our customers before the delivery date stipulated in the sales contracts, to arrange the delivery procedures. Our customers will then come to our designated locations to conduct the delivery procedure with us. We may also assist our customers to obtain the individual building ownership certificates for our properties. In 2020, we experienced a slight delay in property delivery for one project as a result of the COVID-19 pandemic. See “—Effect of the COVID-19 Pandemic—COVID-19 Pandemic” below for details. During the Track Record Period, we did not experience any material delays in the delivery of properties which had any material adverse impact on our business, financial condition and results of operations of our Group as a whole.

After-sales Services

Our customer relation department is responsible for providing after-sales customer services. We formulated and implemented a series of standardized procedures to ensure the quality of our after-sales customer services. With respect to the standardized procedures, we have established a set of service guidelines for our employees to ensure the quality of our services.

After the delivery of properties, we assist our customers in obtaining property ownership certificates and provide assistance to the move-in process. Additionally, our customers can file maintenance service requests through our customer service hotline. We host community activities, and in certain community activities our customers also obtain first-hand information regarding our new property development projects. We also established a call-back system to conduct customer review. For the relatively older residential properties developed by us, we

– 221 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS offered upgrading services such as painting the walls of stairway, replacing the unit gate, renovating the pathways in the common area and upgrading sport equipment, free of charge, to further enhance customer experience, which might, in turn, enhance our brand name and increase customer loyalty to us.

Our after-sales services are complementary, except for repairs for items whose warranty periods have expired or repairs for damages resulted from inappropriate uses. Such repairs are provided by the relevant property management companies, which may charge a service fee. See “—Warranties and Returns.” During the Track Record Period, we were not aware of material customers’ complaints or product liability claims. We hire third-party survey companies to conduct our customer satisfaction survey every year in order to better understand the needs of our customers and improve our service quality.

Warranties and Returns

We are generally required to provide our customers with warranties for the quality of building structures pursuant to the Measures on the Sales of Commodity Housing (商品房銷售管理辦法) and Regulations for the Operations of Urban Property Development (城市房地產開發經營管理條例). We also provide quality warranties for ground foundations, main structures, waterproofing, water and electricity work and decorative work, as the case may be. The warranty durations vary depending on the covered items and are usually for a period of about two to five years starting from the property delivery date as stipulated in Regulation on the Quality Management of Construction Engineering (建設工程質量管理條例),promulgated by the State Council on January 30, 2000 and was latest amended on April 23, 2019. The warranty durations for ground foundations and main structures are the relevant reasonable lifespans stated in the design document.

Our contractors are responsible for rectifying quality defects in the properties pursuant to the contracting contracts, whether such defects are discovered pre-or post-completion and delivery. In practice, substantially all of the expenses incurred for handling customer claims were directly paid by our contractors. In addition, we typically retain 3% to 5% of the contract amount of our construction contracts as quality warranty deposit till the end of warranty period, and, should we incur any expense in handling such claims directly if the relevant contractor fails to respond to customer claims in a timely manner, we would be entitled to deduct the costs incurred from the quality warranty deposit we have retained.

Generally, customers may terminate the purchase contracts if there are material delays in the delivery of our properties which exceed the periods stipulated in the relevant purchase contracts. Customers may return the properties to us if there are material quality defects with respect to our properties or material discrepancies in the GFA of our properties delivered as compared to the GFA stipulated in the purchase contracts.

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PROPERTY LEASING

Along with our residential property projects, we also developed commercial properties and retained ownership of certain commercial properties for leasing.

We hold and operate our commercial properties as investment properties for capital appreciation and lease them to generate rental income. As of December 31, 2020, we held four key completed investment properties of a total GFA of approximately 79,043 sq.m. Our investment properties consist of a school, a kindergarten, an office building and a shopping mall. The school was leased to Jingbo School for school operation, the office building was leased to a connected party for education training service and the kindergarten was leased to a connected party for kindergarten operation. See “Connected Transactions—1. Lease of Properties” for details. The shopping mall was leased to three Independent Third Parties, who are responsible for sourcing the tenants and operating the shopping mall. In addition to the investment properties, we leased certain retail stores attached to our residential properties held for sale to generate rental income. In 2018, 2019 and 2020, our revenue generated from property leasing amounted to RMB17.9 million, RMB26.3 million and RMB27.9 million, respectively.

To maintain the competitiveness and profitability of our properties that generate rental income, we strategically select a balanced mix of tenants based on a project’s overall positioning and the needs of the surrounding communities. We take into consideration the reputation and general brand recognition of the potential tenants, the industry sectors of such tenants, as well as their track records and past relationships with us. To maintain a high occupancy rate of our investment properties, we have formulated a set of marketing strategies such as selecting well recognized anchor stores to increase customer traffic and conducted a variety of marketing activities such as providing a rent-free period for decoration and furnishing.

Depending on the tenants’ relationships with us and the scale, reputation and nature of business of the tenants, we may use the determined the rental fee by charging fixed rental fees during a preliminary period with predetermined periodic rental increases in the remaining lease term.

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The table below sets forth our key properties held for investment as of March 31, 2021:

General Occupancy Project Usage Location Total GFA Status Rate(1) (sq.m.) (%)

1. Jingbo School School Helang 45,741 Completed 100 (賀蘭縣景博中學) 2. Kaiyuan Shopping Mall Shopping mall Lingwu 20,654 Completed 100 (開元商場) 3. Fangjiaoshi Kindergarten Yinchuan 5,682 Completed 100 Kindergarten (方角石幼兒園) 4. Xi Yun Tai, Building Office building Yinchuan 6,966 Completed 100 No. 32, Floor 1-4 (璽雲台32號樓1-4層)

Note:

(1) Refers to occupancy rate of properties as of March 31, 2021.

Our investment properties did not have any material defects or deficiencies during the Track Record Period, although some routine maintenances were made. None of our investment properties encountered any temporary closures during the Track Record Period, except for certain stores in the shopping mall, the school and the kindergarten which were temporarily closed in accordance with various measures adopted by local governments aiming to contain the COVID-19 pandemic.

MANAGEMENT CONSULTING AND OTHER SERVICES

We provide management consulting services to a third-party property developer, mainly including supporting and consulting services provided to these entities in connection with the design, sales and marketing of its properties, and overall project management during the development and sales of its properties. Under management consulting services, we generally do not need to commit a significant amount of financial resources to the projects given that our business partners are responsible for the cost in relation to land and property. Leveraging our brand, experience and expertise in property development, we provide management consulting services with a goal to strengthen our cooperation with our business partners, expand our operation with low capital commitment and have access to various property development opportunities. We charge the management consulting service fees based on an agreed rates of the sale of the properties under our management consulting services.

In addition to management consulting services, we also provide other services, primarily consisting of property brokerage services, to third-party property developers. We charge the property brokerage services fees based on an agreed percentage of the sale price of the property.

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EFFECTS OF THE COVID-19 PANDEMIC

COVID-19 Pandemic

An outbreak of respiratory illness caused by a novel coronavirus, which has been named as COVID-19 by the World Health Organization (“WHO”) was identified in December 2019 and spread globally in early 2020. On March 11, 2020, the WHO declared COVID-19 outbreak a pandemic. In response to the COVID-19 pandemic, the PRC Government has imposed measures across the PRC including, but not limited to, travel restrictions and mandatory quarantine measures across various cities, the extended shutdown of business operations, and the mandatory quarantine requirements on infected individuals and anyone deemed potentially infected.

Impact of the COVID-19 Pandemic on China’s Economy and Real Estate Market

The PRC Government has taken various measures to cure confirmed cases, reduce potential spread and impact of infection. The PRC Government and its local counterparts have also adopted various incentive policies to boost the economy, such as cutting taxes, increasing government investment and increasing the amount of the currency issued. The combination of fiscal and monetary incentives is expected to ease the negative impact of the COVID-19 pandemic on the national economy.

Effects of the COVID-19 Pandemic on Our Business Operations

Our Directors are of the view that the COVID-19 pandemic did not and will not have a significant adverse impact on our business in general. Since the outbreak of the COVID-19 pandemic and up to December 31, 2020, we incurred additional costs and expenses of approximately RMB4.3 million in our operations as a result of the outbreak of the COVID-19 pandemic, which mainly consisted of (i) costs incurred for purchasing prevention materials; and (ii) donations made to Ningxia Charity Federation (寧夏慈善總會). We may continue to incur additional costs and expenses in the near future to protect the health of our employees and comply with the relevant governmental requirements. Our construction sites in Ningxia Hui Autonomous Region and Qinghai Province generally have a construction suspension season in winter from November to the coming mid-March due to the low temperature and governmental requirement. As a result of the COVID-19 pandemic, we had an extra month of construction suspension period in addition to the construction suspension season in early 2020. In addition, one fully pre-sold project in Xianyang, Shaanxi Province experienced a light delay in delivery of appropriately one month. After we sent notices to the relevant property buyers with respect to the extension of property delivery dates pursuant to the relevant local policies, we had not received any complaints, claims, nor administrative penalties. Our Directors are of the view that the delay in delivery of this project did not have any material adverse impact on our business, financial condition and results of operations, given that (i) the delay only affected the time of recognition of our revenue; and (ii) as confirmed by our PRC Legal Advisors, the delay in property deliveries does not involve any non-compliance with the PRC laws and regulations. Pursuant to force majeure provisions under property sales contracts between

– 225 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS buyers and us, as well as the relevant provincial guiding opinions related to the COVID-19 pandemic, the risk resulting in legal liabilities to pay our customers damages for such delay in property deliveries is low. Other than the aforementioned project, we had not experienced any material delay in our property delivery because we timely applied for approvals for resumption of construction from relevant authorities pursuant to the relevant local regulations and requirements as the COVID-19 pandemic were gradually contained across different regions, and all of our projects under construction in Yinchuan, Xining, Haidong and Xianyang resumed operations in mid-March 2020. We set forth below a detailed analysis of impact of the COVID-19 pandemic on our business operations.

Property Development

We generally have a construction suspension season in winter in Ningxia Hui Autonomous Region and Qinghai Province from November to the coming mid-March due to the low temperature and governmental requirement. The COVID-19 pandemic began its spread in late January 2020 during our construction suspension season. The property construction and sales activities have been suspended for approximately a month following the end of our construction suspension season in March 2020 and gradually resumed thereafter. Our contractors continued to carry out their obligations under the relevant contracts pursuant to the contract terms. As of the Latest Practicable Date, save as disclosed above, we did not experience any significant shortage of construction materials or labors that materially interrupted the construction or sales of our properties, and we had not experienced any material delay in our property delivery.

Since the outbreak of COVID-19 pandemic, we reduced our pre-sales and sales activities as we closed all sales offices and display units in February and March 2020. We launched an online sales office in March 2020, which allowed our customers to review our property projects and chat with our sales personnel online. Our sales offices and display units in Yinchuan and Xining re-opened since March 2020.

Other than the delays in commencement of construction, pre-sales and sales activities set forth above in details, we do not expect any significant delays in property construction, pre-sale, and delivery. Our property sales are expected to pick up as our property sales re-bounced in April and May 2020.

Impact on Our Supply Chain

Since the outbreak of the COVID-19 pandemic and up to the Latest Practicable Date, we did not experience any significant disruption to the services provided by our contractors or the supply of materials from our suppliers. While the supply chains in all industries have been disrupted to a certain extent by the outbreak of the COVID-19 pandemic, particularly due to the prolonged suspension of business operations nationwide and the instability of workforce arising from the mandatory quarantine requirements, we also suspended our construction

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Based on the above, we do not expect the COVID-19 pandemic to have a material adverse impact on our property development projects.

Property Leasing

Our property leasing business has been affected by the COVID-19 pandemic as a result of the closure of certain investment properties, such as certain stores in the shopping mall, the school and the kindergarten, in accordance with various measures adopted by local governments aiming to contain the spread of the COVID-19 pandemic. We also formulated appropriate rent reduction or exemption measures for our commercial properties in Yinchuan and Xining. As a result of such measures, the total amount of rent reduced and exempted for the year ended December 31, 2020 was approximately RMB1.6 million. For the year ended December 31, 2020, two tenants sought an earlier termination of their lease contracts with us. We do not expect the COVID-19 pandemic to have a material adverse impact on our property leasing business.

Management Consulting and Other Services

We provide management consulting to third-party property developers, mainly comprising management consultation services that we provide to them in connection with the design, sales and marketing of properties, and overall project management during development and sales of properties. We receive service fees pursuant to the terms of the relevant contracts. The service fees are typically received in accordance with the development progress of relevant projects. As we expect the COVID-19 pandemic to have a limited impact on the development progress of the relevant projects, we expect the pandemic to only have a limited adverse impact on our management consulting services and will not materially and adversely affect this business line for the year ending December 31, 2020.

Based on above, we are of the view that the COVID-19 pandemic did not have a significant impact on our business and financial condition during the Track Record Period and will not have a significant impact on our business and financial conditions going forward.

The information above is prepared based on our internal records and our management’s present expectation, which are subject to various risks, assumptions and uncertainties. There is no assurance that the actual impact will not deviate from our current estimates or expectations. See “Risk Factors—Risks Relating to the PRC—The COVID-19 pandemic may adversely affect the PRC economy, the PRC real estate industry and our business operations.”

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In the event of material change in the expected impact of the COVID-19 pandemic on our business operations and prospects, to comply with the Listing Rules, we will make announcements as and when appropriate if our business might be materially or adversely affected.

Taking into account our current project development and sales schedules, our expected cash generated from operating activities, the estimated [REDACTED] from the [REDACTED], our credit facilities maintained with banks, and additional financial resources available to us, together with our expected cash outflow in the near future, our Directors are of the opinion that we will have available sufficient working capital for our present capital requirements that is for at least the 12 months following the date of this document. See “Financial Information—Liquidity and Capital Resources.”

Compliance with the COVID-19 Pandemic Related Regulations and Measures

We have complied with the relevant regulations and measures implemented by government authorities with a view to containing the COVID-19 pandemic including various measures and procedures with respect to the closure and opening of sales offices, suspension and resumption of construction activities, and quarantine requirements.

We closed sales offices after the outbreak of the COVID-19 pandemic pursuant to the requirements of the relevant local authorities and commenced online property sales. Our sales offices gradually opened in March 2020 after the COVID-19 pandemic has been effectively contained nationwide in China. We followed established procedures applying for opening of our sales offices and take enhanced measures to sanitize common areas of our sales offices and require our sales personnel and all visitors to all sales offices to wear masks as well as maintain social distancing.

We suspended the construction activities and closed construction sites after the outbreak of the COVID-19 pandemic. After the COVID-19 pandemic has been effectively contained, we followed the relevant procedures set by the relevant government authorities with respect to resumption of construction activities, and would only resume construction upon obtaining the required approvals. After the resumption of construction activities, we required all personnel on the construction site to strictly follow our procedures to prevent exposure and contain the transmission of the COVID-19 pandemic, including taking the temperature of all personnel before they enter into the construction site, sanitizing common areas and direct work places, including all on-site facilities, requiring all on-site personnel to maintain social distance when working, having breaks or having meals.

We require all of our employees to follow the required steps taken by various local governments when returning to work, including various quarantine requirements. To our best knowledge, there were no confirmed cases of our employees and no key management personnel of our general contractors being quarantined as of the Latest Practicable Date. As the general contractors may further engage sub-contractors, we are not aware whether any sub-contractors or their respective work force were/are being quarantined. We have obtained approvals for each

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Our Contingency Plan and Response towards the COVID-19 Pandemic

In response to the COVID-19 pandemic, we have implemented a contingency plan to minimize the disruptions that may be caused to our business operations, including (i) keeping close communication with local governments and arrange resumption of our construction and sales activities accordingly in time; (ii) launching our online sales office to allow our customers to review our property projects and chat with our sales personnel online; (iii) discussing with subcontractors and material suppliers to ensure the supply of our raw materials and productivity of labor; and (iv) making up the lost progress by increasing machinery, labor force and reasonably arranging overtime work after resumption of work. We also adopted enhanced hygiene and precautionary measures across our projects, including (i) monitoring the medical symptoms of our employees and the visitors at our offices by measuring their body temperatures and providing forehead thermometer and disinfectant; (ii) regularly cleaning and disinfecting the common areas in our offices; (iii) providing technical support for employees to work from home; and (iv) promoting the awareness of preventive hygiene measure required by local governments. As of December 31, 2020, we incurred costs and expenses of approximately RMB4.3 million in response to the outbreak of the COVID-19 pandemic, which mainly consisted of (i) costs incurred for purchasing epidemic prevention materials; and (ii) donations made to Ningxia Charity Federation (寧夏慈善總會). We may continue to incur additional costs and expenses in the near future to protect the health of our employees and comply with the relevant governmental requirements. Our Directors confirm that the costs associated with the enhanced measures had no significant impact on our financial position for the year ended December 31, 2020.

Effects of the COVID-19 Pandemic on Our Business Strategies

We plan to continue to strengthen our position in Ningxia Hui Autonomous Region and Qinghai province and actively expand into cities with high potential in China. We believe that our expansion plan as discussed in “Business—Our Strategies” is feasible, and it is unlikely that we would change the use of the [REDACTED] from the [REDACTED] as disclosed in “Future Plans and [REDACTED]” in this document as a result of the COVID-19 pandemic.

PROPERTIES FOR SELF-USE

As of the Latest Practicable Date, we had properties of a total GFA of approximately 14,389.9 sq.m. which we occupied mainly for self-use as offices.

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LEASED PROPERTIES

As of the Latest Practicable Date, we leased 11 properties with a total GFA of approximately 3,694 sq.m. mainly used as office and employee dormitory. Our leases generally have a term ranging from one to three years, and we expect to renew the leases upon their expiry.

As of the Latest Practicable Date, we failed to register ten lease agreement we entered into as tenant for certain properties with a total GFA of approximately 3,609 sq.m. We sought cooperation from the landlords at the leased properties to register such executed lease agreements. Registration of lease agreements requires the submission of certain documents of landlords, including their identity documentation and property ownership certificates, to the relevant authorities. We failed to register the ten lease agreement primarily due to the lack of the cooperation from the relevant landlords to complete such registration. Our PRC Legal Advisors have advised that the lack of registration will not affect the validity of the lease agreements. However, relevant government authorities may require us to rectify these unregistered lease agreements within a certain period of time. If we fail to rectify within the specified time, we may face a fine of up to RMB10,000 for each unregistered lease agreement. See “Risk Factors—Risks Relating to Our Business—We may be subject to fines due to the absence of registration of some of our leases.” As of the Latest Practicable Date, we had not received any rectification order from any regulatory authority or been subject to any fines in respect of non-registration of any of our lease agreements. In the event that we are required by relevant competent authorities to rectify the non-registration of these lease agreements, and we are unable to do so due to lack of cooperation from the landlords, we intend to terminate such lease agreement(s), find alternative locations nearby and relocate from such leased properties. Given the nature of our operation, we believe that it would not be difficult for us to identify and relocate to alternative premises and relocation would not result in any material disruptions to our business. Taking into account that the maximum penalties we may be subject to and the additional relocation costs we may incur, our Directors believe that these unregistered lease agreements would not have a material operational or financial impact on us. Accordingly, no provision has been made in our financial statements. In order to ensure ongoing compliance with the PRC law and regulations relating to the registration of executed lease agreements, where we execute a lease agreement as a tenant, we will continue to seek cooperation from the landlords of the leased properties to register executed lease agreements with the relevant government authorities.

SUPPLIERS AND CUSTOMERS

Suppliers

Our suppliers primarily include construction contractors, decoration and landscaping contractors and materials and equipment suppliers. In 2018, 2019 and 2020, purchases from our five largest suppliers amounted to RMB619.8 million, RMB1,904.7 million and RMB2,011.4 million, respectively, accounting for 43.6%, 45.5% and 32.3% of our total purchases, respectively. All of our five largest suppliers during the Track Record Period were Independent

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Third Parties. In 2018, 2019 and 2020, purchases from our single largest supplier amounted to RMB195.2 million, RMB680.8 million and RMB543.7 million, respectively, accounting for 13.7%, 16.3% and 8.7% of our total purchases, respectively.

All of our five largest suppliers during the Track Record Period were construction contractors. The table below sets forth certain other information of our five largest suppliers during the Track Record Period:

Duration of Business Relationship as of the Percentage Year of Latest Total of Our Independent incorporation/ Practicable Purchase Total Third Supplier Business activities establishment Date Amount Purchases Party (Years) (RMB’000) (%)

Year ended December 31, 2020 1. Supplier A Provision of general 1982 3 543,702 8.7 Yes construction works 2. Supplier B Provision of general 2003 2 485,472 7.8 Yes construction works 3. Supplier C Provision of general 1998 2 443,501 7.1 Yes construction works 4. Supplier D Provision of general 1990 3 273,646 4.4 Yes construction works 5. Supplier E Provision of general 1994 3 265,087 4.3 Yes construction works

Year ended December 31, 2019 1. Supplier A Provision of general 1982 3 680,783 16.3 Yes construction works 2. Supplier E Provision of general 1994 3 480,956 11.5 Yes construction works 3. Supplier D Provision of general 1990 3 256,670 6.1 Yes construction works 4. Supplier C Provision of general 1998 2 251,329 6.0 Yes construction works 5. Supplier B Provision of general 2003 2 234,971 5.6 Yes construction works

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Year ended December 31, 2018 1. Supplier F Provision of general 1987 4 195,194 13.7 Yes construction works 2. Supplier D Provision of general 1990 3 128,643 9.0 Yes construction works 3. Supplier G Provision of general 1955 11 100,411 7.1 Yes construction works 4. Supplier H Provision of general 2000 3 98,909 7.0 Yes construction works 5. Supplier A Provision of general 1982 3 96,658 6.8 Yes construction works

To the best knowledge of our Directors, none of our Directors, their respective close associates or any shareholder who owns more than 5% of our issued share capital had any interest in any of our five largest suppliers during the Track Record Period. None of our five largest customers during the Track Record Period was our five largest suppliers. The credit terms for our five largest suppliers depend on construction progress. Payment to our suppliers is typically settled by wire transfer.

Customers

We, act as a nominee shareholder through our subsidiary, hold 5% interest in one of our five largest customers, for which we provided management consulting services, in order to enhance the brand value and marketing efficiency of the relevant project. To the best knowledge of our Directors, other than the aforementioned customer, none of our Directors, their respective close associates or any shareholder who owns more than 5% of our issued share capital had any interest in any of our five largest customers during the Track Record Period.

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AWARDS AND RECOGNITIONS

We have received recognition from various industry associations and media. The table below sets out certain of the awards we received in respect of our property development operations:

Year Award/Recognition Project/Branch Awarding Institution

2020 ..... Innovation Award for Green Our Group Ministry of Housing and Building (綠色建築創新獎 Urban-Rural 項) Development of the PRC (中華人民共和國住房和城鄉建設部) Platinum Grade for the HiH Medium Residence • China National Health (Residential) Xiyue Lake Engineering Research Recognition Program (璽悅灣) Center of Residence and (HiH健康標識(住宅)項目 Housing Environment 鉑金級認定) (國家住宅與居住環境工程技術研究中心) 2020 Top 50 Real Estate Our Group China Top 10 Real Estate Companies in China in Research Group (中國房 terms of Brand Value 地產TOP10研究組) (2020中國房地產公司品牌價值TOP50)

2019 ..... Certificate of Green Our Group Ningxia Academy of Building Label (Two-Star) Building Research Co., (二星級綠色建築標記證書) Ltd. (寧夏建築科學研究院股份有限公司) 2019 Enterprise with Our Group Yinchuan Municipal Outstanding Contributions People’s Government to the Local Economy (銀川市人民政府) (2019年度地方經濟突出貢獻企業) Encouragement Award of Our Group China Association for the 18th National Quality Quality (中國質量協會) Prize (第十八屆全國質量獎鼓勵獎) Annual Business Leader in Our Group Ningxia Association of Ningxia in 2019 (2019年 Entrepreneurs in the Hui 度寧商領軍企業) Autonomous Region (寧夏回族自治區企業家協會)

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Year Award/Recognition Project/Branch Awarding Institution

2018 ..... “Impact Ningxia” Our Group The Promotion Department Contribution to of the Party Committee Development Award in of the Autonomous 2018 (2018年度“影響寧 Region and other 15 夏”發展推動力獎) Agencies (自治區黨委宣傳部等15個單位) Top 100 Quality Enterprises Our Group Ningxia Evaluation in Ningxia (寧夏質量百強 Committee of Top 100 企業) Quality Enterprises, Ningxia Association of Enterprises in the Hui Autonomous Region, Ningxia Industrial Parks Union (寧夏質量百強企業審定委員會、寧夏回族自治區區企業協會、寧夏工業園區聯合會) Ningxia Hui Autonomous Our Group Ningxia Hui Autonomous Region Quality Award (寧 Region People’s 夏回族自治區質量獎) Government (寧夏回族自治區人民政府) Philanthropic Enterprise Our Group Promotion Department of Award (慈善企業獎) the District Party Committee (區黨委宣傳部) May Day Labor Award Our Group General District Trade (五壹勞動獎狀) Union (區總工會)

2018 ..... Ningxia Outstanding Private Our Group Ningxia Hui Autonomous Enterprise in terms of Tax Region Tax Service, Contribution in 2017 State Taxation (2017年度全區納稅貢獻突 Administration, Ningxia 出民營企業) Hui Autonomous Region Local Taxation Bureau (寧夏回族自治區國家稅務局、寧夏回族自治區地方稅務局)

INFORMATION TECHNOLOGY

We rely on the effective operation of our information technology systems for our business operations. The information technology systems we used are developed by Independent Third Parties and/or Wanyi Technology Limited Company (萬翼科技有限公司), a wholly-owned subsidiary of Vanke Group. Our information technology team is responsible for maintaining the information technology system. Our information technology system keeps pace with the expansion of our business and is customized to meet our business needs. The centralized

– 234 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS information technology system is controlled and operated from our headquarters and/or Wanyi Technology Limited Company (萬翼科技有限公司) when the projects are developed by project companies in which Vanke Group holds equity interest. See “Connected Transactions—2. Administrative and Technical Support Services” for details on our arrangements with Wanyi Technology Limited Company (萬翼科技有限公司).

We are subject to security risks and threats from cyber-attacks with respect to our information technology systems. We require our staff to follow our management guidelines on our information technology system and safeguard information in the system. In addition, we conduct reviews of our information technology system, perform the upgrades and backup the data to prevent and address potential attacks. During the Track Record Period, we had not experienced any disruptions to our information technology system that materially impacted our business operations.

COMPETITION

The PRC real estate industry is highly fragmented and competitive. As a real estate developer in China, we primarily compete with other Chinese real estate developers focusing on the development of residential properties in the PRC, in particular, real estate developers in Northwest China, where we operate. We compete on many fronts, including product quality, service quality, price, financial resources, brand recognition, ability to acquire land and other factors. In recent years, an increasing number of property developers have entered the property development markets in the cities where we have operations, resulting in increased competition for land available for development. We believe major entry barriers into the PRC property development industry include a potential entrant’s limited knowledge of local property market conditions and limited brand recognition in these markets. We believe that the PRC real estate industry still has a large potential for growth. We believe that, with our solid experience in real estate development, our reputable brand name and our experienced management team, we are able to respond promptly and effectively to challenges in the PRC property market.

RISK MANAGEMENT AND INTERNAL CONTROL

We believe that risk management and internal control is crucial to the success of any property developer in the PRC. Key operational risks that we face include changes in PRC political and economic conditions, changes in the PRC regulatory environment, availability of suitable land sites for developments at reasonable prices, availability of financing to support our developments, ability to complete our development projects on time, competition from other property developers. See “Risk Factors” in this document for a discussion of various risks and uncertainties we face.

In addition, we also face various financial risks. In particular, we are exposed to interest rate risk, credit risk and liquidity risk. See “Financial Information—Quantitative and Qualitative Analysis about Market Risk” for a discussion of these market risks.

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We embed a culture of compliance in the daily work routine of our employees through regular compliance training, and set various expectations for our employees’ work performances in terms of compliance. We have established a comprehensive risk management and internal control system, which consist of an organization framework, as well as policies, procedures and risk management methods that we consider to be appropriate for our business operations. The system is designed to allow us to identify, report and address those risk and incidents that may significantly affect our performance or otherwise expose us to significant losses, liability or non-compliance with applicable laws and regulations. Our risk management system comprises the formulation and implantation of a set of policies and procedures relating to relevant risk areas, including compliance with laws and regulations, construction quality, work safety and environmental matters. We conducts self-assessment of internal control on a regular basis, the scope of which includes internal environment, risk assessment and control activities, information and communication and internal supervision. We are constantly monitoring the effectiveness of our risk management system. Our board oversees the implementation of our risk management and internal control measures. Our board is responsible for approving our business and investment plans, adjusting our risk management plans and strategies in response to risks identified in our business operations. Our internal control system covers various aspects of our operations, including information system control, procurement and accounts payable control, cash management, compensation management and financial reporting control.

WORKING CAPITAL MANAGEMENT

We manage our working capital under a centralized model and have adopted a two-tier management and organization structure to manage and oversee the use of our working capital. Under such structure, the finance management center at our headquarters manages and oversees the finance departments at each of our regional project companies. The finance management center is in charge of the overall management and implementation of our working capital policies, which includes the establishment of our budget management system, the guidance, coordination and standardization of the working capital management of our regional project companies, the formulation of the annual and quarter working capital management plan, the review and summary of the annual budget and the oversight and evaluation of the working capital management of each of our regional project companies.

On the other hand, the finance departments at each of our regional project companies are responsible for the execution of working capital management policies formulated by the finance management center and the formation and execution of working capital plan for their respective regional project companies. In particular, pursuant to our working capital management system, the finance departments at our regional project companies are required to submit monthly, quarterly and annual working capital management plan to the finance management center at our headquarters. The finance management center will review and adjust such plans by taking into consideration of various factors, including our overall business plan, project sales and pre-sale schedules and payment schedules in the relevant construction contracts, so as to ensure such plans are in line with the actual needs of our business.

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During the Track Record Period, we provided sufficient working capital to our land acquisition and development activities for our existing property projects through the establishment of our overall management on project development and pre-sale schedule, settlement schedule of land grant contracts and project acquisitions as well as use of our pre-sale and sales proceeds, cash on hand and bank and other borrowings.

INTELLECTUAL PROPERTY

We believe our brand “Ningxia Zhongfang (寧夏中房) ” is well known and widely recognized in the cities and regions we have entered into. We have built up our brand primarily through consistent delivery of high-quality properties to our customers. We will use all reasonable and proper measures to protect our proprietary rights with regard to intellectual property developed during our operations. As of the Latest Practicable Date, we owned nine trademarks and one domain name which are material and were registered in the PRC, eight trademarks which were under application for registration in the PRC, and two trademarks which were under application for registration in Hong Kong. See “Appendix V—Statutory and General Information—2. Intellectual Property Rights of our Group” to the document. We are not aware of any infringement of our intellectual property rights by any third parties or violation of any intellectual property rights of third parties during the Track Record Period and up to the Latest Practicable Date.

INSURANCE

We maintain or require the general contractors to maintain constructional all-risks insurance for our property development operations. We maintain insurance, including social insurance, for our employees as required by applicable laws and regulations and as we consider appropriate for our business operations. Our Directors consider that our practice is in line with the industry norm. There is a risk that we may incur uninsured losses, damage or liabilities. See “Risk Factors—Risks Relating to Our Business—We may not have adequate insurance coverage to cover risks related to our business.”

SOCIAL, HEALTH, WORK SAFETY AND ENVIRONMENTAL MATTERS

Social, Health and Work Safety

In respect of social responsibilities, in particular health, work safety and social insurance, we have entered into employment contracts with our employees in accordance with the applicable PRC laws and regulations. We hire employees based on their merits and it is our corporate policy to offer equal opportunities to our employees regardless of gender, age, race, religion or any other social or personal characteristics.

We maintain social welfare insurance for our full-time employees in the PRC, including pension insurance, medical insurance, personal injury insurance, unemployment insurance and maternity insurance, in accordance with relevant PRC laws and regulations.

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Our safety production management guidelines contain policies and procedures regarding work safety and occupational health issues. We provide our employees with necessary safety training, and our construction sites are equipped with safety equipment including protective gloves, boots and hats. Our project management department is responsible for recording work accidents, reporting work accidents as well as maintaining health and work safety compliance records.

During the Track Record Period, we did not encounter any material safety accident, there were no claims for personal or property damages and no compensation was paid to employees in respect of claims for personal or property damages related to safety accident.

Environmental Matters

We are subject to a number of environmental and safety laws and regulations in the PRC including the PRC Environmental Protection Law (中華人民共和國環境保護法), the PRC Prevention and Control of Noise Pollution Law (中華人民共和國環境噪聲污染防治法), the PRC Environmental Impact Assessment Law (中華人民共和國環境影響評價法) and the Administrative Regulations on Environmental Protection for Development Projects (建設項目環境保護管理條例). See “Regulatory Overview—Laws and Regulations Concerning Environmental Protection” for details of these laws and regulations. Pursuant to these laws and regulations, we have engaged independent third-party environmental consultants to conduct environmental impact assessments at all of our construction projects, and such environmental impact assessments were submitted to relevant governmental authorities for approval before commencement of development. Upon completion of construction work, we are required to be examined by a third party designated by the relevant governmental authorities and are subject to governmental authorities’ acceptance. Only property development projects which have passed such examination and acceptance can be delivered.

Under our typical construction contracts, we require our contractors to strictly comply with relevant environmental and safety laws and regulations. We inspect the construction sites regularly and require our contractors to immediately rectify any defect or non-compliance identified.

We believe our operations do not have significant impacts on the environment and natural resources. As of the Latest Practicable Date, we had not encountered any material issues in passing inspections conducted by the relevant environmental authorities upon completion of our property development projects. During the Track Record Period, no material fines or penalties were imposed on us for non-compliance of PRC environmental laws and regulations, and we had obtained all material required approvals in relation to the environmental impact reports, where applicable, for our projects under development.

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EMPLOYEES

As of December 31, 2020, we had a total of 341 employees. All of our employees are located in the PRC. A breakdown of our employees by function as of December 31, 2020 is set forth below:

Number of Percentage of Function employees total employees (%)

Senior Management ...... 34 10.0 Engineering Management...... 94 27.6 Cost Management ...... 42 12.3 Finance ...... 34 10.0 Administration ...... 31 9.1 Design ...... 31 9.1 Preliminary Selection and Investment ...... 22 6.5 Customer Relation ...... 19 5.6 Sales and Marketing ...... 14 4.1 Operational Management ...... 10 2.9 Research and Development ...... 10 2.9

Total ...... 341 100.0

We believe that the successful implementation of our growth and business strategies rests on a team of experienced, motivated and well-trained managers and employees at all levels. We endeavor to recruit talented employees by offering competitive wages and benefits, systematic training opportunities and promotion opportunities. We recruit employees from well-known universities in the PRC. As of December 31, 2020, approximately 87.4% of our employees had a bachelor’s degree or above. We have implemented systematic, specialty-focused vocational training programs for our employees at different levels on a regular basis to meet different requirements and emphasize individual initiative and responsibility. We offer (i) “Rookie Wing Program” (“雛鷹班”) for employees with high potentials; (ii) “Eagle Wing Program” (“雄鷹班”) for junior-level management personnel; and (iii) “Gigantic Wing Program” (“鯤鵬班”) for mid-level management personnel. Under each program, we provide various tailored training sessions and activities. We generally invite external experts and training professionals to conduct the training sessions and arrange internal sharing seminar or presentation after particular training sessions. We have woven into our training program mentorship, assessment, feedback and evaluation procedures for our employees to facilitate their growth and development. We believe that our training programs, combined with on-the-job learning, facilitate advancement of our employees.

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The remuneration package of our employees includes salary, bonus and equity incentives. In 2018, 2019 and 2020, we incurred employee benefit expenses of RMB83.6 million, RMB132.6 million and RMB165.4 million, respectively, representing approximately 3.3%, 6.2% and 2.9% of our revenue, respectively, during those years. In general, we determine employee salaries based on each employee’s qualification, position and seniority. We have designed an annual review system to assess the performance of our employees, which forms the basis of our determination on salary raises, bonuses and promotions. As required by PRC regulations, we make contributions to mandatory social security funds for the benefit of our PRC employees that provide for pension insurance, medical insurance, unemployment insurance, personal injury insurance, maternity insurance and housing funds.

Our employees do not negotiate their terms of employment through any labor union or by way of collective bargaining agreements. As of the Latest Practicable Date, no labor dispute had occurred which materially and adversely affected or was likely to have a material and adverse effect on our operations.

During the Track Record Period, we failed to make full contribution to the social insurance and housing provident funds for some of our employees of our subsidiaries and branches as required under the relevant PRC laws and regulations. It took place mainly because the staff who were in charge of this matter did not fully understand the different regulatory requirements in certain areas where we operated.

According to the relevant PRC laws and regulations, (i) if we fail to pay the full amount of social insurance contributions as required, the relevant PRC authorities may demand us to pay the outstanding contributions within a stipulated deadline and we may be liable for a late payment fee that equals to 0.05% of the outstanding amount of social insurance contributions for each day of the delay. If we fail to make such payments within the stipulated deadline, we may also be liable to a fine from one to three times of the amount of the outstanding amount of social insurance contributions; and (ii) in respect of outstanding housing provident fund contributions, we may be ordered to pay the outstanding housing provident fund contributions within a prescribed time period. If the payment is not made within such time limit, an application may be made to PRC courts for compulsory enforcement.

Our Directors are of the view that such incident would not have a material and adverse effect on our business and results of operations, considering that: (i) as of the Latest Practicable Date, we had not received any notification from the relevant government authorities requiring us to pay any shortfalls or imposing any penalties with respect to social insurance and housing provident funds; (ii) we were not aware of any employee complaints nor have we received any demand, court filings or notices from any current or former employees regarding any outstanding social insurance or housing provident fund contributions as of the Latest Practicable Date; (iii) we had made the provisions in the amount of RMB0.8 million, RMB1.1 million and RMB1.2 million, respectively, in 2018, 2019 and 2020, in respect of the potential liabilities arising from the failure to make full contribution to social insurance and housing provident funds for our employees; (iv) our undertaking to make contributions within a

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LEGAL PROCEEDINGS AND COMPLIANCE

Legal Proceedings

We may be involved in legal proceedings or disputes in the ordinary course of business from time to time, such as contract disputes with our customers, subcontractors, suppliers and other parties. On December 30, 2020, an individual initiated a civil lawsuit against one of our construction subcontractors and us, claiming that, among other things, our construction subcontractor and us failed to pay the individual the construction fees. The total amount of the claims raised by the plaintiff was RMB3.8 million. On April 4, 2021, the trial court dismissed the case given that the evidence provided by the plaintiff was insufficient. As of the Latest Practicable Date, the plaintiff had not appealed. Based on the advice of the litigation counsel engaged by our Group in relation to the lawsuit, our Directors confirm that the outcome of this lawsuit, whether in favor or against us, will not have any material adverse effect on our financial condition, results of operations and business.

Compliance with Laws and Regulations

During the Track Record Period and up to the Latest Practicable Date, save as disclosed, we had, in all material respects, complied with all the relevant and applicable PRC laws and regulations governing the business of property development and management and we had obtained all material licenses, permits and certificates for the purpose of operating our business.

Non-compliance Incidents

During the Track Record Period, we experienced certain non-compliance incidents. Summaries of such incidents are set forth below.

Pre-sale Proceeds Incidents

Background

The relevant laws and regulations governing the management of pre-sale proceeds in the PRC mainly include (i) the applicable laws and regulations at the national level which set out the general principles and requirements; and (ii) the applicable regulations at the provincial,

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During the Track Record Period, certain subsidiaries failed to fully or directly deposit the required amounts of pre-sale proceeds into the designated escrow accounts as generally required by the relevant local regulatory requirements. The above incidents are collectively referred to as the “Pre-sale Proceeds Incidents,” and the details of such Pre-sale Proceeds Incidents are set forth below.

During the Track Record Period and up to the date of the document, except for Yongning County of Yinchuan and Yinchuan, there was no required regulatory threshold levels of restricted cash balance in the designated escrow accounts for pre-sale proceeds in cities we had property development operations. Our Directors confirm that we maintained sufficient balance and we were in compliance with required regulatory threshold levels of restricted cash balance in the designated escrow accounts for pre-sale proceeds during the Track Record Period. See“Regulatory Overview—Laws and Regulations Concerning Real Estate Transactions—Pre- Sale of Commodity Buildings.”

Failure to Fully or Directly Deposit the Required Amounts into Designated Escrow Accounts

During the Track Record Period, three, one, one and one projects in Xining, Yinchuan, Haidong and Xianyang, respectively, were involved in the Pre-sale Proceeds Incident for failure to fully or directly deposit the required amounts of pre-sale proceeds into the designated escrow accounts in accordance with relevant regulatory requirements. The detailed quantitative information in relation to the our deposit of pre-sale proceeds are set forth below:

Year ended December 31, 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Pre-sale proceeds received ...... 311,244 3,496,821 4,274,611 Pre-sale proceeds required to be deposited into designated escrow accounts ...... 311,244 3,496,821 4,274,611 Actual pre-sale proceeds deposited .... 255,904 1,426,904 1,573,546 – Directly deposited ...... 64,720 246,270 1,275,221 – Indirectly deposited ...... 191,184 1,180,634 298,325 Pre-sale proceeds not fully deposited as required ...... 55,340 2,069,917 2,701,065

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Our Directors confirm that pre-sale proceeds that were not fully or directly deposited into the designated escrow accounts were deposited in the relevant project companies’ general bank accounts and such pre-sale proceeds were used for the development of the respective projects, such as being used to settle construction-related payments, finance costs for project financing and tax payments, which was in compliance with the relevant laws and regulations.

Reasons for the Non-Compliance

We did not fully or directly deposit the pre-sale proceeds for the six property projects primarily because:

(i) certain mortgage banks did not directly deposit mortgage loans into our designated escrow accounts opened with other banks for relevant pre-sold properties due to their internal policies reasons and/or commercial reasons and deposited such mortgage loans into our general banking accounts with such mortgage banks. Pursuant to applicable local regulations and procedures, for each project or in some cities, each pre-sale permit, a project company may only open one designated escrow account with one bank, but may maintain general banking accounts in different banks for the convenience of business transactions. The purchasers of our properties, however, can apply for mortgage loans with different banks, which may be different from the one where the designated escrow account for the relevant property project is established and maintained.

During the Track Record Period, all mortgage banks we worked with were licensed PRC commercial banks and the banks required depositing mortgage loan proceeds to the project company’s general banking account opened with themselves. According to CIA, such arrangement is common among mortgage banks in China.

(ii) the lack of understandings by the employees of the relevant PRC laws and regulations since employees of our project company believed that it is not necessary to deposit the pre-sale proceeds into the designated escrow accounts after fulfillment of conditions for withdrawals and/or meets the regulatory threshold of the supervised funds, and; failure to provide adequate training to our employees to enable them to fully understand the relevant PRC local requirements and to execute our then established internal control policies to properly supervise the deposit of pre-sale proceeds.

Legal Consequence and Potential Maximum Penalties

According to the Pre-sale Measures, the competent regulatory authority may impose a fine that equals three times of illegal gains but less than RMB30,000 per project if a property developer fails to use the pre-sale proceeds as required. The maximum penalty of RMB30,000 refers to the maximum penalty a project may be subject to, regardless whether the project is involved in one or more types of non-compliances in relation to pre-sale proceeds. See “Regulatory Overview—Laws and Regulations Concerning Real Estate Transactions.” The

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As of the Latest Practicable Date, we had obtained confirmations from, or conducted interviews with, the competent local governmental authorities confirming that we had complied with the relevant laws and regulations in relation to pre-sale proceeds or we had not been penalized for violating the relevant laws and regulations in relation to pre-sale; and our Directors confirm that we had not been subject to any administrative penalty imposed by competent administrative authorities relating to the Pre-sale Proceeds Incidents. Our PRC Legal Advisors are of the view that such local regulatory authorities are competent authorities, as pursuant to the Pre-sale Measures and the Pre-sale Notice, local-level authorities are delegated and granted the authority to formulate, and supervise the implementation of detailed requirements for the supervision of pre-sale proceeds. In addition, the main purpose of applicable laws and regulations in relation to the pre-sale proceeds is to ensure sufficient fund will be retained by property developers for the completion of projects, and the Directors confirm the Pre-sale Proceeds Incidents did not cause any material delay in property delivery or failure to deliver property during the Track Record Period.

Taking into account that (i) the foregoing confirmations obtained from and the interviews conducted with the competent local government authorities, which covered all of our project companies that had been involved in the Pre-sale Proceeds Incidents during the Track Record Period and up to the Latest Practicable Date; (ii) the foregoing Directors’ confirmations; (iii) the relevant project companies have taken rectification actions with respect to the relevant Pre-sale Proceeds Incidents to the extent feasible and our Company has enhanced the internal control measures to ensure that its subsidiaries comply with the relevant local rules and regulations regarding pre-sale proceeds; and (iv) the main purpose of governmental supervision for the pre-sale proceeds from commercial properties is to ensure the consummation of development and construction of the corresponding projects, and the Directors further confirm that the Pre-sale Proceeds Incidents did not cause any material delay in property delivery or failure to deliver property during the Track Record Period and up to the Latest Practicable Date, our PRC Legal Advisors are of the view that the risk of us being penalized by the relevant government authorities which issued the above-mentioned confirmations or accepted the interviews relating to the Pre-sales Proceeds Incidents is low. According to the confirmations we obtained from and interviews conducted with the competent local governmental authorities, our PRC Legal Advisors advised that except for the above-mentioned Pre-sale Proceeds Incidents, we were in compliance with the requirements of relevant PRC laws and regulations relating to pre-sales proceeds, including the use of pre-sales proceeds, in all material aspects during the Track Record Period.

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Current Status of the Property Projects Involved in the Pre-sale Proceeds Incidents

As of the Latest Practicable Date, the six property projects that involved in the Pre-sales Proceeds Incidents during the Track Record Period were under development. For the six property projects that have yet to be completed and delivered, we have sufficient working capital to complete and deliver the pre-sold units to property purchasers by the scheduled date of delivery.

Internal Control Measures Adopted

We handled pre-sales proceeds with the following measures prior to the implementation of our enhanced internal control measures in March 2021: (i) regarding the deposit of pre-sales proceeds, we had formulated procedures for personnel of the sales department of our project companies, requiring them to deposit pre-sales proceeds into the designated escrow accounts established in the designated banks. In addition, the finance department of our project companies were required to regularly check the balances of such accounts and maintain sufficient balances; and (ii) regarding the withdrawal of pre-sales proceeds, our staff were required to collect and submit relevant documents and records to the relevant government authorities to apply for withdrawal of pre-sales proceeds.

We have enhanced the internal control measures regarding pre-sale proceeds by implementing the following measures: (i) prior to the commencement of a pre-sale, our operational management center at our headquarters will lead and conduct examination and rectification in order to make sure that our project company has set up escrow accounts in accordance with local laws and regulations; (ii) the designated personnel of the finance department of each project company ensure that the pre-sale proceeds are fully and directly deposited into the designated escrow accounts and oversee the withdrawals conducted by the relevant project company to ensure that withdrawals from the relevant designated escrow accounts are strictly in accordance with the relevant local regulatory requirements; (iii) our operational management center at our headquarters collects and reviews the relevant regulatory requirements relating to pre-sale proceeds on a regular basis, focusing particularly on the requirements relating to property projects that are scheduled to commence pre-sales recently, and discusses with the internal control managers at our finance department of the relevant regional companies to ensure agreement on the procedures and requirements for the relevant property project; and (iv) Head of Finance Department (財務中心總監) provides regular training to staff in sales and finance department in relation to operating procedures and relevant regulatory requirements on pre-sale proceeds, in order to ensure that they will operate in compliance with our internal guidelines and relevant regulatory requirements.

In order to rectify the practical difficulties that our project companies experienced in depositing the pre-sale proceeds into the designated escrow accounts and to strengthen future compliance with the applicable laws and regulations in relation to pre-sale proceeds management, we required our project companies to select mortgage banks with internal policies that would allow our project companies to directly deposit mortgage loans into the designated escrow accounts in the future. In the event that any mortgage bank fails to directly

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Our internal control consultant performed a follow-up review in March 2021. Based on the follow-up review, there is no material deficiencies identified in our abovementioned enhanced internal control measure.

Our Directors confirmed since March 2021 and up to the date of this document, all of our subsidiaries (i) had followed the abovementioned enhanced internal control measures; (ii) had fully deposited the newly-received pre-sale proceeds received into the designated escrow accounts as required by the relevant local laws and regulations. In the event that any mortgage bank fails to directly deposit mortgage loans into the designated escrow accounts, we manually transfer the funds from the mortgage bank accounts into the designated escrow accounts monthly in accordance with our enhanced internal measures; (iii) utilized the pre-sale proceeds received during such period in compliance with the relevant rules and regulations; and (iv) maintained the required balance of pre-sale proceeds in the relevant designated escrow accounts throughout the period.

After considering the status of the Pre-sale Proceeds Incidents subsequent to the Track Record Period and the foregoing, our Directors are of the view that, and the Sole Sponsor concurs, the enhanced internal control measures adopted by us are adequately and effectively designed to reasonably prevent such Pre-sale Proceeds Incidents from taking place in the future.

Qualifications

The table below sets forth details of the material qualification certificates for our business as of the Latest Practicable Date:

Company Name Qualification Classification Expiration Date

Ningxia Zhongfang Qualification Certificate for Class I In effect, expiring on Industrial ...... Property Development December 31, 2022 (房地產開發企業資質證書) Yinchuan Zhongchen . . . Qualification Certificate for Class III In effect, expiring on Property Development November 27, 2021 (房地產開發企業資質證書) Xianyang Yangguang Qualification Certificate for Class IV In effect, expiring on Meiyu...... Property Development August 10, 2023 (房地產開發企業資質證書)

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Company Name Qualification Classification Expiration Date

Ningxia Zhongjin...... Qualification Certificate for Temporary In effect, expiring on Property Development June 15, 2021 (房地產開發企業資質證書) Ningxia Zhongyue ..... Qualification Certificate for Temporary In effect, expiring on Property Development October 13, 2021 (房地產開發企業資質證書) Ningxia Zhongen Real Qualification Certificate for Temporary In effect, expiring on Estate Limited Property Development November 19, 2021 Company (寧夏中恩置 (房地產開發企業資質證書) 業有限公司)...... Ningxia Zhonghan ..... Qualification Certificate for Temporary In effect, expiring on Property Development December 8, 2021 (房地產開發企業資質證書) Ningxia Zhongfang Qualification Certificate for Class I In effect, expiring on Group Xing Real Property Development October 25, 2022 Estate Development (房地產開發企業資質證書) Limited Company (寧夏中房集團西寧房地產開發有限責任公司)... Ningxia Zhongfang Qualification Certificate for Class IV In effect, expiring on Group Haidong Property Development June 14, 2023 Industry Company (房地產開發企業資質證書) Limited (寧夏中房集團海東實業有限公司)... Sichuan Hengmao Jiye Qualification Certificate for Temporary In effect, expiring on Real Estate Property Development February 11, 2022 Development Company (房地產開發企業資質證書) Limited (四川恒茂基業房地產開發有限公司). . Chongzhou Zhongye Qualification Certificate for Temporary In effect, expiring on Ruihua Real Estate Property Development June 17, 2023 Development Company (房地產開發企業資質證書) Limited (崇州市中業瑞華房地產開發有限公司)...... Zhongfang Vanke Real Qualification Certificate for Temporary In effect, expiring on Estate ...... Property Development February 28, 2022 (房地產開發企業資質證書) Ningxia Zhenghui ..... Qualification Certificate for Temporary In effect, expiring on Property Development May 13, 2021 (房地產開發企業資質證書)

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Company Name Qualification Classification Expiration Date

Ningxia Yuejia ...... Qualification Certificate for Temporary In effect, expiring on Property Development May 13, 2021 (房地產開發企業資質證書) Ningxia Wanjin ...... Qualification Certificate for Temporary In effect, expiring on Property Development December 3, 2021 (房地產開發企業資質證書) Ningxia Wanpeng...... Qualification Certificate for Temporary In effect, expiring on Property Development July 6, 2021 (房地產開發企業資質證書) Ningxia Wanyue ...... Qualification Certificate for Temporary In effect, expiring on Property Development December 7, 2021 (房地產開發企業資質證書) Yinchuan Wanbo ...... Qualification Certificate for Temporary In effect, expiring on Property Development July 1, 2021 (房地產開發企業資質證書) Xining Zhongfang Qualification Certificate for Temporary In effect, expiring on Vanke...... Property Development February 20, 2022 (房地產開發企業資質證書) Xining Wanlan ...... Qualification Certificate for Temporary In effect, expiring on Property Development June 17, 2021 (房地產開發企業資質證書) Xining Wancan ...... Qualification Certificate for Temporary In effect, expiring on Property Development June 17, 2021 (房地產開發企業資質證書) Xining Wanxian...... Qualification Certificate for Temporary In effect, expiring on Property Development June 17, 2021 (房地產開發企業資質證書) Xining Wantang...... Qualification Certificate for Temporary In effect, expiring on Property Development October 24, 2021 (房地產開發企業資質證書) Xining Ningcan ...... Qualification Certificate for Temporary In effect, expiring on Property Development September 9, 2021 (房地產開發企業資質證書) Xining Wanhan ...... Qualification Certificate for Temporary In effect, expiring on Property Development December 7, 2021 (房地產開發企業資質證書)

Our PRC Legal Advisors have advised us that, during the Track Record Period and up to the Latest Practicable Date, we had obtained all material requisite licenses, approvals, permits, certificates to conduct our business in the PRC.

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If we fail to maintain our licenses, certificates, permits or governmental approvals upon expiry, our development plans may be delayed and there may be an adverse effect on our business. See “Risk Factors—Risks Relating to Our Business—We may fail to obtain or experience delays in obtaining the relevant PRC governmental approvals for our property development projects.”

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OVERVIEW

Mr. Fang, our chairman of the Board, an executive Director and one of our Controlling Shareholders, has been working in Ningxia Zhongfang Industrial since 2000, where he was responsible for overseeing our business development and operation management of our Group. For further information about Mr. Fang, see “Directors and Senior Management—Board of Directors—Executive Directors.”

DELINEATION OF BUSINESS

Business of our Group

Other Businesses of our Controlling Shareholders

Apart from our business, Mr. Fang, one of our Controlling Shareholders, through certain companies controlled by him, including Ningxia Zhongfang Development, is interested in other businesses including, among others, property management services*, facility installation services, elderly care services and education services (the “Other Businesses”). Given the differences in the nature of the business between our Group and the Other Businesses, our Directors are of the view that there is a clear business delineation. As a result, none of the Other Businesses would compete or is expected to compete, directly or indirectly, with the business of our Group.

During the Track Record Period, our Group had engaged other companies controlled by our Controlling Shareholders to provide property management services. It is expected that our Group will continue to engage other companies controlled by our Controlling Shareholders for the provision of such services after [REDACTED]. Details of such continuing connected transactions are set out in “Connected Transactions.”

Note:

* The property management service business is carried out by Yinchuan Zhong Fang Housing Property Management Co., Ltd. (銀川中房物業集團股份有限公司) which is quoted on NEEQ (stock code: 870685). Yinchuan Zhong Fang Housing Property Management Co., Ltd. is owned as to 35% by Ningxia Zhongfang Development, which is in turn owned as to 42.96% by Mr. Fang.

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In addition, as of the Latest Practicable Date, none of our executive Directors had any interest in any business which competed or was likely to compete, either directly or indirectly, with our Company’s business which would require disclosure under Rule 8.10 of the Listing Rules.

INDEPENDENCE FROM OUR CONTROLLING SHAREHOLDERS

We are capable of carrying on our business independently from our Controlling Shareholders and their close associates (other than our Group) after the [REDACTED] for the following reasons:

Management Independence

Our Board comprises three executive Directors, one non-executive Director and three independent non-executive Directors. None of our Directors or the members of our senior management holds any directorship or senior management role in our Controlling Shareholders or their close associates (other than our Group).

Each of our Directors is aware of his/her fiduciary duties as a Director, which require, among other things, that he/she acts for the benefit and in the best interests of our Company and does not allow any conflict between his/her duties as a Director and his/her personal interests. In the event that there is a potential conflict of interest arising out of any transaction to be entered into between our Group and any of the Directors or their respective close associates, the interested Director(s) shall abstain from voting at the relevant board meetings of our Company in respect of such transactions and shall not be counted in the quorum. In addition, we have an independent senior management team to carry out the business operations of our Group independently from our Controlling Shareholders.

Based on the reasons above, our Directors are of the view that our Group is capable of managing our business independently from our Controlling Shareholders and their respective close associates following the completion of the [REDACTED].

Operational Independence

Although our Controlling Shareholders will retain a controlling interest in our Company after the [REDACTED], we have full rights to make all decisions on, and to carry out, our own business operations independently from our Controlling Shareholders and their respective close associates.

Licences required for operation

We hold all relevant licences necessary to carry on our current business independently from our Controlling Shareholders and/or their respective close associates.

Access to customers, suppliers and business partners

We conduct our own sales and marketing primarily through our own sales and marketing team. Our Group has a large and diversified base of customers that are unrelated to our Controlling Shareholders and/or their respective close associates. We have independent access to our customers, our suppliers as well as our other business partners.

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Operational facilities

All of the properties and facilities necessary for our business operations are independent from our Controlling Shareholders and their respective close associates.

Employees

We have our own team employees for our operations, human resources, accounting and financing. As of the Latest Practicable Date, all of our full-time employees were recruited independently and primarily through recruitment websites, on-campus recruitment programs, recruiting firms and internal referrals.

Continuing connected transactions with our Controlling Shareholders

Details of the continuing connected transactions between our Group and our Controlling Shareholders or their associates which will continue upon [REDACTED] are set out in “Connected Transactions.” All such transactions will be conducted on arm’s length basis and on normal commercial terms. Save for such continuing connected transactions, our Directors do not expect that there will be any other transactions between our Group and our Controlling Shareholders or their respective close associates immediately upon completion of the [REDACTED]. In addition, none of our Controlling Shareholders or their respective close associates has been our major supplier or customer which provides or procures for any critical services or materials for our operation. Thus, the existence of the above continuing connected transactions will not affect our operational independence from our Controlling Shareholders and their respective close associates after [REDACTED].

Based on the above, our Directors are of the view that our Group had been operating independently from our Controlling Shareholders and their respective close associates during the Track Record Period and will continue to operate independently.

Financial Independence

All loans, advances and balances due to or from the Controlling Shareholders or their close associates which did not arise out of the ordinary course of business were settled as of the Latest Practicable Date. All share pledges and guarantees provided by or to our Controlling Shareholders and their respective close associates on the borrowings of our Group or our Controlling Shareholders and their respective close associates were fully released as of the Latest Practicable Date.

In addition, we have our own internal control and accounting systems, accounting and finance department, independent treasury function for cash receipts and payment and independent access to third party financing. Accordingly, our Directors are of the view that our Group is capable of maintaining financial independence from our Controlling Shareholders and their respective close associates.

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CORPORATE GOVERNANCE MEASURES

Each of our Controlling Shareholders has confirmed that he/it fully comprehends his/its obligations to act in our Shareholders’ best interests as a whole. Our Directors believe that there are adequate corporate governance measures in place to manage existing and potential conflicts of interest. In order to further avoid potential conflicts of interest, we have implemented the following measures:

(a) as part of our preparation for the [REDACTED], we have amended our Articles of Association to comply with the Listing Rules. In particular, our Articles of Association provided that, unless otherwise provided, a Director shall not vote on any resolution approving any contract or arrangement or any other proposal in which such Director or any of his associates have a material interest nor shall such Director be counted in the quorum present at the meeting;

(b) a Director with material interests shall make full disclosure in respect of matters that may have conflict or potentially conflict with any of our interest and abstain from the board meetings on matters in which such Director or his associates have a material interest, unless the attendance or participation of such Director at such meeting of the Board is specifically requested by a majority of the independent non-executive Directors;

(c) we are committed that our Board should include a balanced composition of executive Directors, non-executive Director and independent non-executive Directors. We have appointed independent non-executive Directors and we believe our independent non-executive Directors possess sufficient experience and they are free of any business or other relationship which could interfere in any material manner with the exercise of their independent judgment and will be able to provide an impartial, external opinion to protect the interests of our public Shareholders. Details of our independent non-executive Directors are set out in “Directors and Senior Management—Board of Directors—Independent non-executive Directors;”

(d) we have appointed Guotai Junan Capital Limited as our compliance adviser, which will provide advice and guidance to us in respect of compliance with the applicable laws and the Listing Rules including various requirements relating to Directors’ duties and corporate governance; and

(e) as required by the Listing Rules, our independent non-executive Directors shall review any connected transactions annually and confirm in our annual report that such transactions have been entered into in our ordinary and usual course of business, are either on normal commercial terms or on terms no less favorable to us than those available to or from independent third parties and on terms that are fair and reasonable and in the interests of our Shareholders as a whole.

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OVERVIEW

Our Group has entered into a number of agreements with our connected persons, the details of which are set out below. The transactions disclosed in this section will constitute our continuing connected transactions under Chapter 14A of the Listing Rules upon [REDACTED].

(A) CONTINUING CONNECTED TRANSACTION FULLY EXEMPT FROM THE REPORTING, ANNUAL REVIEW, ANNOUNCEMENT AND INDEPENDENT SHAREHOLDERS’ APPROVAL REQUIREMENTS

1. Property Management Services Provided by Vanke Service

On [●], 2021, our Company (for ourselves and on behalf of our subsidiaries) entered into a property management services framework agreement (the “Vanke PM Services Framework Agreement”) with Vanke Service Co., Ltd. (萬物雲空間科技服務股份有限公司)(“Vanke Service”) (for itself and on behalf of its subsidiaries), pursuant to which we agreed to engage Vanke Service and its subsidiaries to provide property management services, including but not limited to (i) pre-delivery services prior to the delivery of properties to property owners, such as security, car park management, cleaning, gardening, repair, maintenance or operation of common area, pre-sale display units, sales offices and shared facilities; and (ii) property management services for unsold property units held by us (the “Vanke PM Services”). The Vanke PM Services Framework Agreement has a term commencing from the [REDACTED]to December 31, 2023.

For the years ended December 31, 2018, 2019 and 2020, the total service fees paid by our Group to Vanke Service and its subsidiaries for the Vanke PM Services amounted to RMB1.8 million, RMB11.1 million and RMB21.7 million, respectively. The significant increase in the service fees paid to Vanke Service in 2019 and 2020 as compared with 2018 was mainly due to the increase in total GFA of properties for which we engaged Vanke Service to provide Vanke PM Services. The total GFA of properties for which we had engaged Vanke Service and its subsidiaries for the provision of Vanke PM Services was nil, nil and 0.3 million sq.m. for the years ended December 31, 2018, 2019 and 2020, respectively. The amount of sales offices for which we had engaged Vanke Service and its subsidiaries for the provision of Vanke PM Services amounted to 3, 6 and 7, respectively, during the same period.

The service fees to be charged for the Vanke PM Services shall be determined with reference to a number of factors, including (i) the scope of services and type, size and location and the total GFA of the property development projects of which such Vanke PM Services is required; (ii) the anticipated operational costs (including labor costs, material costs and administrative costs) for providing such services; (iii) the prevailing market price for similar services and similar type of projects and shall be no less favorable than those quoted by Independent Third Parties to us; and (iv) the fee quotes to be submitted by members of Vanke Service under the relevant tender bids and the guidance price set by the relevant government authorities (if any).

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Our Directors estimate that the maximum transaction amounts under the Vanke PM Services Framework Agreement for the years ending December 31, 2021, 2022 and 2023 will not exceed RMB16.3 million, RMB24.4 million and RMB31.8 million, respectively. Such estimate is based on (i) the historical transaction amounts for similar services and similar types of projects during the Track Record Period; (ii) the number of existing property projects for which we have engaged Vanke Service or its subsidiaries through tender bids to provide the Vanke PM Services; and (iii) the estimated GFA of the properties expected to be sold and delivered by us that will require Vanke PM Services in the relevant years, projected with reference to the trend of increase in GFA of properties delivered by our Group during the Track Record Period.

The increase in service fees to be paid by us to Vanke Service or its subsidiaries for the years ending December 31, 2021, 2022 and 2023 as compared to the Track Record Period is mainly due to the expected increase in GFA of unsold properties in demand for Vanke PM Services, which has been estimated based on the GFA of properties delivered and scheduled to be delivered by our Group and available for management by Vanke Service or its subsidiaries. For the years ending December 31, 2021, 2022 and 2023, it is anticipated that our Group will engage Vanke Service and its subsidiaries for the provision of Vanke PM Services for a total GFA of 1.2 million sq.m., 2.1 million sq.m. and 2.8 million sq.m., respectively, which were estimated with reference to the delivery schedule of our Group. The amount of sales offices for which we anticipate to engage Vanke Service and its subsidiaries for the provision of Vanke PM Services amounted to 13, 14 and 15, respectively, for the same period.

The Vanke PM Services Framework Agreement is a framework agreement which provides the mechanism for the operation of the connected transactions described therein. It is envisaged that from time to time and as required, individual service contracts may be entered into between our Group and Vanke Service or its subsidiaries. Each individual service contract will set out the Vanke PM Services to be provided by Vanke Service or its subsidiaries to our Group, the fees for the services to be paid by our Group and any detailed specifications which may be relevant to those engagements. The individual service contracts may only contain provisions which are in all material respects consistent with the binding principles, guidelines, terms and conditions set out in the Vanke PM Services Framework Agreement.

Vanke Service is owned as to 60% by Vanke Group. Vanke (Chengdu) Enterprise Co., Ltd. (萬科(成都)企業有限公司), which is a substantial shareholder holding 40% of the equity interest in Zhongfang Vanke Industrial, one of our principal operating subsidiaries, is also owned as to 90% by Vanke Group. As such, Vanke Service is an associate of a connected person of our Company for the purpose of the Listing Rules. Accordingly, the transactions contemplated under the Vanke PM Service Framework Agreement will constitute continuing connected transactions of our Company under Chapter 14A of the Listing Rules upon [REDACTED].

As each of the applicable percentage ratios under the Listing Rules in respect of the annual caps in relation to the Vanke PM Services Framework Agreement is expected to be less than 1% on an annual basis and such transaction is a connected transaction only because it involves connected person at the subsidiary level, therefore, it will constitute de minimis continuing connected transactions of our Group and will be exempt from the reporting, annual review, announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

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2. Administrative and Technical Support Services

On [●], 2021, our Company (for ourselves and on behalf of our subsidiaries) entered into an administrative and technical support cooperation framework agreement with Wanyi Technology Limited Company (萬翼科技有限公司) (for itself and on behalf of other members of Vanke Group and its associates) (the “Administrative and Technical Support Cooperation Framework Agreement”), pursuant to which the Vanke Group agreed to (i) provide certain IT products and technical services to us, including among others, provision of cloud services, cloud storage and cloud service related technical support, IT security support, office automation system hardware and software; (ii) provide various platform systems in relation to funding, taxes, data processing and sales collection; (iii) provide certain finance and administrative services including bookkeeping, accounting, file management and other relevant IT services; and (iv) technical consulting services (the “Administrative and Technical Support Cooperation”). The Administrative and Technical Support Cooperation Framework Agreement has a term commencing from the [REDACTED] until December 31, 2023.

For each of the years ended December 31, 2018, 2019 and 2020, the total amount of fees payable by us to Vanke Group for the Administrative and Technical Support Cooperation amounted to RMB0.1 million, RMB1.1 million and RMB5.9 million, respectively. The significant increase in the fees paid by us to Vanke Group for the Administrative and Technical Support Cooperation in 2019 and 2020 as compared with 2018 was mainly due to the expansion in business operation resulting from the increased scale of the development of property projects under our strategic cooperation with Vanke Group. By purchasing the products and services under the Administrative and Technical Support Cooperation, we are able to leverage the technology strength of Vanke Group, which will further add value to our Group.

The fees to be charged for the products and services under the Administrative and Technical Support Cooperation will be determined based on actual costs (taking into account the anticipated operational costs including among others, labor costs and material costs) of the products or services we received from Vanke Group. Vanke Group generally adopts the same pricing standard for similar products and services provided to the project companies it invests in.

Our Directors estimate that the maximum transaction amounts under the Administrative and Technical Support Cooperation Framework Agreement for the years ending December 31, 2021, 2022 and 2023 will not exceed RMB4.8 million, RMB5.8 million and RMB7.5 million, respectively. Such estimates is based on (i) the historical transaction amounts and growth trend during the Track Record Period; (ii) the estimated costs to be paid based on the existing signed contracts; and (iii) the increasing growth trend for properties we developed which are anticipated to enter into Administrative and Technical Support Cooperation with Vanke Group.

Vanke (Chengdu) Enterprise Co., Ltd. (萬科(成都)企業有限公司), which is a substantial shareholder holding 40% of the equity interest in Zhongfang Vanke Industrial, one of our principal operating subsidiaries, is also owned as to 90% by China Vanke Co., Ltd. As such, China Vanke Co., Ltd. is an associate of a connected person of our Company for the purpose of the Listing Rules. Accordingly, the transactions contemplated under the Administrative and Technical Support Cooperation Framework Agreement will constitute continuing connected transactions of our Company under Chapter 14A of the Listing Rules upon [REDACTED].

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As each of the applicable percentage ratios under the Listing Rules in respect of the annual caps in relation to the Administrative and Technical Support Cooperation Framework Agreement is expected to be less than 1% on an annual basis and such transaction is a connected transaction only because it involves connected person at the subsidiary level, therefore, it will constitute de minimis continuing connected transactions of our Group and will be exempt from the reporting, annual review, announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

3. Intelligent System Purchase and Installation

On [●], 2021, our Company (for ourselves and on behalf of our subsidiaries) entered into a master purchase and installation agreement with Shenzhen Vanrui Intelligent Technology Co., Ltd. (深圳市萬睿智能科技有限公司)(“Vanrui Technology”) (for itself and on behalf of other members of Vanke Group and its associates) (the “Master Purchase and Installation Agreement”), pursuant to which our Group agreed to (i) purchase construction site intelligent systems, including but not limited to entry control, data transmission and monitoring systems; and (ii) procure for related installation services (the “Intelligent System Purchase and Installation Services”). The Master Purchase and Installation Agreement has a term commencing from the [REDACTED] until December 31, 2023.

For each of the years ended December 31, 2018, 2019 and 2020, the total amount of fees payable by us to Vanrui Technology for the Intelligent System Purchase and Installation Services amounted to RMB0.2 million, RMB2.7 million and RMB8.6 million, respectively. The significant increase in the fees paid by us to Vanrui Technology for the Intelligent System Purchase and Installation Services in 2019 and 2020 as compared with 2018 was mainly due to the increase in the number of property development projects launched under our strategic cooperation with Vanke Group.

The intelligent systems that we procure under the Master Purchase Agreement will be applied towards the property development projects of Zhongfang Vanke Industrial, which enables us to leverage on the technology capabilities of Vanke Group and will be beneficial to our Group’s future business development. The fees to be charged for the Intelligent System Purchase and Installation Services will be determined based on the actual costs (taking into account the anticipated operational costs including among others, labor costs and material costs). Vanke Group generally adopts the same pricing standard for similar products and services provided to the project companies it invests in.

Our Directors estimate that the maximum transaction amounts under the Master Purchase and Installation Agreement for the years ending December 31, 2021, 2022 and 2023 will not exceed RMB9.8 million, RMB10.0 million and RMB9.6 million, respectively. Such estimates is based on (i) the historical transaction amounts and growth trend during the Track Record Period; (ii) the estimated costs to be paid based on the existing signed contracts; and (iii) the increasing growth trend for properties we developed which are anticipated to engage Vanrui Technology for the Intelligent System Purchase and Installation Services.

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Vanrui Technology is owned as to 100% by Vanke Group. Vanke (Chengdu) Enterprise Co., Ltd. (萬科(成都)企業有限公司), which is a substantial shareholder holding 40% of the equity interest in Zhongfang Vanke, one of our principal operating subsidiaries, is also owned as to 90% by Vanke Group. As such, Vanrui Technology is an associate of a connected person of our Company for the purpose of the Listing Rules. Accordingly, the transactions contemplated under the Master Purchase and Installation Agreement will constitute continuing connected transactions of our Company under Chapter 14A of the Listing Rules upon [REDACTED].

As each of the applicable percentage ratios under the Listing Rules in respect of the annual caps in relation to the Master Purchase and Installation Agreement is expected to be less than 1% on an annual basis and such transaction is a connected transaction only because it involves connected person at the subsidiary level, therefore, it will constitute de minimis continuing connected transactions of our Group and will be exempt from the reporting, annual review, announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

(B) CONTINUING CONNECTED TRANSACTIONS SUBJECT TO THE REPORTING, ANNUAL REVIEW AND ANNOUNCEMENT REQUIREMENTS BUT EXEMPT FROM INDEPENDENT SHAREHOLDERS’ APPROVAL REQUIREMENT

1. Lease of Properties

On [●], 2021, our Company (for ourselves and on behalf of our subsidiaries) entered into a property lease framework agreement (the “Property Lease Framework Agreement”) with Ningxia Zhongfang Development (for itself and on behalf of its subsidiaries and associates), pursuant to which we agreed to lease certain premises to Ningxia Zhongfang Development, its subsidiaries and/or associates for commercial use. The Property Lease Framework Agreement has a term commencing from the [REDACTED] to December 31, 2023.

As the Property Lease Framework Agreement is a framework agreement, it is envisaged that from time to time and as required, individual lease agreements will be entered into between the relevant members of our Group and Ningxia Zhongfang Development, its subsidiaries and/or associates. Each individual lease agreement will set out the specific terms and conditions according to the principle terms provided in the Property Lease Framework Agreement.

Based on the property lease agreements entered into between the relevant members of our Group and the subsidiaries of Ningxia Zhongfang Development, we leased a total of five properties to the subsidiaries of Ningxia Zhongfang Development for office or commercial use in Yinchuan and Xining with a total GFA of 55,279.7 sq.m. as of the Latest Practicable Date. For the years ended December 31, 2018, 2019 and 2020, the total amount of rental paid by Ningxia Zhongfang Development and its subsidiaries and associates to us for the leased properties amounted to RMB5.8 million, RMB8.3 million and RMB6.6 million, respectively.

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We will continue to lease the above properties to the subsidiaries of Ningxia Zhongfang Development after the [REDACTED]. Our Directors estimate that the maximum annual rental payable to our Group by Ningxia Zhongfang Development and its subsidiaries and associates pursuant to the Property Lease Framework Agreement for the years ending December 31, 2021, 2022 and 2023 will not exceed RMB13.1 million, RMB14.8 million and RMB15.7 million, respectively. The total rental to be paid under the Property Lease Framework Agreement shall be determined after arm’s length negotiations with reference to factors including (i) the rental payable to our Group and the annual increment thereof pursuant to the property leasing arrangements currently in existence; and (ii) the prevailing market rates of the properties in the same locality with similar scale and quality. The Property Lease Framework Agreement shall be entered into on terms no more favorable than those offered by us to Independent Third Parties.

The rental payable to our Group for the years ending December 31, 2021, 2022 and 2023 is expected to increase as compared to that for the Track Record Period given that (i) Ningxia Zhongfang Development was only established in late 2020 after the corporate division of Ningxia Zhongfang Industrial; (ii) the rental payable under the Property Lease Framework Agreement has been adjusted with reference to the market rates of the properties in the same locality with similar scale and quality; and (iii) We expect to lease more properties to subsidiaries of Ningxia Zhongfang Development in 2021, 2022 and 2023.

Jones Lang LaSalle Corporate Appraisal and Advisory Limited, an independent property valuer, has reviewed the terms of the Property Lease Framework Agreement and the existing lease agreements between our Group and the relevant subsidiaries and associates of Ningxia Zhongfang Development, and confirmed that the agreed rentals fair and reasonable and are in line with the market rate by reference to the prevailing market prices for similar properties in similar location and usage.

Ningxia Zhongfang Development is owned as to 42.96% by Mr. Fang, our executive Director and a Controlling Shareholder. As such, Ningxia Zhongfang Development, its subsidiaries and associates are connected persons of our Company for the purpose of the Listing Rules. Accordingly, the transactions contemplated under the Property Lease Framework Agreement will constitute continuing connected transactions for our Company under Chapter 14A of the Listing Rules upon [REDACTED].

As each of the applicable percentage ratios under the Listing Rules in respect of the annual caps in relation to the Property Lease Framework Agreement is expected to be more than 0.1% but less than 5% on an annual basis, such transactions are subject to the reporting, annual review and announcement requirements but exempt from the independent shareholders’ approval requirement under Chapter 14A of the Listing Rules.

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2. Property Management Services Provided by Yinchuan Zhongfang PM

On [●], 2021, our Company (for ourselves and on behalf of our subsidiaries) entered into a property management services framework agreement (the “Yinchuan Zhongfang PM Services Framework Agreement”) with Yinchuan Zhong Fang Housing Property Management Co., Ltd. (銀川中房物業集團股份有限公司)(“Yinchuan Zhongfang PM”) (for itself and on behalf of its subsidiaries), pursuant to which we agreed to engage Yinchuan Zhongfang PM and its subsidiaries to provide property management services, including but not limited to (i) pre-delivery services prior to the delivery of properties to property owners, such as security, car park management, cleaning, gardening, repair, maintenance or operation of common area, pre-sale display units, sales offices and shared facilities; and (ii) property management services for unsold property units held by us and office buildings (the “Yinchuan Zhongfang PM Services”). The Yinchuan Zhongfang PM Services Framework Agreement has a term commencing from the [REDACTED] to December 31, 2023.

For the years ended December 31, 2018, 2019 and 2020, the total service fees paid by our Group to Yinchuan Zhongfang PM and its subsidiaries for the Yinchuan Zhongfang PM Services amounted to RMB7.3 million, RMB9.8 million and RMB13.4 million, respectively. The total GFA of properties for which we had engaged Yinchuan Zhongfang PM and its subsidiaries for the provision of Yinchuan Zhongfang PM Services was 0.9 million sq.m., 0.9 million sq.m. and 0.6 million sq.m. for the years ended December 31, 2018, 2019 and 2020, respectively. The amount of sales offices for which we had engaged Yinchuan Zhongfang PM and its subsidiaries for the provision of Yinchuan Zhongfang PM Services amounted to 7, 9 and 12, respectively, during the same period.

The service fees to be charged for the Yinchuan Zhongfang PM Services shall be determined with reference to a number of factors, including (i) the scope of services and type, size and location and the total GFA of the property development projects of which such Yinchuan Zhongfang PM Services is required; (ii) the anticipated operational costs (including labor costs, material costs and administrative costs) for providing such services; (iii) the prevailing market price for similar services and similar type of projects and shall be no less favorable than those quoted by Independent Third Parties to us; and (iv) the fee quotes to be submitted by members of Yinchuan Zhongfang PM under the relevant tender bids and the guidance price set by the relevant government authorities (if any). To ensure that no preferential treatment shall be given to Yinchuan Zhongfang PM in terms of selection of service providers, we shall obtain from at least two Independent Third Party suppliers for comparison before proceeding to agree on the actual fees with Yinchuan Zhongfang PM or its subsidiaries.

Our Directors estimate that the maximum transaction amounts under the Yinchuan Zhongfang PM Services Framework Agreement for the years ending December 31, 2021, 2022 and 2023 will not exceed RMB24.0 million, RMB33.0 million and RMB29.8 million, respectively. Such estimate is based on (i) the historical transaction amounts for similar services and similar types of projects during the Track Record Period; (ii) the number of existing property projects for which we have engaged Yinchuan Zhongfang PM or its subsidiaries through tender bids to provide the Yinchuan Zhongfang PM Services; and (iii) the estimated GFA of the properties expected to be sold and delivered by us that will require Yinchuan Zhongfang PM Services in the relevant years, projected with reference to the trend of increase of properties delivered by our Group during the Track Record Period.

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The increase of service fees to be paid by us to Yinchuan Zhongfang PM or its subsidiaries for the years ending December 31, 2021, 2022 and 2023 as compared to the Track Record Period is mainly due to the expected increase in GFA of unsold properties in demand for Yinchuan Zhongfang PM Services, which has been estimated based on the GFA of properties delivered and scheduled to be delivered by our Group and available for management by Yinchuan Zhongfang PM or its subsidiaries. For the years ending December 31, 2021, 2022 and 2023, it is anticipated that our Group will engage Yinchuan Zhongfang PM and its subsidiaries for the provision of Yinchuan Zhongfang PM Services for a total GFA of 0.4 million sq.m., 0.4 million sq.m. and 0.5 million sq.m., respectively, which were estimated with reference to the delivery schedule of our Group. The amount of sales offices for which we anticipate to engage Yinchuan Zhongfang PM and its subsidiaries for the provision of Yinchuan Zhongfang PM Services amounted to 23, 28 and 23, respectively, for the same period.

The Yinchuan Zhongfang PM Services Framework Agreement is a framework agreement which provides the mechanism for the operation of the connected transactions described therein. It is envisaged that from time to time and as required, individual service contracts may be entered into between our Group and Yinchuan Zhongfang PM or its subsidiaries. Each individual service contract will set out the Yinchuan Zhongfang PM Services to be provided by Yinchuan Zhongfang PM or its subsidiaries to our Group, the fees for the services to be paid by our Group and any detailed specifications which may be relevant to those engagements. The individual service contracts may only contain provisions which are in all material respects consistent with the binding principles, guidelines, terms and conditions set out in the Yinchuan Zhongfang PM Services Framework Agreement.

Yinchuan Zhongfang PM is owned as to 35% by Ningxia Zhongfang Development, which is in turn owned as to 42.96% by Mr. Fang, our executive Director and a Controlling Shareholder. As such, Mr. Fang is entitle to exercise or control the exercise of 30% or more of the voting power of Yinchuan Zhongfang PM and as a result, Yinchuan Zhongfang PM and its subsidiaries are connected persons of our Company for the purpose of the Listing Rules. Accordingly, the transactions contemplated under the Yinchuan Zhongfang PM Services Framework Agreement will constitute continuing connected transactions for our Company under Chapter 14A of the Listing Rules upon [REDACTED].

As each of the applicable percentage ratios under the Listing Rules in respect of the annual caps in relation to the Yinchuan Zhongfang PM Services Framework Agreement is expected to be more than 0.1% but less than 5% on an annual basis, such transactions are subject to the reporting, annual review and announcement requirements but exempt from the independent shareholders’ approval requirement under Chapter 14A of the Listing Rules.

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The transactions described under “—(B) Continuing Connected Transactions subject to the Reporting, Annual Review and Announcement Requirements but Exempt from Independent Shareholders’ Approval Requirement” above constitute our continuing connected transactions under the Listing Rules, which are subject to the reporting, annual review and announcement requirements but exempt from the independent shareholders’ approval requirement of the Listing Rules.

We have applied for, and the Stock Exchange [has granted] us, a waiver from strict compliance with the applicable requirements under Chapter 14A of the Listing Rules pursuant to Rule 14A.105 of the Listing Rules in respect of the non-exempt continuing connected transactions described above subject to the condition that the aggregate of such non-exempt continuing connected transactions for each financial year shall not exceed the relevant annual amounts stated above. Should there be any material changes to the terms thereunder, or should there be any other agreements to be entered into between our Group and the connected persons of our Company, or upon expiry of such waivers, we will comply with the applicable requirements under the Listing Rules and may apply for relevant waivers (where applicable).

Apart from the relevant requirements of which the waiver is sought, our Company will comply with the relevant requirements under Chapter 14A of the Listing Rules.

(D) DIRECTORS’ VIEWS

Our Directors, including the independent non-executive Directors, are of the view that the continuing connected transactions described under “—(B) Continuing Connected Transactions subject to the Reporting, Annual Review and Announcement Requirements but Exempt from Independent Shareholders’Approval Requirement” above have been and will be carried out: (i) in the ordinary and usual course of our business; (ii) on normal commercial terms or better that are fair and reasonable, and in the interests of our Company and our Shareholders as a whole; and (iii) the annual caps thereof are fair and reasonable and in the interest of our Group and our Shareholders as a whole.

(E) SOLE SPONSOR’S VIEW

Based on the due diligence findings and the information and confirmation from our Group, the Sole Sponsor is of the view that the continuing connected transactions described under “—(B) Continuing Connected Transactions subject to the Reporting, Annual Review and Announcement Requirements but Exempt from Independent Shareholders’ Approval Requirement” above have been entered into in the ordinary and usual course of our business, are on normal commercial terms or better, are fair and reasonable and in the interests of our Company and our Shareholders as a whole, and that the proposed annual caps thereof are fair and reasonable, and in the interest of our Company and our Shareholders as a whole.

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BOARD OF DIRECTORS

Our Board currently consists of seven Directors comprising three executive Directors, one non-executive Director and three independent non-executive Directors. The powers and duties of our Board include convening general meetings and reporting our Board’s work at our Shareholders’ meetings, determining our business and investment plans, preparing our annual financial budgets and final reports, formulating proposals for profit distributions and exercising other powers, functions and duties as conferred by the Articles and all applicable laws and regulations, including the Listing Rules. We [have entered] into service agreements with each of our executive Directors. We [have also entered] into letters of appointment with each of our non-executive Director and independent non-executive Directors.

The following table sets forth certain information in respect of members of our Board:

Members of our Board

Relationship with other Date of Date of Existing Roles and Directors joining our appointment position in responsibilities in and senior Name Age Group as Director our Group our Group management

Mr. Fang Lu 58 August 8, 2000 November 5, Chairman of Responsible for None (方陸)..... 2020 the Board formulating the (re-designated and executive overall business as executive Director direction of Director on our Group March 29, 2021)

Ms. Zhang Jun 49 April 1, 1997 March 29, Executive Responsible for None (張君)..... 2021 Director overseeing the and president operations and overall management of our Group

Mr. Wang 54 August 26, March 29, Executive Responsible for None Xiaoping 1994 2021 Director and guiding the (王小平) ... vice president business development of our Group

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Relationship with other Date of Date of Existing Roles and Directors joining our appointment position in responsibilities in and senior Name Age Group as Director our Group our Group management

Mr. Zhu Yu 58 March 29, March 29, Non-executive Responsible for None (朱瑜)..... 2021 2021 Director providing strategic advice and recommendations on the operations and management of our Group

Mr. Feng Lun 61 [●], 2021 [●], 2021 Independent Responsible for None (馮侖)..... non-executive providing Director independent advice on the operations and management of our Group

Mr. Au Yeung 53 [●], 2021 [●], 2021 Independent Responsible for None Po Fung non-executive providing (歐陽寶豐). Director independent advice on the operations and management of our Group

Mr. Lu Lin 58 [●], 2021 [●], 2021 Independent Responsible for None (路林)..... non-executive providing Director independent advice on the operations and management of our Group

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Members of our senior management

Relationship Date of with other Date of appointment Existing Roles and Directors joining our to current position in responsibilities in and senior Name Age Group position our Group our Group management

Mr. He Bin 45 May 8, 2000 July 1, 2017 Vice president Responsible for None (何斌)...... overseeing the operation management and the customer service of our Group

Mr. Zhang Yanbin 45 February 8, January 1, Vice president Responsible for None (張彥斌)...... 2003 2021 overseeing the business development in Ningxia Area

Executive Directors

Mr. Fang Lu (方陸), aged 58, was appointed as our Director on November 5, 2020 and was re-designated as our executive Director and appointed as the chairman of our Board on March 29, 2021. Mr. Fang is primarily responsible for formulating the overall business direction of our Group.

Mr. Fang has over 20 years of experience in the PRC real estate industry. Prior to joining our Group in August 2000, from March 1992 to May 1994, Mr. Fang served as the assistant to the head and later the deputy head of the Department of Economic Development of Yinchuan Hi-Tech Industry Development Zone (銀川高新技術產業開發區), where he was mainly responsible for the overall economic development and investment promotion of the industry development zone. From June 1994 to July 2000, Mr. Fang served as a general manager of Ningxia Aihua Building Decoration Engineering Co., Ltd. (寧夏愛華建築裝飾工程有限公司), an architectural ornament company, where he was mainly responsible for overseeing business development, project management and staff management. From August 2000 to November 2010, Mr. Fang served as a general manager and deputy chairman of our Group, where he was mainly responsible for overseeing the operation management and business development.

Mr. Fang obtained the qualification of economist from the Ministry of Labor and Personnel of the PRC (中華人民共和國勞動人事部) in September 1992 and qualification of senior engineer (高級工程師) from the Personnel Department of Ningxia Hui Autonomous Region (寧夏回族自治區人事廳) in February 2003.

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Mr. Fang has received multiple awards in recognition of his experience in the real estate industry. He was recognized as one of the “Top 100 Socially Responsible Real Estate Entrepreneurs in China” (中國房地產百位最具社會責任感企業家) by China Real Estate Industry Association (中國房地產產業協會) in 2015. Mr. Fang was awarded the “Top 10 Leading Persons of Enterprise Independent Innovation in Ningxia” (寧夏企業自主創新十大領軍人物) by Ningxia Enterprise Independent Innovation Achievement Release Committee (寧夏企業自主創新成果發佈委員會) and Entrepreneurs Association of Ningxia Hui Autonomous Region (寧夏回族自治區企業家協會) in 2015. He was also awarded the “2016 Quality Contribution Award of Autonomous Region” (自治區質量貢獻獎) by People’s Government of Ningxia Hui Autonomous Region (寧夏回族自治區人民政府) and awarded the “The Most Influential Entrepreneur” (最具影響力企業家) by Entrepreneurs Association of Ningxia Hui Autonomous Region (寧夏回族自治區企業家協會) in 2017.

Mr. Fang obtained a bachelor’s degree in Chinese language from Ningxia University (寧夏大學) in the PRC in July 1985.

Ms. Zhang Jun (張君), aged 49, was appointed as our executive Director on March 29, 2021. She has been our president since January 2017 and is primarily responsible for overseeing the operations and overall management of our Group. Ms. Zhang has over 24 year of experience in the PRC real estate industry. Prior to joining our Group in April 1997, from August 1991 to July 1997, Ms. Zhang served as a section chief of Ningxia Fifth Construction Engineering Co., Ltd. (寧夏第五建築工程有限公司), a construction engineering company, where she was mainly responsible for land development and financing matters. She is also a director of our various subsidiaries.

Ms. Zhang was awarded the “Third Prize of Green Building Innovation Award” (綠色建築創新獎三等獎) by MOHURD in 2015 and was named as one of the “Top 10 Outstanding Entrepreneur” (十大優秀企業家) in Ningxia in 2017.

Ms. Zhang has been qualified as a senior engineer (高級工程師) as certified by Ningxia Hui Autonomous Region Human Resources and Social Security Department (寧夏回族自治區人力資源和社會保障廳) since March 2010. Ms. Zhang obtained a bachelor’s degree in civil and industrial construction from Ningxia University (寧夏大學) (formerly known as Ningxia Institute of Technology (寧夏工學院)) in the PRC in June 1995.

Mr. Wang Xiaoping (王小平), aged 54, was appointed as our executive Director on March 29, 2021. He has been our vice president since August 2018 and he is responsible for guiding the business development of our Group. Mr. Wang has over 27 years of experience in the PRC real estate industry. He is also the general manager of Ningxia Zhongfang Xining since August 2018.

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Mr. Wang joined our Group as a clerk since its establishment, where he was primarily responsible for real estate development management. He served as the head of planning and operation department of Ningxia Zhongfang Industrial in March 2005, where he was primarily responsible for overseeing the overall and operation management, he was then promoted to the deputy general manager of Ningxia Zhongfang Industrial in June 2009, where he was primarily responsible for overseeing the real estate development and business expansion. From December 2010 to September 2014, Mr. Wang served as the deputy general manager of Ningxia Zhongfang Xining, where he was primarily responsible for business development and overall management. From September 2014 to August 2018, he served as the general manager of Ningxia Zhongfang Xining and was then promoted to the chairman of the supervisory board, where he was primarily responsible for supervising the decision-making process of Ningxia Zhongfang Xining.

Mr. Wang was awarded the “Outstanding Integrity Construction Entrepreneur” (誠信建設優秀企業家) by Qinghai Province Enterprise Credit Association (青海省企業信用協會)in 2014.

Mr. Wang has been qualified as a civil engineer (土建工程師) in Yinchuan City since December 1998. Mr. Wang obtained a bachelor’s degree in civil and industrial construction from Ningxia Institute of Technology (寧夏工學院) in the PRC in January 1995. He obtained his master’s degree in management science and engineering (管理科學與工程) from Xi’an University of Architecture and Technology (西安建築科技大學) in the PRC in November 2001, through distance learning.

Non-executive Director

Mr. Zhu Yu (朱瑜), aged 58, was appointed as our non-executive Director on March 29, 2021. He is primarily responsible for providing strategic advice and recommendations on the operations and management of our Group.

Mr. Zhu has over 15 years of experience in the PRC real estate industry. Prior to joining our Group, from March 2006 to September 2016, he served as the vice president and since September 2016, he served as the senior counselor of CIFI Holdings (Group) Co. Ltd. (旭輝控股(集團)有限公司, a property development company whose shares are listed on the Main Board of the Stock Exchange (stock code: 0884), where he is mainly responsible for overseeing the financing operations of capital market. From October 2016 to April 2018, he served as the executive director of Shanghai Yongsheng Property Service Co., Ltd. (上海永升物業管理有限公司), a property management company whose shares are previously quoted on NEEQ during the period from April 2017 through January 2018 (stock code: 871385).

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Since December 2020, Mr. Zhu has also served as a non-executive director of Tentimes International Holdings Co., Limited (天泰國際控股有限公司)(“Tentimes”). Tentimes is a regional property developer with its main business operations exclusively located in Shandong Province, the PRC, which may also tap into markets across the Bohai Rim Area and Yangtze River Delta regions of Eastern China, whereas our Group focuses on the development and sales of quality mid- to high-end residential properties in the selected regions in Northwest China, including Yinchuan, Xining, Haidong and Xianyang, and we expect Ningxia Hui Autonomous Region and Qinghai Province will continue to play an important role in our business development. Accordingly, the businesses of our Group and Tentimes are clearly delineated by reference to the respective geographical locations of their property projects and business focuses, and our Directors do not consider the business of Tentimes to be likely to compete, directly or indirectly, with our Group’s business. In addition, as a non-executive director, Mr. Zhu is not a member of the core management team of our Group and Tentimes, and he will not participate in the day-to-day business affairs and operations either in our Group and Tentimes. Taking into account of the foregoing, our Directors are of the view that Mr. Zhu’s role as a non-executive director in Tentimes does not have any material impact on his ability to discharge responsibilities to our Group and will not negatively affect his duties towards our Company.

Mr. Zhu was qualified as an associate professor by the Personnel Department of Jiangsu since June 2001. Mr. Zhu obtained a bachelor’s degree in mathematics from Nanjing Normal University in the PRC in July 1982.

Independent non-executive Directors

Mr. Feng Lun (馮侖), aged 61, was appointed as an independent non-executive Director on [●], 2021. He is primarily responsible for providing independent advice on the operations and management of our Group.

Mr. Feng has approximately 28 years of real estate investment experience. From 1993 to 2015, he served as the chairman of the board of Wantong Investment Holdings Company Ltd. (萬通投資控股股份有限公司), an investment company, where he was mainly responsible for the overall management. From December 1998 to March 2011, he also served as the chairman of the board of Vantone Neo Development Group Co., Ltd. (北京萬通新發展集團股份有限公司), formerly known as Beijing Wantong Real Estate Company Ltd. (北京萬通地產股份有限公司), a real estate company whose shares are listed on the Shanghai Stock Exchange (stock code: 600246), where he was mainly responsible for the overseeing the daily operation and overall management. Since August 2015, he has been serving as the chairman of the board of Sifang Yufeng Investment Co., Ltd. (四方御風投資有限公司), an investment management company, where he is in charge of the overall management.

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In addition, Mr. Feng holds or had held directorships in the following listed companies:

Place of listing and Period of Name of company Principal business stock code Position service

China Everbright Bank Co., Commercial bank Shanghai Stock Independent February 2015 Ltd. Exchange non-executive to present (中國光大銀行股份有限公 (stock code: 601818) director 司) and Main Board of the Stock Exchange (stock code: 6818)

Bank of Xi’an Co., Ltd. Commercial bank Shanghai Stock Independent August 2016 (西安銀行股份有限公司) Exchange non-executive to present (stock code: 600928) director

Youzu Interactive Co., Ltd. Development and Shenzhen Stock Independent February 2018 (遊族網絡股份有限公司) operation of web Exchange non-executive to present games (stock code: 002174) director

Shanghai Zhongcheng Real estate investment Previously quoted on Director May 2018 to Alliance Investment NEEQ during the April 2020 Management Co., Ltd. period from October (上海中城聯盟投資管理股 2015 through 份有限公司) December 2019

Netease, Inc. (網易) Internet technology Main Board of the Independent July 2005 to Stock Exchange non-executive present (stock code: 9999) director

Haitong Securities Co., Ltd. Stocks and futures Main Board of the Independent December (海通證券股份有限公司) brokerage, investment Stock Exchange non-executive 2014 to banking, corporate (stock code: 6837) director June 2019 finance, asset management, mutual fund, and private equity

Shanghai Xinnanyang Only Education services and Shanghai Stock Independent February 2019 Education & Technology training Exchange (stock code: non-executive to present Co., Ltd. (上海新南洋昂立 600661) director 教育科技股份有限公司)

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Mr. Feng obtained a bachelor’s degree in economics from Northwestern University (西北大學) in the PRC in January 1982, a master’s degree in scientific socialism (科學社會主義) from Party School of the Central Committee of Communist Party of China (中國共產黨中央委員會黨校) in the PRC in December 1984 and a doctorate degree in laws from Chinese Academy of Social Sciences (中國社會科學院) in the PRC in June 2003.

Mr. Feng was the director or supervisor of the following companies, which were established in the PRC and of which the business license was previously revoked:

Position held in the company before Date of license Reasons of license Name of the Company license revocation revocation revocation

Hainan Yongtong International Investment Director December 15, ceased business operations Consulting Co., Ltd. (海南永通國際投資諮 2003 for more than six 詢有限公司) consecutive months

Shanghai Huide Investment Development Director January 7, 2004 ceased business operations Co., Ltd. (上海匯德投資發展有限公司) for more than six consecutive months

Beijing Huishi Times Entertainment Planning Supervisor December 15, ceased business operations Co., Ltd. (北京惠世時代影視策劃有限責任 2008 for more than six 公司) consecutive months

Hainan Xinxin Sunshine Farm Co., Ltd. Supervisor June 30, 2011 ceased business operations (海南新新陽光農莊有限公司) for more than six consecutive months

Xi’an Wanlian Teaching Technology Co., Ltd. Director January 16, ceased business operations (西安萬聯教學科技有限公司) 2020 for more than six consecutive months

Hainan Yufeng Culture Communication Supervisor June 29, 2016 ceased business operations Co., Ltd. (海南御風文化傳播有限公司) for more than six consecutive months

Mr. Feng confirmed that as of the Latest Practicable Date, no claims have been made against him and he was not aware of any threatened or potential claims made against him and there are no outstanding claims and/or liabilities as a result of the revocation of business license of the above companies.

Mr. Au Yeung Po Fung (歐陽寶豐), aged 53, was appointed as our independent non-executive Director on [●], 2021. He is primarily responsible for providing independent advice on the operations and management of our Group.

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Mr. Au Yeung has extensive work experience in the real estate industry. He held various senior management positions in the following companies in the real estate industry:

Place of listing Period of Name of company Principal business and stock code Position service

Powerlong Real Estate Commercial real Main Board of the Chief financial officer, November 2007 Holdings Limited estate Stock Exchange vice president and to October (寶龍地產控股有限公 development and (stock code: 1238) company secretary 2011 司) investment, property management and hotel development

Sun Hung Kai Development of Main Board of the Chief financial officer October 2011 Properties Limited properties for sale Stock Exchange at Sun Hung Kai to December (新鴻基地產開發有限 and investment (stock code: 16) Real Estate Agency 2013 公司) Ltd (新鴻基地產代理有限公司), a subsidiary of Sun Hung Kai Properties Limited (Mainland operations)

Fosun Industrial Global real estate Main Board of the Vice president and February 2014 Holdings Limited investment and Stock Exchange chief financial officer to August (復星地產控股有限公 management (stock code: 656) 2014 司) (a subsidiary of Fosun International Limited (復星國際有限公司))

Sansheng Holdings Property Main Board of the Chief financial officer August 2017 to (Group) Co. Ltd. development Stock Exchange and vice president of January 2018 (三盛控股(集團)有限 and investment (stock code: 2183) Sansheng Real Estate 公司) Group

Beijing Huahong Jiye Investment N/A Vice president March 2018 to Investment Group development October 2018 Co., Ltd. (北京華鴻 and property 基業投資集團有限公 development 司)

Shanghai Huadong Property N/A Vice president February 2019 Properties (Group) development to January Limited (上海華董地 2021 產(集團)有限公司)

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In addition, Mr. Au Yeung holds or had held directorships in the following listed companies:

Place of listing Period of Name of company Principal business and stock code Position service

Kiu Hung Toys, resources and Main Board of the Independent May 2016 to International leisure-related Stock Exchange non-executive September Holdings Limited business (stock code: 381) director 2016 (僑雄國際控股有限公司)

China LNG Group Asset management Main Board of the Independent July 2016 to Limited (中國天然 and new energy Stock Exchange non-executive September 氣集團有限公司) development (stock code: 931) director 2019

GR Properties Property Main Board of the Independent July 2017 to Limited (國銳地產 development and Stock Exchange non-executive February 有限公司) management (stock code: 108) director 2020

Shanshan Brand Design, marketing Main Board of the Independent May 2018 to Management Co., and sales of Stock Exchange non-executive June 2021 Ltd. (杉杉品牌運 formal and casual (stock code: 1749) director 營股份有限公司) business menswear

Redsun Properties Real estate Main Board of the Independent June 2018 to Group Limited development Stock Exchange non-executive present (弘陽地產集團有 (stock code: 1996) director 限公司)

eBroker Group Financial technology GEM of the Independent June 2018 to Limited (電子交易 solution provider Stock Exchange non-executive present 集團有限公司) (stock code: 8036) director

Zhongliang Holdings Property Main Board of the Independent June 2019 to Group Company development, Stock Exchange non-executive present Limited (中梁控股 property (stock code: 2772) director 集團有限公司) management, property leasing and management consulting

Sinic Holdings Property Main Board of the Independent August 2019 (Group) Company development and Stock Exchange non-executive to present Limited (新力控股 property leasing (stock code: 2103) director (集團)有限公司)

Zhenro Services Property Main Board of the Independent June 2020 to Group Limited Management Stock Exchange non-executive present (正榮服務集團有 (stock code: 6958) director 限公司)

Sunkwan Properties Property Main Board of the Independent October Group Limited Development Stock Exchange non-executive 2020 to (上坤地產集團有 (stock code: 6900) director present 限公司)

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While Mr. Au Yeung is currently holding directorships in six other companies listed on the Stock Exchange as disclosed above, our Directors are of the view that Mr. Au Yeung will be able to devote sufficient time to discharge his duties and responsibilities as an independent non-executive Director given that: (i) his roles in other listed companies primarily require him to oversee their management independently, rather than to allocate substantial time on the participation of the day-to-day management and operations of their respective businesses; (ii) he has demonstrated that he is capable of devoting sufficient time to discharge his duties owed to each of these listed companies by attending board meetings and board committee meetings of these listed companies during their latest financial year, as disclosed in the annual reports of the relevant listed companies; (iii) he has acquired extensive management experience and developed substantial knowledge on corporate governance through his directorships in other listed companies, which is expected to facilitate the proper discharge of his duties and responsibilities as an independent non-executive Director; and (iv) he has confirmed that he will have sufficient time to fulfill his duties as an independent non-executive Director notwithstanding his existing independent non-executive directorships in six other listed companies.

Mr. Au Yeung was admitted as a fellow of The Association of Chartered Certified Accountants in November 2000, a fellow of the Hong Kong Society of Accountants (currently known as the Hong Kong Institute of Certified Public Accountants (HKICPA)) in May 2003, and a fellow of the Institute of Chartered Accountants in England and Wales in July 2015. Mr. Au Yeung was also certified as a chartered financial analyst (CFA) of the CFA Institute in September 2006. Mr. Au Yeung obtained a bachelor’s degree in business from The Hong Kong Polytechnic (currently known as The Hong Kong Polytechnic University) in Hong Kong in November 1990.

Mr. Au Yeung was a director of Uniford Asia Limited, a company incorporated in Hong Kong and dissolved by striking off pursuant to section 291 of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong which was in force before March 3, 2014) as the company ceased operations on May 18, 2001. Mr. Au Yeung confirms that such company had been inactive and was solvent at the time of dissolution. Mr. Au Yeung further confirms that there is no fraudulent act or misfeasance on his part leading to the striking off of such company and he is not aware any actual or potential claim has been or will be made against him as a result of the striking off of such company.

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Mr. Lu Lin (路林), aged 58, was appointed as our independent non-executive Director on [●], 2021. He is primarily responsible for providing independent advice on the operations and management of our Group.

Mr. Lu has over 23 years of experience in investment industry. From June 1989 to May 1994, Mr. Lu served as a senior clerk of Publication Division of the Publicity Department of the CPC Central Committee (中共中央宣傳部出版局), where he was mainly responsible for policy research. From May 1994 to November 1995, he served as a senior staff (副處) of Talent Exchange Training Division of Development Research Center of the State Council (國務院發展研究中心下屬人才交流培訓中心), where he was mainly responsible for policy research and training management. From November 1995 to August 1997, he served as a deputy office manager and general manager of development department of New Century Financial Leasing Co., Ltd. (新世紀金融租賃有限責任公司), a company principally engaged in financial leasing, where he was mainly responsible for overall management. From August 1997 to March 1999, he served as a deputy general manager of Daheng New Epoch Technology, Inc. (大恒新紀元科技股份有限公司) (formerly known as New Epoch Property Co., Ltd. (新紀元物產股份有限公司)), a company whose shares are listed on the Shanghai Stock Exchange (stock code: 600288), where he was mainly responsible for overseeing the overall management. From March 1999 to August 2000, he served as an vice president of China Hi-Tech Group Co., Ltd. (中國高科集團股份有限公司), a technology investment company whose shares are listed on the Shanghai Stock Exchange (stock code: 600730), where he was mainly responsible for overseeing the operation and overall management. From August 2000 to March 2001, he served as the chief financial office of Shanghai Internet Venture Capital Co., Ltd. (上海互聯網創業投資有限公司), a venture capital company, and was promoted as the chairman of the board from March 2001 to March 2004, where he was mainly responsible for investment management and business development. From April 2004 to August 2017, he served as a general manager of Shanghai Zhongcheng Alliance Investment Management Co., Ltd. (上海中城聯盟投資管理股份有限公司), a real estate investment company whose shares was previously quoted on NEEQ during the period from October 2015 through December 2019, he was then promoted as the chairman of the board from August 2017 to April 2020, where he was mainly responsible for overseeing the operation and overall management. Since July 2007, he served as the executive director of Shanghai Fubuxing Asset Management Co., Ltd. (上海賦比興資產管理有限公司), an asset management company, where he was responsible for overall management.

Mr. Lu obtained a bachelor’s degree in library science from East China Normal University (華東師範大學) in the PRC in December 1984. Mr. Lu obtained a master’s degree in library and information science from Wuhan University (武漢大學) in the PRC in July 1989. He also obtained a doctoral degree in economics from Fudan University (復旦大學) in the PRC in July 1999.

Save as disclosed above, none of our Directors have held any other directorships in listed companies during the three years immediately preceding the date of this document.

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Save as disclosed above, to the best of the knowledge, information and belief of our Directors having made all reasonable enquiries, there was no information relating to our Directors that is required to be disclosed pursuant to paragraphs (b) to (v) of Rule 13.51(2) of the Listing Rules or any other matters concerning any Director that needs to be brought to the attention of our Shareholders as of the Latest Practicable Date.

SENIOR MANAGEMENT

Our executive Directors and other member of our senior management are responsible for the day-to-day operations and management of our business. See “—Board of Directors—Executive Directors” for the biographical details of our executive Directors, namely Mr. Fang Lu, Ms. Zhang Jun and Mr. Wang Xiaoping. Members of our senior management also include the following:

Mr. He Bin (何斌), aged 45, joined our Group in May 2000 and has been the vice president of our Group since July 2017. He is primarily responsible for overseeing our business operations and customer service.

Mr. He has over 20 years of experience in the PRC real estate industry. From May 2000 to February 2005, Mr. He served as a statistician of our Group, where he was primarily responsible for data collection and statistics. He was promoted to the deputy director of sales department in February 2005, where he was primarily responsible for real estate sales management. From January 2008 to December 2010, he served as the head of sales department of our Group, where he was primarily responsible for sales management. From December 2010 to July 2014, he served as the deputy general manager of Ningxia Zhongfang Industrial, where he was responsible for overseeing the business operations and overall management. From July 2014 to July 2017, he served as the director of operations management center of our Group, where he was primarily responsible for overseeing the operations and investment management.

Mr. He was awarded the “Outstanding Individual” (先進個人) by Statistics Bureau of Ningxia Hui Autonomous Region (寧夏回族自治區統計局) in 2001 and 2003, respectively, and the “Advanced Individual” (先進個人) by Yinchuan Statistics Bureau (銀川市統計局) in 2004 and 2005, respectively. He was also awarded the “Outstanding Individual in Price Monitoring” (價格監測工作先進個人) by Yinchuan Administration for Commodity Prices (銀川市物價局) in 2005 and the “First Prize of Advanced Individual in Statistics” (統計工作先進個人一等獎) by Yinchuan Statistics Bureau (銀川市統計局) in 2002 and 2003, respectively.

Mr. He obtained a bachelor’s degree in investment economics (投資經濟) from Shanxi University of Finance And Economics (山西財經大學) in the PRC in July 1997. He has completed a job training course of real estate planning director (房地產策劃總監崗位培訓) which provided by China Employment Training Technical Instruction Center of Ministry of Labour and Social Security (勞動和社會保障部中國就業培訓技術指導中心) in the PRC in August 2008.

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Mr. Zhang Yanbin (張彥斌), aged 45, joined our Group in February 2003 and has been serving as the vice president since January 2021. He is responsible for overseeing the business development in Ningxia Area.

Prior to joining our Group, from July 2000 to February 2003, Mr. Zhang served as the technical staff of China Construction Third Engineering Bureau Co., Ltd. (中國建築第三工程局有限公司), a building construction company, where he was responsible for formulating the construction scheme and technical management. From December 2010 to July 2017, Mr. Zhang served as the deputy general manager of Ningxia Zhongfang Industrial, he was promoted as an executive general manager from July 2017 to January 2021, where he was primarily responsible for overall management and real estate development.

Mr. Zhang has been a dealmaker (併購交易師) certified by China Mergers and Acquisitions Association (中國併購公會) since October 2015, an intermediate engineer (中級工程師) certified by Yinchuan Human Resources and Social Security Department (銀川市人力資源和社會保障局) since October 2018. He also acquired the Fund Practice Certificate (基金執業證書) by completing the PEMA (併購與基金) education courses provided by Asian Business School of Tianjin University of Finance and Economics (天津財經大學亞洲商學院) in May 2013.

Mr. Zhang obtained a bachelor’s degree in civil and industrial construction from Ningxia University (寧夏大學) in the PRC in July 2000. He also completed the postgraduate courses of real estate operation and management provided by Chongqing University (重慶大學)inthe PRC in January 2008 and the Project Management Training Program (項目管理進修項目) provided by International Engineering Project Management Institute of Tsinghua University (清華大學國際工程項目管理研究院) in the PRC in May 2011.

COMPANY SECRETARY

Ms. Guo Jiajia (郭佳佳), aged 27, was appointed as one of our joint company secretaries on March 29, 2021. Ms. Guo joined our Group as an accountant since March 2018 and she is primarily responsible for overseeing the management of financial and capital operation of our Group.

Prior to joining our Group, from October 2016 to October 2017, Ms. Guo served as the accountant of Australia Greenpower Solution Limited Company, a solar power company, where she was primarily responsible for accounts payable and accounts receivable management, individual income tax filing, preparation of annual and monthly financial statements and financial analysis.

Ms. Guo obtained her bachelor’s degree with major in English and minor in accounting from Nanjing Normal University (南京師範大學) in the PRC in July 2013. She also obtained a master’s degree in accounting and finance from The University of Sydney in Australia in May 2017.

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Ms. Lam Wing Chi (林穎芝), aged 31, was appointed as one of our joint company secretaries on March 29, 2021. Ms. Lam joined Corporate Services of Tricor Services Limited in October 2015, and currently serves as a manager providing corporate secretarial and compliance services.

Ms. Lam has over 7 years of experience in the corporate secretarial field. She has been providing professional corporate services to Hong Kong listed companies, private and offshore companies. She currently holds company secretary positions in Raffles Interior Limited, an interior fitting-out services provider, whose shares are listed on the Main Board of the Stock Exchange (stock code: 1376). Ms. Lam has been a chartered secretary and an associate of both The Hong Kong Institute of Chartered Secretaries and The Chartered Governance Institute (formerly known as The Institute of Chartered Secretaries and Administrators) in the United Kingdom since December 2016.

Ms. Lam has obtained a bachelor’s degree in accounting from Hong Kong Shue Yan University in July 2012.

BOARD COMMITTEES

Our Board has established the Audit Committee, the Remuneration Committee and the Nomination Committee and delegated various responsibilities to these committees, which assist our Board in discharging its duties and overseeing particular aspects of our Group’s activities.

Audit committee

Our Group has established the Audit Committee on [●], 2021 with written terms of reference in compliance with Rule 3.21 of the Listing Rules and paragraph C.3 of the Corporate Governance Code (the “CG Code”) as set out in Appendix 14 to the Listing Rules. The Audit Committee consists of three members, namely, Mr. Au Yeung Po Fung, Mr. Lu Lin and Mr. Zhu Yu. Mr. Au Yeung Po Fung has been appointed as the chairman of the Audit Committee as he has the appropriate professional qualifications or related financial management expertise as required under Rule 3.10(2) of the Listing Rules.

The primary duties of the Audit Committee include, but are not limited to, (i) reviewing and supervising our financial reporting process and internal control system of our Group, risk management and internal audit; (ii) providing advice and comments to our Board; and (iii) performing other duties and responsibilities as may be assigned by our Board.

Remuneration committee

Our Group has established the Remuneration Committee on [●], 2021 with written terms of reference in compliance with Rule 3.25 of the Listing Rules and paragraph B.1 of the CG Code as set out in Appendix 14 to the Listing Rules. The Remuneration Committee consists of three members, namely Mr. Feng Lun, Mr. Lu Lin and Mr. Wang Xiaoping. Mr. Feng Lun has been appointed as the chairman of the Remuneration Committee.

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The primary duties of the Remuneration Committee include, but are not limited to (i) establishing, reviewing and providing advices to our Board on our policy and structure concerning remuneration of our Directors and senior management and on the establishment of a formal and transparent procedure for developing policies concerning such remuneration; (ii) determining the terms of the specific remuneration package of each Director and senior management member; and (iii) reviewing and approving performance-based remuneration by reference to corporate goals and objectives resolved by our Directors from time to time.

Nomination committee

Our Group has established the Nomination Committee on [●], 2021 with written terms of reference in compliance with paragraph A.5 of the CG Code as set out in Appendix 14 to the Listing Rules. The Nomination Committee consists of three members, namely Mr. Fang Lu, Mr. Feng Lun and Mr. Lu Lin. Mr. Fang Lu has been appointed as the chairman of the Nomination Committee.

The primary duties of the Nomination Committee include, but are not limited to, (i) reviewing the structure, size and composition of our Board on a regular basis and making recommendations to our Board regarding any proposed changes to the composition of our Board; (ii) identifying, selecting or making recommendations to our Board on the selection of individuals nominated for directorship, and ensuring the diversity of our Board members; (iii) assessing the independence of our independent non-executive Directors; and (iv) making recommendations to our Board on relevant matters relating to the appointment, re-appointment and removal of our Directors and succession planning for our Directors.

CORPORATE GOVERNANCE

Our Directors recognize the importance of incorporating elements of good corporate governance in the management structures and internal control procedures of our Group so as to achieve effective accountability.

Our Company has adopted the code provisions stated in the CG Code. Our Company is committed to the view that our Board should include a balanced composition of executive Directors and independent non-executive Directors so that there is a strong independent element on our Board, which can effectively exercise independent judgment.

BOARD DIVERSITY POLICY

Our Board has adopted a board diversity policy which sets out the approach to achieve diversity on our Board. Our Company recognizes and embraces the benefits of having a diverse Board and sees increasing diversity at the Board level as an essential element in supporting the attainment of our Company’s strategic objectives and sustainable development. Our Company seeks to achieve Board diversity through the consideration of a number of factors, including but not limited to talent, skills, gender, age, cultural and educational background, ethnicity, professional experience, independence, knowledge and length of service. We will select

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Our Directors have a balanced mix of skills and experiences, including overall management, operation management, legal, finance, business development and customer services experiences. Furthermore, our Directors are of a wide range of age, from 49 years old to 61 years old. Taking into account our business model and specific needs of our Group, we consider that the composition of our Board satisfies our board diversity policy.

With regards to gender diversity on the Board, we recognize the particular importance of gender diversity. Our Board currently comprises seven Directors, including one female Director. We have taken and will continue to take steps to promote and enhance gender diversity at all levels of our Company, including but without limitation at our Board and senior management levels. Our board diversity policy provides that our Board shall take opportunities when selecting and making recommendations on suitable candidates for Board appointments with the aim to increase the proportion of female members over time after [REDACTED]. We will also ensure that there is gender diversity when recruiting staff at mid to senior level so that we will have a pipeline of female senior management and potential successors to our Board going forward. It is our objective to maintain an appropriate balance of gender diversity with reference to the stakeholders’ expectation and international and local recommended best practices.

Our nomination committee is responsible for ensuring the diversity of our Board members. After [REDACTED], our nomination committee will review our board diversity policy and its implementation from time to time to monitor its continued effectiveness and we will disclose the implementation of our board diversity policy, including any measurable objectives set for implementing the board diversity policy and the progress on achieving these objectives, in our corporate governance report on an annual basis.

COMPENSATION OF DIRECTORS AND SENIOR MANAGEMENT

Our Directors and members of our senior management receive compensation from our Company in the form of fees, salaries, bonuses and other benefits in kind such as contributions to pension plans. The aggregate remuneration (including fees, salaries, contributions to pension schemes, bonus, share-based payments, retirement benefits scheme, allowance and other benefits in kind) paid to our Directors for the years ended December 31, 2018, 2019 and 2020 was RMB7.8 million, RMB11.0 million and RMB16.5 million, respectively. Save as disclosed above, no other amounts have been paid or are payable by any member of our Group to our Directors during the Track Record Period.

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The aggregate amount of fees, salaries, contributions to pension schemes, bonus, share-based payments, retirement benefits scheme, allowance and other benefits in kind paid to our five highest paid individuals (excluding Directors) in respect of the years ended December 31, 2018, 2019 and 2020 was RMB5.3 million, RMB6.1 million and RMB11.4 million, respectively.

No remuneration was paid by us to our Directors or the five highest paid individuals as an inducement to join or upon joining us or as a compensation for loss of office in respect of the years ended December 31, 2018, 2019 and 2020. Further, none of our Directors had waived or agreed to waive any remuneration during the same periods.

Under the arrangement currently in force, the aggregate remuneration (including fees, salaries, contributions to pension schemes, bonus, share-based payments, retirement benefits scheme, allowances and other benefits in kind) of our Directors for the year ending December 31, 2021 is estimated to be no more than RMB22.8 million. Our Board will review and determine the remuneration and compensation packages of our Directors and senior management and, following the [REDACTED], will receive recommendation from the Remuneration Committee which will take into account salaries paid by comparable companies, time commitment and responsibilities of our Directors and performance of our Group.

COMPLIANCE ADVISER

Our Company has appointed Guotai Junan Capital Limited as our compliance adviser pursuant to Rule 3A.19 of the Listing Rules. Pursuant to Rule 3A.23 of the Listing Rules, our compliance adviser will advise our Company in the following circumstances:

• before the publication of any regulatory announcement, circular or financial report;

• where a transaction, which might be a notifiable or connected transaction, is contemplated, including shares issues and share repurchases;

• where our Company proposes to use the [REDACTED]ofthe[REDACTED]ina manner different from that detailed in this document or where our business activities, developments or results deviate from any forecast, estimate or other information in this document; and

• where the Stock Exchange makes an inquiry of our Company under Rule 13.10 of the Listing Rules.

The term of the appointment of our compliance adviser shall commence on the [REDACTED] and end on the date on which our Company distribute our annual report in respect of our financial results for the first full financial year commencing after the [REDACTED].

SHARE OPTION SCHEME

Our Company has conditionally adopted the Share Option Scheme. The principal terms of the Share Option Scheme are summarized in “Appendix V—Statutory and General Information—D. Share Option Scheme.”

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So far as our Directors are aware, the following persons will, immediately prior to and following the completion of the [REDACTED] and the [REDACTED] (without taking into account any Shares which may be issued pursuant to the exercise of the [REDACTED]orany option which may be granted under the Share Option Scheme), have interests or short positions in our Shares or underlying Shares, which would be required to be disclosed to us under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who is, directly or indirectly interested in 10% or more of the issued voting shares of our Company:

Shares held as of the date of this document immediately Shares held immediately prior to the completion of the following the completion of Nature of [REDACTED] and the the [REDACTED] and Name of Shareholder interest [REDACTED](1) the [REDACTED] Number Percentage Number Percentage

Mr. Fang(2) ...... Interest in 12,889 Shares 42.91% [REDACTED] [REDACTED]% controlled (L) Shares (L) corporation

MSmart Beneficial owner 12,889 Shares 42.91% [REDACTED] [REDACTED]% International(2) .... (L) Shares (L)

Ms. Zhang Min Interest of 12,889 Shares 42.91% [REDACTED] [REDACTED]% (張岷)(3) ...... spouse (L) Shares (L)

FunJoy...... Beneficial owner 5,008 Shares 16.67% [REDACTED] [REDACTED]% (L) Shares (L)

Eminence Joy ...... Beneficial owner 3,306 Shares 11.01% [REDACTED] [REDACTED]% (L) Shares (L)

Ms. Gong Fan Interest in 2,746 Shares 9.14% [REDACTED] [REDACTED]% (龔帆)(4) ...... controlled (L) Shares (L) corporation

Foresea Beneficial owner 2,746 Shares 9.14% [REDACTED] [REDACTED]% Investments(4) .... (L) Shares (L)

Mr. Mu Weidong Interest of 2,746 Shares 9.14% [REDACTED] [REDACTED]% (穆衞東)(5) ...... spouse (L) Shares (L)

Notes:

(1) The letter “L” denotes a long position in our Shares.

(2) MSmart International is wholly-owned by Mr. Fang. By virtue of the SFO, Mr. Fang is deemed to be interested in the Shares in which MSmart International is interested.

(3) Ms. Zhang Min is the spouse of Mr. Fang. By virtue of the SFO, Ms. Zhang Min is deemed to be interested in the Shares in which Mr. Fang is interested.

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(4) Foresea Investments is wholly-owned by Ms. Gong Fan. By virtue of the SFO, Ms. Gong Fan is deemed to be interested in the Shares in which Foresea Investments is interested.

(5) Mr. Mu Weidong is the spouse of Ms. Gong Fan. By virtue of the SFO, Mr. Mu Weidong is deemed to be interested in the Shares in which Ms. Gong Fan is interested.

If the [REDACTED] is fully exercised, the interest of Mr. Fang, MSmart International, Ms. Zhang Min, Fun Joy, Eminence Joy, Ms. Gong Fan, Foresea Investments and Mr. Mu Weidong in our Shares will be [REDACTED]%, [REDACTED]%, [REDACTED]%, [REDACTED]%, [REDACTED]%, [REDACTED]%, [REDACTED]% and [REDACTED]%, respectively.

Save as disclosed in this section, our Directors are not aware of any person who will, immediately following the completion of the [REDACTED] and the [REDACTED] (without taking into account any Shares which may be issued pursuant to the exercise of the [REDACTED] or any option which may be granted under the Share Option Scheme), have beneficial interests or short positions in any Shares or underlying Shares, which would be required to be disclosed to us under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who is, directly or indirectly interested in 10% or more of the issued voting shares of our Company. Our Directors are not aware of any arrangement which may at a subsequent date result in a change of control of our Company.

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The following is a description of the authorized and issued share capital of our Company in issue and to be issued as fully paid or credited as fully paid immediately before and following the completion of the [REDACTED] and the [REDACTED] (without taking into account any Shares which may be issued upon the exercise of the [REDACTED] or any option which may be granted under the Share Option Scheme):

Authorized Nominal share capital: value (US$)

10,000,000,000 Shares of US$0.01 each 100,000,000.00

Issued and to be issued, fully paid or credited as fully paid:

30,039 Shares in issue as of the date of this document 300.39

[REDACTED] Shares to be issued pursuant to the [REDACTED][REDACTED]

[REDACTED] Shares to be issued under the [REDACTED][REDACTED]

[REDACTED] Total [REDACTED]

ASSUMPTIONS

The above table assumes that the [REDACTED] becomes unconditional and the issue of Shares pursuant to the [REDACTED] and the [REDACTED] are made. It takes no account of any Shares which may be issued and allotted pursuant to the exercise of the [REDACTED] and any options which may be granted under the Share Option Scheme or any Shares which may be issued or bought back by us pursuant to the general mandates granted to our Directors to issue or buy back Shares as described below.

RANKINGS

The [REDACTED] will be ordinary shares in the share capital of our Company and will carry the same rights in all respects with all Shares in issue or to be issued as mentioned in this document and, in particular, will rank in full for all dividends or other distributions declared, made or paid on the Shares in respect of a record date which falls after the date of this document save for the entitlement under the [REDACTED].

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SHARE OPTION SCHEME

GENERAL MANDATE TO ISSUE AND ALLOT SHARES

Subject to the [REDACTED] becoming unconditional, our Directors have been granted a general mandate to issue, allot and deal with Shares in the share capital of our Company with a total number of issued shares of not more than the sum of:

(1) 20% of the total number of Shares in issue immediately following the completion of the [REDACTED] and the [REDACTED] (excluding Shares which may be issued and allotted pursuant to the exercise of the [REDACTED] or any option which may be granted under the Share Option Scheme); and

(2) the total number of Shares bought back by our Company (if any) pursuant to the general mandate to buy back Shares granted to our Directors referred to below.

Our Directors may, in addition to the Shares which they are authorized to issue under this general mandate, issue, allot or deal with Shares under a rights issue, scrip dividend scheme or similar arrangement, or on the exercise of any options which may be granted under the Share Option Scheme.

This general mandate will remain in effect until the earliest of:

(i) the conclusion of the next annual general meeting of our Company; or

(ii) the expiration of the period within the next annual general meeting of our Company is required by the Articles or any applicable laws to be held; or

(iii) the date on which such general mandate is varied or revoked by an ordinary resolution of our Shareholders in general meeting.

Further information on this general mandate is set out in “Appendix V—Statutory and General Information—A. Further information about our Company—4. Written resolutions of the Shareholders passed on [●], 2021.”

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GENERAL MANDATE TO BUY BACK SHARES

Subject to the [REDACTED] becoming unconditional, our Directors have been granted a general mandate to exercise all the powers of our Company to buy back Shares with a total number of Shares of not more than 10% of the total number of Shares in issue immediately following the completion of the [REDACTED] and the [REDACTED] (excluding Shares which may be issued and allotted pursuant to the exercise of the [REDACTED] or any option which may be granted under the Share Option Scheme).

This mandate only relates to buybacks made on the Stock Exchange or any other stock exchange on which the Shares are [REDACTED] (and which is recognized by the SFC and the Stock Exchange for this purpose), and which are in accordance with the Listing Rules. A summary of the relevant Listing Rules is set out in “Appendix V—Statutory and General Information—A. Further information about our Company—6. Buyback by our Company of our own securities.”

This general mandate to buy back Shares will remain in effect until the earliest of:

(i) the conclusion of the next annual general meeting of our Company; or

(ii) the expiration of the period within which the next annual general meeting of our Company is required by the Articles or any applicable laws to be held; or

(iii) the date on which such general mandate is varied or revoked by an ordinary resolution of our Shareholders in general meeting.

CIRCUMSTANCES UNDER WHICH GENERAL MEETING AND CLASS MEETING ARE REQUIRED

Our Company has only one class of Shares, namely ordinary shares, each of which carries the same rights as the other Shares.

As a matter of the Cayman Islands Companies Act, an exempted company is not required by law to hold any general meeting or class meeting. The holding of general meeting or class meeting is prescribed under the articles of association of a company. Accordingly, our Company will hold general meetings as prescribed under the Articles, a summary of which is set out in “Appendix IV—Summary of the Constitution of our Company and Cayman Islands Company Law.”

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You should read the following discussion and analysis in conjunction with our audited combined financial information set forth in our Accountants’ Report in Appendix I to this document. Our audited combined financial information was prepared in accordance with the IFRS, which may differ in material aspects from generally accepted accounting principles in other jurisdictions. The following discussion and analysis contain certain forward-looking statements which involve risks and uncertainties. These forward-looking statements are based on assumptions and analysis we made in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate under the circumstances. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under the section headed “Risk Factors” and elsewhere in this document.

OVERVIEW

We are an expanding property developer with comprehensive experience focusing on the development and sales of quality mid- to high-end residential properties in selected regions in China. Since our founding in 1994, we have become the market leader in Yinchuan and Xining and have expanded to other strategically selected areas in Northwest China. We were ranked among the “2020 Top 50 Brand of China Real Estate Companies” by the China Real Estate TOP 10 Research (中國房地產TOP10研究組) and ranked first in terms of contracted sales among all property developers in Yinchuan and Xining in 2020 according to CIA.

As of March 31, 2021, we had 30 property development projects at various stages of development, among which, 29 projects developed by our subsidiaries and one project developed by our joint ventures and associates. As of March 31, 2021, our property development projects had a total GFA attributable to us of 6,516,722 sq.m., comprising (i) GFA available for sale, rentable GFA for completed projects of 182,839 sq.m.; (ii) planned GFA for properties under development of 4,704,514 sq.m.; and (iii) estimated GFA for properties held for future development of 1,629,369 sq.m.

With our distinctive property designs, standardized property development process, multiple land acquisition methods, professional management team and industry recognized brand image, we experienced rapid business expansion during the Track Record Period. Our revenue grew at a CAGR of approximately 50.0% from RMB2,503.7 million in 2018 to RMB5,635.8 million in 2020. Our net profit grew at a CAGR of 52.0% from RMB364.6 million in 2018 to RMB842.7 million in 2020.

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BASIS OF PRESENTATION

We were incorporated as an exempted company with limited liability under the laws of Cayman Islands on November 5, 2020. As disclosed in “History, Reorganization and Group Structure—Reorganization” in this document, our Company became the holding company of the companies now comprising our Group. The companies now comprising our Group were under the common control of the Controlling Shareholders before and after the Reorganization. Accordingly, the financial information of our Group has been prepared on a combined basis by applying the principles of merger accounting as if the Reorganization had been completed at the beginning of the Track Record Period.

The combined statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of our Group for the Track Record Period include the results and cash flows of all companies now comprising our Group from the earliest date presented or since the date when the subsidiaries first came under the common control of the Controlling Shareholders, where this is a shorter period. The combined statements of financial position of our Group as of December 31, 2018, 2019 and 2020 have been prepared to present the assets and liabilities of the subsidiaries using the existing book values from the Controlling Shareholders’ perspective. No adjustments are made to reflect fair values, or recognize any new assets or liabilities as a result of the Reorganization.

Equity interests in subsidiaries held by parties other than the Controlling Shareholders, and changes therein, prior to the Reorganization are presented as non-controlling interests in equity in applying the principles of acquisition accounting. All intra-group transactions and balances have been eliminated on combination in full.

KEY FACTORS AFFECTING OUR RESULTS OF OPERATIONS

Our business, results of operations and financial condition have been and will continue to be affected by a number of factors, many of which are beyond our control. See “Risk Factors.” Some of the key factors include, without limitation, the following.

Economic Conditions and Regulatory Environment in the PRC

The overall economic growth and urbanization in the cities and regions that we operate and intend to operate are expected to continue to impact our business and operating results. The overall economic growth and the rate of urbanization in the PRC and the regions where we operate will continue to be affected by a number of macroeconomic factors, including changes in the global economy as well as the macroeconomic, fiscal and monetary policies of the PRC Government. Such macroeconomic dynamics and policies have in the past affected and will likely continue to affect the supply of and demand for properties and property pricing trends in the cities and regions where we operate and intend to operate.

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In addition, our business and operating results have been, and will continue to be, significantly affected by governmental policies and regulations in the PRC, as well as the local policies and regulations of the regions where we operate, in particular those relating to property market. In the past few years, the PRC Government implemented a series of measures to control the overheated property market, which aim to discourage speculative investments and increase the supply of affordable residential properties. From time to time, the central and local governments adjust or introduce policies and regulations relating to land grants, pre-sales of properties, bank financing and taxation, planning and zoning, building design and construction, which have significantly impacted the availability and cost of financing for real estate developers, including us. In addition, restrictive regulations may also affect the availability and cost of financing for potential property purchasers, such as higher minimum down payment requirements, higher mortgage rates provided by commercial banks, restrictions on the number of properties local residents may purchase and increasing taxes on title transfer and property ownership.

Timing of Property Development, Pre-sale and Delivery

The number of property projects that a developer can undertake during any particular period is limited due to substantial capital requirements for land acquisitions and construction costs as well as land supply. The development of a property project may take several months to even years before the commencement of pre-sales, depending on the size and difficulty of the project, and no revenue with respect to such project may be recognized until it is completed and delivered to the customers. Therefore, our cash flows and results of operation vary from period to period, subject to the selling prices and the GFA pre-sold/sold and delivered in the relevant periods. In addition, delays in construction, regulatory approval and other processes may also adversely affect the timetable of our projects. Timing of pre-sale is not only subject to our internal schedules but also relevant PRC laws and regulations. The relevant pre-sales requirements vary from city to city and pre-sale proceeds of a project are required to be used to finance its development. As a result of the time differences between cost incurred, cash received from pre-sales and revenue recognition, our results of operation have fluctuated in the past and are likely to continue to fluctuate in the future. See “Risk Factors—Risks Relating to Our Business—We face risks related to the pre-sales of properties from any potential limitations or restrictions imposed by the PRC Government.”

Revenue and Product Mix

We derive our revenue primarily from property development and sales, and we generate a small portion of our revenue from property leasing services and management consulting and other services. As a result, our results of operations, in particular, our gross profit, and the sources and amount of cash from operations, have varied and may continue to vary from period to period depending on the mix of our revenues from property development and sales, property leasing services and management consulting and other services.

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With respect to the revenue we generated from property development and sales, as we recognize revenue from property development and sales when the properties are transferred to our purchasers, our revenue primarily depends on the volume of properties we sell, the prices at which we make the sales and the timing of delivery of sold properties to purchasers. The volume of properties we sell and the timing of delivery of sold properties depend on the progress on the construction of our properties and the market response we obtain when we launch our property sales. Revenue from property development and sales fluctuates based on the levels of actual completion of construction and delivery of our properties and therefore may vary significantly from period to period. Our revenue may fluctuate because of the mix of our projects, the timing of completion of our projects and the timing of recognition of revenue from pre-sales of units in our development properties. While we generally are involved in a number of projects at any given time and those projects may be at varying stages of completion, many of our projects are large and thus necessarily require substantial time to complete. Accordingly, even assuming a constant level of market demand for our properties, the number of properties that we have available for sale can vary significantly from period to period, resulting in fluctuations in our revenue derived from properties development and sales.

Ability to Acquire Suitable Land at a Reasonable Cost

Land acquisition costs are one of the major components of our cost of sales for property development and sales. Our continuing growth and profitability depend, to a large extent, on our ability to acquire suitable land at a reasonable cost that can yield favorable returns, which in turn, depending on various factors, including the method and timing of land acquisition, location of the land parcel, as well as the competition we may face in a specific region. During the Track Record Period, we acquired land for our projects through the listing-for-sale process organized by the relevant government authorities, auctions and public tenders, by cooperating with third-party business partners through joint ventures or associates, by acquiring equity interests in companies that possess land use rights, or by participating in primary land development in connection with local governments’ urban renewal initiatives. As the PRC economy continues to grow and demand for residential properties remains relatively strong, we expect competition among property developers for acquiring suitable land to intensify.

In addition, land supply policies and implementation measures set by the PRC Government are likely to further intensify competition, and consequently, increase the land acquisition costs. In order to participate in the public tender, auction and listing-for-sale processes, we are required to pay a deposit upfront, which typically represents a significant portion of the actual cost of the relevant land and we are typically required to settle the land premium within one year after signing the land grant contract, which have accelerated the timing of our payment for land acquisition costs and have had a significant impact on our cash flows. It is generally expected that land premiums will continue to rise in the PRC as the economy continues to grow and the real estate market remains one of the most invested markets in the country, which may materially and adversely affect our business and operating results.

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Construction Materials and Labor Cost

Construction costs constitute a substantial portion of our cost of sales, of which, construction materials and labor cost are the two major components. Construction costs fluctuate as a result of changes in the price of certain key construction materials, such as steel and cement. Costs for construction materials and construction labor are generally included in the contractor fees agreed between us and our general contractors. However, for certain major construction materials such as steel and cement, where the prices may fluctuate significantly, we and our contractors usually specify the price range within which the total construction contract price will remain relatively stable. If the price fluctuate outside such initial specified price range, we will be solely responsible for the price increase beyond the agreed scope. If we are unable to successfully pass on such increase in construction costs to our customers, we cannot sell our properties at a price level sufficient to cover all the increased costs, and we will not be able to achieve our target margin and our profitability will be adversely impacted as well.

Availability and Cost of Financing

Financing is an important source of funding for property development. During the Track Record Period, we financed our operations primarily through internally generated cash flow from the pre-sales of our properties, as well as external financings, such as borrowings from banks. The monetary regulations imposed by the PRC Government from time to time may affect our access to capital and cost of financing. We are also highly susceptible to any regulations or measures adopted by the PBOC that restrict bank lending, especially those that restrict the ability of real estate developers to obtain bank financing. As commercial banks in the PRC link the interest rates on their loans to benchmark lending rates published by the PBOC, we expect that any increase in the benchmark lending rates will increase our borrowing costs.

We may continue to access both the international and domestic capital markets to diversify our financing sources, secure sufficient working capital and to support our business expansion. An increase in our finance costs will negatively affect our profitability and results of operations and the availability of financing will affect our ability to engage in our project development activities, which will adversely affect our results of operations.

LAT

All income from the sales or transfer of state-owned land use rights, buildings and their attached facilities in the PRC is subject to LAT at progressive rates ranging from 30% to 60% of the appreciated value of the property, which is calculated by deducting from the gross sales proceeds the costs associated with property development and sales and certain other deductibles. See “Regulatory Overview—Laws and Regulations Concerning Taxation—Land Value-added Tax.” During the Track Record Period, we assessed the difference between the amount we prepaid and our estimated LAT liability. In 2018, 2019 and 2020, we recorded LAT expenses in the amount of RMB150.9 million, RMB161.8 million and RMB309.5 million,

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SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES AND JUDGMENTS

Significant Accounting Policies

We have identified certain accounting policies that are significant to the preparation of our financial statements. Our significant accounting policies, which are important for an understanding of our financial condition and results of operations, are set forth in the Accountants’ Report in Appendix I to this document. Our significant accounting policies include, among others:

Revenue Recognition

Property Development and Sales

We recognize revenues from property development and sales when or as the control of the asset is transferred to the customer.

In determining the transaction price, we adjust the promised amount of consideration for the effect of a financing component if it is significant.

For property development and sales contract for which the control of the property is transferred at a point in time, we recognize revenue when the customer obtains the physical possession or the legal title of the completed property and we have present right to payment and the collection of the consideration is probable.

Rental Income

We recognize rental income on a time proportion basis over the lease terms. Variable lease payments that do not depend on an index or a rate are recognized as income in the accounting period in which they are incurred.

Management Consulting and Other Services

We recognize management consulting and other services income derived from the provision of support services in connection with development of property projects when the relevant services are rendered and the customer simultaneously receives and consumes the benefits provided by us.

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Interest Income

We recognize interest income on an accrual basis using the effective interest method by applying the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, when appropriate, to the net carrying amount of the financial asset.

Properties under Development

Properties under development are intended to be held for sale after completion.

We state properties under development at the lower of cost and net realizable value and comprise land costs, construction costs, borrowing costs, professional fees and other costs directly attributable to such properties incurred during the development period and net realizable value.

We classify properties under development as current assets unless the construction period of the relevant property development project is expected by the Directors to be beyond the normal operating cycle. On completion, these properties are transferred to completed properties held for sale.

Completed Properties Held for Sale

We state completed properties held for sale at the lower of cost and net realizable value.

Cost comprises development costs attributable to the unsold properties. Net realizable value is determined by reference to the sale proceeds of properties sold in the ordinary course of business, less applicable variable selling expenses, or by management estimates based on prevailing marketing conditions.

Investment Properties

Investment properties are interests in land and buildings held to earn rental income and/or for capital appreciation, rather than for use in the production or supply of goods or services or for administrative purposes; or held for sale in the ordinary course of business. We measure such properties initially at cost, including transaction costs. Subsequent to initial recognition, we state investment properties at fair value, which reflects market conditions at the end of each year of the Track Record Period.

Gains or losses arising from changes in the fair values of investment properties are included in our combined statement of profit or loss in the year in which they arise.

We recognize any gains or losses on the retirement or disposal of an investment property in our combined statement of profit or loss in the year of the retirement or disposal.

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For a transfer from investment properties to owner-occupied properties or inventories, the cost of a property is its fair value at the date of change in use. If a property occupied by us as an owner-occupied property becomes an investment property, we account for any difference at the date of change in use between the carrying amount and the fair value of the property as a revaluation and carry the difference in the asset revaluation reserve in equity.

Classification between Investment Properties and Owner-occupied Properties

We have developed criteria in determining whether a property qualifies as an investment property. Investment property is a property held to earn rentals or for capital appreciation or both. Therefore, we consider whether a property generates cash flows largely independently of the other assets held by our Group. Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion that is held for use in the production or supply of goods or services or for administrative purposes. If these portions could be sold separately or leased out separately under a finance lease, we account for the portions separately. If the portions could not be sold separately, the property is an investment property only if an insignificant portion is held for use in the production or supply of goods or services or for administrative purposes. Judgement is made on an individual property basis to determine whether ancillary services are so significant that a property does not qualify as an investment property.

Classification of Subsidiaries, Joint Ventures and Associates

The classification of an investment as a subsidiary, a joint venture or an associate is based on whether we have control, joint control or significant influence over the investee, which involves judgements through the analysis of various factors, including our representation on the chief decision-making authorities of an investee, such as board of directors’ meetings and shareholders’ meetings, as well as other facts and circumstances.

Subsidiaries are combined, which means that each of their assets, liabilities and transactions are included line-by-line in our combined financial statements. The interests in joint ventures and associates are equity accounted for as investments on the combined statements of financial position.

Investments and other financial assets

Initial recognition and measurement

Financial assets are classified, at initial recognition, as subsequently measured at amortized cost, fair value through other comprehensive income, and fair value through profit or loss.

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The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and our business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which we have applied the practical expedient of not adjusting the effect of a significant financing component, we initially measure a financial asset at its fair value plus in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient are measured at the transaction price determined under IFRS 15 in accordance with our revenue recognition policies.

In order for a financial asset to be classified and measured at amortized cost or fair value through other comprehensive income, it needs to give rise to cash flows that are solely payments of principal and interest (“SPPI”) on the principal amount outstanding. Financial assets with cash flows that are not SPPI are classified and measured at fair value through profit or loss, irrespective of the business model.

Our business model for managing financial assets refers to how we manage our financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Financial assets classified and measured at amortised cost are held within a business model with the objective to hold financial assets in order to collect contractual cash flows, while financial assets classified and measured at fair value through other comprehensive income are held within a business model with the objective of both holding to collect contractual cash flows and selling. Financial assets which are not held within the aforementioned business models are classified and measured at fair value through profit or loss.

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as follows:

Financial assets at amortized cost (debt instruments)

Financial assets at amortized cost are subsequently measured using the effective interest method and are subject to impairment. Gains and losses are recognized in the statement of profit or loss when the asset is derecognized, modified or impaired.

Financial assets designated at fair value through other comprehensive income (equity investments)

Upon initial recognition, we can elect to classify irrevocably our equity investments as equity investments designated at fair value through other comprehensive income when they meet the definition of equity under IAS 32 Financial Instruments: Presentation and are not held for trading. The classification is determined on an instrument-by-instrument basis.

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Gains and losses on these financial assets are never recycled to the statement of profit or loss. Dividends are recognized as other income in the statement of profit or loss when the right of payment has been established, it is probable that the economic benefits associated with the dividend will flow to us and the amount of the dividend can be measured reliably, except when we benefit from such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in other comprehensive income. Equity investments designated at fair value through other comprehensive income are not subject to impairment assessment.

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value recognized in the statement of profit or loss.

This category includes derivative instruments and equity investments which the Group had not irrevocably elected to classify at fair value through other comprehensive income. Dividends on equity investments classified as financial assets at fair value through profit or loss are also recognized as other income in the statement of profit or loss when the right of payment has been established, it is probable that the economic benefits associated with the dividend will flow to us and the amount of the dividend can be measured reliably.

A derivative embedded in a hybrid contract, with a financial liability or non-financial host, is separated from the host and accounted for as a separate derivative if the economic characteristics and risks are not closely related to the host; a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and the hybrid contract is not measured at fair value through profit or loss. Embedded derivatives are measured at fair value with changes in fair value recognized in the statement of profit or loss. Reassessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required or a reclassification of a financial asset out of the fair value through profit or loss category.

A derivative embedded within a hybrid contract containing a financial asset host is not accounted for separately. The financial asset host together with the embedded derivative is required to be classified in its entirety as a financial asset at fair value through profit or loss.

Impairment of financial assets

We recognizes an allowance for expected credit losses (“ECLs”) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

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Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

Our financial liabilities include trade and other payables, amount due to the ultimate holding company, derivative financial instruments and interest-bearing bank and other borrowings.

Subsequent measurement

The subsequent measurement of financial liabilities depends on their classification as follows:

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by us that are not designated as hedging instruments in hedge relationships as defined by IFRS 9. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognized in the statement of profit or loss. The net fair value gain or loss recognized in the statement of profit or loss does not include any interest charged on these financial liabilities.

Financial liabilities designated upon initial recognition as at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in IFRS 9 are satisfied. Gains or losses on liabilities designated at fair value through profit or loss are recognized in the statement of profit or loss, except for the gains or losses arising from the Group’s own credit risk which are presented in other comprehensive income with no subsequent reclassification to the statement of profit or loss. The net fair value gain or loss recognized in the statement of profit or loss does not include any interest charged on these financial liabilities.

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Financial liabilities at amortized cost (loans and borrowings)

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost, using the effective interest rate method unless the effect of discounting would be immaterial, in which case they are stated at cost. Gains and losses are recognized in the statement of profit or loss when the liabilities are derecognized as well as through the effective interest rate amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective interest rate amortization is included in finance costs in the statement of profit or loss.

Early Adoption of IFRS 9, IFRS 15, IFRS 16 and IFRIC 23

We have early adopted all IFRSs effective for the accounting period commencing from January 1, 2020, together with the relevant transitional provisions. We have adopted IFRS 9, IFRS 15, IFRS 16, IFRIC 23, amendments to IFRS 9, IAS 39 and IFRS 7, amendments to IFRS 3 and amendments to IAS 1 and IAS 8 on a consistent basis throughout the Track Record Period.

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DESCRIPTION OF CERTAIN COMBINED STATEMENTS OF PROFIT OR LOSS ITEMS

The following table sets forth a summary of our combined statements of profit or loss for the years indicated:

Year ended December 31, 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Revenue ...... 2,503,727 2,125,067 5,635,839 Cost of sales ...... (1,631,297) (1,294,920) (3,842,191)

Gross profit ...... 872,430 830,147 1,793,648 Other income and gains ...... 157,760 353,474 257,323 Selling and distribution expenses ...... (78,053) (164,066) (213,813) Administrative expenses ...... (126,672) (192,126) (233,617) (Impairment)/reversal of impairment losses, on financial assets, net ...... (110,697) 305 (1,334) Other expenses ...... (34,128) (32,400) (64,223) Finance costs ...... (24,956) (37,097) (37,993) Share of profits and losses of associates ...... – – (5,176)

Profit before tax from continuing operations ...... 655,684 758,237 1,494,815 Income tax expense ...... (283,052) (321,549) (624,003)

Profit for the year from continuing operations ...... 372,632 436,688 870,812

DISCONTINUED OPERATION (Loss)/profit for the year from discontinued operations ...... (8,017) 78,127 (28,162)

Profit for the year ...... 364,615 514,815 842,650

Attributable to: Owners of the parent ...... 352,560 457,812 798,931 Non-controlling interests ...... 12,055 57,003 43,719

364,615 514,815 842,650

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Revenue

Our revenue during the Track Record Period consists of revenue derived from (i) property development and sales, (ii) property leasing services, and (iii) management consulting services. To focus our resources primarily on property development and sales, we excluded the manufacture and sale of electronic products from our Group upon the Reorganization since December 2020. The following table sets forth each of the components described above and the percentage of our revenue represented for the years indicated:

Year ended December 31, 2018 2019 2020 RMB’000 % RMB’000 % RMB’000 %

Total ...... 2,503,727 100.0 2,125,067 100.0 5,635,839 100.0

Property Development and Sales

Revenue from property development and sales has constituted, and is expected to continue to constitute, a substantial majority of our total revenue. Our operating results for any given period are dependent upon the GFA and the selling prices of the properties we delivered during such period. Conditions in the property markets in which we operate change from period to period and are affected by general economic, political and regulatory developments in the PRC as well as in the cities and regions in which we operate. See “—Key Factors Affecting Our Results of Operations” above.

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We focus on suitable locations in selected cities in Northwest China. The following table sets forth our revenue generated from each city, total GFA delivered in each city and the respective ASP per sq.m. for each city for the years indicated during the Track Record Period:

Year ended December 31, 2018 2019 2020 ASP ASP ASP GFA (RMB per GFA (RMB per GFA (RMB per RMB’000 % (sq.m.) sq.m.) RMB’000 % (sq.m.) sq.m.) RMB’000 % (sq.m.) sq.m.)

Yinchuan . . 1,019,679 41.2 129,198 7,892 1,120,527 54.0 179,340 6,248 3,494,296 63.1 536,888 6,508 Xining.... 1,263,005 50.9 196,746 6,419 918,207 44.3 111,493 8,236 1,564,961 28.3 182,531 8,574 Xianyang . . 196,524 7.9 42,728 4,599 35,735 1.7 5,052 7,073 479,257 8.6 75,743 6,327

Total .... 2,479,208 100.0 368,672 6,725 2,074,469 100.0 295,885 7,011 5,538,514 100.0 795,162 6,965

Consistent with industry practice, we typically enter into pre-sales contracts with customers while the properties are still under development but after satisfying the conditions for pre-sales in accordance with PRC laws and regulations. In general, there is a time difference between the time we commence the pre-sales of properties under development and the completion of the construction of such properties. We do not recognize any revenue from the pre-sales of the properties until such properties are completed and delivered to the customers. Since the revenue is only recognized upon the delivery of properties, the timing of such delivery may affect the amount of our revenue from property development and sales in respective years, and may also cause other payables and accruals to fluctuate from year to year.

The fluctuation in our revenue from property development and sales during the Track Record Period was primarily attributable to the fluctuation in the total GFA delivered in a given year. Our revenue from property development and sales decreased from RMB2,479.2 million in 2018 to RMB2,074.5 million in 2019 because we did not deliver any new large-scale projects in 2019 and our total GFA delivered decreased from 368,672 sq.m. to 295,885 sq.m.. Our revenue from property development and sales increased from RMB2,074.5 million in 2019 to RMB5,538.5 million in 2020 primarily because we delivered five new large-scale projects in 2020. In 2018, 2019 and 2020, we generated property development and sales revenue from 26, 27 and 38 projects, respectively. Specifically,

• Our total GFA delivered in Yinchuan increased from 129,198 sq.m. in 2018 to 179,340 sq.m. in 2019, primarily attributable to the increases in GFA delivered from Xi Yun Tai (璽雲台) and Su He Sunshine (蘇荷陽光), partially offset by the decreases in GFA delivered from other projects. Our total GFA delivered in Yinchuan increased significantly from 179,340 sq.m. in 2019 to 536,888 sq.m. in 2020, primarily attributable to the beginning of delivery of Eastern Joy (東方悅), Vanke–Chu Xin Garden (萬科‧初昕苑), Eastern Rhyme Park (東方韻園) and Vanke–City Light (萬科‧城市之光).

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• Our total GFA delivered in Xining decreased from 196,746 sq.m. in 2018 to 111,493 sq.m. in 2019, primarily attributable to the decreases in GFA delivered from Chengbei International Village (城北國際村) and Xining Salzburg Palace (西寧薩爾斯堡). Our total GFA delivered in Xining increased from 111,493 sq.m. in 2019 to 182,531 sq.m. in 2020, primarily attributable to an increase in GFA delivered from Chengbei International Village (城北國際村) and the beginning of delivery of Blue Coast (藍岸).

• Our total GFA delivered in Xianyang decreased from 42,728 sq.m. in 2018 to 5,052 sq.m. in 2019, primarily attributable to a decrease in GFA delivered from Meiyu Xihu(美域熙湖). Our total GFA delivered in Xianyang increased from 5,052 sq.m. in 2019 to 75,743 sq.m. in 2020, primarily attributable to an increase in GFA delivered from Meiyu Xihu (美域熙湖).

The ASP of delivered properties increased from RMB6,725 per sq.m. in 2018 to RMB7,011 per sq.m. in 2019, and remained stable at RMB6,965 per sq.m. in 2020, primarily attributable to the prevailing market conditions and the selling prices for properties in cities and regions where we developed. Specifically:

• In Yinchuan, the ASP of delivered properties decreased from RMB7,892 per sq.m. in 2018 to RMB6,248 per sq.m. in 2019, primarily attributable to changing market conditions and the market positioning of the units we sold in 2019. The ASP of delivered properties increased from RMB6,248 per sq.m. in 2019 to RMB6,508 per sq.m. in 2020, primarily attributable to a change in the mix and positioning of units sold.

• In Xining, the ASP of delivered properties increased from RMB6,419 per sq.m. in 2018 to RMB8,236 per sq.m. in 2019, primarily attributable to an increase in sales of Xining Salzburg Palace (西寧薩爾斯堡) which had higher unit price due to its market positioning. The ASP of delivered properties further increased from RMB8,236 per sq.m. in 2019 to RMB8,574 per sq.m. in 2020, primarily attributable to a further increase in unit price of Xining Salzburg Palace (西寧薩爾斯堡), as well as the delivery of Blue Coast (藍岸), which had high unit price due to its market positioning.

• In Xianyang, the ASP of delivered properties increased from RMB4,599 per sq.m. in 2018 to RMB7,073 per sq.m. in 2019, primarily attributable to an increase in the number of commercial units sold in Meiyu Xihu(美域熙湖), which had a higher price than the residential units. The ASP of delivered properties decreased from RMB7,073 per sq.m. in 2019 to RMB6,327 per sq.m. in 2020, primarily attributable to the discounted sales of carparks in Meiyu Xihu(美域熙湖) as a result of our effort to reduce our carpark inventories, which reduced our ASP.

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The following table sets forth a breakdown of total GFA delivered and the respective ASP per sq.m. for each property type, as well as a breakdown of our revenue by property type during the periods indicated, both in absolute amount and as a percentage of total property development and sales revenue.

Year ended December 31, 2018 2019 2020 ASP ASP ASP GFA (RMB per GFA (RMB per GFA (RMB per RMB’000 % (sq.m.) sq.m.) RMB’000 % (sq.m.) sq.m.) RMB’000 % (sq.m.) sq.m.)

Residential. . 1,802,552 72.7 288,974 6,238 1,663,956 80.2 242,494 6,862 4,691,920 84.8 661,093 7,097 Commercial . 509,522 20.6 48,328 10,543 211,734 10.2 18,942 11,178 528,877 9.5 50,476 10,478 Carpark . . . 167,134 6.7 31,370 5,328 198,779 9.6 34,449 5,770 317,717 5.7 83,593 3,801

Total .... 2,479,208 100.0 368,672 6,725 2,074,469 100.0 295,885 7,011 5,538,514 100.0 795,162 6,965

Our GFA delivered for residential properties decreased from 2018 to 2019, primarily because we did not deliver any new large-scale projects in 2019. Our GFA delivered for residential properties increased from 2019 to 2020, primarily because we delivered five new large-scale projects in 2020. Our ASP for residential properties increased during the Track Record Period, primarily due to increasing market demand for residential properties as well as the positioning of the new projects we sold.

Our GFA delivered for commercial properties fluctuated during the Track Record Period, which corresponded to the delivery of our projects. Our ASP for commercial properties generally remained stable during the Track Record Period.

Our GFA delivered for carparks increased during the Track Record Period, primarily due to our effort to reduce carpark inventories as well as an increase in projects delivered from 2019 to 2020. Our ASP for carparks increased from 2018 to 2019, primarily due to the changing mix of market positioning of the properties we sold, and decreased from 2019 to 2020, primarily due to discounted sales activities we conducted in 2020 to reduce our carpark inventories.

Property Leasing Services

Revenue from our property leasing services consists of recurring rental income from leasing our properties, such as shopping malls and public facilities. Our revenue derived from property leasing services was RMB17.9 million, RMB26.3 million and RMB27.9 million in 2018, 2019 and 2020, respectively. Our revenue from our property leasing services increased during the Track Record Period due to an increase in properties we held for rental properties, in line with the completion and delivery of our property development projects.

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Revenue from Management Consulting and Other Services

We provide management consulting services to Independent Third Parties, which mainly represent the provision of consultation services to these entities in connection with construction, sales and marketing, and overall management during the development and sale of property projects.

Our management consulting service segment commenced in 2018, as we started to provide such services for the Yueranju (“悅然居”) project. Our revenue from management consulting services increased from RMB6.6 million in 2018 to RMB53.2 million in 2020, mainly due to the increase in the sale of the properties under our management consulting services.

In addition to management consulting services, we also provide other services, primarily consisting of property brokerage services, to property developers. We started to provide such other services in 2019, and our revenue from other services increased from RMB6.1 million in 2019 to RMB16.2 million in 2020, in line with the overall increase in our customers’ property sales.

Cost of Sales

Our cost of sales primarily represents the costs we incur directly relating to the property development and sales and, to a less extent, the costs we incur for our property leasing services and management consulting and other services.

The following table sets forth a breakdown of our cost of sales for the years indicated:

Year ended December 31, 2018 2019 2020 RMB’000 % RMB’000 % RMB’000 %

Construction costs ...... 1,007,829 61.7 853,749 66.0 2,606,970 67.9 Land use right costs..... 501,690 30.8 315,177 24.3 968,560 25.2 Capitalized borrowing costs...... 116,706 7.2 111,175 8.6 231,879 6.0 Leasing costs ...... 3,090 0.2 4,998 0.4 5,080 0.1 Cost of management consulting and other services ...... 1,982 0.1 9,821 0.7 29,702 0.8

Total ...... 1,631,297 100.0 1,294,920 100.0 3,842,191 100.0

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Cost of Sales for Property Development and Sales

Cost of property development and sales mainly consists of construction costs, land acquisition costs and capitalized interest:

Construction Costs

Construction costs include costs for the design and construction of a project, including costs of construction materials and labor costs. Our construction costs are affected by a number of factors, including the type and geographic conditions of the properties being constructed or the type and amount of construction material costs and labor costs have been primary contributing factors in terms of fluctuations in our construction costs.

The table below sets forth a sensitivity analysis for our construction costs illustrating, for the years indicated, their impact on our profit before taxation if our construction costs had been 5% higher or lower, assuming all other variables remained constant.

Year ended December 31, 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Increase/(decrease) in profit before taxation If construction costs per sq.m. had been 5% lower ...... 50,391 42,687 130,349 As a percentage of profit before taxation ...... 7.7% 5.6% 8.7%

If construction costs per sq.m. had been 5% higher ...... (50,391) (42,687) (130,349) As a percentage of profit before taxation ...... (7.7%) (5.6%) (8.7%)

Land Acquisition Costs

Land acquisition costs include costs relating to acquisition of the rights to occupy, use and develop land and primarily land premium incurred in connection with a land grant from the government. A project’s land acquisition costs are affected by a number of factors, such as the location of the land parcel, local property market condition, the timing of the land acquisition, the project’s plot ratios, the method of acquisition and changes in PRC regulations.

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Capitalized Interest

Capitalized interest includes a portion of our finance costs that is directly attributable to the construction of a particular project. Finance costs that are not directly attributable to the development of a project are expensed and recorded as finance costs in our combined statements of profit or loss in the period during which they are incurred.

The following tables set forth a breakdown of our cost of sale for property development and sales and certain other data in relation to our cost of sale for property development and sales for the years indicated:

Year ended December 31, 2018 2019 2020 RMB’000 % RMB’000 % RMB’000 %

Construction costs ..... 1,007,829 62.0 853,749 66.7 2,606,970 68.5 Land acquisition costs . . 501,690 30.8 315,177 24.6 968,560 25.4 Capitalized interest .... 116,706 7.2 111,175 8.7 231,879 6.1

Total ...... 1,626,225 100.0 1,280,101 100.0 3,807,409 100.0

Year ended December 31, 2018 2019 2020

Total GFA delivered (sq.m.)...... 368,672 295,885 795,162 Average cost per sq.m. delivered (RMB)(1) ...... 4,411 4,326 4,788 Average cost as % of ASP ...... 65.6% 61.7% 68.7% Average land acquisition cost per sq.m. delivered (RMB)(2) ...... 1,361 1,065 1,218 Average land acquisition cost as % ofASP...... 20.2% 15.2% 17.5%

Notes:

(1) Refers to the average cost of sales for our property development and sales and is derived by dividing the sum of construction costs, land acquisition costs and capitalized interest for a period by the total GFA delivered during that period.

(2) Refers to the average land acquisition cost of our property development and sales and is derived by dividing the land acquisition costs for a period by the total GFA delivered during that period.

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Our cost of sales decreased from 2018 to 2019 primarily due to a decrease in GFA delivered as we did not deliver any new large-scale projects in 2019. Our cost of sales increased from 2019 to 2020 primarily due to the expansion of our business. Our cost of sales as a percentage of our revenue decreased from 2018 to 2019, primarily due to the higher pricing of the GFA we delivered in 2019. Our cost of sales as a percentage of our revenue increased from 2019 to 2020, primarily because a substantial portion of our new projects in 2020 were delivered with fine interior fit-out works pursuant to the market positioning of such projects, which increased our development cost.

Gross Profit and Gross Profit Margin

The following table sets forth our gross profit and gross profit margin by business segment for the years indicated:

Year ended December 31, 2018 2019 2020 Gross Gross Gross Gross profit Gross profit Gross profit profit margin profit margin profit margin RMB’000 % RMB’000 % RMB’000 %

Property development and sales ...... 852,982 34.4 794,371 38.3 1,731,105 31.3 Residential ...... 533,196 29.6 565,972 34.0 1,331,818 28.4 Commercial ...... 230,431 45.2 113,988 53.8 245,905 46.5 Carpark ...... 89,355 53.5 114,411 57.5 153,382 48.3 Property leasing services ...... 14,825 82.8 21,291 81.1 22,839 81.8 Management consulting and other services ...... 4,623 70.0 14,485 59.7 39,704 57.2

Total ...... 872,430 34.8 830,147 39.1 1,793,648 31.8

Our gross profit margin increased from 34.8% in 2018 to 39.1% in 2019, primarily due to an increase in the gross profit margin of our property development and sales business. Our gross profit margin decreased from 39.1% in 2019 to 31.8% in 2020, primarily due to a decrease in gross profit margin from our property development and sales business.

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Our gross profit margin for residential property development and sales increased from 2018 to 2019, primarily due to favorable market conditions and the higher market positioning of the property units sold in 2019, thus allowing us to charge higher unit price for our properties. Our gross profit margin for residential property development and sales decreased from 2019 to 2020, primarily because a substantial portion of our new projects in 2020 were delivered with fine interior fit-out works, which increased our development cost and decreased our gross profit margin.

Our gross profit margin for commercial property development and sales increased from 2018 to 2019, primarily because we did not deliver any new large-scale projects in 2019 and therefore incurred relatively less cost. Our gross profit margin for commercial property development and sales decreased from 2019 to 2020, primarily due to an increase in cost of sales relating to newly developed projects.

Our gross profit margin for carpark development and sales increased from 2018 to 2019 due to favorable market conditions and and the higher market positioning, but decreased in 2020, primarily due to discounted sales activities we conducted in order to reduce our carparks inventories.

Our gross profit margin for property leasing services remained high and stable during the Track Record Period, as property leasing services involve only a small amount of maintenance cost as its cost of sales.

Our gross profit margin for management consulting and other services decreased from 2018 to 2019, primarily because we started to offer property brokerage services in 2019, which had lower gross profit margin than management consulting services due to the higher level of manpower required for providing such services. Our gross profit margin for management consulting and other services decreased from 2019 to 2020 due to the decrease in gross profit margin from our property brokerage services as we employed additional staff to provide such services that had not yet been reflected in a similar increase in revenue. During the Track Record Period, the gross profit margin for management consulting service had been stable.

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Other Income and Gains

The following table sets forth a breakdown of other income and gains during the periods indicated, both in absolute amount and as a percentage of total other income and gains.

Year ended December 31, 2018 2019 2020 RMB’000 % RMB’000 % RMB’000 %

Bank interest income . . 3,896 2.5 8,117 2.3 15,209 5.9 Fund possession fee . . . 17,073 10.8 19,931 5.6 107,978 42.0 Forfeiture of deposits. . . 7,574 4.8 7,953 2.2 12,591 4.9 Government grants .... 140 0.1 12,350 3.5 6,427 2.5 Dividend income from equity investments at fair value through other comprehensive income ...... 6,835 4.3 3,835 1.1 3,196 1.2 Investment income from financial assets at fair value through profit or loss ...... 5,705 3.6 11,513 3.3 35,490 13.8 Change in fair value of financial assets at fair value through profit or loss ...... 69 –* 429 0.1 – – Fair value gains on investment properties . 3,730 2.4 198 0.1 – – Change in fair value of investments in property projects .... 109,181 69.2 280,160 79.3 71,013 27.6 Others ...... 3,557 2.3 8,988 2.5 5,419 2.1 Total ...... 157,760 100.0 353,474 100.0% 257,323 100.0

* Less than 0.1%

Our other income and gains mainly consist of (i) bank interest income; (ii) fund possession fee from cash advances we made to other third parties relating to property development projects; (iii) forfeiture of deposits, which primarily represents the forfeited deposits we received from certain potential customers who subsequently decided not to proceed with the relevant transactions after entering into pre-sale or sale agreements with us; (iv) government grants, which primarily represent government grants and subsidies we received in connection with our business; (v) dividend income from equity investments at fair value through other comprehensive income, which primarily represents dividend we received from our equity investment in Yellow River Rural Commercial Bank and other companies; (vi)

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Other income and gains increased from RMB157.8 million in 2018 to RMB353.5 million in 2019, primarily attributable to an increase in change in fair value of investments in property projects as a result of commencement of the contractual arrangement with another Independent Third Party property developer for the development of a property project in 2019 and our related investment in such project was initially recognized at fair value through profit or loss during 2019, and an increase in government grants as we received green building subsidies from the government for our Xi Yun Tai (璽雲台) and Eastern Home (東城人家) projects. Other income and gains decreased from RMB353.5 million in 2019 to RMB257.3 million in 2020, primarily attributable to a decrease in change in fair value of investments in property projects as a result of the initial recognition of investment in a property project during 2019 while no new contractual arrangement for investment in property project was made in 2020, partially offset by (i) the increase in fund possession fee from cash advances we made to a third-party property developer provided during 2020, and (ii) an increase in fund possession fee from advances we made to third parties in order to participate in a village renovation project in Xi’an (see “Business—Our Property Development Management—Land acquisition” for details) as well as cash advances made to an investment company in order to participate in a city renovation project in Shenzhen in 2020 (see “—Description of Certain Combined Statements of Financial Position Items—Prepayments, Other Receivables and Other Assets” for details) and an increase in investment income from financial assets at fair value through profit or loss as a result of additional income we received from wealth management products.

Selling and Distribution Expenses

Our selling and distribution expenses mainly consist of (i) promotion and advertising expenses, which primarily represent costs incurred in connection with advertisement in media and promotional events; (ii) sales agency expenses, which primarily represent fees paid to third party sales agents; (iii) employee benefit expenses, (iv) depreciation and amortization; (v) sales administrative expenses, which primarily represent the expenses incurred in daily operation and management of our sales offices, as well as after sale services; and (vi) others, which primarily represent material costs for marketing materials.

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The following table sets forth the components of our selling and distribution expenses for the years indicated:

Year ended December 31, 2018 2019 2020 RMB’000 % RMB’000 % RMB’000 %

Promotion and advertising expenses. . . 37,822 48.5 110,023 67.1 114,187 53.4 Sales agency expenses . . . 24,507 31.4 19,974 12.2 58,775 27.5 Employee benefit expenses...... 1,357 1.7 4,928 3.0 13,271 6.2 Depreciation and amortization ...... 393 0.5 517 0.3 490 0.2 Sales administrative expenses...... 8,887 11.4 19,957 12.2 23,348 10.9 Others ...... 5,087 6.5 8,667 5.2 3,742 1.8

Total ...... 78,053 100.0 164,066 100.0 213,813 100.0

Our selling and distribution expenses increased from 2018 to 2019, primarily attributable to (i) an increase in promotion and advertising expenses, which was primarily due to the establishment of Zhongfang Vanke Industrial and the related marketing expense; and (ii) an increase in sales administrative expenses, which was primarily due to increased administrative expenses related to our sales offices as a result of our business expansion. Our selling and distribution expenses increased from 2019 to 2020, primarily attributable to (i) an increase in sales agency expenses, primarily due to increased sales in 2020; (ii) an increase in employee benefit expenses as we hired additional sales personnel to support our business expansion; and (iii) an increase in sales administrative expenses, which was in line with our business expansion.

Administrative Expenses

Our administrative expenses mainly consist of (i) employee benefit expenses, which primarily represent salaries paid to our administrative personnel; (ii) tax and surcharges, which primarily represent stamp duties in relation to sales contracts we entered into and property tax in relation to properties we leased; (iii) office administration expenses, which primarily represent office and rental expenses, utility and property management fees, traveling and entertainment expenses, professional consulting expenses and [REDACTED] expenses; (iv) bank charges incurred by our administrative personnel in the daily operations of our business; (v) depreciation and amortization, which primarily represent the depreciation and amortization of our office equipment and intangible assets; and (vi) others, which primarily represent recruitment expenses, training costs, telecommunication expenses and other miscellaneous expenses.

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The following table sets forth the components of our administrative expenses for the years indicated:

Year ended December 31, 2018 2019 2020 RMB’000 % RMB’000 % RMB’000 %

Employee benefit expenses...... 82,206 64.9 127,633 66.4 152,151 65.1 Tax and surcharges .... 14,866 11.7 19,595 10.2 24,296 10.4 Office administration expenses...... 17,624 14.0 23,493 12.2 33,281 14.2 Office and rental expenses ...... 3,119 2.5 4,768 2.5 6,238 2.7 Utilities and property management expenses ...... 4,506 3.6 5,876 3.0 7,311 3.1 Travel and entertainment expenses ...... 6,504 5.1 7,903 4.1 8,086 3.5 Consulting expenses . . 3,495 2.8 4,946 2.6 6,654 2.8 [REDACTED] expenses ...... [REDACTED][REDACTED][REDACTED][REDACTED][REDACTED][REDACTED] Bank charges ...... 476 0.4 873 0.5 1,371 0.6 Depreciation and amortization ...... 8,506 6.7 16,429 8.6 15,110 6.5 Others ...... 2,994 2.3 4,103 2.1 7,408 3.2

Total ...... 126,672 100.0 192,126 100.0 233,617 100.0

Our administrative expenses increased from 2018 to 2019, primarily due to an increase in employee benefit expenses because we hired additional staff and raised the salary level of our employees in 2019, as well as an increase in tax and surcharges in line with the growth in our contracted sales. Our administrative expenses further increased from 2019 to 2020, primarily due to (i) an increase in employee benefit expenses as we raised the salary level of our employees in 2020; (ii) an increase of tax and surcharges of stamp duties and property tax in line with the growth in our revenue; and (iii) an increase in office administration expenses as a result of the consulting expenses and [REDACTED] expenses we incurred in connection with the [REDACTED].

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Impairment/reversal of losses on financial assets

Our impairment/reversal of losses on financial assets mainly consist of (i) impairment of financial assets included in prepayments, other receivables and other assets and (ii) impairment of trade receivables. We recorded impairment of financial assets included in prepayments, other receivables and other assets in the amount of RMB110.5 million in 2018 due to the impairment of our provision of bad debts of an Independent Third Party to us. We intended to cooperate with the Independent Third Party with respect to a potential property development project, and accordingly made deposit to the Independent Third Party for the acquisition of a parcel of land to secure the deal. As of the Latest Practicable Date, the acquisition has suspended, and we regard its success rate to be low. However, this Independent Third Party company refused to return our deposit to us. For the sake of prudence, we recognized our deposit with this Independent Third Party company as impairment of financial assets.

Other Expenses

Our other expenses mainly consist of (i) donations to charities; (ii) fines and default payments, which were mainly paid for certain non-compliance incidents, such as commencing construction before obtaining construction work permits and overdue payments of social insurance, housing provident fund contributions and taxes; (iii) change in fair value of investment properties; (iv) expenses from financial assets at fair value through profit or loss; (v) change in fair value of financial liabilities at fair value through profit or loss; and (vi) others, which primarily represent utility and other miscellaneous expenses we paid on behalf of construction contractors. The following table sets forth the components of our other expense for the years indicated:

Year ended December 31, 2018 2019 2020 RMB’000 % RMB’000 % RMB’000 %

Donations ...... 751 2.2 7,179 22.2 4,069 6.3 Impairment loss on properties under construction ...... 15,678 45.9 – – – – Fines and default payments ...... – – 670 2.1 – – Change in fair value of investment properties . – – – – 104 0.2 Change in fair value of financial liabilities at fair value through profit or loss ...... 17,544 51.4 22,691 70.0 58,191 90.6 Others ...... 155 0.5 1,860 5.7 1,859 2.9

Total ...... 34,128 100.0 32,400 100.0 64,223 100.0

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Our other expenses remained stable from 2018 to 2019. Our other expenses increased from 2019 to 2020, primarily due to an increase in change in fair value of financial liabilities at fair value through profit or loss as a result of the liabilities in the property projects measured at fair value through profit or loss. See “—Combined Balance Sheets—Financial liabilities at Fair Value through Profit or Loss” for details.

Finance Cost

Our finance costs mainly consist of (i) interest on bank and other borrowings and lease liabilities, net of capitalized interest relating to properties under development, and (ii) interest expense arising from revenue contracts, which is related to the pre-sales proceeds we received from our customers. The following table sets forth the components of our finance expenses for the years indicated:

Year ended December 31, 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Interest on loans and borrowings ..... 138,391 141,454 166,464 Interest expense arising from revenue contracts ...... 41,011 42,987 70,225 Interest on lease liabilities ...... 11 100 120

Total interest expense ...... 179,413 184,541 236,809 Less: Interest capitalized ...... (154,457) (147,444) (198,816)

Total ...... 24,956 37,097 37,993

Our finance costs increased from 2018 to 2019, primarily due to a decrease in interest capitalized as a result of a decrease in construction activities in 2019. Our finance costs remained stable in 2019 and 2020, as the increase in interest capitalized as a result of the increase our construction activities was largely offset by an increase in interest on loans and borrowings due to an increase in our interest-bearing bank and other borrowings, as well as an increase in interest expense arising from revenue contracts as a result of an increase in pre-sale proceeds we received from our property sales in line with our business expansion.

Share of Losses of Associates

We co-develop property development projects by establishing associates with third-party property developers. Our share of losses of associates in 2018, 2019 and 2020 was nil, nil and RMB5.2 million, respectively. The share of losses of associates in 2020 was primarily due to the operational expenses we incurred in connection with the initial development stage of the Shi Mao—Yun Jin (世貿•雲錦) project.

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Income Tax Expenses

Income tax expenses represent corporate income tax and LAT payable by our subsidiaries in the PRC. We calculate our effective corporate income tax rate (deducting the tax effect from LAT) by using the quotient of (a) the result of PRC corporate income tax plus deferred income tax, divided by (b) the result of profit before income tax minus LAT. In 2018, 2019 and 2020, our effective corporate income tax rate had remained stable at 26.2%, 26.8% and 26.5%, respectively. The following table sets forth the components of our income tax expenses for the years indicated:

Year ended December 31, 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Current tax: PRC Corporate income tax ...... 162,752 360,600 622,425 PRCLAT...... 150,910 161,766 309,511 Deferred tax...... (30,610) (200,817) (307,933)

Total ...... 283,052 321,549 624,003

During the Track Record Period, we had paid all relevant taxes when due and there are no material matters in dispute or unresolved with the relevant tax authorities.

Discontinued Operations

Our Group disposed of equity interests in certain of our previous subsidiaries, and accordingly discontinued the relevant operations, during the Track Record Period, mainly because we believed that the pertinent operations were not core to our business. See “History, Reorganization and Corporate Structure—Reorganization—Corporate Division of Ningxia Zhongfang Industrial.”

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RESULTS OF OPERATIONS FROM CONTINUING OPERATIONS

2020 Compared to 2019

Revenue

Our revenue increased from RMB2,125.1 million in 2019 to RMB5,635.8 million in 2020, primarily reflecting the following:

• Revenue from property development and sales. Revenue from property development and sales increased from RMB2,074.5 million in 2019 to RMB5,538.5 million in 2020, primarily because we delivered five new projects in 2020. Specifically, the total GFA of properties delivered increased by 168.7% from 295,885 sq.m. in 2019 to 795,162 sq.m. in 2020. In particular, (i) our total GFA delivered in Yinchuan increased significantly from 179,340 sq.m. in 2019 to 536,888 sq.m. in 2020, primarily attributable to the launch of delivery of Eastern Joy (東方悅), Vanke—Chu Xin Garden (萬科•初昕苑), Eastern Rhyme Park (東方韻園) and Vanke—City Light (萬科•城市之光); (ii) our total GFA delivered in Xining increased from 111,493 sq.m. in 2019 to 182,531 sq.m. in 2020, primarily attributable to an increase in GFA delivered from Chengbei International Village (城北國際村) and the launch of delivery of Blue Coast (藍岸); and (iii) our total GFA delivered in Xianyang increased from 5,052 sq.m. in 2019 to 75,743 sq.m. in 2020, primarily attributable to an increase in GFA delivered from Meiyu Xihu (美域熙湖). The ASP decreased by 0.7% from RMB7,011 per sq.m. in 2019 to RMB6,965 per sq.m. in 2020, primarily due to prevailing market conditions and the selling prices for properties in cities and regions where we developed, as the increases in our ASP in Yinchuan and Xining were partially offset by the decrease in our ASP in Xianyang.

• Revenue from property leasing services. Revenue from property leasing services increased from RMB26.3 million in 2019 to RMB27.9 million in 2020, primarily due to an increase in properties we held for rental properties, in line with the completion and delivery of our property development projects.

• Revenue from management consulting and other services. Revenue from management consulting services increased from RMB18.3 million in 2019 to RMB53.2 million in 2020, primarily due to the increase in the sale of properties under our management consulting services. Revenue from other services, primarily consisting of property brokerage services, increased from RMB6.0 million in 2019 to RMB16.2 million in 2020, in line with the overall increase in our customers’ sale of properties.

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Cost of Sales

Our cost of sales increased from RMB1,294.9 million in 2019 to RMB3,842.2 million in 2020, which was primarily due to an increase in property development costs, as reflected in construction costs, land use right costs and capitalized borrowing costs, in line with the increase in our sale of properties.

Gross Profit and Gross Profit Margin

Our gross profit increased from RMB830.1 million in 2019 to RMB1,793.6 million in 2020, primarily due to an increase in our revenue from our property development and sales business. Our gross profit margin decreased from 39.1% in 2019 to 31.8% in 2020, primarily reflecting the following:

• Property development and sales. Our gross profit margin for residential property development and sales decreased, because a substantial portion of our new projects in 2020 were delivered with fine interior fit-out works pursuant to their market positioning, which increased our development cost and decreased our gross profit margin. Our gross profit margin for commercial property development and sales decreased, because of an increase in cost of sales relating to newly developed projects. Our gross profit margin for carpark development and sales also decreased, due to discounted sales activities we conducted in order to reduce our inventories.

• Property leasing services. Our gross profit margin for property leasing services remained high and stable in 2019 and 2020, as property leasing services involve only a small amount of maintenance cost as its cost of sales.

• Management consulting and other services. Our gross profit margin for management consulting and other services decreased from 2019 to 2020 due to the decrease in gross profit margin from our property brokerage services as we employed additional staff to provide such services that had not yet been reflected in a similar increase in revenue.

Other Income and Gains

Our other income and gains decreased from RMB353.5 million in 2019 to RMB257.3 million in 2020, primarily due to a decrease in change in fair value of investments in property projects as a result of a smaller increase in the amount to be received determined based on the sales and costs of the relevant property units as compared to 2019 due to the development progress of the underlying property project, partially offset by an increase in investment income from financial assets at fair value through profit or loss as a result of additional income we received from wealth management products, partially offset by an increase in fund possession fee, which mainly consisted of RMB53.5 million derived from cash advances we made in order to participate in a village renovation project in Xi’an (see “Business—Our Property Development Management—Land acquisition” for details on the project) as well as from cash advances made to an investment company in order to participate in a city renovation project in Shenzhen in 2020 (see “—Description of Certain Combined Statements of Financial Position Items—Prepayments, Other Receivables and Other Assets” for details).

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Selling and Distribution Expenses

Our selling and distribution expenses increased from RMB164.1 million in 2019 to RMB213.8 million in 2020, primarily due to (i) an increase in sales agency expenses, primarily due to increased sales in 2020; (ii) an increase in employee benefit expenses as we hired additional sales personnel to support our business expansion; and (iii) an increase in sales administrative expenses, which was in line with our business expansion.

Administrative Expenses

Our administrative expenses increased from RMB192.1 million in 2019 to RMB233.6 million in 2020,, primarily due to (i) an increase in employee benefit expenses as we raised the salary level of our employees in 2020, (ii) an increase in tax and surcharges in line with the growth in our revenue, and (iii) an increase in office administration expenses as a result of the consulting expenses and [REDACTED] expenses we incurred in connection with the [REDACTED].

Other Expenses

Our other expenses increased from RMB32.4 million in 2019 to RMB64.2 million in 2020, primarily due to an increase in change in fair value of financial liabilities at fair value through profit or loss as a result of an increase in the fair value of our Xining Salzburg Palace (西寧薩爾斯堡) and Chengbei International Village (城北國際村) projects, as our business partner is entitled to receive a portion of our profits from these projects as our business partner contributed fund to these projects’ development pursuant to the relevant investment agreements. See “—Description of Certain Combined Statements of Financial Position Items— Financial Liabilities at Fair Value Through Profit or Loss” for details.

Finance Cost

Our finance cost remained stable at RMB37.1 million in 2019 and RMB38.0 million in 2020, as the increase in interest capitalized as a result of the increase in construction activities was largely offset by an increase in interest on loans and borrowings due to an increase in our interest-bearing bank and other borrowings, as well as an increase in interest expense arising from revenue contracts.

Share of Losses of Associates

Our share of losses of associates increased from nil in 2019 to RMB5.2 million in 2020, primarily due to the initial operational expenses we incurred for the initial development stage of the Shi Mao—Yun Jin (世貿•雲錦) project.

Profit before Tax

As a result of the foregoing, our profit before tax increased from RMB758.2 million in 2019 to RMB1,494.8 million in 2020.

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Income Tax Expenses

Our income tax expenses increased from RMB321.5 million in 2019 to RMB624.0 million in 2020, primarily due to our increased profit before tax.

Profit for the Year

As a result of the foregoing, our profit for the year increased from RMB514.8 million in 2019 to RMB842.7 million in 2020.

2019 Compared to 2018

Revenue

Our revenue decreased from RMB2,503.7 million in 2018 to RMB2,125.1 million in 2019, primarily reflecting the following:

• Revenue from property development and sales. Revenue from property development and sales decreased from RMB2,479.2 million in 2018 to RMB2,074.5 million in 2019, primarily attributable to a decrease in the total GFA delivered from 2018 to 2019, partially offset by an increase in ASP from 2018 to 2019. Our total GFA of properties delivered decreased from 368,672 sq.m. in 2018 to 295,885 sq.m. in 2019, as a result of (i) a decrease in GFA delivered in Xining from 196,746 sq.m. in 2018 to 111,493 sq.m. in 2019, primarily attributable to the decreases in GFA delivered from Chengbei International Village (城北國際村) and Xining Salzburg Palace (西寧薩爾斯堡); and (ii) a decreased in GFA delivered in Xianyang from 42,728 sq.m. in 2018 to 5,052 sq.m. in 2019, primarily attributable to a decrease in GFA delivered from Meiyu Xihu (美域熙湖); partially offset by an increase in GFA delivered in Yinchuan from 129,198 sq.m. in 2018 to 179,340 sq.m. in 2019, primarily attributable to the increases in GFA delivered from Xi Yun Tai (璽雲台) and Su He Sunshine (蘇荷陽光). The ASP increased from RMB6,725 per sq.m. in 2018 to RMB7,011 per sq.m. in 2019, primarily due to the prevailing market conditions and the selling prices for properties in cities and regions where we developed, as the increases in our ASP in Xining and Xianyang were partially offset by the decrease in our ASP in Yinchuan.

• Revenue from property leasing services. Revenue from property leasing services decreased from RMB17.9 million in 2018 to RMB26.3 million in 2019, primarily attributable to an increase in properties we held for rental properties, in line with the completion and delivery of our property development projects.

• Revenue from management consulting and other services. Revenue management consulting services increased from RMB6.6 million in 2018 to RMB18.3 million in 2019, primarily due to the increase in the sale of properties under our management consulting services for the Yueranju (“悅然居”) project. We also started to provide other services, primarily consisting of property brokerage services, to property developers in 2019 and recorded revenue of RMB6.0 million in that year.

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Cost of Sales

Our cost of sales decreased from RMB1,631.3 million in 2018 to RMB1,294.9 million in 2019, which was primarily due to a decrease in our cost of property development and sales. Our cost of property development and sales decreased from RMB1,626.2 million in 2018 to RMB1,280.1 million in 2019, primarily due to decreases in construction costs, land use right costs and capitalized borrowing costs, which was mainly attributable to the decrease in our property sales from 2018 to 2019.

Gross Profit and Gross Profit Margin

As a result of the foregoing, our gross profit increased from RMB872.4 million in 2018 to RMB830.1 million in 2019. Our gross profit margin increased from 34.8% in 2018 to 39.1% in 2019, primarily reflecting the following:

• Property development and sales. Our gross profit margin for residential property development and sales increased from 2018 to 2019, primarily due to favorable market conditions and the higher market positioning of the property units sold in 2019, thus allowing us to charge higher unit price for our properties. Our gross profit margin for commercial property development and sales increased, because we did not deliver any new large-scale projects in 2019 and therefore incurred relatively less cost. Our gross profit margin for carpark development and sales increased from 2018 to 2019, due to favorable market conditions and the higher market positioning of the property units sold in 2019.

• Property leasing services. Our gross profit margin for property leasing services remained high and stable in 2018 and 2019, as property leasing services involve only a small amount of maintenance cost as its cost of sales.

• Management consulting and other services. Our gross profit margin for management consulting and other services decreased from 2018 to 2019, primarily because we started to offer property brokerage services in 2019, which had lower gross profit margin than management consulting services due to the higher level of manpower required for providing such services.

Other Income and Gains

Our other income and gains increased from RMB157.8 million in 2018 to RMB353.5 million in 2019, primarily attributable to an increase in change in fair value of investments in property projects as a result of an increase in the amount to be received determined based on the sales and costs of the relevant property units due to the development progress of the underlying property project.

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Selling and Distribution Expenses

Our selling and distribution expenses increased from RMB78.1 million in 2018 to RMB164.1 million in 2019, primarily attributable to (i) an increase in our promotion and advertising expenses as a result of the establishment of Zhongfang Vanke Industrial and the related marketing expense; and (ii) an increase in sales administrative expenses as a result of increased administrative expenses related to our sales offices as a result of our business expansion.

Administrative Expenses

Our administrative expenses increased from RMB126.7 million in 2018 to RMB192.1 million in 2019, primarily due to an increase in employee benefit expenses because we hired additional staff and raised the salary level of our employees in 2019, as well as an increase in tax and surcharges in line with the growth in our contracted sales.

Other Expenses

Our other expenses remained stable at RMB34.1 million in 2018 to RMB32.4 million in 2019.

Finance Cost

Our finance cost increased from RMB25.0 million in 2018 to RMB37.1 million in 2019, primarily due to a decrease in interest capitalized as a result of the decrease in property sales in 2019.

Share of Losses of Associates

Our share of losses of associates was nil in both 2018 and 2019.

Profit before Tax

As a result of the foregoing, our profit before tax increased from RMB655.7 million in 2018 to RMB758.2 million in 2019.

Income Tax Expenses

Our income tax expenses increased from RMB283.1 million in 2018 to RMB321.5 million in 2019, primarily due to an increase in our profit before tax.

Profit for the Year

As a result of the foregoing, our profit for the year increased from RMB364.6 million in 2018 to RMB514.8 million in 2019.

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DESCRIPTION OF CERTAIN COMBINED STATEMENTS OF FINANCIAL POSITION ITEMS

Properties under Development

Properties under development are intended to be held for sale after completion. We state properties under development at the lower of costs comprising land costs, construction costs, borrowing costs, professional fees and other costs directly attributable to such properties incurred during the development period and net realizable value. Upon completion, the properties are transferred to completed properties held for sale. The value of our properties under development totaled approximately RMB5,720.2 million, RMB10,684.0 million and RMB18,519.6 million, respectively, as of December 31, 2018, 2019 and 2020. The increase in our properties under development during the Track Record Period was primarily due to the expansion of our property development activities.

As of March 31, 2021, none of our properties under development for sale as of December 31, 2020 had been transferred to completed properties for sale as we had not completed any new projects during the first quarter of 2021.

Completed Properties Held for Sale

Completed properties held for sale represent completed properties remaining unsold at the end of each year and are stated at the lower of cost and net realizable value. Cost comprises development costs attributable to the unsold properties. Net realizable value is determined by reference to the sale proceeds of properties sold in the ordinary course of business, less applicable variable selling expenses, or by management estimates based on prevailing marketing conditions. As of December 31, 2018, 2019 and 2020, we had completed properties held for sale of RMB1,908.7 million, RMB1,674.1 million and RMB1,899.2 million, respectively. Our completed properties held for sale decreased from 2018 to 2019 as we enhanced our sales effort for completed properties. Our completed properties held for sale increased from 2019 to 2020 due to the completion of new property projects.

As of March 31, 2021, we had sold approximately RMB101.5 million, or 5.3%, of the completed properties held for sale as of December 31, 2020.

Investment Properties

Investment properties are properties (including the leasehold property held as a right-of-use asset) we retain for rental income and/or capital appreciation purposes. They are measured initially at cost, including transaction costs and subsequent to initial recognition, stated at fair value. Gains or losses arising from changes in the fair value of investment property are included in our combined statement of profit or loss in the year in which they arise. Transfers are made to or from investment properties when and only when there is a change in use. For a transfer from properties under development or completed properties held for sale to investment properties, any difference between the fair value of the properties at that date and its previous carrying amount is recognized in profit or loss. The value of our

– 321 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION investment properties totaled approximately RMB116.6 million, RMB116.8 million and RMB302.8 million, respectively, as of December 31, 2018, 2019 and 2020. The value of our investment properties remained stable in 2018 and 2019, but increased in 2020 primarily due to the expansion and further construction of the Jingbo School, which was held by us to earn rental income.

Property, Plant and Equipment

Our property, plant and equipment consist of buildings, leasehold improvements, furniture and fixtures, motor vehicles and construction in progress. The value of our property, plant and equipment totaled approximately RMB317.3 million, RMB332.2 million and RMB28.6 million, respectively, as of December 31, 2018, 2019 and 2020. Our property, plant and equipment increased from 2018 to 2019, primarily due to the addition in construction in progress and our acquisition of furniture and fixtures, leasehold improvements and buildings, partially offset by the depreciation of our buildings and furniture and fixtures. Our property, plant and equipment decreased from 2019 to 2020 primarily due to the divestment of assets included in discontinued operations and buildings recategorized as investment properties as part of the Reorganization.

Investments in property projects

We make investments in two property projects in Yinchuan which are wholly-owned by our business partner, an Independent Third Party property developer. Pursuant to the cooperation agreements with such business partner, we are entitled to receive a certain percentage of return from the relevant property projects that is commensurate with the percentage of our principal investment in developing such property projects. Our principal investment and right of return distributed from property projects represent our interests in the property projects of which variable returns are determined based on the financial performance of the relevant property units specified in the cooperation agreement with our business partner and is measured at fair value at the end of each year.

We have engaged an Independent Third Party valuer, who has appropriate qualifications and recent experiences in the valuation of similar properties in the relevant locations, to carry out the valuation of fair value as of December 31, 2020. Details of the fair value measurements are set out in Note 41 to the Accountants’ Report in Appendix I to the document.

Investments in Associates

We formed associates with business partners to develop specific property projects or engage in specific business. We recorded investments in associates in the amount of RMB27.8 million, RMB37.0 million and RMB118.2 million, respectively, as of December 31, 2018, 2019 and 2020, respectively. We state our investments in associates at our share of net assets under the equity method of accounting, less any impairment losses. Our investments in associates remained stable in 2018 and 2019, but increased in 2020 due to our investment made to Baotou Shimao New-development Real Estate Development Co., Ltd. in connection with the development of the Shi Mao—Yun Jin (世貿•雲錦) project.

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Trade Receivables

Our trade receivables primarily consist of receivables from our property development and sales and property leasing services. Proceeds from property sales and property lease are generally received in accordance with the terms stipulated in the sale and purchase agreements. There is generally no credit period granted to the property purchasers. Trade receivables from management consulting services is received in accordance with the terms of the relevant agreements, which is due for payment upon the issuance of demand note. Trade receivables are settled based on the progress payment schedule stipulated in the contract. As of December 31, 2018, 2019 and 2020, our trade receivables amounted to approximately RMB14.5 million, RMB11.6 million and RMB22.9 million, respectively.

As of March 31, 2021, approximately RMB0.2 million, representing 0.9% of trade receivables as of December 31, 2020, were subsequently collected.

The following table sets forth an aging analysis of our trade receivables based on the invoice date and as of the dates indicated:

As of December 31, 2018 2019 2020 RMB’000 RMB’000 RMB’000

Trade receivables Within one year ...... 13,971 9,549 18,972 Over one year ...... 521 2,010 3,913

Total ...... 14,492 11,559 22,885

Our trade receivables turnover days are calculated by dividing the average of trade receivables at the beginning and the end of the year by revenue and multiply the resulting value by 360 days. Our trade receivables turnover days were 4.2 days, 2.2 days and 1.1 days for the years ended December 31, 2018, 2019 and 2020, respectively. Our trade receivables turnover days decreased during the Track Record Period due to our enhanced trade receivables collection effort.

Contract Cost Assets

Contract cost assets represent the sales commission for to be paid for obtaining property sale contracts. We deferred the amounts paid and will charge them to profit or loss when the related revenue is recognized. Our contract cost assets increased from RMB29.4 million in 2018 to RMB63.6 million in 2019 and further to RMB170.1 million in 2020, in line with the growth in our contracted sales during the Track Record Period.

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Prepayments, Other Receivables and Other Assets

The following table sets forth the components of our prepayments, other receivables and other assets as of the dates indicated:

As of December 31, 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Deposits for land auction...... 780,750 3,455,013 2,221,380 Receivables related to land use rights to be jointly acquired with third parties . . – – 1,882,152 Prepayments for acquisition of land use rights ...... 345,840 930,857 1,354,524 Cooperative operation receivables ...... 306,263 446,927 1,006,015 Due from non-controlling shareholders . . 60,000 93,200 139,259 Due from other related parties ...... 1,916 1,147 125,195 Amounts due from third parties ...... – 71,786 93,744 Other deposits ...... 39,438 50,782 39,670 Prepayments for construction cost ...... 70,600 18,921 11,899 Advances to third parties ...... 2,250,000 4,616,580 888,000 Prepaid taxes and other tax recoverables . 117,844 433,755 771,780 Other receivables ...... 53,519 172,998 105,205

4,026,170 10,291,966 8,638,823 Less: impairment ...... (503) (156) (1,027)

4,025,667 10,291,810 8,637,796

Deposits for land auction represent the tender deposits prepaid for bidding of land use rights. The amount of our deposits for land auction fluctuated during the Track Record Period mainly due to the timing of acquisition and the timing of obtaining the relevant land use rights certificate.

Receivables related to land use rights to be jointly acquired with third parties represent the advance to a third-party property developer in relation to the village renovation and demolition work of parcels of land before future land transfer. See “Business—Our Property Development Management—Land Acquisition” for details on the background of such advance. As of March 2021, Vanke Group had reimbursed RMB1,198.1 million to us, representing 60.0% of such advance plus fund possession fee, in proportion to its 60.0% equity interest in the project company which is expected to participate in such land transfer.

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Prepayments for acquisition of land use rights represent the land premium deposits we paid for land parcels acquired through public tenders, auctions and listing-for-sale. We recorded such land premium deposits as prepayments before we obtained land use rights certificates for the respective land parcels. Our prepayments for acquisition of land use rights increased during the Track Record Period, corresponding to the increase in the number of public tenders, auctions and listing-for-sale we participated in.

Cooperative operation receivables represent short term working capital due from a shareholder of Zhongfang Vanke Industrial. Under our cooperation arrangement, the relevant shareholder of Zhongfang Vanke Industrial is generally required to make an amount of fund contribution that is commensurate with its equity interest in Zhongfang Vanke Industrial in the development of property projects. In order to expedite the daily operation of our business, we will sometimes make payments or incur expenses on behalf of the relevant shareholder without waiting for its fund contributions, and such payments we made on behalf of the relevant shareholder are accounted for as our cooperative operation receivables. Our cooperative operation receivables increased during the Track Record Period mainly due to the increase in the number of property projects launched by Zhongfang Vanke Industrial.

Amounts due from non-controlling shareholders are mainly unearned profit distribution made from our non-wholly owned subsidiaries to non-controlling shareholders from time to time before the final settlement and distribution of our jointly developed projects, as well as registered capital not yet paid by the relevant non-controlling shareholder. Our amount due from non-controlling shareholders increased during the Track Record Period, primarily due to the increase in the number of our projects jointly developed with third parties as well as our business expansion.

Amount due from other related parties are mainly investment return to be distributed by our associates to us. Our amount due from other related parties had been relatively stable in 2018 and 2019, but increased significantly in 2020 due to the development and sales progress of Shi Mao − Yun Jin (世貿•雲錦) project under our associate company.

Amounts due from third parties mainly represent unearned profit distribution made to our business partner of our two property projects, namely Xining Salzburg Palace (西寧薩爾斯堡) and Chengbei International Village (城北國際村) in Xining, from time to time before the final settlement and distribution of the relevant projects. Under the relevant cooperation agreements we entered into with our business partner, when a surplus of funds became available in the project company, unearned profit can be temporarily distributed to our business partner from time to time. Such unearned profit distribution shall be repaid by our business partner back to the project company when the project company has capital needs, or shall be settled when the project company distribute retained earnings after the relevant project is completed and delivered. Our amount due from third parties increased during the Track Record Period, primarily due to the development progress of the relevant projects. See “—Financial Liabilities at Fair Value Through Profit or Loss” for details.

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Other deposits mainly represent deposits made to general contractors subject to the construction agreements, as well as deposits made in relation to migrant workers subject to the relevant local regulations and policies, and mortgage loans proceeds deposited to a third-party supervised bank account relating to the pre-sale proceeds received from our projects as required by the local regulations and policies. Our other deposits increased from 2018 to 2019 primarily due to an increase of projects under development. Our other deposits decreased from 2019 to 2020 primarily due to the release of deposits we made for the development of Sunshine Meiyu (陽光美域).

Prepayments for construction cost represent prepayments we made to our contractors for the cost of construction and to our suppliers for the cost of raw materials.

Advances to third parties mainly represents cash advances we made to the Independent Third Parties, which were interest-bearing for our participation in certain potential property projects in Shenzhen. In 2018, we entered into an acquisition agreement with an Independent Third Party, pursuant to which we made advances in the amount of RMB2,250.0 million to acquire a project company in Shenzhen in order to expand into the Shenzhen property development market; however, as the project company did not obtain pre-sale permit as required under the acquisition agreement, we terminated the deal at the end of 2018, and retrieved such prepayment in 2019. In 2019, in order to participate in two potential city renovation projects in Shenzhen, we made cash advances to two investment companies in the amounts of RMB2,967.3 million and RMB1,559.3 million, respectively, for the potential acquisitions of properties under renovation; by 2020, however, as we regarded the potential projects as no longer viable, we requested the return of the full amount of the cash advances we made to these companies. In 2020, in order to participate in a city renovation project in Shenzhen, we provided cash advances to an investment company of up to RMB1,200.0 million for the potential acquisition of properties under renovation; however, in early 2021, as we regarded the potential project as no longer viable, we requested the return of the full amount of the cash advance we made to this company. As of the Latest Practicable Date, all advances we made had been returned and there was no prepayment outstanding.

Prepaid taxes and other tax recoverables primarily represent prepaid VAT and, to a lesser extent, other surcharges prepaid by us. The upward trend during the Track Record Period was in line with the increase in our contracted sales of properties.

Our other receivables increased from 2018 to 2019 and decreased from 2019 to 2020 due to the sales of certain assets in 2019 by an entity, which was part of our Group until its corporate division (and therefore ceased to be part of our Group) in 2020 as part of the Reorganization.

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Financial Assets at Fair Value Through Profit or Loss

We record financial assets at fair value through profit or loss at fair value with net changes recognized in profit or loss. Such financial assets include equity investments which we had not irrevocably elected to classify as fair value through other comprehensive income. Our financial assets at fair value through profit or loss include wealth management products issued by banks in Mainland China that are mandatory classified as financial assets at fair value through profit or loss as their contractual cash flows are not solely payments of principal and interest. Our financial assets at fair value through profit or loss decreased from RMB104.9 million as of December 31, 2018 to RMB5.0 million as of December 31, 2019, and further to nil as of December 31, 2020 as these wealth management products gradually matured.

Equity Investments Designated at Fair Value Through Other Comprehensive Income

Equity investments designated at fair value through other comprehensive income represent non-controlling equity investments we made in certain companies that are strategic in nature. During the Track Record Period, we held equity investments in Yellow River Rural Commercial Bank as well as two other investment management companies. Our equity investments designated at fair value through other comprehensive income decreased from RMB118.4 million as of December 31, 2018 to RMB80.4 million as of December 31, 2019, and further decreased to RMB66.5 million as of December 31, 2020 due to changes in their fair value, which was valuated by an independent valuer we engaged.

Cash and Cash Equivalents, Restricted Cash and Pledged Deposits

The following table sets forth the components of our cash and cash equivalents, restricted cash and pledged deposits as of the dates indicated:

As of December 31, 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Cash and bank balances ...... 1,722,397 1,393,075 2,812,956 Less: Restricted cash ...... (180,352) (303,012) (370,406) Pledged deposits...... (82,768) (86,990) (105,387)

Cash and cash equivalents...... 1,459,277 1,003,073 2,337,163

Our cash and cash equivalents decreased from RMB1,459.3 million as of December 31, 2018 to RMB1,003.1 million as of December 31, 2019 primarily due to advances made to third parties as well as the repayment of bank loans and interest. Our cash and cash equivalents increased from RMB1,003.1 million as of December 31, 2019 to RMB2,337.2 million as of December 31, 2020 primarily due to the repayment of advances we made to third parties, as well as proceeds from bank and other borrowings.

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We are required to deposit certain percentage of pre-sale proceeds to the designated regulatory account and such proceeds can only be used for construction of the relevant projects. We recorded such proceeds as restricted cash. The increase in restricted cash during the Track Record Period was primarily attributable to the increase in pre-sale proceeds from our projects under development.

Pledged deposits mainly consist of bank deposits pledged as security for our bank and other borrowings, purchasers’ mortgage loans, construction of projects and notes payable. The fluctuation in pledged deposits during the Track Record Period was primarily attributable to the fluctuation in purchasers’ mortgage loans in connection with property sales in the corresponding periods.

Trade and Bills Payables

Trade and bills payables primarily represent payables to contractors and material suppliers. Our trade and bills payables increased from RMB1,625.1 million as of December 31, 2018 to RMB3,078.5 million as of December 31, 2019, primarily due to an increase in the number of projects that were constructed. Our trade and bills payables increased from RMB3,078.5 million as of December 31, 2019 to RMB4,319.7 million as of December 31, 2020, primarily due to an increase in the number of projects that were constructed.

The following table sets forth an aging analysis of our trade and bills payables based on the invoice date as of the dates indicated:

As of December 31, 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Less than one year...... 1,251,952 2,915,861 4,026,514 Over one year ...... 373,134 162,619 293,227

Total ...... 1,625,086 3,078,480 4,319,741

As of March 31, 2021, approximately RMB67.7 million, representing 15.7% of total trade and bills payables as of December 31, 2020, was settled. Our Directors confirm that we had not defaulted on payment of trade and bills payables during the Track Record Period and up to the Latest Practicable Date.

In 2018, 2019 and 2020, our trade and bills payable turnover days were approximately 310.8 days, 653.8 days and 346.6 days, respectively. Our trade and bills payable turnover days increased from 2018 to 2019, primarily due to a reduction in cost of sales in line with the decrease in our revenue. Our trade and bills payable turnover days decreased from 2019 to 2020, primarily due to an increase in our cost of sales in line with the increased delivery of properties sold.

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Other Payables and Accruals

The following table sets forth the components of our other payables and accruals as of the dates indicated:

As of December 31, 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Due to non-controlling shareholders . . . 653,949 898,016 437,928 Advances from third parties...... 734,867 863,269 311,546 Other tax and surcharges ...... 230,114 820,063 1,641,366 Cooperative operation payables ...... 4,166,816 5,478,753 895,425 Amounts due to third parties ...... – – 153,594 Payroll and welfare payable...... 35,225 72,567 101,326 Retention deposits related to construction ...... 8,741 23,426 34,865 Other payables...... 351,614 201,519 139,482

6,181,326 8,357,613 3,715,532

Note:

(1) Other payables mainly include deposits from our tenants and miscellaneous fees to be paid.

Amounts due to non-controlling shareholders mainly represent capital contribution from the non-controlling shareholders of our subsidiaries that is commensurate with the percentage of their equity interest in developing such property projects. Our advance from non-controlling shareholders increased from RMB653.9 million as of December 31, 2018 to RMB898.0 million as of December 31, 2019 primarily due to increase in the number of our project companies, which was in line with the increase in our property development activities. Our advance from non-controlling shareholders decreased to RMB437.9 million as of December 31, 2020 primarily because we repaid the capital contribution made by certain non-controlling shareholders of our subsidiaries out of the profits made by the relevant subsidiaries pursuant to the relevant investment arrangement.

Advances from third parties mainly represent cash advances we received from our employees. We have a policy that allows our employees to make voluntary cash advances to our Group to support our business expansion; in return, we will provide our employees with market interest. The amount of advances from third parties fluctuated during the Track Record Period due to the fluctuation in the popularity of such investment program among our employees.

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Other tax and surcharges mainly represent unpaid tax and surcharges payable, excluding LAT and corporate income tax. Our other tax and surcharges increased during the Track Record Period, in line with the increase in our contracted sales.

Cooperative operation payables mainly represent short term working capital procured by a shareholder of Zhongfang Vanke Industrial. Our cooperative operation payables in 2018 primarily consist of short term working capital for acquisition of a project company in Shenzhen in order to expand into the Shenzhen property development market; however, as the project company did not obtain pre-sale permit as required under the acquisition agreement, we terminated the deal at the end of 2018, and returned the full amount of the short term working capital in 2019. Our cooperative operation payables in 2019 primarily consist short term working capital in order to participate in two potential city renovation development projects in Shenzhen during 2019. In 2020, however, as we regarded such potential projects as no longer viable, we returned the relevant fund and the balance of our cooperative operation payables decreased significantly in 2020 as a result.

Amounts due to third parties mainly represent advance we received from certain third party developed projects in Yinchuan wholly-owned by our business partner to which we made investment before the final settlement and completion of the relevant property projects. Under the relevant cooperation agreements we entered into with our business partner, when a surplus of funds became available in the property projects, advance can be temporarily distributed to us from time to time. Such advance shall be repaid by us back to the property projects when the property projects has capital needs, or shall be settled when the property projects distribute return after the relevant projects are completed and delivered. See “—Investments in property projects” for details.

Payroll and welfare payable represents the unpaid salaries and welfares payable. Our payroll and welfare payable increased from RMB35.2 million as of December 31, 2018 to RMB72.6 million as of December 31, 2019 was primarily attributable to the establishment of Zhongfang Vanke Industrial in 2019. Our payroll and welfare payable further increased to RMB101.3 million as of December 31, 2020 as a result of our business expansion.

Retention deposits related to construction represent the quality assurance deposits, performance bonds and bid bonds we received from our contractors. Retention deposits related to construction increased during the Track Record Period, in line with our increased construction activities.

Other payables mainly represent deposits from our tenants and miscellaneous fees to be paid. Our other payables decreased during the Track Record Period due to a decrease in new tenants renting our properties.

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Contract Liabilities

We receive payments from customers on billing schedule as established in contracts in relation to the pre-sales of our properties. Payments are usually received before the delivery of properties. Our contract liabilities increased from RMB3,120.5 million as of December 31, 2018 to RMB9,902.8 million as of December 31, 2019, and further to RMB19,685.3 million as of December 31, 2020, primarily attributable to an increase in our pre-sales proceeds.

The following table sets forth our contract consideration that has been received but not yet been recognized as revenue and the expected timing of satisfaction of performance obligation as of the dates indicated:

As of December 31, 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Expected to be satisfied within one year . . 2,020,680 5,424,451 7,906,854 Expected to be satisfied after one year . . . 1,803,789 5,561,620 13,339,151

Total ...... 3,824,469 10,986,071 21,246,005

Financial Liabilities at Fair Value Through Profit or Loss

The balance represents our liabilities in the property projects of which the amounts to be paid are determined based on the sales and costs of the relevant property units specified in the contractual arrangement with certain counterparties and are carried at fair value at the end of each year.

The following table sets forth our financial liabilities at fair value through profit or loss arisen from the counterparties as of the dates indicated:

As of December 31, 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Arisen from our business partner under cooperation arrangement...... 192,892 145,583 173,282 Arisen from our financial partners under trust financing arrangements...... – – 30,492

Total ...... 192,892 145,583 203,774

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Arisen from our business partner under cooperation arrangement

Before the commencement of the development of our two property projects in Xining, namely Xining Salzburg Palace (西寧薩爾斯堡) and Chengbei International Village (城北國際村) in Xining, we entered into cooperation agreements with a business partner, being an Independent Third Party property developer. Pursuant to such agreements, such business partner is entitled to receive a certain percentage of return from the relevant property projects that is commensurate with the percentage of their principal investment in developing such property projects. Its principal investment and right of such return results in the financial liabilities at fair value through profit or loss.

Arisen from our financial partners under trust financing arrangements

Before the commencement of the development of our two property projects in Yinchuan, namely Flora Garden (花語軒) and Xi Yue Mansion (西悅府), we entered into trust financing arrangements with two Independent Third Party financial partners, respectively. Pursuant to such arrangements, such financial partners are entitled to receive variable returns agreed in the trust financing agreements distributed from these project companies. Their rights of such returns, together with their redemption rights agreed in the trust financing agreements, result in the financial liabilities at fair value through profit or loss. See “—Indebtedness—Trust and Other Financing Arrangements” for details of the key terms of such trust financing agreements.

We engaged an Independent Third Party valuer, who has appropriate qualifications and recent experiences in the valuation of similar properties in the relevant locations, to carry out the valuation of the fair value of such financial liabilities as of December 31, 2020. Details of the fair value measurements are set forth in Note 41 of the Accountants’ Report as set out in Appendix I to this document.

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NET CURRENT ASSETS

During the Track Record Period, we had met our working capital needs mainly from cash flow from operations, bank loans and other borrowings, trust financing and senior notes. The following table sets forth a breakdown of our net current assets as of the dates indicated:

As of As of December 31, March 31, 2018 2019 2020 2021 (RMB’000) (RMB’000) (RMB’000) (RMB’000) (unaudited)

Current assets Properties under development...... 5,720,183 10,684,044 18,519,562 21,166,961 Completed properties held for sale . . 1,908,672 1,674,109 1,899,249 1,804,286 Trade receivables ...... 14,492 11,559 22,885 25,075 Contract cost assets ...... 29,429 63,635 170,148 202,360 Prepayments, other receivables and other assets ...... 4,025,667 10,291,810 8,637,796 9,373,449 Tax recoverable ...... 7,068 67,875 182,679 199,319 Financial assets at fair value through profit or loss ...... 104,940 4,960 – 8,843 Restricted cash ...... 180,352 303,012 370,406 375,564 Pledged deposits...... 82,768 86,990 105,387 114,836 Cash and cash equivalents ...... 1,459,277 1,003,073 2,337,163 4,033,450 Assets held for sale ...... 214,871–––

Total current assets ...... 13,747,719 24,191,067 32,245,275 37,304,143

Current liabilities Trade and bills payables ...... 1,625,086 3,078,480 4,319,741 4,345,383 Other payables and accruals ...... 6,181,326 8,357,613 3,715,532 4,345,961 Financial liabilities at fair value through profit or loss ...... 70,000––– Contract liabilities ...... 3,120,548 9,902,777 19,685,289 22,484,426 Lease liabilities ...... 781 2,288 934 859 Interest-bearing bank and other borrowings ...... 477,627 574,779 718,244 985,528 Tax payable ...... 838,692 1,092,678 1,405,544 1,521,070

Total current liabilities...... 12,314,060 23,008,615 29,845,284 33,683,227

Net current assets ...... 1,433,659 1,182,452 2,399,991 3,620,916

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Our net current assets remained relatively stable at RMB1,433.7 million as of December 31, 2018 and at RMB1,182.5 million as of December 31, 2019. Our net current assets increased from RMB1,182.5 million as of December 31, 2019 to RMB2,400.0 million as of December 31, 2020, primarily because the increase in the total current assets outpaced the increase in our total current liabilities. The increase in our total current assets from RMB24,191.1 million as of December 31, 2019 to RMB32,245.3 million as of December 31, 2020, was primarily due to (i) an increase in our property under development of RMB7,835.5 million, which is in line with our business expansion; (ii) an increase in our cash and cash equivalent of RMB1,334.1 million; and (iii) an increase in our completed properties held for sale of RMB225.1 million due to the expansion of our business; partially offset by an increase in total current liabilities from RMB23,008.6 million as of December 31, 2019 to RMB29,845.3 million as of December 31, 2020, primarily due to an increase in contract liabilities of RMB9,782.5 million due to our increased pre-sales activities.

Our Directors are of the view that, after taking into account the financial resources available to us including the estimated [REDACTED]ofthe[REDACTED], available banking facilities and our internally generated funds, we have sufficient working capital to satisfy our present requirements for at least the next 12 months following the date of this document.

LIQUIDITY AND CAPITAL RESOURCES

Our main sources of liquidity are proceeds from the pre-sales of our properties, bank and other borrowings and trust financing. In the foreseeable future, we expect these requirements to continue to be our principal sources of liquidity and we may use a portion of the [REDACTED] from the [REDACTED] to finance some of our capital requirements.

Cash Flow

The following table sets forth a summary of our cash flows for the years indicated:

Year ended December 31, 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Net increase/(decrease) in cash and cash equivalents ...... 930,830 (456,204) 1,334,090 Cash and cash equivalents at the beginning of the year ...... 528,447 1,459,277 1,003,073

Cash and cash equivalents at the end of the year ...... 1,459,277 1,003,073 2,337,163

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Net Cash Used in/from Operating Activities

Our cash used in operating activities principally comprises payments made in relation to our property development and sales and land acquisitions. Our cash from operating activities is principally proceeds received from pre-sales of our properties.

In 2020, our net cash flows used in operating activities were RMB932.9 million, primarily reflecting (i) profit before income tax of RMB1,466.7 million; and (ii) negative movements in working capital of RMB1,577.9 million, primarily reflected by RMB7,712.9 million increase in properties under development, RMB67.4 million increase in prepayments, other receivables and other assets, RMB149.0 million increase in completed properties held for sale, RMB106.5 million increase in contract cost assets, RMB67.4 million increase in restricted cash, RMB18.4 million increase in pledged deposits, RMB11.8 million increase in trade receivables, and RMB4,468.3 million decrease in other payables and accruals; as partially offset by RMB9,782.5 million increase in contract liabilities and RMB1,241.3 million increase in trade and bills payables.

In 2019, our net cash flows from operating activities were RMB2,178.6 million, primarily reflecting (i) profit before income tax of RMB850.5 million; and (ii) positive movements in working capital of RMB1,966.1 million, primarily reflected by RMB6,782.2 million increase in contract liabilities, RMB2,165.9 million increase in other payables and accruals, RMB1,453.4 million increase in trade and bills payables, RMB298.6 million decrease in completed properties held for sale, RMB2.9 million decrease in trade receivables, as partially offset by RMB4,880.4 million increase in properties under development, RMB3,695.4 million increase in prepayments, other receivables and other assets, RMB122.7 million increase in restricted cash, RMB34.2 million increase in contract cost assets, and RMB4.2 million increase in pledged deposits.

In 2018, our net cash flows from operating activities were RMB3,337.7 million, primarily reflecting (i) profit before income tax of RMB647.8 million; and (ii) positive movements in working capital of RMB2,846.5 million, primarily reflected by RMB4,418.0 million increase in other payables and accruals, RMB1,375.5 million increase in contract liabilities, RMB433.6 million increase in trade and bills payables, RMB122.7 million decrease in completed properties held for sale, RMB28.7 million decrease in trade receivables, RMB60.8 million decrease in pledged deposit, as partially offset by RMB2,824.9 million increase in properties under development, RMB492.2 million increase in prepayments, other receivables and other assets, RMB146.2 million increase in restricted cash, and RMB7.8 million increase in contract cost assets.

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Net Cash Used in/from Investing Activities

Our cash used in investing activities principally comprises advances paid to third parties, payment of investment in property projects, acquisition of financial assets at fair value through profit or loss and investments in associates. Our cash generated from investing activities principally comprises repayment of the advances we paid to third parties, returns of investment in property projects and disposal of financial assets at fair value through profit or loss.

In 2020, our net cash flows from investing activities were RMB2,548.8 million, primarily reflecting the net effect of (i) repayment of advance to third parties of RMB4,627.0 million; (ii) proceeds from investments in property projects of RMB592.1 million; (iii) purchase of investments in associates of RMB123.0 million; (iv) interest income received of RMB44.1 million; and (v) disposal of financial assets at fair value through profit or loss of RMB1,800.5 million.

In 2019, our net cash flows used in investing activities were RMB2,453.2 million, primarily reflecting the net effect of (i) repayment of advance to third parties of RMB4,616.6 million; (ii) increase in investments in property projects of RMB420.2 million; (iii) purchases of items of property, plant and equipment of RMB56.7 million; (iv) proceeds from investment in property projects of RMB204.0 million; and (v) disposal of financial assets at fair value through profit or loss of RMB114.4 million.

In 2018, our net cash flows used in investing activities were RMB2,249.1 million, primarily reflecting the net effect of (i) advances to third parties of RMB2,250.0 million; (ii) increase in investments in property projects of RMB222.3 million; (iii) disposal of financial assets at fair value through profit or loss of RMB215.7 million; (iv) purchase of financial assets at fair value through profit or loss of RMB104.9 million; and (v) purchases of items of property, plant and equipment of RMB32.5 million.

Net Cash Used in/from Financing Activities

Cash from financing activities principally comprises proceeds from interest-bearing bank and other borrowings and capital contribution from non-controlling shareholders of the subsidiaries. Cash used in financing activities principally comprises repayment of interest- bearing bank and other borrowings, interest paid and dividend paid.

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In 2020, our net cash flows from financing activities were RMB281.8 million, which was primarily attributable to (i) proceeds from interest-bearing bank and other borrowings of RMB1,720.3 million; (ii) capital contribution from non-controlling shareholders of the subsidiaries of RMB168.2 million; (iii) capital contribution by the then equity holders of Subsidiaries of RMB2.4 million; partially offset by (i) repayment of interest-bearing bank and other borrowings of RMB1,131.1 million; (ii) interest paid of RMB289.0 million; (iii) dividend paid of RMB98.6 million; and (iv) net cash outflow on distribution in specie of RMB62.2 million.

In 2019, our net cash flows used in financing activities were RMB181.7 million, which was primarily attributable to (i) repayment of interest-bearing bank and other borrowings of RMB900.5 million; (ii) interest paid of RMB239.5 million; (iii) dividend paid of RMB17.9 million; partially offset by (i) proceeds from interest-bearing bank and other borrowings of RMB989.6 million; and (ii) capital contribution from non-controlling shareholders of the subsidiaries of RMB0.8 million.

In 2018, our net cash flows used in financing activities were RMB157.8 million, which was primarily attributable to (i) repayment of interest-bearing bank and other borrowings of RMB536.5 million; (ii) interest paid of RMB160.7 million; (iii) dividend paid of RMB38.7 million; partially offset by (i) proceeds from interest-bearing bank and other borrowings of RMB520.0 million; and (ii) capital contribution from non-controlling shareholders of the subsidiaries of RMB120.2 million.

Capital Expenditures

Our capital expenditure during the Track Record Period primarily represented expenditures incurred relating to purchase of property, plant and equipment and intangible assets. In 2018, 2019 and 2020, we incurred capital expenditures of RMB34.6 million, RMB56.8 million and RMB22.8 million, respectively.

Our Directors estimate that our capital expenditure for 2021 will be approximately RMB43.0 million. Such estimates represent the total capital expenditure we expect to incur in the relevant years based on our existing business plans. We may adjust our business plans and the estimate total capital expenditure may also change.

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INDEBTEDNESS

The following table sets forth the components of our borrowings as of the dates indicated:

As of As of December 31, March 31, 2018 2019 2020 2021 (RMB’000) (RMB’ 000) (RMB’000) (RMB’ 000) (unaudited)

Current Other loans – unsecured .... – – 119,912 129,912 Current portion of long term bank loans – secured ..... 178,825 304,000 485,038 597,368 Current portion of long term other loans – secured(1) . . . 118,000 40,000 22,000 177,000 Current portion of long term other loans – unsecured(1) . 180,802 230,779 91,294 81,248 Current portion of lease liabilities ...... 781 2,288 934 859 Total current ...... 478,408 577,067 719,178 986,387

Non-current Bank loans – secured...... 500,700 691,500 456,540 169,500 Other loans – secured(1)..... 112,000 – 342,853 201,727 Other borrowings – unsecured(1) ...... 219,746 81,000 369,500 376,852 Financial liabilities at fair value through profit or loss(1), (2) ...... – – 30,492 31,430 Non-current portion of lease liabilities ...... 818 934 – 900

Total non-current ...... 833,264 773,434 1,199,385 780,409 Total indebtedness ...... 1,311,672 1,350,501 1,918,563 1,766,796

Notes:

(1) Other loans and financial liabilities at fair value through profit or loss include financing arrangements with trust companies, asset management companies, other financial institutions and other third-party companies during the Track Record Period.

(2) These balances of financial liabilities at fair value through profit or loss only include those arisen from our financial partners under trust financing arrangements.

Our total lease liabilities were RMB1.6 million, RMB3.2 million, RMB0.9 million and RMB1.8 million as of December 31, 2018, 2019 and 2020 and March 31, 2021, respectively, in accordance with the adoption of IFRS 16.

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Our total borrowings increased from RMB1,311.7 million as of December 31, 2018 to RMB1,350.5 million as of December 31, 2019, and further increased to RMB1,918.6 million as of December 31, 2020, primarily because of our increased financial needs in light of our business expansion and cash flow planning.

We are subject to certain customary restrictive covenants under our credit facilities with commercial banks. For example, certain of our subsidiaries are prohibited from merger, restructuring, spin-off, material asset transfer, liquidation, change of control, reduction of registered capital, change of scope of business, declaration of dividends and incurring further indebtedness without the prior consent of the relevant banks. Certain of our banking facilities also contain cross default provisions. See “Risk Factors—Risks Relating to Our Business—We may not have adequate financing to fund our future land acquisition and property development projects, and capital resources may not be available on favorable terms, or at all.” However, our Directors do not expect that such covenants would materially restrict our overall ability to undertake additional debt or equity financing necessary to carry out our current business plans. Our Directors confirmed that they are not aware of any breach of any of the covenants contained in our banking and other loan facilities constituting any event of default during the Track Record Period and up to the Latest Practicable Date, nor are they aware of any restrictions that will limit our ability to drawdown on our unutilized facilities. Our Directors further confirmed that during the Track Record Period and up to the Latest Practicable Date, we had not experienced any material difficulties in obtaining banking facilities.

As of December 31, 2018, 2019 and 2020, our borrowings were repayable as follows:

As of December 31, 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Bank loans repayable: Within one year ...... 178,825 304,000 485,038 Between one and two years ...... 238,200 394,000 419,040 Between three and five years ...... 262,500 297,500 37,500

679,525 995,500 941,578

Other borrowings repayable: Within one year ...... 298,802 270,779 233,206 Between one and two years ...... 205,746 81,000 529,500 Between three and five years ...... 126,000 – 182,853

630,548 351,779 945,559

Total borrowings ...... 1,310,073 1,347,279 1,887,137

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The following table shows the weighted-average interest rates for our bank and other borrowings as of the dates indicated:

As of December 31, 2018 2019 2020 %%%

Bank borrowings ...... 5.9 6.0 5.8 Other borrowings...... 9.6 7.7 8.9 Total weighted average effective interest rates...... 7.7 6.4 7.3

The weighted-average interest rates for our bank and other borrowings represent the actual borrowing costs incurred during the period divided by the weighted-average borrowings that were outstanding during the period. The fluctuation in our weighted-average interest rates for our bank and other borrowings during the Track Record Period was primarily due to the fluctuation of the interest rates for our other borrowings, because such other borrowings were often made on a project-level and fluctuated depending on the business prospect and finance arrangement for the particular projects.

As of December 31, 2020, we had approximately RMB796.8 million in unutilized banking facilities. Our approved unutilized credit facilities are covered by legally binding and enforceable loan agreements which we have entered into with the banks and other financial institutions. Our Directors have confirmed that, other than the [REDACTED], we do not currently have any concrete and material external financing plans outside our ordinary course of business. We do not anticipate any changes to the availability of bank financing to finance our operations in the future, although there is no assurance that we will be able to access bank financing on favorable terms.

Trust and Other Financing Arrangements

Trust Financing

As with many other property developers in the PRC, we also enter into financing arrangements with trust companies, asset management companies and their financing vehicles, as well as other financial partners in the ordinary course of business to finance our property development and other related operations. Compared with bank borrowings, such financing arrangements usually offer greater flexibility in terms of availability, approval schedule and repayment requirements, which constitute an effective alternative source of funding for some of our project developments, particularly during the tightened banking credit environments. These financing arrangements can be categorized into trust financing and other financing arrangements. Trust financing arrangements refer to the financing arrangements with trust companies, asset management companies and their financing vehicles. As of December 31, 2020, the total amount of trust financing outstanding accounted for 49.4% of our total borrowings, and accounted for 15.0% of our total financial liabilities at fair value through profit or loss (which is categorized as Type 3 arrangement described below), as of the same date. For the details of the financial liabilities at fair value through profit or loss, see “—Description of Certain Combined Statements of Financial Position Items—Financial Liabilities at Fair Value through Profit or Loss”. For additional information as to the relevant laws and regulations applicable to trust financing arrangements, see “Regulatory Overview— Laws and Regulations Concerning Real Estate Financing—Trust Loan.”

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The following table sets forth our outstanding trust financing arrangements with trust companies, asset management companies and their financing vehicles as of the dates indicated:

Principal balance as of General category Annual Veto of trust Financial interest Effective Maturity rights to December 31, March 31, financing Item Institution rate date Date Collaterals lender 2020 2021 arrangements RMB’000 % (unaudited)

1. . . Financial 11.0 September September Pledge of the 30% N/A 70,912 70,912 Type 2 Institution A 2020 2021 equity interest in Ningxia Zhongyue 2. . . Financial 11.0 November November Pledge of the 30% N/A 31,800 31,800 Type 2 Institution A 2020 2021 equity interest in Ningxia Zhongyue 3. . . Financial 11.0 December December Pledge of the 30% N/A 17,200 17,200 Type 2 Institution A 2020 2021 equity interest in Ningxia Zhongyue 4. . . Financial 11.0 January January Pledge of the 30% N/A – 10,000 Type 2 Institution A 2021 2022 equity interest in Ningxia Zhongyue 5. . . Financial 11.0 June 2020 June 2022 Pledge of the land N/A 182,000 177,000 Type 1 Institution B use right and construction-in- progress of Blue Fragrance; pledge of the land use right of Nan Yue Mansion; guarantee from Ningxia Zhongfang Industrial 6. . . Financial 8.0 September September N/A N/A 91,369 91,369 Type 1 Institution A 2020 2024 7. . . Financial 8.0 October October N/A N/A 1,500 1,500 Type 1 Institution A 2020 2024

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8. . . Financial 8.0 November November N/A N/A 46,200 46,200 Type 1 Institution A 2020 2024 9. . . Financial 8.0 December December N/A N/A 25,800 25,800 Type 1 Institution A 2020 2024 10. . . Financial 8.0 January January N/A N/A – 15,000 Type 1 Institution A 2021 2025 11. . . Financial 8.1 December December N/A No 368,600 368,600 Type 3 Institution C 2020 2022 12. . . Financial 11.0 December December N/A No 15,000 15,000 Type 3 Institution A 2020 2024

Our trust financing arrangements are broadly categorized into:

• Type 1 arrangements which have terms similar to bank borrowings and do not involve either a pledge or a transfer of equity interests;

• Type 2 arrangements which have similar terms as bank borrowings and involves a pledge of equity interests; or

• Type 3 arrangements which involve a transfer of equity interests to the trust financing provider or a subscription of registered capital by the financial institutions; we undertake to repurchase such equity interests at a pre-determined repurchase consideration or at a consideration calculated based on a pre-determined formula at the expiry of the terms of the respective financing arrangements.

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The following table sets forth the aggregate principal balances of our trust financing borrowings by type as of the dates indicated:

As of December 31, 2020 As of March 31, 2021 Number RMB’000 Number RMB’000

Type1...... 5 346,869 6 356,869 Type2...... 3 119,912 4 129,912 Type3...... 2 383,600 2 383,600

Total trust financing borrowings ...... 10 850,381 12 870,381

Key Terms of Type 1 Arrangements

In Type 1 arrangements, where our equity interests are neither pledged nor transferred, the lenders sometimes require such financings to be secured by our properties under development, completed properties held for sale or land use rights or guaranteed by our subsidiaries. They may also contain terms that prohibit our borrowing subsidiaries from entering into transactions such as merger, restructuring, spin-off, material asset transfer, liquidation, change of control, reduction of registered capital, change of scope of business or declaration of dividends or incurring further indebtedness without prior consent. We retain the rights and control in respect of the daily operation and management of our project companies and borrowing subsidiaries.

Key Terms of Type 2 Arrangements

In Type 2 arrangements, the equity interests held by us, as the case may be, in the relevant companies are pledged to the lenders. The lenders do not have the right to participate in these companies’ board or shareholders’ meetings or have veto rights in any form. In addition, we are generally not required to obtain the prior consent from the lenders in respect of operational activities during the ordinary course of business. Since under the terms of this type of borrowing arrangements, the lenders typically can only exercise ordinary creditors’ rights and do not have veto rights relating to operational matters in the ordinary course of business of those relevant companies, we believe that such arrangements will not affect the control over such companies. The pledged interests will be released upon repayment of the principal of, and any other amount due under, such trust financing.

Key Terms of Type 3 Arrangements

In Type 3 arrangements, where a portion of our equity interests in the borrowing project companies are transferred to, or subscribed by and issued to, the lenders, the legal terms are more complex. A summary of key terms is set forth below.

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Board Representation

Through equity participation in the relevant project companies, the lenders are entitled to appoint a certain number of directors to the relevant boards. We retain majority board seats in all the relevant subsidiaries and therefore, we retain control over the decision making power of such boards. During the Track Record Period, there had been no dissenting vote cast by any of the board representatives appointed by lenders in this type of arrangements.

Control over the Project Companies

During the term of the Type 3 arrangements, we retain the right in respect of the day-to-day operation and management of our project companies and their businesses. However, under certain of our Type 3 arrangements, the lenders are entitled to designate officers to relevant subsidiaries to supervise the management of such subsidiaries, including exercising actual control of the stamps, licenses and certificates, and inspecting the construction site. Such officers also have access to the bank account, financial records and IT systems of our project companies. In addition, under such arrangements, the lenders are entitled to take over the management of our relevant subsidiary in cases the management of our subsidiary are not competent to perform management roles. During the Track Record Period, none of the lenders in this type of arrangements actively participated or intervened in the day-to-day operations and management of any of our project companies.

Repayment

The terms of our trust financing arrangements range from one year to three years. We are obliged to make the full repayment of the loans under our trust financing arrangements in order to repurchase the equity interest from the relevant lenders and discharge the pledged land use rights and/or equity interests. If we fail to satisfy our repayment obligations on time, we will be subject to penalties for any late payment based on the calculation agreed in the relevant agreements, or we will be subject to enforcement actions against the security interest we have granted and could affect our ownership of our project companies. See “Risk Factors—Risks Relating to Our Business—We have indebtedness and may incur additional indebtedness in the future.” We expect that we will satisfy our repayment obligations under our trust financing arrangements by utilizing our internal resources. During the Track Record Period, we had not defaulted on any of our repayments or other obligations in any material respect under the trust financing arrangements.

Security

As security for the performance of our project companies, we have in some cases provided guarantees, share pledges and/or fixed asset liens to the lenders.

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Fixed Income Return and Variable Interest Return

Under the terms of the Type 3 agreements we have entered into, the lenders are entitled to the fixed income return from their principal investment in certain project companies at pre-determined fixed rates upon the satisfaction of certain conditions. Our Directors have confirmed that the rates of fixed income return provided to the trust companies, asset management companies or other financial institutions under our Type 3 arrangements are within the range of market rates. Meanwhile, the lenders are also entitled to receive variable returns agreed in the relevant trust financing agreements distributed from the project companies. Such variable returns result in part of financial liabilities at fair value through profit or loss. See “—Financial Liabilities at Fair Value Through Profit or Loss” for further details.

Financing Covenants

Our loan agreements with trust companies, asset management companies and their financing vehicles contain a number of customary affirmative and/or negative covenants. To ensure the loans for which the agreed uses are properly applied, such lenders normally stipulate certain monitoring measures in their loan agreements. For example, we are required to provide interim financial statements, property development and sales schedules to the relevant lenders upon their request. Under certain trust financing agreements, we are required to report to the relevant lenders as to the use of proceeds on a regular basis. In addition, we are subject to restrictive covenants under certain loan agreements with such lenders. For example, we are not permitted to transfer or assign our rights and obligations under the loan agreements to any third-party without the prior consent from the relevant lenders. We are prohibited from carrying out any merger, restructuring, spin-off, reduction of registered share capital, material asset transfer, liquidation, change in shareholding or management structure, or establishment of any joint venture without the written consent of or written notification to the relevant lenders.

Borrowings from Third-Party Companies

From time to time, we enter into loan agreements with third party companies that are not financial institutions. As of March 31, 2021, we had two loans with third party companies that are not financial institutions: one loan had an annual interest rate of 9.0% and principal balance of RMB23.0 million outstanding, and the other loan had an annual interest rate of 5.0% and principal balance of RMB46.7 million outstanding. Both loans are unsecured and will mature in June 2021.

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As confirmed by the Directors, all the borrowings that we borrowed during the Track Record Period under trust and other financing arrangements were for the purposes of business operations. Our PRC Legal Advisors are of the view that, given that our financing arrangements with the two third-party companies do not violate the applicable provisions of the Civil Code or the Provisions, the risk of the PBOC imposing any penalty on us is low.

COMMITMENTS AND CONTINGENT LIABILITIES

Capital Commitments

During the Track Record Period, our capital commitments mainly related to investment properties and acquisition of properties. The table below sets forth our capital commitments as of the dates indicated:

As of December 31, 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Contracted, but not provided for: Property development activities ..... 5,492,773 10,738,875 6,271,084 Acquisition of land use rights ...... 776,930 2,104,211 2,479,270

Total ...... 6,269,703 12,843,086 8,750,354

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Contingent Liabilities

In line with market practice in the PRC, we have arrangements with various banks for the provision of mortgage financing and where required, provide our customers with guarantees as security for mortgage loans. The terms of such guarantees typically last until the issuance of the real estate ownership certificate upon the completion of guarantee registration or satisfaction of mortgage loan by the purchaser. As a guarantor, if the purchaser defaults in payment, we are obligated to repay all outstanding amounts owed by the purchaser to the mortgagee bank under the loan and have the right to claim such amount from the defaulting purchaser. We did not incur any material losses during the Track Record Period in respect of the guarantees provided for mortgage facilities granted to purchasers of our completed properties held for sale. Our Directors considered that the likelihood of default in payments by purchasers is minimal and therefore the financial guarantees measured at fair value is immaterial. As such, no provision has been made in connection with the guarantees.

The following table set forth our total mortgage guarantees as of the dates indicated:

As of As of December 31, March 31, 2018 2019 2020 2021 (RMB’000) (RMB’000) (RMB’000) (RMB’000) (unaudited)

Guarantees given to banks in connection with facilities granted to purchasers of our properties...... 1,323,671 1,726,711 1,351,440 3,376,400

Except as disclosed herein and apart from intra-group liabilities, we did not have any outstanding loan capital, bank overdrafts and liabilities under acceptances or other similar indebtedness, debentures, mortgages, charges or loans, or acceptance credits or hire purchase commitments, guarantees or other material contingent liabilities or any covenant in connection therewith as of March 31, 2021, being the latest practicable date for the purpose of the indebtedness statement. Our Directors have confirmed that there had not been any material change in the indebtedness, capital commitments and contingent liabilities of our Group up to the latest practicable date for the purpose of the indebtedness statement.

OFF-BALANCE SHEET ARRANGEMENTS

Except for the contingent liabilities disclosed above, we have not entered into any off-balance sheet arrangements or commitments to guarantee the payment obligations of any third parties and related parties. We do not have any variable interest in any uncombined entity that provides financing, liquidity, market risk or credit support to us.

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SUMMARY OF KEY FINANCIAL RATIOS

The following table sets forth certain of our key financial ratios as of the dates and for the years indicated:

As of/for the year ended December 31, 2018 2019 2020

Current ratio(1)...... 1.1 1.1 1.1 Interest coverage ratio(2) ...... 27.3 21.4 40.3 Debt to equity ratio(3) ...... N/A 15.8 N/A Return on total assets (%)(4) ...... 3.2 2.1 2.9 Return on equity (%)(5) ...... 25.8 22.5 35.1

Notes:

(1) Current ratio is calculated based on our total current assets divided by our total current liabilities as of the respective dates.

(2) Interest coverage ratio is calculated based on profit for the year before income tax expenses, adding finance costs, divided by finance costs.

(3) Debt to equity ratio is calculated based on total borrowings less cash and cash equivalents divided by total equity, multiplied by 100%.

(4) Return on total assets ratio is calculated based on our profit from continuing operations for the period divided by the average balance of our total assets at the beginning and end of the period and multiplied by 100%.

(5) Return on equity ratio is calculated based on our profit from continuing operations for the period divided by the average balance of total equity at the beginning and end of the period and multiplied by 100%.

Current Ratio

Our current ratio remained stable at 1.1, 1.1 and 1.1 as of December 31, 2018, 2019 and 2020, respectively.

Interest Coverage Ratio

The Group’s interest coverage ratio decreased from 27.3 in 2018 to 21.4 in 2019 because the increase in the Group’s finance costs outpaced the increase in the Group’s profit for the year before income tax expenses. The Group’s interest coverage ratio increased from 21.4 in 2019 to 40.3 in 2020 because the Group experienced a significant increase in the Group’s profit for the year before income tax expenses while the Group’s finance costs remained stable.

Debt to Equity Ratio

We did not record debt to equity ratios as of December 31, 2018 and 2020 because we had more cash than borrowings. We recorded debt to equity ratio of 15.8 as of December 31, 2019 because our cash balances decreased from 2018 to 2019, primarily due to advances we made to third parties as well as our repayment of bank loans and interest.

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Return on Total Assets

Our return on total assets decreased from 3.2% in 2018 to 2.1% in 2019, primarily due to an increase in our total assets in connection with the growth in our property development activities. Our return on total assets increased from 2.1% in 2019 to 2.9% in 2020 because the increase in our profit from continuing operations outpaced the increase in our total assets as we began to realize return from our investment in our property development projects.

Return on Equity

Our return on equity decreased from 25.8% in 2018 to 22.5% in 2019 because the increase in our equity outpaced the increase in our profit from continuing operations. Our return on equity increased from 22.5% in 2019 to 35.1% in 2020 because we experienced a significant increase in our profit from continuing operations, which outpaced the increase in our equity.

Financial ratios under the proposed PBOC standard

According to the CIA Report, two forums were held among the MOHURD, the PBOC and certain property developers in August 2020 and January 2021, respectively, to discuss long-term mechanisms for the real estate sector in the PRC, which indicated that certain new standard, regulations or rules governing the external financing of property developers in the PRC may have been formed. Set out below are our three ratios as required under such newly proposed standard, also known as the “three red lines”, as of December 31, 2020:

Ratio Calculation basis and requirement Ratio

Liability asset ratio (Total liabilities less contract liabilities) 80.7% (excluding contract divided by (total assets less contract liabilities) liabilities).

This ratio should not exceed 70%.

Net gearing ratio (Total interest-bearing liabilities less cash Not and bank balances) divided by total applicable(1) equity.

This ratio should not exceed 100%.

Cash to short-term Cash and bank balances divided by 2.3 borrowing ratio short-term interest bearing liabilities

This ratio should not be lower than 1.0.

Note:

(1) This ratio is not applicable as we had a net cash position as of the date indicated.

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The above newly proposed standard as reported in the news articles stipulates that (i) for property developers which comply with all the above-mentioned three limits, their size of interest-bearing liabilities may increase by less than 15% annually; (ii) for property developers which only comply with two of the above-mentioned three limits, their size of interest-bearing liabilities may increase by less than 10% annually; (iii) for property developers which only comply with one of the above-mentioned three limits, their size of interest-bearing liabilities may increase by less than 5% annually; and (iv) for property developers which fail to comply with all of the above-mentioned three limits, their size of interest-bearing liabilities shall not increase at all.

However, as of the Latest Practicable Date, there were no official announcements regarding new standard, regulations or rules after the forum was held. As such, the newly proposed standard or the “three red lines” has not materially come into effect.

In the event that the “three red lines” mentioned in the news articles comes into effect and any of our above-mentioned financial ratios does not comply with any of the relevant requirement under the “three red lines” in the future, we may not be able to draw down the amount of credit facilities to the extent we need or any credit facilities at all before we repay our existing interest-bearing liabilities, and may need to slow down our land acquisition activities and delay our construction commencement schedules of our property under future development to ensure we would have sufficient cash to complete our existing property projects and support our businesses.

After the [REDACTED], to ensure that we comply with the requirements under the newly proposed standard from time to time, we will (i) review the above-mentioned ratios on a regular basis or whenever we intend to raise new debt financing; (ii) improve our cash flow by arranging for pre-sale activities as soon as practicable and speed up the collection of pre-sale proceeds of our properties; and (iii) obtain more long-term bank and other borrowings instead of short-term financing to finance the development of our projects.

QUANTITATIVE AND QUALITATIVE ANALYSIS ABOUT MARKET RISK

We are, in the ordinary course of our business, exposed to various market risks, including interest rate risk, credit risk and liquidity risk. Our exposure to these risks and the financial risk management policies and practices used by us to manage these risks are described below.

Interest Rate Risk

Our exposure interest rate risk arises from interest-bearing bank deposits and bank and other borrowings. Bank deposits, bank and other borrowings issued at variable rates expose us to cash flow interest-rate risk. Bank and other borrowing issued at fixed rates expose us to fair value interest rate risk. For borrowings obtained at variable rates, we are exposed to cash flow interest rate risk which is partially offset by cash held at variable rates. We closely monitor trend of interest rate and its impact on our interest rate risk exposure.

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Credit Risk

We are exposed to credit risk in relation to our trade and other receivables and cash deposits with banks. The carrying amounts of trade and other receivables, restricted cash, cash and cash equivalents represent our maximum exposure to credit risk in relation to financial assets. To manage this risk, deposits are mainly placed with licensed banks which are all high-credit-quality financial institutions.

For trade and other receivables, we have established monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, we review the recoverability of these receivables at the end of each year of the Track Record Period to ensure that adequate impairment losses are made for irrecoverable amounts. In this regard, our directors consider that our credit risk is significantly reduced.

Liquidity Risk

We aim to maintain sufficient cash through internally generated sales proceeds and an adequate amount of committed credit facilities to meet our operation needs and commitments in respect of property projects. Our objective is to maintain a balance between continually of funding and flexibility through the use of interest-bearing bank and other borrowings. We review our liquidity position on an ongoing basis, including review of the expected cash inflows and outflows, pre-sales/sales results, maturity of our borrowings and the progress of the planned property development projects in order to monitor our liquidity requirements in the short and long terms. We have established an appropriate liquidity risk management measures for our liquidity management requirements to ensure that we maintain sufficient reserves of, and adequate committed lines of funding from, financial institutions to meet our liquidity requirements in the short and long term.

RELATED PARTY TRANSACTIONS

Significant Related Party Transactions

The related party transaction during the Track Record Period are as set forth in Note 39 to the Accountants’ Report in Appendix I.

Most of our related party transactions during the Track Record Period were non-trade in nature, mainly represented advances to/(from) related parties, payments made by us on behalf of related parties or vice versa for convenience.

We also had certain related party transactions which were trade in nature, including:

• Property management services. We engaged certain of our associates to provide property management services for us. For the years ended December 31, 2018, 2019 and 2020, the total amount of property management fees paid by us to our associates amounted to RMB7.3 million, RMB6.9 million and RMB5.1 million, respectively.

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• Gardening services. We engaged certain of our associates to gardening services for us. For the years ended December 31, 2018, 2019 and 2020, the total amount of gardening services fees paid by us to our associates amounted to RMB3.0 million, RMB2.4 million and RMB1.1 million, respectively.

Balances with Related Parties

As of December 31, 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Amounts due from related companies Non-trade-related Associates ...... 1,916 1,147 125,195 Amounts due to related companies Trade-related Associates ...... 4,107 3,376 338 Companies controlled by Ningxia Zhongfang Development ...... – – 7 Non-trade-related Associates ...... 39 39 – Companies controlled by Ningxia Zhongfang Development ...... – – 44

Total ...... 4,146 3,415 389

The non-trade amounts due from related companies mainly represent cash advances we made to related companies. The interest-bearing loans advanced by us to related companies may not be compliant with the General Lending Provisions. According to the General Lending Provisions, only financial institutions may legally engage in the business of extending loans, and loans between companies that are not financial institutions are prohibited. The PBOC may impose penalties on the lender equivalent to one to five times of the income generated (being interest charged) from loan advancing activities. However, according to the Provisions of the Supreme People’s Court on Issues concerning the Application of Law in the Trial of Private Lending Cases (最高人民法院關於審理民間借貸案件適用法律若干問題的規定), borrowing agreements among companies are valid if extended for purpose of financing production or business operations (except for the circumstances resulting in a void contract as stipulated in the Civil Code and in the Provisions. According to the amendment of the above Provisions in January 1, 2021, for the loan contract established before August 20, 2020, request will be supported to calculate the interest portion according to the then effective judicial interpretations from the establishment of the contract to August 19, 2020; for the portion of interest from August 20, 2020 to the date of repayment of the loan, the upper limit of protected interest rate shall be determined as four times of LPR at the time when the plaintiff files the lawsuit.

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The advances due from related parties as of December 31, 2020 will not be settle before [REDACTED], as that intercompany transactions which cause the non-trade-related balances between us and our associates are connected to the business operations of the relevant entities, and will be recurring in the future during the ordinary course of our business, because the joint development of property projects with third-party property developers occur in the ordinary course of the our business, and is one of our methods of expanding our development activities and geographical coverage. As of the Latest Practicable Date, we had not received any notice of claim or penalty relating to the cash advances.

Our Directors have confirmed that all business transactions with related parties were conducted on normal commercial terms and on arm’s length basis and did not have a material impact on our results of operations during the Track Record Period. For further details, see Note 39 to the Accountants’ Report in Appendix I to this document.

DIVIDEND POLICY AND DISTRIBUTABLE RESERVES

Our Board is responsible for submitting proposals in respect of dividend payments, if any, to our Shareholders for approval at general meetings. A decision to declare any dividends and the amount of such dividends depend on various factors, including our results of operation, cash flows, financial condition, future business prospects, capital requirements statutory and contractual restrictions on the payment of dividends by us, and other factors that our Board considers relevant.

As of December 31, 2020, the distributable reserves of our Group amounted to RMB2,331.6 million.

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DISCLOSURE PURSUANT TO RULES 13.13 TO 13.19 OF THE LISTING RULES

Except as otherwise disclosed in this document, we confirm that, as of the Latest Practicable Date, we were not aware of any circumstances that would give rise to a disclosure requirement under Rules 13.13 to Rules 13.19 of the Listing Rules.

[REDACTED] EXPENSES

DIRECTORS’ CONFIRMATION ON NO MATERIAL ADVERSE CHANGE

Our Directors confirm that they have performed sufficient due diligence on our Company to ensure that, up to the date of this document, there has been no material adverse change in our financial or trading position since December 31, 2020 (being the date to which our Company’s latest combined audited financial results were prepared), and there has been no events since December 31, 2020 which would materially affect the information shown in the Accountants’ Report, the text of which is set out in Appendix I to this document.

PROPERTY INTERESTS AND PROPERTY VALUATION

JLL, an independent property valuer, has valued the property which we had interests as of March 31, 2021 and is of the opinion that the aggregate market value of those properties as of such date was RMB27,736.3 million, and the value attributable to our Group was RMB16,713.7 million. The full text of the letter, summary of valuation and valuation certificates with regard to our property interests are set out in “Appendix III—Property Valuation” to this document.

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The statement below shows the reconciliation of aggregate amounts of certain properties reflected in the audited combined financial information as of December 31, 2020 as set out in “Appendix I—Accountants’ Report” with the valuation of these properties as of March 31, 2021 as set out in “Appendix III—Property Valuation.”

(RMB’000)

Net book value of the following properties as of December 31, 2020 — Properties under development ...... 18,519,562 — Completed properties held for sale ...... 1,899,249 — Investment property...... 302,795

Addition ...... 2,653,919 Less: sale of completed properties held for sale...... (101,483) Net book value of the properties as of March 31, 2021 ...... 23,274,042

Net valuation surplus...... 4,462,258

Market value of properties as of March 31, 2021 as set out in the Property Valuation Report in Appendix III to this document...... 27,736,300

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UNAUDITED PRO FORMA ADJUSTED NET TANGIBLE ASSETS

For illustrative purpose only, the following statement of unaudited pro forma adjusted net tangible assets of our Group prepared in accordance with Rule 4.29 of the Hong Kong Listing Rules is prepared to show the effect on the audited net tangible assets of our Group as of December 31, 2020 as if the [REDACTED] had occurred on December 31, 2020 and is based on the combined net assets derived from the audited financial information of our Group as of December 31, 2020, as set out in the Accountants’ Report in Appendix I to this document and adjusted as follows:

Combined net tangible assets of our Unaudited pro Group forma adjusted attributable to net tangible owners of assets of the Company Estimated our Group as of [REDACTED] attributable to Unaudited pro forma December 31, from the owners of adjusted net tangible 2020 [REDACTED] the Company assets per Share (RMB’000) (RMB’000) (RMB’000) (RMB) (HK$) (Note 1) (Note 2) (Note 3) (Note 4)

Based on an [REDACTED] of HK$[REDACTED] per Share . . . 2,784,319 [REDACTED][REDACTED][REDACTED][REDACTED] Based on an [REDACTED] of HK$[REDACTED] per Share . . . 2,784,319 [REDACTED][REDACTED][REDACTED][REDACTED] Based on an [REDACTED] of HK$[REDACTED] per Share . . . 2,784,319 [REDACTED][REDACTED][REDACTED][REDACTED]

Notes:

(1) The combined net tangible assets attributable to owners of the Company as of December 31, 2020 is arrived at after deducting intangible asset of RMB216,000 from the combined equity attributable to owners of the Company of RMB2,784,535,000 as of December 31, 2020, as shown in Appendix I to this document. (2) The estimated [REDACTED] from the [REDACTED] are based on the [REDACTED]of HK$[REDACTED] per Share and HK$[REDACTED] per Share, after deduction of the [REDACTED] and other related expenses payable by our Group and does not take into account of any Shares which may be issued upon the exercise of the [REDACTED]. The estimated [REDACTED] from the [REDACTED] are converted into Hong Kong dollars at an exchange rate of RMB0.83252 to HK$1.00. (3) The unaudited pro forma adjusted net tangible assets per Share is calculated based on [REDACTED] Shares in issue immediately following the completion of the [REDACTED] without taking into account any Shares which may be issued upon the exercise of the [REDACTED] or any option which may be granted under the Share Option Scheme or any Shares which may be allotted and issued or repurchased under the general mandates for the allotment and issue or repurchase of the Shares as described in Appendix V – Statutory and General Information. (4) The unaudited pro forma adjusted combined net tangible assets per Share are converted into Hong Kong dollars at an exchange rate of RMB0.83252 to HK$1.00. (5) No adjustment has been made to reflect any trading result or open transaction of the Group entered subsequent to December 31, 2020.

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FUTURE PLANS AND PROSPECTS

See “Business—Our Business Strategies” for a detailed description of our future plans.

[REDACTED]

We estimate that we will receive [REDACTED] of approximately HK$[REDACTED] million from the [REDACTED], after deducting the [REDACTED] and other estimated expenses payable by us in connection with the [REDACTED], assuming that the [REDACTED] is not exercised, without taking into account any Shares which may be issued upon exercise of any options which may be granted under the Share Option Scheme and assuming an [REDACTED] of HK$[REDACTED] per Share (being the [REDACTED]ofthe indicative [REDACTED] range). We intend to use such [REDACTED] from the [REDACTED] for the purposes and in the amounts set forth below:

• approximately [REDACTED]%, or approximately HK$[REDACTED], will be used to finance the construction of our existing projects, including Xi Yue Mansion (西悅府), Flora Garden (花語軒) and Xi Jiang Yue (西江悅).

Estimated Percentage Construction Construction and amount Project Status Completion Date of [REDACTED] Timeline of Proposed Usage

Xi Yue Mansion Under October 2022 [REDACTED]%, • [REDACTED]%, or HK$[REDACTED], (西悅府) development or third quarter of 2021; HK$[REDACTED] • [REDACTED]%, or HK$[REDACTED], fourth quarter of 2021

Flora Garden Under December 2023 [REDACTED]%, • [REDACTED]%, or HK$[REDACTED], (花語軒) development or third quarter of 2021; HK$[REDACTED] • [REDACTED]%, or HK$[REDACTED], fourth quarter of 2021; • [REDACTED]%, or HK$[REDACTED], second quarter of 2022

Xi Jiang Yue Under June 2022 [REDACTED]%, • [REDACTED]%, or HK$[REDACTED], (西江悅) development or first quarter of 2022 HK$[REDACTED]

See “Business – Our Property Development Business – Our Property Projects” for more details on the timetable for each of these projects;

• approximately [REDACTED]%, or approximately HK$[REDACTED], will be used to finance our future projects, including land acquisition costs;

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• approximately [REDACTED]%, or approximately HK$[REDACTED], will be used to repay a portion of our existing borrowings for our project development, comprising (i) the outstanding balance of HK$[REDACTED] of borrowing with an interest rate of 11.0% per annum and the maturity date of September 2021; and (ii) the outstanding balance of HK$[REDACTED] of a borrowing with an interest rate of 11.0% per annum and the maturity date of June 2022; and

• approximately [REDACTED]%, or approximately HK$[REDACTED], will be used for general business operations and working capital.

If the [REDACTED] is exercised in full, we estimate that the additional [REDACTED] from the [REDACTED] of these additional Shares will be approximately HK$[REDACTED], after deducting the [REDACTED] and other estimated expenses payable by us in connection with the [REDACTED], assuming an [REDACTED] of HK$[REDACTED] per Share, being the [REDACTED] of the indicative [REDACTED] range.

If the [REDACTED] is determined at HK$[REDACTED] per [REDACTED], being the [REDACTED] of the indicative [REDACTED] range stated in this document, and assuming that the [REDACTED] is not exercised, we will receive additional [REDACTED]of approximately HK$[REDACTED]. If the [REDACTED] is fixed at HK$[REDACTED] per [REDACTED], being the [REDACTED] of the indicative [REDACTED] range stated in this document, and assuming that the [REDACTED] is not exercised, the [REDACTED]we receive will be reduced by approximately HK$[REDACTED].

To the extent that the [REDACTED] from the [REDACTED] are not immediately applied to the purposes stated above, and to the extent permitted by applicable laws and regulations, we intend to deposit the [REDACTED] into short-term interest-bearing bank accounts with licensed financial institutions. We will make a formal announcement in the event that there is any change in our use of [REDACTED] from the purposes stated above or in our allocation of the [REDACTED] in the proportions stated above.

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– 404 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

[To insert the firm’s letterhead]

ACCOUNTANTS’ REPORT ON HISTORICAL FINANCIAL INFORMATION TO THE DIRECTORS OF ZHONGYI JIYE HOLDING COMPANY LIMITED AND GUOTAI JUNAN CAPITAL LIMITED

Introduction

We report on the historical financial information of Zhongyi Jiye Holding Company Limited (the “Company”) and its subsidiaries (together, the “Group”) set out on pages [●]to [●], which comprises the combined statements of profit or loss, statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group for each of the years ended 31 December 2018, 2019 and 2020 (the “Relevant Periods”), and the combined statements of financial position of the Group as at 31 December 2018, 2019 and 2020 and the statement of financial position of the Company as at 31 December 2020 and a summary of significant accounting policies and other explanatory information (together, the “Historical Financial Information”). The Historical Financial Information set out on pages [●]to[●] forms an integral part of this report, which has been prepared for inclusion in the document of the Company dated [Date] (the “Document”) in connection with the [REDACTED] of the shares of the Company on the Main Board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).

Directors’ responsibility for the Historical Financial Information

The directors of the Company are responsible for the preparation of the Historical Financial Information that gives a true and fair view in accordance with the basis of presentation and the basis of preparation set out in notes 2.1 and 2.2 to the Historical Financial Information, respectively, and for such internal control as the directors determine is necessary to enable the preparation of the Historical Financial Information that is free from material misstatement, whether due to fraud or error.

Reporting accountants’ responsibility

Our responsibility is to express an opinion on the Historical Financial Information and to report our opinion to you. We conducted our work in accordance with Hong Kong Standard on Investment Circular Reporting Engagements 200 Accountants’ Reports on Historical Financial Information in Investment Circulars issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”). This standard requires that we comply with ethical standards and plan and perform our work to obtain reasonable assurance about whether the Historical Financial Information is free from material misstatement.

Our work involved performing procedures to obtain evidence about the amounts and disclosures in the Historical Financial Information. The procedures selected depend on the reporting accountants’ judgement, including the assessment of risks of material misstatement of the Historical Financial Information, whether due to fraud or error. In making those risk assessments, the reporting accountants consider internal control relevant to the entity’s

– I-1 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT preparation of the Historical Financial Information that gives a true and fair view in accordance with the basis of presentation and the basis of preparation set out in notes 2.1 and 2.2 to the Historical Financial Information, respectively, in order to design procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Our work also included evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the Historical Financial Information.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion

In our opinion, the Historical Financial Information gives, for the purposes of the accountants’ report, a true and fair view of the financial position of the Group as at 31 December 2018, 2019 and 2020 and the Company as at 31 December 2020 and of the financial performance and cash flows of the Group for each of the Relevant Periods in accordance with the basis of presentation and the basis of preparation set out in notes 2.1 and 2.2 to the Historical Financial Information, respectively.

Report on matters under the Rules Governing the Listing of Securities on the Stock Exchange and the Companies (Winding Up and Miscellaneous Provisions) Ordinance

Adjustments

In preparing the Historical Financial Information, no adjustments to the Underlying Financial Statements as defined on page [3] have been made.

Dividends

We refer to note 13 to the Historical Financial Information which contains information about the dividends paid by the Company in respect of the Relevant Periods.

No historical financial statements for the Company

As at the date of this report, no statutory financial statements have been prepared for the Company since its date of incorporation.

[●] Certified Public Accountants Hong Kong [●]

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I HISTORICAL FINANCIAL INFORMATION

Preparation of Historical Financial Information

Set out below is the Historical Financial Information which forms an integral part of this accountants’ report.

The financial statements of the Group for the Relevant Periods, on which the Historical Financial Information is based, were audited by Ernst & Young in accordance with Hong Kong Standards on Auditing issued by the HKICPA (the “Underlying Financial Statements”).

The Historical Financial Information is presented in Renminbi (“RMB”) and all values are rounded to the nearest thousand (RMB’000) except when otherwise indicated.

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COMBINED STATEMENTS OF PROFIT OR LOSS

Year ended 31 December Notes 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

CONTINUING OPERATIONS Revenue...... 6 2,503,727 2,125,067 5,635,839 Cost of sales ...... 7 (1,631,297) (1,294,920) (3,842,191)

Gross profit ...... 872,430 830,147 1,793,648 Other income and gains ...... 6 157,760 353,474 257,323 Selling and distribution expenses ..... (78,053) (164,066) (213,813) Administrative expenses ...... (126,672) (192,126) (233,617) (Impairment)/reversal of impairment losses on financial assets, net...... 7 (110,697) 305 (1,334) Other expenses ...... (34,128) (32,400) (64,223) Finance costs ...... 8 (24,956) (37,097) (37,993) Share of profits and losses of: Associates ...... – – (5,176)

PROFIT BEFORE TAX FROM CONTINUING OPERATIONS ..... 7 655,684 758,237 1,494,815 Income tax expense ...... 11 (283,052) (321,549) (624,003)

PROFIT FOR THE YEAR FROM CONTINUING OPERATIONS ..... 372,632 436,688 870,812 DISCONTINUED OPERATION (Loss)/profit for the year from discontinued operations ...... 12 (8,017) 78,127 (28,162)

PROFIT FOR THE YEAR...... 364,615 514,815 842,650

Attributable to: ...... Owners of the parent ...... 352,560 457,812 798,931 Non-controlling interests ...... 12,055 57,003 43,719

364,615 514,815 842,650

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COMBINED STATEMENTS OF COMPREHENSIVE INCOME

Year ended 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

PROFIT FOR THE YEAR...... 364,615 514,815 842,650

OTHER COMPREHENSIVE (LOSS)/INCOME Other comprehensive (loss)/income that will not be reclassified to profit or loss in subsequent periods: Revaluation gains on transfer from property, plant and equipment to investment properties ...... – – 62,438 Income tax effect...... – – (15,610)

– – 46,828

Equity investments designated at fair value through other comprehensive income: Changes in fair value ...... (1,460) (38,000) (13,930) Income tax effect ...... 365 9,500 3,483 (1,095) (28,500) (10,447)

Net other comprehensive (loss)/income that will not be reclassified to profit or loss in subsequent periods...... (1,095) (28,500) 36,381

OTHER COMPREHENSIVE (LOSS)/INCOME FOR THE YEAR, NET OFTAX...... (1,095) (28,500) 36,381

TOTAL COMPREHENSIVE INCOME FOR THE YEAR ...... 363,520 486,315 879,031

Attributable to: Owners of the parent ...... 351,465 429,312 835,312 Non-controlling interests ...... 12,055 57,003 43,719

363,520 486,315 879,031

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COMBINED STATEMENTS OF FINANCIAL POSITION

As at 31 December Notes 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

NON-CURRENT ASSETS Property, plant and equipment ...... 15 317,292 332,216 28,551 Investment properties ...... 16 116,599 116,797 302,795 Right-of-use assets...... 17 38,741 39,351 2,181 Intangible assets ...... 18 1,621 965 216 Investments in associates ...... 19 27,759 37,046 118,174 Investments in property projects ...... 20 331,487 827,870 460,354 Deferred tax assets...... 21 302,530 585,938 915,574 Equity investments designated at fair value through other comprehensive income ...... 27 118,400 80,400 66,470

Total non-current assets ...... 1,254,429 2,020,583 1,894,315

CURRENT ASSETS Properties under development ...... 22 5,720,183 10,684,044 18,519,562 Completed properties held for sale ...... 23 1,908,672 1,674,109 1,899,249 Trade receivables...... 24 14,492 11,559 22,885 Contract cost assets ...... 25 29,429 63,635 170,148 Prepayments, other receivables and other assets ...... 26 4,025,667 10,291,810 8,637,796 Tax recoverable ...... 7,068 67,875 182,679 Financial assets at fair value through profit or loss ...... 28 104,940 4,960 – Restricted cash ...... 29 180,352 303,012 370,406 Pledged deposits ...... 29 82,768 86,990 105,387 Cash and cash equivalents ...... 29 1,459,277 1,003,073 2,337,163

13,532,848 24,191,067 32,245,275 Assets held for sale ...... 12 214,871 – –

Total current assets ...... 13,747,719 24,191,067 32,245,275

CURRENT LIABILITIES Trade and bills payables ...... 30 1,625,086 3,078,480 4,319,741 Other payables and accruals ...... 31 6,181,326 8,357,613 3,715,532 Financial liabilities at fair value through profit or loss ..... 34 70,000 – – Contract liabilities ...... 32 3,120,548 9,902,777 19,685,289 Interest-bearing bank and other borrowings ...... 33 477,627 574,779 718,244 Lease liabilities ...... 17 781 2,288 934 Tax payable ...... 11 838,692 1,092,678 1,405,544

Total current liabilities ...... 12,314,060 23,008,615 29,845,284 NET CURRENT ASSETS ...... 1,433,659 1,182,452 2,399,991

TOTAL ASSETS LESS CURRENT LIABILITIES ...... 2,688,088 3,203,035 4,294,306

– I-6 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

As at 31 December Notes 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

NON-CURRENT LIABILITIES Interest-bearing bank and other borrowings ...... 33 832,446 772,500 1,168,893 Lease liabilities ...... 17 818 934 – Financial liabilities at fair value through profit or loss ..... 34 122,892 145,583 203,774 Deferred tax liabilities...... 21 30,183 103,274 137,104

Total non-current liabilities ...... 986,339 1,022,291 1,509,771

Net assets...... 1,701,749 2,180,744 2,784,535

EQUITY Equity attributable to owners of the parent Share capital ...... 35 ––2 Reserves...... 36 1,625,836 2,037,228 2,331,611

Non-controlling interests ...... 75,913 143,516 452,922

Total equity ...... 1,701,749 2,180,744 2,784,535

– I-7 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

COMBINED STATEMENTS OF CHANGES IN EQUITY

Fair value reserve of financial assets at fair value Asset through other Non- Share Merger revaluation comprehensive Statutory Retained controlling Total capital reserve reserve income reserve profits Total interests equity (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000) Note 35 Note 36(a) Note 36(c) Note 36(d) Note 36(b)

As at 1 January 2018 ...... – 86,292 – 23,778 294,116 908,867 1,313,053 (123,492) 1,189,561 Profit for the year ...... – – – –– 352,560 352,560 12,055 364,615 Other comprehensive income for the year: Change in fair value of equity investments at fair value through other comprehensive income, netoftax...... – – – (1,095) – – (1,095) – (1,095)

Total comprehensive income for the year ...... – – – (1,095) – 352,560 351,465 12,055 363,520 Appropriations to statutory surplus reserve ...... – – – – 45,521 (45,521) – – – Capital contribution by the non-controlling shareholders of subsidiaries ...... – – – ––––187,350 187,350 Dividend paid to the then equity holder of a subsidiary ...... – – – –– (38,682) (38,682) – (38,682)

As at 31 December 2018 and 1 January 2019 ...... – 86,292* –* 22,683* 339,637* 1,177,224* 1,625,836 75,913 1,701,749

Profit for the year ...... – – – –– 457,812 457,812 57,003 514,815 Other comprehensive income for the year: Change in fair value of equity investments at fair value through other comprehensive income, netoftax...... – – – (28,500) – – (28,500) – (28,500) Total comprehensive income for the year ...... – – – (28,500) – 457,812 429,312 57,003 486,315 Appropriations to statutory surplus reserve ...... – – – – 55,110 (55,110) – – – Capital contribution by the non-controlling shareholders of subsidiaries ...... – – – ––––10,600 10,600 Dividend paid to the then equity holder of a subsidiary ...... – – – –– (17,920) (17,920) – (17,920)

As at 31 December 2019 and 1 January 2020 ...... – 86,292* –* (5,817)* 394,747* 1,562,006* 2,037,228 143,516 2,180,744

– I-8 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

Fair value reserve of financial assets at fair value Asset through other Non- Share Merger revaluation comprehensive Statutory Retained Controlling Total capital reserve reserve income reserve profits Total interests equity (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000) Note 35 Note 36(a) Note 36(c) Note 36(d) Note 36(b)

As at 31 December 2019 and 1 January 2020 ...... – 86,292 – (5,817) 394,747 1,562,006 2,037,228 143,516 2,180,744 Profit for the year ...... – – – – – 798,931 798,931 43,719 842,650 Other comprehensive income for the year: Change in fair value of equity investments at fair value through other comprehensive income, netoftax...... – – – (10,447) – – (10,447) – (10,447) Revaluation gains on transfer from property, plant and equipment to investment properties, net of tax. . – – 46,828 – – – 46,828 – 46,828

Total comprehensive income for the year ...... – – 46,828 (10,447) – 798,931 835,312 43,719 879,031

Issue of shares ...... 2 – – –––2–2 Appropriations to statutory surplus reserve ...... – – – – 29,553 (29,553) – – – Capital contribution by the then equity holders of subsidiaries . . . – 2,430 – – – – 2,430 – 2,430 Capital reduction of a subsidiary . . – (15,855) – – – – (15,855) – (15,855) Capital contribution by the non-controlling shareholders of subsidiaries ...... – – – ––––264,171 264,171 Deemed distribution upon the completion of the corporate division ...... – (28,160) – – (12,928) (387,855) (428,943) 1,516 (427,427) Dividend paid to the then equity holder of a subsidiary ...... – – – – – (98,561) (98,561) – (98,561)

As at 31 December 2020...... 2 44,707* 46,828* (16,264)* 411,372* 1,844,968* 2,331,613 452,922 2,784,535

* These reserve accounts represent the total combined reserves of RMB1,625,836,000, RMB2,037,228,000 and RMB2,331,611,000 in the combined statements of financial position as at 31 December 2018, 2019 and 2020, respectively.

– I-9 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

COMBINED STATEMENTS OF CASH FLOWS

Year ended 31 December Notes 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax ...... From continuing operations ...... 655,684 758,237 1,494,815 From discontinued operations ...... (7,920) 92,235 (28,162) Adjustments for: Depreciation of items of property, plant and equipment . . . 15 24,870 31,533 15,977 Depreciation of right-of-use assets ...... 17 2,914 1,766 2,296 Amortization of other intangible assets ...... 18 599 735 703 Impairment/(reversal of impairment) of financial assets . . . 7 110,697 (305) 1,334 Impairment losses recognised for properties under Development...... 7 15,678 – – Fair value gains from financial assets at fair value through profit or loss...... 7 (69) (429) – Fair value losses from financial liabilities at fair value through profit or loss ...... 7 17,544 22,691 58,191 Share of profits and losses of associates ...... (9,375) (11,247) (5,155) Investment income from financial assets at fair value through profit or loss ...... 6 (5,705) (11,513) (35,490) Dividend income from financial assets at fair value through other comprehensive income ...... 6 (6,835) (3,835) (3,196) Gains on disposal of items of property, plant and equipment...... 7 (410) (35) (77) Gains on disposal of assets held for sale ...... 7 – (63,826) – Change in fair value of investment properties ...... 7 (3,730) (198) 104 Change in fair value of investments in property projects . . 7 (109,181) (280,160) (71,013) Finance costs ...... 28,268 40,155 40,851 Interest income...... (21,053) (28,143) (123,250) Increase in properties under development ...... (2,824,899) (4,880,422) (7,712,850) Decrease/(increase) in completed properties held for sale . . 122,732 298,568 (148,992) Increase in prepayments, other receivables and other assets ...... (492,241) (3,695,411) (67,357) Increase in restricted cash ...... (146,200) (122,660) (67,394) Increase in pledged deposits...... (60,799) (4,222) (18,397) Decrease/(increase) in trade receivables ...... 28,664 2,891 (11,789) Increase in contract cost assets ...... (7,794) (34,206) (106,513) Increase in trade and bills payables ...... 433,577 1,453,394 1,241,261 Increase/(decrease) in other payables and accruals ...... 4,417,981 2,165,898 (4,468,349) Increase in contract liabilities...... 1,375,462 6,782,229 9,782,512

Cash generated from/(used in) operations ...... 3,538,459 2,513,720 (229,940) Interest received ...... 3,980 8,212 15,272 Tax paid ...... (204,720) (343,295) (718,264)

Net cash flows from/(used in) operating activities...... 3,337,719 2,178,637 (932,932)

– I-10 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

Year ended 31 December Notes 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

CASH FLOWS FROM INVESTING ACTIVITIES Purchases of items of property, plant and equipment ...... (32,524) (56,712) (22,467) Purchase of intangible assets...... (2,085) (89) (381) Purchase of financial assets at fair value through profit or loss ...... (104,871) (2,500) (1,760,000) Disposal of financial assets at fair value through profit or loss ...... 215,705 114,422 1,800,450 Proceeds from disposal of items of property, plant and equipment ...... 4,168 3,766 18,839 Disposal of investments in associates ...... 5,718 – 47,027 Purchase of investments in associates ...... (510) – (123,000) Dividends income ...... 9,075 5,795 3,196 Interest income received ...... 17,073 16,047 44,135 Advances to third parties ...... (2,250,000) (4,616,580) (2,716,693) Repayment of advance to third parties ...... – 2,253,884 4,626,964 Increase in investments in property projects ...... (222,306) (420,223) – Proceeds from investments in property projects ...... – 204,000 592,123 Proceeds from disposal of assets held for sale ...... 111,479 45,000 38,609

Net cash flows (used in)/from investing activities ...... (2,249,078) (2,453,190) 2,548,802

CASH FLOWS FROM FINANCING ACTIVITIES Net cash outflow on distribution in specie ...... 12 – – (62,190) Proceeds from issue of shares ...... – – 2 Capital contribution by the then equity holders of subsidiaries ...... – – 2,430 Capital reduction of a subsidiary ...... – – (15,855) Proceeds from interest-bearing bank and other borrowings . . 520,000 989,636 1,720,280 Repayment of interest-bearing bank and other borrowings. . . (536,475) (900,525) (1,131,096) Repayment of financial liabilities at fair value through profit or loss ...... (80,000) (141,787) (21,957) Principal portion of lease payments ...... 17 (901) (753) (2,288) Capital contribution from non-controlling shareholders of the subsidiaries...... 120,200 800 168,171 Advances from third parties ...... 18,769 128,402 – Repayment of advances from third parties ...... – – (551,723) Interest paid ...... (160,722) (239,504) (288,993) Dividend paid ...... (38,682) (17,920) (98,561)

Net cash flows used in financing activities ...... (157,811) (181,651) (281,780)

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS ...... 930,830 (456,204) 1,334,090 Cash and cash equivalents at beginning of year ...... 528,447 1,459,277 1,003,073

CASH AND CASH EQUIVALENTS AT END OF YEAR . . 1,459,277 1,003,073 2,337,163 ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS Cash and bank balances...... 29 1,722,397 1,393,075 2,812,956 Less: Restricted cash ...... 29 (180,352) (303,012) (370,406) Pledged deposits ...... 29 (82,768) (86,990) (105,387) Cash and cash equivalents as stated in the statements of cash flows and statements of financial position ...... 1,459,277 1,003,073 2,337,163

– I-11 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

STATEMENTS OF FINANCIAL POSITION THE COMPANY

As at 31 December Note 2020 (RMB’000)

CURRENT LIABILITIES Other payables and accruals...... 91

NET LIABILITIES ...... 91

EQUITY Share capital ...... 35 2 Reserves ...... (93)

Total equity ...... (91)

– I-12 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

II NOTES TO THE HISTORICAL FINANCIAL INFORMATION

1. CORPORATE INFORMATION

The Company is an exempted company incorporated in the Cayman Islands on November 5, 2020. The registered office of the Company is Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands.

The Company is an investment holding company. During the Relevant Periods, the subsidiaries now comprising the Group were involved in property development and sales, the provision of property leasing services and property management consulting and other services (the “[REDACTED] Business”).

The Company and its subsidiaries now comprising the Group underwent the Reorganisation as set out in the section headed “History, reorganization and corporate structure” in the Document. Apart from the Reorganisation, the Company has not commenced any business or operation since its incorporation.

As at the date of this report, the Company had direct and indirect interests in its subsidiaries, the particulars of which are set out below:

Place and date of Nominal value of incorporation/ issued Percentage of equity registration and place ordinary/registered attributable to the Name of operations share capital Company Principal activities Direct Indirect

Joy Premium Limited (Note(e)) . . British Virgin Islands/ United States 100% – Investment holding 9 December 2020 Dollar (“US$”) 1 Zhong Yu (HK) Limited PRC/Hong Kong Hong Kong – 100% Investment holding 中譽香港有限公司 31 December 2020 Dollar 10,000 (Note(c) and (e)) ...... Ningxia Zhongqia Industrial Co., PRC/Mainland China RMB10,000,000 – 100% Investment holding Ltd. 寧夏中洽實業有限公司 18 February 2021 (Note(c) and (e)) ...... Ningxia Zhongxian Industrial Co., PRC/Mainland China RMB1,000,000,000 – 100% Investment holding Ltd. 寧夏中賢實業有限公司 16 October 2020 (Note(c) and (e)) ...... Ningxia Zhongfang Industrial PRC/Mainland China RMB1,000,000,000 – 100% Property development Group Co., Ltd. 寧夏中房實業集 26 August 1994 團有限公司 (Note(a) and (c)) . . Ningxia Zhongfang Group Xining PRC/Mainland China RMB200,000,000 – 100% Property development Real Estate Development Co., 8 June 2001 Ltd. 寧夏中房集團西寧房地產開發有限責任公司 (Note(a) and (c)) ...... Xianyang Yangguang Meiyu Real PRC/Mainland China RMB12,000,000 – 55% Property development Estate Co., Ltd. 咸陽陽光美域置 23 November 2009 業有限公司 (Note(a) and (c)) . . Yinchuan Zhongchen Real Estate PRC/Mainland China RMB14,000,000 – 100% Property development Co., Ltd. 銀川中宸置地有限責任 2 November 2012 公司 (Note(a) and (c))...... Ningxia Zhongfang Group PRC/Mainland China RMB50,000,000 – 100% Property development Haidong Industrial Co., Ltd. 7 September 2018 寧夏中房集團海東實業有限公司 (Note(a) and (c)) ...... Xining Ningxiong Industrial Co., PRC/Mainland China RMB50,000,000 – 100% Property development Ltd. 西寧寧雄實業有限公司 25 November 2019 (Note(a) and (c)) ......

– I-13 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

Xianghe Zhongyu Real Estate PRC/Mainland China RMB50,000,000 – 100% Property development Development Co., Ltd 10 January 2012 香河中鈺房地產開發有限公司 (Note(a) and (c)) ...... Ningxia Zhongjin Real Estate Co., PRC/Mainland China RMB96,920,000 – 45% Property development Ltd. 寧夏中錦置業有限公司 30 March 2020 (Note(c) (d) and (e)) ...... Ningxia Zhongyue Co., Ltd. PRC/Mainland China RMB50,000,000 – 100% Property development 寧夏中悅置業有限公司 2 June 2020 (Note(c) and (e)) ...... Ningxia Zhongen Co., Ltd. PRC/Mainland China RMB15,000,000 – 56% Property development 寧夏中恩置業有限公司 31 August 2020 (Note(c) and (e)) ...... Ningxia Zhonghan Co., Ltd. PRC/Mainland China RMB20,000,000 – 100% Property development 寧夏中翰置業有限公司 30 September 2020 (Note(c) and (e)) ...... Ningxia Zhongmao Co., Ltd PRC/Mainland China RMB14,000,000 – 100% Property development 寧夏中茂置業有限公司 17 November 2020 (Note(c) and (e)) ...... Ningxia Zhongsheng Co., Ltd. PRC/Mainland China RMB14,000,000 – 100% Property development 寧夏中晟置業有限公司 30 September 2020 (Note(c) and (e)) ...... Ningxia Zhongfang Group Huzhu PRC/Mainland China RMB50,000,000 – 100% Property development Real Estate Development Co., 17 December 2020 Ltd. 寧夏中房集團互助房地產開發有限責任公司 (Note(c) and (e)) ...... Sichuan Hengmao Jiye Real Estate PRC/Mainland China RMB100,000,000 – 100% Investment holding Development Co., Ltd. 四川恒茂 25 May 2018 基業房地產開發有限公司 (Note(a) and (c)) ...... Chongzhou Zhongye Ruihua Real PRC/Mainland China RMB296,077,930 – 97% Property development Estate Development Co., Ltd. 8 October 2018 崇州市中業瑞華房地產開發有限公司 (Note(a) and (c))...... Yinchuan Zhongfang Real Estate PRC/Mainland China RMB3,000,000 – 100% Property consultation Consulting Co., Ltd 6 March 2018 銀川中房地產顧問有限公司 (Note(a) and (c)) ...... Xining Zhongfang Real Estate PRC/Mainland China RMB5,000,000 – 100% Property consultation Consulting Co., Ltd 19 March 2018 西寧中房地產顧問有限公司 (Note(a) and (c)) ...... Zhongfang Vanke Industrial Co., PRC/Mainland China RMB100,000,000 – 40% Property development Ltd. 中房萬科實業有限公司 28 September 2017 (Note(b) (c) and (d)) ...... Xining Zhongfang Vanke Industrial PRC/Mainland China RMB30,000,000 – 99% Property development 西寧中房萬科實業有限公司 16 August 2018 (Note(b) (c) and (f)) ...... Xining Wanlan Real Estate Co., PRC/Mainland China RMB20,000,000 – 100% Property development Ltd. 西寧萬瀾房地產有限公司 23 August 2018 (Note(b) (c) and (f)) ......

– I-14 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

Xining Wantang Real Estate Co., PRC/Mainland China RMB20,000,000 – 51% Property development Ltd. 西寧萬唐房地產有限公司 25 June 2019 (Note(b) (c) and (f)) ...... Xining Ningcan Industrial Co., PRC/Mainland China RMB50,000,000 – 100% Property development Ltd. 西寧寧燦實業有限公司 25 November 2019 (Note(b) (c) and (f)) ...... Xining Wanxian Real Estate Co., PRC/Mainland China RMB20,000,000 – 100% Property development Ltd. 西寧萬賢房地產有限公司 4 September 2018 (Note(b), (c) and (f)) ...... Xining Wanhan Real Estate Co., PRC/Mainland China RMB20,000,000 – 100% Property development Ltd. 西寧萬涵房地產有限公司 12 November 2020 (Note(c) (e) and (f)) ...... Xining Wancan Real Estate Co., PRC/Mainland China RMB20,000,000 – 100% Property development Ltd. 西寧萬燦房地產有限公司 4 September 2018 (Note(b) (c) and (f)) ...... Ningxia Zhongfang Vanke PRC/Mainland China RMB10,000,000 – 98% Property development Real Estate Co., Ltd. 19 December 2017 寧夏中房萬科房地產有限公司 (Note(b) (c) and (f)) ...... Ningxia Zhenghui Real Estate PRC/Mainland China RMB13,000,000 – 100% Property development Development Co., Ltd. 28 December 2017 寧夏正輝房地產開發有限公司 (Note(b) (c) and (f)) ...... Ningxia Yuejia Real Estate PRC/Mainland China RMB13,000,000 – 70% Property development Development Co., Ltd. 26 December 2017 寧夏悅家房地產開發有限公司 (Note(b) (c) and (f)) ...... Ningxia Wanpeng Real Estate PRC/Mainland China RMB13,000,000 – 100% Property development Development Co., Ltd. 21 June 2018 寧夏萬鵬房地產開發有限公司 (Note(b) (c) and (f)) ...... Ningxia Wanjin Real Estate Co., PRC/Mainland China RMB13,000,000 – 75% Property development Ltd. 寧夏萬錦房地產有限公司 13 July 2018 (Note(b) (c) and (f)) ...... Ningxia Wanyue Real Estate Co., PRC/Mainland China RMB400,000,000 – 70% Property development Ltd. 寧夏萬悅房地產有限公司 4 July 2018 (Note(b) (c) and (f)) ...... Yinchuan Zhonghe Zhiyuan PRC/Mainland China RMB1,000,000 – 100% Property consultation Broking & Consulting Co., Ltd 12 October 2018 銀川合眾致遠經紀顧問有限公司 (Note(b) (c) and (f)) ...... Yinchuan Wanbo Zhongtai Real PRC/Mainland China RMB320,000,000 – 70% Property development Estate Development Co., Ltd 29 November 2019 銀川萬博中泰房地產有限公司 (Note(b) (c) and (f)) ...... Ningxia Wanyu Xiangcheng Real PRC/Mainland China RMB13,000,000 – 100% Property development Estate Development Co., Ltd. 2 July 2020 寧夏萬宇翔宸房地產有限公司 (Note(c) (e) and (f)) ...... Ningxia Wanjia jinye Real Estate PRC/Mainland China RMB13,000,000 – 100% Property development Development Co., Ltd. 2 July 2020 寧夏萬嘉錦業房地產有限公司 (Note(c) (e) and (f)) ......

– I-15 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

Ningxia Wanzhong jingming Real PRC/Mainland China RMB500,000,000 – 100% Property development Estate Development Co., Ltd. 6 November 2020 寧夏萬中景明房地產有限公司 (Note(c) (e) and (f)) ......

The English names of all group companies registered in the PRC represent the best efforts made by the management of the Company to translate the Chinese names of these companies as they do not have official English names.

Notes:

(a) The statutory financial statements of these entities for the years ended 31 December 2018, 2019 and 2020 prepared in accordance with generally accepted accounting principles in the People’s Republic of China (“PRC GAAP”) and regulations were audited by Xigema Certified Public Accountants (Special Ordinary Partnership) Ningxia Branch, a certified public accounting firm registered in the PRC.

(b) The statutory financial statements of these entities for the years ended 31 December 2018, 2019 and 2020 prepared in accordance with generally accepted accounting principles in the People’s Republic of China (“PRC GAAP”) and regulations were audited by Grant Thornton LLP Chengdu Branch, a certified public accounting firm registered in the PRC.

(d) The Group was granted more than majority of voting rights in the shareholders’ meeting according to the contractual arrangement and articles of association with the then equity holders, which give the Group the current ability to direct the relevant activities of these entities. Therefore, these entities were accounted for as subsidiaries of the Group.

Percentage of voting rights held by the Group

Zhongfang Vanke Industrial Co., Ltd...... 60% Ningxia Zhongjin Real Estate Co., Ltd...... 51%

(e) No audited financial statements have been audited for this entity, as this entity is newly established in 2020 and 2021.

(f) These entities are subsidiaries of a non-wholly-owned subsidiary of the Company and, accordingly, are accounted for as subsidiaries by virtue of the Company’s control over it.

2.1 BASIS OF PRESENTATION

Pursuant to the Reorganisation, as more fully explained in the section headed “History, Reorganization and Corporate Structure” in the Document, the Company became the holding company of the companies now comprising the Group subsequent to the end of the Relevant Periods on 12 March 2021. The Reorganisation involved only the insertion and a series of equity transfers of the Company as a new holding entity above an existing company and has not resulted in any change of economic substance, the Historical Financial Information for the Relevant Periods has been presented as a continuation of the existing company using the pooling of interest method.

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The combined statements of profit or loss, statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group for the Relevant Periods are prepared as if the current group structure had been in existence throughout the Relevant Periods. The combined statements of financial position of the Group as at 31 December 2018, 2019 and 2020 have been prepared to present the assets and liabilities of the companies now comprising the Group, as if the current group structure had been in existence at those dates.

All intra-group transactions and balances have been eliminated on combination.

2.2 BASIS OF PREPARATION

The Historical Financial Information has been prepared in accordance with International Financial Reporting Standards (“IFRSs”), which comprise all standards and interpretations approved by the International Accounting Standards Board (the “IASB”). All IFRSs effective for the accounting period commencing from 1 January 2020, together with the relevant transitional provisions, have been early adopted by the Group in the preparation of the Historical Financial Information throughout the Relevant Periods.

The Historical Financial Information has been prepared under the historical cost convention, except for investment properties, financial assets at fair value through profit or loss (“FVTPL”), equity investments designated at fair value through other comprehensive income (“FVOCI”), investments in property projects and financial liabilities at fair value through profit or loss which have been measured at fair value.

2.3 ISSUED BUT NOT YET EFFECTIVE INTERNATIONAL FINANCIAL REPORTING STANDARDS

The Group has not applied the following new and revised IFRSs, that have been issued but are not yet effective, in this Historical Financial Information. The Group intends to adopt them, if applicable, when they become effective.

Amendments to IFRS 10 and Sale or Contribution of Assets between an Investor and its Associate IAS 28 or Joint Venture4 IFRS 17 Insurance Contracts3 Amendments to IFRS 17 Insurance Contracts3,5 Amendments to IAS 1 Classification of Liabilities as Current or Non-current, Disclosure of Accounting Policies3 Amendments to IAS 8 Definition of Accounting Estimates3 Amendments to IAS 12 Deferred Tax related to Assets and Liabilities arising from a Single Transaction3 Amendments to IFRS 3 Reference to the Conceptual Framework2 Amendments to IFRS 9, IAS 39, Interest Rate Benchmark Reform—Phase 21 IFRS 7, IFRS 4 and IFRS 16 Amendments to IAS 16 Property, Plant and Equipment: Proceeds before Intended Use2 Amendments to IAS 37 Onerous Contract—Cost of Fulfilling a Contract2 Annual Improvements to Amendments to IFRS 1, IFRS 9, Illustrative Examples accompanying IFRSs 2018-2020 IFRS 16, and IAS 412

1 Effective for annual periods beginning on or after 1 January 2021

2 Effective for annual periods beginning on or after 1 January 2022

3 Effective for annual periods beginning on or after 1 January 2023

4 No mandatory effective date yet determined but available for adoption

5 As a consequence of the amendments to IFRS 17 issued in June 2020, IFRS 4 was amended to extend the temporary exemption that permits insurers to apply IAS 39 rather than IFRS 9 for annual periods beginning before 1 January 2023

Further information about those IFRSs that are expected to be applicable to the Group is described below.

Amendments to IFRS 10 and IAS 28 address an inconsistency between the requirements in IFRS 10 and in IAS 28 in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The amendments require a full recognition of a gain or loss when the sale or contribution of assets between an investor

– I-17 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT and its associate or joint venture constitutes a business. For a transaction involving assets that do not constitute a business, a gain or loss resulting from the transaction is recognised in the investor’s profit or loss only to the extent of the unrelated investor’s interest in that associate or joint venture. The amendments are to be applied prospectively. The previous mandatory effective date of amendments to IFRS 10 and IAS 28 was removed by the IASB in December 2015 and a new mandatory effective date will be determined after the completion of a broader review of accounting for associates and joint ventures. However, the amendments are available for adoption now.

Amendments to IAS 1 clarify the criteria for determining whether to classify a liability as current or non-current. The amendments specify that the conditions which exist at the end of the reporting period are those which will be used to determine if a right to defer settlement of a liability exists. The amendments clarify the situations that are considered settlement of a liability. The new guidance will be effective for annual periods starting on or after 1 January 2022. Early application is permitted. The amendments are not expected to have any significant impact on the Group’s financial statements.

Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 address issues not dealt with in the previous amendments which affect financial reporting when an existing interest rate benchmark is replaced with an alternative RFR. The Phase 2 amendments provide a practical expedient to allow the effective interest rate to be updated without adjusting the carrying amount when accounting for changes in the basis for determining the contractual cash flows of financial assets and liabilities, if the change is a direct consequence of the interest rate benchmark reform and the new basis for determining the contractual cash flows is economically equivalent to the previous basis immediately preceding the change. In addition, the amendments permit changes required by the interest rate benchmark reform to be made to hedge designations and hedge documentation without the hedging relationship being discontinued. Any gains or losses that could arise on transition are dealt with through the normal requirements of IFRS 9 to measure and recognise hedge ineffectiveness. The amendments also provide a temporary relief to entities from having to meet the separately identifiable requirement when an RFR is designated as a risk component. The relief allows an entity, upon designation of the hedge, to assume that the separately identifiable requirement is met, provided the entity reasonably expects the RFR risk component to become separately identifiable within the next 24 months. Furthermore, the amendments require an entity to disclose additional information to enable users of financial statements to understand the effect of interest rate benchmark reform on an entity’s financial instruments and risk management strategy. The amendments are effective for annual periods beginning on or after 1 January 2021 and shall be applied retrospectively, but entities are not required to restate the comparative information.

For the other amendments not abovementioned, the directors of the Company are in the view of that application of these amendments are not expected to have any significant impact on the Group’s financial statements.

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Subsidiaries

A subsidiary is an entity (including a structured entity), directly or indirectly, controlled by the Company.

Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee (i.e., existing rights that give the Group the current ability to direct the relevant activities of the investee).

When the Company has, directly or indirectly, less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

(a) the contractual arrangement with the other vote holders of the investee;

(b) rights arising from other contractual arrangements; and

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control described in the accounting policy for subsidiaries above. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. The results of subsidiaries are included in the Company’s statements of profit or loss and other comprehensive

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Investments in associates

An associate is an entity in which the Group has a long-term interest of generally not less than 20% of the equity voting rights and over which it is in a position to exercise significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies.

The Group’s investments in associates are stated in the combined statement of financial position at the Group’s share of net assets under the equity method of accounting, less any impairment losses. Adjustments are made to bring into line any dissimilar accounting policies that may exist. The Group’s share of the post-acquisition results and other comprehensive income of associates is included in the combined statement of profit or loss and combined other comprehensive income, respectively. In addition, when there has been a change recognised directly in the equity of the associate, the Group recognises its share of any changes, when applicable, in the combined statement of changes in equity. Unrealised gains and losses resulting from transactions between the Group and its associates are eliminated to the extent of the Group’s investments in the associates, except where unrealised losses provide evidence of an impairment of the assets transferred. Goodwill arising from the acquisition of associates is included as part of the Group’s investments in associates.

Fair value measurement

The Group measures its investment properties, derivative financial instruments and equity investments at fair value at the end of each reporting period. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible by the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 — based on quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2 — based on valuation techniques for which the lowest level input that is significant to the fair value measurement is observable, either directly or indirectly

Level 3 — based on valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

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Impairment of non-financial assets

Where an indication of impairment exists, or when annual impairment testing for an asset is required (other than inventories, contract assets, deferred tax assets, financial assets, investment properties and non-current assets/a disposal group classified as held for sale), the asset’s recoverable amount is estimated. An asset’s recoverable amount is the higher of the asset’s or cash-generating unit’s value in use and its fair value less costs of disposal, and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case the recoverable amount is determined for the cash-generating unit to which the asset belongs.

An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is charged to the statement of profit or loss in the period in which it arises in those expense categories consistent with the function of the impaired asset.

An assessment is made at the end of each reporting period as to whether there is an indication that previously recognised impairment losses may no longer exist or may have decreased. If such an indication exists, the recoverable amount is estimated. A previously recognised impairment loss of an asset other than goodwill is reversed only if there has been a change in the estimates used to determine the recoverable amount of that asset, but not to an amount higher than the carrying amount that would have been determined (net of any depreciation/amortisation) had no impairment loss been recognised for the asset in prior years. A reversal of such an impairment loss is credited to the statement of profit or loss in the period in which it arises.

Related parties

A party is considered to be related to the Group if:

(a) the party is a person or a close member of that person’s family and that person

(i) has control or joint control over the Group;

(ii) has significant influence over the Group; or

(iii) is a member of the key management personnel of the Group or of a parent of the Group;

(b) the party is an entity where any of the following conditions applies:

(i) the entity and the Group are members of the same group;

(ii) one entity is an associate or joint venture of the other entity (or of a parent, subsidiary or fellow subsidiary of the other entity);

(iii) the entity and the Group are joint ventures of the same third party;

(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third entity;

(v) the entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group;

(vi) the entity is controlled or jointly controlled by a person identified in (a);

(vii) a person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity); and

(viii) the entity, or any member of a group of which it is a part, provides key management personnel services to the Group or to the parent of the Group.

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Property, plant and equipment and depreciation

Property, plant and equipment, other than construction in progress, are stated at cost less accumulated depreciation and any impairment losses. When an item of property, plant and equipment is classified as held for sale or when it is part of a disposal group classified as held for sale, it is not depreciated and is accounted for in accordance with IFRS 5, as further explained in the accounting policy for “Non-current assets and disposal groups held for sale”. The cost of an item of property, plant and equipment comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use.

Expenditure incurred after items of property, plant and equipment have been put into operation, such as repairs and maintenance, is normally charged to the statement of profit or loss in the period in which it is incurred. In situations where the recognition criteria are satisfied, the expenditure for a major inspection is capitalised in the carrying amount of the asset as a replacement. Where significant parts of property, plant and equipment are required to be replaced at intervals, the Group recognises such parts as individual assets with specific useful lives and depreciates them accordingly.

Depreciation is calculated on the straight-line basis to write off the cost of each item of property, plant and equipment to its residual value over its estimated useful life. The principal annual rates used for this purpose are as follows:

Furniture and fixtures ...... 18.00% to 31.67% Buildings ...... 4.75% to 19% Motor vehicles ...... 9.5% to 23.75% Leasehold improvements ...... Over the shorter of the lease terms and benefit period

Where parts of an item of property, plant and equipment have different useful lives, the cost of that item is allocated on a reasonable basis among the parts and each part is depreciated separately. Residual values, useful lives and the depreciation method are reviewed, and adjusted if appropriate, at least at each financial year end.

An item of property, plant and equipment including any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal or retirement recognised in the statement of profit or loss in the year the asset is derecognised is the difference between the net sales proceeds and the carrying amount of the relevant asset.

Construction in progress represents a building under construction, which is stated at cost less any impairment losses, and is not depreciated. Cost comprises the direct costs of construction and capitalised borrowing costs on related borrowed funds during the period of construction. Construction in progress is reclassified to the appropriate category of property, plant and equipment when completed and ready for use.

Investment properties

Investment properties are interests in land and buildings (including the leasehold property held as a right-of-use asset which would otherwise meet the definition of an investment property) held to earn rental income and/or for capital appreciation, rather than for use in the production or supply of goods or services or for administrative purposes; or for sale in the ordinary course of business. Such properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the end of the reporting period.

Gains or losses arising from changes in the fair values of investment properties are included in the statement of profit or loss in the year in which they arise.

Any gains or losses on the retirement or disposal of an investment property are recognised in the statement of profit or loss in the year of the retirement or disposal.

For a transfer from investment properties to owner-occupied properties or inventories, the deemed cost of a property for subsequent accounting is its fair value at the date of change in use. If a property occupied by the Group as an owner-occupied property becomes an investment property, the Group accounts for such property in accordance with IAS 16 Property, Plant and Equipment up to the date of change in use, and any difference at that date between

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Properties under development

Properties under development are intended to be held for sale after completion.

Properties under development are stated at the lower of cost comprising land costs, construction costs, borrowing costs capitalised, professional fees and other costs directly attributable to such properties incurred during the development period and net realisable value.

Properties under development are classified as current assets unless those will not be realised in normal operating cycle. On completion, the properties are transferred to completed properties held for sale.

Completed properties held for sale

Completed properties held for sale are stated in the statement of financial position at the lower of cost and net realizable value. Cost comprises development costs attributable to the unsold properties. Net realizable value is determined by reference to the sale proceeds of properties sold in the ordinary course of business, less applicable variable selling expenses, or by management estimates based on prevailing marketing conditions.

Allocation of property development costs

Land costs are allocated to each unit according to their respective saleable gross floor areas (“GFA”) to the total saleable GFA. Construction costs relating to units were identified and allocated specifically. Common construction costs have been allocated according to the saleable GFA similar to land costs.

Non-current assets and disposal groups held for sale

Non-current assets and disposal groups are classified as held for sale if their carrying amounts will be recovered principally through a sales transaction rather than through continuing use. For this to be the case, the asset or disposal group must be available for immediate sale in its present condition subject only to terms that are usual and customary for the sale of such assets or disposal groups and its sale must be highly probable. All assets and liabilities of a subsidiary classified as a disposal group are reclassified as held for sale regardless of whether the Group retains a non-controlling interest in its former subsidiary after the sale.

Non-current assets and disposal groups (other than investment properties and financial assets) classified as held for sale are measured at the lower of their carrying amounts and fair values less costs to sell. Property, plant and equipment and intangible assets classified as held for sale are not depreciated or amortised.

Intangible assets (other than goodwill)

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is the fair value at the date of acquisition. The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are subsequently amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each financial year end.

Software and others

Expenditure on computer software is capitalized and amortized using the straight-line method over its estimated useful life of 3 to 6 years.

Leases

The Group assesses at contract inception whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

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Group as a lessee

The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Group recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

(a) Right-of-use assets

Right-of-use assets are recognised at the commencement date of the lease (that is the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and any impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease terms and the estimated useful lives of the assets as follows:

Land use rights...... 50years Office premises ...... 3years

If ownership of the leased asset transfers to the Group by the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.

When the right-of-use assets relate to interests in leasehold land held as inventories, they are subsequently measured at the lower of cost and net realisable value in accordance with the Group’s policy for “inventories”. When a right-of-use asset meets the definition of investment property, it is included in investment properties. The corresponding right-of-use asset is initially measured at cost, and subsequently measured at fair value, in accordance with the Group’s policy for “investment properties”.

(b) Lease liabilities

Lease liabilities are recognised at the commencement date of the lease at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for termination of a lease, if the lease term reflects the Group exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recognised as an expense in the period in which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in lease payments (e.g., a change to future lease payments resulting from a change in an index or rate) or a change in assessment of an option to purchase the underlying asset.

The Group applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (that is those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the recognition exemption for leases of low-value assets to leases of office equipment and laptop computers that are considered to be of low value.

When the Group enters into a lease in respect of a low-value asset, the Group decides whether to capitalise the lease on a lease-by-lease basis. Lease payments on short-term leases and leases of low-value assets are recognised as an expense on a straight-line basis over the lease term.

Group as a lessor

When the Group acts as a lessor, it classifies at lease inception (or when there is a lease modification) each of its leases as either an operating lease or a finance lease.

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Leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. When a contract contains lease and non-lease components, the Group allocates the consideration in the contract to each component on a relative stand-alone selling price basis. Rental income is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of profit or loss due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.

Leases that transfer substantially all the risks and rewards incidental to ownership of an underlying asset to the lessee, are accounted for as finance leases.

Investments and other financial assets

Initial recognition and measurement

Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income, and fair value through profit or loss.

The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient of not adjusting the effect of a significant financing component, the Group initially measures a financial asset at its fair value plus in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient are measured at the transaction price determined under IFRS 15 in accordance with the policies set out for “Revenue recognition” below.

In order for a financial asset to be classified and measured at amortised cost or fair value through other comprehensive income, it needs to give rise to cash flows that are solely payments of principal and interest (“SPPI”) on the principal amount outstanding. Financial assets with cash flows that are not SPPI are classified and measured at fair value through profit or loss, irrespective of the business model.

The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Financial assets classified and measured at amortised cost are held within a business model with the objective to hold financial assets in order to collect contractual cash flows, while financial assets classified and measured at fair value through other comprehensive income are held within a business model with the objective of both holding to collect contractual cash flows and selling. Financial assets which are not held within the aforementioned business models are classified and measured at fair value through profit or loss.

All regular way purchases and sales of financial assets are recognised on the trade date, that is, the date that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace.

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as follows:

Financial assets at amortised cost (debt instruments)

Financial assets at amortised cost are subsequently measured using the effective interest method and are subject to impairment. Gains and losses are recognised in the statement of profit or loss when the asset is derecognised, modified or impaired.

Financial assets designated at fair value through other comprehensive income (equity investments)

Upon initial recognition, the Group can elect to classify irrevocably certain of its equity investments as equity investments designated at fair value through other comprehensive income when they meet the definition of equity under IAS 32 Financial Instruments: Presentation and are not held for trading. The classification is determined on an instrument-by-instrument basis.

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Gains and losses on these financial assets are never recycled to the statement of profit or loss. Dividends are recognised as other income in the statement of profit or loss when the right of payment has been established, it is probable that the economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably, except when the Group benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in other comprehensive income. Equity investments designated at fair value through other comprehensive income are not subject to impairment assessment.

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value recognised in the statement of profit or loss.

This category includes derivative instruments and certain of equity investments which the Group had not irrevocably elected to classify at fair value through other comprehensive income. Dividends on equity investments classified as financial assets at fair value through profit or loss are also recognised as other income in the statement of profit or loss when the right of payment has been established, it is probable that the economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.

A derivative embedded in a hybrid contract, with a financial liability or non-financial host, is separated from the host and accounted for as a separate derivative if the economic characteristics and risks are not closely related to the host; a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and the hybrid contract is not measured at fair value through profit or loss. Embedded derivatives are measured at fair value with changes in fair value recognised in the statement of profit or loss. Reassessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required or a reclassification of a financial asset out of the fair value through profit or loss category.

Derecognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from the Group’s combined statement of financial position) when:

• the rights to receive cash flows from the asset have expired; or

• the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a “pass-through” arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risk and rewards of ownership of the asset. When it has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the Group continues to recognise the transferred asset to the extent of the Group’s continuing involvement. In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

Impairment of financial assets

The Group recognises an allowance for expected credit losses (“ECLs”) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

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General approach

ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12 months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

At each reporting date, the Group assesses whether the credit risk on a financial instrument has increased significantly since initial recognition. When making the assessment, the Group compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information that is available without undue cost or effort, including historical and forward-looking information.

The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

Debt investments at fair value through other comprehensive income and financial assets at amortised cost are subject to impairment under the general approach and they are classified within the following stages for measurement of ECLs except for trade receivables and contract assets which apply the simplified approach as detailed below.

Stage 1 — Financial instruments for which credit risk has not increased significantly since initial recognition and for which the loss allowance is measured at an amount equal to 12-month ECLs

Stage 2 — Financial instruments for which credit risk has increased significantly since initial recognition but that are not credit-impaired financial assets and for which the loss allowance is measured at an amount equal to lifetime ECLs

Stage 3 — Financial assets that are credit-impaired at the reporting date (but that are not purchased or originated credit-impaired) and for which the loss allowance is measured at an amount equal to lifetime ECLs

Simplified approach

For trade receivables that do not contain a significant financing component or when the Group applies the practical expedient of not adjusting the effect of a significant financing component, the Group applies the simplified approach in calculating ECLs. Under the simplified approach, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

For trade receivables that contain a significant financing component and lease receivables, the Group chooses as its accounting policy to adopt the simplified approach in calculating ECLs with policies as described above.

Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, interest-bearing bank and other borrowings, or payables, as appropriate.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

The Group’s financial liabilities include trade and other payables, interest-bearing bank and other borrowings, lease liabilities and financial liabilities at fair value through profit or loss.

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Subsequent measurement

The subsequent measurement of financial liabilities depends on their classification as follows:

Financial liabilities at fair value through profit or loss

Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by IFRS 9. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognised in the statement of profit or loss. The net fair value gain or loss recognised in the statement of profit or loss does not include any interest charged on these financial liabilities.

Financial liabilities designated upon initial recognition as at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in IFRS 9 are satisfied. Gains or losses on liabilities designated at fair value through profit or loss are recognised in the statement of profit or loss, except for the gains or losses arising from the Group’s own credit risk which are presented in other comprehensive income with no subsequent reclassification to the statement of profit or loss. The net fair value gain or loss recognised in the statement of profit or loss does not include any interest charged on these financial liabilities.

Financial liabilities at amortised cost (loans and borrowings)

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost, using the effective interest rate method unless the effect of discounting would be immaterial, in which case they are stated at cost. Gains and losses are recognised in the statement of profit or loss when the liabilities are derecognised as well as through the effective interest rate amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective interest rate amortisation is included in finance costs in the statement of profit or loss.

Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled, or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and a recognition of a new liability, and the difference between the respective carrying amounts is recognised in the statement of profit or loss.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

Cash and cash equivalents

For the purpose of the combined statement of cash flows, cash and cash equivalents comprise cash on hand and demand deposits, and short term highly liquid investments that are readily convertible into known amounts of cash, are subject to an insignificant risk of changes in value, and have a short maturity of generally within three months when acquired, less bank overdrafts which are repayable on demand and form an integral part of the Group’s cash management.

For the purpose of the combined statement of financial position, cash and cash equivalents comprise cash on hand and at banks, including term deposits, and assets similar in nature to cash, which are not restricted as to use.

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Provisions

A provision is recognised when a present obligation (legal or constructive) has arisen as a result of a past event and it is probable that a future outflow of resources will be required to settle the obligation, provided that a reliable estimate can be made of the amount of the obligation.

When the effect of discounting is material, the amount recognised for a provision is the present value at the end of the reporting period of the future expenditures expected to be required to settle the obligation. The increase in the discounted present value amount arising from the passage of time is included in finance costs in the statement of profit or loss.

Income tax

Income tax comprises current and deferred tax. Income tax relating to items recognised outside profit or loss is recognised outside profit or loss, either in other comprehensive income or directly in equity.

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period, taking into consideration interpretations and practices prevailing in the countries in which the Group operates.

Deferred tax is provided, using the liability method, on all temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all taxable temporary differences, except:

• when the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• in respect of taxable temporary differences associated with investments in subsidiaries and associates, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, and the carryforward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carryforward of unused tax credits and unused tax losses can be utilised, except:

• when the deferred tax asset relating to the deductible temporary differences arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• in respect of deductible temporary differences associated with investments in subsidiaries and associates, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at the end of each reporting period and are recognised to the extent that it has become probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

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Deferred tax assets and deferred tax liabilities are offset if and only if the Group has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

Government grants

Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the costs, which it is intended to compensate, are expensed.

Where the grant relates to an asset, the fair value is credited to a deferred income account and is released to the statement of profit or loss over the expected useful life of the relevant asset by equal annual instalments or deducted from the carrying amount of the asset and released to the statement of profit or loss by way of a reduced depreciation charge.

Revenue recognition

Revenue from contracts with customers

Revenue from contracts with customers is recognised when control of goods or services is transferred to the customers at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services.

When the consideration in a contract includes a variable amount, the amount of consideration is estimated to which the Group will be entitled in exchange for transferring the goods or services to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved.

When the contract contains a financing component which provides the customer with a significant benefit of financing the transfer of goods or services to the customer for more than one year, revenue is measured at the present value of the amount receivable, discounted using the discount rate that would be reflected in a separate financing transaction between the Group and the customer at contract inception. When the contract contains a financing component which provides the Group with a significant financial benefit for more than one year, revenue recognised under the contract includes the interest expense accreted on the contract liability under the effective interest method. For a contract where the period between the payment by the customer and the transfer of the promised goods or services is one year or less, the transaction price is not adjusted for the effects of a significant financing component, using the practical expedient in IFRS 15.

(a) Sale of properties

Revenue is recognised when or as the control of the asset is transferred to the customer.

In determining the transaction price, the Group adjusts the promised amount of consideration for the effect of financing component if it is significant.

Property sales contracts are recognised at a point of time when the control of the property is transferred. Revenue is recognised when the customer obtains the physical possession or the legal title of the completed property and the Group has the present right to payment and the collection of the consideration is probable.

(b) Management consulting and other services

Management consulting and other services derived from the provision of support services in connection with development of property projects is recognised when the relevant services are rendered and the customer simultaneously receives and consumes the benefits provided by the entity’s performance as the entity performs.

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Revenue from other sources

Property lease income is recognised on a time proportion basis over the lease terms. Variable lease payments that do not depend on an index or a rate are recognised as income in the accounting period in which they are incurred.

Contract liabilities

A contract liability is recognised when a payment is received or a payment is due (whichever is earlier) from a customer before the Group transfers the related goods or services. Contract liabilities are recognised as revenue when the Group performs under the contract (i.e., transfers control of the related goods or services to the customer).

Contract cost assets

Other than the costs which are capitalised as inventories, property, plant and equipment and intangible assets, costs incurred to fulfil a contract with a customer are capitalised as an asset if all of the following criteria are met:

(a) The costs relate directly to a contract or to an anticipated contract that the entity can specifically identify.

(b) The costs generate or enhance resources of the entity that will be used in satisfying (or in continuing to satisfy) performance obligations in the future.

The capitalised contract cost assets are amortised and charged to the statement of profit or loss on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the asset relates. Other contract costs are expensed as incurred.

Employee benefits

Pension scheme

The employees of the Group’s subsidiaries which operate in Mainland China are required to participate in a central pension scheme operated by the local municipal government. These subsidiaries are required to contribute a certain percentage of their payroll costs to the central pension scheme. The contributions are charged to the statement of profit or loss as they become payable in accordance with the rules of the central pension scheme.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, i.e., assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets. The capitalisation of such borrowing costs ceases when the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs capitalised. All other borrowing costs are expensed in the period in which they are incurred. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

Dividends

Final dividends are recognised as a liability when they are approved by the shareholders in a general meeting. Proposed final dividends are disclosed in the notes to the financial statements.

Interim dividends are simultaneously proposed and declared, because the Company’s memorandum and articles of association grant the directors the authority to declare interim dividends. Consequently, interim dividends are recognised immediately as a liability when they are proposed and declared.

Foreign currencies

The Historical Financial Information is presented in RMB because the Group’s principal operations are carried out in Mainland China. The functional currency of the Company and certain subsidiaries incorporated outside Mainland China is HKD and the functional currency of the subsidiaries established in Mainland China is RMB, which

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Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was measured. The gain or loss arising on translation of a non-monetary item measured at fair value is treated in line with the recognition of the gain or loss on change in fair value of the item (i.e., translation difference on the item whose fair value gain or loss is recognised in other comprehensive income or profit or loss is also recognised in other comprehensive income or profit or loss, respectively).

In determining the exchange rate on initial recognition of the related asset, expense or income on the derecognition of a non-monetary asset or non-monetary liability relating to an advance consideration, the date of initial transaction is the date on which the Group initially recognises the non-monetary asset or non-monetary liability arising from the advance consideration. If there are multiple payments or receipts in advance, the Group determines the transaction date for each payment or receipt of the advance consideration.

The functional currencies of certain overseas subsidiaries and associates are currencies other than RMB. As at the end of the reporting period, the assets and liabilities of these entities are translated into RMB at the exchange rates prevailing at the end of each of the Relevant Periods and its statements of profit or loss and other comprehensive income are translated into RMB at the weighted average exchange rates for the year.

The resulting exchange differences are recognised in other comprehensive income and accumulated in the exchange fluctuation reserve. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in the statement of profit or loss.

4. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES

The preparation of the Group’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and their accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amounts of the assets or liabilities affected in the future.

Judgements

In the process of applying the Group’s accounting policies, management has made the following judgements, apart from those involving estimations, which have the most significant effect on the amounts recognised in the Historical Financial Information:

Classification of subsidiaries and associates

The classification of an investment as a subsidiary or an associate is based on whether the Group is determined to have control or significant influence over the investee, which involves judgements through the analysis of various factors, including the Group’s representation on the chief decision-making authorities of an investee, such as board of directors’ meetings and shareholders’ meetings, as well as other facts and circumstances.

Subsidiaries are combined, which means that each of their assets, liabilities and transactions are included line-by-line in the Group’s combined financial statements. The interests in associates are equity accounted for as investments on the combined statements of financial position.

Deferred tax assets

Deferred tax assets are recognised for all deductible temporary differences, and carryforward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carryforward of unused tax credits and unused tax losses can be utilised.

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Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. Further details are included in note 21 to the Historical Financial Information.

Significant financing component

In determining the transaction price, the Group adjusts the promised amount of consideration for the effects of the timing value of money if the timing of payments agreed by the parties to the contract provides the Group with a significant benefit of financing.

Certain advance payments received from customers provide a significant financing benefit to the Group. Although the Group is required by the government to place all deposits and periodic payments received from the pre-completion sales in a stakeholder account, the Group is able to benefit from those advance payments as it can withdraw money from that account to pay for expended construction costs on the project. The advance payments received in effect reduce the Group’s need to rely on other sources of financing.

The amount of the financing component is estimated at the inception of the contract. After contract inception, the discount rate is not updated for changes in interest rates or other circumstances, such as a change in credit risk. The period of financing is from the time that the payment is received until the transfer of goods to the customers is completed.

Estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below:

Provision for properties under development and completed properties held for sale

The Group’s properties under development and completed properties held for sale are stated at the lower of cost and net realisable value. Based on the Group’s historical experience and the nature of the subject properties, the Group makes estimates of the selling prices, the costs of completion of properties under development, and the costs to be incurred in selling the properties based on prevailing market conditions.

If there is an increase in costs to completion or a decrease in net sales value, the net realisable value will decrease and this may result in a provision for properties under development and completed properties held for sale. Such provision requires the use of judgement and estimates. Where the expectation is different from the original estimate, the carrying value and provision for properties in the periods in which such estimate is changed will be adjusted accordingly.

PRC corporate income tax (“CIT”)

The Group is subject to corporate income taxes in the PRC. As a result of the fact that certain matters relating to the income taxes have not been confirmed by the local tax bureau, objective estimate and judgement based on currently enacted tax laws, regulations and other related policies are required in determining the provision for income taxes to be made. Where the final tax outcome of these matters is different from the amounts originally recorded, the differences will impact on the income tax and tax provisions in the period in which the differences realise.

PRC land appreciation tax (“LAT”)

The Group is subject to LAT in the PRC. The provision for LAT is based on management’s best estimates according to the understanding of the requirements set forth in the relevant PRC tax laws and regulations. The actual LAT liabilities are subject to the determination by the tax authorities upon the completion of the property development projects. The Group has not finalised its LAT calculation and payments with the tax authorities for certain of its property development projects. The final outcome could be different from the amounts that were initially recorded, and any differences will impact on the LAT expenses and the related provision in the period in which the differences realise.

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5. OPERATING SEGMENT INFORMATION

Management monitors the operating results of the Group’s business which includes property development by project location for the purpose of making decisions about resource allocation and performance assessment, while no revenue, net profit or total assets from a single location exceeded 10% of the Group’s combined revenue, net profit or total assets, respectively. As all locations have similar economic characteristics with similar nature of property development and leasing and management, nature of the aforementioned business processes, type or class of customers for the aforementioned businesses and methods used to distribute the properties or provide the services, all locations were aggregated as one reportable operating segment.

Geographical information

No geographical information is presented as the Group’s revenue from the external customers is derived solely from its operation in Mainland China and no non-current assets of the Group are located outside Mainland China.

Information about major customers

No revenue from sales to a single customer or a group of customers under common control accounted for 10% or more of the Group’s revenue for each of the Relevant Periods.

6. REVENUE, OTHER INCOME AND GAINS

An analysis of revenue is as follows:

Year ended 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Revenue from contracts with customers...... 2,485,812 2,098,815 5,607,920 Revenue from other sources Property lease income ...... 17,915 26,252 27,919

2,503,727 2,125,067 5,635,839

Revenue from contracts with customers

(a) Disaggregated revenue information

Year ended 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Types of goods or services Sale of properties ...... 2,479,208 2,074,469 5,538,514 Management consulting services ...... 6,604 18,296 53,243 Other services ...... – 6,050 16,163

2,485,812 2,098,815 5,607,920

Timing of revenue recognition Properties transferred at a point in time...... 2,479,208 2,074,469 5,538,514 Services transferred over time...... 6,604 24,346 69,406

2,485,812 2,098,815 5,607,920

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Refer to note 32 for information relating to the amounts of revenue recognised in each of the Relevant Periods that were included in the contract liabilities at the beginning of each of the Relevant Periods.

(b) Performance obligations

Information about the Group’s performance obligations is summarised below:

Sale of properties

The performance obligation is satisfied upon delivery of the properties and the Group has already received the payment or has the right to receive the payment probably.

Management consulting services

For management consulting services, the Group recognizes revenue in the amount that equals to the right to invoice which corresponds directly with the value to the customer of the Group’s performance to date. The Group has elected the practical expedient not to disclose the remaining performance obligations for these types of contracts. The majority of the management consulting service contracts do not have a fixed term. The term of the contracts for pre-delivery and consulting services is generally set to expire when the counterparties notify the Group that the services are no longer required.

Other services

For other services, the Group recognizes revenue on provision of support services in connection with the development of property projects is recognised when the relevant services are rendered and the customer simultaneously receives and consumes the benefits provided by the entity’s performance as the entity performs.

Other income and gains

Year ended 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Bank interest income ...... 3,896 8,117 15,209 Fund possession fee ...... 17,073 19,931 107,978 Forfeiture of deposits ...... 7,574 7,953 12,591 Government grants ...... 140 12,350 6,427 Dividend income from equity investments at FVOCI ...... 6,835 3,835 3,196 Investment income from financial assets at fair value through profit or loss...... 5,705 11,513 35,490 Fair value gains on investment properties ..... 3,730 198 – Change in fair value of financial assets at fair value through profit or loss...... 69 429 – Change in fair value of investments in property projects ...... 109,181 280,160 71,013 Others ...... 3,557 8,988 5,419

157,760 353,474 257,323

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7. PROFIT BEFORE TAX

The Group’s profit before tax from continuing operations is arrived at after charging / (crediting):

Year ended 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Cost of inventories sold (note 23) ...... 1,626,225 1,280,101 3,807,409 Cost of services provided ...... 5,072 14,819 34,782 Depreciation of property, plant and equipment (note 15) ...... 24,870 31,533 15,977 Depreciation of right-of-use assets (note 17).... 2,914 1,766 2,296 Amortisation of intangible assets (note 18)..... 599 735 703 Auditor’s remuneration ...... 464 789 3,553 Employee benefit expense (including directors’ and chief executive’s remuneration in note 9): –Wages and salaries ...... 71,964 114,780 153,293 –Pension scheme contributions and social welfare ...... 11,599 17,781 12,130 Impairment of financial assets, net: Impairment of trade receivables (note 24) .... 189 42 463 Impairment of financial assets included in prepayments, other receivables and other assets (note 26) ...... 110,508 (347) 871 Impairment losses recognised for properties under development (note 22) ...... 15,678 – – Change in fair value of financial assets at fair value through profit or loss (note 6) ...... (69) (429) – Change in fair value of investment properties (note 16) ...... (3,730) (198) 104 Change in fair value of investments in property projects (note 6)...... (109,181) (280,160) (71,013) Change in fair value of financial liabilities at fair value through profit or loss...... 17,544 22,691 58,191 Dividend income from equity investments at FVOCI (note 6) ...... (6,835) (3,835) (3,196) Bank interest income (note 6)...... (3,896) (8,117) (15,209) Net gain on disposal of items of property, plant and equipment ...... (410) (35) (77)

8. FINANCE COSTS

An analysis of finance costs from continuing operations is as follows:

Year ended 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Interest on loans and borrowings ...... 138,391 141,454 166,464 Interest expense arising from revenue contracts . . 41,011 42,987 70,225 Interest on lease liabilities ...... 11 100 120

Total interest expense on financial liabilities not at FVTPL...... 179,413 184,541 236,809 Less: Interest capitalised ...... (154,457) (147,444) (198,816)

24,956 37,097 37,993

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9. DIRECTORS’ AND CHIEF EXECUTIVE’S REMUNERATION

The Company did not have any chief executive, executive directors, non-executive directors and independent non-executive directors at any time during the Relevant Periods until the Company was incorporated on 5 November 2020. Mr. Fang Lu (“Mr. Fang”) was appointed as an executive director of the Company on 5 November 2020.

Subsequent to the end of the Relevant Periods, Ms. Zhang Jun and Mr. Wang Xiaoping were appointed as executive directors of the Company on 29 March 2021, and Ms. Zhang Jun was appointed as the chief executive officer of the Company on 29 March 2021.

Certain of the directors received remuneration from the subsidiaries now comprising the Group for their appointment as directors of these subsidiaries. The remuneration of each of these directors as recorded in the financial statements of the subsidiaries is set out below:

Year ended 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Fees ...... – – –

Salaries, allowances and benefits in kind ..... 3,387 5,774 6,195 Performance related bonus ...... 4,037 4,779 10,057 Pension scheme contributions ...... 330 437 267

7,754 10,990 16,519

(a) Independent non-executive directors

Mr. Feng Lun, Mr. Au Yeung Po Fung and Mr. Lu Lin were appointed as independent non-executive directors of the Company on [●] 2021. There was no emolument payable to the independent non-executive directors during the Relevant Periods.

(b) Executive directors and the chief executive officer

Year ended 31 December 2018 Salaries, allowances Pension and benefits Performance scheme Fee in kind related bonus contributions Total (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000)

Executive directors: Mr. Fang ...... – 1,748 1,834 145 3,727 Ms. Zhang Jun ...... – 764 1,488 98 2,350 Mr. Wang Xiaoping ...... – 875 715 87 1,677

– 3,387 4,037 330 7,754

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Year ended 31 December 2019 Salaries, allowances Pension and benefits Performance scheme Fee in kind related bonus contributions Total (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000)

Executive directors: Mr. Fang ...... – 2,882 2,022 160 5,064 Ms. Zhang Jun ...... – 1,822 1,452 142 3,416 Mr. Wang Xiaoping ...... – 1,070 1,305 135 2,510

– 5,774 4,779 437 10,990

Year ended 31 December 2020 Salaries, allowances Pension and benefits Performance scheme Fee in kind related bonus contributions Total (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000)

Executive directors: Mr. Fang ...... – 3,017 5,023 89 8,129 Ms. Zhang Jun ...... – 2,077 4,464 89 6,630 Mr. Wang Xiaoping ...... – 1,101 570 89 1,760

– 6,195 10,057 267 16,519

Mr. Zhu Yu was appointed as a non-executive director of the Company on 29 March 2021. There was no emolument payable to the non-executive director during the Relevant Periods.

10. FIVE HIGHEST PAID EMPLOYEES

The five highest paid employees during the years ended 31 December 2018, 2019 and 2020 included 2, 2 and 2 directors, details of whose remuneration are set out in note 9 above. Details of the remaining 3, 3 and 3 highest paid employees who are neither a director nor chief executive of the Company are as follows:

Year ended 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Salaries, allowances and benefits in kind ..... 1,882 2,932 3,263 Performance related bonus ...... 3,259 2,947 7,975 Pension scheme contributions ...... 195 242 206

5,336 6,121 11,444

– I-37 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

The number of non-director and non-chief executive highest paid employees whose remuneration fell within the following bands is as follows:

Year ended 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

HK$1,500,001 to HK$2,000,000 ...... 2 – – HK$2,000,001 to HK$2,500,000 ...... – 3 – HK$2,500,001 to HK$3,000,000 ...... 1 – – HK$3,000,001 to HK$3,500,000 ...... – – 1 HK$3,500,001 to HK$4,000,000 ...... – – – HK$4,000,001 to HK$4,500,000 ...... – – 1 HK$4,500,001 to HK$5,000,000 ...... – – 1

333

11. INCOME TAX

The Group is subject to income tax on an entity basis on profits arising in or derived from the jurisdictions in which members of the Group are domiciled and operate. The Company was incorporated in the Cayman Islands as an exempted company with limited liability under the Companies Act of the Cayman Islands and accordingly is not subject to income tax. Pursuant to the rules and regulations of the British Virgin Islands, the Group is not subject to any tax in the British Virgin Islands. Hong Kong profits tax has not been provided as the Group did not derive any assessable profits in Hong Kong during the Relevant Periods.

Subsidiaries of the Group operating in Mainland China are subject to the PRC corporate income tax with a tax rate of 25% for the Relevant Periods.

LAT is levied at progressive rates ranging from 30% to 60% on the appreciation of land value, being the proceeds from the sale of properties less deductible expenditures including land costs, borrowing costs and other property development expenditures. The Group has estimated, made and included in taxation a provision for LAT according to the requirements set forth in the relevant Mainland China tax laws and regulations. The LAT provision is subject to the final review and approval by the local tax bureau.

Year ended 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Current tax: Corporate income tax ...... 162,752 360,600 622,425 LAT...... 150,910 161,766 309,511 Deferred tax ...... (30,610) (200,817) (307,933)

Total tax charge for the year ...... 283,052 321,549 624,003

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A reconciliation of income tax expense applicable to profit before tax at the statutory rate for the jurisdictions in which the Company and the majority of its subsidiaries are domiciled to the income tax expense at the effective income tax rate for each of the Relevant Periods is as follows:

Year ended 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Profit before tax from continuing operations.... 655,684 758,237 1,494,815 Profit before tax from discontinued operations . . (7,920) 92,235 (28,162)

647,764 850,472 1,466,653

Tax at the statutory tax rate ...... 161,941 212,618 366,663 Lower tax rates for specific provinces or enacted by local authority ...... (29) (225) – Profits and losses attributable to associates .... (2,344) (2,812) (1,289) Income not subject to tax ...... (2,692) (959) (799) Expenses not deductible for tax...... 6,832 8,069 11,520 Tax losses and deductible temporary differences utilised from previous years ...... (102) (8,195) – Tax losses and deductible temporary differences not recognised ...... 6,361 5,836 15,775 Provision for LAT ...... 150,910 161,766 309,511 Tax effect on LAT ...... (37,728) (40,441) (77,378)

Tax charge at the Group’s effective rate ...... 283,149 335,657 624,003

Tax charge from continuing operations at the effective rate...... 283,052 321,549 624,003

Tax charge from discontinued operations at the effective rate...... 97 14,108 –

The share of tax charges attributable to associates amounted to RMB3,125,000, RMB3,749,000, RMB3,444,000 for the years ended 31 December 2018, 2019 and 2020, respectively. The share of tax credit attributable to associates amounted to nil, nil, RMB1,725,000 for the years ended 31 December 2018, 2019 and 2020, respectively. Both are included in “Share of profits and losses of associates” in the combined statements of profit or loss and in note 12 for discontinued operations.

Tax payables in the combined statements of financial position represent the following:

31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Tax payables: Corporate income tax 483,411 612,905 761,459 LAT 355,281 479,773 644,085

838,692 1,092,678 1,405,544

– I-39 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

12. DISCONTINUED OPERATION

In preparation for the [REDACTED] and in order to focus resources on the core business of property development, the Group has decided to separate and divide its other business which were originally carried out by the Group, among others, included property management, facility installation, elderly care and education service business (the “Other Business”) into a separate company. Then Ningxia Zhongfang Development Group Co., Ltd. (“Ningxia Zhongfang Development”) was established to carry out the Other Business immediately upon the completion of the corporate division.

The net assets of the Other Business were distributed pro rata to the shareholders and the corporate division was completed on 1 December 2020. The shareholders and their equity interest in the Group and Ningxia Zhongfang Development are the same before and after the corporate division. The transaction was recognized and measured in accordance with “IFRIC 17 – Distribution of Non-cash Assets to Owners”. The fair value of the net assets attributable to Ningxia Zhongfang Development, subject to the distribution in specie, amounted to approximately RMB427,427,000 (book value: RMB421,388,000). The transaction resulted in a non-cash loss of approximately RMB6,039,000.

The operations of Ningxia Zhongfang Development were classified as discontinued operations during the Relevant Periods.

The results of Ningxia Zhongfang Development for the Relevant Periods are presented below:

Year ended 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Revenue ...... 46,215 173,951 52,573 Expenses ...... (60,198) (89,905) (82,169) Finance costs ...... (3,312) (3,058) (2,258) Share of profits and losses of associates ...... 9,375 11,247 10,331 Changes in fair value of the assets to be distributed ...... – – (6,039)

(Loss)/profit before tax from the discontinued operations ...... (7,920) 92,235 (28,162) Income tax: Related to pre-tax profit...... (97) (14,108) –

(Loss)/profit for the year from the discontinued operations ...... (8,017) 78,127 (28,162)

The net cash flows incurred by Ningxia Zhongfang Development are as follows:

Year ended 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Operating activities...... (25,045) (8,865) (10,053) Investing activities ...... 66,665 25,316 61,130 Financing activities...... (11,388) (9,058) (38,503)

Net cash inflow ...... 30,232 7,393 12,574

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The detail of fair value of the net assets of the discontinued operation on 1 December 2020 is as below:

As at 1 December 2020 (RMB’000)

Net assets: Property, plant and equipment 165,144 Right-of-use assets 34,874 Intangible assets 383 Trade receivables 299 Prepayments, other receivables and other assets 514,444 Cash and cash equivalents 62,190 Trade and bills payables (7,106) Other payables and accruals (244,379) Contract liabilities (43,901) Interest-bearing bank and other borrowings (53,037) Other current liabilities (3,000)

Non-controlling interests 1,516

427,427

An analysis of the net outflow of cash and cash equivalents in respect of discontinued operation is as follows:

As at 1 December 2020 (RMB’000)

Cash consideration – Cash and bank balances included in discontinued operations (62,190)

Net outflow of cash and cash equivalents in respect of discontinued operation (62,190)

In 2018, Ningdong energy and chemical industry base administration committee decided to acquire several parcels of land possessed by Ningdong Logistics Development Co., Ltd, a subsidiary of Other Business. Then related land use rights and property, plant and equipment amounted to RMB214,871,000 were classified as assets held for sale. This transaction was completed in 2019.

13. DIVIDENDS

31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Distribution in specie (Note (a)) – – 427,427 Dividend paid to the then equity holder of a subsidiary 38,682 17,920 98,561

38,682 17,920 525,988

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(a) As mentioned in Note 12, Ningxia Zhongfang Development was spun-off via a distribution in specie of the Group’s entire shareholding in Ningxia Zhongfang Development completed on 1 December 2020. The transaction was recognized and measured in accordance with “IFRIC 17 – Distribution of Non-cash Assets to Owners”. The fair value of the net assets attributable to Ningxia Zhongfang Development, subject to the distribution in specie, amounted to approximately RMB427,427,000. The transaction resulted in a non-cash loss of approximately RMB6,039,000 (Note 37).

14. EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT

Earnings per share information is not presented as its inclusion, for the purpose of this report, is not considered meaningful due to the Reorganization and the basis of presentation of the results of the Group for the Relevant Periods as disclosed in note 2.1 to the Historical Financial Information.

15. PROPERTY, PLANT AND EQUIPMENT

31 December 2018

Leasehold Furniture Motor Construction Buildings improvements and fixtures vehicles in progress Total (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000)

At 1 January 2018: Cost ...... 262,383 1,207 34,169 9,728 50,207 357,694 Accumulated depreciation .... (41,429) – (13,059) (7,700) – (62,188)

Net carrying amount ...... 220,954 1,207 21,110 2,028 50,207 295,506

At 1 January 2018, net of accumulated depreciation .... 220,954 1,207 21,110 2,028 50,207 295,506 Additions ...... 18,139 1,500 6,993 2,150 – 28,782 Transfer from completed properties held for sale ..... 149,987 – – – – 149,987 Disposals ...... (651) – (578) (84) (2,445) (3,758) Assets reclassified as held for sale...... (72,478) – (8,115) – (47,762) (128,355) Depreciation provided during the year ...... (17,941) (1,207) (5,063) (659) – (24,870)

At 31 December 2018, net of accumulated depreciation .... 298,010 1,500 14,347 3,435 – 317,292

At 31 December 2018: Cost ...... 338,210 1,500 27,860 10,196 – 377,766 Accumulated depreciation .... (40,200) – (13,513) (6,761) – (60,474)

Net carrying amount ...... 298,010 1,500 14,347 3,435 – 317,292

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31 December 2019

Leasehold Furniture Motor Construction Buildings improvements and fixtures vehicles in progress Total (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000)

At 1 January 2019: Cost ...... 338,210 1,500 27,860 10,196 – 377,766 Accumulated depreciation .... (40,200) – (13,513) (6,761) – (60,474)

Net carrying amount ...... 298,010 1,500 14,347 3,435 – 317,292

At 1 January 2019, net of accumulated depreciation .... 298,010 1,500 14,347 3,435 – 317,292 Additions ...... 5,299 8,081 12,039 145 24,624 50,188 Disposals ...... (3,141) – (153) (437) – (3,731) Depreciation provided during the year ...... (20,812) (1,501) (8,580) (640) – (31,533)

At 31 December 2019, net of accumulated depreciation .... 279,356 8,080 17,653 2,503 24,624 332,216

At 31 December 2019: Cost ...... 339,075 9,581 38,643 9,204 24,624 421,127 Accumulated depreciation .... (59,719) (1,501) (20,990) (6,701) – (88,911)

Net carrying amount ...... 279,356 8,080 17,653 2,503 24,624 332,216

31 December 2020

Leasehold Furniture Motor Construction Buildings improvements and fixtures vehicles in progress Total (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000)

At 1 January 2020: Cost ...... 339,075 9,581 38,643 9,204 24,624 421,127 Accumulated depreciation .... (59,719) (1,501) (20,990) (6,701) – (88,911)

Net carrying amount ...... 279,356 8,080 17,653 2,503 24,624 332,216

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Leasehold Furniture Motor Construction Buildings improvements and fixtures vehicles in progress Total (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000)

At 1 January 2020, net of accumulated depreciation .... 279,356 8,080 17,653 2,503 24,624 332,216 Additions ...... 17,340 – 2,542 – – 19,882 Transfer to investment properties ...... (123,664) – – – – (123,664) Disposals ...... (18,688) – – (74) – (18,762) Distribution of assets included in discontinued operations ..... (120,515) (6,144) (13,238) (623) (24,624) (165,144) Depreciation provided during the year ...... (13,710) (444) (1,570) (253) – (15,977)

At 31 December 2020, net of accumulated depreciation .... 20,119 1,492 5,387 1,553 – 28,551

At 31 December 2020: Cost ...... 49,087 1,492 10,078 7,771 – 68,428 Accumulated depreciation .... (28,968) – (4,691) (6,218) – (39,877)

Net carrying amount ...... 20,119 1,492 5,387 1,553 – 28,551

Certain of the Group’s property, plant and equipment with aggregate carrying amounts of approximately RMB12,269,000, RMB15,981,000 and RMB3,480,000 as at 31 December 2018, 2019 and 2020, respectively, have been pledged to secure bank and other borrowings granted to the Group (note 33).

16. INVESTMENT PROPERTIES

Completed (RMB’000)

Carrying amount at 1 January 2018 ...... 112,869 Net gain from a fair value adjustment...... 3,730

Carrying amount at 31 December 2018 ...... 116,599

Carrying amount at 1 January 2019 ...... 116,599 Net gain from a fair value adjustment...... 198

Carrying amount at 31 December 2019 ...... 116,797

Carrying amount at 1 January 2020 ...... 116,797 Transfer from an owner-occupied property ...... 123,664 Revaluation gains on transfer from property, plant and equipment to investment properties ...... 62,438 Net loss from a fair value adjustment ...... (104)

Carrying amount at 31 December 2020 ...... 302,795

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The Group’s investment properties are situated in Mainland China. The Group’s investment properties were revalued on 31 December 2018, 2019 and 2020 based on valuations performed by Jones Lang LaSalle Corporate Appraisal and Advisory Limited (“JLL”), an independent professionally qualified valuer, at RMB116,599,000, RMB116,797,000 and RMB302,795,000, respectively. The Group’s senior finance manager and the chief financial officer decide, after approval from the board of directors of the Company, to appoint which external valuer to be responsible for the external valuations of the Group’s properties. Selection criteria include market knowledge, reputation, independence and whether professional standards are maintained. The Group’s senior finance manager and the chief financial officer have discussions with the valuer on the valuation assumptions and valuation results when the valuation is performed for financial reporting.

Certain of the Group’s investment properties with aggregate carrying amounts of approximately RMB38,720,000, RMB36,682,000 and RMB34,644,000 as at 31 December 2018, 2019 and 2020, respectively, have been pledged to secure bank and other borrowings granted to the Group (note 33).

Fair value hierarchy

The following table illustrates the fair value measurement hierarchy of the Group’s investment properties:

Fair value measurement as at 31 December 2018 using Quoted prices in Significant Significant active observable unobservable markets inputs inputs (Level 1) (Level 2) (Level 3) Total (RMB’000) (RMB’000) (RMB’000) (RMB’000)

Recurring fair value measurement for: Commercial properties ...... – – 116,599 116,599

Fair value measurement as at 31 December 2019 using Quoted prices in Significant Significant active observable unobservable markets inputs inputs (Level 1) (Level 2) (Level 3) Total (RMB’000) (RMB’000) (RMB’000) (RMB’000)

Recurring fair value measurement for: Commercial properties ...... – – 116,797 116,797

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Fair value measurement as at 31 December 2020 using Quoted prices in Significant Significant active observable unobservable markets inputs inputs (Level 1) (Level 2) (Level 3) Total (RMB’000) (RMB’000) (RMB’000) (RMB’000)

Recurring fair value measurement for: Commercial properties ...... – – 302,795 302,795

During the Relevant Periods, there were no transfers of fair value measurements between Level 1 and Level 2 and no transfers into or out of Level 3.

Below is a summary of the valuation techniques used and the key inputs to the valuation of investment properties:

Range or weighted average 31 December Significant Valuation technique unobservable inputs 2018 2019 2020

Commercial properties Income approach Expected Rental value RMB19.8-37.5 RMB20.1-38.1 RMB20.7-39.0 completed (per square metre and per month)

Capitalization rate 4.5%-7.0% 4.5%-7.0% 4.5%-7.0%

The fair value of completed commercial properties is determined using the income approach by taking into account the rental income of the properties derived from the existing leases and/or achievable in the existing market with due allowance for the reversionary income potential of the leases, which have been then capitalised to determine the fair value at an appropriate capitalisation rate. Where appropriate, reference to the comparable sales transactions as available in the relevant market has also been considered.

A significant increase (decrease) in the estimated rental value would result in a significant increase (decrease) in the fair value of the investment properties. A significant increase (decrease) in the capitalisation rate would result in a significant decrease (increase) in the fair value of the investment properties.

17. LEASES

The Group as a lessee

The Group has lease contracts for various items of office premises used in its operations. Lump sum payments were made upfront to acquire the leased land from the owners with lease periods of 50 years, and no ongoing payments will be made under the terms of these land leases. Leases of office premises generally have lease terms between 3 and 5 years. Generally, the Group is restricted from assigning and subleasing the leased assets outside the Group.

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(a) Right-of-use assets

As at 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Carrying amount at the beginning of the year .... 125,671 38,741 39,351 Additions ...... 2,500 2,376 – Assets reclassified as held for sale ...... (86,516) – – Assets included in discontinued operations ...... – – (34,874) Amortisation provided during the year ...... (2,914) (1,766) (2,296)

Carrying amount at the end of the year ...... 38,741 39,351 2,181

(b) Lease liabilities

As at 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Carrying amount at the beginning of the year .... – 1,599 3,222 New leases ...... 2,500 2,376 – Accretion of interest recognised during the year . . . 11 100 120 Payments ...... (912) (853) (2,408)

Carrying amount at the end of the year ...... 1,599 3,222 934

Analysed into:...... Current portion ...... 781 2,288 934 Non-current portion ...... 818 934 –

As at 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Interest on lease liabilities ...... 11 100 120 Depreciation charge of right-of-use asset ...... 2,914 1,766 2,296

Total amount recognised in profit or loss ...... 2,925 1,866 2,416

(d) The total cash outflow for leases and future cash outflows relating to leases that have not yet commenced are disclosed in notes 37(c) and 42, respectively, to the financial statements.

The Group as a Lessor

The Group leases its investment properties (note 16) under operating lease arrangements. The terms of the leases generally require the tenants to pay security deposits and provide for periodic rent adjustments according to the then prevailing market conditions. Rental income recognised by the Group during the Relevant Periods was RMB17,915,000, RMB26,252,000, RMB27,919,000 for the years ended 31 December 2018, 2019 and 2020, respectively, details of which are included in note 6 to the History Financial Information.

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At the end of each of the Relevant Periods, the undiscounted lease payments receivable by the Group in future periods under non-cancellable operating leases with its tenants are as follows:

As at 31 December 2018 2019 2020 (RMB’000 (RMB’000) (RMB’000)

Within one year ...... 14,970 14,375 17,263 After one year but within two years ...... 10,456 9,403 13,524 After two years ...... 33,601 15,584 26,115

59,027 39,362 56,902

18. INTANGIBLE ASSETS

Software and others (RMB’000)

31 December 2018 At the beginning of the year: Cost ...... 914 Accumulated depreciation ...... (539)

Net carrying amount ...... 375

Carrying amount at the beginning of the year ...... 375 Additions ...... 1,845 Amortisation provided during the year ...... (599)

Carrying amount at the end of the year ...... 1,621

At the end of the year: Cost ...... 2,763 Accumulated amortisation...... (1,142)

Net carrying amount ...... 1,621

31 December 2019 At the beginning of the year:...... Cost ...... 2,763 Accumulated depreciation ...... (1,142)

Net carrying amount ...... 1,621

Carrying amount at the beginning of the year ...... 1,621 Additions ...... 79 Amortisation provided during the year ...... (735)

Carrying amount at the end of the year ...... 965

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Software and others (RMB’000)

At the end of the year: Cost ...... 2,842 Accumulated amortisation...... (1,877)

Net carrying amount ...... 965

31 December 2020 At the beginning of the year: Cost ...... 2,842 Accumulated depreciation ...... (1,877)

Net carrying amount ...... 965

Carrying amount at the beginning of the year ...... 965 Additions ...... 337 Assets included in discontinued operations ...... (383) Amortisation provided during the year ...... (703)

Carrying amount at the end of the year ...... 216

At the end of the year: Cost ...... 2,579 Accumulated amortisation...... (2,363)

Net carrying amount ...... 216

19. INVESTMENTS IN ASSOCIATES

As at 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Share of net assets...... 27,759 37,046 118,174

The Group’s receivable and payable balances with the associates are disclosed in note 39 to the Historical Financial Information.

The Group prepared profit forecast for each underlying project operated by these associates, and closely monitor the status of such projects. Based on the foregoing, the directors of the Company are of the view that these associates operated in line with the original plan, there was no indication of impairment for investments in associates and thus no impairment testing was needed at the end of each period during the Track Record Period. No provision for impairment was necessary as at December 31, 2018, 2019 and 2020.

As at 31 December 2020, the Group’s shareholding in the associates includes the investment in Baotou Shimao New-development real estate development Co., Ltd. amounted to RMB103,204,000. The projects operated by Baotou Shimao New-development Real Estate Development Co., Ltd. were at initial development stage for the year ended December 31, 2020.

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(a) Particulars of the Group’s material associates are as follows:

Statutory percentage of Nominal value ownership interest Place and year of registered attributable to Principal Name of companies of registration share capital the Group activities (RMB’000)

Yinchuan Zhong Fang PRC/1995 16,000 35% Property Housing Property management Management Co., Ltd. . . . services Baotou Shimao New- PRC/2019 27,000 40% Property development real estate development development Co., Ltd. . . . Xian Ningzhu Real Estate PRC/2020 12,000 40% Property Co., Ltd...... development

The associates have been accounted for using the equity method in this financial information.

(b) The following table illustrates the aggregate financial information of the Group’s associates that are not individually material:

As at 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Share of the associates’ loss for the year ...... – – (5,176) Share of the associates’ total comprehensive loss ...... – – (5,176) Aggregate carrying amount of the Group’s investments in the associates ...... 27,759 37,046 118,174

20. INVESTMENTS IN PROPERTY PROJECTS

As at 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Investments in property projects ...... 331,487 827,870 460,354

Above financial asset represents the Group’s interests in property projects of which variable returns are determined based on the financial performance of the relevant property units specified in the cooperation arrangement with the counterparty, and it is measured at fair value at the end of the Relevant Period. The fair value at 31 December 2018, 2019 and 2020 has been arrived at on the basis of valuation carried out by JLL, a firm of independent qualified professional valuer which is not connected with the Group, who has appropriate qualifications and recent experiences in the valuation of similar properties in the relevant locations. Details of the fair value measurements are set out in note 41.

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21. DEFERRED TAX

The movements in deferred tax assets and liabilities during each of the Relevant Periods are as follows:

Deferred tax assets

Fair value Losses Advertising adjustments available for fee for of financial offsetting offsetting Unrealised Impairment liabilities at against future against future Accrued revenue losses on fair value taxable taxable construction received in financial through profits profits cost advance Accrued LAT assets profit or loss Total (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000)

At 1 January 2018 . . . 105,209 6,381 1,794 54,052 73,017 – 26,337 266,790 Deferred tax credited to profit or loss during the year (note 11). . . 10,244 (4,308) (1,794) 36,642 15,803 173 4,386 61,146

At 31 December 2018 and 1 January 2019 . . 115,453 2,073 – 90,694 88,820 173 30,723 327,936 Deferred tax charged/ credited to profit or loss during the year (note 11) ...... (14,965) (628) – 259,285 31,123 (76) 5,673 280,412

At 31 December 2019 and 1 January 2020 . . 100,488 1,445 – 349,979 119,943 97 36,396 608,348 Deferred tax charged/ credited to profit or loss during the year (note 11) ...... (18,225) (405) 5,469 306,979 41,078 333 14,548 349,777

At 31 December 2020 . . 82,263 1,040 5,469 656,958 161,021 430 50,944 958,125

Deferred tax liabilities

Fair value Fair value adjustments of Fair value adjustments of investment in adjustments of Costs to investment property financial assets obtain properties projects at FVOCI contracts Total (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000)

At 1 January 2018 ...... 17,492 – 7,926 – 25,418 Deferred tax credited to profit or loss during the year (note 11) ...... 932 27,295 – 2,309 30,536 Deferred tax credited to equity during the year ...... – – (365) – (365)

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At 31 December 2018 and 1 January 2019 ...... 18,424 27,295 7,561 2,309 55,589 Deferred tax credited to profit or loss during the year (note 11) ...... 50 70,040 – 9,505 79,595 Deferred tax credited to equity during the year ...... – – (9,500) – (9,500)

At 31 December 2019 and 1 January 2020 ...... 18,474 97,335 (1,939) 11,814 125,684 Deferred tax credited to profit or loss during the year (note 11) ...... (26) 17,753 – 24,117 41,844 Deferred tax credited to equity during the year ...... 15,610 – (3,483) – 12,127

At 31 December 2020 ...... 34,058 115,088 (5,422) 35,931 179,655

For presentation purposes, certain deferred tax assets and liabilities amounting to RMB25,406,000, RMB22,410,000 and RMB42,551,000 have been offset in the combined statements of financial position as at 31 December 2018, 2019 and 2020, respectively. The following is an analysis of the deferred tax balances for financial reporting purposes:

As at 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Net deferred tax assets recognised in the combined statements of financial position .... 302,530 585,938 915,574

Net deferred tax liabilities recognised in the combined statements of financial position . . . 30,183 103,274 137,104

Pursuant to the PRC Corporate Income Tax Law, a 10% withholding tax is levied on dividends declared to foreign investors from the foreign investment enterprises established in Mainland China. The requirement is effective from 1 January 2008 and applies to earnings after 31 December 2007. A lower withholding tax rate may be applied if there is a tax treaty between Mainland China and the jurisdiction of the foreign investors. For the Group, the applicable rate is 10%. The Group is therefore liable for withholding taxes on dividends distributed by those subsidiaries established in Mainland China in respect of earnings generated from 1 January 2008.

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At 31 December 2018, 2019 and 2020, no deferred tax has been recognised for withholding taxes that would be payable on the unremitted earnings that are subject to withholding taxes of the Company and the Group’s subsidiaries established in Mainland China. In the opinion of the directors of the Company, the Group’s fund will be retained in Mainland China for the expansion of the Group’s operation, so it is not probable that these subsidiaries will distribute such earnings in the foreseeable future. The aggregate amounts of temporary differences associated with investments in subsidiaries and associates in Mainland China for which deferred tax liabilities have not been recognised totalled approximately RMB2,013,322,000, RMB2,500,210,000 and RMB2,730,805,000 as at 31 December 2018, 2019 and 2020, respectively.

Deferred tax assets have not been recognised in respect of the following items:

As at 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Tax losses ...... 23,864 14,340 19,840 Deductible temporary differences...... 1,172 1,260 1,260

25,036 15,600 21,100

Deferred tax assets are recognised for tax losses carried forward to the extent that the realisation of the related tax benefits through future taxable profits is probable.

As at December 31, 2018, 2019 and 2020, the Group did not recognize deferred tax assets of approximately RMB5,966,000, RMB3,585,000, and RMB4,960,000 in respect of losses amounting to approximately RMB23,864,000, RMB14,340,000, and RMB19,840,000, respectively, that can be carried forward to offset against future taxable income. These tax losses will expire up to and including years 2021, 2022, 2023, 2024 and 2025, respectively.

22. PROPERTIES UNDER DEVELOPMENT

As at 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

At the beginning of the year ...... 2,837,816 5,720,183 10,684,044 Additions ...... 4,482,849 6,009,399 11,868,067 Transferred to completed properties held for sale ...... (1,626,004) (1,045,538) (4,032,549) Impairment losses ...... (15,678) – – Impairment losses transferred to completed properties held for sale ...... 41,200 – –

At the end of the year ...... 5,720,183 10,684,044 18,519,562

Certain of the Group’s properties under development with aggregate carrying amounts of approximately RMB2,071,400,000, RMB3,175,692,000 and RMB3,551,669,000 as at 31 December 2018, 2019 and 2020, respectively, have been pledged to secure bank and other borrowings granted to the Group (note 33).

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23. COMPLETED PROPERTIES HELD FOR SALE

As at 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

At the beginning of the year ...... 2,100,080 1,908,672 1,674,109 Transferred from properties under development . . 1,626,004 1,045,538 4,032,549 Impairment losses transferred from properties under development ...... (41,200) – – Transferred to property, plant and equipment . . . (149,987) – – Transferred to cost of inventories sold ...... (1,626,225) (1,280,101) (3,807,409)

At the end of the year ...... 1,908,672 1,674,109 1,899,249

Certain of the Group’s completed properties held for sale with aggregate carrying amounts of approximately RMB287,609,000, RMB206,403,000 and RMB301,474,000 as at 31 December 2018, 2019 and 2020, respectively, have been pledged to secure bank and other borrowings granted to the Group (note 33).

24. TRADE RECEIVABLES

As at 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Trade receivables ...... 14,681 11,790 23,579 Less: Impairment ...... (189) (231) (694)

At the end of the year ...... 14,492 11,559 22,885

The Group’s trade receivables primarily consist of receivables from its property sales and property lease. Proceeds from property sales and property lease are generally received in accordance with the terms stipulated in the sale and purchase agreements. There is generally no credit period granted to the property purchasers. Trade receivables from management consulting and other services are received in accordance with the terms of the relevant agreements, which is due for payment upon the issuance of demand note. Trade receivables are settled based on the progress payment schedule stipulated in the contract. The Group seeks to maintain strict control over its outstanding receivables and has a credit control department to minimise credit risk. Overdue balances are reviewed regularly by senior management. In view of the aforementioned and the fact that the Group’s trade receivables relate to a large number of diversified customers, there is no significant concentration of credit risk. The Group does not hold any collateral or other credit enhancements over its trade receivable balances. Trade receivables are non-interest-bearing.

An ageing analysis of the trade receivables as at the end of each of the Relevant Periods, based on the invoice date and net of loss allowance, is as follows:

As at 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Within 1 year...... 13,971 9,549 18,972 Over 1 year ...... 521 2,010 3,913

14,492 11,559 22,885

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The movements in the loss allowance for impairment of trade receivables are as follows:

As at 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

At the beginning of the year ...... – 189 231 Impairment losses ...... 189 42 463

At the end of the year ...... 189 231 694

An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses. The provision rates are based on days past due for groupings of various customer segments with similar loss patterns. The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions. Generally, trade receivables are written off if past due for more than one year and are not subject to enforcement activity.

Set out below is the information about the credit risk exposure on the Group’s trade receivables using a provision matrix:

As at 31 December 2018:

Trade receivables ageing Within 1 year 1 to 2 years Over 2 years Total

Expected credit loss rate ...... 1.1% 6.4% – 1.3% Gross carrying amount ...... 14,124 557 – 14,681 Expected credit losses ...... 153 36 – 189

As at 31 December 2019:

Trade receivables ageing Within 1 year 1 to 2 years Over 2 years Total

Expected credit loss rate ...... 1.5% 4.1% – 2.0% Gross carrying amount ...... 9,694 2,096 – 11,790 Expected credit losses ...... 145 86 – 231

As at 31 December 2020:

Trade receivables ageing Within 1 year 1 to 2 years Over 2 years Total

Expected credit loss rate ...... 1.5% 5.6% 58.4% 2.6% Gross carrying amount ...... 19,257 4,005 317 23,579 Expected credit losses ...... 285 224 185 694

25. CONTRACT COST ASSETS

As at 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Contract costs arising from sale of properties .... 29,429 63,635 170,148

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Management expected that the contract acquisition costs, which represented primarily sales commission for obtaining property sale contracts, are recoverable. The Group has deferred the amounts paid and will charge them to profit or loss when the related revenue is recognised. As at 31 December 2018, 2019 and 2020, the amounts charged to profit or loss were RMB24,507,000, RMB19,974,000, and RMB58,775,000 respectively, and there was no impairment loss in relation to the remaining balance.

26. PREPAYMENTS, OTHER RECEIVABLES AND OTHER ASSETS

As at 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Deposits for land auction ...... 780,750 3,455,013 2,221,380 Receivables related to land use rights to be jointly acquired with third parties (Note (i)) . . – – 1,882,152 Prepayments for acquisition of land use rights . . 345,840 930,857 1,354,524 Cooperative operation receivables (Note (ii)) . . . 306,263 446,927 1,006,015 Due from non-controlling shareholders ...... 60,000 93,200 139,259 Due from other related parties ...... 1,916 1,147 125,195 Amounts due from third parties ...... – 71,786 93,744 Other deposits ...... 39,438 50,782 39,670 Prepayments for construction cost ...... 70,600 18,921 11,899 Advances to third parties (Note(iii)) ...... 2,250,000 4,616,580 888,000 Prepaid taxes and other tax recoverables ...... 117,844 433,755 771,780 Other receivables ...... 53,519 172,998 105,205

4,026,170 10,291,966 8,638,823 Less: Impairment ...... (503) (156) (1,027)

4,025,667 10,291,810 8,637,796

Note (i): In cooperation with Vanke Group, the Group plan to participate in a village renovation project and target to acquire certain parcels of land in a village located at Xi’an, Shaanxi Province. In order to be involved at a very early stage and have better access to the renovation and demolition work of such parcels of land before the future land transfer, the Group entered into cooperation agreements with a third-party property developer. In addition, in order to expedite the process of the demolition and resettlement work to be completed by the third-party property developer so as to fulfill the criteria of the land transfer of such parcels of land, the Group made advance to such third-party property developer to cover its borrowings, fees and expenses related to renovation, demolition and relocation matters. During the period between June 2020 and December 31, 2020, the Group made an aggregate advance amounted to RMB1,829 million to the third-party property developer, also recorded fund possession fee of approximately RMB53 million. Subsequent collection is disclosed in Note 45 of the financial statements.

Note (ii): Cooperative operation receivables mainly represent receivables due from a shareholder of Zhongfang Vanke Industrial Co., Ltd. The amounts are non-interest-bearing and repayment on demand.

Note (iii): Advances to third parties mainly represents cash advances the Group made to the independent third parties, which were interest-bearing for participation of Group in certain potential property projects in Shenzhen. All advances are receivable within one year and collected back.

Other items of receivables included in prepayments, other receivables and other assets are unsecured, non-interest-bearing and repayable on demand.

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The movements in provision for impairment of receivables are as follows:

As at 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

At the beginning of the year ...... – 503 156 Impairment losses (note 7)...... 110,508 (347) 871 Impairment losses written off ...... (110,005) – –

At the end of the year/period ...... 503 156 1,027

In 2018, the Group intended to cooperate with an independent third party with respect to a potential property development project, and accordingly made deposit to the independent third party for the acquisition of a parcel of land to secure the deal. The acquisition has suspended. However, this independent third company refused to return deposit to Group. The Group had made full provision to the entire deposit amounted to RMB110,005,000, which was written off in 2018 as well.

The internal credit rating of amounts due from non-controlling shareholders of subsidiaries and other deposits was regarded as the grade of performing. The Group has assessed that the credit risk of these receivables has not increased significantly since initial recognition. The expected loss rate of these receivables is assessed to be 0.1%. The Group has evaluated the expected loss rate and gross carrying amount, measured the impairment based on the 12-month expected credit losses, and assessed that the expected credit losses were RMB503,000, RMB156,000 and RMB1,027,000 as at December 31, 2018, 2019 and 2020, respectively. Save for the credit risk assessment in the amounts due from non-controlling shareholders of subsidiaries and other deposits, a credit loss analysis was performed associated with other items of financial assets included in prepayments, other receivables and other assets at each end of the Relevant Periods by considering the probability of default of comparable companies with published credit ratings. At each end of the Relevant Periods, the ECLs of the financial assets included in prepayments, other receivables and other assets were measured based on the 12-month expected credit loss if they are not past due and there is no information indicating that the financial assets had a significant increase in credit risk since initial recognition.

27. EQUITY INVESTMENTS DESIGNATED AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

As at 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Unlisted investments, at fair value ...... 118,400 80,400 66,470

The above equity investments were irrevocably designated at fair value through other comprehensive income as the Group considers these investments to be strategic in nature.

28. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

As at 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Other unlisted investments, at fair value ...... 104,940 4,960 –

The above equity investments were classified as financial assets at fair value through profit or loss as they were held for trading.

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The above unlisted investments were wealth management products issued by banks in Mainland China. They were mandatorily classified as financial assets at fair value through profit or loss as their contractual cash flows are not solely payments of principal and interest.

29. CASH AND CASH EQUIVALENTS AND PLEDGED DEPOSITS

As at 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Cash and bank balances ...... 1,722,397 1,393,075 2,812,956 Less: Restricted cash ...... (180,352) (303,012) (370,406) Pledged deposits ...... (82,768) (86,990) (105,387)

Cash and cash equivalents ...... 1,459,277 1,003,073 2,337,163

Pursuant to relevant regulations in the PRC, certain property development companies of the Group are required to place certain amounts of cash in designated bank accounts for specified use. As at 31 December 2018, 2019 and 2020, such restricted cash amounted to RMB180,352,000, RMB303,012,000 and RMB370,406,000, respectively.

Bank deposits of RMB82,768,000, RMB86,990,000, and RMB105,387,000 were pledged as security for purchasers’ mortgage loans, construction of projects, or pledged to banks as collateral for the issuance of bank acceptance notes as at 31 December 2018, 2019 and 2020, respectively.

All cash and bank balances are denominated in RMB.

The RMB is not freely convertible into other currencies, however, under Mainland China’s Foreign Exchange Control Regulations and Administration of Settlement, Sale and Payment of Foreign Exchange Regulations, the Group is permitted to exchange RMB for other currencies through banks authorized to conduct foreign exchange business.

Cash at banks earns interest at floating rates based on daily bank deposit rates. Short term time deposits are made for varying periods of between one day and three months depending on the immediate cash requirements of the Group and earn interest at the respective short term time deposit rates. The bank balances and pledged deposits are deposited with creditworthy banks with no recent history of default.

30. TRADE AND BILLS PAYABLES

An ageing analysis of the trade and bills payables as at the end of each of the Relevant Periods, based on the invoice date, is as follows:

As at 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Less than 1 year ...... 1,251,952 2,915,861 4,026,514 Over 1 year ...... 373,134 162,619 293,227

1,625,086 3,078,480 4,319,741

Trade and bills payables are unsecured and interest-free and are normally settled based on the progress of construction.

The fair values of trade and bills payables as at the end of each of the Relevant Periods approximated to their corresponding carrying amounts due to their relatively short maturity terms.

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31. OTHER PAYABLES AND ACCRUALS

As at 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Other tax and surcharges ...... 230,114 820,063 1,641,366 Due to non-controlling shareholders ...... 653,949 898,016 437,928 Cooperative operation payables (Note (i)) ..... 4,166,816 5,478,753 895,425 Advances from third parties ...... 734,867 863,269 311,546 Amounts due to third parties ...... – – 153,594 Payroll and welfare payable ...... 35,225 72,567 101,326 Retention deposits related to construction ..... 8,741 23,426 34,865 Other payables ...... 351,614 201,519 139,482

6,181,326 8,357,613 3,715,532

Note (i): Cooperative operation payables mainly represent short term working capital procured by a shareholder of Zhongfang Vanke Industrial Co., Ltd, which are interest-free and repayable on demand.

32. CONTRACT LIABILITIES

The Group recognised the following revenue-related contract liabilities:

As at 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Contract liabilities ...... 3,120,548 9,902,777 19,685,289

The Group receives payments from customers based on billing schedules as established in the property sales contracts. Payments are usually received in advance of the performance under the contracts which are mainly from property development and sales.

The continuous increase of contracted liabilities as of 31 December 2018, 2019 and 2020 was in line with the increase in the Group’s pre-sale activities.

The following table shows the revenue recognised during the Relevant Periods related to contract liabilities which are carried forward.

As at 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Revenue recognised that was included in the contract liability balance at the beginning of the year Sale of properties ...... 1,255,374 1,592,451 3,662,989

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The following table includes the transaction price allocated to the remaining performance obligations (unsatisfied or partially unsatisfied) related to the sale of properties as at the end of each of the Relevant Periods.

As at 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Expected to be satisfied Within 1 year ...... 2,020,680 5,424,451 7,906,854 After 1 year ...... 1,803,789 5,561,620 13,339,151

3,824,469 10,986,071 21,246,005

33. INTEREST-BEARING BANK AND OTHER BORROWINGS

31 December 2018 31 December 2019 31 December 2020 Effective Effective Effective interest interest interest rate (%) Maturity RMB’000 rate (%) Maturity RMB’000 rate (%) Maturity RMB’000

Current Other loans — secured . . . ––––––112021 119,912 Current portion of long term bank borrowings — secured . . 5.46-6.70 2019 178,825 5.23-6.70 2020 304,000 3.85-6.65 2021 485,038 Current portion of long term other loans — secured..... 10.5-11 2019 118,000 10.5 2020 40,000 8-11 2021 22,000 Current portion of long term other loans — unsecured . . . 5-11 2019 180,802 5-11 2020 230,779 5-10 2021 91,294

477,627 574,779 718,244

Non-current Bank borrowings 2020- 2021 — secured ...... 4.75-7.35 2024 500,700 5.225-7.35 -2024 691,500 5.7-6.65 2022-2024 456,540 Other borrowings — secured ...... 11 2020 112,000 – – – 8-11 2022-2024 342,853 Other borrowings — unsecured ...... 5-11 2020-2021 219,746 5-11 2021 81,000 8.10 2022 369,500

832,446 772,500 1,168,893

1,310,073 1,347,279 1,887,137

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As at 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Analysed into: Bank borrowings repayable: Within one year ...... 178,825 304,000 485,038 In the second year ...... 238,200 394,000 419,040 In the third to fifth years, inclusive ...... 262,500 297,500 37,500

679,525 995,500 941,578

Other borrowings repayable: Within one year ...... 298,802 270,779 233,206 In the second year ...... 205,746 81,000 529,500 In the third to fifth years, inclusive ...... 126,000 – 182,853

630,548 351,779 945,559

1,310,073 1,347,279 1,887,137

The Group’s borrowings are denominated in RMB.

Certain of the Group’s bank and other borrowings are secured by the pledges of the following assets with carrying values at the end of each of the Relevant Periods as follows:

As at 31 December Notes 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Property, plant and equipment...... 15 12,269 15,981 3,480

Investment properties ...... 16 38,720 36,682 34,644

Properties under development ...... 22 2,071,400 3,175,692 3,551,669

Completed properties held for sale..... 23 287,609 206,403 301,474

A shareholder, Mr. Fang, has guaranteed certain of the bank and other borrowings of up to RMB180,000,000, RMB100,000,000 and RMB80,000,000 as at 31 December 2018, 2019 and 2020, respectively.

A shareholder, Ms. Gong Fan, has guaranteed certain of the bank and other borrowings of up to RMB180,000,000, RMB100,000,000 and RMB80,000,000 as at 31 December 2018, 2019 and 2020, respectively.

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34. FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS

As at 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Financial liabilities, at fair value ...... 192,892 145,583 203,774 Less: within one year ...... (70,000) – –

122,892 145,583 203,774

The above balance represents the Group’s liabilities in the property projects of which the amounts to be paid are determined based on the financial performance of the relevant property units specified in the cooperation arrangement with the counterparts and it is carried at fair value at the end of the Relevant Period. The fair value at 31 December 2018, 2019 and 2020 has been arrived at on the basis of valuation carried out by JLL, a firm of independent qualified professional valuer which is not connected with the Group, who has appropriate qualifications and recent experiences in the valuation of similar properties in the relevant locations. Details of the fair value measurements are set out in note 41.

35. SHARE CAPITAL

As at 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000

Authorised: 5,000,000 ordinary shares of US$0.01 each ...... – – 334,475

Issued: 30,000 ordinary shares of US$0.01 each ...... – – 2

A summary of movements in the Company’s share capital is as follows:

Number of shares Amount Amount RMB’000 (USD’000) equivalent

At December 31, 2019 and January 1, 2020 – – – Issuance of new shares 30,000 – 2

At December 31, 2020 30,000 – 2

The Company was incorporated in the Cayman Islands as an exempted company with limited liability on November 5, 2020 with authorized share capital of US$50,000 divided into 5,000,000 shares of US$0.01 each.

Upon incorporation, one share was issued to an initial subscriber, an independent third party, and such share was transferred to MSmart International Limited, a company incorporated in the BVI and wholly-owned by Mr. Fang on the same date. On the same date, an additional 29,999 shares were issued and allotted to several shareholders.

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36. RESERVES

The amounts of the Group’s reserves and the movements therein for the years ended 31 December 2018, 2019 and 2020 are presented in the combined statements of changes in equity.

(a) Merger reserve

The merger reserve of the Group represents the issued capital of the then holding company of the companies now comprising the Group and the capital contributions from the equity holders of certain subsidiaries now comprising the Group before the completion of the Reorganisation.

(b) Statutory reserve

In accordance with the PRC Company Law and the articles of association of the subsidiaries established in the PRC, the Group is required to appropriate 10% of its net profits after tax, as determined under PRC GAAP, to the statutory reserve until the reserve balance reaches 50% of its registered capital. Subject to certain restrictions set out in the relevant PRC regulations and in the articles of association of the Group, the statutory reserve may be used either to offset losses, or to be converted to increase share capital, provided that the balance after such conversion is not less than 25% of the registered capital of the Group. The reserve cannot be used for purposes other than those for which it is created and is not distributable as cash dividends.

The asset revaluation reserve arises from change in use from an owner-occupied property to an investment property.

(d) Fair value reserve of financial assets at FVOCI

The fair value reserve of financial assets through other comprehensive income represents unrealised fair value gains or losses for equity investments designated at FVOCI.

37. NOTES TO THE COMBINED STATEMENT OF CASH FLOWS

(a) Major non-cash transactions

During the Relevant Periods, the Group had non-cash additions to right-of-use assets and lease liabilities of RMB2,500,000, RMB2,376,000 and nil for the years ended 31 December 2018, 2019 and 2020, respectively, in respect of lease arrangements for office buildings.

As mentioned in Note 12, Ningxia Zhongfang Development was spun-off via a distribution in specie of the Group’s entire shareholding in Ningxia Zhongfang Development completed on 1 December 2020. The transaction resulted in a non-cash loss of approximately RMB6,039,000.

(b) Changes in liabilities arising from financing activities

Financial Total Interest liabilities at liabilities bearing bank fair value from and other Lease through financing borrowings liabilities profit or loss activities (RMB’000) (RMB’000) (RMB’000) (RMB’000)

At 1 January 2018...... 1,304,545 – 255,348 1,559,893 Cash flows from/(used in) financing activities ...... 5,528 (901) (80,000) (75,373) New operating leases ...... – 2,500 – 2,500 Accrual of interest...... – 11 – 11 Interest paid classified as operating cash flows ...... – (11) – (11) Change in fair value ...... – – 17,544 17,544

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At 31 December 2018 ...... 1,310,073 1,599 192,892 1,504,564 Cash flows from/(used in) financing activities ...... 37,206 (753) (70,000) (33,547) New operating leases ...... – 2,376 – 2,376 Accrual of interest...... – 100 – 100 Interest paid classified as operating cash flows ...... – (100) – (100) Change in fair value ...... – – 22,691 22,691

At 31 December 2019 ...... 1,347,279 3,222 145,583 1,496,084 Cash flows from/(used in) financing activities ...... 539,858 (2,288) – 537,570 Accrual of interest...... – 120 – 120 Interest paid classified as operating cash flows ...... – (120) – (120) Change in fair value ...... – – 58,191 58,191

At 31 December 2020 ...... 1,887,137 934 203,774 2,091,845

The total cash outflow for leases included in the statement of cash flows is as follows:

Year ended 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Within operating activities ...... 11 100 120 Within financing activities ...... 901 753 2,288

912 853 2,408

38. COMMITMENTS

The Group had the following capital commitments at the end of each of the Relevant Periods:

As at 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Contracted, but not provided for: Property development activities ...... 5,492,773 10,738,875 6,271,084 Acquisition of land use right ...... 776,930 2,104,211 2,479,270

6,269,703 12,843,086 8,750,354

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39. RELATED PARTY TRANSACTIONS

(a) Name and relationship

Name of related parties Relationship with the Group

銀川中房物業集團股份有限公司 (Yinchuan Associate Zhongfang Property Group Holding Co., Ltd.) 包頭世茂新發展房地產開發有限公司 (Baotou Associate Shimao New-development real estate development Co., Ltd.) 寧夏中房小額貸款有限公司* (Ningxia Zhongfang Company controlled by Ningxia Zhongfang Group Petty Loan Co., Ltd.) Development 寧夏中房養老產業發展有限公司* (Ningxia Company controlled by Ningxia Zhongfang Zhongfang Aged Care Industrial Development Development Co., Ltd.)

* As disclosed in note 12 to the Discontinued Operation, the Group disposed of its entire interests in these entities. The operations of these entities were classified as discontinued operations during the Relevant Periods.

(b) Other than as disclosed elsewhere in the Historical Financial Information, the following transactions were carried out with related parties during the Relevant Periods:

Year ended 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Advances from related parties: Company controlled by Ningxia Zhongfang Development ...... – – 157 Associates ...... 93 499 44

93 499 201

Repayment of advances from related parties: Company controlled by Ningxia Zhongfang Development ...... – – 157 Associates ...... 93 499 44

93 499 201

Property management services provided by Associates ...... 7,273 6,884 5,132

Advances to Associates ...... – – 125,195

Sales of properties to Associates ...... – 462 720

Leases of properties to Company controlled by Ningxia Zhongfang Development ...... – – 643

Gardening services provided by Associates ...... 2,980 2,411 1,118

These transactions were carried out in accordance with the terms and conditions mutually agreed by the parties involved.

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Year ended 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Due from related parties Non-trade-related: Associates ...... 1,916 1,147 125,195

Due to related parties Trade-related: Company controlled by Ningxia Zhongfang Development ...... – – 7 Associates ...... 4,107 3,376 338

4,107 3,376 345

Due to related parties Non-trade-related: Company controlled by Ningxia Zhongfang Development ...... – – 44 Associates ...... 39 39 –

39 39 44

Balances with the above related parties were unsecured and repayable on demand.

(d) Compensation of key management personnel of the Group

Year ended 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Salaries, allowances and benefits in kind ...... 5,269 8,706 9,458 Performance related bonus ...... 7,296 7,726 18,032 Pension scheme contributions ...... 525 679 473

Total compensation paid to key management personnel ...... 13,090 17,111 27,963

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40. FINANCIAL INSTRUMENTS BY CATEGORY

The carrying amounts of each of the categories of financial instruments as at the end of each of the Relevant Periods are as follows:

31 December 2018

Financial assets

Financial assets at Financial Financial amortised assets at assets at cost FVTPL FVOCI Total (RMB’000) (RMB’000) (RMB’000) (RMB’000)

Equity investments at fair value through other comprehensive income (note 27) ...... – – 118,400 118,400 Trade receivables (note 24) ..... 14,492 – – 14,492 Financial assets included in prepayments and other receivables (note 26) ...... 3,491,383 – – 3,491,383 Financial assets at fair value through profit or loss (note 28) . – 104,940 – 104,940 Investments in property projects (note 20) ...... – 331,487 – 331,487 Pledged deposits (note 29)...... 82,768 – – 82,768 Restricted cash (note 29)...... 180,352 – – 180,352 Cash and cash equivalents (note 29) ...... 1,459,277 – – 1,459,277

5,228,272 436,427 118,400 5,783,099

Financial liabilities

Financial Financial liabilities at liabilities at amortised cost FVTPL Total (RMB’000) (RMB’000) (RMB’000)

Trade and bills payables (note 30) ...... 1,625,086 – 1,625,086 Financial liabilities included in other payables and accruals (note 31) ...... 5,882,299 – 5,882,299 Interest-bearing bank and other borrowings (note 33) ...... 1,310,073 – 1,310,073 Lease liabilities (note 17) ...... 1,599 – 1,599 Financial liabilities at fair value through profit or loss (note 34) ...... – 192,892 192,892

8,819,057 192,892 9,011,949

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31 December 2019

Financial assets

Financial assets at Financial Financial amortised assets at assets at cost FVTPL FVOCI Total (RMB’000) (RMB’000) (RMB’000) (RMB’000)

Equity investments at fair value through other comprehensive income (note 27) ...... – – 80,400 80,400 Trade receivables (note 24) ..... 11,559 – – 11,559 Financial assets included in prepayments and other receivables (note 26) ...... 8,908,277 – – 8,908,277 Financial assets at fair value through profit or loss (note 28) . – 4,960 – 4,960 Investments in property projects (note 20) ...... – 827,870 – 827,870 Pledged deposits (note 29)...... 86,990 – – 86,990 Restricted cash (note 29)...... 303,012 – – 303,012 Cash and cash equivalents (note 29) ...... 1,003,073 – – 1,003,073

10,312,911 832,830 80,400 11,226,141

Financial liabilities

Financial Financial liabilities at liabilities at amortised cost FVTPL Total (RMB’000) (RMB’000) (RMB’000)

Trade and bills payables (note 30) ...... 3,078,480 – 3,078,480 Financial liabilities included in other payables and accruals (note 31) ...... 7,418,273 – 7,418,273 Interest-bearing bank and other borrowings (note 33) ...... 1,347,279 – 1,347,279 Lease liabilities (note 17) ...... 3,222 – 3,222 Financial liabilities at fair value through profit or loss (note 34) ...... – 145,583 145,583

11,847,254 145,583 11,992,837

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31 December 2020

Financial assets

Financial assets at Financial Financial amortised assets at assets at cost FVTPL FVOCI Total (RMB’000) (RMB’000) (RMB’000) (RMB’000)

Equity investments at fair value through other comprehensive income (note 27) ...... – – 66,470 66,470 Trade receivables (note 24) ..... 22,885 – – 22,885 Financial assets included in prepayments and other receivables (note 26) ...... 6,499,593 – – 6,499,593 Investments in property projects (note 20) ...... – 460,354 – 460,354 Pledged deposits (note 29)...... 105,387 – – 105,387 Restricted cash (note 29)...... 370,406 – – 370,406 Cash and cash equivalents (note 29) ...... 2,337,163 – – 2,337,163

9,335,434 460,354 66,470 9,862,258

Financial liabilities

Financial Financial liabilities at liabilities at amortised cost FVTPL Total (RMB’000) (RMB’000) (RMB’000)

Trade and bills payables (note 30) ...... 4,319,741 – 4,319,741 Financial liabilities included in other payables and accruals (note 31) ...... 1,954,532 – 1,954,532 Interest-bearing bank and other borrowings (note 33) ...... 1,887,137 – 1,887,137 Lease liabilities (note 17) ...... 934 – 934 Financial liabilities at fair value through profit or loss (note 34) ...... – 203,774 203,774

8,162,344 203,774 8,366,118

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41. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS

The carrying amounts and fair values of the Group’s financial instruments as at the end of each of the Relevant Periods, other than those with carrying amounts that reasonably approximate to fair values, are as follows:

Carrying amounts Fair values 31 December 31 December 31 December 31 December 31 December 31 December 2018 2019 2020 2018 2019 2020 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Financial liabilities Interest-bearing bank borrowings (note 33) . . . 679,525 995,500 941,578 681,396 996,529 941,108 Other borrowings (other than lease liabilities) . . . 630,548 351,779 945,559 630,798 351,779 945,178

1,310,073 1,347,279 1,887,137 1,312,194 1,348,308 1,886,286

Management has assessed that the fair values of cash and cash equivalents, pledged deposits, restricted cash, trade receivables, financial assets included in prepayments, other receivables and other assets, trade and bills payables and financial liabilities included in other payables and accruals approximate to their carrying amounts largely due to the short term maturities of these instruments.

The Group’s corporate finance team headed by the chief financial officer is responsible for determining the policies and procedures for the fair value measurement of financial instruments. The corporate finance team reports directly to the chief financial officer and the board of directors. At each reporting date, the corporate finance team analyses the movements in the values of financial instruments and determines the major inputs applied in the valuation. The valuation is reviewed and approved by the group financial controller. The valuation process and results are discussed with the board of directors twice a year for annual financial reporting.

During the relevant periods, there were no transfers of fair value measurements between Level 1 and Level 2 and no transfers into or out of Level 3 for both financial assets and liabilities.

The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values.

The fair value of the domestic unlisted equity investments classified as equity investments designated at FVOCI have been estimated using a market-based valuation technique based on assumptions that are not supported by observable market prices or rates. The valuation requires the directors to determine comparable public companies (peers) based on industry, size, leverage and strategy, and to calculate an appropriate price multiple, such as enterprise value to earnings before interest and taxes (EV/EBIT) multiple, price to earnings (“P/E”) multiple and price-to-sales (“P/S”) multiple, for each comparable company identified. The multiple is calculated by dividing the enterprise value of the comparable company by an earnings measure. The trading multiple is then discounted for considerations such as illiquidity and size differences between the comparable companies based on company-specific facts and circumstances. The discounted multiple is applied to the corresponding earnings measure of the unlisted equity investments to measure the fair value. The fair value measurement of the equity investments designated at FVOCI is categorised within Level 3 of the fair value hierarchy.

The Group invests in unlisted investments, which represent wealth management products issued by financial institutions in Mainland China. The Group has estimated the fair value of these unlisted investments by using a discounted cash flow valuation model based on the market interest rates of instruments with similar terms and risks. The fair value measurement of the financial assets at FVTPL is categorised within Level 2 of the fair value hierarchy.

The Group invests in several property projects in Mainland China, of which fair values are determined by using a discounted cash flow valuation model based on assumptions that are not supported by observable market prices or rates. The valuation requires the Company to determine comparable public companies based on industry, size,

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The fair values of interest-bearing bank and other borrowings and financial liabilities at fair value through profit or loss have been calculated by discounting the expected future cash flows using rates currently available for instruments with similar terms, credit risk and remaining maturities. The Group’s own non-performance risk for interest-bearing bank and other borrowings and financial liabilities at fair value through profit or loss as at 31 December 2018, 2019 and 2020 was assessed to be insignificant.

Below is a summary of significant unobservable inputs to the valuation of financial instruments as at December 31, 2018 and 2019 and 2020:

Significant Valuation Technique unobservable input Range

Equity investments Market Comparable Discounts for lack December 31, 2018: designated at FVOCI method of marketability 20%-30% (“DLOM”) December 31, 2019: 20%-30% December 31, 2020: 20%-30%

Investments in property Discounted cash flow Discount rate December 31, 2018: projects method 16.43% December 31, 2019: 15.85% December 31, 2020: 14.63%

Financial liabilities at Discounted cash flow Discount rate December 31, 2018: FVTPL method 16.43 % December 31, 2019: 15.85% December 31, 2020: 14.63%

Fair value hierarchy

The following tables illustrate the fair value measurement hierarchy of the Group’s financial instruments:

Assets measured at fair value:

As at 31 December 2018

Fair value measurement using Quoted prices in Significant Significant active observable Unobservable markets Inputs Inputs (Level 1) (Level 2) (Level 3) Total (RMB’000) (RMB’000) (RMB’000) (RMB’000)

Equity investments designated at fair value through other comprehensive income...... – – 118,400 118,400 Financial assets at fair value through profit or loss...... – 104,940 – 104,940 Investments in property Projects . . . – – 331,487 331,487

– 104,940 449,887 554,827

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As at 31 December 2019

Fair value measurement using Quoted prices in Significant Significant active observable unobservable markets inputs inputs (Level 1) (Level 2) (Level 3) Total (RMB’000) (RMB’000) (RMB’000) (RMB’000)

Equity investments designated at fair value through other comprehensive income...... – – 80,400 80,400 Financial assets at fair value through profit or loss...... – 4,960 – 4,960 Investments in property projects . . . – – 827,870 827,870

– 4,960 908,270 913,230

As at 31 December 2020

Equity investments designated at fair value through other comprehensive income...... – – 66,470 66,470 Investments in property projects . . . – – 460,354 460,354

– – 526,824 526,824

Liabilities measured at fair value:

As at 31 December 2018

Financial liabilities at fair value through profit or loss ...... – – 192,892 192,892

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As at 31 December 2019

Financial liabilities at fair value through profit or loss ...... – – 145,583 145,583

As at 31 December 2020

Financial liabilities at fair value through profit or loss ...... – – 203,774 203,774

Liabilities for which fair values are disclosed:

As at 31 December 2018

Interest-bearing bank and other borrowings ...... – 1,312,194 – 1,312,194

As at 31 December 2019

Fair value measurement using Quoted prices in Significant Significant active observable unobservable markets Inputs inputs (Level 1) (Level 2) (Level 3) Total (RMB’000) (RMB’000) (RMB’000) (RMB’000)

Interest-bearing bank and other borrowings ...... – 1,348,308 – 1,348,308

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As at 31 December 2020

Interest-bearing bank and other borrowings ...... – 1,886,286 – 1,886,286

During the Relevant Periods, there were no transfers of fair value measurements between Level 1 and Level 2 and no transfers into or out of Level 3 for both financial assets and financial liabilities.

42. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group’s principal financial instruments mainly include cash and bank equivalents, restricted cash, pledged deposits, trade receivables, other receivables, trade and bills payables and other payables, which arise directly from its operations. The Group has other financial assets and liabilities such as interest-bearing bank and other borrowings, lease liabilities, and financial assets at fair value through profit or loss. The main purpose of these financial instruments is to raise finance for the Group’s operations.

The main risks arising from the Group’s financial instruments are interest rate risk, foreign currency risk, credit risk, and liquidity risk. Generally, the Group introduces conservative strategies on its risk management. To keep the Group’s exposure to these risks to a minimum, the Group has not used any derivatives and other instruments for hedging purposes. The Group does not hold or issue derivative financial instruments for trading purposes. The board of directors reviews and agrees policies for managing each of these risks and they are summarised below:

(a) Interest rate risk

The Group’s exposure to risk for changes in market interest rates relates primarily to the Group’s interest-bearing bank and other borrowings set out in note 33. The Group does not use derivative financial instruments to hedge interest rate risk. The Group manages its interest cost using variable rate bank borrowings and other borrowings.

If the interest rate of bank and other borrowings had increased/decreased by 1% and all other variables were held constant, the profit before tax of the Group, through the impact on floating rate borrowings, would have decreased/increased by approximately RMB13,100,730, RMB13,472,789 and RMB18,871,374 for the years ended 31 December 2018, 2019 and 2020, respectively.

(b) Credit risk

The Group divides financial instruments on the basis of shared credit risk characteristics, such as instrument type and credit risk ratings for the purpose of determining significant increases in credit risk and calculation of impairment. To manage risk arising from trade receivables, the Group has policies in place to ensure that credit terms are made only to counterparties with an appropriate credit history and management performs ongoing credit evaluations of the Group’s counterparties. The credit period granted to the customers is generally from one to twelve months and the credit quality of these customers is assessed, taking into account their financial position, past experience and other factors. The Group also has other monitoring procedures to ensure that follow-up action is taken to recover overdue receivables. In addition, the Group reviews regularly the recoverable amount of trade receivables to ensure that adequate impairment losses are made for irrecoverable amounts. The Group has no significant concentrations of credit risk, with exposure spread over a large number of counterparties and customers.

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Management makes periodic collective assessments for financial assets included in prepayments and other receivables and amounts due from related parties as well as individual assessments on the recoverability of other receivables and amounts due from related parties based on historical settlement records and past experience. The Group classified financial assets included in prepayments and other receivables and amounts due from related parties in Stage 1 and continuously monitored their credit risk. The directors of the Company believe that there is no material credit risk inherent in the Group’s outstanding balance of financial assets included in prepayments and other receivables and amounts due from related parties.

Maximum exposure and year-end staging

The tables below show the credit quality and the maximum exposure to credit risk based on the Group’s credit policy, which is mainly based on past due information unless other information is available without undue cost or effort, and year-end staging classification as at 31 December 2018, 2019 and 2020. The amounts presented are gross carrying amounts for financial assets and the exposure to credit risk for the financial guarantee contracts.

12-month ECLs Lifetime ECLs Simplified Stage 1 Stage 2 Stage 3 approach Total (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000)

As at 31 December 2018 Trade receivables ...... – – – 14,492 14,492 Financial assets included in prepayments, other receivables and other assets ...... 3,491,383 – – – 3,491,383 Restricted cash — Not yet past due .... 180,352 – – – 180,352 Pledged deposits — Not yet past due .... 82,768 – – – 82,768 Cash and cash equivalents — Not yet past due .... 1,459,277 – – – 1,459,277

5,213,780 – – 14,492 5,228,272

As at 31 December 2019 Trade receivables ...... – – – 11,559 11,559 Financial assets included in prepayments, other receivables and other assets ...... 8,908,277 – – – 8,908,277 Restricted cash — Not yet past due .... 303,012 – – – 303,012 Pledged deposits — Not yet past due .... 86,990 – – – 86,990 Cash and cash equivalents — Not yet past due .... 1,003,073 – – – 1,003,073

10,301,352 – – 11,559 10,312,911

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12-month ECLs Lifetime ECLs Simplified Stage 1 Stage 2 Stage 3 approach Total (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000)

As at 31 December 2020 Trade receivables ...... – – – 22,885 22,885 Financial assets included in prepayments, other receivables and other assets ...... 6,499,593 – – – 6,499,593 Restricted cash — Not yet past due .... 370,406 – – – 370,406 Pledged deposits — Not yet past due .... 105,387 – – – 105,387 Cash and cash equivalents — Not yet past due .... 2,337,163 – – – 2,337,163

9,312,549 – – 22,885 9,335,434

The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of interest-bearing bank and other borrowings. Cash flows are closely monitored on an ongoing basis.

The maturity profile of the Group’s financial liabilities as at the end of each of the Relevant Periods, based on contractual undiscounted payments, is as follows:

Less than 3to12 3 months months Over 1 year Total (RMB’000) (RMB’000) (RMB’000) (RMB’000)

As at 31 December 2018 Trade and bills payables ...... 1,625,086 – – 1,625,086 Other payables...... 5,894,318 36,057 – 5,930,375 Lease liabilities ...... – 854 854 1,708 Interest-bearing bank and other borrowings...... 115,420 457,240 969,337 1,541,997 Financial liabilities at fair value through profit or loss ...... – 70,000 245,433 315,433

7,634,824 564,151 1,215,624 9,414,599

As at 31 December 2019 Trade and bills payables ...... 3,078,480 – – 3,078,480 Other payables...... 7,432,392 42,357 – 7,474,749 Lease liabilities ...... – 2,408 967 3,375 Interest-bearing bank and other borrowings...... 20,811 631,176 884,993 1,536,980 Financial liabilities at fair value through profit or loss ...... – – 245,433 245,433

10,531,683 675,941 1,131,393 12,339,017

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Less than 3to12 3 months months Over 1 year Total (RMB’000) (RMB’000) (RMB’000) (RMB’000)

As at 31 December 2020 Trade and bills payables ...... 4,319,741 – – 4,319,741 Other payables...... 1,959,627 15,285 – 1,974,912 Lease liabilities ...... – 967 – 967 Interest-bearing bank and other borrowings...... 146,666 692,299 1,283,397 2,122,362 Financial liabilities at fair value through profit or loss ...... – – 313,439 313,439

6,426,034 708,551 1,596,836 8,731,421

(d) Capital management

The primary objectives of the Group’s capital management are to safeguard the Group’s ability to continue as a going concern and to maintain healthy capital ratios in order to support its business and maximise shareholders’ value.

The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.

The Group monitors capital using the debt/asset ratio, which is total liabilities divided by total assets. The debt-to-asset ratios as at the end of the year were as follows:

As at 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Total assets ...... 15,002,148 26,211,650 34,139,590 Total liabilities ...... 13,300,399 24,030,906 31,355,055

Debt/asset ratio ...... 89% 92% 92%

43. CONTINGENT LIABILITIES

At the end of each of the Relevant Periods, contingent liabilities not provided for in the Historical Financial Information were as follows:

As at 31 December 2018 2019 2020 (RMB’000) (RMB’000) (RMB’000)

Guarantees given to banks in connection with facilities granted to purchasers of the Group’s properties ...... 1,323,671 1,726,711 1,351,440

The Group provided guarantees in respect of mortgage facilities granted by certain banks to the purchasers of the Group’s completed properties held for sale. Pursuant to the terms of the guarantee arrangements, in case of default on mortgage payments by the purchasers, the Group is responsible for repaying the outstanding mortgage principals together with any accrued interest and penalties owed by the defaulted purchasers to those banks.

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Under the above arrangement, the related properties were pledged to the banks as collateral for the mortgage loans, and upon default on mortgage repayments by these purchasers, the banks are entitled to take over the legal titles and will realise the pledged properties through open auction.

The Group’s guarantee period starts from the dates of grant of the relevant mortgage loans and ends upon the issuance and registration of property ownership certificates and mortgage certificates to the purchasers, which will generally be available within half a year to two years after the purchasers take possession of the relevant properties.

The Group did not incur any material losses during the Relevant Periods in respect of the guarantees provided for mortgage facilities granted to purchasers of the Group’s completed properties held for sale. The directors of the Company considered that in case of default on payments, the net realisable value of the related properties would be sufficient to repay the outstanding mortgage loans together with any accrued interest and penalty, and therefore, no provision has been made in connection with the guarantees.

44. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by the Company, the Group or any of the companies now comprising the Group in respect of any period subsequent to 31 December 2020.

45. EVENTS AFTER THE RELEVANT PERIODS

As of 31 December 2020, there was an aggregate advance together with fund possession fee of RMB1,882 million for land use rights to be jointly acquired with third parties as disclosed in the Note 26 of the financial statements. In March 2021, in accordance with the agreements the Group entered into with Vanke Group through a project company, Vanke Group reimbursed RMB1,198.1 million to the Group, representing 60% of such advance plus the fund possession fee, in proportion to its 60% equity interest in the project company, which shall participate in the land transfer to acquire such parcels of land.

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A. UNAUDITED PRO FORMA STATEMENT OF ADJUSTED COMBINED NET TANGIBLE ASSETS

The following unaudited pro forma adjusted combined net tangible assets of the Group have been prepared in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited and with reference to Accounting Guideline 7 “Preparation of Pro Forma Financial Information for inclusion in Investment Circulars” issued by the Hong Kong Institute of Certified Public Accountants for illustration purposes only, and is set out here to illustrate the effect of the [REDACTED] on the combined net tangible assets of the Group attributable to owners of the Company as at 31 December 2020 as if [REDACTED] had taken place on 31 December 2020.

The unaudited pro forma adjusted combined net tangible assets of the Group attributable to owners of the Company has been prepared for illustrative purposes only and because of its hypothetical nature, it may not give a true picture of the financial position of the Group had the [REDACTED] been completed as at 31 December 2020 or any future date. It is prepared based on the combined net tangible assets as at 31 December 2020 as set out in the Accountants’ Report as set out in Appendix I to this document, and adjusted as described below. The unaudited pro forma adjusted combined net tangible assets do not form part of the Accountants’ Report as set out in Appendix I to this document.

Combined net tangible assets of our Unaudited pro Group forma adjusted attributable to net tangible owners of assets of the Company our Group as at 31 Estimated attributable to Unaudited pro forma December [REDACTED] from owners of adjusted net tangible 2020 the [REDACTED] the Company assets per Share (RMB’000) (RMB’000) (RMB’000) (RMB) (HK$) (Note 1) (Note 2) (Note 3) (Note 4)

Based on an [REDACTED] of HK$[REDACTED] per Share .... 2,784,319 [REDACTED][REDACTED][REDACTED][REDACTED] Based on an [REDACTED] of HK$[REDACTED] per Share .... 2,784,319 [REDACTED][REDACTED][REDACTED][REDACTED] Based on an [REDACTED] of HK$[REDACTED] per Share .... 2,784,319 [REDACTED][REDACTED][REDACTED][REDACTED]

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Notes:

(1) The combined net tangible assets attributable to owners of the Company as at 31 December 2020 is arrived at after deducting intangible asset of RMB216,000 from the combined equity attributable to owners of the Company of RMB2,784,535,000 as at 31 December 2020, as shown in Appendix I to this document.

(2) The estimated [REDACTED] from the [REDACTED] are based on the [REDACTED]of HK$[REDACTED] per Share and HK$[REDACTED] per Share, after deduction of the [REDACTED] and other related expenses payable by our Group and does not take into account of any Shares which may be issued upon the exercise of the [REDACTED]. The estimated [REDACTED] from the [REDACTED] are converted into Hong Kong dollars at an exchange rate of RMB0.83252 to HK$1.00.

(3) The unaudited pro forma adjusted net tangible assets per Share is calculated based on [REDACTED] Shares in issue immediately following the completion of the [REDACTED] without taking into account any Shares which may be issued upon the exercise of the [REDACTED] or any option which may be granted under the Share Option Scheme or any Shares which may be allotted and issued or repurchased under the general mandates for the allotment and issue or repurchase of the Shares as described in Appendix V – Statutory and General Information.

(4) The unaudited pro forma adjusted combined net tangible assets per Share are converted into Hong Kong dollars at an exchange rate of RMB0.83252 to HK$1.00.

(5) No adjustment has been made to reflect any trading result or open transaction of the Group entered subsequent to 31 December 2020.

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[REDACTED]

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[REDACTED]

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[REDACTED]

– II-5 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX III PROPERTY VALUATION

The following is the text of a letter, summary of values and valuation certificates prepared for the purpose of incorporation in this document received from Jones Lang LaSalle Corporate Appraisal and Advisory Limited, an independent valuer, in connection with its valuation as 31 March 2021 of the selected property interests held by the Group.

Jones Lang LaSalle Corporate Appraisal and Advisory Limited 7th Floor, One Taikoo Place, 979 King’s Road, Hong Kong tel +852 2846 5000 fax +852 2169 6001 Company Licence No.: C-030171

仲量聯行企業評估及咨詢有限公司香港英皇道979號太古坊一座7樓電話 +852 2846 5000 傳真 +852 2169 6001 公司牌照號碼：C-030171

[●] 2021

The Board of Directors Zhongyi Jiye Holding Company Limited Cricket Square Hutchins Drive PO Box 2681 Grand Cayman KY1-1111 Cayman Islands

Dear Sirs,

In accordance with your instructions to value the selected property interests held by Zhongyi Jiye Holding Company Limited (the “Company”) and its subsidiaries (hereinafter together referred to as the “Group”) in the People’s Republic of China (the “PRC”), we confirm that we have carried out inspections, made relevant enquiries and searches and obtained such further information as we consider necessary for the purpose of providing you with our opinion on the market values of the selected property interests as at 31 March 2021 (the “valuation date”).

For the purpose of this report, we classified these properties as the property interests relating to “property activities” which mean holding (directly or indirectly) and/or development of properties for letting or retention as investments, or the purchase or development of properties for subsequent sale, or for subsequent letting or retention as investments.

Furthermore, we have adopted the below guidance on what constitutes a property interest:

(a) one or more units in the same building or complex;

(b) one or more properties located at the same address or lot number;

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(d) one or more properties, structures or facilities comprising a property development project (even if there are different phases);

(e) one or more properties held for investment within one complex;

(f) one or more properties, structures or facilities located contiguously to each other or located on adjoining lots and used for the same or similar operational/business purposes; or

(g) a project or phases of development presented to the public as one whole project or forming a single operating entity.

Our valuation is carried out on a market value basis. Market value is defined as “the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion”.

We have valued the property interests in Group I which are held for sale and Group III which are held for future development by the comparison approach assuming sale of the property interests in their existing states with the benefit of immediate vacant possession and by making reference to comparable sales transactions as available in the market. This approach rests on the wide acceptance of the market transactions as the best indicator and pre-supposes that evidence of relevant transactions in the market place can be extrapolated to similar properties, subject to allowances for variable factors.

For the purpose of our valuation, real estate developments for sale are those the Construction Work Completion and Inspection Certificate/Tables or Building Ownership Certificates/Real Estate Title Certificates thereof are issued by the relevant local authorities, and this also includes those property interests which have been contracted to be sold, but the formal assignment procedures of which have not yet been completed; and property developments for future development are those the Construction Work Commencement Permits are not issued while the State-owned Land Use Rights Grant Contract have been obtained.

In valuing the property interests in Group II which are held under development by the Group, we have assumed that they will be developed and completed in accordance with the latest development proposals provided to us by the Group. In arriving at our opinion of values, we have adopted the comparison approach by making reference to comparable sales evidence as available in the relevant market and have also taken into account the accrued construction cost and professional fees relevant to the stage of construction as at the valuation date and the remainder of the cost and fees expected to be incurred for completing the development. We have relied on the accrued construction cost and professional fees information provided by the Group according to the different stages of construction of the properties as at the valuation date, and we did not find any material inconsistency from those of other similar developments.

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For the purpose of our valuation, property developments under development are those for which the Construction Works Commencement Permits have been issued while the Construction Work Completion and Inspection Certificate/Tables have not been issued.

We have valued the property interests in Group IV which are held for investment and Group V which are held and occupied by the Group by the income approach by taking into account the net rental income of the property derived from the existing leases and/or achievable in the existing market with due allowance for the reversionary income potential of the leases, which have been then capitalized to determine the market value at an appropriate capitalization rate. Where appropriate, reference has also been made to the comparable sales transactions as available in the relevant market.

Our valuation has been made on the assumption that the seller sells the property interests in the market without the benefit of a deferred term contract, leaseback, joint venture, management agreement or any similar arrangement, which could serve to affect the values of the property interests.

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

In valuing the property interests, we have complied with all requirements contained in Chapter 5 and Practice Note 12 of the Rules Governing the Listing of Securities issued by the Stock Exchange of Hong Kong Limited; the RICS Valuation—Global Standards published by the Royal Institution of Chartered Surveyors; the HKIS Valuation Standards published by the Hong Kong Institute of Surveyors, and the International Valuation Standards published by the International Valuation Standards Council.

We have relied to a very considerable extent on the information given by the Group and have accepted advice given to us on such matters as tenure, planning approvals, statutory notices, easements, particulars of occupancy, lettings, and all other relevant matters.

We have been shown copies of title documents including State-owned Land Use Rights Certificates, Real Estate Title Certificates, Building Ownership Certificates and other official plans relating to the property interests and have made relevant enquiries. Where possible, we have examined the original documents to verify the existing title to the property interests in China and any material encumbrance that might be attached to the property interests or any tenancy amendment. We have relied considerably on the advice given by the Company’s PRC Legal Advisors—Tongshang, concerning the validity of the property interests in the PRC.

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We have had no reason to doubt the truth and accuracy of the information provided to us by the Group. We have also sought confirmation from the Group that no material factors have been omitted from the information supplied. We consider that we have been provided with sufficient information to arrive an informed view, and we have no reason to suspect that any material information has been withheld.

We have not carried out detailed measurements to verify the correctness of the areas in respect of the properties but have assumed that the areas shown on the title documents and official site plans handed to us are correct. All documents and contracts have been used as reference only and all dimensions, measurements and areas are approximations. No on-site measurement has been taken.

We have inspected the exterior and, where possible, the interior of the properties. However, we have not carried out investigation to determine the suitability of the ground conditions and services for any development thereon. Our valuation has been prepared on the assumption that these aspects are satisfactory and that no unexpected cost and delay will be incurred during construction. Moreover, no structural survey has been made, but in the course of our inspection, we did not note any serious defect. We are not, however, able to report whether the property is free of rot, infestation or any other structural defect. No tests were carried out on any of the services.

Inspection of the properties was carried out in March and April 2021 by Ms. Gloria Wang, Mr. Owen Zhang, Ms. Elaine Huang, Ms. Ran Wang and Mr. Shuo Yang. Ms. Gloria Wang and Mr. Owen Zhang are China Certified Real Estate Appraiser and have more than 10 years’ experience in the property valuation in the PRC; Ms. Elaine Huang who is Chartered Surveyor and has 4 years’ experience in the valuation of properties in the RPC; Ms. Ran Wang and Mr. Shuo Yang who has 4 years’ and 3 years’ experience in the property valuation in the PRC.

Unless otherwise stated, all monetary figures stated in this report are in Renminbi (RMB). Our summary of values and valuation certificates are attached below for your attention.

Yours faithfully, For and on behalf of Jones Lang LaSalle Corporate Appraisal and Advisory Limited Eddie T. W. Yiu MRICS MHKIS RPS (GP) Senior Director

Note: Eddie T.W. Yiu is a Chartered Surveyor who has 27 years’ experience in the valuation of properties in Hong Kong and the PRC as well as relevant experience in the Asia-Pacific region.

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SUMMARY OF VALUES

Abbreviation:

Group I: Completed properties held for sale by the Group in the PRC

Group II: Properties held under development by the Group in the PRC

Group III: Properties held for future development by the Group in the PRC

Group IV: Properties held for investment by the Group in the PRC

Group V: Properties held and occupied by the Group in the PRC

“N/A”: Not Available or Not Applicable

The total Market Value Market value Market value Market value Market value Market value market value Attributable in existing in existing in existing in existing in existing in existing to the Group state as at state as at state as at state as at state as at state as at Interest as at the the valuation the valuation the valuation the valuation the valuation the valuation attributable valuation No. Property date date date date date date to the Group date RMB RMB RMB RMB RMB RMB RMB

Group I: Group II: Group III: Group IV: Group V:

1. Portions of Sunshine 62,900,000 654,000,000 – – – 716,900,000 55% 394,295,000 Meiyu located at the Binhe West Road Qindu District Xianyang City Shannxi Province The PRC (咸陽中房 • 陽光美域)

2. Portions of Xi Yun Tai 52,800,000 – 66,400,000 – – 119,200,000 100% 119,200,000 Sorth Area located at the the eastern side of Minzu North Street Xingqing District Yinchuan City Ningxia Hui Autonomous Region The PRC (璽雲台南區)

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Group I: Group II: Group III: Group IV: Group V:

3. Portions of Xi Yun 17,700,000 551,000,000 – 54,000,000 – 622,700,000 100% 622,700,000 Tai North Area located at the the eastern side of Minzu North Street Xingqing District Yinchuan City Ningxia Hui Autonomous Region The PRC (璽雲台北區)

4. Portions of Eastern Joy 63,200,000 600,000,000 18,000,000 – – 681,200,000 100% 681,200,000 located at the northwestern side of Yanxing Road and Yinheng Road Xingqing District Yinchuan City Ningxia Hui Autonomous Region The PRC (中房•東方悅)

5. Eastern Ode located at the – 948,000,000 – – – 948,000,000 100% 948,000,000 southeastern side of No.9 Road and Weiqi Road Xingqing District Yinchuan City Ningxia Hui Autonomous Region The PRC (中房•東方賦)

6. Xi Yue Bay located at the – 1,396,000,000 – – – 1,396,000,000 100% 1,396,000,000 southeastern side of Peihua Road and Jingguan Road Jinfeng District Yinchuan City Ningxia Hui Autonomous Region The PRC (璽悅灣)

– III-6 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX III PROPERTY VALUATION

Group I: Group II: Group III: Group IV: Group V:

7. Portions of Phase I to IV 209,800,000 ––––209,800,000 100% 209,800,000 of East Area and Phase I to III of West Area of Zhongfang•Salzburg No. 59 Haixi Road Chengbei District Xining City Qinghai Province The PRC (中房•薩爾斯堡東區一至四期及西區一至三期)

8. Middle Area and Phase IV – 1,004,000,000 – – – 1,004,000,000 100% 1,004,000,000 of West Area of Zhongfang•Salzburg located at the northern side of Meili Shui Street Chengbei District Xining City Qinghai Province The PRC (中房•薩爾斯堡中區及西區四期)

9. Eastern Cloud located at – 574,000,000 – – – 574,000,000 100% 574,000,000 the No. 11 Bowen Road Chengdong District Xining City Qinghai Province The PRC (中房•東方雲舒)

10. Nan Yue Mansion located – 200,000,000 – – – 200,000,000 100% 200,000,000 at the No. 10 Fengqing Road Chengnan New District Xining City Qinghai Province The PRC (中房•南樂府)

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Group I: Group II: Group III: Group IV: Group V:

11. Portions of Chengbei 109,200,000 819,000,000 – – – 928,200,000 100% 928,200,000 International Village No. 48 Ningzhang Road Chengbei District Xining City Qinghai Province The PRC (中房•城北國際村)

12. Portions of Blue Coast 314,200,000 ––––314,200,000 100% 314,200,000 No. 32 Meili Shui Street Chengbei District Xining City Qinghai Province The PRC (中房•藍岸)

13. Blue Fragrance located at – 383,000,000 126,700,000 – – 509,700,000 100% 509,700,000 the Guanghua Road Chengxi District Xining City Qinghai Province The PRC (中房•藍韻)

14. Yong Yue Mansion II – 168,000,000 3,600,000 – – 171,600,000 45% 77,220,000 located at Shengli Road South, Ninghe South Road East, Ninghui Road West Yanghe Village Yongning County Yinchuan City Ningxia Hui Autonomous Region The PRC (中房•永悅府)

– III-8 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX III PROPERTY VALUATION

Group I: Group II: Group III: Group IV: Group V:

15. Xi Yue Mansion located at – – 689,400,000 – – 689,400,000 100% 689,400,000 the western side of Yuncai lane Xixia District Yinchuan City Ningxia Hui Autonomous Region The PRC (西悅府)

16. Jin Li located at the – 22,000,000 205,800,000 – – 227,800,000 56% 127,568,000 Northern side of Qingwang Road, Western side of Qingning Street Litong District Wuzhong City Ningxia Hui Autonomous Region The PRC (錦里)

17. Portions of Su He 50,000,000 – – 186,200,000 – 236,200,000 100% 236,200,000 Sunshine located at He Lan Shan East Ave Hongqiao Road Helan County Yinchuan City Ningxia Hui Autonomous Region The PRC (銀川•蘇荷陽光)

18. Xi Jiang Yue located at the – 553,000,000 – – – 553,000,000 97.3% 538,069,000 north side of the intersection of Jinpendi Avenue and Binhe Road Chongyang Town Chongzhou City Sichuan Province The PRC (中房•西江悅)

– III-9 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX III PROPERTY VALUATION

Group I: Group II: Group III: Group IV: Group V:

19. Haidong Salzburg Palace – 749,000,000 – – – 749,000,000 100% 749,000,000 located at the No. 16 Shanzhou Street Ledu District Haidong City Qinghai Province The PRC (中房•海東薩爾斯堡)

20. Vanke–Park Avenue – 1,577,000,000 47,500,000 – – 1,624,500,000 40% 649,800,000 located at the North side of Chaidamu Road Chengzhong District Xining City Qinghai Province The PRC (萬科•公園里)

21. Vanke–Times Metropolis – 2,471,000,000 227,800,000 – – 2,698,800,000 20.4% 550,555,200 located at No.3 Shidai Avenue Chengzhong District Xining City Qinghai Province The PRC (萬科•時代都會)

22. Vanke–Starlight Metropolis – – 1,807,900,000 – – 1,807,900,000 40% 723,160,000 located at the intersection of An Ning Road and Xinan Street Chengzhong District Xining City Qinghai Province The PRC (萬科•時代星光)

23. Vanke Town located at the – 5,496,000,000 – – – 5,496,000,000 40% 2,198,400,000 intersection of West Nanchuan Road and Yujinxiang Avenue Chengzhong District Xining City Qinghai Province The PRC (西寧萬科城)

– III-10 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX III PROPERTY VALUATION

Group I: Group II: Group III: Group IV: Group V:

24. Unsold units of 92,600,000 173,000,000 – – – 265,600,000 28% 74,368,000 Vanke–Chu Xin Garden located at the North of Yin Tong Road and East of No.9 Street Xingqing District Yinchuan City Ningxia Hui Autonomous Region The PRC (萬科•初昕苑)

25. Unsold units of 12,100,000 658,000,000 – – – 670,100,000 40% 268,040,000 Vanke–City Light located at the South of Beijing Road and East of Jinger Road Xingqing District Yinchuan City Ningxia Hui Autonomous Region The PRC (萬科•城市之光)

26. Vanke–Emerald Lake View – 838,000,000 – – – 838,000,000 40% 335,200,000 located at the East of Hongqiao Nan Road Desheng Industrial Zone Helan County Yinchuan City Ningxia Hui Autonomous Region The PRC (中房萬科•翡翠湖望)

27. Vanke–Jin Chen located at – 723,000,000 – – – 723,000,000 21% 151,830,000 the Eastern side of Fuanxiang Jinfeng District Yinchuan City Ningxia Hui Autonomous Region The PRC (中房萬科•錦宸)

– III-11 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX III PROPERTY VALUATION

Group I: Group II: Group III: Group IV: Group V:

28. Vanke–Dream Town – 1,122,000,000 – – – 1,122,000,000 28% 314,160,000 located at the Southern side of Jinfeng Seventeen Road Jinfeng District Yinchuan City Ningxia Hui Autonomous Region The PRC (萬科•理想城)

29. Vanke–Metropolis located – 708,000,000 – – – 708,000,000 28% 198,240,000 at the Eastern side of Zhengyuan South Street, Western side of Taqu Street Jinfeng District Yinchuan City Ningxia Hui Autonomous Region The PRC (萬科•大都會)

30. A Piece of Land located at – – 736,200,000 – – 736,200,000 100% 736,200,000 Qinshui Avenue East Harbin Road North Jinfeng District Yinchuan City Ningxia Hui Autonomous Region The PRC (花語軒)

31. Kaiyuan Shopping Mall – – – 116,000,000 – 116,000,000 100% 116,000,000 located at West of Zhongxing Road and south of Xiping Street Lingwu County Yinchuan City Ningxia Hui Autonomous Region The PRC (銀川•開元商場)

32. A Piece of Land located at ––No– – Nil 40% Nil North of Tuanjie Road Commercial Jinfeng District Value Yinchuan City Ningxia Hui Autonomous Region The PRC (萬科•北師大)

– III-12 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX III PROPERTY VALUATION

Group I: Group II: Group III: Group IV: Group V:

33. Unsold portions of Xining ––––35,500,000 35,500,000 100% 35,500,000 International One Nos. 18-2, 18-4 and 18-6, Building No.1, located at No. 18 Kunlun Middle Road Chengdong District Xining City Qinghai Province The PRC (西寧國際壹號)

34. Golf Composite building ––––7,900,000 7,900,000 100% 7,900,000 located at south of Composite, Minzu North Street Xingqing District Yinchuan City Ningxia Hui Autonomous Region The PRC (高爾夫綜合樓)

35. New Office located at ––––35,600,000 35,600,000 100% 35,600,000 No. 1 Shanghai West Road Xingqing District Yinchuan City Ningxia Hui Autonomous Region The PRC (寧夏中房實業集團總部大廈)

Total: 984,500,000 22,387,000,000 3,929,300,000 356,500,000 79,000,000 27,736,300,000 16,713,705,200

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VALUATION CERTIFICATE

Market value in Particulars of existing state as at No. Property Description and tenure occupancy the valuation date RMB

1. Project Sunshine Project Sunshine Meiyu is a As at the valuation 716,900,000 Meiyu located at residential development located date, the unsold units the Binhe at the Binhe West Road, Qindu of the property were 55% interest West Road District, Xianyang City. The vacant for sale and attributable to Qindu District locality is well served by public the CIP of the the Group: Xianyang City transportation network and property was under RMB394,295,000 Shannxi Province supporting facilities. construction. The PRC (咸陽中房 • 陽光美 The project comprises Phase I 域) and Phase II occupying 2 parcels of land with a total site area of approximately 110,307.70 sq.m. Phase I and portion of Phase II of the project were completed in various stages between 2016 and 2020. The remaining portion of Phase II of the project was under construction.

The property comprised various unsold units of Phase I and portion of Phase II of the project (the “unsold units”) with a total gross floor area of 6,241.55 sq.m. and the remaining portion of Phase II of the project under construction (the “CIP”). The CIP of the property has a gross floor area of approximately 149,367.45 sq.m. and is scheduled to be completed in July 2022. Details of the areas of property are set out in note 8.

As advised by the Group, the construction cost (excluding land cost and financial cost) of the CIP is estimated to be approximately RMB526,700,000 of which approximately RMB322,200,000 had been incurred as at the valuation date.

The land use rights of the property have been granted for terms expiring on 8 November 2085 for residential use and 8 November 2055 for commercial use.

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Notes:

1. Pursuant to 2 State-owned Land Use Rights Certificates—Xian Guo Yong (2015) Di Nos. 184 and 189, the land use rights of 2 parcels of land with a total site area of approximately 110,307.70 sq.m. have been granted to Xianyang Yangguang Meiyu Real Estate Co., Ltd (咸陽陽光美域置業有限公司,“Xianyang Yangguang Meiyu”, a 55% owned subsidiary of the Company) for terms expiring on 8 November 2085 for residential use and 8 November 2055 for commercial use.

2. Pursuant to 4 Construction Work Planning Permits—Jian Zi Di Nos. 610400201600003, 610400201600004, 610400201700030 and 610400201800002 in favour of Xianyang Yangguang Meiyu, the project with a gross floor area of approximately 552,173.59 sq.m. (including the property) has been approved for construction.

3. Pursuant to 5 Construction Work Commencement Permits—Nos. 610401201602190101, 610401201602190201, 610401201605260101, 610401201710120101, 610401201804230201, 610401201804230101 in favour of Xianyang Yangguang Meiyu, permission by the relevant local authority was given to commence the construction of the project with a gross floor area of approximately 552,173.63 sq.m (including the property).

4. Pursuant to 9 Pre-sale Permits in favour of Xianyang Yangguang Meiyu, the Group is entitled to sell residential and commercial units of the project (representing a gross floor area of approximately 449,481.40 sq.m.) to purchasers.

5. Pursuant to 20 Construction Work Completion and Inspection Certificates in favour of Xianyang Yangguang Meiyu, the construction of portions of the project with a gross floor area of approximately 402,806.18 sq.m. (including the unsold units of the property) has been completed and passed the inspection acceptance.

6. According to the information provided by the Group, the gross floor area of the property is set out as below:

Gross Floor Nos. of car Group Usage Area parking space (sq.m.)

Group I—held for sale Residential 1,267.31 (unsold units) Retail 4,974.24

Sub-total: 6,241.55 Group II—held under development Residential 109,831.83 (CIP) Retail 10,800.86 Basement (inclusive of car parking spaces) 28,734.76 205

Sub-total: 149,367.45 205

Grand-Total: 155,609.00 205

7. As advised by the Group, various residential units and retail units of the unsold units of the property with a gross floor area of approximately 2,523.24 sq.m. have been pre-sold to various third parties at a total consideration of RMB25,691,659 inclusive of value-added tax.

As advised by the Group, various residential and retail units of the CIP of the property with a gross floor area of approximately 110,853.13 sq.m. in Group II of the property have been pre-sold to various third parties at a total consideration of RMB908,948,051 inclusive of value-added tax. Such portions of the property have not been legally and virtually transferred and therefore we have included the units in our valuation. In arriving at our opinion on the market value of the property, we have taken into account the contracted prices of such portions of the property.

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8. The market value of the CIP of the property as if completed as at the valuation date according to the development proposal as described above and which can be freely transferred in the market, would be RMB978,900,000.

9. Our valuation has been made on the following basis and analysis:

(a) In undertaking our valuation, we have identified and analyzed various relevant sales evidences in the locality which have similar characteristics as the subject property such as nature, use, size, layout and accessibility of the property. The unit price of these comparable properties ranges from RMB6,800 to RMB11,000 per sq.m. for residential units, RMB6,900 to RMB29,000 per sq.m. for retail units on the first floor and RMB130,000 to RMB145,000 per space for car parking spaces. Appropriate adjustments and analysis are considered to the differences in location, size and other characters between the comparable properties and the property to arrive at an assumed unit rate for the property.

(b) In undertaking our valuation, we have made reference to sales prices of land within the locality which have the similar characters comparable to the property. The accommodation value of these comparable land sites ranges from RMB1,500 to RMB2,200 per sq.m. for residential use. Appropriate adjustments and analysis are considered to the differences in nature, use, site area, layout, accessibility and other characters between the comparable properties and the property to arrive at our assumed accommodation value.

10. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal adviser, which contains, inter alia, the following:

(a) Xianyang Yangguang Meiyu has legally obtained the land use rights of the property and entitled to occupy and use of the parcel of land, whilst the transfer and otherwise dispose of the parcel of land are subject to relevant mortgage contracts and relevant laws in the PRC;

(b) Xianyang Yangguang Meiyu has obtained the requisite approvals in respect of the actual development; and

(c) Xianyang Yangguang Meiyu has the right to pre-sell portion of the property based on the Pre-sale Permit mentioned in note 5.

11. A summary of major certificates/approvals is shown as follows:

a. State-owned Land Use Rights Certificate Yes b. Construction Work Planning Permit Yes c. Construction Work Commencement Permit Yes d. Pre-sale Permit Yes e. Construction Work Completion and Inspection Certificate/Table/Report Portion f. Building Ownership Certificate N/A

12. For the purpose of this report, the property is classified into the following groups according to the purpose for which it is held, we are of the opinion that the market value of each group as at the valuation date in its existing state is set out as below:

Market value in existing state as at Group the valuation date (RMB)

Group I—held for sale by the Group 62,900,000 Group II—held under development by the Group 654,000,000

Total: 716,900,000

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VALUATION CERTIFICATE

Market value in Particulars of existing state as at No. Property Description and tenure occupancy the valuation date RMB

2. Project Xi Yun Tai Project Xi Yun Tai South Area is As at the valuation 119,200,000 South Area located at the eastern side of date, the unsold units located at the Minzu North Street. The locality of the property was 100% interest eastern is a newly developing area, vacant, the CIP of the attributable to side of Minzu public transportation and property was under the Group: North Street supporting facilities around the construction and RMB119,200,000 Xingqing District property need to be further remaining portion of Yinchuan City improved. the property was bare Ningxia Hui land. Autonomous The project occupies 6 parcels of Region land with a site area of The PRC approximately 157,000.74 sq.m., (璽雲台南區) which is being developed into a residential and commercial development. As advised by the Group, portions of the project were completed between 2015 and 2019, and the unsold portion of that (the “unsold units”) with gross floor area of approximately 8,674.44 sq.m. was vacant for sale. A kindergarten of the project was under construction (the “CIP”) with gross floor area of approximately 4,561.88 sq.m. and is scheduled to be completed in July 2021. The remaining portion of the property was bare land with gross floor area of approximately 32,544.00 sq.m. and is scheduled to be completed in June 2023.

The classification, usage and gross floor area details of the property were set out in note 6.

As advised by the Group, the construction cost (excluding land cost and financial cost) of CIP and bare land portions of the property is estimated to be approximately RMB5,000,000 of which approximately RMB2,200,000 had been incurred as at the valuation date.

The land use rights of the property have been granted for terms expiring on 19 January 2080 for residential use and 19 January 2050 for commercial use.

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Notes:

1. Pursuant to 6 State-owned Land Use Rights Certificates—Yin Guo Yong (2012) Di Nos. 15185 to 15186, Yin Guo Yong (2013) Di Nos.03978 to 03981, the land use rights of 6 parcels of land with a total site area of approximately 157,000.74 sq.m. have been granted to Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司,“Zhongfang Industrial”, a wholly-owned subsidiary of the Company) for terms expiring on 19 January 2080 for residential use and 19 January 2050 for commercial use.

2. Pursuant to 13 Construction Work Planning Permits in favour of Zhongfang Industrial, the project with a gross floor area of approximately 540,491.41 sq.m. (including the property) has been approved for construction.

3. Pursuant to 36 Construction Work Commencement Permits in favour of Zhongfang Industrial, permission by the relevant local authority was given to commence the construction of the project with a gross floor area of approximately 507,826.09 sq.m. (including the property).

4. Pursuant to 30 Pre-sale Permits in favour of Zhongfang Industrial, the Group is entitled to sell portions of the project (representing a gross floor area of approximately 416,765.56 sq.m.) to purchasers.

5. Pursuant to 35 Construction Work Completion and Inspection Certificates in favour of Zhongfang Industrial, the construction of portions of the project with a gross floor area of approximately 503,264.21 sq.m. (including the unsold units of the property) has been completed and passed the inspection acceptance.

6. According to the information provided by the Group, the gross floor area of the property is set out as below:

Gross Floor Nos. of car Group Usage Area parking space (sq.m.)

Group I—held for sale Residential 300.04 (unsold units) Retail 376.44 Health center 2,097.51 Commercial apartment 5,900.45

Sub-total: 8,674.44

Group II—held under development Kindergarten 4,561.88 (CIP) Sub-total: 4,561.88

Group III—held for future development Commercial apartment 32,554.00 (bare land) Sub-total: 32,554.00

Grand-Total: 45,790.32

7. As advised by the Group, kindergarten of the CIP with a gross floor area of approximately 4,561.88 sq.m. will free transfer to the local government. Therefore, we have attributed no commercial value to it.

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8. Our valuation has been made on the following basis and analysis:

(a) In undertaking our valuation, we have identified and analyzed various relevant sales evidences in the locality which have similar characteristics as the subject property such as nature, use, size, layout and accessibility of the property. The unit price of these comparable properties ranges from RMB8,000 to RMB10,000 per sq.m. for residential units, RMB17,000 to RMB19,000 per sq.m. for retail units on the first floor, RMB6,000 to RMB8,000 per sq.m. for health center and RMB4,000 to RMB6,000 for commercial apartment. Appropriate adjustments and analysis are considered to the differences in location, size and other characters between the comparable properties and the property to arrive at an assumed unit rate for the property.

(b) In undertaking our valuation, we have made reference to sales prices of land within the locality which have the similar characters comparable to the property. The accommodation value of these comparable land sites ranges from RMB1,500 to RMB2,500 per sq.m. for residential use. Appropriate adjustments and analysis are considered to the differences in nature, use, site area, layout, accessibility and other characters between the comparable properties and the property to arrive at our assumed accommodation value.

9. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal adviser, which contains, inter alia, the following:

(a) Zhongfang Industrial has legally obtained the land use rights of the property and entitled to occupy and use of the parcel of land, whilst the transfer and otherwise dispose of the parcel of land are subject to relevant mortgage contracts and relevant laws in the PRC;

(b) Zhongfang Industrial has obtained the requisite approvals in respect of the actual development;

(c) Zhongfang Industrial has the right to pre-sell portion of the property based on the Pre-sale Permit mentioned in note 4.

10. A summary of major certificates/approvals is shown as follows:

a. State-owned Land Use Rights Certificate Yes b. Construction Work Planning Permit Yes c. Construction Work Commencement Permit Portion d. Pre-sale Permit Portion e. Construction Work Completion and Inspection Certificate Portion f. Building Ownership Certificate/Real Estate Title Certificate (Building) N/A

11. For the purpose of this report, the property is classified into the following groups according to the purpose for which it is held, we are of the opinion that the market value of each group as at the valuation date in its existing state is set out as below:

Market value in existing state as at Group the valuation date (RMB)

Group I—held for sale by the Group 52,800,000 Group II – held under development by the Group No commercial value Group III—held for future development by the Group 66,400,000

Total: 119,200,000

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VALUATION CERTIFICATE

Market value in Particulars of existing state as at No. Property Description and tenure occupancy the valuation date RMB

3. Project Xi Yun Tai Project Xi Yun Tai North Area is As at the valuation 622,700,000 North Area located located at the eastern side of date, the unsold units at the eastern side Minzu North Street. There are of the property was 100% interest of Minzu North several residential projects vacant, the IP of the attributable to Street Xingqing nearby, however, public property were rented the Group: District Yinchuan transports and supporting to 2 tenants for RMB622,700,000 City Ningxia Hui facilities in the neighboring area kindergarten and Autonomous need to be further developed. office purpose Region respectively and the The PRC The project occupies a parcel of CIP of the property (璽雲台北區) land with a site area of was under approximately 132,685.80 sq.m., construction. which is being developed into a residential and commercial development.

Portions of the project were completed between 2017 and 2020. The unsold units with a total gross floor area of approximately 985.71 sq.m (the “unsold units”) of that completed portion was vacant for sale whereas the remaining completed portion of the project with a total gross floor area of approximate 12,648.53 sq.m. (the “IP”) were rented to 2 tenants investment purpose as at the valuation date. The remaining portion of the project was under construction (the “CIP”) as at the valuation date and is scheduled to be completed in May 2021. As advised by the Group, upon completion, the CIP will have a gross floor area of approximately 116,674.92 sq.m.

The property comprises the unsold units, IP and CIP of the project with a total gross floor area of approximately 130,309.16 sq.m. The classification, usage and gross floor area details of the property were set out in note 6.

As advised by the Group, the construction cost (excluding land cost and financial cost) of the CIP is estimated to be approximately RMB363,600,000 of which approximately RMB201,900,000 had been incurred as at the valuation date.

The land use rights of the property have been granted for terms expiring on 19 January 2080 for residential use and 19 January 2050 for commercial use.

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Notes:

1. Pursuant to a Real Estate Title Certificate (Land))—Ning (2018) Xing Qing Qu Bu Dong Chan Quan Di No. 0038129, the land use rights of the aforesaid land parcel with a site area of approximately 132,685.80 sq.m. have been granted to Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司, “Zhongfang Industrial”) for terms expiring on 19 January 2080 for residential use and 19 January 2050 for commercial use. As advised by the Group, the land consideration has been fully paid.

2. Pursuant to 6 Construction Work Planning Permits—Yin Shen Fu Jian Zi Di Nos. (2016) 029, (2017) 034, (2017) 286, (2018) 036, (2019) 033 and (2019) 169 in favour of Zhongfang Industrial, the project with a gross floor area of approximately 315,380.15 sq.m. (including the property) has been approved for construction.

3. Pursuant to 41 Construction Work Commencement Permits in favour of Zhongfang Industrial, permission by the relevant local authority was given to commence the construction of the project with a gross floor area of approximately 315,380.15 sq.m. (including the property).

4. Pursuant to 10 Pre-sale Permits in favour of Zhongfang Industrial, the Group is entitled to sell portions of the project (representing a gross floor area of approximately 106,083.20 sq.m.) to purchasers.

5. Pursuant to 29 Construction Work Completion and Inspection Certificates in favour of Zhongfang Industrial, the construction of portion of the project with a gross floor area of approximately 192,790.23 sq.m. (including the unsold units and the IP of the property) has been completed and passed the inspection acceptance.

6. Pursuant to 16 Real Estate Title Certificates (Building)—Ning (2020) Xing Qing Qu Bu Dong Chan Quan Di No. 0024138, 0024142, 0024143, 0024240, 0024242, 0024245 to 0024248, 0024250, 0024252, 0024255 to 0024258 and 0034430 in favour of Zhongfang Industrial with the ownership of a gross floor area of approximately 8,647.97 sq.m. (including portions of the unsold units and IP of the property) of the project.

7. According to the information provided by the Group, the gross floor area of the property is set out as below:

Gross Nos. of car Group Usage Floor Area parking space (sq.m.)

Group I—held for sale Retail 985.71 (unsold units) Sub-total: 985.71

Group II—held under Residential 90,297.17 development Retail 7,357.90 (CIP) Underground 18,807.85 399 Ancillary 212.00 Sub-total: 116,674.92 399

Group IV—held for investment Kindergarten 5,682.28 (IP) Office 6,966.25 Sub-total: 12,648.53

Grand-Total: 130,309.16 399

8. As advised by the Group, various residential units with a gross floor area of approximately 79,404.73 sq.m. of the property have been pre-sold to various third parties at a consideration of RMB704,549,517 inclusive of value-added tax. Such portions of the property have not been legally and virtually transferred and therefore we have included the units in our valuation. In arriving at our opinion on the market value of the property, we have taken into account the contracted prices of such portions of the property.

9. Our valuation has been made on the following basis and analysis:

(a) In undertaking our valuation of the unsold units, we have identified and analyzed various relevant sales evidences in the locality which have similar characteristics as the subject property such as nature, use, size, layout and accessibility of the property. The unit price of these comparable properties ranges from

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RMB9,000 to RMB11,000 for residential units and RMB17,000 to RM19,000 per sq.m. for commercial units on the first floor. Appropriate adjustments and analysis are considered to the differences in location, size and other characters between the comparable properties and the property to arrive at an assumed unit rate for the property.

(b) In undertaking our valuation of the CIP, we have made reference to sales prices of land within the locality which have the similar characters comparable to the property. The accommodation value of these comparable land sites ranges from RMB1,500 to RMB2,500 per sq.m. for residential use. Appropriate adjustments and analysis are considered to the differences in nature, use, site area, layout, accessibility and other characters between the comparable properties and the property to arrive at our assumed accommodation value.

(c) In undertaking our valuation of IP, we have considered the actual rents in the existing tenancy agreements and also compared with similar properties located in the same business circle and/or nearby within reasonable walking distance. We adopted market rent when calculating (1) the reversionary rental income after the expiry of the existing leases for occupied area, and (2) the rental income of vacant area;

(d) the unit rents of the comparable kindergarten range from RMB0.60 to RMB1.0 per sq.m. per day and unit rents ranges from RMB0.8 to RMB1.1 per sq.m. per day for office units, appropriate adjustments and analysis are considered to the differences in location, size and other characters between the comparable properties and the property to arrive at the market rent; and

(e) based on our research on office/school market in the surrounding area of the property, for office/school portions, the stabilized market yield ranged from 4% to 6% as at the valuation date. Considering the location, risks and characteristics of the property, we have applied a market yield of 4.5% as the capitalization rate in the kindergarten valuation and applied a market yield of 6.0% as the capitalization rate in the office valuation.

10. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal adviser, which contains, inter alia, the following:

(b) Zhongfang Industrial has obtained the requisite approvals in respect of the actual development; and

(c) Zhongfang Industrial has the right to pre-sell portion of the property based on the Pre-sale Permit mentioned in note 4.

11. A summary of major certificates/approvals is shown as follows:

a. Real Estate Title Certificate (Land) Yes b. Construction Work Planning Permit Yes c. Construction Work Commencement Permit Yes d. Pre-sale Permit Yes e. Construction Work Completion and Inspection Certificate Portion f. Real Estate Title Certificate (Building) Portion

Market value in existing state as at Group the valuation date (RMB)

Group I—held for sale by the Group 17,700,000 Group II—held under development by the Group 551,000,000 Group IV—held for investment by the Group 54,000,000 Total: 622,700,000

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VALUATION CERTIFICATE

Market value in Particulars of existing state as at No. Property Description and tenure occupancy the valuation date RMB

4. Project Eastern Joy Project Eastern Joy is a As at the valuation 681,200,000 located at the residential development located date, the unsold units northwestern side at the northwestern side of of the property was 100% interest of Yanxing Road Yanxing Road and Yinheng Road. vacant for sale, the attributable to and Yinheng Road There are several residential CIP of the property the Group: Xingqing District projects nearby however, public was under RMB681,200,000 Yinchuan City transports and supporting construction, and the Ningxia Hui facilities in the neighboring area bare land of the Autonomous need to be further developed. property was vacant. Region The PRC The project occupies a parcel of (東方悅) land with a site area of approximately 173,176.72 sq.m., which is being developed into a residential and commercial development. Portions of the project were completed in 2020, and the unsold portion of that (the “unsold units”) with gross floor area of approximately 5,826.12 sq.m. was vacant for sale as at the valuation date. Portion of the project was under construction (the “CIP”) as at the valuation date and is scheduled to be completed in September 2022. As advised by the Group, upon completion, the CIP will have a gross floor area of approximately 118,499.46 sq.m. The remaining portion is bare land with a gross floor area of approximately 8,734.26 sq.m.

The property comprises the unsold units, CIP and bare land of the project with a total gross floor area of approximately 133,059.84 sq.m. The classification, usage and gross floor area details of the property were set out in note 6.

As advised by the Group, the construction cost (excluding land cost and financial cost) of the CIP is estimated to be approximately RMB370,400,000, of which approximately RMB269,000,000 had been incurred as at the valuation date.

The land use rights of the property have been granted for terms expiring on 13 August 2077 for residential use and 13 August 2047 for wholesale & retail use.

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Notes:

1. Pursuant to a Real Estate Title Certificate (Land)—Ning (2018) Xing Qing Qu Bu Dong Chan Quan Di No. 0063981, the land use rights of parcel of land with a site area of approximately 173,176.72 sq.m. have been granted to Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團股份有限公司, “Zhongfang Industrial”, a wholly-owned subsidiary of the Company) for terms expiring on 13 August 2077 for residential use and 13 August 2047 for wholesale & retail use.

2. Pursuant to 4 Construction Work Planning Permits—Yin Shen Fu Jian Zi Di Nos. (2018)010, (2018)019, (2019)031 and (2019)167 in favour of Zhongfang Industrial, the project with a gross floor area of approximately 307,136.92 sq.m. (including the unsold units and CIP) has been approved for construction.

4. Pursuant to 39 Pre-sale Permits in favour of Zhongfang Industrial, the Group is entitled to sell portions of the project (representing a gross floor area of approximately 250,925.05 sq.m.) to purchasers.

5. Pursuant to 29 Construction Work Completion and Inspection Certificates in favour of Zhongfang Industrial, the construction of portions of the project with a gross floor area of approximately 188,637.46 sq.m. (including the unsold units of the property) has been completed and passed the inspection acceptance.

6. According to the information provided by the Group, the gross floor area of the property is set out as below:

Gross Nos. of car Group Usage Floor Area parking space (sq.m.)

Group I—held for sale Retail 2,561.92 (unsold units) Health center 3,264.20 Sub-total: 5,826.12

Group II—held under Residential 90,218.32 development (CIP) Retail 4,652.90 Car parking space 17,535.84 438 Storage 6,092.40 Sub-total: 118,499.46 438

Residential 8,734.26 Group III—held for future Sub-total: 8,734.26 development by the Group (bare land) Grand-Total: 133,059.84 438

7. As advised by the Group, various residential units with a gross floor area of approximately 90,082.98 sq.m. of the CIP of the property have been pre-sold to various third parties at consideration of RMB690,289,508 inclusive of value-added tax. Such portions of the property have not been legally and virtually transferred and therefore we have included the units in our valuation. In arriving at our opinion on the market value of the property, we have taken into account the contracted prices of such portions of the property.

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9. Our valuation has been made on the following basis and analysis:

(a) In undertaking our valuation, we have identified and analyzed various relevant sales evidences in the locality which have similar characteristics as the subject property such as nature, use, size, layout and accessibility of the property. The unit price of these comparable properties ranges from RMB7,000 to RMB9,000 per sq.m. for residential units, RMB15,000 to RMB17,000 per sq.m. for retail units on the first floor and RMB6,000 to RMB8,000 per sq.m. for health center. Appropriate adjustments and analysis are considered to the differences in location, size and other characters between the comparable properties and the property to arrive at an assumed unit rate for the property.

(b) In undertaking our valuation, we have made reference to sales prices of land within the locality which have the similar characters comparable to the property. The accommodation value of these comparable land sites ranges from RMB1,500 to RMB2,500 per sq.m. for residential use. Appropriate adjustments and analysis are considered to the differences in nature, use, site area, layout, accessibility and other characters between the comparable properties and the property to arrive at our assumed accommodation value.

10. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal adviser, which contains, inter alia, the following:

(b) Zhongfang Industrial has obtained the requisite approvals in respect of the actual development; and

(c) Zhongfang Industrial has the right to pre-sell portion of the property based on the Pre-sale Permit mentioned in note 4;

11. A summary of major certificates/approvals is shown as follows:

a. Real Estate Title Certificate (Land) Yes b. Construction Work Planning Permit Portion c. Construction Work Commencement Permit Portion d. Pre-sale Permit Portion e. Construction Work Completion and Inspection Certificate/Table/Report Portion f. Building Ownership Certificate/Real Estate Title Certificate (Building) N/A

Market value in existing state as at Group the valuation date (RMB)

Group I—held for sale by the Group 63,200,000 Group II—held under development by the Group 600,000,000 Group III—held for future development by the Group 18,000,000 Total: 681,200,000

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VALUATION CERTIFICATE

Market value in Particulars of existing state as at No. Property Description and tenure occupancy the valuation date RMB

5. Project Eastern Project Eastern Ode is located at As at the valuation 948,000,000 Ode located at southeastern side of No.9 Road date, the property was southeastern side and Weiqi Road. There are under construction. 100% interest of No.9 Road and several residential projects attributable to Weiqi Road nearby however, public transports the Group: Xingqing District and supporting facilities in the RMB948,000,000 Yinchuan City neighboring area need to be Ningxia Hui further developed. Autonomous Region The property occupies 2 parcels The PRC of land with a site area of (東方賦) approximately 100,091.69 sq.m., which is being developed into a residential and commercial development. The property was under construction as at the valuation date and is scheduled to be completed in April 2022. As advised by the Group, upon completion, the project will have a gross floor area of approximately 233,951.04 sq.m. The classification, usage and gross floor area details of the property were set out in note 6.

As advised by the Group, the construction cost (excluding land cost and financial cost) of the property is estimated to be approximately RMB770,500,000 of which approximately RMB418,600,000 had been incurred as at the valuation date.

The land use rights of the property have been granted for terms expiring on 15 January 2088 for residential use and 15 January 2058 for wholesale & retail use.

Notes:

1. Pursuant to 2 State-owned Land Use Rights Grant Contracts—Yin Di Chan He Tong Rang Zi 2017 Nian Nos. 81 and 82, the land use rights of 2 parcels of land with a site area of approximately 100,091.69 sq.m. were contracted to be granted to Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團股份有限公司, “Zhongfang Industrial”, a wholly-owned subsidiary of the Company) for terms of 70 years for residential use and 40 years for wholesale & retail use commencing from the land delivery date. The land consideration was RMB216,900,000.

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2. Pursuant to 2 Real Estate Title Certificates (Land)—Ning (2018) Xing Qing Qu Bu Dong Chan Quan Di No. 0063643 and Ning (2018) Xing Qing Qu Bu Dong Chan Quan Di No 002581, the land use rights of the aforesaid land parcels with a total site area of approximately 100,091.69 sq.m. have been granted to Zhongfang Industrial for terms expiring on 15 January 2088 for residential use and 15 January 2058 for wholesale & retail use.

3. Pursuant to 3 Construction Work Planning Permits—Yin Shen Fu Jian Zi Di Nos. (2019)123, (2019)157 and (2020)018 in favour of Zhongfang Industrial, the property with a gross floor area of approximately 233,951.04 sq.m. has been approved for construction.

4. Pursuant to 6 Construction Work Commencement Permits—Nos 640102201908300401, 640102201908300501, 640102202003120201, 640102201912310101, 640102202003310401, 640102202003110501, 640102202003110601 and 640102202003300501 in favour of Zhongfang Industrial, permission by the relevant local authority was given to commence the construction of the property with a gross floor area of approximately 233,951.04 sq.m.

5. Pursuant to 25 Pre-sale Permits in favour of Zhongfang Industrial, the Group is entitled to sell portions of the property (representing a gross floor area of approximately 190,507.09 sq.m.) to purchasers.

6. According to the information provided by the Group, the gross floor area of the property is set out as below:

Nos. of car Usage Gross Floor Area parking space (sq.m.)

Residential 175,277.56 Retail 8,458.89 Storage 10,461.72 Car parking space 38,064.02 914 Ancillary 1,688.85

Total: 233,951.04 914

7. As advised by the Group, various residential units with a gross floor area of approximately 176,948.46 sq.m. of the property have been pre-sold to various third parties at a consideration of RMB1,373,945,762 inclusive of value-added tax. Such portions of the property have not been legally and virtually transferred and therefore we have included the units in our valuation. In arriving at our opinion on the market value of the property, we have taken into account the contracted prices of such portions of the property.

8. The market value of the property as if completed as at the valuation date according to the development proposal as described above and which can be freely transferred in the market, would be RMB1,470,000,000.

9. Our valuation has been made on the following basis and analysis:

(a) In undertaking our valuation, we have identified and analyzed various relevant sales evidences in the locality which have similar characteristics as the subject property such as nature, use, size, layout and accessibility of the property. The unit price of these comparable properties ranges from RMB7,000 to RMB9,000 per sq.m. for residential units and RMB14,000 to RMB16,000 per sq.m. for retail units on the first floor. Appropriate adjustments and analysis are considered to the differences in location, size and other characters between the comparable properties and the property to arrive at an assumed unit rate for the property.

(b) In undertaking our valuation, we have made reference to sales prices of land within the locality which have the similar characters comparable to the property. The accommodation value of these comparable land sites ranges from RMB1,500 to RMB2,500 per sq.m. for residential use. Appropriate adjustments and analysis are considered to the differences in nature, use, site area, layout, accessibility and other characters between the comparable properties and the property to arrive at our assumed accommodation value.

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10. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal adviser, which contains, inter alia, the following:

(b) Zhongfang Industrial has obtained the requisite approvals in respect of the actual development; and

(c) Zhongfang Industrial has the right to pre-sell portion of the property based on the Pre-sale Permit mentioned in note 5.

11. A summary of major certificates/approvals is shown as follows:

a. Real Estate Title Certificate (Land) Yes b. Construction Work Planning Permit Yes c. Construction Work Commencement Permit Yes d. Pre-sale Permit Yes e. Construction Work Completion and Inspection Certificate N/A f. Building Ownership Certificate/Real Estate Title Certificate (Building) N/A

12. For the purpose of this report, the property is classified into the group as “Group II—held under development by the Group in the PRC” according to the purpose for which it is held.

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VALUATION CERTIFICATE

Market value in Particulars of existing state as at No. Property Description and tenure occupancy the valuation date RMB

6. Project Xi Yue Bay Project Xi Yue Bay is located at As at the valuation 1,396,000,000 located at the the southeastern side of Peihua date, the property was southeastern side Road and Jingguan Road, Jinfeng under construction. 100% interest of Peihua Road District. The locality is well attributable to and Jingguan Road served by public transportation the Group: Jinfeng District and supporting facilities. RMB1,396,000,000 Yinchuan City Ningxia Hui The property occupies a parcel of Autonomous land with a site area of Region approximately 155,582.76 sq.m., The PRC which is being developed into a (璽悅灣) residential and commercial development. The project was under construction as at the valuation date and is scheduled to be completed in September 2022. As advised by the Group, upon completion, the project will have a gross floor area of approximately 230,130.03 sq.m. The classification, usage and gross floor area details of the property were set out in note 6.

As advised by the Group, the construction cost (excluding land cost and financial cost) of the property is estimated to be approximately RMB951,600,000, of which approximately RMB542,300,000 had been incurred as at the valuation date.

The land use rights of the property have been granted for terms expiring on 29 November 2088 for residential use and 29 November 2058 for wholesale & retail uses.

Notes:

1. Pursuant to a State-owned Land Use Rights Grant Contract—Yin Di Chan He Tong Rang Zi 2018 Nian No. 46, the land use rights of a parcel of land with a site area of approximately 155,582.76 sq.m. were contracted to be granted to Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團股份有限公司, “Zhongfang Industrial”, a wholly-owned subsidiary of the Company) for terms of 70 years for residential use and 40 years for wholesale & retail use commencing from the land delivery date. The land consideration was RMB466,700,000.

2. Pursuant to a Real Estate Title Certificate (Land)—Ning (2019) Jin Feng Qu Bu Dong Chan Quan Di No. 0005229, the land use rights of the aforesaid land parcel with a total site area of approximately 155,582.76 sq.m. have been granted to Zhongfang Industrial for terms expiring on 29 November 2088 for residential use and 29 November 2058 for wholesale & retail use.

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3. Pursuant to 3 Construction Work Planning Permits—Yin Shen Fu Jian Di Zi Di Nos. (2019)078, (2019)138 and (2020)007 in favour of Zhongfang Industrial, the property with a gross floor area of approximately 230,130.03 sq.m. has been approved for construction.

4. Pursuant to 28 Construction Work Commencement Permits in favour of Zhongfang Industrial, permission by the relevant local authority was given to commence the construction of the property with a gross floor area of approximately 230,080.03 sq.m. According to the local construction policy – Ning Jian Han (2020) No. 154, Construction Work Commencement Permit for an ancillary room of the property with gross floor area of approximately 50.00 sq.m. is not required.

5. Pursuant to 38 Pre-sale Permits in favour of Zhongfang Industrial, the Group is entitled to sell portions of the property (representing a gross floor area of approximately 177,208.88 sq.m.) to purchasers.

6. According to the information provided by the Group, the gross floor area of the property is set out as below:

Nos. of car Usage Gross Floor Area parking space (sq.m.)

Residential 156,475.36 Villa 7,001.56 Retail 3,544.51 Storage Room 24,730.22 Car parking space 34,097.10 735 Ancillary 4,281.28

Total: 230,130.03 735

7. As advised by the Group, various residential units with a total gross floor area of approximately 156,048.40 sq.m. of the property have been pre-sold to various third parties at a consideration of RMB1,950,410,308 inclusive of value-added tax. Such portions of the property have not been legally and virtually transferred and therefore we have included the units in our valuation. In arriving at our opinion on the market value of the property, we have taken into account the contracted prices of such portions of the property.

9. Our valuation has been made on the following basis and analysis:

(a) In undertaking our valuation, we have identified and analyzed various relevant sales evidences in the locality which have similar characteristics as the subject property such as nature, use, size, layout and accessibility of the property. The unit price of these comparable properties ranges from RMB11,000 to RMB13,000 per sq.m. for residential units, RMB23,000 to RMB26,000 per sq.m. for villa and RMB23,000 to RMB25,000 per sq.m. for retail units on the first floor. Appropriate adjustments and analysis are considered to the differences in location, size and other characters between the comparable properties and the property to arrive at an assumed unit rate for the property.

(b) In undertaking our valuation, we have made reference to sales prices of land within the locality which have the similar characters comparable to the property. The accommodation value of these comparable land sites ranges from RMB2,500 to RMB3,500 per sq.m. for residential use. Appropriate adjustments and analysis are considered to the differences in nature, use, site area, layout, accessibility and other characters between the comparable properties and the property to arrive at our assumed accommodation value.

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10. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal adviser, which contains, inter alia, the following:

(b) Zhongfang Industrial has obtained the requisite approvals in respect of the actual development; and

(c) Zhongfang Industrial has the right to pre-sell portion of the property based on the Pre-sale Permits mentioned in note 5.

11. A summary of major certificates/approvals is shown as follows:

a. State-owned Land Use Rights Grant Contract Yes b. Real Estate Title Certificate (Land) Yes c. Construction Work Planning Permit Yes d. Construction Work Commencement Permit Yes e. Pre-sale Permit Yes f. Construction Work Completion and Inspection Certificate N/A g. Building Ownership Certificate/Real Estate Title Certificate (Building) N/A

12. For the purpose of this report, the property is classified into the group as “Group II—held under development by the Group in the PRC” according to the purpose for which it is held.

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VALUATION CERTIFICATE

Market value in Particulars of existing state as at No. Property Description and tenure occupancy the valuation date RMB

7. Unsold retail and Phases I to IV of East Area and As at the valuation 209,800,000 office units of Phases I to III of West Area of date, the property was Phases I to IV of Xining Salzburg Palace vacant for sale. 100% interest Project East Area completed between 2013 and attributable to and Phases I to III 2019, is located at the No. 59 the Group: of West Area of Haixi Road, Chengbei District. RMB209,800,000 Xining Salzburg The locality is served by public Palace No. 59 transportation and public Haixi Road facilities. Chengbei District Xining City The property comprises the Qinghai Province unsold retail and office units of The PRC the project with a total gross (西寧薩爾斯堡東區 floor area of approximately 一至四期及西區一 36,058.26 sq.m. 至三期) The land use rights of the property have been granted for terms expiring on 7 January 2081 for residential use and 7 January 2051 for commercial use.

Notes:

1. Pursuant to 2 State-owned Land Use Rights Grant Contracts—6301002009CHG-H12010HC-4 and 6301002009CHG-H12010HC-5, the land use rights with a total site area of approximately 270,316.00 sq.m. (including the property) were contracted to be granted to Ningxia Zhongfang Group Xining Real Estate Development Co., Ltd. (寧夏中房集團西寧房地產開發有限責任公司, “Zhongfang Xining”, a wholly-owned subsidiary of the Company) for terms of 70 years for residential use and 40 years for commercial use commencing from the land delivery date. The land consideration was RMB770,737,653.

2. Pursuant to 2 Real Estate Title Certificates (Land)—Qing (2017) Xi Ning Shi Bu Dong Chan Quan Di No. 0016479 and Qing (2018) Xi Ning Shi Bu Dong Chan Quan Di No. 0024793, the land use rights of 2 parcels of land with a total site area of approximately 270,315.11 sq.m. have been granted to Zhongfang Xining for terms expiring on 7 January 2081 for residential use and 7 January 2051 for commercial use.

3. Pursuant to 45 Construction Work Planning Permits—Ning Hai Hu Gui Jian Zi Nos. 2012-47 to 2012-58, 2013-61 to 2013-66, 2013-78 to 2013-91, 2014-040 to 2014-046 and Jian Zi Di Ning Hai Hu Gui Jian Zi Nos. 2015-16, 2016-9, 2016-15, 2017-12, 2017-16 and 2018-2 in favour of Zhongfang Xining, Phases I to IV of East Area and Phases I to III of West Area of Xining Salzburg Palace with a total gross floor area of approximately 631,052.36 sq.m. (including the property) has been approved for construction.

4. Pursuant to 17 Construction Work Commencement Permits—Ning Hai Hu Jian Shi Zi (She) Nos. 2012-016 to 2012-018, 2013-022, 2013-036 to 2013-038, 2014-005, 2014-006, 2014-013, 2015-021, 2016-014, 2016-021, 2017-001, 2017-018, 2017-022 and 2018-011 in favour of Zhongfang Xining, permissions by the relevant local authority were given to commence the construction of Phases I to IV of East Area and Phases I to III of West Area of Xining Salzburg Palace with a total gross floor area of approximately 631,052.36 sq.m. (including the property).

5. Pursuant to 81 Pre-sale Permits—(2013) Fang Yu Shou Zi Di Nos. 068, 069 and other 79 Pre-sale permits in favour of Zhongfang Xining, the Group is entitled to sell portions of Phases I to IV of East Area and Phases I to III of West Area of Xining Salzburg Palace (representing a total gross floor area of approximately 495,939.10 sq.m. (including the property)) to purchasers.

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6. Pursuant to 27 Construction Work Completion and Inspection Certificates in favour of Zhongfang Xining, the construction of Phases I to IV of East Area and Phases I to III of West Area of Xining Salzburg Palace with a total gross floor area of approximately 616,838.95 sq.m. (including the property) has been completed and passed the inspection acceptance.

7. Pursuant to 3 Real Estate Ownership Certificates (Building)—Qing (2020) Xi Ning Shi Bu Dong Chan Quan Di Nos. 0030992, 0053271 and 0004551 in favour of Zhongfang Xining with the ownership of a total gross floor area of approximately 148,123.44 sq.m (including the property) of portions of Phases I to IV of East Area and Phases I to III of West Area of Xining Salzburg Palace.

8. In undertaking our valuation, we have identified and analyzed various relevant sales evidences in the locality which have similar characteristics as the subject property such as nature, use, size, layout and accessibility of the property in Group I. The unit price of these comparable properties ranges from RMB8,000 to RMB15,000 per sq.m. for retail units on the first floor, RMB3,000 to RMB5,000 per sq.m. for office units. Appropriate adjustments and analysis are considered to the differences in location, size and other characters between the comparable properties and the property to arrive at an assumed unit rate for the property.

9. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal adviser, which contains, inter alia, the following:

(a) Zhongfang Xining has legally obtained the land use rights of the property and entitled to occupy and use of the parcel of land, whilst the transfer and otherwise dispose of the parcel of land are subject to relevant mortgage contracts and relevant laws in the PRC;

(b) Zhongfang Xining Palace has obtained the requisite approvals in respect of the actual development; and

(c) Zhongfang Xining has the right to pre-sell portion of the property based on the Pre-sale Permits mentioned in note 5.

10. A summary of major certificates/approvals is shown as follows:

a. State-owned Land Use Rights Grant Contract Yes b. Real Estate Title Certificate (Land) Yes c. Construction Work Planning Permit Yes d. Construction Work Commencement Permit Yes e. Pre-sale Permit Yes f. Construction Work Completion and Inspection Certificate Yes g. Real Estate Title Certificate (Building) Portion

11. For the purpose of this report, the property is classified into the group as “Group I—held for sale by the Group in the PRC” according to the purpose for which it is held.

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VALUATION CERTIFICATE

Market value in Particulars of existing state as at No. Property Description and tenure occupancy the valuation date RMB

8. Middle Area and Middle Area and Phase IV of As at the valuation 1,004,000,000 Phase IV of West West Area of Xining Salzburg date, the property was Area of Project Palace is located at the northern under construction. 100% interest Xining Salzburg side of Meili Shui Street, attributable to Palace located at Chengbei District. The locality is the Group: the northern side well served by public RMB1,004,000,000 of Meili Shui transportation and supporting Street Chengbei facilities. District Xining City Qinghai The property occupies a parcel of Province land with a site area of The PRC approximately 44,878.98 sq.m., (西寧薩爾斯堡中區 which is being developed into a 及西區四期) residential and commercial development. The project was under construction as at the valuation date and was scheduled to be completed in May 2022. As advised by the Group, upon completion, the project will have a total gross floor area of approximately 156,201.85 sq.m. The classification, usage and the gross floor area details of the property were set out in note 6.

As advised by the Group, the construction cost (excluding land cost and financial cost) of the property is estimated to be approximately RMB569,200,000, of which approximately RMB314,100,000 had been incurred as at the valuation date.

The land use rights of the property have been granted for terms expiring on 7 January 2081 for residential use and 7 January 2051 for commercial use.

Notes:

1. Pursuant to a State-owned Land Use Rights Grant Contract—6301002009CHG-H12010HC-4, the land use rights with a site area of approximately 146,756.33 sq.m. (including the property) were contracted to be granted to Ningxia Zhongfang Group Xining Real Estate Development Co., Ltd. (寧夏中房集團西寧房地產開發有限責任公司, “Zhongfang Xining”, a wholly-owned subsidiary of the Company) for terms of 70 years for residential use and 40 years for commercial use commencing from the land delivery date. The land consideration was RMB365,420,235.

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2. Pursuant to a Real Estate Title Certificate (Land)—Qing (2018) Xi Ning Shi Bu Dong Chan Quan Di No. 0024793, the land use rights of the aforesaid land parcel with a site area of approximately 146,756.33 sq.m. (including the property) have been granted to Zhongfang Xining for terms expiring on 7 January 2081 for residential use and 7 January 2051 for commercial use.

3. Pursuant to 2 Construction Work Planning Permits—Jian Zi Di Ning Hai Hu Gui Jian Zi Nos. 2019-1 and 2020-8 in favour of Zhongfang Xining, the property with a total gross floor area of approximately 156,201.85 sq.m. has been approved for construction.

4. Pursuant to 2 Construction Work Commencement Permits—Ning Jian Guan Nos. 630104201904100801 and 630101202006220101 in favour of Zhongfang Xining, permissions by the relevant local authority were given to commence the construction of the property with a total gross floor area of approximately 156,201.85 sq.m.

5. Pursuant to 17 Pre-sale Permits—(2019) Ning Fang Yu Shou Zheng Di Nos. 186 to 197 and (2020) Ning Fang Yu Shou Zheng Di Nos. 164, 165, 197 and 277 in favour of Zhongfang Xining, the Group is entitled to sell portions of the property (representing a total gross floor area of approximately 133,633.91 sq.m.) to purchasers.

6. According to the information provided by the Group, the gross floor area of the property is set out as below:

Nos. of car Usage Gross Floor Area parking space (sq.m.)

Residential 134,846.13 Retail 6,303.12 Ancillary 2,905.60 Basement (inclusive of car parking spaces) 12,147.00 411

Total: 156,201.85 411

7. As advised by the Group, various residential and retail units with a total gross floor area of approximately 118,408.97 sq.m. of the property have been pre-sold to various third parties at a consideration of RMB1,490,978,600 inclusive of value-added tax. Such portions of the property have not been legally and virtually transferred and therefore we have included the units in our valuation. In arriving at our opinion on the market value of the property, we have taken into account the contracted prices of such portions of the property.

9. Our valuation has been made on the following basis and analysis:

(a) In undertaking our valuation, we have identified and analyzed various relevant sales evidences in the locality which have similar characteristics as the subject property such as nature, use, size, layout and accessibility of the property. The unit price of these comparable properties ranges from RMB10,000 to RMB13,000 per sq.m. for residential units, RMB8,000 to RM15,000 per sq.m. for retail units on the first floor. Appropriate adjustments and analysis are considered to the differences in location, size and other characters between the comparable properties and the property to arrive at an assumed unit rate for the property.

(b) In undertaking our valuation, we have made reference to sales prices of land within the locality which have the similar characteristics comparable to the property. The accommodation value of these comparable land sites ranges from RMB3,000 to RMB3,600 per sq.m. for residential and commercial uses. Appropriate adjustments and analysis are considered to the differences in nature, use, site area, layout, accessibility and other characters between the comparable properties and the property to arrive at our assumed accommodation value.

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10. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal adviser, which contains, inter alia, the following:

(b) Zhongfang Xining has obtained the requisite approvals in respect of the actual development; and

(c) Zhongfang Xining has the right to pre-sell portion of the property based on the Pre-sale Permits mentioned in note 5.

11. A summary of major certificates/approvals is shown as follows:

12. For the purpose of this report, the property is classified into the group as “Group II—held under development by the Group in the PRC” according to the purpose for which it is held.

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VALUATION CERTIFICATE

Market value in Particulars of existing state as at No. Property Description and tenure occupancy the valuation date RMB

9. Project Eastern Project Eastern Cloud is located As at the valuation 574,000,000 Cloud located at at the No. 11 Bowen Road, date, the property was the No. 11 Bowen Chengdong District. The locality under construction. 100% interest Road Chengdong is well served by public attributable to District Xining transportation and supporting the Group: City Qinghai facilities. RMB574,000,000 Province The PRC The property occupies a parcel of (東方雲舒) land with a site area of approximately 32,684.65 sq.m., which is being developed into a residential and commercial development. The project was under construction as at the valuation date and was scheduled to be completed in June 2022. As advised by the Group, upon completion, the project will have a total gross floor area of approximately 102,007.53 sq.m. The classification, usage and gross floor area details of the property were set out in note 6.

As advised by the Group, the construction cost (excluding land cost and financial cost) of the property is estimated to be approximately RMB357,600,000, of which approximately RMB165,300,000 had been incurred as at the valuation date.

The land use rights of the property have been granted for terms expiring on 23 December 2089 for residential use and 23 December 2059 for commercial use.

Notes:

1. Pursuant to a State-owned Land Use Rights Grant Contract—No. 2019C-3, the land use rights with a site area of approximately 32,684.65 sq.m. were contracted to be granted to Ningxia Zhongfang Group Xining Real Estate Development Co., Ltd. (寧夏中房集團西寧房地產開發有限責任公司, “Zhongfang Xining”, a wholly- owned subsidiary of the Company) for terms of 70 years for residential use and 40 years for commercial use commencing from the land delivery date. The land consideration was RMB382,434,000.

2. Pursuant to a Construction Land Planning Permit—Ning Gui Di Zi (2020) No. 001, permission towards the planning of a parcel of land with a site area of approximately 32,684.65 sq.m. has been granted to Zhongfang Xining.

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3. Pursuant to a Construction Work Planning Permit—Ning Gui Jian 2020 Di No. 045 in favour of Zhongfang Xining, the property with a gross floor area of approximately 106,533.35 sq.m. has been approved for construction.

4. Pursuant to a Construction Work Commencement Permit—Ning Jian Guan No. 630102202007230101 in favour of Zhongfang Xining, permissions by the relevant local authority were given to commence the construction of the property with a gross floor area of approximately 102,007.53 sq.m.

5. Pursuant to 13 Pre-sale Permits—(2020) Ning Fang Yu Shou Zheng Di Nos. 212 to 219 and 291 to 295 in favour of Zhongfang Xining, the Group is entitled to sell portions of the property (representing a total gross floor area of approximately 81,219.08 sq.m.) to purchasers.

6. According to the information provided by the Group, the gross floor area of the property is set out as below:

Nos. of car Usage Gross Floor Area parking space (sq.m.)

Residential 83,090.97 Retail 6,140.59 Basement (inclusive of car parking spaces) 12,408.26 389

Total: 102,007.53 389

7. As advised by the Group, various residential and retail units with a total gross floor area of approximately 74,296.22 sq.m. of the property have been pre-sold to various third parties at a consideration of RMB801,905,755 inclusive of value-added tax. Such portions of the property have not been legally and virtually transferred and therefore we have included the units in our valuation. In arriving at our opinion on the market value of the property, we have taken into account the contracted prices of such portions of the property.

9. Our valuation has been made on the following basis and analysis:

(a) In undertaking our valuation, we have identified and analyzed various relevant sales evidences in the locality which have similar characteristics as the subject property such as nature, use, size, layout and accessibility of the property. The unit price of these comparable properties ranges from RMB9,000 to RMB12,000 per sq.m. for residential units, RMB20,000 to RM25,000 per sq.m. for retail units on the first floor. Appropriate adjustments and analysis are considered to the differences in location, size and other characters between the comparable properties and the property to arrive at an assumed unit rate for the property.

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10. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal adviser, which contains, inter alia, the following:

(a) There is no material legal impediment for Zhongfang Xining in obtaining the Real Estate Title Certificate (Land) according to the relevant Stated-owned Land Use Rights Grant Contract mentioned in note 1 and the payment proof of land consideration provided by the Group. Zhongfang Xining has the rights to occupy, use and develop the parcel of land and is entitled to transfer, lease, mortgage or otherwise dispose of the parcel of land after obtaining the relevant Real Estate Title Certificate (Land);

(b) Zhongfang Xining has obtained the requisite approvals in respect of the actual development; and

(c) Zhongfang Xining has the right to pre-sell portion of the property based on the Pre-sale Permits mentioned in note 5.

11. A summary of major certificates/approvals is shown as follows:

a. State-owned Land Use Rights Grant Contract Yes b. Real Estate Title Certificate (Land) No c. Construction Land Planning Permit Yes d. Construction Work Planning Permit Yes e. Construction Work Commencement Permit Yes f. Pre-sale Permit Yes g. Construction Work Completion and Inspection Certificate N/A h. Real Estate Title Certificate (Building) N/A

12. For the purpose of this report, the property is classified into the group as “Group II—held under development by the Group in the PRC” according to the purpose for which it is held.

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VALUATION CERTIFICATE

Market value in Particulars of existing state as at No. Property Description and tenure occupancy the valuation date RMB

10. Project Nan Yue Project Nan Yue Mansion is As at the valuation 200,000,000 Mansion located at located at No. 10 Fengqing Road, date, the property was No. 10 Fengqing Chengnan New District. There under construction. 100% interest Road Chengnan are several residential projects attributable to New District nearby however, public transports the Group: Xining City and supporting facilities in the RMB200,000,000 Qinghai Province neighboring area need to be The PRC further developed. (南樂府) The property occupies a parcel of land with a site area of approximately 31,045.09 sq.m., which is being developed into a residential and commercial development. The project was under construction as at the valuation date and was scheduled to be completed in May 2022. As advised by the Group, upon completion, the project will have a total gross floor area of approximately 49,226.67 sq.m.. The classification, usage and gross floor area details of the property were set out in note 6.

As advised by the Group, the construction cost (excluding land cost and financial cost) of the property is estimated to be approximately RMB175,600,000, of which approximately RMB75,700,000 had been incurred as at the valuation date.

The land use rights of the property have been granted for terms expiring on 10 December 2077 for residential use and 10 December 2047 for commercial use.

Notes:

1. Pursuant to an Enforcement Ruling—(2019) Qing 01 Zhi No. 44-2 dated 5 December 2019, the land use rights with a site area of approximately 31,045.09 sq.m. were transferred to Ningxia Zhongfang Group Xining Real Estate Development Co., Ltd. (寧夏中房集團西寧房地產開發有限責任公司, “Zhongfang Xining”, a wholly- owned subsidiary of the Company) for terms of 70 years for residential use and 40 years for commercial use commencing from the land delivery date. The land auction price was RMB64,176,670.

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2. Pursuant to a Real Estate Title Certificate (Land)—Qing (2020) Xi Ning Shi Bu Dong Chan Quan Di No. 0015045, the land use rights of the aforesaid land parcel with a site area of approximately 31,045.09 sq.m. have been granted to Zhongfang Xining for terms expiring on 10 December 2077 for residential use and 10 December 2047 for commercial use.

3. Pursuant to a Construction Work Planning Permit—Jian Zi Di Nan Gui Jian Zi 2020 Di No. 11 in favour of Zhongfang Xining, the property with a gross floor area of approximately 52,270.45 sq.m. has been approved for construction.

4. Pursuant to a Construction Work Commencement Permit—Ning Jian Guan No. 630103202008050101 in favour of Zhongfang Xining, permissions by the relevant local authority were given to commence the construction of the property with a gross floor area of approximately 49,226.67 sq.m.

5. Pursuant to 11 Pre-sale Permits—(2020) Ning Fang Yu Shou Zheng Di Nos. 196, 206 to 211 and 296 to 299 in favour of Zhongfang Xining, the Group is entitled to sell portions of the property (representing a total gross floor area of approximately 37,272.46 sq.m.) to purchasers.

6. According to the information provided by the Group, the gross floor area of the property is set out as below:

Nos. of car Usage Gross Floor Area parking space (sq.m.)

Residential 37,433.82 Retail 4,229.48 Basement (inclusive of car parking spaces) 7,563.37 144

Total: 49,226.67 144

7. As advised by the Group, various residential units with a total gross floor area of approximately 33,161.80 sq.m. of the property have been pre-sold to various third parties at a consideration of RMB298,535,917 inclusive of value-added tax. Such portions of the property have not been legally and virtually transferred and therefore we have included the units in our valuation. In arriving at our opinion on the market value of the property, we have taken into account the contracted prices of such portions of the property.

9. Our valuation has been made on the following basis and analysis:

(a) In undertaking our valuation, we have identified and analyzed various relevant sales evidences in the locality which have similar characteristics as the subject property such as nature, use, size, layout and accessibility of the property. The unit price of these comparable properties ranges from RMB8,000 to RMB10,000 per sq.m. for residential units, RMB10,000 to RM12,000 per sq.m. for retail units on the first floor. Appropriate adjustments and analysis are considered to the differences in location, size and other characters between the comparable properties and the property to arrive at an assumed unit rate for the property.

(b) In undertaking our valuation, we have made reference to sales prices of land within the locality which have the similar characteristics comparable to the property. The accommodation value of these comparable land sites ranges from RMB2,300 to RMB2,800 per sq.m. for residential and commercial uses. Appropriate adjustments and analysis are considered to the differences in nature, use, site area, layout, accessibility and other characters between the comparable properties and the property to arrive at our assumed accommodation value.

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10. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal adviser, which contains, inter alia, the following:

(b) Zhongfang Xining has obtained the requisite approvals in respect of the actual development; and

(c) Zhongfang Xining has the right to pre-sell portion of the property based on the Pre-sale Permits mentioned in note 5.

11. A summary of major certificates/approvals is shown as follows:

12. For the purpose of this report, the property is classified into the group as “Group II—held under development by the Group in the PRC” according to the purpose for which it is held.

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VALUATION CERTIFICATE

Market value in Particulars of existing state as at No. Property Description and tenure occupancy the valuation date RMB

11. Portions of Project Chengbei International As at the valuation 928,200,000 Chengbei Village is located at No. 48 date, the unsold units International Ningzhang Road, Chengbei of the property was 100% interest Village No. 48 District. The locality is well vacant for sale and attributable to Ningzhang Road served by public transportation the CIP of the the Group: Chengbei District and supporting facilities. property was under RMB928,200,000 Xining City construction. Qinghai Province Chengbei International Village The PRC occupies 4 parcels of land with a (城北國際村) total site area of approximately 140,202.91 sq.m., which is being developed into a residential and commercial development. Portions of the project were completed between 2017 and 2019, and the unsold portion of that (the “unsold units”) was vacant for sale as at the valuation date. The remaining portion of the project was under construction (the “CIP”) as at the valuation date and was scheduled to be completed in May 2022. As advised by the Group, upon completion, the CIP will have a gross floor area of approximately 117,079.22 sq.m.

The property comprises the unsold units and CIP of the project with a total gross floor area of approximately 133,174.44 sq.m. The classification, usage and gross floor area details of the property were set out in note 8.

As advised by the Group, the construction cost (excluding land cost and financial cost) of the CIP is estimated to be approximately RMB353,700,000 of which approximately RMB292,900,000 had been incurred as at the valuation date. The land use rights of the property have been granted for terms expiring on 30 June 2084 for residential use.

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Notes:

1. Pursuant to a State-owned Land Use Rights Grant Contract and a Supplementary Agreement—6301002013BC-1, the land use rights with a site area of approximately 145,578.75 sq.m. were contracted to be granted to Ningxia Zhongfang Group Xining Real Estate Development Co., Ltd. (寧夏中房集團西寧房地產開發有限責任公司, “Zhongfang Xining”, a wholly-owned subsidiary of the Company) for terms of 70 years for residential use and 40 years for commercial use commencing from the land delivery date. The land consideration was RMB847,700,000.

2. Pursuant to 4 State-owned Land Use Rights Certificates—Ning Guo Yong (2014) Di No. 00174 and Ning Guo Yong (2015) Di Nos. 00024, 00025 and 00046, the land use rights of the aforesaid land parcel with a total site area of approximately 140,202.91 sq.m. have been granted to Zhongfang Xining for terms expiring on 30 June 2084 for residential use.

3. Pursuant to 22 Construction Work Planning Permits, in favour of Zhongfang Xining, the project with a total gross floor area of approximately 434,518.63 sq.m. (including the property) has been approved for construction.

4. Pursuant to 15 Construction Work Commencement Permits, in favour of Zhongfang Xining, permission by the relevant local authority was given to commence the construction of the project with a total gross floor area of approximately 434,254.61 sq.m. (including the property).

5. Pursuant to 41 Pre-sale Permits, in favour of Chengbei International Village, the Group is entitled to sell portions of the project (representing a total gross floor area of approximately 395,564.52 sq.m.) to purchasers.

6. Pursuant to 11 Construction Work Completion and Inspection Certificates in favour of Zhongfang Xining, the construction of portions of the unsold units of the property with a total gross floor area of approximately 337,098.27 sq.m. has been completed and passed the inspection acceptance.

7. Pursuant to 3 Real Estate Ownership Certificates (Building)—Qing (2018) Xi Ning Shi Bu Dong Chan Quan Di No. 0046321, Qing (2019) Xi Ning Shi Bu Dong Chan Quan Di No. 0042607 and Qing (2020) Xi Ning Shi Bu Dong Chan Quan Di No. 0013022 in favour of Zhongfang Xining with the ownership of a total gross floor area of approximately 237,901.61 sq.m (including the property) of portions of Project Chengbei International Village.

8. According to the information provided by the Group, the gross floor area of the property is set out as below:

Gross Nos. of car Group Usage Floor Area parking space (sq.m.)

Group I—held for sale (unsold units) Retail 16,095.22 Sub-total: 16,095.22

Group II—held under development (CIP) Residential 90,217.72 Retail 20,665.60 Ancillary 606.60 Basement (inclusive of car parking spaces) 5,589.30 158 Sub-total: 117,079.22 158

Grand-total: 133,174.44 158

9. As advised by the Group, various residential and retail units with a total gross floor area of approximately 96,932.51 sq.m. of the CIP of the property have been pre-sold to various third parties at consideration of RMB870,002,871 inclusive of value-added tax. Such portions of the property have not been legally and virtually transferred and therefore we have included the units in our valuation. In arriving at our opinion on the market value of the property, we have taken into account the contracted prices of such portions of the property.

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10. The market value of the CIP of the property as if completed as at the valuation date according to the development proposal as described above and which can be freely transferred in the market, would be RMB1,012,300,000.

11. Our valuation has been made on the following basis and analysis:

(a) In undertaking our valuation, we have identified and analyzed various relevant sales evidences in the locality which have similar characteristics as the subject property such as nature, use, size, layout and accessibility of the property. The unit price of these comparable properties ranges from RMB6,000 to RMB10,000 per sq.m. for residential units, RMB14,000 to RM18,000 per sq.m. for retail units on the first floor. Appropriate adjustments and analysis are considered to the differences in location, size and other characters between the comparable properties and the property to arrive at an assumed unit rate for the property.

12. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal adviser, which contains, inter alia, the following:

(b) Chengbei International Village has obtained the requisite approvals in respect of the actual development; and

(c) Zhongfang Xining has the right to pre-sell portion of the property based on the Pre-sale Permits mentioned in note 5.

13. A summary of major certificates/approvals is shown as follows:

a. State-owned Land Use Rights Grant Contract Yes b. State-owned Land Use Rights Certificate Yes c. Construction Work Planning Permit Yes d. Construction Work Commencement Permit Yes e. Pre-sale Permit Yes f. Construction Work Completion and Inspection Certificate/Table/Report Portion g. Building Ownership Certificate/Real Estate Title Certificate (Building) Portion

14. For the purpose of this report, the property is classified into the following groups according to the purpose for which it is held, we are of the opinion that the market value of each group as at the valuation date in its existing state is set out as below:

Market value in existing state as at Group the valuation date (RMB)

Group I—held for sale by the Group 109,200,000 Group II—held under development by the Group 819,000,000 Total: 928,200,000

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VALUATION CERTIFICATE

Market value in Particulars of existing state as at No. Property Description and tenure occupancy the valuation date RMB

12. Unsold residential Project Blue Coast, completed in As at the valuation 314,200,000 units of Blue September 2020, is located at the date, the property was Coast No. 32 Meili Shui Street, vacant for sale. 100% interest No. 32 Meili Shui Chengbei District. The locality is attributable to Street well served by public the Group: Chengbei District transportation and supporting RMB314,200,000 Xining City facilities. Qinghai Province The PRC The property comprises the (藍岸) unsold residential units of the project with a total gross floor area of approximately 34,513.38 sq.m.

The land use rights of the property have been granted for terms expiring on 15 August 2088 for residential use and 15 August 2058 for commercial use.

Notes:

1. Pursuant to a State-owned Land Use Rights Grant Contract—6301002018CHG-HC-2, the land use rights with a site area of approximately 15,255.94 sq.m. (including the property) were contracted to be granted to Ningxia Zhongfang Group Xining Real Estate Development Co., Ltd. (寧夏中房集團西寧房地產開發有限責任公司, “Zhongfang Xining”, a wholly-owned subsidiary of the Company) for terms of 70 years for residential use and 40 years for commercial use commencing from the land delivery date. The land consideration was RMB100,000,000.

2. Pursuant to a Real Estate Title Certificate (Land)—Qing (2018) Xi Ning Shi Bu Dong Chan Quan Di No. 0054086, the land use rights of the aforesaid land parcel with a site area of approximately 15,255.94 sq.m. have been granted to Zhongfang Xining for terms expiring on 15 August 2088 for residential use and 15 August 2058 for commercial use.

3. Pursuant to a Construction Work Planning Permit—Ning Hai Hu Gui Jian Zi No. 2018-7 in favour of Zhongfang Xining, Blue Coast with a gross floor area of approximately 41,497.57 sq.m. (including the property) has been approved for construction.

4. Pursuant to a Construction Work Commencement Permit—Ning Jian Guan No. 63010420194101001 in favour of Zhongfang Xining, permissions by the relevant local authority were given to commence the construction of Blue Coast with a gross floor area of approximately 41,497.57 sq.m. (including the property).

5. Pursuant to 6 Pre-sale Permits—(2019) Ning Fang Yu Shou Zi Di Nos. 016 to 018 and 038 to in favour of Zhongfang Xining, the Group is entitled to sell portions of Blue Coast (representing a total gross floor area of approximately 34,513.38 sq.m. (including the property)) to purchasers.

6. Pursuant to a Construction Work Completion and Inspection Certificate in favour of Zhongfang Xining, the construction of Blue Coast with a gross floor area of approximately 41,744.74 sq.m. (including the property) has been completed and passed the inspection acceptance.

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7. In undertaking our valuation, we have identified and analyzed various relevant sales evidences in the locality which have similar characteristics as the subject property such as nature, use, size, layout and accessibility of the property in Group I. The unit price of these comparable properties ranges from RMB8,000 to RMB10,000 per sq.m. for residential units. Appropriate adjustments and analysis are considered to the differences in location, size and other characters between the comparable properties and the property to arrive at an assumed unit rate for the property.

8. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal adviser, which contains, inter alia, the following:

(b) Blue Coast has obtained the requisite approvals in respect of the actual development; and

(c) Zhongfang Xining has the right to pre-sell portion of the property based on the Pre-sale Permits mentioned in note 5.

9. A summary of major certificates/approvals is shown as follows:

10. For the purpose of this report, the property is classified into the group as “Group I—held for sale by the Group in the PRC” according to the purpose for which it is held.

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VALUATION CERTIFICATE

Market value in Particulars of existing state as at No. Property Description and tenure occupancy the valuation date RMB

13. Project Blue Project Blue Fragrance is located As at the valuation 509,700,000 Fragrance located at the Guanghua Road, Chengbei date, the CIP of the at the Guanghua District. The locality is well property was under 100% interest Road served by public transportation construction and the attributable to Chengxi District and supporting facilities. bare land of the the Group: Xining City property was vacant. RMB509,700,000 Qinghai Province The property occupies a parcel of The PRC land with a site area of (藍韻) approximately 34,950.84 sq.m., which is being developed into a residential development. Portions of the property were under construction (the “CIP”) as at the valuation date and are scheduled to be completed in June 2021. As advised by the Group, upon completion, the CIP will have a total gross floor area of approximately 63,574.16 sq.m. The construction of the remaining portion of the property (the “bare land”) had not been commenced as at the valuation date. The classification, usage and gross floor area details of the property were set out in note 6.

As advised by the Group, the construction cost (excluding land cost and financial cost) of the property is estimated to be approximately RMB231,400,000, of which approximately RMB131,600,000 had been incurred as at the valuation date.

The land use rights of the property have been granted for terms expiring on 15 October 2088 for residential use and 15 October 2058 for commercial and financial uses.

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Notes:

1. Pursuant to a State-owned Land Use Rights Grant Contract—6301002018CHG-HC-1, the land use rights with a site area of approximately 34,950.84 sq.m. were contracted to be granted to Ningxia Zhongfang Group Xining Real Estate Development Co., Ltd. (寧夏中房集團西寧房地產開發有限責任公司, “Zhongfang Xining”, a wholly-owned subsidiary of the Company) for terms of 70 years for residential use and 40 years for commercial use commencing from the land delivery date. The land consideration was RMB266,751,120.

2. Pursuant to a Real Estate Title Certificate (Land)—Qing (2019) Xi Ning Shi Bu Dong Chan Quan Di No. 0018733, the land use rights of the aforesaid land parcel with a site area of approximately 34,950.84 sq.m. have been granted to Zhongfang Xining for terms expiring on 15 October 2088 for residential use and 15 October 2058 for commercial and financial uses.

3. Pursuant to a Construction Work Planning Permit—Jian Zi Di Ning Hai Hu Gui Jian Zi No. 2019-3 in favour of Zhongfang Xining, the property with a gross floor area of approximately 107,857.100 sq.m. has been approved for construction.

4. Pursuant to a Construction Work Commencement Permit—Ning Jian Guan No. 630104201904100901 in favour of Zhongfang Xining, permissions by the relevant local authority were given to commence the construction of the CIP of the property with a gross floor area of approximately 63,574.16 sq.m.

5. Pursuant to 9 Pre-sale Permits—(2019) Ning Fang Yu Shou Zheng Di Nos. 172 to 180 in favour of Zhongfang Xining, the Group is entitled to sell portions of the property (representing a total gross floor area of approximately 42,869.14 sq.m.) to purchasers.

6. According to the information provided by the Group, the gross floor area of the property is set out as below:

Gross Floor Nos. of car Group Usage Area parking space (sq.m.)

Group II—held under Residential 39,105.97 development Apartment 8,520.66 (CIP) Office 828.32 Retail 769.18 Basement (inclusive of car parking spaces) 14,350.03 415

Sub-total: 63,574.16 415

Group III—held for future Office 44,282.94 development Sub-total: 44,282.94 (bare land) Total: 107,857.10 415

7. As advised by the Group, various residential, retail and apartment units with a total gross floor area of approximately 40,313.25 sq.m. of the CIP of the property have been pre-sold to various third parties at a consideration of RMB514,915,710 inclusive of value-added tax. Such portions of the property have not been legally and virtually transferred and therefore we have included the units in our valuation. In arriving at our opinion on the market value of the property, we have taken into account the contracted prices of such portions of the property.

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9. Our valuation has been made on the following basis and analysis:

(a) In undertaking our valuation, we have identified and analyzed various relevant sales evidences in the locality which have similar characteristics as the subject property such as nature, use, size, layout and accessibility of the property in Group II. The unit price of these comparable properties ranges from RMB11,000 to RMB13,000 per sq.m. for residential units, RMB25,000 to RMB28,000 per sq.m. for retail units on the first floor and RMB117,000 to RMB138,000 per sq.m. for apartment units, RMB6,000 to RMB7,000 per sq.m. for office units. Appropriate adjustments and analysis are considered to the differences in location, size and other characters between the comparable properties and the property to arrive at an assumed unit rate for the property.

(b) In undertaking our valuation, we have made reference to sales prices of land within the locality which have the similar characteristics comparable to the property in Group III. The accommodation value of these comparable land sites ranges from RMB3,000 to RMB3,600 per sq.m. for residential and commercial uses. Appropriate adjustments and analysis are considered to the differences in nature, use, site area, layout, accessibility and other characters between the comparable properties and the property to arrive at our assumed accommodation value.

10. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal adviser, which contains, inter alia, the following:

(b) Blue Fragrance has obtained the requisite approvals in respect of the actual development; and

(c) Zhongfang Xining has the right to pre-sell portion of the property based on the Pre-sale Permits mentioned in note 5.

11. A summary of major certificates/approvals is shown as follows:

a. State-owned Land Use Rights Grant Contract Yes b. Real Estate Title Certificate (Land) Yes c. Construction Work Planning Permit Yes d. Construction Work Commencement Permit Portion e. Pre-sale Permit Portion f. Construction Work Completion and Inspection Certificate/Table/Report N/A g. Building Ownership Certificate/Real Estate Title Certificate (Building) N/A

Market value in existing state as at Group the valuation date (RMB)

Group II—held under development by the Group 383,000,000 Group III—held for future development by the Group 126,700,000

Total: 509,700,000

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VALUATION CERTIFICATE

Market value in Particulars of existing state as at No. Property Description and tenure occupancy the valuation date RMB

14. Project Yong Yue Project Yong Yue Mansion II is As at the valuation 171,600,000 Mansion II located located at West Yanghe Village, date, the CIP of the at Shengli Road Yongning County. There are property was under 45% interest South, Ninghe several residential projects construction and the attributable to South Road East, nearby however, public transports remaining portion was the Group: Ninghui Road and supporting facilities in the bare land. RMB77,200,000 West neighboring area need to be Yanghe Village further developed. Yongning County Yinchuan City The property occupies a parcel of Ningxia Hui land with a site area of Autonomous approximately 66,667 sq.m., Region which is being developed into a The PRC residential and commercial (中房‧永悅府) development. Portions of the property was under construction as at the valuation date and is scheduled to be completed in May 2022. As advised by the Group, upon completion, the CIP will have a gross floor area of approximately 91,776.94 sq.m. The construction of the remaining portion of the property (the “bare land”) had not been commenced as at the valuation date. The classification, usage and gross floor area details of the property were set out in note 6.

As advised by the Group, the construction cost (excluding land cost and financial cost) of the property is estimated to be approximately RMB289,000,000, of which approximately RMB90,500,000 had been incurred as at the valuation date.

The land use rights of the property have been granted for terms expiring on 30 April 2084 for residential use and 30 April 2054 for commercial use.

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Notes:

1. Ningxia Zhongjin Real Estate Co., Ltd (寧夏中錦置業有限公司, “Ningxia Zhongjin”) is a 35% owned subsidiary of the Company. As confirmed by the Company, the Company actually owns 45%-intrest of dividend income from Project Yong Yue Mansion II.

2. Pursuant to a State-owned Land Use Rights Grant Contract—Yong Ning He Tong (2014) No. 7 the land use rights of a parcel of land with a site area of approximately 66,667 sq.m. were contracted to be granted to Ningxia Zhongjin for terms of 70 years for residential use and 40 years for commercial use commencing from the land delivery date. The land consideration was RMB63,100,000.

3. Pursuant to a State-owned Land Use Rights Certificate (Land)—Ning (2020) Yong Ning Xian Bu Dong Chan Quan Di No. Y0004757, the land use rights of the aforesaid land parcel with a site area of approximately 66,667 sq.m. have been granted to Ningxia Zhongjin for terms expiring on on 30 April 2084 for residential use and 30 April 2054 for commercial use.

4. Pursuant to a Construction Work Planning Permit—Yong Shen Fu Jian Zi Di (2020) No. 026 in favour of Ningxia Zhongjin, the property with a gross floor area of approximately 97,590.15 sq.m. has been approved for construction.

5. Pursuant to 4 Construction Work Commencement Permits—No. 640121202007100101, No. 640121202008250201, No. 640121202007130101, No. 640121202008250101 in favour of Ningxia Zhongjin, permission by the relevant local authority was given to commence the construction of the CIP of the property with a gross floor area of approximately 91,776.94 sq.m.

6. Pursuant to 7 Pre-sale Permits—Yong Shen Fu (2020) Fang Yu Shou Zheng No. 001 and Nos. 062 to 067 in favour of Ningxia Zhongjin, the Group is entitled to sell portions of the property (representing a gross floor area of approximately 40,072.88 sq.m.) to purchasers.

7. According to the information provided by the Group, the gross floor area of the property is set out as below:

Gross Floor Nos. of car Group Usage Area parking space (sq.m.)

Group II—held under Residential 69,358.88 development Commercial 3,759.72 (CIP) Kindergarten 3,356.84 Ancillary 797.29 Underground Spaces 14,504.21 257

Sub-Total 91,776.94

Group III—held for future Residential 5,813.21 development (bare land) Sub-Total 5,813.21

Grand-Total: 97,590.15 257

8. As advised by the Group, various residential and retail units with a gross floor area of approximately 12,464.56 sq.m. of the property have been pre-sold to various third parties at a consideration of RMB56,299,063 inclusive of value-added tax. Such portions of the property have not been legally and virtually transferred and therefore we have included the units in our valuation. In arriving at our opinion on the market value of the property, we have taken into account the contracted prices of such portions of the property.

9. The market value of the property as if completed as at the valuation date according to the development proposal as described above and which can be freely transferred in the market, would be RMB401,300,000.

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10. Our valuation has been made on the following basis and analysis:

(a) In undertaking our valuation, we have identified and analyzed various relevant sales evidences in the locality which have similar characteristics as the subject property such as nature, use, size, layout and accessibility of the property. The unit price of these comparable properties ranges from RMB4,600 to RMB5,200 per sq.m. for residential units, RMB10,000 to RMB12,000 per sq.m. for retail units. Appropriate adjustments and analysis are considered to the differences in location, size and other characters between the comparable properties and the property to arrive at an assumed unit rate for the property.

(b) In undertaking our valuation, we have made reference to sales prices of land within the locality which have the similar characters comparable to the property. The accommodation value of these comparable land sites ranges from RMB751 to RMB930 per sq.m. for residential use. Appropriate adjustments and analysis are considered to the differences in nature, use, site area, layout, accessibility and other characters between the comparable properties and the property to arrive at our assumed accommodation value.

11. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal adviser, which contains, inter alia, the following:

(a) Ningxia Zhongjin has legally obtained the land use rights of the property and entitled to occupy and use of the parcel of land, whilst the transfer and otherwise dispose of the parcel of land are subject to relevant mortgage contracts and relevant laws in the PRC;

(b) Ningxia Zhongjin has obtained the requisite approvals in respect of the actual development; and

12. A summary of major certificates/approvals is shown as follows:

a. State-owned Land Use Rights Grant Contract Yes b. Real Estate Title Certificate (Land) Yes c. Construction Work Planning Permit Yes d. Construction Work Commencement Permit Portion e. Pre-sale Permit Portion f. Construction Work Completion and Inspection Certificate/Table/Report N/A g. Building Ownership Certificate/Real Estate Title Certificate (Building) N/A

13. For the purpose of this report, the property is classified into the following groups according to the purpose for which it is held, we are of the opinion that the market value of each group as at the valuation date in its existing state is set out as below:

Market value in existing state as at Group the valuation date (RMB)

Group II—held under development by the Group 168,000,000 Group III—held for future development by the Group 3,600,00

Total: 171,600,000

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VALUATION CERTIFICATE

Market value in Particulars of existing state as at No. Property Description and tenure occupancy the valuation date RMB

15. Project Xi Yue Project Xi Yue Mansion is As at the valuation 689,400,000 Mansion located at located at the western side of date, the property was the western side of Yuncai lane, Xixia District. There bare land. 100% interest Yuncai lane, are several residential projects attributable to Xixia District nearby however, public transports the Group: Yinchuan City and supporting facilities in the RMB689,400,000 Ningxia Hui neighboring area need to be Autonomous further developed. Region The PRC The property occupies 2 parcels (西悅府) of land with a site area of approximately 204,953.47 sq.m., which will be developed into a residential and commercial development with a gross floor area of approximately 454,966 sq.m. As advised by the Group, the construction of the project had not been commenced as at the valuation date.

The land use rights of the property have been granted for terms expiring on 10 August 2090 for residential use and 10 August 2060 for commercial use.

Notes:

1. Pursuant to 2 State-owned Land Use Rights Grant Contracts—Yin Di Chan He Tong Rang Zi 2020 Nian Nos. 33 and 34, the land use rights with a site area of approximately 204,953.47 sq.m. were contracted to be granted to Ningxia Zhongyue Real Estate Co., Ltd. (寧夏中悅置業有限公司, “Ningxia Zhongyue”, a 70%-owned subsidiary of the Company) for terms of 70 years for residential use and 40 years for commercial use commencing from the land delivery date. The land consideration was RMB289,100,000.

2. Pursuant to 2 Real Estate Title Certificates—Ning (2020) Xi Xia Qu Bu Dong Chan Quan Di Nos. 0100153 and 0099707, the land use rights of 2 parcels of land with a total site area of approximately 204,953.47 sq.m. have been granted to Ningxia Zhongyue for terms expiring on 10 August 2090 for residential use and 10 August 2060 for commercial use.

3. In undertaking our valuation, we have made reference to sales prices of land within the locality which have the similar characters comparable to the property. The accommodation value of these comparable land sites ranges from RMB1,000 to RMB1,500 per sq.m. for residential use. Appropriate adjustments and analysis are considered to the differences in nature, use, site area, layout, accessibility and other characters between the comparable properties and the property to arrive at our assumed accommodation value.

4. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisors, which contains that Ningxia Zhongyue has legally obtained the land use rights of the property and entitled to occupy and use of the parcel of land, whilst the transfer and otherwise dispose of the parcel of land are subject to relevant mortgage contracts and relevant laws in the PRC.

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5. A summary of major certificates/approvals is shown as follows:

a. State-owned Land Use Rights Grant Contract Yes b. Real Estate Title Certificate (Land) Yes c. Construction Land Planning Permit No d. Construction Work Planning Permit No

6. For the purpose of this report, the property is classified into the group as “Group III—held for future development by the Group in the PRC” according to the purpose for which it is held.

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VALUATION CERTIFICATE

Market value in Particulars of existing state as at No. Property Description and tenure occupancy the valuation date RMB

16. Project Jin Li Project Jin Li is located at the As at the valuation 227,800,000 located at the Northern side of Qingwang Road date, the CIP of the Northern side of and Western side of Qingning property was under 56% interest Qingwang Road, Street Litong District. The construction and the attributable to Western side of locality is well served by public remaining portion was the Group: Qingning Street transportation network and bare land for future RMB127,568,000 Litong District supporting facilities. development. Wuzhong City Ningxia Province The property occupies 2 parcels The PRC of land with a total site area of (中房錦里) approximately 149,690.00 sq.m. As at the valuation date, 5 residential and commercial buildings of the property are under construction (the “CIP”). with a total gross floor area of approximately 15,589.25 sq.m. and is scheduled to be completed in April 2023. As advised by the Group, the remaining portion of the property had not been commenced. Details of the areas of property are set out in note 5.

As advised by the Group, the construction cost (excluding land cost and financial cost) of the CIP is estimated to be approximately RMB1,045,000,000, of which approximately RMB7,152,000 had been incurred as at the valuation date.

The land use rights of the property have been granted for terms of 40 years for commercial service use and 70 years for residential use.

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Notes:

1. Pursuant to 2 State-owned Land Use Rights Grant Contracts—Wu Zi Ran (He) Zi 2020-17 and 2020-18, the land use rights with a total site area of approximately 149,690.00 sq.m. were contracted to be granted to Ningxia Zhongen Real Estate Co., Ltd. (寧夏中恩置業有限公司, “Ningxia Zhongen”, a 56% owned subsidiary of the Company) for terms of 70 years for residential use and 40 years for commercial use commencing from the land delivery date. The land consideration was RMB208,281,600.

2. Pursuant to 2 Real Estate Title Certificates-Ning (2020) Li Tong Qu Bu Dong Chan Quan Di Nos. W0010358-W0010359, the land use rights of 2 parcels of land with a total site area of approximately 149,690.00 sq.m. have been granted to Ningxia Zhongen for terms expiring on 6 September 2090 for residential use and 6 September 2060 for commercial use.

3. Pursuant to a Construction Work Planning Permit—Jian Zi Di No. GHX2021022 in favour of Ningxia Zhongen, the CIP of the property with a gross floor area of approximately 15,589.25 sq.m. has been approved for construction.

4. Pursuant to 2 Construction Work Commencement Permits—Nos. 642101202103220201 and 642101202103190201 in favour of Ningxia Zhongen, permissions by the relevant local authority was given to commence the construction of the CIP of the property with a gross floor area of approximately 15,589.25 sq.m.

5. According to the information provided by the Group, the gross floor area of the property is set out as below:

Gross Floor Nos. of car Group Usage Area parking space (sq.m.)

Group II—held under Residential 10,680.35 development Retail 1,225.2 (CIP) Ancillary 3,683.7

Sub-total: 15,589.25

Group III—held for future Residential 231,399.25 development (bare land) Sub-total: 231,399.25

Grand-Total: 246,988.50

6. In undertaking our valuation, we have made reference to sales prices of land within the locality which have the similar characters comparable to the property. The accommodation value of these comparable land sites ranges from RMB870 to RMB930 per sq.m. for residential use. Appropriate adjustments and analysis are considered to the differences in nature, use, site area, layout, accessibility and other characters between the comparable properties and the property to arrive at our assumed accommodation value.

7. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisors, which contains that Ningxia Zhongen has legally obtained the land use rights of the property and entitled to occupy and use of the parcel of land, whilst the transfer and otherwise dispose of the parcel of land are subject to relevant mortgage contracts and relevant laws in the PRC.

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8. A summary of major certificates/approvals is shown as follows:

a. State-owned Land Use Rights Grant Contract Yes b. Real Estate Title Certificate (Land) Yes c. Construction Work Planning Permit No d. Construction Work Commencement Permit Portion e. Pre-sale Permit N/A f. Construction Work Completion and Inspection Certificate/Table/Report N/A g. Building Ownership Certificate/Real Estate Title Certificate (Building) N/A

9. For the purpose of this report, the property is classified into the following groups according to the purpose for which it is held, we are of the opinion that the market value of each group as at the valuation date in its existing state is set out as below:

Market value in existing state as at Group the valuation date (RMB)

Group II—held under development by the Group 22,000,000 Group III—held for future development by the Group 205,800,000

Total: 227,800,000

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VALUATION CERTIFICATE

Market value in Particulars of existing state as at No. Property Description and tenure occupancy the valuation date RMB

17. Project Su He Project Su He Sunshine, As at the valuation 236,225,000 Sunshine located completed in July 2019, is date, portions of the at He Lan Shan located at He Lan Shan East Ave, property were vacant 100% interest East Ave Hongqiao Hongqiao Road There are several for sale and the attributable to Road residential projects nearby remaining portions of the Group: Helan County however, public transports and the property were RMB236,225,000 Yinchuan City supporting facilities in the rented to a tenant for Ningxia Hui neighboring area need to be school purpose. Autonomous further developed. Region The PRC The property comprises the (銀川‧蘇荷陽光) unsold portion of the project with a total gross floor area of approximately 48,942.89 sq.m. The classification, usage and gross floor area details of the property were set out in note 6.

The land use rights of the property have been granted for terms expiring on 11 December 2072 for residential use, 11 December 2042 and 11 July 2057 for commercial use.

Notes:

1. Pursuant to 22 Real Estate Title Certificates—Ning (2019) He Lan Xian Bu Dong Chan Quan Di Nos. H0010217 to H0010235, H009604, Ning (2018) He Lan Xian Bu Dong Chan Quan Di Nos. H0012153 and H0012155, Project Su He Sunshine with a total gross floor area of approximately 46,123.70 sq.m (including the property). is owned by Yinchuan Zhongchen Real Estate Co., Ltd. (銀川中宸置地有限責任公司, “Yinchuan Zhongchen”, a wholly-owned subsidiary of the Company), the relevant land use rights of the property have been granted to Yinchuan Zhongchen for terms expiring on 11 December 2072 for residential use, 11 December 2042 and 11 July 2057 for commercial use.

2. Pursuant to a Tenancy Agreement, a portion of the property with a gross floor area of approximately 45,741.81 sq.m. is leased to a tenant for school purpose with the expiry date on 31 December 2023., and the annually rent receivable as at the valuation date was approximately RMB8,000,000, exclusive of management fees, water and electricity charges.

3. According to the information provided by the Group, the gross floor area of the property is set out as below:

Group Usage Gross Floor Area (sq.m.)

Group I—held for sale Residential Units 61.92 (unsold units) Commercial 3,139.16

Sub-Total: 3,201.08

Group IV—held for investment School Building 33,936.49 Playground 1,132.63 Underground Spaces and Ancillary 10,672.69

Sub-Total: 45,741.41

Total: 48,942.89

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4. Our valuation has been made on the following basis and analysis:—

(a) In undertaking our valuation of the property in Group I, we have identified and analyzed various relevant sales evidences in the locality which have similar characteristics as the subject property such as nature, use, size, layout and accessibility. The unit price of these comparable properties ranges from RMB6,000 to RMB7,000 per sq.m. for residential units and RMB15,500 to RMB16,500 per sq.m. for retail units. Appropriate adjustments and analysis are considered to the differences in location, size and other characters between the comparable properties and the property to arrive at an assumed unit rate for the property;

(b) in undertaking our valuation of Group V, we have considered the actual rents in the existing tenancy agreements and also compared with similar properties located in the same business circle and/or nearby within reasonable walking distance. We adopted market rent when calculating (1) the reversionary rental income after the expiry of the existing leases for occupied area, and (2) the rental income of vacant area;

(c) the unit rents of the comparable school property range from RMB0.60 to RMB1.0 per sq.m. per day, appropriate adjustments and analysis are considered to the differences in location, size and other characters between the comparable properties and the property to arrive at the market rent; and

(d) based on our research on office/school market in the surrounding area of the property, for office/school portions, the stabilized market yield ranged from 4% to 5% as at the valuation date. Considering the location, risks and characteristics of the property, we have applied a market yield of 4.5% as the capitalization rate in the valuation.

5. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains that the Group is legally in possession of the building ownership rights of the property mentioned in note 1 and is entitled to legally occupy, use, lease, transfer or otherwise dispose of the aforesaid property.

6. A summary of major certificates/approvals is shown as follows:

a. Real Estate Title Certificate (Land) Yes b. Construction Work Planning Permit Yes c. Construction Work Commencement Permit Yes d. Pre-sale Permit Yes e. Construction Work Completion and Inspection Certificate/Table/Report Yes f. Building Ownership Certificate/Real Estate Title Certificate (Building) Portion

7. For the purpose of this report, the property is classified into the following groups according to the purpose for which it is held, we are of the opinion that the market value of each group as at the valuation date in its existing state is set out as below:

Market value in existing state as at Group Gross floor area the valuation date (sq.m.) (RMB)

Group I—held for sale by the Group 3,201.08 50,000,000 Group IV—held for investment by the Group 3,672.88 186,225,000

Total: 5,465.26 236,225,000

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VALUATION CERTIFICATE

Market value in Particulars of existing state as at No. Property Description and tenure occupancy the valuation date RMB

18. Project Xi Jiang Project Xi Jiang Yue is located at As at the valuation 553,000,000 Yue located at the the north side of the intersection date, the property was north side of the of Jinpendi Avenue and Binhe under construction. 97.3% interest intersection of Road, Chongyang Town. There attributable to Jinpendi Avenue are several residential projects the Group: and Binhe Road nearby however, public transports RMB538,069,000 Chongyang Town and supporting facilities in the Chongzhou City neighboring area need to be Sichuan Province further developed. The PRC (西江悅) Xi Jiang Yue occupies a parcel of land with a site area of approximately 69,857.10 sq.m., which is being developed into a residential and commercial development. The project was under construction as at the valuation date and was scheduled to be completed in June 2022. As advised by the Group, upon completion, the project will have a total gross floor area of approximately 193,955.22 sq.m.

As at the valuation date, the property comprised the whole project of Xi Jiang Yue. The classification, usage and gross floor area details of the property were set out in note 5.

As advised by the Group, the construction cost (excluding land cost and financial cost) of the property is estimated to be approximately RMB622,600,000 of which approximately RMB104,700,000 had been incurred as at the valuation date.

The land use rights of the property have been granted for terms expiring on 1 November 2088 for residential use and 1 November 2058 for commercial use.

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Notes:

1. Pursuant to a State-owned Land Use Rights Grant Contract—Chong Chu Rang He Tong (2018) Di No. 091401, the land use rights with a site area of approximately 69,857.10 sq.m. were contracted to be granted to Chongzhou Zhongye Ruihua Real Estate Development Co., Ltd. (崇州市中業瑞華房地產開發有限公司, “Chongzhou Zhongye”, a 97.3% owned subsidiary of the Company) for terms of 70 years for residential use and 40 years for commercial use commencing from the land delivery date. The land consideration was RMB381,419,948.

2. Pursuant to a Real Estate Title Certificate (Land)—Chuan (2019) Chong Zhou Shi Bu Dong Chan Quan Di No. 0010436, the land use rights of the aforesaid land parcel with a site area of approximately 69,857.10 sq.m. have been granted to Chongzhou Zhongye for terms expiring on 1 November 2088 for residential use and 1 November 2058 for commercial use.

3. Pursuant to a Construction Work Planning Permit—Jian Zi Di No. 510128202030985 in favour of Chongzhou Zhongye, the property with a total gross floor area of approximately 193,955.22 sq.m. has been approved for construction.

4. Pursuant to 2 Construction Work Commencement Permits—Nos. 510184202010230701 and 510184202010270201 in favour of Chongzhou Zhongye, permissions by the relevant local authority were given to commence the construction the property with a total gross floor area of approximately 193,955.22 sq.m.

5. According to the information provided by the Group, the gross floor area of the property is set out as below:

Nos. of car Usage Gross Floor Area parking space (sq.m.)

Residential 145,700.06 Retail 7,059.27 Ancillary 114.00 Basement (inclusive of car parking spaces) 41,081.89 1,033

Total: 193,955.22 1,033

6. The market value of the property as if completed as at the valuation date according to the development proposal as described above and which can be freely transferred in the market, would be RMB1,349,000,000.

7. Our valuation has been made on the following basis and analysis:

(a) In undertaking our valuation, we have identified and analyzed various relevant sales evidences in the locality which have similar characteristics as the subject property such as nature, use, size, layout and accessibility of the property. The unit price of these comparable properties ranges from RMB7,000 to RMB9,000 per sq.m. for residential units and RMB13,000 to RMB15,000 per sq.m. for retail units on the first floor. Appropriate adjustments and analysis are considered to the differences in location, size and other characters between the comparable properties and the property to arrive at an assumed unit rate for the property.

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8. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal adviser, which contains, inter alia, the following:

(a) Chongzhou Zhongye has legally obtained the land use rights of the property and entitled to occupy and use of the parcel of land, whilst the transfer and otherwise dispose of the parcel of land are subject to relevant mortgage contracts and relevant laws in the PRC; and

(b) Chongzhou Zhongye has obtained the requisite approvals in respect of the actual development.

9. A summary of major certificates/approvals is shown as follows:

10. For the purpose of this report, the property is classified into the group as “Group II—held under development by the Group in the PRC” according to the purpose for which it is held.

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VALUATION CERTIFICATE

Market value in Particulars of existing state as at No. Property Description and tenure occupancy the valuation date RMB

19. Project Haidong Project Haidong Salzburg Palace As at the valuation 749,000,000 Salzburg Palace is located at the No. 16 date, the property was located at the Shanzhou Street Ledu District, under construction. 100% interest No. 16 Shanzhou Haidong City. The locality is attributable to Street well served by public the Group: Ledu District transportation network and RMB749,000,000 Haidong City supporting facilities. Qinghai Province The PRC The property comprises a parcel (海東薩爾斯堡) of land with a site area of approximately 79,249.21 sq.m., which will be developed into a residential development with a total gross floor area of approximately 214,529.93 sq.m. The property is scheduled to be completed in September 2022. Details of the areas of property are set out in note 6.

As advised by the Group, the construction cost (excluding land cost and financial cost) of the property is estimated to be approximately RMB659,000,000, of which approximately RMB450,000,000 had been incurred as at the valuation date.

The land use rights of the property have been granted for a term expiring on 1 March 2089 for residential use.

Notes:

1. Pursuant to 2 State-owned Land Use Rights Grant Contracts—6321002019CH13-14, the land use rights of 2 parcel of land with a site area of approximately 79,336 sq.m. were contracted to be granted to Ningxia Zhongfang Haidong Industrial Co., Ltd. (寧夏中房海東實業有限公司, “Zhongfang Haidong”, a wholly-owned subsidiary of the Company) for terms of 70 years for residential use commencing from the land delivery date. The land consideration was RMB154,705,200.00.

2. Pursuant to a State-owned Land Use Rights Certificate (Land)—63000006386, the land use rights of the aforesaid land parcel with a site area of approximately 79,249.21 sq.m. have been granted to Zhongfang Haidong for terms expiring on 1 March 2089 for residential use.

3. Pursuant to 13 Construction Work Planning Permits in favour of Zhongfang Haidong, the property with a gross floor area of approximately 213,926.71 sq.m. has been approved for construction.

4. Pursuant to 5 Construction Work Commencements Permits in favour of Zhongfang Haidong, permission by the relevant local authority was given to commence the construction of the property with a gross floor area of approximately 214,529.93 sq.m.

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5. Pursuant to 13 Pre-sale Permits in favour of Zhongfang Haidong, the Group is entitled to sell residential and commercial units of the property (representing a gross floor area of approximately 175,402.85 sq.m.) to purchasers.

6. According to the information provided by the Group, the gross floor area of the property is set out as below:

Nos. of car Usage Gross Floor Area parking space (sq.m.)

Residential 168,038.21 Retail 7,364.64 Ancillary (inclusive of car parking spaces) 39,127.08 493

Total: 214,529.93 493

7. As advised by the Group, various residential and retail units with a total gross floor area of approximately 159,604.19 sq.m. of the property have been pre-sold to various third parties at a consideration of RMB973,843,252 inclusive of value-added tax. Such portions of the property have not been legally and virtually transferred and therefore we have included the units in our valuation. In arriving at our opinion on the market value of the property, we have taken into account the contracted prices of such portions of the property.

9. Our valuation has been made on the following basis and analysis:

(a) In undertaking our valuation, we have identified and analyzed various relevant sales evidences in the locality which have similar characteristics as the subject property such as nature, use, size, layout and accessibility of the property. The unit price of these comparable properties ranges from RMB4,800 to RMB13,000 per sq.m. for residential units, RMB6,800 to RMB21,000 per sq.m. for commercial units on the first floor. Appropriate adjustments and analysis are considered to the differences in location, size and other characters between the comparable properties and the property to arrive at an assumed unit rate for the property.

(b) In undertaking our valuation, we have made reference to sales prices of land within the locality which have the similar characters comparable to the property. The accommodation value of these comparable land sites ranges from RMB790 to RMB890 per sq.m. for residential use. Appropriate adjustments and analysis are considered to the differences in nature, use, site area, layout, accessibility and other characters between the comparable properties and the property to arrive at our assumed accommodation value.

10. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal adviser, which contains, inter alia, the following:

(a) Zhongfang Haidong has legally obtained the land use rights of the property and entitled to occupy and use of the parcel of land, whilst the transfer and otherwise dispose of the parcel of land are subject to relevant mortgage contracts and relevant laws in the PRC;

(b) Zhongfang Haidong has obtained the requisite approvals in respect of the actual development; and

(c) Zhongfang Haidong has the right to pre-sell portion of the property based on the Pre-sale Permit mentioned in note 5.

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11. A summary of major certificates/approvals is shown as follows:

a. State-owned Land Use Rights Grant Contract Yes b. State-owned Land Use Rights Certificate Yes c. Construction Land Planning Permit Yes d. Construction Work Planning Permit Yes e. Construction Work Commencement Permit Yes f. Pre-sale Permit Yes g. Construction Work Completion and Inspection Certificate/Table/Report N/A

12. For the purpose of this report, the property is classified into the group as “Group II—held under development by the Group in the PRC” according to the purpose for which it is held.

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VALUATION CERTIFICATE

Market value in Particulars of existing state as at No. Property Description and tenure occupancy the valuation date RMB

20. Project Project Vanke—Park Avenue is As at the valuation 1,624,500,000 Vanke—Park located at the North side of date, the CIP of the Avenue located at Chaidamu Road. The locality is property was under 40% interest the North side of well served by public construction and the attributable to Chaidamu Road transportation network and remaining portion was the Group: Chengzhong supporting facilities. bare land for future RMB649,800,000 District development. Xining City The property occupies a parcel of Qinghai Province land with a site area of The PRC approximately 110,939.35 sq.m., (萬科‧公園里) which is being developed into a residential and commercial development. As at the valuation date, 19 residential and commercial buildings of the property are under construction (the “CIP”) with a total gross floor area of approximately 348,082.07 sq.m and is scheduled to be completed in June 2022. As advised by the Group, the remaining portion of the property had not been commenced. Details of the areas of property are set out in note 6.

As advised by the Group, the construction cost (excluding land cost and financial cost) of the CIP is estimated to be approximately RMB1,507,000,000, of which approximately RMB214,000,000 had been incurred as at the valuation date.

The land use rights of the property have been granted for terms expiring on 25 November 2089 for residential use and 25 November 2059 for commercial use.

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Notes:

1. Pursuant to a State-owned Land Use Rights Grant Contract—2019NC-2, the land use rights of a parcel of land with a site area of approximately 110,939.35 sq.m. were contracted to be granted to Xining Ningcan Industrial Co., Ltd. (西寧寧燦實業, “Xining Ningcan”, a 40%-owned subsidiary of the Company) for terms of 70 years for residential use and 40 years for commercial use commencing from the land delivery date. The land consideration was RMB1,297,998,000.

2. Pursuant to a Real Estate Title Certificate—Qing (2020) Xi Ning Bu Dong Chan Quan Di No. 0026394, the land use rights of the aforesaid land parcel with a site area of approximately 110,939.35 sq.m. have been granted to Xining Ningcan for terms expiring on 25 November 2089 for residential use and 25 November 2059 for commercial use.

3. Pursuant to a Construction Work Planning Permit—Jian Zi Di Ning Gui Jian Zi 2020 Nian Di No. 052 in favour of Xining Ningcan, the CIP of the property with a gross floor area of approximately 359,200.57 sq.m. has been approved for construction.

4. Pursuant to 3 Construction Work Commencement Permits—Ning Jian Guan Nos. 6301052020007220101, 630105202011050201 and 630105202010130101 in favour of Xining Ningcan, permissions by the relevant local authority were given to commence the construction of the CIP of the property with a gross floor area of approximately 348,082.07 sq.m.

5. Pursuant to 14 Pre-sale Permits—(2020) Ning Fang Yu Shou Zheng Zi Di Nos. 144 to 154 and (2021) Ning Fang Yu Shou Zheng Zi Di Nos. 031, 032 and 040 in favour of Xining Ningcan, the Group is entitled to sell portions of the property (representing a gross floor area of approximately 263,517.99 sq.m.) to purchasers.

6. According to the information provided by the Group, the gross floor area of the property is set out as below:

Nos. of car Usage Gross Floor Area parking space (sq.m.)

Residential 258,164.09 Retail 8,064.91 Basement (inclusive of car parking spaces) 81,853.07

Total: 348,082.07

7. As advised by the Group, various residential and retail units with a gross floor area of approximately 113,589.27 sq.m. of the property have been pre-sold to various third parties at a consideration of RMB1,413,644,099 inclusive of value-added tax. Such portions of the property have not been legally and virtually transferred and therefore we have included the units in our valuation. In arriving at our opinion on the market value of the property, we have taken into account the contracted prices of such portions of the property.

9. Our valuation has been made on the following basis and analysis:

(a) In undertaking our valuation, we have identified and analyzed various relevant sales evidences in the locality which have similar characteristics as the subject property such as nature, use, size, layout and accessibility of the property. The unit price of these comparable properties ranges from RMB11,000 to RMB13,000 per sq.m. for residential units and RMB25,000 to RMB30,000 per sq.m. for commercial units on the first floor. Appropriate adjustments and analysis are considered to the differences in location, size and other characters between the comparable properties and the property to arrive at an assumed unit rate for the property.

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(b) In undertaking our valuation, we have made reference to sales prices of land within the locality which have the similar characteristics comparable to the property. The accommodation value of these comparable land sites ranges from RMB3,100 to RMB4,200 per sq.m. for residential use. Appropriate adjustments and analysis are considered to the differences in nature, use, site area, layout, accessibility and other characters between the comparable properties and the property to arrive at our assumed accommodation value.

10. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal adviser, which contains, inter alia, the following:

(a) Xining Ningcan has legally obtained the land use rights of the property and entitled to occupy and use of the parcel of land, whilst the transfer and otherwise dispose of the parcel of land are subject to relevant mortgage contracts and relevant laws in the PRC; and

(b) Xining Ningcan has obtained the requisite approvals in respect of the actual development; and

11. A summary of major certificates/approvals is shown as follows:

Market value in existing state as at Group the valuation date (RMB)

Group II—held under development by the Group 1,577,000,000 Group III—held for future development by the Group 47,500,000

Total: 1,624,500,000

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VALUATION CERTIFICATE

Market value in Particulars of existing state as at No. Property Description and tenure occupancy the valuation date RMB

21. Project Project Vanke—Times Metropolis As at the valuation 2,698,800,000 Vanke—Times is located at the intersection of date, the CIP of the Metropolis located South Ring Expressway and property was under 20.4% interest at No. 3 Shidai Shidai Avenue, Chengzhong construction and the attributable to Avenue District. There are several remaining portion was the Group: Chengzhong residential projects nearby bare land for future RMB550,555,200 District Xining however, public transports and development. City Qinghai supporting facilities in the Province The PRC neighboring area need to be (萬科‧時代都會) further developed.

The property occupies 5 parcels of land with a total site area of approximately 195,453.90 sq.m., which is being developed into a residential and commercial development. Portions of the project were under construction (the “CIP”) as at the valuation date and are scheduled to be completed in September 2022. As advised by the Group, upon completion, the CIP will have a gross floor area of approximately 390,832.61 sq.m. The construction of the remaining portion of the project (the “bare land”) had not been commenced as at the valuation date.

The property comprises the whole project with a total gross floor area of approximately 712,388.79 sq.m. The classification, usage and gross floor area details of the property were set out in note 7.

As advised by the Group, the construction cost (excluding land cost and financial cost) of the property is estimated to be approximately RMB2,088,000,000 of which approximately RMB361,000,000 had been incurred as at the valuation date.

The land use rights of the property have been granted for terms expiring on 30 August 2089 for residential use and 30 August 2059 for commercial use.

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Notes:

1. Pursuant to a State-owned Land Use Rights Grant Contract—2019NC-1, the land use rights with a site area of approximately 195,453.90 sq.m. were contracted to be granted to Xining Wantang Real Estate Co., Ltd. (西寧萬唐房地產開發有限公司, Xining Wantang, a 20.4%-owned subsidiary of the Company) for terms of 70 years for residential use and 40 years for commercial use commencing from the land delivery date. The land consideration was RMB1,938,270,000.

2. Pursuant to 4 Real Estate Title Certificates—Qing (2020) Xi Ning Bu Dong Chan Quan Di Nos. 0014487, 0023646, 0023647 and 0025200, the land use rights of the aforesaid land parcel with a site area of approximately 137,739.14 sq.m. have been granted to Xining Wantang for terms expiring on 30 August 2089 for residential use and 30 August 2059 for commercial use.

3. Pursuant to a Construction Work Planning Permit—Jian Zi Di Nan Gui Jian 2020 Di No. 008 in favour of Xining Wantang, the property with a gross floor area of approximately 571,948.79 sq.m. has been approved for construction.

4. Pursuant to 5 Construction Work Commencement Permits—Ning Jian Guan Nos. 630103202007270101, 630103202007270201, 630103202008250301, 630103202102080101 and 630103202009290201 in favour of Xining Wantang, permissions by the relevant local authority were given to commence the construction of the CIP of the property with a gross floor area of approximately 571,829.65 sq.m.

5. Pursuant to 25 Pre-sale Permits—(2020) Ning Fang Yu Shou Zheng Zi Di Nos. 127 to 133, 234 to 237, 327 and (2021) Ning Fang Yu Shou Zheng Zi Di Nos. 010 to 013, in favour of Xining Wantang, the Group is entitled to sell portions of the property (representing a gross floor area of approximately 276,707.81 sq.m.) to purchasers.

6. According to the information provided by the Group, the gross floor area of the property is set out as below:

Nos. of car Usage Gross Floor Area parking space (sq.m.)

Residential 278,718.85 Retail 19,496.76 Office 124,832.27 Kindergarten 3,132.13 Ancillary 7,748.78 Basement (inclusive of car parking spaces) 137,900.86

Total: 571,948.79

7. As advised by the Group, various residential units, office units and apartment units with a total gross floor area of approximately 253,285.80 sq.m. of the CIP of the property have been pre-sold to various third parties at a consideration of RMB3,188,350,526 inclusive of value-added tax. Such portions of the property have not been legally and virtually transferred and therefore we have included the units in our valuation. In arriving at our opinion on the market value of the property, we have taken into account the contracted prices of such portions of the property.

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9. Our valuation has been made on the following basis and analysis:

(a) In undertaking our valuation, we have identified and analyzed various relevant sales evidences in the locality which have similar characteristics as the subject property such as nature, use, size, layout and accessibility of the property in Group II. The unit price of these comparable properties ranges from RMB12,000 to RMB14,000 per sq.m. for residential units, RMB8,500 to RMB10,500 per sq.m. for office units and RMB7,500 to RMB9,500 per space for car parking spaces. Appropriate adjustments and analysis are considered to the differences in location, size and other characters between the comparable properties and the property to arrive at an assumed unit rate for the property.

(b) In undertaking our valuation, we have made reference to sales prices of land within the locality which have the similar characteristics comparable to the property in Group III. The accommodation value of these comparable land sites ranges from RMB4,500 to RMB5,100 per sq.m. for residential use. Appropriate adjustments and analysis are considered to the differences in nature, use, site area, layout, accessibility and other characters between the comparable properties and the property to arrive at our assumed accommodation value.

10. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal adviser, which contains, inter alia, the following:

(a) Xining Wantang has legally obtained the land use rights of the property and entitled to occupy and use of the parcel of land, whilst the transfer and otherwise dispose of the parcel of land are subject to relevant mortgage contracts and relevant laws in the PRC;

(b) Xining Wantang has obtained the requisite approvals in respect of the actual development; and

11. A summary of major certificates/approvals is shown as follows:

a. State-owned Land Use Rights Grant Contract Yes b. Real Estate Title Certificate (Land) Portion c. Construction Land Planning Permit Portion d. Construction Work Planning Permit Portion e. Construction Work Commencement Permit Portion f. Pre-sale Permit Portion

Market value in existing state as at Group the valuation date (RMB)

Group II—held under development by the Group 2,471,000,000 Group III—held for future development by the Group 227,800,000

Total: 2,698,800,000

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VALUATION CERTIFICATE

Market value in Particulars of existing state as at No. Property Description and tenure occupancy the valuation date RMB

22. Project Project Vanke—Starlight As at the valuation 1,807,900,000 Vanke—Starlight Metropolis is located at the date, the property was Metropolis located intersection of An Ning Road and bare land for future 40% interest at the intersection Xinan Street, Chengzhong development. attributable to of An Ning Road District. There are several the Group: and Xinan Street residential projects nearby RMB723,160,000 Chengzhong however, public transports and District supporting facilities in the Xining City neighboring area need to be Qinghai Province further developed. The PRC (萬科‧時代星光) The property occupies 2 parcels of land with a total site area of approximately 129,607.35 sq.m., which will be developed into a residential and commercial development with a gross floor area of approximately 445,332.50 sq.m. The construction of the property was not commenced as at the valuation date. The classification, usage and gross floor area details of the property are set out in note 3.

The land use rights of the property have been granted for terms of 40 years for commercial service use and 70 years for residential use.

Notes:

1. Pursuant to 2 State-owned Land Use Rights Grant Contracts—2020NC-11 and 2020NC-12, the land use rights with 2 site area of approximately 129,625.35 sq.m. were contracted to be granted to Xining Wanhan Real Estate Co., Ltd. (西寧萬涵房地產有限公司, Xining Wanhan, a 40%-owned subsidiary of the Company) for terms of 70 years for residential use and 40 years for commercial use commencing from the land delivery date. The land consideration was RMB1,889,740,000.

2. Pursuant to a Real Estate Title Certificate—Qing (2021) Xi Ning Bu Dong Chan Quan Di Nos. 0014962, the land use rights of the aforesaid land parcel with a site area of approximately 50,697.05 sq.m. have been granted to Xining Wanhan for terms expiring on 12 November 2090 for residential use and 11 November 2060 for commercial use.

3. Pursuant to 2 Construction Land planning Permit—Di Zi Di Nan Gui Di Zi 2021 Di No. 001 and 002, permissions towards the planning of 2 parcels of land with a total site area of approximately 129,607.35 sq.m. have been granted to Xining Wanhan.

4. In undertaking our valuation, we have made reference to sales prices of land within the locality which have the similar characteristics comparable to the property. The accommodation value of these comparable land sites ranges from RMB5,000 to RMB6,000 per sq.m. for residential use. Appropriate adjustments and analysis are considered to the differences in nature, use, site area, layout, accessibility and other characters between the comparable properties and the property to arrive at our assumed accommodation value.

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5. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisors, which contains that Xining Wanhan has legally obtained the land use rights of the property and entitled to occupy and use of the parcel of land, whilst the transfer and otherwise dispose of the parcel of land are subject to relevant mortgage contracts and relevant laws in the PRC.

6. A summary of major certificates/approvals is shown as follows:

a. State-owned Land Use Rights Grant Contract Yes b. Real Estate Title Certificate (Land) Portion

7. For the purpose of this report, the property is classified into the group as “Group III—held for future development by the Group in the PRC” according to the purpose for which it is held.

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VALUATION CERTIFICATE

Market value in Particulars of existing state as at No. Property Description and tenure occupancy the valuation date RMB

23. Project Vanke Project Vanke Town is located at As at the valuation 5,496,000,000 Town located at the intersection of West date, the property was the intersection of Nanchuan Road and Yujinxiang under construction. 40% interest West Nanchuan Avenue, Chengzhong District. attributable to Road and There are several residential the Group: Yujinxiang Avenue projects nearby however, public RMB2,198,400,000 Chengzhong transports and supporting District facilities in the neighboring area Xining City need to be further developed. Qinghai Province The PRC The property occupies 3 parcels (萬科‧萬科城) of land with a total site area of approximately 272,413.74 sq.m., which is being developed into a residential and commercial development. As at the valuation date, the property was under construction and is scheduled to be completed in June 2023. As advised by the Group, upon completion, the project will have a gross floor area of approximately 935,280.55 sq.m. The classification, usage and gross floor area details of the property were set out in note 7.

As advised by the Group, the construction cost of the property is estimated to be approximately RMB4,081,000,000, of which approximately RMB2,466,000,000 had been incurred as at the valuation date.

The land use rights of the property have been granted for terms expiring on 30 October 2088 for residential use 30 October 2058 for commercial use.

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Notes:

1. Pursuant to 3 State-owned Land Use Rights Grant Contracts—2018NC-5, 2018NC-6 and 2018NC-7, the land use rights of 3 parcels of land with a total site area of approximately 272,413.74 sq.m. were contracted to be granted to (Xining Wanlan Real Estate Co., Ltd, Xining Wancan Real Estate Co., Ltd and Xining Wanxian Real Estate Co., Ltd 西寧萬瀾房地產開發有限公司 “Xining Wanlan”, a 40% owned subsidiary of the Company; 西寧萬燦房地產開發有限公司 “Xining Wancan”, a 40% owned subsidiary of the Company; 西寧萬賢房地產開發有限公司, “Xining Wanxian”, a 40% subsidiary of the Company) respectively for terms of 70 years for residential use and 40 years for commercial use commencing from the land delivery date. The land consideration was RMB2,375,650,519.

2. Pursuant to 3 Real Estate Title Certificates—Qing (2019) Xi Ning Shi Bu Dong Chan Quan Di No. 0018711, 0018714 and 0017456, the land use rights of the aforesaid land parcel with a site area of approximately 272,413.74 sq.m. have been granted to Xining Wanlan, Xining Wancan and Xining Wanxian respectively for terms expiring on 30 October 2088 for residential use 30 October 2058 for commercial use.

3. Pursuant to 5 Construction Work Planning Permits—Jian Zi Di Nan Gui Jian 2019-002, 2019-003, 2019-004, 2019-007 and 2020-004 in favour of Xining Wanlan, Xining Wancan and Xining Wanxian respectively, the property with a gross floor area of approximately 1,042,768.03 sq.m. has been approved for construction.

4. Pursuant to 9 Construction Work Commencement Permits—Ning Jian Guan Nos. 630103201903190401, 630103201903190501, 630103201903190601, 630103202003260101, 630103201905160201, 6301032020908030101, 6301032202008030201, 630103201909060101 and 630103201910300101 in favour of Xining Wanlan, Xining Wancan and Xining Wanxian respectively, permissions by the relevant local authority were given to commence the construction of the property with a gross floor area of approximately 935,280.55 sq.m.

5. Pursuant to 60 Pre-sale Permits—(2019) Ning Fang Yu Shou Zheng Zi Di Nos. 102 to 120, 270, 288, 289, 290 to 293, (2020) Ning Fang Yu Shou Zheng Zi Di Nos. 166 to 169, 042, 013 to 017, 030 to 032, 066 to 069 and 121 to 137, in favour of Xining Wanlan, Xining Wancan and Xining Wanxian respectively, the Group is entitled to sell portions of the property (representing a gross floor area of approximately 706,446.42 sq.m.) to purchasers.

6. According to the information provided by the Group, the gross floor area of the property is set out as below:

Usage Gross Floor Area (sq.m.)

Residential 620,562.60 Retail 17,930.05 Office 76,266.92 Basement (inclusive of car parking spaces) 218,230.57 Ancillary 2,290.41

Total: 935,280.55

7. As advised by the Group, various residential and retail units with a gross floor area of approximately 621,949.48 sq.m. of the property have been pre-sold to various third parties at a consideration of RMB6,760,043,561 inclusive of value added tax. Such portions of the property have not been legally and virtually transferred and therefore we have included the units in our valuation. In arriving at our opinion on the market value of the property, we have taken into account the contracted prices of such portions of the property.

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9. Our valuation has been made on the following basis and analysis:

(a) In undertaking our valuation, we have identified and analyzed various relevant sales evidences in the locality which have similar characteristics as the subject property such as nature, use, size, layout and accessibility of the property. The unit price of these comparable properties ranges from RMB10,000 to RMB14,000 per sq.m. for residential units and RMB15,000 to RMB20,000 per sq.m. for retail units on the first floor. Appropriate adjustments and analysis are considered to the differences in location, size and other characters between the comparable properties and the property to arrive at an assumed unit rate for the property.

(b) In undertaking our valuation, we have made reference to sales prices of land within the locality which have the similar characters comparable to the property. The accommodation value of these comparable land sites ranges from RMB3,500 to RMB5,000 per sq.m. for residential use. Appropriate adjustments and analysis are considered to the differences in nature, use, site area, layout, accessibility and other characters between the comparable properties and the property to arrive at our assumed accommodation value.

10. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal adviser, which contains, inter alia, the following:

(a) Xining Wanlan, Xining Wancan and Xining Wanxian have legally obtained the land use rights of the property and entitled to occupy and use of the parcel of land, whilst the transfer and otherwise dispose of the parcel of land are subject to relevant mortgage contracts and relevant laws in the PRC;

(b) Xining Wanlan, Xining Wancan and Xining Wanxian have obtained the requisite approvals in respect of the actual development; and

(c) Xining Wanlan, Xining Wancan and Xining Wanxian have the right to pre-sell portion of the property based on the Pre-sale Permit mentioned in note 5.

11. A summary of major certificates/approvals is shown as follows:

12. For the purpose of this report, the property is classified into the group as “Group II—held under development by the Group in the PRC” according to the purpose for which it is held.

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VALUATION CERTIFICATE

Market value in Particulars of existing state as at No. Property Description and tenure occupancy the valuation date RMB

24. Project Vanke— Project Vanke—Chu Xin Garden As at the valuation 265,600,000 Chu Xin Garden is located at the North of Yin date, the unsold units located at the Tong Road and East of No. 9 of the property was 28% interest North of Yin Tong Street, Xingqing District. There vacant for sale and attributable to Road and East of are several residential projects the CIP of the the Group: No. 9 Street nearby however, public transports property was under RMB74,368,000 Xingqing District and supporting facilities in the construction. Yinchuan City neighboring area need to be Ningxia Hui further developed. Autonomous Region Project Vanke—Chu Xin Garden The PRC occupies a parcel of land with a (萬科初昕苑) site area of approximately 89,836.57 sq.m., which is being developed into a residential development. Portions of the project were completed in 2020, and the unsold portion of that (the “unsold units”) was vacant for sale as at the valuation date. The remaining portion of the project was under construction (the “CIP”) as at the valuation date and is scheduled to be completed in April 2021. As advised by the Group, upon completion, the CIP will have a gross floor area of approximately 21,832.54 sq.m.

The property comprises the unsold units and CIP of the project with a total gross floor area of approximately 33,466.38 sq.m. The classification, usage and gross floor area details of the property were set out in note 8.

As advised by the Group, the construction cost (excluding land cost and financial cost) of the property is estimated to be approximately RMB82,000,000, of which approximately RMB75,000,000 had been incurred as at the valuation date. The land use rights of the property have been granted for terms expiring on 01 March 2088 for residential use.

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Notes:

1. Pursuant to a State-owned Land Use Rights Grant Contract—Yin Di Chan He Tong Rang Zi 2017 Nian No. 83, the land use rights with a site area of approximately 89,836.51 sq.m. were contracted to be granted to Ningxia Yuejia Real Estate Co., Ltd. (寧夏悅家房地產開發有限公司, “Ningxia Yuejia”, a 28%-owned subsidiary of the Company) for terms of 70 years for residential use from the land delivery date. The land consideration was RMB223,020,000.

2. Pursuant to a Real Estate Title Certificate—Ning (2018) Xing Qing Qu Bu Dong Chan Quan Di No. 0018804, the land use rights of a parcel of land with a site area of approximately 89,836.51 sq.m. have been granted to Ningxia Yuejia for a term expiring on 01 March 2088 for residential use.

3. Pursuant to a Construction Work Planning Permit—Yin Gui Jian Zi Di (2018) No. 092 in favour of Ningxia Yuejia, the project with a gross floor area of approximately 194,899.84 sq.m. (including the property) has been approved for construction.

4. Pursuant to a Construction Work Commencement Permit—No. 640102201806151101 in favour of Ningxia Yuejia, permission by the relevant local authority was given to commence the construction of the project with a gross floor area of approximately 194,899.84 sq.m. (including the property).

5. Pursuant to 20 Pre-sale Permits in favour of Ningxia Yuejia, the Group is entitled to sell portions of the project (representing a gross floor area of approximately 160,274.23 sq.m.) to purchasers.

6. Pursuant to 18 Construction Work Completion and Inspection Certificates in favour of Ningxia Yuejia, the construction of the project with a gross floor area of approximately 173,067.30 sq.m. (including the unsold units of the property) has been completed and passed the inspection acceptance.

7. According to the information provided by the Group, the gross floor area of the property is set out as below:

Gross Floor Nos. of car Group Usage Area parking space (sq.m.)

Group I—held for sale Residential 5,707.30 (unsold units) Retail 3,897.60 Apartments 2,028.94

Sub-total: 11,633.84

Group II—held under Residential 21,832.54 development (CIP) Sub-total: 21,832.54

Grand-Total: 33,466.38

8. As advised by the Group, various residential units with a gross floor area of approximately 855.83 sq.m. of the unsold units of the property and various residential units with a gross floor area of approximately 4,414.76 sq.m. of the CIP of the property have been pre-sold to various third parties at consideration of RMB51,502,833 inclusive of value added tax. Such portions of the property have not been legally and virtually transferred and therefore we have included the units in our valuation. In arriving at our opinion on the market value of the property, we have taken into account the contracted prices of such portions of the property.

9. The market value of the CIP of the property as if completed as at the valuation date according to the development proposal as described above and which can be freely transferred in the market, would be RMB184,000,000.

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10. Our valuation has been made on the following basis and analysis:

(a) In undertaking our valuation, we have identified and analyzed various relevant sales evidences in the locality which have similar characteristics as the subject property such as nature, use, size, layout and accessibility of the property. The unit price of these comparable properties ranges from RMB8,500 to RMB9,500 per sq.m. for residential units, RMB13,000 to RMB14,000 per sq.m. for retail units on the first floor and RMB7,000 to RMB8,000 per sq.m. for apartments. Appropriate adjustments and analysis are considered to the differences in location, size and other characters between the comparable properties and the property to arrive at an assumed unit rate for the property.

(b) In undertaking our valuation, we have made reference to sales prices of land within the locality which have the similar characters comparable to the property. The accommodation value of these comparable land sites ranges from RMB1,300 to RMB1,600 per sq.m. for residential use. Appropriate adjustments and analysis are considered to the differences in nature, use, site area, layout, accessibility and other characters between the comparable properties and the property to arrive at our assumed accommodation value.

11. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal adviser, which contains, inter alia, the following:

(a) Ningxia Yuejia has legally obtained the land use rights of the property and entitled to occupy and use of the parcel of land, whilst the transfer and otherwise dispose of the parcel of land are subject to relevant mortgage contracts and relevant laws in the PRC;

(b) Ningxia Yuejia has obtained the requisite approvals in respect of the actual development; and

12. A summary of major certificates/approvals is shown as follows:

a. State-owned Land Use Rights Grant Contract Yes b. Real Estate Title Certificate (Land) Yes c. Construction Land Planning Permit Yes d. Construction Work Planning Permit Yes e. Construction Work Commencement Permit Yes f. Pre-sale Permit Portion g. Construction Work Completion and Inspection Certificate Portion

Market value in existing state as at Group the valuation date (RMB)

Group I—held for sale by the Group 92,600,000 Group II—held under development by the Group 173,000,000

Total: 265,600,000

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VALUATION CERTIFICATE

Market value in Particulars of existing state as at No. Property Description and tenure occupancy the valuation date RMB

25. Project Vanke— Project Vanke—City Light is As at the valuation 670,100,000 City Light located located at the South of Beijing date, the unsold units at the South of Road and East of Jinger Road, of the property was 40% interest Beijing Road and Xingqing District. There are vacant for sale and attributable to East of several residential projects the CIP of the the Group: Jinger Road nearby however, public transports property was under RMB268,040,000 Xingqing District and supporting facilities in the construction. Yinchuan City neighboring area need to be Ningxia Hui further developed. Autonomous Region Project Vanke—City Light The PRC occupies a parcel of land with a (萬科 • 城市之光) site area of approximately 106,121.35 sq.m., which is being developed into a residential development. Portions of the project were completed in 2020, and the unsold portion of that (the “unsold units”) was vacant for sale as at the valuation date. The remaining portion of the project was under construction (the “CIP”) as at the valuation date and is scheduled to be completed in October 2022. As advised by the Group, upon completion, the CIP will have a gross floor area of approximately 160,351.21 sq.m.

The property comprises the unsold units and CIP of the project with a total gross floor area of approximately 161,570.81 sq.m. The classification, usage and gross floor area details of the property were set out in note 8.

As advised by the Group, the construction cost (excluding land cost and financial cost) of the property is estimated to be approximately RMB617,000,000, of which approximately RMB445,000,000 had been incurred as at the valuation date.

The land use rights of the property have been granted for terms expiring on 01 March 2088 for residential use.

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Notes:

1. Pursuant to a State-owned Land Use Rights Grant Contract—Yin Di Chan He Tong Rang Zi 2017 Nian No. 84, the land use rights with a site area of approximately 106,121.35 sq.m. were contracted to be granted to Ningxia Zhenghui Real Estate Co., Ltd. (寧夏正輝房地產開發有限公司, “Ningxia Zhenghui”, a 40%-owned subsidiary of the Company) for terms of 70 years for residential use from the land delivery date. The land consideration was RMB249,840,000.

2. Pursuant to a Real Estate Title Certificate (Land)—Ning (2018) Xing Qing Qu Bu Dong Chan Quan Di No. 0018469, the land use rights of the aforesaid land parcel with a site area of approximately 106,121.35 sq.m. have been granted to Ningxia Zhenghui for a term expiring on 01 March 2088 for residential use.

3. Pursuant to a Construction Work Planning Permit—Yin Gui Jian Zi Di (2018) No. 098 in favour of Ningxia Zhenghui, the project with a gross floor area of approximately 232,587.73 sq.m.(including the property) has been approved for construction.

4. Pursuant to 27 Construction Work Commencement Permits—Nos. 640102201806260801 to 6401022018063301 and 640102201806263301 in favour of Ningxia Zhenghui, permissions by the relevant local authority were given to commence the construction of the project with a gross floor area of approximately 232,587.73 sq.m. (including the property).

5. Pursuant to 24 Pre-sale Permits in favour of Ningxia Zhenghui, the Group is entitled to sell portions of the project (representing a gross floor area of approximately 184,441.41 sq.m.) to purchasers.

6. Pursuant to 10 Construction Work Completion and Inspection Certificates—yc2018397, yc2018398, yc2018406 to yc2018410, and yc2018419 to yc2018421 in favour of Ningxia Zhenghui, the construction of the project with a gross floor area of approximately 72,237.02 sq.m. (including the unsold units of the property) has been completed and passed the inspection acceptance.

7. Pursuant to 10 Real Estate Title Certificates (Building)—Ning (2020) Xing Qing Qu Bu Dong Chan Quan Di Nos. 0086278, 0086280, 0086282, 0086286, 0086289, 0086291 to 0086295 in favour of Ningxia Zhenghui with the ownership of a gross floor area of approximately 71,240.11 sq.m. (including the unsold units of the property) of the project.

8. According to the information provided by the Group, the gross floor area of the property is set out as below:

Nos. of car Group Usage Gross Floor Area parking space (sq.m.)

Group I—held for sale Residential 1,219.60 (unsold units) Sub-total: 1,219.60

Group II—held under Residential 110,201.47 development by the Group Retail 1,311.01 (CIP) Subsidized housing 8,580.96 Kindergarten 2,093.00 Basement (inclusive of car 38,164.77 parking spaces) Sub-total: 160,351.21

Total: 161,570.81

9. As advised by the Group, various residential units and retail units with a gross floor area of approximately 147.01 sq.m. in Group I and various residential units with a gross floor area of approximately 69,471.12 sq.m. in Group II of the property have been pre-sold to various third parties at consideration of RMB538,516,336 inclusive of value added tax. Such portions of the property have not been legally and virtually transferred and therefore we have included the units in our valuation. In arriving at our opinion on the market value of the property, we have taken into account the contracted prices of such portions of the property.

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11. Our valuation has been made on the following basis and analysis:

(a) In undertaking our valuation, we have identified and analyzed various relevant sales evidences in the locality which have similar characteristics as the subject property such as nature, use, size, layout and accessibility of the property. The unit price of these comparable properties ranges from RMB9,500 to RMB10,500 per sq.m. for residential units, RMB18,000 to RMB20,000 per sq.m. for retail units on the first floor and RMB7,500 to RMB8,500 per sq.m. for apartments. Appropriate adjustments and analysis are considered to the differences in location, size and other characters between the comparable properties and the property to arrive at an assumed unit rate for the property.

(b) In undertaking our valuation, we have made reference to sales prices of land within the locality which have the similar characters comparable to the property. The accommodation value of these comparable land sites ranges from RMB1,300 to RMB1,600 per sq.m. for residential use. Appropriate adjustments and analysis are considered to the differences in nature, use, site area, layout, accessibility and other characters between the comparable properties and the property to arrive at our assumed accommodation value.

12. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal adviser, which contains, inter alia, the following:

(a) Ningxia Zhenghui has legally obtained the land use rights of the property and entitled to occupy and use of the parcel of land, whilst the transfer and otherwise dispose of the parcel of land are subject to relevant mortgage contracts and relevant laws in the PRC;

(b) Ningxia Zhenghui has obtained the requisite approvals in respect of the actual development; and

13. A summary of major certificates/approvals is shown as follows:

a. State-owned Land Use Rights Grant Contract Yes b. State-owned Land Use Rights Certificate/Real Estate Title Certificate (Land) Yes c. Construction Land Planning Permit Yes d. Construction Work Planning Permit Yes e. Construction Work Commencement Permit Yes f. Pre-sale Permit Portion g. Construction Work Completion and Inspection Certificate/Table/Report Portion h. Building Ownership Certificate/Real Estate Title Certificate (Building) Portion

Market value in existing state as at the valuation Group date (RMB)

Group I—held for sale by the Group 12,100,000 Group II—held under development by the Group 658,000,000

Total: 670,100,000

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VALUATION CERTIFICATE

Market value in Particulars of existing state as at No. Property Description and tenure occupancy the valuation date RMB

26. Project Vanke— Vanke—Emerald Lake View is As at the valuation 838,000,000 Emerald Lake located at the East of Hongqiao date, the property was View located at Nan Road, Desheng Industrial under construction. 40% interest the East of Helan County. The locality of the attributable to Hongqiao Nan project is well served by public the Group: Road transportation and public RMB335,200,000 Desheng Industrial facilities. Zone Helan County The property occupies 3 parcels Yinchuan City of land with a total site area of Ningxia Hui approximately 67,591 sq.m., Autonomous which is being developed into a Region residential and commercial The PRC development. The project was (萬科 • 翡翠湖望) under construction as at the valuation date and is scheduled to be completed in June 2021. As advised by the Group, upon completion, the project will have a gross floor area of approximately 136,695.76 sq.m. The classification, usage and gross floor area details of the property were set out in note 7.

As advised by the Group, the construction cost of the property is estimated to be approximately RMB534,000,000, of which approximately RMB396,000,000 had been incurred as at the valuation date.

The land use rights of the property have been granted for terms expiring on 10 December 2073 and 25 May 2073 for residential use.

Notes:

1. Pursuant to 3 Real Estate Title Certificates (Land)—Ning (2019) He Lan Xian Bu Dong Chan Quan Di No. H0006109 to H00061111, the land use rights of the aforesaid land parcel with a total site area of approximately 67,591 sq.m. have been granted to Ningxia Wanpeng Real Estate Development Co. Ltd., (寧夏萬鵬房地產開發有限公司, “Ningxia Wanpeng”, a 40% owned subsidiary of the Company) for terms expiring on 10 December 2073 and 25 May 2073 for residential use.

2. Pursuant to 2 Construction Work Planning Permits—He Jian Zi Di 2018097 and He Jian Zi Di 2019010 in favour of Ningxia Wanpeng, the property with a gross floor area of approximately 136,730.92 sq.m. has been approved for construction.

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3. Pursuant to 19 Construction Work Commencement Permits—640122201811230101 to 640122201811231401 and 640122201904010301 to 640122201904010701 in favour of Ningxia Wanpeng, permissions by the relevant local authority were given to commence the construction of the property with a gross floor area of approximately 136,695.76 sq.m.

4. Pursuant to 17 Pre-sale Permits in favour of Ningxia Wanpeng, the Group is entitled to sell portions of the property (representing a gross floor area of approximately 103,950.46 sq.m.) to purchasers.

5. According to the information provided by the Group, the gross floor area of the property is set out as below:

Usage Gross Floor Area (sq.m.)

Residential 93,748.88 Retail 1,384.32 Apartments 12,948.68 Basement (inclusive of car parking spaces) 25,899.40 Kindergarten 2,714.48

Total: 136,695.76

6. As advised by the Group, various residential, apartment and retail units with a gross floor area of approximately 102,711.77 sq.m. of the property have been pre-sold to various third parties at a consideration of RMB995,152,531 inclusive of value added tax. Such portions of the property have not been legally and virtually transferred and therefore we have included the units in our valuation. In arriving at our opinion on the market value of the property, we have taken into account the contracted prices of such portions of the property.

7. The market value of the property as if completed as at the valuation date according to the development proposal as described above and which can be freely transferred in the market, would be RMB1,006,900,000.

8. Our valuation has been made on the following basis and analysis:

(a) In undertaking our valuation, we have identified and analyzed various relevant sales evidences in the locality which have similar characteristics as the subject property such as nature, use, size, layout and accessibility of the property. The unit price of these comparable properties ranges from RMB9,000 to RMB10,000 per sq.m. for residential and apartment units, RMB18,000 to RMB20,000 per sq.m. for retail units on the first floor. Appropriate adjustments and analysis are considered to the differences in location, size and other characters between the comparable properties and the property to arrive at an assumed unit rate for the property.

(b) In undertaking our valuation, we have made reference to sales prices of land within the locality which have the similar characteristics comparable to the property. The accommodation value of these comparable land sites ranges from RMB1,200 to RMB1,400 per sq.m. for residential use. Appropriate adjustments and analysis are considered to the differences in nature, use, site area, layout, accessibility and other characters between the comparable properties and the property to arrive at our assumed accommodation value.

9. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal adviser, which contains, inter alia, the following:

(a) Ningxia Wanpeng has legally obtained the land use rights of the property and entitled to occupy and use of the parcel of land, whilst the transfer and otherwise dispose of the parcel of land are subject to relevant mortgage contracts and relevant laws in the PRC;

(b) Ningxia Wanpeng has obtained the requisite approvals in respect of the actual development; and

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10. A summary of major certificates/approvals is shown as follows:

11. For the purpose of this report, the property is classified into the group as “Group II—held under development by the Group in the PRC” according to the purpose for which it is held.

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VALUATION CERTIFICATE

Market value in Particulars of existing state as at No. Property Description and tenure occupancy the valuation date RMB

27. Vanke—Jin Chen Vanke—Jin Chen is located at As at the valuation 723,000,000 located at the the Eastern side of Fuanxiang date, the property was Eastern side of Jinfeng District Yinchuan City. under construction. 21% interest Fuanxiang The locality of the project is well attributable to Jinfeng District served by public transportation the Group: Yinchuan City and facilities. RMB151,830,000 Ningxia Hui Autonomous The property comprises a parcel Region of land with a site area of The PRC approximately 56,555.71 sq.m., (萬科錦宸) which will be developed into a residential development with a total gross floor area of approximately 111,198.45 sq.m. The property is scheduled to be completed in June 2021. Details of the areas of property are set out in note 6.

As advised by the Group, the construction cost (excluding land cost and financial cost) of the property is estimated to be approximately RMB531,800,000 of which approximately RMB407,200,000 had been incurred as at the valuation date.

The land use rights of the property have been granted for a term expiring on 29 August 2088 for residential use.

Notes:

1. Pursuant to a State-owned Land Use Rights Grant Contract—Yin Di Chan He Tong Rang Zi 2018 Nian No. 29, the land use rights of a parcel of land with a site area of approximately 56,555.71 sq.m. were contracted to be granted to Ningxia Wanjin Real Estate Co., Ltd. (寧夏萬錦房地產有限公司, “Ningxia Wanjin”, a 21%-owned subsidiary of the Company) for terms of 70 years for residential use commencing from the land delivery date. The land consideration was RMB183,120,000.

2. Pursuant to a Real Estate Title Certificate (Land)—Ning (2018) Jin Feng Qu Bu Dong Chan Quan Di No. 0051673, the land use rights of the aforesaid land parcel with a site area of approximately 56,555.71 sq.m. have been granted to Ningxia Wanjin for a term expiring on 29 August 2088 for residential use.

3. Pursuant to 2 Construction Work Planning Permits-Yin Shen Fu Jian Zi Di (2019) Nos. 025 and 035 in favour of Ningxia Wanjin, the property with a total gross floor area of approximately 111,198.45 sq.m. has been approved for construction.

4. Pursuant to 20 Construction Work Commencements Permits in favour of Ningxia Wanjin, permission by the relevant local authority was given to commence the construction of the property with a total gross floor area of approximately 111,198.45 sq.m.

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5. Pursuant to 17 Pre-sale Permits in favour of Ningxia Wanjin, the Group is entitled to sell residential and commercial units of the property (representing a gross floor area of approximately 72,843.50 sq.m.) to purchasers.

6. According to the information provided by the Group, the gross floor area of the property is set out as below:

Nos. of car Usage Gross Floor Area parking space (sq.m.)

Residential 70,519.27 Office 16,966.71 Retail 417.46 Ancillary (inclusive of car parking spaces) 23,295.01 236

Total: 111,198.45 236

7. As advised by the Group, various residential units with a gross floor area of approximately 65,044.04 sq.m. of the property have been pre-sold to various third parties at a consideration of RMB857,791,127 inclusive of value-added tax. Such portions of the property have not been legally and virtually transferred and therefore we have included the units in our valuation. In arriving at our opinion on the market value of the property, we have taken into account the contracted prices of such portions of the property.

9. Our valuation has been made on the following basis and analysis:

(a) In undertaking our valuation, we have identified and analyzed various relevant sales evidences in the locality which have similar characteristics as the subject property such as nature, use, size, layout and accessibility of the property. The unit price of these comparable properties ranges from RMB9,000 to RMB15,000 per sq.m. for residential units, RMB8,000 to RMB20,000 per sq.m. for retail units on the first floor. Appropriate adjustments and analysis are considered to the differences in location, size and other characters between the comparable properties and the property to arrive at an assumed unit rate for the property.

(b) In undertaking our valuation, we have made reference to sales prices of land within the locality which have the similar characters comparable to the property. The accommodation value of these comparable land sites ranges from RMB2,100 to RMB2,700 per sq.m. for residential use. Appropriate adjustments and analysis are considered to the differences in nature, use, site area, layout, accessibility and other characters between the comparable properties and the property to arrive at our assumed accommodation value.

10. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal adviser, which contains, inter alia, the following:

(a) Ningxia Wanjin has legally obtained the land use rights of the property and entitled to occupy and use of the parcel of land, whilst the transfer and otherwise dispose of the parcel of land are subject to relevant mortgage contracts and relevant laws in the PRC;

(b) Ningxia Wanjin has obtained the requisite approvals in respect of the actual development; and

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11. A summary of major certificates/approvals is shown as follows:

a. State-owned Land Use Rights Grant Contract Yes b. State-owned Land Use Rights Certificate/Real Estate Title Certificate (Land) Yes c. Construction Land Planning Permit Yes d. Construction Work Planning Permit Yes e. Construction Work Commencement Permit Yes f. Pre-sale Permit Portion g. Construction Work Completion and Inspection Certificate/Table/Report N/A h. Building Ownership Certificate/Real Estate Title Certificate (Building) N/A

12. For the purpose of this report, the property is classified into the group as “Group II—held under development by the Group in the PRC” according to the purpose for which it is held.

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VALUATION CERTIFICATE

Market value in Particulars of existing state as at No. Property Description and tenure occupancy the valuation date RMB

28. Vanke—Dream Vanke—Dream Town is located As at the valuation 1,122,000,000 Town located at at the Southern side of Jinfeng date, the property was the Southern side Seventeen Road Jinfeng District under construction. 28% interest of Jinfeng Yinchuan City. The locality is attributable to Seventeen Road well served by public the Group: Jinfeng District transportation and facilities. RMB314,160,000 Yinchuan City Ningxia Hui The property comprises a parcel Autonomous of land with a site area of Region approximately 98,214.66 sq.m., The PRC which will be developed into a (萬科 • 理想城) residential development with a total gross floor area of approximately 239,958.42 sq.m. The property is scheduled to be completed in September 2021. Details of the areas of property are set out in note 6.

As advised by the Group, the construction cost (excluding land cost and financial cost) of the property is estimated to be approximately RMB933,100,000 of which approximately RMB626,000,000 had been incurred as at the valuation date.

The land use rights of the property have been granted for a term expiring on 2 September 2088 for residential use.

Notes:

1. Pursuant to a State-owned Land Use Rights Grant Contract—Yin Di Chan He Tong Rang Zi 2018-30, the land use rights of a parcel of land with a site area of approximately 98,214.66 sq.m. were contracted to be granted to Ningxia Wanyue Real Estate Co., Ltd. (寧夏萬悅房地產有限公司, “Ningxia Wanyue”, a 28%-owned subsidiary of the Company) for terms of 70 years for residential use commencing from the land delivery date. The land consideration was RMB294,650,000.

2. Pursuant to a Real Estate Title Certificate (Land)—Ning (2018) Jin Feng Qu Bu Dong Chan Quan Di No. 0049699, the land use rights of a parcel of land with a site area of approximately 98,214.66 sq.m. have been granted to Ningxia Wanyue for a term expiring on 2 September 2088 for residential use.

3. Pursuant to a Construction Work Planning Permit—Yin Shen Fu Jian Zi Di (2019) No. 034 in favour of Ningxia Wanyue, the property with a gross floor area of approximately 239,958.42 sq.m. has been approved for construction.

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4. Pursuant to 25 Construction Work Commencements Permits in favour of Ningxia Wanyue, permission by the relevant local authority was given to commence the construction the property with a total gross floor area of approximately 239,703.42 sq.m.

5. Pursuant to 22 Pre-sale Permits in favour of Ningxia Wanyue, the Group is entitled to sell portions of the property (representing a gross floor area of approximately 193,331.48 sq.m.) to purchasers.

6. According to the information provided by the Group, the gross floor area of the property is set out as below:

Nos. of car Usage Gross Floor Area parking space (sq.m.)

Residential 177,721.12 Retail 4,603.74 Ancillary 47,156.97 Car parking spaces 10,476.59 330

Total: 239,958.42 330

7. As advised by the Group, various residential and retail units with a total gross floor area of approximately 178,688.51 sq.m. of the property have been pre-sold to various third parties at a consideration of RMB1,490,873,577 inclusive of value-added tax. Such portions of the property have not been legally and virtually transferred and therefore we have included the units in our valuation. In arriving at our opinion on the market value of the property, we have taken into account the contracted prices of such portions of the property.

9. Our valuation has been made on the following basis and analysis:

(a) In undertaking our valuation, we have identified and analyzed various relevant sales evidences in the locality which have similar characteristics as the subject property such as nature, use, size, layout and accessibility of the property. The unit price of these comparable properties ranges from RMB5,000 to RMB11,000 per sq.m. for residential units, RMB10,000 to RMB22,000 per sq.m. for retail units on the first floor. Appropriate adjustments and analysis are considered to the differences in location, size and other characters between the comparable properties and the property to arrive at an assumed unit rate for the property.

(b) In undertaking our valuation, we have made reference to sales prices of land within the locality which have the similar characters comparable to the property. The accommodation value of these comparable land sites ranges from RMB1,800 to RMB2,200 per sq.m. for residential use. Appropriate adjustments and analysis are considered to the differences in nature, use, site area, layout, accessibility and other characters between the comparable properties and the property to arrive at our assumed accommodation value.

10. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal adviser, which contains, inter alia, the following:

a. Ningxia Wanyue has legally obtained the land use rights of the property and entitled to occupy and use of the parcel of land, whilst the transfer and otherwise dispose of the parcel of land are subject to relevant mortgage contracts and relevant laws in the PRC;

b. Ningxia Wanyue has obtained the requisite approvals in respect of the actual development; and

c. Ningxia Wanyue has the right to pre-sell portion of the property based on the Pre-sale Permit mentioned in note 5.

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11. A summary of major certificates/approvals is shown as follows:

a. State-owned Land Use Rights Grant Contract Yes b. Real Estate Title Certificate (Land) Yes c. Construction Land Planning Permit Yes d. Construction Work Planning Permit Yes e. Construction Work Commencement Permit Yes f. Pre-sale Permit Yes g. Construction Work Completion and Inspection Certificate/Table/Report N/A h. Building Ownership Certificate/Real Estate Title Certificate (Building) N/A

12. For the purpose of this report, the property is classified into the group as “Group II—held under development by the Group in the PRC” according to the purpose for which it is held.

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VALUATION CERTIFICATE

Market value in Particulars of existing state as at No. Property Description and tenure occupancy the valuation date RMB

29. Vanke—Metropolis Vanke—Metropolis is located at As at the valuation 708,000,000 located at the the Eastern side of Zhengyuan date, the property was Eastern side of South Street, Western side of under construction. 28% interest Zhengyuan Taqu Street Jinfeng District. The attributable to South Street, locality of the project is well the Group: Western side of served by public transportation RMB198,240,000 Taqu Street Jinfeng and facilities. District Yinchuan City Ningxia Hui The property comprises a parcel Autonomous of land with a site area of Region approximately 95,936.14 sq.m., The PRC which will be developed into a (萬科 • 大都會) residential development with a total gross floor area of approximately 254,894.92 sq.m. The property is scheduled to be completed in April 2023. Details of the areas of property are set out in note 6.

As advised by the Group, the construction cost (excluding land cost and financial cost) of the property is estimated to be approximately RMB1,213,100,000 of which approximately RMB279,000,000 had been incurred as at the valuation date.

The land use rights of the property have been granted for a term expiring on 21 January 2090 for residential use.

Notes:

1. Pursuant to a State-owned Land Use Rights Grant Contract —Yin Di Chan He Tong Rang Zi 2019-64, the land use rights of a parcel of land with a site area of approximately 95,936.14 sq.m. were contracted to be granted to Yinchuan Wanbo Zhongtai Real Estate Co., Ltd. (銀川萬博中泰房地產有限公司, “Yinchuan Wanbo”, a 審計 equity attributable 70%-owned subsidiary of the Company) for terms of 70 years for residential use commencing from the land delivery date. The land consideration was RMB309,190,000.

2. Pursuant to a Real Estate Title Certificate—Ning (2020) Jin Feng Qu Bu Dong Chan Quan Di No. 0006117, the land use rights of the aforesaid land parcel with a site area of approximately 95,936.14 sq.m. have been granted to Yinchuan Wanbo for a term expiring on 21 January 2090 for residential use.

3. Pursuant to a Construction Work Planning Permit-Yin Shen Fu Jian Zi Di (2020) No. 064 in favour of Yinchuan Wanbo, the property with a gross floor area of approximately 254,894.92 sq.m. has been approved for construction.

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4. Pursuant to 2 Construction Work Commencements Permits—640102202006120101 and 640102202006290101 in favour of Yinchuan Wanbo, permission by the relevant local authority was given to commence the construction of the property with a total gross floor area of approximately 254,894.92 sq.m.

5. Pursuant to 14 Pre-sale Permits in favour of Yinchuan Wanbo, the Group is entitled to sell portions of the property (representing a gross floor area of approximately 121,668.23 sq.m.) to purchasers.

6. According to the information provided by the Group, the gross floor area of the property is set out as below:

Nos. of car Usage Gross Floor Area parking space (sq.m.)

Residential 196,104.52 Retail 13,263.53 Ancillary 23,834.36 Car parking spaces 21,692.51 651

Total: 254,894.92 651

7. As advised by the Group, various residential units with a total gross floor area of approximately 104,275.08 sq.m. of the property have been pre-sold to various third parties at a consideration of RMB1,177,870,236 inclusive of value-added tax. Such portions of the property have not been legally and virtually transferred and therefore we have included the units in our valuation. In arriving at our opinion on the market value of the property, we have taken into account the contracted prices of such portions of the property.

9. Our valuation has been made on the following basis and analysis:

(a) In undertaking our valuation, we have identified and analyzed various relevant sales evidences in the locality which have similar characteristics as the subject property such as nature, use, size, layout and accessibility of the property. The unit price of these comparable properties ranges from RMB9,000 to RMB14,000 per sq.m. for residential units, RMB10,000 to RMB22,000 per sq.m. for commercial units on the first floor. Appropriate adjustments and analysis are considered to the differences in location, size and other characters between the comparable properties and the property to arrive at an assumed unit rate for the property.

(b) In undertaking our valuation, we have made reference to sales prices of land within the locality which have the similar characters comparable to the property. The accommodation value of these comparable land sites ranges from RMB1,800 to RMB2,000 per sq.m. for residential use. Appropriate adjustments and analysis are considered to the differences in nature, use, site area, layout, accessibility and other characters between the comparable properties and the property to arrive at our assumed accommodation value.

10. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal adviser, which contains, inter alia, the following:

(a) Yinchuan Wanbo has legally obtained the land use rights of the property and entitled to occupy and use of the parcel of land, whilst the transfer and otherwise dispose of the parcel of land are subject to relevant mortgage contracts and relevant laws in the PRC;

(b) Yinchuan Wanbo has obtained the requisite approvals in respect of the actual development; and

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11. A summary of major certificates/approvals is shown as follows:

a. State-owned Land Use Rights Grant Contract Yes b. State-owned Land Use Rights Certificate/Real Estate Title Certificate (Land) Yes c. Construction Land Planning Permit Yes d. Construction Work Planning Permit Yes e. Construction Work Commencement Permit Yes f. Pre-sale Permit Portion g. Construction Work Completion and Inspection Certificate/Table/Report N/A h. Building Ownership Certificate/Real Estate Title Certificate (Building) N/A

12. For the purpose of this report, the property is classified into the group as “Group II—held under development by the Group in the PRC” according to the purpose for which it is held.

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VALUATION CERTIFICATE

Market value in Particulars of existing state as at No. Property Description and tenure occupancy the valuation date RMB

30. Project Hua Yu Project Hua Yu Xuan is located As at the valuation 736,200,000 Xuan located at at Qinshui Avenue East, Harbin date, the property was Qinshui Avenue Road North, Jinfeng District, bare land. 100% interest East Harbin Road Yinchuan City. There are several attributable to North Jinfeng residential projects nearby, the Group: District Yinchuan however, public transports and RMB736,200,00 City Ningxia Hui supporting facilities are needed Autonomous to be future developed. Region The PRC The property occupies a parcel of (花語軒) land with a site area of approximately 95,149 sq.m. As advised by the Group, developing plan had not been commenced as at the valuation date.

The land use rights of the property have been granted for terms of 40 years for commercial service use and 70 years for residential use.

Notes:

1. Pursuant to a State-owned Land Use Rights Grant Contract—Yin Di Chan He Tong Rang Zi 2020 Nian No. 58, the land use rights with a site area of approximately 95,149 sq.m. were contracted to be granted to Ningxia Zhonghan Real Estate Co., Ltd. (寧夏中翰置業有限公司, “Ningxia Zhonghan”, a 100% owned subsidiary of the Company) for terms of 70 years for residential use and 40 years for commercial use commencing from the land delivery date. The land consideration was RMB71,098,000.

2. Pursuant to a Real Estate Title Certificate (Land)—Ning (2021) Jin Feng Qu Bu Dong Chan Quan Di No. 0009698, the land use rights of the aforesaid land parcel with a site area of approximately 95,149 sq.m. have been granted to Ningxia Zhonghan for terms expiring on 27 January 2091 for residential use and 27 January 2061 for commercial use.

3. In undertaking our valuation, we have made reference to sales prices of land within the locality which have the similar characteristics comparable to the property. The accommodation value of these comparable land sites ranges from RMB2,998 to RMB3,869 per sq.m. for residential use. Appropriate adjustments and analysis are considered to the differences in nature, use, site area, layout, accessibility and other characters between the comparable properties and the property to arrive at our assumed accommodation value.

4. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisors, which contains that Ningxia Zhonghan has legally obtained the land use rights of the property and entitled to occupy and use of the parcel of land, whilst the transfer and otherwise dispose of the parcel of land are subject to relevant mortgage contracts and relevant laws in the PRC.

5. A summary of major certificates/approvals is shown as follows:

a. State-owned Land Use Rights Grant Contract Yes b. Real Estate Title Certificate (Land) Yes c. Construction Land Planning Permit No d. Construction Work Planning Permit No

6. For the purpose of this report, the property is classified into the group as “Group III—held for future development by the Group in the PRC” according to the purpose for which it is held.

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VALUATION CERTIFICATE

Market value in Particulars of existing state as at No. Property Description and tenure occupancy the valuation date RMB

31. Kaiyuan Shopping Project Kaiyuan Shopping Mall As at the valuation 116,300,000 Mall located at is a 4 storey commercial date, the property was west of Zhongxing development located at west of rented to various 100% interest Road and south of Zhongxing Road and south of tenants for attributable to Xiping Street Xiping Street, Lingwu County. commercial purpose. the Group: Lingwu County There are several commercial RMB116,300,000 Yinchuan City projects nearby and public Ningxia Hui transports and supporting Autonomous facilities are well developed in Region this area. The PRC (銀川 • 開元商場) The property comprises the whole project with a gross floor area of approximately 20,654.04 sq.m. The classification, usage and gross floor area details of the property were set out in note 6.

The land use rights of the property have been granted for terms expiring on 25 November 2048 for commercial use.

Notes:

1. Pursuant to a State-owned Land Use Rights Certificates—Guo Yong (2009) No. 0329, the land use rights of the aforesaid land parcel with a site area of approximately 23,744.70 sq.m. have been granted to Ningxia Zhongfang Industrial Group Stock Co., Ltd. (寧夏中房實業集團股份有限公司, “Zhongfang Industrial”, a wholly-owned subsidiary of the Company) for terms expiring on 25 November 2048 for commercial use.

2. Pursuant to a Building Ownership Certificate—Ling Wu Shi Fang Quan Zheng Shi Qu Zi Di No. 00025958, the property with a total gross floor area of approximately 20,654.04 sq.m. are owned by “Zhongfang Industrial”.

3. Pursuant to 3 Tenancy Agreements, a portion of the property with a gross floor area of approximately 20,438.95 sq.m. was leased to 3 tenants for commercial purpose with the expiry date between 1 May 2023 to 1 July 2032. The annually rent receivable as at the valuation date was approximately RMB9,398,786.62, exclusive of management fee, water and electricity charges.

4. According to the information provided by the Group, the gross floor area of the property is set out as below:

Usage Gross Floor Area Level (sq.m.)

Commercial 20,654.04 Level 1-4

Total: 20,654.04

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5. Our valuation has been made on the following basis and analysis:

(a) in undertaking our valuation, we have considered the actual rents in the existing tenancy agreements and also compared with similar properties located in the same business circle and/or nearby within reasonable walking distance. We adopted market rent when calculating (1) the reversionary rental income after the expiry of the existing leases for occupied area, and (2) the rental income of vacant area;

(b) the unit rents of the comparable commercial units on the first floor range from RMB1.40 to RMB1.6 per sq.m. per day, appropriate adjustments and analysis are considered to the differences in location, size and other characters between the comparable properties and the property to arrive at the market rent; and

(c) based on our research on commercial market in the surrounding area of the property, for commercial portions, the stabilized market yield ranged from 6% to 7% as at the valuation date. Considering the location, risks and characteristics of the property, we have applied a market yield of 6.5% as the capitalization rate in the valuation.

6. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisors, which contains that Zhongfang Industrial has legally obtained the land use rights of the property and entitled to occupy and use of the parcel of land, whilst the transfer and otherwise dispose of the parcel of land are subject to relevant mortgage contracts and relevant laws in the PRC.

7. A summary of major certificates/approvals is shown as follows:

a. State-owned Land Use Rights Certificate Yes b. Building Ownership Certificate Yes

8. For the purpose of this report, the property is classified into the group as “Group IV—held for investment by the Group in the PRC” according to the purpose for which it is held.

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VALUATION CERTIFICATE

Market value in Particulars of existing state as at No. Property Description and tenure occupancy the valuation date RMB

32. Project Bei Shi Da Project Bei Shi Da is located at As at the valuation No Commercial Value located at South of South of Tuanjie Road, Jinfeng date, the property was Tuanjie Road District, Yinchuan City. There are bare land. Jinfeng District several residential and Yinchuan City commercial projects nearby and Ningxia Hui public transports and supporting Autonomous facilities are well developed in Region this area. The PRC (北師大) The property occupies 2 parcels of land with a total site area of approximately 115,808.58 sq.m. As advised by the Group, developing plan had not been commenced as at the valuation date.

The land use rights of the property have been granted for terms of 40 years for commercial service use and 70 years for residential use.

Notes:

1. Pursuant to 2 State-owned Land Use Rights Grant Contracts—Yin Di Chan He Tong Rang Zi 2020 Nian No. 48 and 49, the land use rights of 2 parcels of land with a total site area of approximately 115,808.58 sq.m. were contracted to be granted to Ningxia Wanzhong Jingming Real Estate Co., Ltd. (寧夏萬中景明房地產有限公司, “Ningxia Wanzhong”, a 40% owned subsidiary of the Company) for terms of 70 years for residential use and 40 years for commercial use commencing from the land delivery date. The land consideration was RMB1,449,672,000.

2. As at the valuation date, the bare land of the property had not been assigned to Ningxia Wanzhong and thus the title of the property had not been vested in Ningxia Wanzhong. Therefore, we have attributed no commercial value to the property. However, for reference purpose, we are of the opinion that the market value of the property as at the valuation date would be RMB1,279,600,000 assuming the relevant title certificates have been obtained by Ningxia Wanzhong and Ningxia Wanzhong is entitled to freely transfer the property.

3. In arriving at our valuation for reference as mentioned in note 2, we have made reference to sales prices of land within the locality which have the similar characteristics comparable to the property. The accommodation value of these comparable land sites ranges from RMB4,500 to RMB6,000 per sq.m. for residential use. Appropriate adjustments and analysis are considered to the differences in nature, use, site area, layout, accessibility and other characters between the comparable properties and the property to arrive at our assumed accommodation value.

4. A summary of major certificates/approvals is shown as follows:

a. State-owned Land Use Rights Grant Contract Yes b. Real Estate Title Certificate (Land) No

5. For the purpose of this report, the property is classified into the group as “Group III—held for future development by the Group in the PRC” according to the purpose for which it is held.

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VALUATION CERTIFICATE

Market value in Particulars of existing state as at No. Property Description and tenure occupancy the valuation date RMB

33. Unsold portions of Project Xining International One As at the valuation 35,500,000 Xining is an 18 storey residential and date, portions of the International One commercial complex property were leased 100% interest Nos. 18-2, development located at No. 18 to various tenants for attributable to 18-4 and 18-6, Kunlun Middle Road, Chengdong retail and office the Group: Building No. 1, District. The locality of the purposes. The RMB35,500,000 No. 18 Kunlun project is a mature residential remaining portion of Middle Road and commercial area. the property was used Chengdong by the Group. District The property comprises the Xining City unsold portions of Xining Qinghai Province International One with a total The PRC gross floor area of approximately (西寧國際壹號) 4,012.98 sq.m. The classification, usage and gross floor area details of the property were set out in note 4.

The land use rights of the property have been granted for a term expiring on 10 August 2046 for commercial and financial uses.

Notes:

1. Pursuant to a State-owned Land Use Rights Certificate—Ning Guo Yong (2013) Di No. GS-00470, the land use rights of a parcel of land with a site area of approximately 119.38 sq.m. have been granted to Ningxia Zhongfang Group Xining Real Estate Development Co., Ltd. (寧夏中房集團西寧房地產開發有限責任公司, “Zhongfang Xining”, a wholly-owned subsidiary of the Company) expiring on 10 August 2046 for commercial and financial uses.

2. Pursuant to a Building Ownership Certificate—Ning Fang Quan Zheng Cheng Dong Qu Zi Di No. 128726, the property with a gross floor area of approximately 4,012.98 sq.m. are owned by Zhongfang Xining.

3. Pursuant to 3 Tenancy Agreements, portions of the property with a total gross floor area of approximately 1,037.94 sq.m. were leased to various tenants for retail and office purposes with the expiry date between 9 October 2021 to 31 December 2023. The annually rent receivable as at the valuation date was approximately RMB710,000, exclusive of management fee, water and electricity charges.

4. According to the information provided by the Group, the gross floor area of the property is set out as below:

Gross Group Usage Floor Area Level (sq.m.)

Group V—held and occupied by the Group Retail 497.71 Level 1 Office 3,515.27 Level 2-5

Total: 4,012.98

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5. Our valuation has been made on the following basis and analysis:

(b) unit rents of the comparable properties are in the range of RMB4.1 to RMB5.1 per sq.m. per day for retail units on the first floor and RMB1.4 to RMB1.8 per sq.m. per day for office units, appropriate adjustments and analysis are considered to the differences in location, size and other characters between the comparable properties and the property to arrive at the market rent; and

(c) based on our research on commercial market in the surrounding area of the property, the stabilized market yield of similar retail and office properties is in the range of 5.0% to 6.5%. Considering the location, risks and characteristics of the property, we have applied a market yield of 6.0% for retail units and 5.5% for office units in the valuation.

6. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisors, which contains that Zhongfang Xining has legally obtained the land use rights of the property and entitled to occupy and use of the parcel of land, whilst the transfer and otherwise dispose of the parcel of land are subject to relevant mortgage contracts and relevant laws in the PRC.

7. A summary of major certificates/approvals is shown as follows:

a. State-owned Land Use Rights Certificate Yes b. Building Ownership Certificate Yes

8. For the purpose of this report, the property is classified into the group as “Group V—held and occupied by the Group in the PRC” according to the purpose for which it is held.

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VALUATION CERTIFICATE

Market value in Particulars of existing state as at No. Property Description and tenure occupancy the valuation date RMB

34. Golf Composite Golf Composite building is a 3 As at the valuation 7,900,000 building located at storey commercial complex date, the property was south of development located at south of rented to various 100% interest Composite, Composite, Minzu North Street. tenants for attributable to Minzu North Street There are several commercial commercial purpose. the Group: Xingqing District projects nearby and public RMB7,900,000 Yinchuan City transports and supporting Ningxia Hui facilities are well developed in Autonomous this area. Region The PRC The property comprises the (高爾夫綜合樓) whole project with a gross floor area of approximately 2,456.69 sq.m. The classification, usage and gross floor area details of the property were set out in note 4.

The land use rights of the property have been granted for terms expiring on 30 July 2044 for commercial use.

Notes:

1. Pursuant to 3 State-owned Land Use Rights Certificates—Yin Guo Yong (2014) Nos. 14258, 14259 and 14264, the land use rights of the aforesaid land parcel with a total site area of approximately 522.14 sq.m. have been granted to Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團股份有限公司, “Zhongfang Industrial”, a wholly-owned subsidiary of the Company) expiring on 30 July 2044 for commercial use.

2. Pursuant to 4 Building Ownership Certificate—Fang Quan Zheng Xing Qing Qu Zi Di Nos. 2011060261, 2011060262, 2011060263 and 2011060266, the property with a total gross floor area of approximately 2,456.69 sq.m. are owned by Zhongfang Industrial.

3. Pursuant to 2 Tenancy Agreements, a portion of the property with a gross floor area of approximately 2,342.38 sq.m. was leased to 2 tenants for commercial purpose with the expiry date between 14 August 2021 to 30 June 2026. The annually rent receivable as at the valuation date was approximately RMB106,854, exclusive of management fee, water and electricity charges.

4. According to the information provided by the Group, the gross floor area of the property is set out as below:

Gross Group Usage Floor Area Level (sq.m.)

Group V—held for investment by the Group Retail 356.18 Level 1 Office 2,100.51 Level 2-3

Total: 2,456.69

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5. Our valuation has been made on the following basis and analysis:

(b) the unit rents of the comparable commercial units are in the range from RMB0.83 to RMB0.96 per sq.m. per day for retail units on the first floor and RMB0.30 to RMB0.40 per sq.m. per day for office units, appropriate adjustments and analysis are considered to the differences in location, size and other characters between the comparable properties and the property to arrive at the market rent; and

7. A summary of major certificates/approvals is shown as follows:

a. State-owned Land Use Rights Certificate Yes b. Building Ownership Certificate Yes

8. For the purpose of this report, the property is classified into the group as “Group V—held and occupied by the Group in the PRC” according to the purpose for which it is held.

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VALUATION CERTIFICATE

Market value in Particulars of existing state as at No. Property Description and tenure occupancy the valuation date RMB

35. Headquarter Headquarter Building is a 11 As at the valuation 35,600,000 Building located at storey commercial complex date, the property was No. 1 Shanghai development located at No. 1 rented to various 100% interest West Road Shanghai West Road. There are tenants for office and attributable to Xingqing District several office projects nearby and warehouse purpose. the Group: Yinchuan City public transports and supporting RMB35,600,000 Ningxia Hui facilities are well developed in Autonomous this area. Region The PRC The property comprises the (總部大廈) whole project with a gross floor area of approximately 8,733.96 sq.m. The classification, usage and gross floor area details of the property were set out in note 4.

The land use rights of the property have been granted for terms expiring on 26 December 2038 for commercial use.

Notes:

1. Pursuant to a State-owned Land Use Rights Certificate—Yin Guo Yong (2011) No. 60326, the land use rights of the aforesaid land parcel with a site area of approximately 3,782.66 sq.m. have been granted to Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團股份有限公司, “Zhongfang Industrial”, a wholly- owned subsidiary of the Company) expiring on 26 December 2038 for commercial use.

2. Pursuant to 2 Building Ownership Certificates—Fang Quan Zheng Xing Qing Qu Zi Di Nos. 2011060254 and 2011060441, the property with a total gross floor area of approximately 8,733.96 are owned by Zhongfang Industrial.

3. Pursuant to a Tenancy Agreements, a portion of the property with a gross floor area of approximately 234.95 sq.m. was leased to a tenant for office purpose with the expiry date on 31 December 2022. The annually rent receivable as at the valuation date was approximately RMB104,316, exclusive of management fee, water and electricity charges.

4. According to the information provided by the Group, the gross floor area of the property is set out as below:

Usage Gross Floor Area Level (sq.m.)

Office 7,920.22 Level 1-10 Warehouse 813.74 Level 1

Total: 8,733.960

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5. Our valuation has been made on the following basis and analysis:

a. in undertaking our valuation, we have considered the actual rents in the existing tenancy agreements and also compared with similar properties located in the same business circle and/or nearby within reasonable walking distance. We adopted market rent when calculating (1) the reversionary rental income after the expiry of the existing leases for occupied area, and (2) the rental income of vacant area;

b. unit rents of the comparable properties are in the range from RMB1.0 to RMB1.26 per sq.m. per day for office units and RMB0.31 to RMB0.44 per sq.m. per day for warehouse units, appropriate adjustments and analysis are considered to the differences in location, size and other characters between the comparable properties and the property to arrive at the market rent; and

c. based on our research on office market in the surrounding area of the property, for commercial portions, the stabilized market yield ranged from 6% to 7% as at the valuation date. Considering the location, risks and characteristics of the property, we have applied a market yield of 6.5% as the capitalization rate in the valuation.

7. A summary of major certificates/approvals is shown as follows:

a. State-owned Land Use Rights Certificate Yes b. Building Ownership Certificate Yes

8. For the purpose of this report, the property is classified into the group as “Group V—held and occupied by the Group in the PRC” according to the purpose for which it is held.

– III-105 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX IV SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANY LAW

Set out below is a summary of certain provisions of the Memorandum and Articles of Association of the Company and of certain aspects of Cayman company law.

The Company was incorporated in the Cayman Islands as an exempted company with limited liability on November 5, 2020 under the Companies Act, Cap. 22 (Act 3 of 1961, as consolidated and revised) of the Cayman Islands (the “Companies Act”). The Company’s constitutional documents consist of its Memorandum of Association (the “Memorandum”) and its Articles of Association (the “Articles”).

1. MEMORANDUM OF ASSOCIATION

(a) The Memorandum states, inter alia, that the liability of members of the Company is limited to the amount, if any, for the time being unpaid on the shares respectively held by them and that the objects for which the Company is established are unrestricted (including acting as an investment company), and that the Company shall have and be capable of exercising all the functions of a natural person of full capacity irrespective of any question of corporate benefit, as provided in section 27(2) of the Companies Act and in view of the fact that the Company is an exempted company that the Company will not trade in the Cayman Islands with any person, firm or corporation except in furtherance of the business of the Company carried on outside the Cayman Islands.

(b) The Company may by special resolution alter its Memorandum with respect to any objects, powers or other matters specified therein.

2. ARTICLES OF ASSOCIATION

The Articles were conditionally adopted on [●] with effect from the [REDACTED]. The following is a summary of certain provisions of the Articles:

(a) Shares

(i) Classes of shares

The share capital of the Company consists of ordinary shares.

(ii) Variation of rights of existing shares or classes of shares

Subject to the Companies Act, if at any time the share capital of the Company is divided into different classes of shares, all or any of the special rights attached to the shares or any class of shares may (unless otherwise provided for by the terms of issue of that class) be varied, modified or abrogated either with the consent in writing of the holders of not less than three-fourths in nominal value of the issued shares of that class or with the sanction of a special resolution passed at a separate general meeting of the holders of the shares of that class. To every such separate general meeting the provisions

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of the Articles relating to general meetings will mutatis mutandis apply, but so that the necessary quorum (other than at an adjourned meeting) shall be two persons holding or representing by proxy not less than one-third in nominal value of the issued shares of that class and at any adjourned meeting two holders present in person or by proxy (whatever the number of shares held by them) shall be a quorum. Every holder of shares of the class shall be entitled to one vote for every such share held by him.

Any special rights conferred upon the holders of any shares or class of shares shall not, unless otherwise expressly provided in the rights attaching to the terms of issue of such shares, be deemed to be varied by the creation or issue of further shares ranking pari passu therewith.

(iii) Alteration of capital

The Company may by ordinary resolution of its members:

(i) increase its share capital by the creation of new shares;

(ii) consolidate all or any of its capital into shares of larger amount than its existing shares;

(iii) divide its shares into several classes and attach to such shares any preferential, deferred, qualified or special rights, privileges, conditions or restrictions as the Company in general meeting or as the directors may determine;

(iv) subdivide its shares or any of them into shares of smaller amount than is fixed by the Memorandum; or

(v) cancel any shares which, at the date of passing of the resolution, have not been taken and diminish the amount of its capital by the amount of the shares so cancelled.

The Company may reduce its share capital or any capital redemption reserve or other undistributable reserve in any way by special resolution.

(iv) Transfer of shares

All transfers of shares may be effected by an instrument of transfer in the usual or common form or in a form prescribed by The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) or in such other form as the board may approve and which may be under hand or, if the transferor or transferee is a clearing house or its nominee(s), by hand or by machine imprinted signature or by such other manner of execution as the board may approve from time to time.

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Notwithstanding the foregoing, for so long as any shares are listed on the Stock Exchange, titles to such listed shares may be evidenced and transferred in accordance with the laws applicable to and the rules and regulations of the Stock Exchange that are or shall be applicable to such listed shares. The register of members in respect of its listed shares (whether the principal register or a branch register) may be kept by recording the particulars required by Section 40 of the Companies Act in a form otherwise than legible if such recording otherwise complies with the laws applicable to and the rules and regulations of the Stock Exchange that are or shall be applicable to such listed shares.

The instrument of transfer shall be executed by or on behalf of the transferor and the transferee provided that the board may dispense with the execution of the instrument of transfer by the transferee. The transferor shall be deemed to remain the holder of the share until the name of the transferee is entered in the register of members in respect of that share.

The board may, in its absolute discretion, at any time transfer any share upon the principal register to any branch register or any share on any branch register to the principal register or any other branch register.

The board may decline to recognise any instrument of transfer unless a fee (not exceeding the maximum sum as the Stock Exchange may determine to be payable) determined by the Directors is paid to the Company, the instrument of transfer is properly stamped (if applicable), it is in respect of only one class of share and is lodged at the relevant registration office or registered office or such other place at which the principal register is kept accompanied by the relevant share certificate(s) and such other evidence as the board may reasonably require to show the right of the transferor to make the transfer (and if the instrument of transfer is executed by some other person on his behalf, the authority of that person so to do).

The registration of transfers may be suspended and the register closed on giving notice by advertisement in any newspaper or by any other means in accordance with the requirements of the Stock Exchange, at such times and for such periods as the board may determine. The register of members must not be closed for periods exceeding in the whole thirty (30) days in any year.

Subject to the above, fully paid shares are free from any restriction on transfer and free of all liens in favour of the Company.

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(v) Power of the Company to purchase its own shares

The Company is empowered by the Companies Act and the Articles to purchase its own shares subject to certain restrictions and the board may only exercise this power on behalf of the Company subject to any applicable requirements imposed from time to time by the Stock Exchange.

Where the Company purchases for redemption a redeemable share, purchases not made through the market or by tender must be limited to a maximum price determined by the Company in general meeting. If purchases are by tender, tenders must be made available to all members alike.

The board may accept the surrender for no consideration of any fully paid share.

(vi) Power of any subsidiary of the Company to own shares in the Company

There are no provisions in the Articles relating to ownership of shares in the Company by a subsidiary.

(vii) Calls on shares and forfeiture of shares

The board may from time to time make such calls upon the members in respect of any monies unpaid on the shares held by them respectively (whether on account of the nominal value of the shares or by way of premium). A call may be made payable either in one lump sum or by installments. If the sum payable in respect of any call or instalment is not paid on or before the day appointed for payment thereof, the person or persons from whom the sum is due shall pay interest on the same at such rate not exceeding twenty per cent. (20%) per annum as the board may agree to accept from the day appointed for the payment thereof to the time of actual payment, but the board may waive payment of such interest wholly or in part. The board may, if it thinks fit, receive from any member willing to advance the same, either in money or money’s worth, all or any part of the monies uncalled and unpaid or installments payable upon any shares held by him, and upon all or any of the monies so advanced the Company may pay interest at such rate (if any) as the board may decide.

If a member fails to pay any call on the day appointed for payment thereof, the board may serve not less than fourteen (14) clear days’ notice on him requiring payment of so much of the call as is unpaid, together with any interest which may have accrued and which may still accrue up to the date of actual payment and stating that, in the event of non-payment at or before the time appointed, the shares in respect of which the call was made will be liable to be forfeited.

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If the requirements of any such notice are not complied with, any share in respect of which the notice has been given may at any time thereafter, before the payment required by the notice has been made, be forfeited by a resolution of the board to that effect. Such forfeiture will include all dividends and bonuses declared in respect of the forfeited share and not actually paid before the forfeiture.

A person whose shares have been forfeited shall cease to be a member in respect of the forfeited shares but shall, notwithstanding, remain liable to pay to the Company all monies which, at the date of forfeiture, were payable by him to the Company in respect of the shares, together with (if the board shall in its discretion so require) interest thereon from the date of forfeiture until the date of actual payment at such rate not exceeding twenty per cent. (20%) per annum as the board determines.

(b) Directors

(i) Appointment, retirement and removal

At each annual general meeting, one third of the Directors for the time being (or if their number is not a multiple of three, then the number nearest to but not less than one third) shall retire from office by rotation provided that every Director shall be subject to retirement at an annual general meeting at least once every three years. The Directors to retire by rotation shall include any Director who wishes to retire and not offer himself for re-election. Any further Directors so to retire shall be those who have been longest in office since their last re-election or appointment but as between persons who became or were last re-elected Directors on the same day those to retire will (unless they otherwise agree among themselves) be determined by lot.

Neither a Director nor an alternate Director is required to hold any shares in the Company by way of qualification. Further, there are no provisions in the Articles relating to retirement of Directors upon reaching any age limit.

The Directors have the power to appoint any person as a Director either to fill a casual vacancy on the board or as an addition to the existing board. Any Director appointed to fill a casual vacancy shall hold office until the first general meeting of members after his appointment and be subject to re-election at such meeting and any Director appointed as an addition to the existing board shall hold office only until the next following annual general meeting of the Company and shall then be eligible for re-election.

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A Director may be removed by an ordinary resolution of the Company before the expiration of his period of office (but without prejudice to any claim which such Director may have for damages for any breach of any contract between him and the Company) and members of the Company may by ordinary resolution appoint another in his place. Unless otherwise determined by the Company in general meeting, the number of Directors shall not be less than two. There is no maximum number of Directors.

The office of director shall be vacated if:

(aa) he resigns by notice in writing delivered to the Company;

(bb) he becomes of unsound mind or dies;

(cc) without special leave, he is absent from meetings of the board for six (6) consecutive months, and the board resolves that his office is vacated;

(dd) he becomes bankrupt or has a receiving order made against him or suspends payment or compounds with his creditors;

(ee) he is prohibited from being a director by law; or

(ff) he ceases to be a director by virtue of any provision of law or is removed from office pursuant to the Articles.

The board may appoint one or more of its body to be managing director, joint managing director, or deputy managing director or to hold any other employment or executive office with the Company for such period and upon such terms as the board may determine and the board may revoke or terminate any of such appointments. The board may delegate any of its powers, authorities and discretions to committees consisting of such Director or Directors and other persons as the board thinks fit, and it may from time to time revoke such delegation or revoke the appointment of and discharge any such committees either wholly or in part, and either as to persons or purposes, but every committee so formed must, in the exercise of the powers, authorities and discretions so delegated, conform to any regulations that may from time to time be imposed upon it by the board.

(ii) Power to allot and issue shares and warrants

Subject to the provisions of the Companies Act and the Memorandum and Articles and to any special rights conferred on the holders of any shares or class of shares, any share may be issued (a) with or have attached thereto such rights, or such restrictions, whether with regard to dividend, voting, return of capital, or otherwise, as the Directors may determine, or (b) on terms that, at the option of the Company or the holder thereof, it is liable to be redeemed.

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The board may issue warrants or convertible securities or securities of similar nature conferring the right upon the holders thereof to subscribe for any class of shares or securities in the capital of the Company on such terms as it may determine.

Subject to the provisions of the Companies Act and the Articles and, where applicable, the rules of the Stock Exchange and without prejudice to any special rights or restrictions for the time being attached to any shares or any class of shares, all unissued shares in the Company are at the disposal of the board, which may offer, allot, grant options over or otherwise dispose of them to such persons, at such times, for such consideration and on such terms and conditions as it in its absolute discretion thinks fit, but so that no shares shall be issued at a discount to their nominal value.

Neither the Company nor the board is obliged, when making or granting any allotment of, offer of, option over or disposal of shares, to make, or make available, any such allotment, offer, option or shares to members or others with registered addresses in any particular territory or territories being a territory or territories where, in the absence of a registration statement or other special formalities, this would or might, in the opinion of the board, be unlawful or impracticable. Members affected as a result of the foregoing sentence shall not be, or be deemed to be, a separate class of members for any purpose whatsoever.

(iii) Power to dispose of the assets of the Company or any of its subsidiaries

There are no specific provisions in the Articles relating to the disposal of the assets of the Company or any of its subsidiaries. The Directors may, however, exercise all powers and do all acts and things which may be exercised or done or approved by the Company and which are not required by the Articles or the Companies Act to be exercised or done by the Company in general meeting.

(iv) Borrowing powers

The board may exercise all the powers of the Company to raise or borrow money, to mortgage or charge all or any part of the undertaking, property and assets and uncalled capital of the Company and, subject to the Companies Act, to issue debentures, bonds and other securities of the Company, whether outright or as collateral security for any debt, liability or obligation of the Company or of any third party.

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(v) Remuneration

The ordinary remuneration of the Directors is to be determined by the Company in general meeting, such sum (unless otherwise directed by the resolution by which it is voted) to be divided amongst the Directors in such proportions and in such manner as the board may agree or, failing agreement, equally, except that any Director holding office for part only of the period in respect of which the remuneration is payable shall only rank in such division in proportion to the time during such period for which he held office. The Directors are also entitled to be prepaid or repaid all travelling, hotel and incidental expenses reasonably expected to be incurred or incurred by them in attending any board meetings, committee meetings or general meetings or separate meetings of any class of shares or of debentures of the Company or otherwise in connection with the discharge of their duties as Directors.

Any Director who, by request, goes or resides abroad for any purpose of the Company or who performs services which in the opinion of the board go beyond the ordinary duties of a Director may be paid such extra remuneration as the board may determine and such extra remuneration shall be in addition to or in substitution for any ordinary remuneration as a Director. An executive Director appointed to be a managing director, joint managing director, deputy managing director or other executive officer shall receive such remuneration and such other benefits and allowances as the board may from time to time decide. Such remuneration may be either in addition to or in lieu of his remuneration as a Director.

The board may establish or concur or join with other companies (being subsidiary companies of the Company or companies with which it is associated in business) in establishing and making contributions out of the Company’s monies to any schemes or funds for providing pensions, sickness or compassionate allowances, life assurance or other benefits for employees (which expression as used in this and the following paragraph shall include any Director or past Director who may hold or have held any executive office or any office of profit with the Company or any of its subsidiaries) and ex-employees of the Company and their dependents or any class or classes of such persons.

The board may pay, enter into agreements to pay or make grants of revocable or irrevocable, and either subject or not subject to any terms or conditions, pensions or other benefits to employees and ex-employees and their dependents, or to any of such persons, including pensions or benefits additional to those, if any, to which such employees or ex-employees or their dependents are or may become entitled under any such scheme or fund as is mentioned in the previous paragraph. Any such pension or benefit may, as the board considers desirable, be granted to an employee either before and in anticipation of, or upon or at any time after, his actual retirement.

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The board may resolve to capitalise all or any part of any amount for the time being standing to the credit of any reserve or fund (including a share premium account and the profit and loss account) whether or not the same is available for distribution by applying such sum in paying up unissued shares to be allotted to (i) employees (including directors) of the Company and/or its affiliates (meaning any individual, corporation, partnership, association, joint-stock company, trust, unincorporated association or other entity (other than the Company) that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with, the Company) upon exercise or vesting of any options or awards granted under any share incentive scheme or employee benefit scheme or other arrangement which relates to such persons that has been adopted or approved by the members in general meeting, or (ii) any trustee of any trust to whom shares are to be allotted and issued by the Company in connection with the operation of any share incentive scheme or employee benefit scheme or other arrangement which relates to such persons that has been adopted or approved by the members in general meeting.

(vi) Compensation or payments for loss of office

Pursuant to the Articles, payments to any Director or past Director of any sum by way of compensation for loss of office or as consideration for or in connection with his retirement from office (not being a payment to which the Director is contractually entitled) must be approved by the Company in general meeting.

(vii) Loans and provision of security for loans to Directors

The Company must not make any loan, directly or indirectly, to a Director or his close associate(s) if and to the extent it would be prohibited by the Companies Ordinance (Chapter 622 of the laws of Hong Kong) as if the Company were a company incorporated in Hong Kong.

(viii) Disclosure of interests in contracts with the Company or any of its subsidiaries

A Director may hold any other office or place of profit with the Company (except that of the auditor of the Company) in conjunction with his office of Director for such period and upon such terms as the board may determine, and may be paid such extra remuneration therefor in addition to any remuneration provided for by or pursuant to the Articles. A Director may be or become a director or other officer of, or otherwise interested in, any company promoted by the Company or any other company in which the Company may be interested, and shall not be liable to account to the Company or the members for any remuneration, profits or other benefits received by him as a director, officer or member of, or from his interest in, such other company. The board may also cause the voting power conferred by the shares in any other company held or owned by the Company to be exercised in such manner in all respects as it thinks fit, including the exercise thereof in favour of any resolution appointing the Directors or any of them to be directors or officers of such other company, or voting or providing for the payment of remuneration to the directors or officers of such other company.

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No Director or proposed or intended Director shall be disqualified by his office from contracting with the Company, either with regard to his tenure of any office or place of profit or as vendor, purchaser or in any other manner whatsoever, nor shall any such contract or any other contract or arrangement in which any Director is in any way interested be liable to be avoided, nor shall any Director so contracting or being so interested be liable to account to the Company or the members for any remuneration, profit or other benefits realised by any such contract or arrangement by reason of such Director holding that office or the fiduciary relationship thereby established. A Director who to his knowledge is in any way, whether directly or indirectly, interested in a contract or arrangement or proposed contract or arrangement with the Company must declare the nature of his interest at the meeting of the board at which the question of entering into the contract or arrangement is first taken into consideration, if he knows his interest then exists, or in any other case, at the first meeting of the board after he knows that he is or has become so interested.

A Director shall not vote (nor be counted in the quorum) on any resolution of the board approving any contract or arrangement or other proposal in which he or any of his close associates is materially interested, but this prohibition does not apply to any of the following matters, namely:

(aa) any contract or arrangement for giving to such Director or his close associate(s) any security or indemnity in respect of money lent by him or any of his close associates or obligations incurred or undertaken by him or any of his close associates at the request of or for the benefit of the Company or any of its subsidiaries;

(bb) any contract or arrangement for the giving of any security or indemnity to a third party in respect of a debt or obligation of the Company or any of its subsidiaries for which the Director or his close associate(s) has himself/themselves assumed responsibility in whole or in part whether alone or jointly under a guarantee or indemnity or by the giving of security;

(cc) any contract or arrangement concerning an offer of shares or debentures or other securities of or by the Company or any other company which the Company may promote or be interested in for subscription or purchase, where the Director or his close associate(s) is/are or is/are to be interested as a participant in the underwriting or sub-underwriting of the offer;

(dd) any contract or arrangement in which the Director or his close associate(s) is/are interested in the same manner as other holders of shares or debentures or other securities of the Company by virtue only of his/their interest in shares or debentures or other securities of the Company; or

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(ee) any proposal or arrangement concerning the adoption, modification or operation of a share option scheme, a pension fund or retirement, death, or disability benefits scheme or other arrangement which relates both to Directors, his close associates and employees of the Company or of any of its subsidiaries and does not provide in respect of any Director, or his close associate(s), as such any privilege or advantage not accorded generally to the class of persons to which such scheme or fund relates.

The board may meet for the despatch of business, adjourn and otherwise regulate its meetings as it considers appropriate. Questions arising at any meeting shall be determined by a majority of votes. In the case of an equality of votes, the chairman of the meeting shall have an additional or casting vote.

(d) Alterations to constitutional documents and the Company’s name

The Articles may be rescinded, altered or amended by the Company in general meeting by special resolution. The Articles state that a special resolution shall be required to alter the provisions of the Memorandum, to amend the Articles or to change the name of the Company.

(e) Meetings of members

(i) Special and ordinary resolutions

A special resolution of the Company must be passed by a majority of not less than three-fourths of the votes cast by such members as, being entitled so to do, vote in person or, in the case of such members as are corporations, by their duly authorised representatives or, where proxies are allowed, by proxy at a general meeting of which notice has been duly given in accordance with the Articles.

Under the Companies Act, a copy of any special resolution must be forwarded to the Registrar of Companies in the Cayman Islands within fifteen (15) days of being passed.

An ordinary resolution is defined in the Articles to mean a resolution passed by a simple majority of the votes of such members of the Company as, being entitled to do so, vote in person or, in the case of corporations, by their duly authorised representatives or, where proxies are allowed, by proxy at a general meeting of which notice has been duly given in accordance with the Articles.

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(ii) Voting rights and right to demand a poll

Subject to any special rights or restrictions as to voting for the time being attached to any shares, at any general meeting on a poll every member present in person or by proxy or, in the case of a member being a corporation, by its duly authorised representative shall have one vote for every fully paid share of which he is the holder but so that no amount paid up or credited as paid up on a share in advance of calls or installments is treated for the foregoing purposes as paid up on the share. A member entitled to more than one vote need not use all his votes or cast all the votes he uses in the same way.

At any general meeting a resolution put to the vote of the meeting is to be decided by way of a poll save that the chairman of the meeting may in good faith, allow a resolution which relates purely to a procedural or administrative matter to be voted on by a show of hands in which case every member present in person (or being a corporation, is present by a duly authorized representative), or by proxy(ies) shall have one vote provided that where more than one proxy is appointed by a member which is a clearing house (or its nominee(s)), each such proxy shall have one vote on a show of hands.

If a recognised clearing house (or its nominee(s)) is a member of the Company it may authorise such person or persons as it thinks fit to act as its representative(s) at any meeting of the Company or at any meeting of any class of members of the Company provided that, if more than one person is so authorised, the authorisation shall specify the number and class of shares in respect of which each such person is so authorised. A person authorised pursuant to this provision shall be deemed to have been duly authorised without further evidence of the facts and be entitled to exercise the same powers on behalf of the recognised clearing house (or its nominee(s)) as if such person was the registered holder of the shares of the Company held by that clearing house (or its nominee(s)) including, where a show of hands is allowed, the right to vote individually on a show of hands.

Where the Company has any knowledge that any shareholder is, under the rules of the Stock Exchange, required to abstain from voting on any particular resolution of the Company or restricted to voting only for or only against any particular resolution of the Company, any votes cast by or on behalf of such shareholder in contravention of such requirement or restriction shall not be counted.

(iii) Annual general meetings and extraordinary general meetings

The Company must hold an annual general meeting of the Company every year within a period of not more than fifteen (15) months after the holding of the last preceding annual general meeting or a period of not more than eighteen (18) months from the date of adoption of the Articles, unless a longer period would not infringe the rules of the Stock Exchange.

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Extraordinary general meetings may be convened on the requisition of one or more shareholders holding, at the date of deposit of the requisition, not less than one-tenth of the paid up capital of the Company having the right of voting at general meetings. Such requisition shall be made in writing to the board or the secretary for the purpose of requiring an extraordinary general meeting to be called by the board for the transaction of any business specified in such requisition. Such meeting shall be held within 2 months after the deposit of such requisition. If within 21 days of such deposit, the board fails to proceed to convene such meeting, the requisitionist(s) himself/herself (themselves) may do so in the same manner, and all reasonable expenses incurred by the requisitionist(s) as a result of the failure of the board shall be reimbursed to the requisitionist(s) by the Company.

(iv) Notices of meetings and business to be conducted

An annual general meeting must be called by notice of not less than twenty-one (21) clear days and not less than twenty (20) clear business days. All other general meetings must be called by notice of at least fourteen (14) clear days and not less than ten (10) clear business days. The notice is exclusive of the day on which it is served or deemed to be served and of the day for which it is given, and must specify the time and place of the meeting and particulars of resolutions to be considered at the meeting and, in the case of special business, the general nature of that business.

In addition, notice of every general meeting must be given to all members of the Company other than to such members as, under the provisions of the Articles or the terms of issue of the shares they hold, are not entitled to receive such notices from the Company, and also to, among others, the auditors for the time being of the Company.

Any notice to be given to or by any person pursuant to the Articles may be served on or delivered to any member of the Company personally, by post to such member’s registered address or by advertisement in newspapers in accordance with the requirements of the Stock Exchange. Subject to compliance with Cayman Islands law and the rules of the Stock Exchange, notice may also be served or delivered by the Company to any member by electronic means.

All business that is transacted at an extraordinary general meeting and at an annual general meeting is deemed special, save that in the case of an annual general meeting, each of the following business is deemed an ordinary business:

(aa) the declaration and sanctioning of dividends;

(bb) the consideration and adoption of the accounts and balance sheet and the reports of the directors and the auditors;

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(cc) the election of directors in place of those retiring;

(dd) the appointment of auditors and other officers; and

(ee) the fixing of the remuneration of the directors and of the auditors.

(v) Quorum for meetings and separate class meetings

No business shall be transacted at any general meeting unless a quorum is present when the meeting proceeds to business, but the absence of a quorum shall not preclude the appointment of a chairman.

The quorum for a general meeting shall be two members present in person (or, in the case of a member being a corporation, by its duly authorised representative) or by proxy and entitled to vote. In respect of a separate class meeting (other than an adjourned meeting) convened to sanction the modification of class rights the necessary quorum shall be two persons holding or representing by proxy not less than one-third in nominal value of the issued shares of that class.

(vi) Proxies

Any member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint another person as his proxy to attend and vote instead of him. A member who is the holder of two or more shares may appoint more than one proxy to represent him and vote on his behalf at a general meeting of the Company or at a class meeting. A proxy need not be a member of the Company and is entitled to exercise the same powers on behalf of a member who is an individual and for whom he acts as proxy as such member could exercise. In addition, a proxy is entitled to exercise the same powers on behalf of a member which is a corporation and for which he acts as proxy as such member could exercise as if it were an individual member. Votes may be given either personally (or, in the case of a member being a corporation, by its duly authorised representative) or by proxy.

(f) Accounts and audit

The board shall cause true accounts to be kept of the sums of money received and expended by the Company, and the matters in respect of which such receipt and expenditure take place, and of the property, assets, credits and liabilities of the Company and of all other matters required by the Companies Act or necessary to give a true and fair view of the Company’s affairs and to explain its transactions.

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The accounting records must be kept at the registered office or at such other place or places as the board decides and shall always be open to inspection by any Director. No member (other than a Director) shall have any right to inspect any accounting record or book or document of the Company except as conferred by law or authorised by the board or the Company in general meeting. However, an exempted company must make available at its registered office in electronic form or any other medium, copies of its books of account or parts thereof as may be required of it upon service of an order or notice by the Tax Information Authority pursuant to the Tax Information Authority Act of the Cayman Islands.

A copy of every balance sheet and profit and loss account (including every document required by law to be annexed thereto) which is to be laid before the Company at its general meeting, together with a printed copy of the Directors’ report and a copy of the auditors’ report, shall not less than twenty-one (21) days before the date of the meeting and at the same time as the notice of annual general meeting be sent to every person entitled to receive notices of general meetings of the Company under the provisions of the Articles; however, subject to compliance with all applicable laws, including the rules of the Stock Exchange, the Company may send to such persons summarised financial statements derived from the Company’s annual accounts and the directors’ report instead provided that any such person may by notice in writing served on the Company, demand that the Company sends to him, in addition to summarised financial statements, a complete printed copy of the Company’s annual financial statement and the directors’ report thereon.

At the annual general meeting or at a subsequent extraordinary general meeting in each year, the members shall appoint an auditor to audit the accounts of the Company and such auditor shall hold office until the next annual general meeting. Moreover, the members may, at any general meeting, by special resolution remove the auditor at any time before the expiration of his terms of office and shall by ordinary resolution at that meeting appoint another auditor for the remainder of his term. The remuneration of the auditors shall be fixed by the Company in general meeting or in such manner as the members may determine.

The financial statements of the Company shall be audited by the auditor in accordance with generally accepted auditing standards which may be those of a country or jurisdiction other than the Cayman Islands. The auditor shall make a written report thereon in accordance with generally accepted auditing standards and the report of the auditor must be submitted to the members in general meeting.

(g) Dividends and other methods of distribution

The Company in general meeting may declare dividends in any currency to be paid to the members but no dividend shall be declared in excess of the amount recommended by the board.

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The Articles provide dividends may be declared and paid out of the profits of the Company, realised or unrealised, or from any reserve set aside from profits which the directors determine is no longer needed. With the sanction of an ordinary resolution dividends may also be declared and paid out of share premium account or any other fund or account which can be authorised for this purpose in accordance with the Companies Act.

Except in so far as the rights attaching to, or the terms of issue of, any share may otherwise provide, (i) all dividends shall be declared and paid according to the amounts paid up on the shares in respect whereof the dividend is paid but no amount paid up on a share in advance of calls shall for this purpose be treated as paid up on the share and (ii) all dividends shall be apportioned and paid pro rata according to the amount paid up on the shares during any portion or portions of the period in respect of which the dividend is paid. The Directors may deduct from any dividend or other monies payable to any member or in respect of any shares all sums of money (if any) presently payable by him to the Company on account of calls or otherwise.

Whenever the board or the Company in general meeting has resolved that a dividend be paid or declared on the share capital of the Company, the board may further resolve either (a) that such dividend be satisfied wholly or in part in the form of an allotment of shares credited as fully paid up, provided that the shareholders entitled thereto will be entitled to elect to receive such dividend (or part thereof) in cash in lieu of such allotment, or (b) that shareholders entitled to such dividend will be entitled to elect to receive an allotment of shares credited as fully paid up in lieu of the whole or such part of the dividend as the board may think fit.

The Company may also upon the recommendation of the board by an ordinary resolution resolve in respect of any one particular dividend of the Company that it may be satisfied wholly in the form of an allotment of shares credited as fully paid up without offering any right to shareholders to elect to receive such dividend in cash in lieu of such allotment.

Any dividend, interest or other sum payable in cash to the holder of shares may be paid by cheque or warrant sent through the post addressed to the holder at his registered address, or in the case of joint holders, addressed to the holder whose name stands first in the register of the Company in respect of the shares at his address as appearing in the register or addressed to such person and at such addresses as the holder or joint holders may in writing direct. Every such cheque or warrant shall, unless the holder or joint holders otherwise direct, be made payable to the order of the holder or, in the case of joint holders, to the order of the holder whose name stands first on the register in respect of such shares, and shall be sent at his or their risk and payment of the cheque or warrant by the bank on which it is drawn shall constitute a good discharge to the Company. Any one of two or more joint holders may give effectual receipts for any dividends or other moneys payable or property distributable in respect of the shares held by such joint holders.

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Whenever the board or the Company in general meeting has resolved that a dividend be paid or declared the board may further resolve that such dividend be satisfied wholly or in part by the distribution of specific assets of any kind.

All dividends or bonuses unclaimed for one year after having been declared may be invested or otherwise made use of by the board for the benefit of the Company until claimed and the Company shall not be constituted a trustee in respect thereof. All dividends or bonuses unclaimed for six years after having been declared may be forfeited by the board and shall revert to the Company.

No dividend or other monies payable by the Company on or in respect of any share shall bear interest against the Company.

(h) Inspection of corporate records

Pursuant to the Articles, the register and branch register of members shall be open to inspection for at least two (2) hours during business hours by members without charge, or by any other person upon a maximum payment of HK$2.50 or such lesser sum specified by the board, at the registered office or such other place at which the register is kept in accordance with the Companies Act or, upon a maximum payment of HK$1.00 or such lesser sum specified by the board, at the office where the branch register of members is kept, unless the register is closed in accordance with the Articles.

(i) Rights of minorities in relation to fraud or oppression

There are no provisions in the Articles relating to rights of minority shareholders in relation to fraud or oppression. However, certain remedies are available to shareholders of the Company under Cayman Islands law, as summarised in paragraph 3(f) of this Appendix.

(j) Procedures on liquidation

A resolution that the Company be wound up by the court or be wound up voluntarily shall be a special resolution.

Subject to any special rights, privileges or restrictions as to the distribution of available surplus assets on liquidation for the time being attached to any class or classes of shares:

(i) if the Company is wound up and the assets available for distribution amongst the members of the Company shall be more than sufficient to repay the whole of the capital paid up at the commencement of the winding up, the excess shall be distributed pari passu amongst such members in proportion to the amount paid up on the shares held by them respectively; and

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(ii) if the Company is wound up and the assets available for distribution amongst the members as such shall be insufficient to repay the whole of the paid-up capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by the members in proportion to the capital paid up, or which ought to have been paid up, at the commencement of the winding up on the shares held by them respectively.

If the Company is wound up (whether the liquidation is voluntary or by the court) the liquidator may, with the authority of a special resolution and any other sanction required by the Companies Act divide among the members in specie or kind the whole or any part of the assets of the Company whether the assets shall consist of property of one kind or shall consist of properties of different kinds and the liquidator may, for such purpose, set such value as he deems fair upon any one or more class or classes of property to be divided as aforesaid and may determine how such division shall be carried out as between the members or different classes of members. The liquidator may, with the like authority, vest any part of the assets in trustees upon such trusts for the benefit of members as the liquidator, with the like authority, shall think fit, but so that no contributory shall be compelled to accept any shares or other property in respect of which there is a liability.

(k) Subscription rights reserve

The Articles provide that to the extent that it is not prohibited by and is in compliance with the Companies Act, if warrants to subscribe for shares have been issued by the Company and the Company does any act or engages in any transaction which would result in the subscription price of such warrants being reduced below the par value of a share, a subscription rights reserve shall be established and applied in paying up the difference between the subscription price and the par value of a share on any exercise of the warrants.

3. CAYMAN ISLANDS COMPANY LAW

The Company is incorporated in the Cayman Islands subject to the Companies Act and, therefore, operates subject to Cayman Islands law. Set out below is a summary of certain provisions of Cayman company law, although this does not purport to contain all applicable qualifications and exceptions or to be a complete review of all matters of Cayman company law and taxation, which may differ from equivalent provisions in jurisdictions with which interested parties may be more familiar:

(a) Company operations

As an exempted company, the Company’s operations must be conducted mainly outside the Cayman Islands. The Company is required to file an annual return each year with the Registrar of Companies of the Cayman Islands and pay a fee which is based on the amount of its authorised share capital.

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(b) Share capital

The Companies Act provides that where a company issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount of the value of the premiums on those shares shall be transferred to an account, to be called the “share premium account”. At the option of a company, these provisions may not apply to premiums on shares of that company allotted pursuant to any arrangement in consideration of the acquisition or cancellation of shares in any other company and issued at a premium.

The Companies Act provides that the share premium account may be applied by the company subject to the provisions, if any, of its memorandum and articles of association in (a) paying distributions or dividends to members; (b) paying up unissued shares of the company to be issued to members as fully paid bonus shares; (c) the redemption and repurchase of shares (subject to the provisions of section 37 of the Companies Act); (d) writing-off the preliminary expenses of the company; and (e) writing-off the expenses of, or the commission paid or discount allowed on, any issue of shares or debentures of the company.

No distribution or dividend may be paid to members out of the share premium account unless immediately following the date on which the distribution or dividend is proposed to be paid, the company will be able to pay its debts as they fall due in the ordinary course of business.

The Companies Act provides that, subject to confirmation by the Grand Court of the Cayman Islands (the “Court”), a company limited by shares or a company limited by guarantee and having a share capital may, if so authorised by its articles of association, by special resolution reduce its share capital in any way.

There is no statutory restriction in the Cayman Islands on the provision of financial assistance by a company to another person for the purchase of, or subscription for, its own or its holding company’s shares. Accordingly, a company may provide financial assistance if the directors of the company consider, in discharging their duties of care and acting in good faith, for a proper purpose and in the interests of the company, that such assistance can properly be given. Such assistance should be on an arm’s-length basis.

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(d) Purchase of shares and warrants by a company and its subsidiaries

A company limited by shares or a company limited by guarantee and having a share capital may, if so authorised by its articles of association, issue shares which are to be redeemed or are liable to be redeemed at the option of the company or a shareholder and the Companies Act expressly provides that it shall be lawful for the rights attaching to any shares to be varied, subject to the provisions of the company’s articles of association, so as to provide that such shares are to be or are liable to be so redeemed. In addition, such a company may, if authorised to do so by its articles of association, purchase its own shares, including any redeemable shares. However, if the articles of association do not authorise the manner and terms of purchase, a company cannot purchase any of its own shares unless the manner and terms of purchase have first been authorised by an ordinary resolution of the company. At no time may a company redeem or purchase its shares unless they are fully paid. A company may not redeem or purchase any of its shares if, as a result of the redemption or purchase, there would no longer be any issued shares of the company other than shares held as treasury shares. A payment out of capital by a company for the redemption or purchase of its own shares is not lawful unless immediately following the date on which the payment is proposed to be made, the company shall be able to pay its debts as they fall due in the ordinary course of business.

Shares purchased by a company is to be treated as cancelled unless, subject to the memorandum and articles of association of the company, the directors of the company resolve to hold such shares in the name of the company as treasury shares prior to the purchase. Where shares of a company are held as treasury shares, the company shall be entered in the register of members as holding those shares, however, notwithstanding the foregoing, the company is not be treated as a member for any purpose and must not exercise any right in respect of the treasury shares, and any purported exercise of such a right shall be void, and a treasury share must not be voted, directly or indirectly, at any meeting of the company and must not be counted in determining the total number of issued shares at any given time, whether for the purposes of the company’s articles of association or the Companies Act.

A company is not prohibited from purchasing and may purchase its own warrants subject to and in accordance with the terms and conditions of the relevant warrant instrument or certificate. There is no requirement under Cayman Islands law that a company’s memorandum or articles of association contain a specific provision enabling such purchases and the directors of a company may rely upon the general power contained in its memorandum of association to buy and sell and deal in personal property of all kinds.

Under Cayman Islands law, a subsidiary may hold shares in its holding company and, in certain circumstances, may acquire such shares.

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(e) Dividends and distributions

The Companies Act permits, subject to a solvency test and the provisions, if any, of the company’s memorandum and articles of association, the payment of dividends and distributions out of the share premium account. With the exception of the foregoing, there are no statutory provisions relating to the payment of dividends. Based upon English case law, which is regarded as persuasive in the Cayman Islands, dividends may be paid only out of profits.

No dividend may be declared or paid, and no other distribution (whether in cash or otherwise) of the company’s assets (including any distribution of assets to members on a winding up) may be made to the company, in respect of a treasury share.

(f) Protection of minorities and shareholders’ suits

The Courts ordinarily would be expected to follow English case law precedents which permit a minority shareholder to commence a representative action against or derivative actions in the name of the company to challenge (a) an act which is ultra vires the company or illegal, (b) an act which constitutes a fraud against the minority and the wrongdoers are themselves in control of the company, and (c) an irregularity in the passing of a resolution which requires a qualified (or special) majority.

In the case of a company (not being a bank) having a share capital divided into shares, the Court may, on the application of members holding not less than one fifth of the shares of the company in issue, appoint an inspector to examine into the affairs of the company and to report thereon in such manner as the Court shall direct.

Any shareholder of a company may petition the Court which may make a winding up order if the Court is of the opinion that it is just and equitable that the company should be wound up or, as an alternative to a winding up order, (a) an order regulating the conduct of the company’s affairs in the future, (b) an order requiring the company to refrain from doing or continuing an act complained of by the shareholder petitioner or to do an act which the shareholder petitioner has complained it has omitted to do, (c) an order authorising civil proceedings to be brought in the name and on behalf of the company by the shareholder petitioner on such terms as the Court may direct, or (d) an order providing for the purchase of the shares of any shareholders of the company by other shareholders or by the company itself and, in the case of a purchase by the company itself, a reduction of the company’s capital accordingly.

Generally claims against a company by its shareholders must be based on the general laws of contract or tort applicable in the Cayman Islands or their individual rights as shareholders as established by the company’s memorandum and articles of association.

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(g) Disposal of assets

The Companies Act contains no specific restrictions on the power of directors to dispose of assets of a company. However, as a matter of general law, every officer of a company, which includes a director, managing director and secretary, in exercising his powers and discharging his duties must do so honestly and in good faith with a view to the best interests of the company and exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

(h) Accounting and auditing requirements

A company must cause proper books of account to be kept with respect to (i) all sums of money received and expended by the company and the matters in respect of which the receipt and expenditure takes place; (ii) all sales and purchases of goods by the company; and (iii) the assets and liabilities of the company.

Proper books of account shall not be deemed to be kept if there are not kept such books as are necessary to give a true and fair view of the state of the company’s affairs and to explain its transactions.

An exempted company must make available at its registered office in electronic form or any other medium, copies of its books of account or parts thereof as may be required of it upon service of an order or notice by the Tax Information Authority pursuant to the Tax Information Authority Act of the Cayman Islands.

(i) Exchange control

There are no exchange control regulations or currency restrictions in the Cayman Islands.

(j) Taxation

Pursuant to the Tax Concessions Act of the Cayman Islands, the Company has obtained an undertaking:

(1) that no law which is enacted in the Cayman Islands imposing any tax to be levied on profits, income, gains or appreciation shall apply to the Company or its operations; and

(2) that the aforesaid tax or any tax in the nature of estate duty or inheritance tax shall not be payable on or in respect of the shares, debentures or other obligations of the Company.

The undertaking for the Company is for a period of twenty years from 18 March 2021.

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The Cayman Islands currently levy no taxes on individuals or corporations based upon profits, income, gains or appreciations and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to the Company levied by the Government of the Cayman Islands save for certain stamp duties which may be applicable, from time to time, on certain instruments executed in or brought within the jurisdiction of the Cayman Islands. The Cayman Islands are a party to a double tax treaty entered into with the United Kingdom in 2010 but otherwise is not party to any double tax treaties.

(k) Stamp duty on transfers

No stamp duty is payable in the Cayman Islands on transfers of shares of Cayman Islands companies except those which hold interests in land in the Cayman Islands.

(l) Loans to directors

There is no express provision in the Companies Act prohibiting the making of loans by a company to any of its directors.

(m) Inspection of corporate records

The notice of registered office is a matter of public record. A list of the names of the current directors and alternate directors (if applicable) is made available by the Registrar of Companies for inspection by any person on payment of a fee. The register of mortgages is open to inspection by creditors and members.

Members of the Company have no general right under the Companies Act to inspect or obtain copies of the register of members or corporate records of the Company. They will, however, have such rights as may be set out in the Company’s Articles.

(n) Register of members

An exempted company may maintain its principal register of members and any branch registers at such locations, whether within or without the Cayman Islands, as the directors may, from time to time, think fit. The register of members shall contain such particulars as required by Section 40 of the Companies Act. A branch register must be kept in the same manner in which a principal register is by the Companies Act required or permitted to be kept. The company shall cause to be kept at the place where the company’s principal register is kept a duplicate of any branch register duly entered up from time to time.

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There is no requirement under the Companies Act for an exempted company to make any returns of members to the Registrar of Companies of the Cayman Islands. The names and addresses of the members are, accordingly, not a matter of public record and are not available for public inspection. However, an exempted company shall make available at its registered office, in electronic form or any other medium, such register of members, including any branch register of members, as may be required of it upon service of an order or notice by the Tax Information Authority pursuant to the Tax Information Authority Act of the Cayman Islands.

(o) Register of Directors and Officers

The Company is required to maintain at its registered office a register of directors and officers which is not available for inspection by the public. A copy of such register must be filed with the Registrar of Companies in the Cayman Islands and any change must be notified to the Registrar within thirty (30) days of any change in such directors or officers.

(p) Beneficial Ownership Register

An exempted company is required to maintain a beneficial ownership register at its registered office that records details of the persons who ultimately own or control, directly or indirectly, 25% or more of the equity interests or voting rights of the company or have rights to appoint or remove a majority of the directors of the company. The beneficial ownership register is not a public document and is only accessible by a designated competent authority of the Cayman Islands. Such requirement does not, however, apply to an exempted company with its shares listed on an approved stock exchange, which includes the Stock Exchange. Accordingly, for so long as the shares of the Company are listed on the Stock Exchange, the Company is not required to maintain a beneficial ownership register.

(q) Winding up

A company may be wound up (a) compulsorily by order of the Court, (b) voluntarily, or (c) under the supervision of the Court.

The Court has authority to order winding up in a number of specified circumstances including where the members of the company have passed a special resolution requiring the company to be wound up by the Court, or where the company is unable to pay its debts, or where it is, in the opinion of the Court, just and equitable to do so. Where a petition is presented by members of the company as contributories on the ground that it is just and equitable that the company should be wound up, the Court has the jurisdiction to make certain other orders as an alternative to a winding-up order, such as making an order regulating the conduct of the company’s affairs in the future, making an order authorising civil proceedings to be brought in the name and on behalf of the company by the petitioner on such terms as the Court may direct, or making an order providing for the purchase of the shares of any of the members of the company by other members or by the company itself.

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A company (save with respect to a limited duration company) may be wound up voluntarily when the company so resolves by special resolution or when the company in general meeting resolves by ordinary resolution that it be wound up voluntarily because it is unable to pay its debts as they fall due. In the case of a voluntary winding up, such company is obliged to cease to carry on its business (except so far as it may be beneficial for its winding up) from the time of passing the resolution for voluntary winding up or upon the expiry of the period or the occurrence of the event referred to above.

For the purpose of conducting the proceedings in winding up a company and assisting the Court therein, there may be appointed an official liquidator or official liquidators; and the court may appoint to such office such person, either provisionally or otherwise, as it thinks fit, and if more persons than one are appointed to such office, the Court must declare whether any act required or authorised to be done by the official liquidator is to be done by all or any one or more of such persons. The Court may also determine whether any and what security is to be given by an official liquidator on his appointment; if no official liquidator is appointed, or during any vacancy in such office, all the property of the company shall be in the custody of the Court.

As soon as the affairs of the company are fully wound up, the liquidator must make a report and an account of the winding up, showing how the winding up has been conducted and how the property of the company has been disposed of, and thereupon call a general meeting of the company for the purposes of laying before it the account and giving an explanation thereof. This final general meeting must be called by at least 21 days’ notice to each contributory in any manner authorised by the company’s articles of association and published in the Gazette.

(r) Reconstructions

There are statutory provisions which facilitate reconstructions and amalgamations approved by a majority in number representing seventy-five per cent. (75%) in value of shareholders or class of shareholders or creditors, as the case may be, as are present at a meeting called for such purpose and thereafter sanctioned by the Court. Whilst a dissenting shareholder would have the right to express to the Court his view that the transaction for which approval is sought would not provide the shareholders with a fair value for their shares, the Court is unlikely to disapprove the transaction on that ground alone in the absence of evidence of fraud or bad faith on behalf of management.

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(s) Take-overs

Where an offer is made by a company for the shares of another company and, within four (4) months of the offer, the holders of not less than ninety per cent. (90%) of the shares which are the subject of the offer accept, the offeror may at any time within two (2) months after the expiration of the said four (4) months, by notice in the prescribed manner require the dissenting shareholders to transfer their shares on the terms of the offer. A dissenting shareholder may apply to the Court within one (1) month of the notice objecting to the transfer. The burden is on the dissenting shareholder to show that the Court should exercise its discretion, which it will be unlikely to do unless there is evidence of fraud or bad faith or collusion as between the offeror and the holders of the shares who have accepted the offer as a means of unfairly forcing out minority shareholders.

(t) Indemnification

Cayman Islands law does not limit the extent to which a company’s articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Court to be contrary to public policy (e.g. for purporting to provide indemnification against the consequences of committing a crime).

(u) Economic Substance Requirements

Pursuant to the International Tax Cooperation (Economic Substance) Act, 2018 of the Cayman Islands (“ES Act”) that came into force on 1 January 2019, a “relevant entity” is required to satisfy the economic substance test set out in the ES Act. A “relevant entity” includes an exempted company incorporated in the Cayman Islands as is the Company; however, it does not include an entity that is tax resident outside the Cayman Islands. Accordingly, for so long as the Company is a tax resident outside the Cayman Islands, including in Hong Kong, it is not required to satisfy the economic substance test set out in the ES Act.

4. GENERAL

Conyers Dill & Pearman, the Company’s special legal counsel on Cayman Islands law, have sent to the Company a letter of advice summarising certain aspects of Cayman Islands company law. This letter, together with a copy of the Companies Act, is available for inspection as referred to in “Appendix VI—Documents Delivered to the Registrar of Companies and Available for Inspection—B. Documents available for inspection”. Any person wishing to have a detailed summary of Cayman Islands company law or advice on the differences between it and the laws of any jurisdiction with which he is more familiar is recommended to seek independent legal advice.

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A. FURTHER INFORMATION ABOUT OUR COMPANY

1. Incorporation of our Company

Our Company was incorporated in the Cayman Islands under the Cayman Islands Companies Act as an exempted company with limited liability on November 5, 2020. Our Company has established its principal place of business in Hong Kong at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong and was registered with the Registrar of Companies in Hong Kong as a non-Hong Kong company under Part 16 of the Companies Ordinance on April 9, 2021. Ms. Lam Wing Chi and Ms. Chan Sau Ling have been appointed as the authorized representatives of our Company for the acceptance of service of process and notices on behalf of our Company in Hong Kong.

As our Company was incorporated in the Cayman Islands, we are subject to the Cayman Islands Companies Act, the Memorandum and the Articles. A summary of certain provisions of the Memorandum and Articles and relevant aspects of the Cayman Islands Companies Act is set out in “Appendix IV — Summary of the Constitution of our Company and Cayman Islands Company Law.”

2. Changes in the share capital of our Company

As of the date of incorporation of our Company, the authorized share capital of our Company was US$50,000 divided into 5,000,000 Shares of US$0.01 each. Upon its incorporation, one fully-paid Share of US$0.01 each of our Company was allotted and issued to an initial subscriber who is an Independent Third Party on November 5, 2020, which was then transferred to MSmart International at par on the same date.

On November 5, 2020, 12,889 Shares, 5,008 Shares, 3,306 Shares, 2,746 Shares, 1,853 Shares, 1,692 Shares, 1,626 Shares and 880 Shares were allotted and issued to MSmart International, Fun Joy, Eminence Joy, Foresea Investments, Sherri International, Boxy International, Boxy Space and Hybrid Angel, respectively.

On March 12, 2021, Jadeway Investments transferred one share of Mac Light, representing the entire issued share capital of Mac Light, to our Company in consideration of the allotment and issue of 39 Shares to Jadeway Investments.

Pursuant to the written resolutions of the Shareholders passed on [●], 2021, our authorized share capital was increased from US$50,000 to US$100,000,000 by the creation of additional 9,995,000,000 Shares, and following such increase, the authorized share capital of our Company was US$100,000,000 divided into 10,000,000,000 Shares of US$0.01 each.

Immediately following completion of the [REDACTED] and the [REDACTED] and without taking into account any Shares which may be issued upon the exercise of the [REDACTED] or any option which may be granted under the Share Option Scheme, the issued share capital of our Company will be US$[REDACTED] divided into [REDACTED] Shares, all fully paid or credited as fully paid, and [REDACTED] Shares will remain unissued.

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Save as disclosed above and as mentioned in “—4. Written resolutions of our Shareholders passed on [●], 2021” below, there has been no alteration in the share capital of our Company since its incorporation.

3. Changes in the share capital of our subsidiaries

Our principal subsidiaries are set out in the Accountants’ Report, the text of which is set out in Appendix I to this document.

The following alterations in the share capital of our subsidiaries have taken place within the two years immediately preceding the date of this document:

Ningxia Zhongxian

On February 18, 2021, the registered capital of Ningxia Zhongxian was increased from RMB10,000,000 to RMB10,050,300.

On March 1, 2021, the registered capital of Ningxia Zhongxian was increased from RMB10,050,250 to RMB1,000,000,000.

Ningxia Zhongfang Industrial

On September 11, 2020, the registered capital of Ningxia Zhongfang Industrial was decreased from RMB68,422,400 to RMB62,052,883.

On October 13, 2020, the registered capital of Ningxia Zhongfang Industrial was decreased from RMB62,052,883 to RMB52,569,698.

On October 14, 2020, the registered capital of Ningxia Zhongfang Industrial was increased from RMB52,569,698 to RMB55,000,000.

On December 2, 2020, the registered capital of Ningxia Zhongfang Industrial was decreased from RMB55,000,000 to RMB30,000,000.

On January 4, 2021, the registered capital of Ningxia Zhongfang Industrial was increased from RMB30,000,000 to RMB1,000,000,000.

Ningxia Zhongjin Real Estate Co., Ltd. (寧夏中錦置業有限公司)(Ningxia Zhongjin)

On July 21, 2020, the registered capital of Ningxia Zhongjin was increased from RMB63,000,000 to RMB96,920,000.

Ningxia Zhongyue Real Estate Co., Ltd. (寧夏中悅置業有限公司)(Ningxia Zhongyue)

On June 24, 2020, the registered capital of Ningxia Zhongyue was increased from RMB18,000,000 to RMB50,000,000.

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Ningxia Zhonghan Real Estate Co., Ltd. (寧夏中翰置業有限公司) (“Ningxia Zhonghan”)

On December 23, 2020, the registered capital of Ningxia Zhonghan was increased from RMB14,000,000 to RMB20,000,000.

Ningxia Zhongfang Xining

On July 22, 2019, the registered capital of Ningxia Zhongfang Xining was increased from RMB67,000,000 to RMB200,000,000.

Chongzhou Zhongye Ruihua Real Estate Development Co., Ltd. (崇州市中業瑞華房地產開發有限公司) (“Chongzhou Zhongye”)

On August 20, 2020, the registered capital of Chongzhou Zhongye was increased from RMB8,000,000 to RMB296,077,926.3.

Yinchuan Wanbo Zhongtai Real Estate Co., Ltd. (銀川萬博中泰房地產有限公司) (“Yinchuan Wanbo”)

On June 1, 2020, the registered capital of Yinchuan Wanbo was increased from RMB13,000,000 to RMB320,000,000.

Ningxia Wanzhong Jingming Real Estate Co., Ltd. (寧夏萬中景明房地產有限公司) (“Ningxia Wanzhong”)

On December 14, 2020, the registered capital of Ningxia Wanzhong was increased from RMB13,000,000 to RMB500,000,000.

Save as disclosed above, there has been no alteration in the share capital of our subsidiaries during the two years preceding the date of this document.

4. Written resolutions of our Shareholders passed on [●], 2021

Pursuant to the written resolutions passed by the Shareholders on [●], 2021, among other matters:

(a) we approved and adopted the amended and restated Memorandum with immediate effect;

(b) we approved and conditionally adopted the amended and restated Articles which will become effective upon [REDACTED];

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(c) the authorized share capital of our Company was increased from US$50,000 divided into 5,000,000 Shares to US$100,000,000 divided into 10,000,000,000 Shares by the creation of an additional 9,995,000,000 Shares ranking pari passu in all aspects with the existing Shares with immediate effect;

(d) conditional on (aa) the Listing Committee granting the approval for the [REDACTED] of, and permission to [REDACTED], the Shares in issue and Shares to be issued and allotted pursuant to the [REDACTED], the [REDACTED] and as mentioned in this document including the Shares which may be issued and allotted pursuant to the exercise of the [REDACTED] and any option which may be granted under the Share Option Scheme; (bb) the [REDACTED] having been duly determined; and (cc) the obligations of the [REDACTED] under the [REDACTED] becoming unconditional and not being terminated in accordance with the terms of such agreement (or any conditions as specified in this document), in each case on or before the dates and times specified in the [REDACTED]:

(i) the [REDACTED] was approved and our Directors were authorized to allot and issue the [REDACTED] pursuant to the [REDACTED];

(ii) the [REDACTED] was approved and our Directors were authorized to allot and issue Shares pursuant to the exercise of the [REDACTED];

(iii) the rules of the Share Option Scheme, the principal terms of which are set out in “D. Share Option Scheme” below in this appendix, were approved and adopted and our Directors were authorized to grant options to subscribe for Shares thereunder and to issue, allot and deal with Shares pursuant to the exercise of options granted under the Share Option Scheme;

(iv) conditional on the share premium account of our Company being credited as a result of the [REDACTED], our Directors were authorized to capitalize US$[REDACTED] standing to the credit of the share premium account of our Company by applying such sum in paying up in full at par [REDACTED] Shares for issue and allotment to holders of Shares whose names appear on the register of members of our Company on the date of passing this resolution in proportion (as near as possible without involving fractions so that no fraction of a share shall be allotted and issued) to their then existing respective shareholdings in our Company;

(v) a general unconditional mandate was given to our Directors to issue, allot and deal with (including the power to make an offer or agreement, or grant securities which would or might require Shares to be issued and allotted), otherwise than pursuant to a rights issue or pursuant to any scrip dividend schemes or similar arrangements providing for the allotment and issue of Shares in lieu of the whole or part of a dividend on Shares in accordance with the Articles or pursuant to a specific authority granted by the Shareholders in

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general meeting, unissued Shares not exceeding the aggregate of 20% of the number of issued Shares immediately following the completion of the [REDACTED] and [REDACTED] (but taking no account of any Shares which may be issued and allotted pursuant to the exercise of the Overallotment Option or any option which may be granted under the Share Option Scheme), such mandate to remain in effect until the conclusion of the next annual general meeting of our Company, or the expiration of the period within which the next annual general meeting of our Company is required by the Articles or any applicable laws to be held, or until revoked or varied by an ordinary resolution of the Shareholders in general meeting, whichever occurs first;

(vi) a general unconditional mandate was given to our Directors authorizing them to exercise all powers of our Company to buy back on the Stock Exchange or on any other approved stock exchange on which the securities of our Company may be listed and which is recognized by the SFC and the Stock Exchange for this purpose such number of Shares as will represent up to 10% of the number of issued Shares immediately following the completion of the [REDACTED] and the [REDACTED] (but taking no account of any Shares which may be allotted and issued pursuant to the exercise of the [REDACTED] or any option which may be granted under the Share Option Scheme), such mandate to remain in effect until the conclusion of the next annual general meeting of our Company, or the expiration of the period within which the next annual general meeting of our Company is required by the Articles or any applicable laws to be held, or until revoked or varied by an ordinary resolution of the Shareholders in general meeting, whichever occurs first; and

(vii) the general unconditional mandate mentioned in paragraph (v) above was extended by the addition to the number of issued Shares which may be issued and allotted or agreed conditionally or unconditionally to be issued and allotted by our Directors pursuant to such general mandate of an amount representing the total number of issued Shares bought back by our Company pursuant to the mandate to buy back Shares referred to in paragraph (vi) above.

5. Reorganization

In preparation for the [REDACTED], the companies comprising our Group underwent the Reorganization and our Company became the holding company of our Group. For further details with regard to the Reorganization, see “History, Reorganization and Corporate Structure.”

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6. Buyback by our Company of our own securities

This section includes information required by the Stock Exchange to be included in this document concerning the buyback by our Company of our own securities.

(a) Provisions of the Listing Rules

The Listing Rules permit companies with a primary listing on the Stock Exchange to purchase their shares on the Stock Exchange subject to certain restrictions.

(i) Shareholders’ approval

The Listing Rules provide that all proposed buybacks of shares (which must be fully paid in the case of shares) by a company with a primary listing on the Stock Exchange must be approved in advance by an ordinary resolution of its shareholders in general meeting, either by way of general mandate or by specific approval of a particular transaction.

Note: Pursuant to the written resolutions passed by our Shareholders on [●], 2021, a general unconditional mandate (the “Buyback Mandate”) was granted to our Directors authorizing the buyback of shares by our Company on the Stock Exchange, or on any other stock exchange on which the securities of our Company may be listed and which is recognized by the SFC and the Stock Exchange for this purpose, with the total number of Shares not exceeding 10% of the total number of Shares in issue and to be issued as mentioned herein, at any time until the conclusion of the next annual general meeting of our Company, the expiration of the period within which the next annual general meeting of our Company is required by an applicable law or the Articles to be held or when such mandate is revoked or varied by an ordinary resolution of our Shareholders in general meeting, whichever is the earliest.

(ii) Source of funds

Buybacks must be funded out of funds legally available for the purpose in accordance with the Articles and the Cayman Islands Companies Act. A listed company may not buyback its own shares on the Stock Exchange for a consideration other than cash or for settlement otherwise than in accordance with the trading rules of the Stock Exchange from time to time.

(iii) Core connected persons

The Listing Rules prohibit our Company from knowingly repurchasing the Shares on the Stock Exchange from a “core connected person”, which includes a director, chief executive or substantial shareholder of our Company or any of the subsidiaries or a close associate of any of them and a core connected person shall not knowingly sell Shares to our Company.

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(b) Reasons for buybacks

Our Directors believe that it is in the best interests of our Company and our Shareholders as a whole for our Directors to have a general authority from our Shareholders to enable our Company to buy back Shares in the market. Such buybacks may, depending on the market conditions and funding arrangements at the time, lead to an enhancement of our Company’s net asset value per Share and/or earnings per Share and will only be made when our Directors believe that such buybacks will benefit our Company and our Shareholders.

In buying back Shares, our Company may only apply funds legally available for such purpose in accordance with our Articles, the Listing Rules and the applicable laws of the Cayman Islands.

It is presently proposed that any buyback of Shares will be made out of the profits of our Company, the share premium amount of our Company or the proceeds of a fresh issue of Shares made for the purpose of the buyback and, in the case of any premium payable on the purchase over the par value of the Shares to be bought back must be provided for, out of either or both of the profits of our Company or from sums standing to the credit of the share premium account of our Company. Subject to the Cayman Islands Companies Act, a buyback of Shares may also be paid, out of capital.

On the basis of the current financial position of our Group as disclosed in this document and taking into account the current working capital position of our Company, our Directors consider that, if the Buyback Mandate were to be exercised in full, it might have a material adverse effect on the working capital and/or the gearing position of our Group as compared to the position disclosed in this document. However, our Directors do not propose to exercise the Buyback Mandate to such an extent as would, in the circumstances, have a material adverse effect on the working capital requirements or the gearing levels of our Group which in the opinion of our Directors are from time to time appropriate for our Group.

(d) Share capital

The exercise in full of the Buyback Mandate, on the basis of [REDACTED] Shares in issue immediately after the [REDACTED] (but not taking into account of our Shares which may be issued pursuant to the exercise of the [REDACTED] or any option which may be granted under the Share Option Scheme), would result in up to [REDACTED] Shares being bought back by our Company during the period until:

(i) the conclusion of the next annual general meeting of our Company;

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(ii) the expiration of the period within which the next annual general meeting of our Company is required by any applicable law or the Articles to be held; or

(iii) the date on which the Buyback Mandate is revoked or varied by an ordinary resolution of our Shareholders in general meeting, whichever occurs first.

(e) General

None of our Directors nor, to the best of their knowledge having made all reasonable enquiries, any of their close associates (as defined in the Listing Rules), has any present intention if the Buyback Mandate is exercised to sell any Share(s) to our Company or our subsidiaries.

Our Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the Buyback Mandate in accordance with the Listing Rules and the applicable laws of the Cayman Islands.

If as a result of a buyback of Shares pursuant to the Buyback Mandate, a Shareholder’s proportionate interest in the voting rights of our Company increases, such increase will be treated as an acquisition for the purposes of the Takeovers Code. Accordingly, a Shareholder or a group of Shareholders acting in concert, depending on the level of increase of the Shareholders’ interest, could obtain or consolidate control of our Company and may become obliged to make a mandatory offer in accordance with Rule 26 of the Takeovers Code as a result of any such increase. Save as disclosed above, our Directors are not aware of any consequence that would arise under the Takeovers Code as a result of a buyback pursuant to the Buyback Mandate.

If the Buyback Mandate is fully exercised immediately following completion of the [REDACTED] and the [REDACTED] (but not taking into account our Shares which may be issued pursuant to the exercise of the [REDACTED] or any option which may be granted under the Share Option Scheme), the total number of Shares which will be bought back pursuant to the Buyback Mandate will be [REDACTED] Shares, being 10% of the total number of Shares based on the aforesaid assumptions. Any buyback of Shares which results in the number of Shares held by the public being reduced to less than the prescribed percentage of our Shares then in issue could only be implemented with the approval of the Stock Exchange to waive the Listing Rules requirements regarding the public float under Rule 8.08 of the Listing Rules. However, our Directors have no present intention to exercise the Buyback Mandate to such an extent that, in the circumstances, there is insufficient public float as prescribed under the Listing Rules.

No core connected person of our Company has notified our Group that he/she/it has a present intention to sell Shares to our Company, or has undertaken not to do so, if the Buyback Mandate is exercised.

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B. FURTHER INFORMATION ABOUT OUR BUSINESS

1. Summary of material contracts

The following contracts (not being contracts in the ordinary course of business) have been entered into by members of our Group within the two years preceding the date of this document and are or may be material:

(a) a corporate division agreement (公司分立協議) dated November 30, 2020 entered into between Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團限公司) and Ningxia Zhongfang Development Group Co., Ltd. (寧夏中房發展集團有限公司), pursuant to which the parties agreed to carry out the division of the assets, equity interests, liabilities, personnel and equipment of Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) in accordance with the agreement;

(b) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Fang Lu (方陸) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Fang Lu (方陸) agreed to transfer 1.2889% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司)ata consideration of RMB18,424,800;

(c) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Gong Fan (龔帆) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Gong Fan (龔帆) agreed to transfer 0.27462% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司)ata consideration of RMB3,925,700;

(d) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Zhang Jun (張君) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Zhang Jun (張君) agreed to transfer 0.18528% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司) at a consideration of RMB2,648,600;

(e) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Wang Xiaoping (王小平) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Wang Xiaoping (王小平) agreed to transfer 0.1692% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司) at a consideration of RMB2,418,700;

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(f) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Chou Jianping (仇建萍) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Chou Jianping (仇建萍) agreed to transfer 0.16256% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司) at a consideration of RMB2,323,800;

(g) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Zhang Yanbin (張彥斌) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Zhang Yanbin (張彥斌) agreed to transfer 0.08838% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司) at a consideration of RMB1,263,400;

(h) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between He Bin (何斌) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which He Bin (何斌) agreed to transfer 0.086% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司)ata consideration of RMB1,229,400;

(i) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Qi Xujun (祁旭俊) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Qi Xujun (祁旭俊) agreed to transfer 0.05959% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司) at a consideration of RMB851,800;

(j) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Xu Deqiang (徐德強) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Xu Deqiang (徐德強) agreed to transfer 0.05056% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司) at a consideration of RMB722,800;

(k) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Chen Lei (陳雷) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Chen Lei (陳雷) agreed to transfer 0.04809% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司)ata consideration of RMB687,400;

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(l) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Gu Yingqin (古瑛琴) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Gu Yingqin (古瑛琴) agreed to transfer 0.04172% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司) at a consideration of RMB596,400;

(m) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Dong Hongcheng (董洪成) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Dong Hongcheng (董洪成) agreed to transfer 0.03851% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司) at a consideration of RMB550,500;

(n) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Ding Chunwen (丁春文) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Ding Chunwen (丁春文) agreed to transfer 0.03712% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司) at a consideration of RMB530,600;

(o) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Li Run (李潤) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Li Run (李潤) agreed to transfer 0.03535% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司)ata consideration of RMB505,300;

(p) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Yu Yuefeng (俞躍峰) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Yu Yuefeng (俞躍峰) agreed to transfer 0.03469% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司) at a consideration of RMB495,900;

(q) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Zhu Li’e (朱麗娥) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Zhu Li’e (朱麗娥) agreed to transfer 0.03468% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司) at a consideration of RMB495,800;

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(r) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Wang Yanhong (王燕虹) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Wang Yanhong (王燕虹) agreed to transfer 0.03449% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司) at a consideration of RMB493,000;

(s) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Wei Bin (魏斌) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Wei Bin (魏斌) agreed to transfer 0.02862% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司)ata consideration of RMB409,100;

(t) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Lei Haiyan (雷海燕) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Lei Haiyan (雷海燕) agreed to transfer 0.0281% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司) at a consideration of RMB401,700;

(u) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Qu Gengchang (瞿耿常) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Qu Gengchang (瞿耿常) agreed to transfer 0.02767% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司) at a consideration of RMB395,500;

(v) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Yang Liu (楊柳) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Yang Liu (楊柳) agreed to transfer 0.02767% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司)ata consideration of RMB395,500;

(w) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Cao Dianying (曹殿穎) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Cao Dianying (曹殿穎) agreed to transfer 0.02693% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司) at a consideration of RMB385,000;

– V-12 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX V STATUTORY AND GENERAL INFORMATION

(x) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Zhu Weixing (朱衛星) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Zhu Weixing (朱衛星) agreed to transfer 0.02675% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司) at a consideration of RMB382,400;

(y) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Lei Peng (雷鵬) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Lei Peng (雷鵬) agreed to transfer 0.02163% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司)ata consideration of RMB309,200;

(z) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Xu Changhao (徐長浩) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Xu Changhao (徐長浩) agreed to transfer 0.02002% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司) at a consideration of RMB286,200;

(aa) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Wang Liang (王亮) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Wang Liang (王亮) agreed to transfer 0.01798% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司) at a consideration of RMB257,000;

(bb) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Li Xingfu (李興富) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Li Xingfu (李興富) agreed to transfer 0.01689% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司) at a consideration of RMB241,400;

(cc) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Zuo Long (左龍) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Zuo Long (左龍) agreed to transfer 0.01144% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司)ata consideration of RMB163,500;

– V-13 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX V STATUTORY AND GENERAL INFORMATION

(dd) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Wang Xiaopeng (王小鵬) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Wang Xiaopeng (王小鵬) agreed to transfer 0.00948% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司) at a consideration of RMB135,500;

(ee) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Dou Yanyan (竇衍艷) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Dou Yanyan (竇衍艷) agreed to transfer 0.00581% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司) at a consideration of RMB83,100;

(ff) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Huang Xuejing (黃學經) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Huang Xuejing (黃學經) agreed to transfer 0.00581% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司) at a consideration of RMB83,100;

(gg) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Li Chengliang (李承良) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Li Chengliang (李承良) agreed to transfer 0.00581% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司) at a consideration of RMB83,100;

(hh) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Ma Cheng (馬騁) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Ma Cheng (馬騁) agreed to transfer 0.00581% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司)ata consideration of RMB83,100;

(ii) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Shi Liansheng (史連昇) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Shi Liansheng (史連昇) agreed to transfer 0.00581% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司) at a consideration of RMB83,100;

– V-14 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX V STATUTORY AND GENERAL INFORMATION

(jj) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Tian Fulai (田福來) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Tian Fulai (田福來) agreed to transfer 0.00581% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司) at a consideration of RMB83,100;

(kk) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Qian Guangning (錢廣寧) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Qian Guangning (錢廣寧) agreed to transfer 0.00494% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司) at a consideration of RMB70,600;

(ll) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Rong Fanqiao (榮范橋) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Rong Fanqiao (榮范橋) agreed to transfer 0.00410% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司) at a consideration of RMB58,600;

(mm) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Shi Yongwei (石永偉) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Shi Yongwei (石永偉) agreed to transfer 0.00410% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司) at a consideration of RMB58,600;

(nn) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Zhang Shijie (張世杰) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Zhang Shijie (張世杰) agreed to transfer 0.0041% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司) at a consideration of RMB58,600;

(oo) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Guo Jiaqi (郭佳琦) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Guo Jiaqi (郭佳琦) agreed to transfer 0.00403% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司) at a consideration of RMB57,600;

– V-15 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX V STATUTORY AND GENERAL INFORMATION

(pp) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Ye Lina (葉麗娜) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Ye Lina (葉麗娜) agreed to transfer 0.00395% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司)ata consideration of RMB56,500;

(qq) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Zhang Lei (張磊) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Zhang Lei (張磊) agreed to transfer 0.00291% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司)ata consideration of RMB41,600;

(rr) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Zhang Liqing (張黎慶) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Zhang Liqing (張黎慶) agreed to transfer 0.00291% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司) at a consideration of RMB41,600;

(ss) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Zhang Yang (張洋) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Zhang Yang (張洋) agreed to transfer 0.00059% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司) at a consideration of RMB8,400;

(tt) an equity transfer agreement (股權轉讓協議) dated January 5, 2021 entered into between Shi Yinren (時銀仁) and Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司), pursuant to which Shi Yinren (時銀仁) agreed to transfer 0.00059% of the equity interest in Ningxia Zhongfang Industrial Group Co., Ltd. (寧夏中房實業集團有限公司) to Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司) at a consideration of RMB8,400;

(uu) a capital increase agreement (增資協議) dated February 2, 2021 entered into between Ningxia Junben Information Consulting Co., Ltd. (寧夏君本信息諮詢有限公司) and Zhonghong (HK) Limited (中宏香港有限公司) pursuant to which Zhonghong (HK) Limited (中宏香港有限公司) agreed to subscribe for the increased registered capital of Ningxia Zhongxian Industrial Co., Ltd. (寧夏中賢實業有限公司) of RMB50,250 at a consideration of RMB7,100,000, among which RMB7,049,750 would be credited to the capital surplus of Ningxia Zhongxian Industrial Co., Ltd (寧夏中賢實業有限公司);

– V-16 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX V STATUTORY AND GENERAL INFORMATION

(vv) a capital increase agreement (增資協議) dated February 25, 2021 entered into among Ningxia Junben Information Consulting Co., Ltd. (寧夏君本信息諮詢有限公司), Zhonghong (HK) Limited (中宏香港有限公司) and Ningxia Zhongqia Industrial Co., Ltd. (寧夏中洽實業有限公司), pursuant to which Zhonghong (HK) Limited (中宏香港有限公司) and Ningxia Zhongqia Industrial Co., Ltd. (寧夏中洽實業有限公司) agreed to subscribe for the increased registered capital of Ningxia Zhongxian Industrial Co., Ltd. (寧夏中賢實業有限公司) of RMB1,249,750 and RMB988,700,000, respectively;

(ww) an equity transfer agreement (股權轉讓協議) dated February 26, 2021 entered into between Ningxia Zhongqia Industrial Co., Ltd. (寧夏中洽實業有限公司) and Ningxia Junben Information Consulting Co., Ltd. (寧夏君本信息諮詢有限公司), pursuant to which Ningxia Junben Information Consulting Co., Ltd. (寧夏君本信息諮詢有限公司) agreed to transfer 1% of the equity interest in Ningxia Zhongxian Industrial Co., Ltd. (寧夏中賢實業有限公司) to Ningxia Zhongqia Industrial Co., Ltd. (寧夏中洽實業有限公司) at a consideration of RMB14,200,000;

(xx) a share transfer agreement (股權轉讓協議) dated March 12, 2021 entered into between Jadeway Investments Limited and Zhongyi Jiye Holding Company Limited, pursuant to which Jadeway Investments Limited agreed to transfer one share, representing the entire share capital of Mac Light Limited, to Zhongyi Jiye Holding Co., Ltd. and Zhongyi Jiye Holding Company Limited allotted and issued 39 Shares with par value of US$0.01 each to Jadeway Investments Limited as consideration;

(yy) the Deed of Indemnity; and

(zz) the [REDACTED].

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2. Intellectual property rights of our Group

(a) Trademarks

As of the Latest Practicable Date, our Company is the registered proprietor of the following trademarks which are material to our business:

Registration Place of Registered Date of No. Trademark Number Class Registration Proprietor Registration Expiry Date

1. 10201255 35 PRC Ningxia January 21, January 20, Zhongfang 2013 2023 Industrial

2. 10201322 36 PRC Ningxia January 21, January 20, Zhongfang 2013 2023 Industrial

3. 10201381 37 PRC Ningxia January 21, January 20, Zhongfang 2013 2023 Industrial

4. 10201421 43 PRC Ningxia January 21, January 20, Zhongfang 2013 2023 Industrial

5. 35624439 35 PRC Ningxia February 21, February 20, Zhongfang 2020 2030 Industrial

6. 35635793 36 PRC Ningxia November 28, November 27, Zhongfang 2019 2029 Industrial

7. 35621060 37 PRC Ningxia February 21, February 20, Zhongfang 2020 2030 Industrial

8. 35638648 45 PRC Ningxia November 28, November 27, Zhongfang 2019 2029 Industrial

9. 46955495 36 PRC Ningxia January 28, January 27, Zhongfang 2021 2031 Industrial

– V-18 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX V STATUTORY AND GENERAL INFORMATION

As of the Latest Practicable Date, our Group was the applicant of the following applications for trademarks which, in the opinion of our Directors, are or may be material to our business:

Application Name of Place of Date of No. Trademark Number Class Applicant Application Application

1. 305490955 25, 36, 37, Ningxia Hong Kong December 28, 43, 44 Zhongfang 2020 Industrial 2. 305490964 35, 36, 37, Ningxia Hong Kong December 28, 43, 44 Zhongfang 2020 Industrial

3. 52666670 37 Ningxia PRC December 31, Zhongfang 2020 Industrial

4. 49687861 11 Ningxia PRC September 11, Zhongfang 2020 Industrial

5. 49666438 16 Ningxia PRC September 11, Zhongfang 2020 Industrial

6. 49694121 35 Ningxia PRC September 11, Zhongfang 2020 Industrial

7. 49694985 36 Ningxia PRC September 11, Zhongfang 2020 Industrial

8. 49685175 41 Ningxia PRC September 11, Zhongfang 2020 Industrial

9. 49691637 43 Ningxia PRC September 11, Zhongfang 2020 Industrial

10. 49689506 44 Ningxia PRC September 11, Zhongfang 2020 Industrial

– V-19 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX V STATUTORY AND GENERAL INFORMATION

(b) Domain names

As of the Latest Practicable Date, our Group had registered the following domain names which are material to our business:

Name of Registered Date of No. Domain name Proprietor Registration Expiry Date

1. nxzfjt.com Ningxia Zhongfang June 19, 2019 June 1, 2022 Industrial

C. FURTHER INFORMATION ABOUT OUR DIRECTORS AND SUBSTANTIAL SHAREHOLDERS

1. Directors

(a) Disclosure of Interests—Interests and short positions of the Directors and the chief executive of our Company in the Shares, underlying Shares and debentures of our Company and its associated corporations

Immediately following completion of the [REDACTED] and the [REDACTED] and assuming that the [REDACTED] or any option which may be granted under the Share Option Scheme is not exercised, the interests or short positions of our Directors or chief executives of our Company in the shares, underlying shares and debentures of our Company or our associated corporations (within the meaning of Part XV of the SFO) which will be required to be notified to our Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO) or which will be required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or which will be required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers to be notified to our Company and the Stock Exchange, once our Shares are [REDACTED] will be as follows:

(i) Interest in our Company

Number of Shares Percentage Name of Director Nature of Interest interested(1) of interest

Mr. Fang(2) ...... Interest in a controlled [REDACTED] [REDACTED]% corporation Shares (L) Ms. Zhang Jun Interest in a controlled [REDACTED] [REDACTED]% (張君)(3) ...... corporation Shares (L) Mr. Wang Xiaoping Interest in a controlled [REDACTED] [REDACTED]% (王小平)(4) ..... corporation Shares (L)

Notes:

(1) The letter “L” denotes the person’s long position in our Shares. (2) The [REDACTED] Shares are owned by MSmart International. MSmart International is wholly-owned by Mr. Fang. By virtue of the SFO, Mr. Fang is deemed to be interested in the Shares in which MSmart International is interested. (3) The [REDACTED] Shares are owned by Sherri International. Sherri International is wholly owned by Ms. Zhang Jun. By virtue of the SFO, Ms. Zhang Jun is deemed to be interested in the Shares in which Sherri International is interested. (4) The [REDACTED] Shares are owned by Boxy International. Boxy International is wholly owned by Mr. Wang Xiaoping. By virtue of the SFO, Mr. Wang Xiaoping is deemed to be interested in the Shares in which Boxy International is interested.

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(b) Particulars of service agreements and letters of appointment

Each of our executive Directors [has entered] into a service agreement with our Company for a term of three years commencing from the [REDACTED], which may be terminated by not less than three months’ notice in writing served by either party on the other.

Each of our non-executive Director and independent non-executive Directors [has entered] into a letter of appointment with our Company for a term of three years commencing from the [REDACTED], which may be terminated by not less than three months’ notice in writing served by either party on the other.

Each of our executive Directors is entitled to a remuneration and shall be paid on the basis of a twelve-month year. During the years ended December 31, 2018, 2019 and 2020, the aggregate remuneration (including fees, salaries, bonus, share-based payments, contributions to retirement benefits schemes, allowances and other benefits in kind) paid to our Directors was RMB7.8 million, RMB11.0 million and RMB16.5 million, respectively. For details, please refer to Note 9 of the Accountants’ Report set out in Appendix I to this document.

Each of our non-executive Director and independent non-executive Directors [has been appointed] for a term of three years. We intend to pay a director’s fee of RMB300,000 per annum to Mr. Feng Lun, HK$320,000 per annum to Mr. Au Yeung Po Fung and RMB200,000 per annum to each of Mr. Zhu Yu and Mr. Lu Lin. Save for directors’ fees, none of our non-executive Director and independent non-executive Directors is expected to receive any other remuneration for holding their office as non-executive Director and independent non-executive Directors.

Under the arrangement currently in force, the aggregate remuneration (including fees, salaries, bonus, share-based payments, contributions to retirement benefits scheme, allowances and other benefits in kind) of our Directors for the year ending December 31, 2021 is estimated to be no more than RMB22.8 million.

2. Substantial shareholders

(a) Interest of the substantial shareholders in the Shares

Save as disclosed as “Substantial Shareholders,” so far as our Directors are aware, immediately following the completion of the [REDACTED] and the [REDACTED] assuming that the [REDACTED] or any options that may be granted under the Share Option Scheme are not exercised, no person (other than our Directors and chief executives of our Company) will have or be deemed or taken to have an interest and/or short position in our Shares or the underlying Shares which would fall to be disclosed under the provisions of Division 2 and 3 of Part XV of the SFO, or who will be, directly or indirectly, interested in 10% or more of the issued voting shares of our Company.

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(b) Interest in other members of our Group

As of the Latest Practicable Date, so far as our Directors are aware, the following persons (other than our Directors or chief executive officer of our Company) were entitled to exercise, or control the exercise of, 10% or more of the issued voting shares at any general meeting of other members of our Group:

Name of member of our Percentage of Group Name of Shareholder equity interest

Ningxia Zhongjin ...... Ningxia Yongning Shicheng 65%(1) Real Estate Development Co., Ltd. (寧夏永寧實成房地產開發有限公司)

Xianyang Yangguang Meiyu . . . Xianyang Real Estate 24% Development Co., Ltd. (咸陽市房地產開發公司)

Baoji Jian’an Group Co. 21% Ltd. (寶雞建安集團股份有限公司)

Zhongfang Vanke Industrial .... Vanke (Chengdu) Enterprise 40% Co., Ltd. (萬科(成都)企業有限公司)

Shenzhen Huayin 20%(2)

Ningxia Yuejia ...... Zhuhai Taizhihe Investment 30% Co., Ltd. (珠海泰之和投資有限責任公司)

Ningxia Wanjin Real Estate Mr. Guo Junlong (郭軍龍) 25% Co., Ltd. (寧夏萬錦房地產有限公司) ......

Ningxia Wanyue ...... Tokyo Tatemono Co., Ltd. 30% (東京建物株式會社)

Yinchuan Wanbo Zhongtai Real Yinchuan C&D Landmark 30% Estate Co., Ltd. (銀川萬博中 Co., Ltd. (銀川建發置地泰房地產有限公司)...... 有限公司)

Xining Wantang ...... Xining Xintang Real Estate 49% Development Co., Ltd. (西寧新唐房地產開發有限公司)

Ningxia Zhongen Real Estate Mr. Yue Zheng (岳政) 20.6%(3) Co., Ltd. (寧夏中恩置業有限公司)...... Mr. Wan Hao (萬浩) 28.4%(3)

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Notes:

(1) Ningxia Yongning Shicheng Real Estate Development Co., Ltd. (寧夏永寧實成房地產開發有限公司) is entitled to exercise 49% of the voting rights at the general meeting of Ningxia Zhongjin according to the articles of association of Ningxia Zhongjin.

(2) Shenzhen Huayin has entrusted its 20% of the voting rights at the general meeting of Zhongfang Vanke Industrial to Ningxia Zhongfang Industrial pursuant to a voting rights entrustment agreement entered into between Ningxia Zhongfang Industrial and Shenzhen Huayin.

(3) Such equity interest is held on trust by Ningxia Zhongfang Industrial.

3. Agency fees or commissions received

Save as disclosed in this document, no commissions, discounts, brokerages or other special terms were granted in connection with the issue or sale of any capital of any member of our Group within the two years immediately preceding the date of this document.

4. Disclaimers

Save as disclosed in this document:

(a) none of our Directors or chief executive of our Company has any interest or short position in our shares, underlying shares or debentures of our Company or any of its associated corporation (within the meaning of the SFO) which will have to be notified to our Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO or which will be required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or which will be required to be notified to our Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers once our Shares are [REDACTED];

(b) none of our Directors or experts referred to under “—E. Other information—8. Qualifications of experts” below has any direct or indirect interest in the promotion of our Company, or in any assets which have within the two years immediately preceding the date of this document been acquired or disposed of by or leased to any member of our Group, or are proposed to be acquired or disposed of by or leased to any member of our Group;

(c) none of our Directors is materially interested in any contract or arrangement subsisting at the date of this document which is significant in relation to the business of our Group taken as a whole;

(d) none of our Directors has any existing or proposed service contracts with any member of our Group (excluding contracts expiring or determinable by the employer within one year without payment of compensation (other than statutory compensation));

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(e) taking no account of Shares which may be taken up under the [REDACTED], none of our Directors knows of any person (not being a Director or chief executive of our Company) who will, immediately following completion of the [REDACTED], have an interest or short position in our Shares or underlying Shares of our Company which would fall to be disclosed to our Company under the provisions of Divisions 2 and 3 of Part XV of SFO or be interested, directly or indirectly, in 10% or more of the issued voting shares of any member of our Group; and

(f) so far as is known to our Directors as of the Latest Practicable Date, none of our Directors, their respective close associates (as defined under the Listing Rules) or Shareholders of our Company who are interested in more than 5% of the total number of issued Shares has any interests in the five largest customers or the five largest suppliers of our Group.

D. SHARE OPTION SCHEME

The following is a summary of the principal terms of the Share Option Scheme conditionally adopted by the written resolutions of our Shareholders passed on [●], 2021.

(a) Purpose

The Share Option Scheme is a share incentive scheme prepared in accordance with Chapter 17 of the Listing Rules and is established to recognize and acknowledge the contributions that the Eligible Participants (as defined in paragraph (b) below) had or may have made to our Group. The Share Option Scheme will provide the Eligible Participants an opportunity to have a personal stake in our Company with the view to achieving the following objectives:

(i) motivate the Eligible Participants to optimize their performance efficiency for the benefit of our Group; and

(ii) attract and retain or otherwise maintain an on-going business relationship with the Eligible Participants whose contributions are or will be beneficial to the long-term growth of our Group.

(b) Who may join

The Board may, at its discretion, offer to grant an option to the following persons (collectively the “Eligible Participants”) to subscribe for such number of new Shares as the Board may determine at an exercise price determined in accordance with paragraph (f) below:

(i) any full-time or part-time employees, executives or officers of our Company or any of our subsidiaries;

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(ii) any directors (including non-executive directors and independent non-executive directors) of our Company or any of our subsidiaries; and

(iii) any advisors, consultants, suppliers, customers, distributors and such other persons who, in the sole opinion of the Board will contribute or have contributed to our Company or any of our subsidiaries.

Upon acceptance of the option, the grantee shall pay HK$1.00 to our Company by way of consideration for the grant.

An option shall be deemed to have been granted and accepted by the grantee and to have taken effect when the duplicate offer document constituting acceptances of the options duly signed by the grantee, together with a remittance or payment in favor of our Company of HK$1.00 by way of consideration for the grant thereof, is received by our Company on or before the relevant acceptance date. Such remittance or payment shall in no circumstances be refundable. Any offer to grant an option to subscribe for Shares may be accepted in respect of less than the number of Shares for which it is offered provided that it must be accepted in respect of a board lot for dealing in Shares on the Stock Exchange or an integral multiple thereof and such number is clearly stated in the duplicate offer document constituting acceptance of the option. To the extent that the offer to grant an option is not accepted by any prescribed acceptance date, it shall be deemed to have been irrevocably declined.

Subject to paragraphs (l), (m), (n), (o) and (p), an Option shall be exercised in whole or in part and, other than where it is exercised to the full extent outstanding, shall be exercised in integral multiples of such number of Shares as shall represent one board lot for dealing in Shares on the Stock Exchange for the time being, by the grantee by giving notice in writing to our Company stating that the option is thereby exercised and the number of Shares in respect of which it is exercised. Each such notice must be accompanied by a remittance or payment for the full amount of the exercise price for our Shares in respect of which the notice is given. Within 21 days after receipt of the notice and the remittance or payment and, where appropriate, receipt of the certificate by the auditors to our Company or the approved independent financial advisor as the case may be pursuant to paragraph (r), our Company shall issue and allot the relevant number of Shares to the grantee credited as fully paid and issue to the grantee certificates in respect of our Shares so allotted.

The exercise of any option shall be subject to our Shareholders in general meeting approving any necessary increase in the authorized share capital of our Company.

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(d) Maximum number of Shares

The maximum number of Shares in respect of which options may be granted under the Share Option Scheme and under any other share option schemes of our Company must not in aggregate exceed 10% of the total number of Shares in issue upon the completion of the [REDACTED] and the [REDACTED], being [REDACTED] Shares, excluding for this purpose Shares which would have been issuable pursuant to options which have lapsed in accordance with the terms of the Share Option Scheme (or any other share option schemes of our Company). Subject to the issue of a circular by our Company and the approval of our Shareholders in general meeting in compliance with Rules 17.03(3) and 17.06 of the Listing Rules and/or such other requirements prescribed under the Listing Rules from time to time, the Board may:

(i) renew this limit at any time to 10% of our Shares in issue as at the date of the approval by our Shareholders in general meeting; and/or

(ii) grant options beyond the 10% limit to Eligible Participants specifically identified by the Board. The circular to be issued by our Company to our Shareholders shall contain a generic description of the specified Eligible Participants who may be granted such options, the number and terms of the options to be granted, the purpose of granting options to the specified Eligible Participants with an explanation as to how the options serve such purpose, the information required under Rule 17.02(2)(d) and the disclaimer required under Rule 17.02(4) of the Listing Rules.

Notwithstanding the foregoing and subject to paragraph (r) below, the maximum number of Shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under the Share Option Scheme and any other share option schemes of our Company at any time shall not exceed 30% of our Shares in issue from time to time. No options shall be granted under any schemes of our Company (including the Share Option Scheme) if this will result in the 30% limit being exceeded. The maximum number of Shares in respect of which options may be granted shall be adjusted, in such manner as the auditors of our Company or an approved independent financial advisor shall certify to be appropriate, fair and reasonable in the event of any alteration in the capital structure of our Company in accordance with paragraph (r) below whether by way of capitalization issue, rights issue, sub-division or consolidation of Shares or reduction of share capital of our Company but in no event shall exceed the limit prescribed in this paragraph.

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(e) Maximum number of options to any one individual

The total number of Shares issued and which may fall to be issued upon exercise of the options granted under the Share Option Scheme and any other share option schemes of our Company (including both exercised and outstanding options) to each Eligible Participant in any 12-month period up to the date of grant shall not exceed 1% of our Shares in issue as at the date of grant. Any further grant of options in excess of this 1% limit shall be subject to:

(i) the issue of a circular by our Company to our Shareholders which shall comply with Rules 17.03(4) and 17.06 of the Listing Rules and/or such other requirements as prescribed under the Listing Rules from time to time. The circular to be issued by our Company shall contain the identity of the Eligible Participant, the numbers of and terms of the options to be granted (and options previously granted to such participant), the information as required under Rule 17.02(2)(c) and (d) and the disclaimer required under 17.02(4) of the Listing Rules; and

(ii) the approval of our Shareholders in general meeting and/or other requirements prescribed under the Listing Rules from time to time with such Eligible Participant and his/her close associates (as defined in the Listing Rules) (or his/her associates if the Eligible participant is a connected person (as defined in the Listing Rules)) abstaining from voting. The numbers and terms (including the exercise price) of options to be granted to such participant must be fixed before our Shareholders’ approval and the date of the Board meeting at which the Board proposes to grant the options to such Eligible Participant shall be taken as the date of grant for the purpose of calculating the subscription price of our Shares. The Board shall forward to such Eligible Participant an offer document in such form as the Board may from time to time determine which states (or, alternatively, documents accompanying the offer document which state), among others:

(aa) the Eligible Participant’s name, address and occupation;

(bb) the date on which an Option is offered to an Eligible Participant which must be a date on which the Stock Exchange is open for the business of dealing in securities;

(cc) the date upon which an offer for an option must be accepted;

(dd) the date upon which an option is deemed to be granted and accepted in accordance with paragraph (c) above;

(ee) the number of Shares in respect of which the option is offered;

(ff) the subscription price and the manner of payment of such price for our Shares on and in consequence of the exercise of the option;

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(gg) the date of the expiry of the option as may be determined by the Board; and

(hh) the method of acceptance of the Option which shall, unless the Board otherwise determines, be as set out in paragraph (c) above.

(iii) other terms and conditions (including, without limitation, any minimum period for which an option must be held before it can be exercised and/or any performance targets which must be achieved before the option can be exercised) relating to the offer of the option which in the opinion of the Board are fair and reasonable but not being inconsistent with the Share Option Scheme and the Listing Rules.

(f) Price of Shares

Subject to any adjustments made as described in paragraph (r) below, the subscription price of a Share in respect of any particular option granted under the Share Option Scheme shall be be determined by the Board in its absolute discretion, but in any event must be at least the higher of:

(i) the official closing price of our Shares as stated in the Stock Exchange’s daily quotation sheets on the date on which such option is offered in writing to our Eligible Participant, which must be a day on which the Stock Exchange is open for the business of dealing in securities;

(ii) the average of the official closing prices of our Shares as stated in the Stock Exchange’s daily quotation sheets for the five business days immediately preceding the date on which such option is offered in writing to our Eligible Participant; and

(iii) the nominal value of a Share.

(g) Granting options to a director, chief executive or substantial shareholder of our Company or any of their respective associates

Any grant of options to a director, chief executive or substantial shareholder (as defined in the Listing Rules) of our Company or any of their respective associates (as defined in the Listing Rules) is required to be approved by the independent non-executive Directors (excluding any independent non-executive Director who is the grantee of the options). If the Board proposes to grant options to a substantial shareholder or any independent non-executive Director or their respective associates (as defined in the Listing Rules) which will result in the number of Shares issued and to be issued upon exercise of options granted and to be granted (including options exercised, canceled and outstanding) to such person in the 12-month period up to and including the date of such grant:

(i) representing in aggregate over 0.1% or such other percentage as may be from time to time provided under the Listing Rules of our Shares in issue on the date of offer of the option; and

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(ii) having an aggregate value, based on the official closing price of our Shares as stated in the daily quotation sheets of the Stock Exchange on the date of each grant, in excess of HK$5 million or such other sum as may be from time to time provided under the Listing Rules, based on the official closing price of our Shares at the date of each grant, such further grant of options will be subject to the issue of a circular by our Company and the approval of our Shareholders in general meeting on a poll at which the grantee, his/her associates and all core connected persons (as defined in the Listing Rules) of our Company shall abstain from voting in favor, and/or such other requirements prescribed under the Listing Rules from time to time. Any vote taken at the meeting to approve the grant of such options shall be taken as a poll.

The circular to be issued by our Company to our Shareholders pursuant to the above paragraph shall contain the following information:

(i) the details of the number and terms (including the exercise price) of the options to be granted to each selected Eligible Participant which must be fixed before our Shareholders’ meeting and the date of Board meeting for proposing such further grant shall be taken as the date of grant for the purpose of calculating the exercise price of such options;

(ii) a recommendation from the independent non-executive Directors (excluding any independent non-executive Director who is the grantee of the options) to the independent Shareholders as to voting;

(iii) the information required under Rule 17.02(2)(c) and (d) and the disclaimer required under Rule 17.02(4) of the Listing Rules; and

(iv) the information required under Rule 2.17 of the Listing Rules.

(h) Restrictions on the times of grant of options

A grant of options shall not be made after inside information has come to the knowledge of our Company until it has announced such inside information pursuant to the requirements of the Listing Rules and the Inside Information Provisions of Part XIVA of the SFO. In particular, no options shall be granted during the period commencing one month immediately preceding the earlier of:

(i) the date of the Board meeting (as such date to first notified to the Stock Exchange in accordance with the Listing Rules) for the approval of our annual results or our results for half-year, quarterly or other interim period (whether or not required under the Listing Rules); and

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(ii) the deadline for our Company to publish an announcement of our annual results or our results for half-year, or quarterly or other interim period (whether or not required under the Listing Rules), and ending on the date of actual publication of the results for such year, half year, quarterly or interim period (as the case may be), and where an option is granted to a Director:

(aa) no options shall be granted during the period of 60 days immediately preceding the publication date of the annual results or, if shorter, the period from the end of the relevant financial year up to the publication date of the results; and

(bb) during the period of 30 days immediately preceding the publication date of the quarterly results (if any) and half-year results or, if shorter, the period from the end of the relevant quarterly or half-year period up to the publication date of the results.

(i) Rights are personal to grantee

An option and an offer to grant an option shall be personal to the grantee and shall not be transferrable or assignable. No grantee shall in any way sell, transfer, charge, mortgage, encumber or create any interest (legal or beneficial) in favor of any third party over or in relation to any option held by him/her or any offer relating to the grant of an option made to him/her or attempt so to do (save that the grantee may nominate a nominee in whose name our Shares issued pursuant to the Share Option Scheme may be registered). Any breach of the foregoing shall entitle our Company to cancel any outstanding options or any part thereof granted to such grantee.

(j) Time of exercise of option and duration of the Share Option Scheme

An option may be exercised in accordance with the terms of the Share Option Scheme at any time after the date upon which the option is deemed to be granted and accepted and prior to the expiry of 10 years from that date. The period during which an option may be exercised will be determined by the Board in its absolute discretion, save that no option may be exercised more than 10 years after it has been granted. No option may be granted more than 10 years after the [REDACTED]. Subject to earlier termination by our Company in general meeting or by the Board, the Share Option Scheme shall be valid and effective for a period of 10 years from the [REDACTED].

(k) Performance target

A grantee may be required to achieve any performance targets as the Board may then specify in the grant before any options granted under the Share Option Scheme can be exercised.

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(l) Rights on ceasing employment or death

If the grantee of an option ceases to be an employee of our Company or any of its subsidiaries:

(i) by any reason other than death or termination of his employment on the grounds specified in paragraph (m) below, the grantee may exercise the option up to the entitlement of the grantee as at the date of cessation (to the extent not already exercised) within a period of one month from such cessation; or

(ii) by reason of death, his/her personal representative(s) may exercise the option within a period of 12 months from such cessation, which date shall be the last actual working day with our Company or the relevant subsidiary whether salary is paid in lieu of notice or not, failing which it will lapse.

(m) Rights on dismissal

If the grantee of an option ceases to be an employee of our Company or any of its subsidiaries on the grounds that he/she has been guilty of serious misconduct, or has been convicted of any criminal offense involving his/her integrity or honesty or in relation to an employee of our Group (if so determined by the Board), or has become insolvent, bankrupt or has made arrangements or compositions with his/her creditors generally, or on any other ground on which an employee would be entitled to terminate his/her employment at common law or pursuant to any applicable laws or under the grantee’s service contract with our Group, his/her option will lapse and not be exercisable after the date of termination of his/her employment.

(n) Rights on takeover

If a general offer is made to all our Shareholders (or all such Shareholders other than the offeror and/or any person controlled by the offeror and/or any person acting in concert with the offeror (as defined in the Takeovers Codes)) and such offer becomes or is declared unconditional during the option period of the relevant option, the grantee of an option shall be entitled to exercise the option in full (to the extent not already exercised) at any time within 14 days after the date on which the offer becomes or is declared unconditional.

(o) Rights on winding-up

In the event a notice is given by our Company to its members to convene a general meeting for the purposes of considering, and if thought fit, approving a resolution to voluntarily wind-up our Company, our Company shall forthwith give notice thereof to all grantees and thereupon, each grantee (or his/her legal personal representative(s)) shall be entitled to exercise all or any of his/her options (to the extent not already exercised) at any time not later than two business days prior to the proposed general meeting of our Company referred to above by giving notice in writing to our Company, accompanied by a remittance or payment for the full amount of the aggregate subscription price for our Shares in respect of which the notice is given, whereupon our Company shall as soon as possible and, in any event, no later than the business day immediately prior to the date of the proposed general meeting, allot the relevant Shares to the grantee credited as fully paid and register the grantee as holder thereof.

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(p) Rights on compromise or arrangement between our Company and its members or creditors

If a compromise or arrangement between our Company and its members or creditors is proposed for the purposes of a scheme for the reconstruction of our Company or its amalgamation with any other companies pursuant to the laws of jurisdictions in which our Company was incorporated, our Company shall give notice to all the grantees of the options on the same day as it gives notice of the meeting to its members or creditors summoning the meeting to consider such a compromise or arrangement and any grantee may by notice in writing to our Company accompanied by a remittance or payment for the full amount of the aggregate subscription price for our Shares in respect of which the notice is given (such notice to be received by our Company not later than two business days prior to the proposed meeting), exercise the option to its full extent or to the extent specified in the notice and our Company shall as soon as possible and in any event no later than 12:00 noon (Hong Kong time) on the business day immediately prior to the date of the proposed meeting, allot and issue such number of Shares to the grantee which falls to be issued on such exercise of the option credited as fully paid and register the grantee as holder thereof.

With effect from the date of such meeting, the rights of all grantees to exercise their respective options shall forthwith be suspended. Upon such compromise or arrangement becoming effective, all options shall, to the extent that they have not been exercised, lapse and determine. If for any reason such compromise or arrangement does not become effective and is terminated or lapses, the rights of grantees to exercise their respective options shall with effect from such termination be restored in full but only upon the extent not already exercised and shall become exercisable.

(q) Ranking of Shares

Our Shares to be allotted upon the exercise of an option will not carry voting, dividend or other rights until completion of the registration of the grantee (or any other person nominated by the grantee) as the holder thereof. Subject to the aforesaid, Shares issued and allotted on the exercise of options shall be subject to the provisions of the articles of association of our Company will carry the same rights in all respects and shall have the same voting, dividend, transfer and other rights, including those arising on liquidation as attached to the other fully-paid Shares in issue on the date of issue and rights in respect of any dividend or other distributions paid or made on or after the date of issue.

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(r) Effect of alterations to capital

In the event of any alteration in the capital structure of our Company whilst any option may become or remains exercisable, whether by way of capitalization issue, rights issue, open offer (if there is a price dilutive element), consolidation, sub-division or reduction of share capital of our Company, or otherwise howsoever, such corresponding alterations (if any) shall be made in the number of Shares subject to any options so far as unexercised and/or the subscription price per Share of each outstanding option as the auditors of our Company or an independent financial advisor shall certify in writing to the Board to be in their/his/her opinion fair and reasonable in compliance with Rule 17.03(13) of the Listing Rules and the note thereto and the supplementary guidance issued by the Stock Exchange on September 5, 2005 and any future guidance and interpretation of the Listing Rules issued by the Stock Exchange from time to time and the note thereto. The capacity of the auditors of our Company or the approved independent financial advisor, as the case may be, in this paragraph is that of experts and not arbitrations and their certificate shall, in absence of manifest error, be final and conclusive and binding on our Company and the grantees.

Any such alterations will be made on the basis that a grantee shall have the same proportion of the issued share capital of our Company for which any grantee of an option is entitled to subscribe pursuant to the options held by him/her before such alteration and the aggregate subscription price payable on full exercise of any option is to remain as nearly as possible the same (and in any event not greater than) as it was before such event. No such alteration will be made the effect of which would be to enable a Share to be issued at less than its nominal value. The issue of securities as consideration in a transaction is not to be regarded as a circumstance requiring any such alterations.

(s) Expiry of option

An option shall lapse automatically and not be exercisable (to the extent not already exercised) on the earliest of:

(i) the date of expiry of the option as may be determined by the Board;

(ii) the expiry of any of the periods referred to in paragraphs (l), (m), (n), (o) or (p);

(iii) the date on which the scheme of arrangement of our Company referred to in paragraph (p) becomes effective;

(iv) subject to paragraph (o), the date of commencement of the winding-up of our Company;

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(v) the date on which the grantee ceases to be an Eligible Participant by reason of such grantee’s resignation from the employment of our Company or any of our subsidiaries or the termination of his/her employment or contract on any one or more of the grounds that he/she has been guilty of serious misconduct, or has been convicted of any criminal offense involving his/her integrity or honesty, or in relation to an employee of our Group (if so determined by the Board), or has been insolvent, bankrupt or has made compositions with his/her creditors generally or any other ground on which an employee would be entitled to terminate his/her employment at common law or pursuant to any applicable laws or under the grantee’s service contract with our Group. A resolution of the Board to the effect that the employment of a grantee has or has not been terminated on one or more of the grounds specified in this paragraph shall be conclusive; or

(vi) the date on which the Board shall exercise our Company’s right to cancel the option at any time after the grantee commits a breach of paragraph (i) above or the options are canceled in accordance with paragraph (u) below.

(t) Alteration of the Share Option Scheme

The Share Option Scheme may be altered in any respect by resolution of the Board except that:

(i) any alteration to the advantage of the grantees or the Eligible Participants (as the case may be) in respect of the matters contained in Rule 17.03 of the Listing Rules; or

(ii) any material alteration to the terms and conditions of the Share Option Scheme or any change to the terms of options granted, must be made with the prior approval of our Shareholders in general meeting provided that if the proposed alteration shall adversely affect any option granted or agreed to be granted prior to the date of alteration, such alteration shall be further subject to the grantees’ approval in accordance with the terms of the Share Option Scheme. The amended terms of the Share Option Scheme shall still comply with Chapter 17 of the Listing Rules and any change to the authority of the Board in relation to any alteration to the terms of the Share Option Scheme must be approved by Shareholders in general meeting.

(u) Cancelation of options

Any cancelation of options granted but not exercised must be approved by the grantees of the relevant options in writing. For the avoidance of doubt, such approval is not required in the event any option is canceled pursuant to paragraph (i).

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(v) Termination of the Share Option Scheme

Our Company may by resolution in general meeting or the Board at any time terminate the Share Option Scheme and in such event no further option shall be offered but the provisions of the Share Option Scheme shall remain in force to the extent necessary to give effect to the exercise of any option granted prior thereto or otherwise as may be required in accordance with the provisions of the Share Option Scheme. Options granted prior to such termination but not yet exercised at the time of termination shall continue to be valid and exercisable in accordance with the Share Option Scheme.

(w) Administration of the Board

The Share Option Scheme shall be subject to the administration of the Board whose decision as to all matters arising in relation to the Share Option Scheme or its interpretation or effect (save as otherwise provided herein) shall be final and binding on all parties.

(x) Conditions of the Share Option Scheme

The Share Option Scheme shall take effect subject to and is conditional upon:

(i) the passing of the necessary resolutions by our Shareholders to approve and adopt the rules of the Share Option Scheme;

(ii) the Listing Committee of the Stock Exchange granting the approval for the [REDACTED] of and permission to [REDACTED], our Shares which may fall to be issued pursuant to the exercise of options to be granted under the Share Option Scheme;

(iii) the obligations of the [REDACTED] under the [REDACTED] becoming unconditional (including, if relevant, as a result of the waivers of any such condition(s) by the [REDACTED] (on behalf of the [REDACTED])) and not being terminated in accordance with the terms of the [REDACTED] or otherwise;

(iv) the commencement of [REDACTED] our Shares on the Stock Exchange.

If the conditions in paragraph (x) above are not satisfied within six calendar months from the adoption date:

(i) the Share Option Scheme shall forthwith determine;

(ii) any option granted or agreed to be granted pursuant to the Share Option Scheme and any offer of such a grant shall be of no effect; and

(iii) no person shall be entitled to any rights or benefits or be under any obligations under or in respect of the Share Option Scheme or any option granted thereunder.

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(y) Disclosure in annual and interim reports

Our Company will disclose details of the Share Option Scheme in its annual and interim reports including the number of options, date of grant, exercise price, exercise period and vesting period during the financial year/period in the annual/interim reports in accordance with the Listing Rules in force from time to time.

(z) Present status of the Share Option Scheme

As of the Latest Practicable Date, no option had been granted or agreed to be granted under the Share Option Scheme.

Application has been made to the Listing Committee of the Stock Exchange for the [REDACTED] of and permission to [REDACTED] our Shares which may fall to be issued pursuant to the exercise of the options to be granted under the Share Option Scheme, being [REDACTED] Shares in total.

E. OTHER INFORMATION

1. Tax and other indemnities

Our Controlling Shareholders [have entered] into the Deed of Indemnity with and in favor of our Company (for ourselves and as trustee for each of our subsidiaries) to provide indemnities on a joint and several basis in respect of, among other matters, (i) any liability for estate duty under the Estate Duty Ordinance (Chapter 111 of the Laws of Hong Kong), or legislation similar thereto in Hong Kong or any jurisdictions outside Hong Kong which might be incurred by any member of our Company on or before the [REDACTED]; (ii) any claims, penalties or other indebtedness resulting from the non-compliance incidents during the Track Record Period as disclosed in “Business—Legal Proceedings and Compliance—Non- compliance Incidents;” (iii) any claims, penalties or other indebtedness resulting from any insufficient contribution to social insurance and housing provident funds during the Track Record Period as disclosed in “Business—Employees;” and (iv) other taxation which may be suffered by any member of our Group in respect of, among other things, any income, profits or gains earned, accrued or received on or before the [REDACTED], save (a) to the extent that specific provision or reserve has been made for such taxation in the audited combined financial statements of our Group as set out in Appendix I; (b) to the extent that the liability for such taxation would not have arisen but for any act or omission of, or delay by, any member of our Group after the [REDACTED]; and (c) to the extent such loss arises or is incurred only as a result of a retrospective change in law or regulations or the interpretation or practice thereof by any relevant authority coming into force after the [REDACTED].

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2. Litigation

Save as disclosed in “Business—Legal Proceedings and Compliance,” as of the Latest Practicable Date, no member of our Group was engaged in any litigation or arbitration of material importance and, so far as our Directors are aware, no litigation or claim of material importance is pending or threatened by or against any member of our Group.

3. Sole Sponsor

The Sole Sponsor satisfies the independence criteria applicable to sponsor set out in Rule 3A.07 of the Listing Rules. The Sole Sponsor will receive an aggregate fee of US$800,000 for acting as the sponsor for the [REDACTED].

The Sole Sponsor have made an application on our Company’s behalf to the Listing Committee of the Stock Exchange for the approval for the [REDACTED] of, and permission to [REDACTED], all the Shares in issue and to be issued as mentioned in this document. All necessary arrangements have been made for the Shares to be admitted into CCASS.

4. Preliminary expenses

The preliminary expenses incurred and paid by our Company relating to the incorporation of our Company were approximately RMB18,500.

5. No material adverse change

Saved as disclosed in this document, our Directors confirm that there has been no material adverse change in our Group’s financial or trading position since December 31, 2020 (being the date on which the latest audited combined financial information of our Group was prepared).

6. Promoter

Our Company has no promoter. Within the two years immediately preceding the date of this document, no cash, securities or other benefit has been paid, allotted or given nor are any proposed to be paid, allotted or given to any promoters in connection with the [REDACTED] and the related transactions described in this document.

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7. Taxation of holders of Shares

(a) Hong Kong

The sale, purchase and transfer of Shares registered with our Company’s Hong Kong branch register of members will be subject to Hong Kong stamp duty. The current rate charged on each of the purchaser and seller is 0.1% of the consideration or, if higher, the fair value of the Shares being sold or transferred. Profits from dealings in the Shares arising in or derived from Hong Kong may also be subject to Hong Kong profits tax.

(b) Cayman Islands

Under the present Cayman Islands law, there is no stamp duty payable in the Cayman Islands on transfer of Shares.

Intending holders of the Shares are recommended to consult their professional advisors if they are in doubt as to the taxation implications of holding or disposing of or dealing in the Shares. It is emphasized that none of our Company, our Directors or the other parties involved in the [REDACTED] will accept responsibility for any tax effect on, or liabilities of, holders of Shares resulting from their holding or disposal of or dealing in Shares or exercise of any rights attaching to them.

8. Qualifications of experts

The following are the qualifications of the experts who have given opinions or advice which are contained in this document:

Name Qualifications

Guotai Junan Capital Limited ...... Licensed corporation under the SFO to conduct Type 6 (advising on corporate finance) regulated activities as defined under the SFO

Ernst & Young ...... Certified Public Accountants and Registered Public Interest Entity Auditor

Conyers Dill & Pearman ...... Cayman Islands attorneys-at-law

Commerce & Finance Law Offices. . PRC legal advisors

China Index Academy ...... Industry consultant

Jones Lang LaSalle Corporate Property valuer Appraisal and Advisory Limited . .

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9. Consents of experts

Each of the experts named in “—8. Qualifications of experts” above has given and has not withdrawn its written consent to the issue of this document with the inclusion of its reports, letters, opinions, summaries of opinions and/or references to its names included herein in the form and context in which they respectively appear.

10. Interests of experts in our Company

None of the persons named in “—8. Qualifications of experts” above is interested beneficially or otherwise in any Shares or shares of any member of our Group or has any right or option (whether legally enforceable or not) to subscribe for or nominate persons to subscribe for any shares or securities in any member of our Group.

11. Binding effect

This document shall have the effect, in an application is made in pursuance of it, of rendering all persons concerned bound by all of the provisions (other than the penal provisions) of sections 44A and 44B of the Companies (Winding Up and Miscellaneous Provisions) Ordinance so far as applicable.

12. Miscellaneous

(a) Within the two years immediately preceding the date of this document:

(i) save as disclosed in “History, Reorganization and Corporate Structure” in this document, no share or loan capital of our Company or any of our subsidiaries has been issued or agreed to be issued fully or partly paid either for cash or for a consideration other than cash;

(ii) no share or loan capital of our Company or any of our subsidiaries is under option or is agreed conditionally or unconditionally to be put under option;

(iii) no commissions, discounts, brokerages or other special terms have been granted in connection with the issue or sale of any capital of our Company or any of our subsidiaries; and

(iv) no commission has been paid or payable subscribing, agreeing to subscribe or procuring subscription or agreeing to procure subscription for any shares in our Company or any of our subsidiaries;

(b) no founder, management or deferred Shares nor any debenture in our Company or any of our subsidiaries have been issued or agreed to be issued;

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(c) there has not been any interruption in the business of our Group which may have or has had a significant effect on the financial position of our Group in the 12 months preceding the date of this document;

(d) the [REDACTED] of our Company will be maintained in the Cayman Islands by [REDACTED]anda[REDACTED] of our Company will be maintained in Hong Kong by [REDACTED]. Unless our Directors otherwise agree, all transfer and other documents of title of Shares must be lodged for registration with and registered by our Company’s share register in Hong Kong and may not be lodged in the Cayman Islands. All necessary arrangements have been made to enable the Shares to be admitted to CCASS;

(e) no company within our Group is presently listed on any stock exchange or traded on any trading system;

(f) our Directors have been advised that under the Cayman Islands Companies Act the use of a Chinese name by our Company in conjunction of our Company’s English name does not contravene the Cayman Islands Companies Act;

(g) our Company has no outstanding convertible debt securities or debentures; and

(h) there is no restriction affecting the remittance of profits or repatriation of capital into Hong Kong and from outside Hong Kong.

13. Bilingual document

The English language and Chinese language versions of this document are being published separately in reliance upon the exemption provided by section 4 of the Companies (Exemption of Companies and Prospectuses from Compliance with Provisions) Notice (Chapter 32L of the Laws of Hong Kong).

In case of any discrepancies between the English language version and Chinese language version of this document, the English language version shall prevail.

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A. DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES

The documents attached to this document and delivered to the Registrar of Companies in Hong Kong for registration were (a) a copy of the [REDACTED]; (b) the written consents referred to in “Appendix V—Statutory and general information—D. Other Information—9. Consents of experts;” and (c) a copy of each of the material contracts referred to in “Appendix V—Statutory and general information—B. Further information about our business—1. Summary of material contracts.”

B. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the office of Sidley Austin at Level 39, Two International Finance Centre, 8 Finance Street, Central, Hong Kong during normal business hours from 9:30 a.m. to 5:30 p.m. up to and including the date which is 14 days from the date of this document:

(a) the Memorandum of Association and the Articles of Association;

(b) the Accountants’ Report prepared by Ernst & Young, the text of which is set out in Appendix I to this document;

(c) the report from Ernst & Young in respect of the unaudited pro forma financial information, the text of which is set out in Appendix II to this document;

(d) the audited combined financial statements of our Group for the financial years ended December 31, 2018, 2019 and 2020;

(e) the letter, summary of valuations and valuation certificates relating to the property interests of our Group prepared by Jones Lang LaSalle Corporate Appraisal and Advisory Limited, the texts of which are set out in Appendix III to this document;

(f) the legal opinions dated the document date issued by Commerce & Finance Law Offices, our legal advisors as to PRC law, in respect of certain aspects, general corporate matters and property interests of our Group;

(g) the letter of advice dated the document date issued by Conyers Dill & Pearman, our legal advisors as to Cayman Islands law, summarizing certain aspects of the company law of the Cayman Islands referred to in Appendix IV to this document;

(h) the industry report issued by China Index Academy;

(i) the Cayman Islands Companies Act;

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(j) copies of the material contracts referred to in “Appendix V—Statutory and General Information—B. Further information about our business—1. Summary of material contracts;”

(k) the service agreements and letters of appointment entered into between our Company and each of the Directors (as applicable);

(l) the rules of the Share Option Scheme; and

(m) the written consents referred to in “Appendix V—Statutory and General Information—E. Other information—9. Consents of experts.”

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