Mainland China and Kong 2017 Q1 Capital Markets Overview and IPO Markets Update Foreword

In 2017 Q1, the Mainland China stock market grew steadily on the back of a stabilising economy and improved market sentiment. Continuing the momentum from 2016 Q4, the A-share IPO market remained active with both the number of listings and the amount of funds raised one of the highest in recent years. In Hong Kong, an influx of capital from Chinese investors prompted by the attractive valuations of the Hong Kong stock market and volatility expectations helped propel the and trading turnover to an 18-month high. The number of IPOs recorded in 2017 Q1 was the highest in more than two decades, reflecting a strong demand in the primary market. Our latest quarterly update contains key observations of the Mainland China and Hong Kong stock markets as well as upcoming developments of the bond markets. In addition, it analyses Hong Kong and A-share IPOs from various perspectives and includes our outlook for the primary equities market for the rest of 2017.

© 2017 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Hong Kong. 2 Capital Markets Overview Mainland China IPO Market Hong Kong IPO Market Capital Markets Overview • Market Highlights • Mainland China Stock Market • Hong Kong Stock Market • Stock Connect • Mainland China Debt Market • Hong Kong Debt Market Market Highlights

• The Mainland China stock market grew steadily on the back of a stabilising economy and improved market sentiment. The Shanghai Composite Index and Shenzhen Composite Index ended the quarter at 3,223 and 1,986, which translate to year-to-date increases of 3.8 percent and 0.9 percent, respectively. The daily turnover of both exchanges also increased.

• The Shanghai and the came in second and third, respectively, in the 2017 Q1 global rankings in terms of funds raised. A total of 134 IPOs worth a combined RMB 70 billion were recorded – the highest first quarter figures since 2014.

• Capital is flowing into Hong Kong as Chinese investors seek to take advantage of relatively low stock valuations. The inflows are also the result of Renminbi depreciation expectations.

• Inflows into Hong Kong were most pronounced in the first quarter. The Hang Seng Index closed the quarter at 24,112, the highest over the past one and a half years. The average daily turnover in 2017 Q1 also jumped by 28 percent to HKD 60 billion compared to HKD 47 billion in 2016 Q4.

• Hong Kong recorded 20 MB IPOs and 19 GEM IPOs in 2017 Q1, the highest first quarter figures in more than two decades. However, funds raised of HKD 13 billion was the lowest first quarter figure since 2014.

© 2017 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Hong Kong. 5 Mainland China’s Stock Market - Steady Growth in 2017 Q1

Stabilising Expected economy recovery Improved of exports market sentiment

Steady growth

31 Dec. 2015 31 Dec. 2016 31 Mar. 2017

Shanghai Stock Exchange:

SSE Composite Index 3,539 3,104 3,223

Equity Securities Average Daily Turnover RMB 314B RMB 202B RMB 221B

A-share Average P/E Ratio 17.6x 15.9x 16.9x Shenzhen Stock Exchange: SZSE Composite Index 2,309 1,969 1,986

Equity Securities Average Daily Turnover RMB 479B RMB 245B RMB 280B

A-share Average P/E Ratio 53.3x 41.6x 40.4x

Source: Wind and iFinD © 2017 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Hong Kong. 6 – 2017 Q1 Statistics

SSE Composite Index*

3,300 3,223 3,223 in Mar 2017 3,200 3,104 3,100 3,000 2,930 2,900 3.8% 2,800 2,738 2,700 2,600 3,104 in Dec 2016

Source: Wind SSE Equity Securities Average Daily Turnover# RMB’ billion 700 RMB 221B 600 500 in Mar 2017 400 221 300 217 190 202 200 100 9.4% - RMB 202B in Dec 2016

Source: Wind and iFinD SSE A-share Average P/E Ratio* 18.0 16.9 x 16.9x in Mar 2017 17.0 15.9 x 16.0 15.0 14.4 x 6.3% 14.0 13.7 x 13.0

15.9x in Dec 2016

* Month-end figures Source: Wind and iFinD # Average daily turnover includes trading turnover from stocks. Trading turnover from funds, bonds, warrants and preferred stocks are excluded.

© 2017 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Hong Kong. 7 Shenzhen Stock Exchange – 2017 Q1 Statistics

SZSE Composite Index*

2,200 in Mar 2017 2,100 1,986 1,974 1,986 2,000 1,969 1,900 1,800 1,689 0.9% 1,700 1,600

1,969 in Dec 2016 Source: Wind SZSE Equity Securities Average Daily Turnover# RMB’ billion 384 400 RMB 280B 350 324 280 300 in Mar 2017 245 250 200 150 14.3% 100 RMB 245B in Dec 2016

Source: Wind and iFinD SZSE A-share Average P/E Ratio*

45.0 40.4x in Mar 2017 43.0 41.6 x 40.7 x 40.4 x 41.0 39.3 x 39.0 (2.9%)

37.0

41.6x in Dec 2016 Source: Wind and iFinD * Month-end figures # Average daily turnover includes trading turnover from stocks. Trading turnover from funds, bonds, warrants and preferred stocks are excluded.

© 2017 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Hong Kong. 8 Hong Kong Stock Market - Strong 2017 Q1

Capital inflows Attractive Increased capital valuations inflows from Mainland Hong Kong-listed Chinese investors companies generally amid RMB trade at a lower P/E ratio depreciation compared to the China- expectations listed stocks

Strong performance

31 Dec 2015 31 Dec 2016 31 Mar 2017

Hang Seng Index 21,914 22,001 24,112

HKEx Equity Securities Average Daily Turnover HKD 40B HKD 47B HKD 60B

HKEx Main Board Average P/E Ratio 9.9x 10.5x 13.0x

Source: HKEx and iFinD

© 2017 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Hong Kong. 9 The Stock Exchange of Hong Kong – 2017 Q1 Statistics

Hang Seng Index*

25,000 24,112 in Mar 2017 24,000 24,112 23,000 22,001 22,000 20,794 21,000 20,000 19,683 9.6% 19,000 18,000

22,001 in Dec 2016 Source: HKEx HKEx Equity Securities Average Daily Turnover# HKD’ billion 65 60 60 HKD 60B 55 50 in Mar 2017 50 47 45 43 40 35 27.7% 30

HKD 47B in Dec 2016 Source: HKEx and iFinD HKEx Main Board Average P/E Ratio* 13.0 x 13.0 13.0x in Mar 2017 12.0 11.0 10.5 x 9.8 x 10.0 8.8 x 23.8% 9.0 8.0

10.5x in Dec 2016 Source: HKEx

* Month-end figures # Average daily turnover includes trading turnover from equity securities. Trading turnover from derivative warrants, CBBCs, and unit trusts are excluded.

© 2017 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Hong Kong. 10 Stock Connect ~ Increased trading turnover

Stock Connect continues to experience an increase in turnover since the launch of SZ-HK Stock Connect in December 2016. The average daily Southbound turnover increased comparing to previous quarter, contributing to 13% the average daily turnover of Hong Kong equity securities in 2017 Q1.

Southbound Investments Average Daily Turnover Northbound Investments Average Daily Turnover HKD’ billion RMB’ billion

9.0 9.0 8.0 8.0 7.0 7.0 3.5 6.0 6.0 5.0 3.1 5.0 2.7 2.1 4.0 4.0 0.8 3.0 3.0 1.5 4.8 1.3 2.0 0.8 Average DailyTurnover 2.0 3.6 3.2 3.4 3.2 Average Average DailyTurnover 1.0 1.0 1.8 1.7 1.5 - -

Northbound Buy Trades Northbound Sell Trades Southbound Buy Trades Southbound Sell Trades

Source: HKEx Source: HKEx

© 2017 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Hong Kong. 11 Mainland China Debt Market

Proceeds from Debt Securities issued in the Inter-bank Bond Market, SSE and SZSE

RMB’ billion

40,000 36,605 35,000 World’s 3rd largest

30,000 24,327 25,000 debt market with RMB 66 trillion 20,000 outstanding at the end of 2017 Q1. Bond 15,000 12,190 Connect will provide offshore investors an 8,098 9,055 10,000 additional investment channel into China.

Proceeds from Debt Securities 5,000

- 2012 2013 2014 2015 2016

Source: Wind

Fast- Internationalisation 88% 53% growing - corporate - SDR Bonds issued in issued by interbank bond - Greater access for foreign public market investors bond sector market - Bond Connect

* Corporate bond includes MTN, enterprise bonds, and commercial papers

© 2017 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Hong Kong. 12 Hong Kong Debt Market

Proceeds from Debt Securities Listed on HKEx HKD’ billion 1,000 961 Bond Connect is expected to 900 775 800 751 strengthen Hong Kong’s role as the 700 600 576 financial securities gateway into 500 400 341 Mainland China, allowing overseas 300 200 Proceeds from from Proceeds Debt Securities investors to trade onshore bonds from 100 - Hong Kong 2012 2013 2014 2015 2016

Source: HKEx Bond Connect Scheme Premier Li Keqiang announced that Financial Services Bond Connect will be launched in 2017. Development Council released a proposal on Bond HKEx and PBoC indicated that they will Connect. begin preparation work for Bond Connect.

21 Jan 2016 29 Nov 2016 4 Jan 2017 15 Mar 2017 End of 2017

HKEx announced its HKEx released a Expected Launch intention to explore the research report on the Bond Connect scheme offshore RMB market in its 2016-2018 and advised setting up Strategic Plan. Bond Connect.

© 2017 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Hong Kong. 13 Mainland China IPO Market • A-share IPOs Overview • Top 10 A-share IPOs • A-share IPO Pipeline • NEEQ Companies • Outlook A-share IPO Market Overview – 2017 Q1

• Continuing the momentum from 2016 Q4, the A-share IPO market made a strong start with both the number of listings and the amount of funds raised, one of the highest in recent years.

• The momentum in the A-share IPO market has been fuelled by an accelerated IPO approval process since late 2016. Approved IPO cases are now released in batches on an almost weekly basis in 2017 Q1.

• With a clear aim to deal with pending IPO applications in alignment with a market-oriented approach, the normalisation and acceleration of IPO approvals has increased the supply of high - quality companies in the A-share market and will help maintain reasonable valuations in the long run.

• The proportion of companies passing through the approval process declined to 87% in Q1 2017 from over 90% in 2016. This suggests that the bar for IPO approvals has been raised and indicates that the A-share IPO market will focus on both quantity and quality.

• The debt-to-equity swap programmes coupled with supply-side structural reforms and state-owned enterprise reforms would favour the development of the IPO market. Increasing number of NEEQ listed companies applying for an IPO, as well as policies surrounding the development of multi-tiered capital markets will also help set the positive trend for the A-share IPO market in the years ahead.

© 2017 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All 15 rights reserved. Printed in Hong Kong. A-share IPOs: 2017 Q1

…the most first quarter funds raised since 2014 with RMB 70 billion

A quarter of …the most first quarter IPOs in 10 years with 134 IPOs records… … a higher contribution from deals smaller than RMB 1 billion, representing 63 percent of total proceeds (2016 Q4: 49%)

SSE SZSE A – share (SSE & SZSE)

Funds raised Funds raised # of IPOs # of IPOs # of IPOs (RMB’B) (RMB’B) < RMB 1B RMB 1-5B > RMB 5B

2017 Q1 41.8 65 27.8 69 118 16 -

2016 Q1 5.1 9 6.2 15 23 1 -

2016 full year 101.7 103 47.9 124 204 20 3

Source: Wind and KPMG analysis

© 2017 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Hong Kong. 16 A-share IPOs: 2017 Q1 – Sector Breakdown

Number of A-share IPOs (2016) Number of A-share IPOs (2017 Q1)

2%

4%

11% (25) 20% (27) 15% (20)

More non-FS (65 4% 2% 29% ) 5% companies are seeking A- 7% 7% 6% 2% 6% share listings 43% (58) 37% (85)

Proceeds of A-share IPOs (2016) Proceeds of A-share IPOs (2017 Q1)

11% The weightings of 21% (31B) 25% (37B) 1% 18% (13B) 1% 7% 22% (16B) 6% industrials 11%

32% (23B) 5% 27% (41B) 7% 2% and consumer 4%

markets IPO . Financial services . Industrial . Consumer markets increased to . Infrastructure/ Real estate proceeds . Energy and natural resources . Public services and others . Healthcare/ Life sciences 32% and 22%, respectively . Technology, media and telecom

Source: Wind and KPMG analysis

© 2017 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Hong Kong. 17 Top 10 largest A-share IPOs of 2017 Q1 combined for RMB 19 billion, or 27 percent of total proceeds raised. They are mainly from traditional sectors including FS, consumer markets and industrials. Stock Proceeds Company P/E Ratio Sector Exchange (RMB ‘bn) 1 China Galaxy Securities Co.,Ltd. SSE 4.1 7.02x Financial Services 2 Central China Securities Co., Ltd. SSE 2.8 11.23x Financial Services 3 Oppein Home Group Inc. SSE 2.1 22.99x Consumer Markets 4 Yealink Network Technology Corporation Limited SZSE 1.7 15.76x TMT Infrastructure / Real Guangzhou Port Company Limited SSE 1.6 22.98x 5 Estate 6 Guangzhou Shangpin Home Collection Co.,Ltd SZSE 1.5 22.99x Consumer Markets 7 Guangdong Pak Corporation Co., Ltd. SZSE 1.4 22.99x Consumer Markets 8 Shenzhen Kedali Industry Co.,Ltd. SZSE 1.3 22.99x Industrial 9 Huada Automotive Technology Corp.,Ltd SSE 1.2 19.83x Industrial 10 Baiyin Nonferrous Group Co., Ltd. SSE 1.2 556.25x ENR

Source: Wind and KPMG analysis

© 2017 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Hong Kong. 18 A-share IPO Pipeline

Number of IPO applications decreased More ENR, industrials, from and TMT companies are seeking listings

681 to 600

A-share IPO applications - Number of companies A-share IPO applications – Sector breakdown

900 By number of companies 2% 800 11% 700 600 26% (154) 500 16% (95) 400 4%

No. of companies 300 7% 8% 200

100 729 850 786 681 600 26% (159)

0 Consumer Markets ENR 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 Financial Services Healthcare/ Life Sciences Industrial Infrastructure / Real Estate No. of IPO applications TMT Public Services and Others

Source: Wind and KPMG analysis

© 2017 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Hong Kong. 19 NEEQ Companies ~ Transfer to A-shares

Of the 600 A-share IPO applicants at the end of 2017 Q1, 69 are NEEQs. An increasing number of NEEQ companies are seeking A-share listings.

New Pre-IPO Tutoring Registrations - NEEQ Companies

120 110 101 101 NEEQ companies filed pre- 100 90 IPO tutoring registrations 80 in 2017 Q1 70 63 60 52 52 50 45 40 26 30 20 4 10 10 1 1 1 2 3 64 of them are from the industrial 0 or TMT sectors No.of New Pre-IPO Turoring Registrations

Source: Wind and KPMG analysis

© 2017 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Hong Kong. 20 Mainland China outlook

Mainland China’s capital markets will maintain their momentum and the IPO market is expected to remain active in light of: • A stabilising economy and expected recovery in exports • The development of strategic emerging industries as part of China’s innovation- driven economic development • Key role of capital markets in supply side and state-owned enterprises reform • Demand arising from the debt-to-equity swap program and other deleveraging policies

© 2017 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Hong Kong. 21 Hong Kong IPO Market • Hong Kong IPO Overview • Top 10 Hong Kong IPOs • Listing of Overseas Companies • Outlook Hong Kong IPO Market Overview – 2017 Q1

• The Hong Kong IPO market recorded the highest first quarter IPO numbers in more than two decades, reflecting a strong demand in the primary market. However, in terms of IPO proceeds, Hong Kong recorded the lowest first quarter result since 2014 because of the absence of sizeable IPOs.

• Diversification in terms of sectors and geography will enhance the attractiveness and competitiveness of the city’s capital markets and positive trends have been observed from the newly listed companies.

• More overseas companies have been seeking Hong Kong listings since 2016 and there are a number of overseas listing applicants in the pipeline at the moment. Companies from ASEAN countries eyeing opportunities in Mainland China are increasingly interested to list in Hong Kong.

• Diversifying away from traditional sectors and attracting the listings of high-growth industries from the technology, healthcare and life sciences sectors will contribute to long term development of the market. More companies from non-financial services sectors, including education, healthcare and life sciences listed in the first quarter.

• Upcoming consultation by the Hong Kong Exchange and Clearing Limited (HKEx) on the creation of a new board can help to attract start-ups and emerging companies to list in Hong Kong. Together with the review of the GEM board in the consultation, the market is expected to be better stratified to fit the needs of companies at different stages of growth.

• In spite of a number of challenges and uncertainties, Hong Kong still possesses a healthy pipeline of more than [120] active IPO applications. With market liquidity improving, we expect Hong Kong’s IPO market to remain steady with a year-end forecast of 120 IPOs worth a combined HKD 200 billion. The eventual outcome will largely depend on various factors including the destination of several sizeable deals.

© 2017 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Hong Kong. 23 Hong Kong IPOs: 2017 Q1

…the highest number of companies listed in the first quarter over the last two decades A quarter

of …the lowest first quarter funds raised since 2014 with HKD 13 billion records…

…the lowest first quarter average deal size for MB listings since 2010 (HKD 0.6 billion) No IPOs over the size of HKD 5 billion were recorded.

Main Board GEM Board

Funds Funds # of IPOs # of IPOs raised # of IPOs raised (HKD’B) < HKD 1B HKD 1-5B > HKD 5B (HKD’B)

2017 Q1 12.0 20 17 3 - 1.3 19

2016 Q1 29.9 13 8 3 2 0.3 6

2016 full year 190.6 72 48 14 10 4.6 45

Source: HKEx and KPMG analysis

© 2017 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Hong Kong. 24 Hong Kong IPOs: 2017 Q1 - Sector Breakdown

Number of HK IPOs (2016) Number of HK IPOs (2017 Q1) 4 Education 10% 8% companies raised 14% (17) 14% (16) 8% 15% (6) 13% (5) 3% HKD 4 billion in 2017 Q1, 14% (17) 10% accounting for approx. 4% 26% (30) 8% 33% (13) 8% one-third of total funds 12% raised. Proceeds of HK IPOs (2016) Proceeds of HK IPOs (2017 Q1)

3% 3% 2% 2% 5% 27% (3.6B)

10% (19B) 33% (4.4B) The weighting of funds 2% 5% 4%

by 13% 2% raised FS 70% (136B) 18% (2.4B)

companies declined 1% . Financial services . Industrial to in 2017 Q1 (2016 27% . Consumer markets . Infrastructure/ Real estate Q4: 35%). . Energy and natural resources . Public services and others . Healthcare/ Life sciences . Technology, media and telecom

Source: Wind and KPMG analysis

© 2017 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Hong Kong. 25 Top 10 largest Hong Kong IPOs

of 2017 Q1 accounted for 80 percent of total funds raised. Half were from the education and life sciences / healthcare sectors.

Funds raised P/E Company Sector (HKD bn) Ratio 1 Jilin Jiutai Rural Commercial Bank 3.5 10.1x Financial Services

2 China YuHua Education 1.8 17.6x Education

3 Minsheng Education 1.4 21.2x Education

4 New Century Healthcare 1.0 112.6x Life Sciences / Healthcare

5 Wisdom Education Int’l 0.9 19.7x Education

6 Able Engineering Holdings 0.6 11.9x Infrastructure / Real Estate

7 Luzhou Xinglu Water 0.5 13.4x Infrastructure / Real Estate

8 Hospital Corporation of China 0.4 44.4x Life Sciences / Healthcare

9 Chanhigh Holdings 0.3 10.1x Infrastructure / Real Estate

10 Morris Holdings 0.3 12.9x Consumer Markets

Source: Wind and KPMG analysis

© 2017 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All 26 rights reserved. Printed in Hong Kong. Listing of overseas companies

More overseas companies are seeking HK listings. These companies are mostly from the ASEAN countries. More than 10 overseas companies are in active application as of the end of Q1. They are mostly from the industrial, infrastructure / real estate and TMT sectors.

2014 2015 2016 2017 Q1 2 11 Overseas IPOs 2 2 106 Hong Kong and 119 37 Mainland IPOs 107

Total number of IPOs 109 121 117 39

Source: Wind and KPMG analysis

© 2017 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Hong Kong. 27 Outlook for Hong Kong

KPMG China expects Hong Kong’s IPO market to remain steady with a year-end forecast of 120 IPOs worth a combined HKD 200 billion. The eventual outcome will largely depend on the following factors:

• Final choice of listing venue of sizeable deals • Capital inflows into Hong Kong • Fundraising demand of Mainland China and Hong Kong companies • Potential impact of further US interest rate hikes

© 2017 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Hong Kong. 28 Contact us

Paul Lau Head of Capital Markets Advisory Group KPMG China Tel.: +852 2826 8010 [email protected]

Katharine Wong Partner, Capital Markets Advisory Group KPMG China Tel.: +852 2978 8195 [email protected]

Anthony Ho Partner, Capital Markets Advisory Group KPMG China Tel.: +852 2143 8533 [email protected]

© 2017 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Hong Kong. 29 Mainland China Beijing Beijing Zhongguancun Chengdu Chongqing Foshan 8th Floor, KPMG Tower Room 603, Flat B 17th Floor, Office Tower 1, IFS Unit 1507, 15th Floor 8th Floor, One AIA Financial Center Oriental Plaza China Electronic Plaza No. 1, Section 3 Hongxing Road Metropolitan Tower 1 East Denghu Road 1 East Chang An Avenue No.3 Danling Street Chengdu, 610021, China 68 Zourong Road Foshan 528200, China Beijing 100738, China Beijing 100080, China Tel : +86 (28) 8673 3888 Chongqing 400010, China Tel : +86 (757) 8163 0163 Tel : +86 (10) 8508 5000 Tel : +86 (10) 5875 2555 Fax : +86 (28) 8673 3838 Tel : +86 (23) 6383 6318 Fax: +86 (757) 8163 0168 Fax : +86 (10) 8518 5111 Fax : +86 (10) 5875 2558 Fax : +86 (23) 6383 6313

Fuzhou Guangzhou Hangzhou Nanjing Qingdao Unit 1203A, 12th Floor 21st Floor, CTF Finance Centre 8th Floor, West Tower 46th Floor, Zhujiang No.1 Plaza 4th Floor, Inter Royal Building Sino International Plaza 6 Zhujiang East Road Julong Building, 9 Hangda Road 1 Zhujiang Road 15 Donghai West Road 137 Wusi Road Zhujiang New Town Hangzhou 310007, China Nanjing 210008, China Qingdao 266071, China Fuzhou 350003, China Guangzhou 510623, China Tel : +86 (571) 2803 8000 Tel : +86 (25) 8691 2888 Tel : +86 (532) 8907 1688 Tel : +86 (591) 8833 1000 Tel : +86 (20) 3813 8000 Fax : +86 (571) 2803 8111 Fax : +86 (25) 8691 2828 Fax : +86 (532) 8907 1689 Fax : +86 (591) 8833 1188 Fax : +86 (20) 3813 7000

Shanghai Shenyang Shenzhen Tianjin Xiamen 50th Floor, Plaza 66 19th Floor, Tower A 9th Floor, China Resources Unit 06, 40th Floor, Office Tower 12th Floor, International Plaza 1266 Nanjing West Road Fortune Plaza, 61 Beizhan Road Building 5001 Shennan East Road Tianjin World Financial Center 8 Lujiang Road Shanghai 200040, China Shenyang 110013, China Shenzhen 518001, China 2 Dagu North Road Xiamen 361001, China Tel : +86 (21) 2212 2888 Tel : +86 (24) 3128 3888 Tel : +86 (755) 2547 1000 Tianjin 300020, China Tel : +86 (592) 2150 888 Fax : +86 (21) 6288 1889 Fax : +86 (24) 3128 3899 Fax : +86 (755) 8266 8930 Tel : +86 (22) 2329 6238 Fax : +86 (592) 2150 999 Fax : +86 (22) 2329 6233 Hong Kong SAR and Macau SAR Hong Kong Macau 8th Floor, Prince’s Building 24th Floor, B&C, 10 Chater Road Bank of China Building Central, Hong Kong Avenida Doutor Mario Soares 23rd Floor, Hysan Place Macau 500 Hennessy Road Tel : +853 2878 1092 Causeway Bay, Hong Kong Fax : +853 2878 1096 Tel : +852 2522 6022 Fax : +852 2845 2588 kpmg.com/cn

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. © 2017 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Publication no.: HK-IPO17-0001 Publication date: April 2017