Shenzhen International : Discloseable Transaction - Entering into of a Capital Increase Agreement in connection with Introducing Cooperative Partner for the Residential Site of the Qianhai Start-up Project

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(incorporated in Bermuda with limited liability)

On 20 December 2016, SIQ Investment (an indirect wholly-owned subsidiary of the Company) and SIQ Real Estate (SIQ Investment's wholly-owned subsidiary) entered into the Capital Increase Agreement with SY Land, pursuant to which SIQ Investment and SIQ Real Estate agreed to SY Land making a Capital Contribution of RMB1.12 billion (approximately HK$1.26 billion) to SIQ Real Estate. Upon completion of the Capital Contribution, the registered capital of SIQ Real Estate will be owned as to 50% by SIQ Investment and as to 50% by SY Land. SIQ Real Estate will be accounted for as an associated company of the Company upon completion of the Capital Contribution.

SIQ Real Estate holds the Group's land use right to Land Parcel No. T102 - 0265 located at Block 6, Unit 19 of Qianhai Shenzhen-Hong Kong Cooperation Zone (前海深港合作區19 單元6街坊). Such land parcel is for residential use and occupies a land site area of approximately 12,491 square metres with a gross floor area of 52,900 square metres. The Land Parcel is one of the land parcels in the first part (i.e. the Qianhai Start-up Project) of the consolidation and preparation work to be conducted by Shenzhen Municipality Government on the five land parcels in Qianhai owned by the Group. A residential project will be developed on the Land Parcel, the development and construction of which will be the responsibility of SIQ Real Estate.

The contribution amount under the Capital Contribution represents a premium of approximately RMB1.115 billion (approximately HK$1.253 billion) over the net book value of SIQ Real Estate prior to the Capital Contribution. This is mainly due to the market value of the land use right of the Land Parcel owned by SIQ Real Estate represents a premium of approximately RMB1.104 billion (approximately HK$1.240 billion) (equivalent to approximately 98%) over its book value.

SY Land is a subsidiary of Shenzhen Investment, a well-known property developer in Shenzhen whose core business includes property development, property investment and property management. As disclosed in Shenzhen Investment's 2015 annual report, as at 31 December 2015, Shenzhen Investment had a land reserve of approximately 10 million square metres in terms of planned gross floor area in various cities of the PRC, of which approximately 3 million square metres gross floor area of quality land reserve are located in Shenzhen.

The Directors believe that the Capital Contribution will enable the Group to lock in the current value and profit of the Land Parcel. The Directors also believe that the introduction of SY Land, a well-known property developer, as the new investor of SIQ Real Estate will promote an alliance with a top tier property enterprise, facilitate the joint development of the residential land parcel in the start-up project of the Group in Qianhai and generate profit from the sale proceeds after the development. The Capital Contribution would also allow the Group to better allocate its resources towards focusing on the development of its core logistic business, increase the overall quality and income of the residential project of the Group's Qianhai Start-up Project, thereby reducing the Group's investment risks and creating better returns for the shareholders of the Company. The Land Parcel is one of the land parcels in the first part (i.e. the Qianhai Start-up Project) of the consolidation and preparation work to be conducted by Shenzhen Municipality Government on the five land parcels in Qianhai owned by the Group. The realisation of value through the Capital Contribution will serve as an example for the realisation of the value of the land parcels owned by the Group in Qianhai in the future.

As the equity interest of the Group in SIQ Real Estate will be diluted from 100% to 50% following completion of the Capital Contribution, the Capital Contribution contemplated under the Capital Increase Agreement will constitute a deemed disposal of the Group's equity interest in SIQ Real Estate under Rule 14.29 of the Listing Rules.

Since the applicable percentage ratios for the Capital Contribution as set out in the Listing Rules are more than 5% but less than 25%, the transactions contemplated under the Capital Increase Agreement constitute a discloseable transaction for the Company under Rule 14.06 of the Listing Rules and are subject to the reporting and announcement requirements under the Listing Rules.

Reference is made to the Company's announcement dated 5 October 2015 whereby the Group entered into a land consolidation and preparation framework agreement (the "Framework Agreement") with Shenzhen UPLRC and Qianhai Authority in respect of the Group's project in Qianhai. The parties have agreed to conduct consolidation and preparation work in respect of five land parcels with an aggregate site area of approximately 380,000 square metres by way of land swap, monetary compensation and profit sharing. Such land parcels are in

Qianhai and owned by West Logistics. Pursuant to the Framework Agreement, Shenzhen UPLRC and Qianhai Authority have also agreed to arrange a profit-oriented land site (經營性 用地) with an area of approximately 38,800 square metres at Block 6, Unit 19 of Qianhai Shenzhen-Hong Kong Cooperation Zone (前海深港合作區 19 單元 6 街坊) as "Shenzhen International Qianhai Intelligent Hub" (深國際前海智慧港), the Group's start-up project in

Qianhai (the "Qianhai Start-up Project").

Thereafter, the Company announced on 2 December 2016 that as agreed by the relevant parties, West Logistics has recently entered into an agreement with Qianhai Authority to terminate the previous land use right agreement in respect of the land parcel no. T102-0069, being one of the five land parcels owned by West Logistics in Qianhai. Moreover, three of the Group's wholly-owned subsidiaries (one of which is SIQ Real Estate) have each entered into a new land use rights transfer agreement with Qianhai Authority respectively on 2 December 2016, to formalise the Group's title to the respective land use rights of such land parcels in Qianhai on which the Qianhai Start-up Project will be developed. Accordingly, SIQ Real Estate has obtained the land use right to Land Parcel No. T102-0265 located at Block 6, Unit 19 of Qianhai Shenzhen-Hong Kong Cooperation Zone. Such land parcel is for residential use and occupies a land site area of approximately 12,491 square metres with a gross floor area of 52,900 square metres. The Land Parcel is one of the land parcels in the first part (i.e. the Qianhai Start-up Project) of the consolidation and preparation work to be conducted by Shenzhen Municipality Government on the five land parcels in Qianhai owned by the Group. A residential project will be developed on the Land Parcel, the development and construction of which will be the responsibility of SIQ Real Estate.

The land use right of the land site of the Qianhai Start-up Project obtained by the Group is the first part of the consolidation and preparation work to be conducted by Shenzhen Municipality Government on the five land parcels with an aggregate site area of approximately 380,000 square metres in Qianhai owned by the Group. In accordance with the principles laid down in the Framework Agreement, the Group has been actively negotiating with Qianhai Authority and Shenzhen UPLRC in respect of the major terms of land consolidation and preparation of all five land parcels with an aggregate site area of approximately 380,000 square metres in Qianhai owned by the Group, including the time of assessment and value of the land under the previous and new land use arrangements, the area and land use of the land site and commencement date of the term of the land use right in respect of the land swap, the party which owns the value of land under the previous land use arrangements and the ratio of profit sharing in respect of increase in the value of land under the new land use arrangements.

The Company hereby announces that on 20 December 2016, SIQ Investment (an indirect wholly-owned subsidiary of the Company) and SIQ Real Estate (SIQ Investment's wholly-owned subsidiary) entered into the Capital Increase Agreement with SY Land, pursuant to which SIQ Investment and SIQ Real Estate agreed to SY Land making a Capital Contribution of RMB1.12 billion (approximately HK$1.26 billion) to SIQ Real Estate. Upon completion of the Capital Contribution, the registered capital of SIQ Real Estate will be owned as to 50% by SIQ Investment and as to 50% by SY Land. SIQ Real Estate will be accounted for as an associated company of the Company upon completion of the Capital Contribution.

The material terms of the Capital Increase Agreement are set out below:

Parties: (a) SIQ Investment

1. SIQ Real Estate

2. SY Land

Both SIQ Investment and SIQ Real Estate are limited liability companies incorporated in the PRC and are indirect wholly-owned subsidiaries of the Company. SIQ Real Estate owns the land use right of the Land Parcel.

SY Land is a subsidiary of Shenzhen Investment. Shenzhen Investment is a company incorporated in Hong Kong with limited liability whose shares are listed on the Stock Exchange (stock code: 00604).

To the best of the Directors' knowledge, information and belief having made all reasonable enquiries, SY Land and its ultimate beneficial owners are Independent Third Parties (as defined in the Listing Rules).

Capital Contribution: As at the date of this announcement, the registered capital of SIQ Real Estate is RMB5 million (approximately HK$5,618,000) and SIQ Real Estate is wholly-owned by SIQ Investment.

Pursuant to the Capital Increase Agreement, SIQ Investment and SIQ Real Estate agreed that the Capital Contribution to be made by SY Land to SIQ Real Estate is RMB1.12 billion (approximately HK$1.26 billion), of which RMB5 million (approximately HK$5,618,000) will be contributed to the registered capital of SIQ Real Estate and the remaining RMB1.115 billion (approximately HK$1.253 billion) will be contributed to the capital reserve (資本 公積) of SIQ Real Estate.

Upon completion of the Capital Contribution, the registered capital of SIQ Real Estate will be increased from RMB5 million (approximately HK$5,618,000) to RMB10 million (approximately HK$11,236,000) and will be owned as to 50% by SIQ Investment and as to 50% by SY Land. SIQ Real Estate will be accounted for as an associated company of the Company upon completion of the Capital Contribution.