Sinomax : MAJOR AND CONNECTED TRANSACTION IN RELATION TO THE DISPOSAL OF 51% EQUITY INTEREST IN CHENGDU XINGANG SPONGE CO., LTD.

December 09, 2019 at 04:06 am

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Sinomax Group Limited (the "Company"), you should at once hand this circular to the purchaser(s) or the transferee(s) or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or the transferee(s).

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

Sinomax Group Limited

盛諾集團有限公司

(Incorporated under the laws of the Cayman Islands with limited liability)

(Stock Code: 1418)

MAJOR AND CONNECTED TRANSACTION

IN RELATION TO THE DISPOSAL OF 51% EQUITY INTEREST IN

CHENGDU XINGANG SPONGE CO., LTD.

Independent Financial Adviser to

the Independent Board Committee and the Shareholders

Capitalised terms used in this cover page have the same meanings as those defined in this circular, unless the context requires otherwise.

A letter from the Board is set out on pages 5 to 11 of this circular. A letter of advice from the Independent Board Committee is set out on pages 16 and 17 of this circular. A letter of advice of the Independent Financial Adviser containing its opinion and advice to the Independent Board Committee and the Shareholders is set out on pages 18 to 37 of this circular.

9 December 2019

		CONTENTS
			Page
DEFINITIONS .	. . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
LETTER FROM THE INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . . . . . . . .	16
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER . . . . . . . . . . . . . . . . . . .	18
APPENDIX I	- FINANCIAL INFORMATION OF THE GROUP . . . . . . . . . . . . . . .	I-1
APPENDIX II	-	VALUATION REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-1
APPENDIX III	-	GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1

- i -

DEFINITIONS

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

"2016 Acquisition"	the acquisition of 51% equity interest in Chengdu Xingang
	by Sinomax Zhejiang from Mr. Liu pursuant to the equity
	transfer agreement dated 19 February 2016 and entered
	into between Sinomax Zhejiang (as purchaser) and Mr. Liu
	(as vendor), particulars of which are set out in the 2016
	Announcement

"2016 Announcement"

"associate(s)"

"Board"

"Business Day(s)"

"Chengdu Xingang"

the announcement of the Company dated 19 February 2016 in relation to the 2016 Acquisition

has the meaning ascribed to it under the Listing Rules

the board of Directors

a day on which banks are open for business in Hong Kong and the PRC (excluding Saturdays and Sundays)

Chengdu Xingang Sponge Co., Ltd.*（成都新港海綿有限公司）, a company established in the PRC with limited liability

"Company"	Sinomax Group Limited, a company incorporated under
	the laws of the Cayman Islands with limited liability, the
	shares of which are listed on the Main Board of the Stock
	Exchange (stock code: 1418)

"Completion"

"connected person(s)"

"Consideration"

completion of the Disposal in accordance with the terms and conditions of the Share Purchase Agreement

has the meaning ascribed to it under the Listing Rules

the consideration in the sum of RMB157,000,000 (equivalent to approximately HK$172,700,000) payable by Mr. Liu to Sinomax Zhejiang pursuant to the Share Purchase Agreement

- 1 -

DEFINITIONS

"Director(s)"

"Disposal"

"Group"

"HK$"

"Hong Kong"

"Independent Board Committee"

"Independent Financial Adviser"

"Latest Practicable Date"

"Listing Rules"

"Long Stop Date"

"Macau"

the director(s) of the Company

the disposal of 51% equity interest in Chengdu Xingang by Sinomax Zhejiang to Mr. Liu pursuant to the Share Purchase Agreement

the Company and its subsidiaries

Hong Kong dollar, the lawful currency of Hong Kong

the Hong Kong Special Administrative Region of the PRC

the independent board committee of the Company, comprising all independent non-executive Directors, which has been formed for the purpose of advising the Shareholders in respect of the Share Purchase Agreement and the Transaction

Lego Corporate Finance Limited, a corporation licensed to carry out Type 6 (advising on corporate finance) regulated activity under the SFO, being the independent financial adviser to the Independent Board Committee and the Shareholders in respect of the Share Purchase Agreement and the Transaction

6 December 2019, being the latest practicable date prior to the printing of this circular for ascertaining certain information for inclusion in this circular

the Rules Governing the Listing of Securities on the Stock Exchange

23 December 2019 (or such other date as may be agreed in writing by Sinomax Zhejiang and Mr. Liu)

the Macau Special Administrative Region of the PRC

- 2 -

DEFINITIONS

"Mr. Liu"

"Post-IPO Share

Option Scheme"

"PRC" or "China"

"Pre-IPO Share Option Scheme"

"Property"

"Remaining Group" "RMB"

"SFO"

"Shareholder(s)"

"Share Purchase Agreement"

"Share Pledge Agreement"

Mr. Liu Jiaming, being the purchaser under the Share Purchase Agreement

the post-IPO share option scheme conditionally adopted by the Company on 4 March 2014

the People's Republic of China, which, for the purpose of this circular, excludes Hong Kong, Macau and Taiwan

the pre-IPO share option scheme conditionally adopted by the Company on 13 December 2013 and expired on 10 July 2014, being the listing date of the Company

the properties owned by Chengdu Xingang situated in Furniture Industrial Park, Xinfan Town, Xindu District, Chengdu City, Sichuan Province, the PRC*（中國四川省成都市新都區新繁鎮家具工業園）with an area of approximately 100,287.72 square metres

the Group excluding Chengdu Xingang

Renminbi, the lawful currency of the PRC

the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

holder(s) of the Share(s)

the share purchase agreement dated 15 November 2019 entered into between Sinomax Zhejiang (as vendor) and Mr. Liu (as purchaser) in relation to, among others, the Disposal

the share pledge agreement to be entered into between Mr. Liu (as pledgor) and Sinomax Zhejiang (as pledgee) upon Completion in relation to the pledge of 51% equity interest in Chengdu Xingang by Mr. Liu to Sinomax Zhejiang to secure the payment of the Consideration in full by Mr. Liu under the Share Purchase Agreement

- 3 -

DEFINITIONS

"Share(s)"

"Sinomax Enterprises"

"Sinomax Zhejiang"

ordinary share(s) of nominal value of HK$0.10 each in the share capital of the Company

Sinomax Enterprises Limited, a company incorporated in the British Virgin Islands and the controlling Shareholder of the Company

Sinomax (Zhejiang) Polyurethane Technology Limited* （賽諾（浙江）聚氨酯新材料有限公司）(formerly known as Sinomax (Zhejiang) Polyurethane Household Products Limited*（聖諾盟（浙江）聚氨酯家居用品有限公司）), a company established in the PRC with limited liability and an indirect wholly-ownedsubsidiary of the Company, being the vendor under the Share Purchase Agreement

"Stock Exchange"

"Transaction"

"%" or "per cent."

The Stock Exchange of Hong Kong Limited

the Disposal and any other transaction as contemplated under the Share Purchase Agreement

percentage or per centum

In the event of any inconsistency between the English and Chinese versions of this circular, the English version of this circular shall prevail over the Chinese version of this circular.

In this circular, unless otherwise stated, the conversion of RMB into HK$ has been made at an exchange rate of RMB1: HK$1.1. Such conversion should not be construed as a representation that any amount has been, could have been or may be, exchanged at this or any other rate.

If there is any inconsistency between the Chinese names of entities or enterprises established in the PRC and their English translations, the Chinese names shall prevail. The English translation of company names in Chinese which are marked with " *" is for identification purposes only.

- 4 -

LETTER FROM THE BOARD

Sinomax Group Limited 盛諾集團有限公司

(Incorporated under the laws of the Cayman Islands with limited liability)

(Stock Code: 1418)

Executive Directors:	Registered Office:
Mr. Lam Chi Fan (Chairman of the Board)	P.O. Box 309
Mr. Cheung Tung (President)	Ugland House
Mr. Chen Feng	Grand Cayman KY1-1104
Mr. Lam Kam Cheung	Cayman Islands
(Chief Financial Officer and Company Secretary)
Ms. Lam Fei Man	Principal place of business in
	Hong Kong:
Independent non-executive Directors:	Units 2005-2007
Mr. Wong Chi Keung	Level 20 Tower 1
Professor Lam Sing Kwong, Simon	MegaBox Enterprise Square Five
Mr. Fan Chun Wah, Andrew, J.P.	38 Wang Chiu Road
Mr. Zhang Hwo Jie	Kowloon Bay
Mr. Wu Tak Lung	Hong Kong
	9 December 2019
To the Shareholders
Dear Sir or Madam,

MAJOR AND CONNECTED TRANSACTION

IN RELATION TO THE DISPOSAL OF 51% EQUITY INTEREST OF

CHENGDU XINGANG SPONGE CO., LTD.

INTRODUCTION

Reference is made to the Company's announcement dated 18 November 2019 in relation to the Disposal. It was announced that on 15 November 2019 (after trading hours), Sinomax Zhejiang (as vendor), an indirect wholly-owned subsidiary of the Company, entered into the Share Purchase Agreement with Mr. Liu (as purchaser), pursuant to which Sinomax Zhejiang has conditionally agreed to sell, and Mr. Liu has conditionally agreed to acquire, 51% equity interest in Chengdu Xingang at the Consideration of RMB157,000,000 (equivalent to approximately HK$172,700,000) subject to the terms and conditions therein.

- 5 -

LETTER FROM THE BOARD

The Transaction constitutes a major and connected transaction of the Company under the Listing Rules. To the best of the knowledge, information and belief of the Directors, having made all reasonable enquiries, as at the Latest Practicable Date, none of the Shareholders and their respective associates has any material interest in the Share Purchase Agreement and the Transaction (including the Disposal). As such, no Shareholder would be required to abstain from voting on the resolution in respect of the Share Purchase Agreement and the Transaction (including the Disposal) if the Company were to convene a general meeting for the purpose of approving the same. As at the Latest Practicable Date, Sinomax Enterprises is the controlling Shareholder of the Company and beneficially holds 1,275,906,000 Shares, representing approximately 72.91% of the entire issued share capital of the Company. A written shareholder's approval in respect of the Share Purchase Agreement and the Transaction (including the Disposal) has been obtained from Sinomax Enterprises. Pursuant to Rule 14.44 of the Listing Rules, such written shareholder's approval may be accepted in lieu of holding a general meeting of the Company. In addition, the Company has applied to the Stock Exchange for, and the Stock Exchange has granted, a waiver from the requirement to convene a general meeting of the Company for the purpose of approving the Disposal under Rule 14A.37 of the Listing Rules such that the written shareholder's approval obtained from Sinomax Enterprises is also accepted in lieu of convening a general meeting of the Company under Chapter 14A of the Listing Rules. Accordingly, no general meeting of the Company will be convened for the purpose of approving the Disposal.

The Independent Board Committee, comprising all the independent non-executive Directors, has been established to advise the Shareholders in respect of the Share Purchase Agreement and the Transaction. The Independent Financial Adviser has been appointed by the Company to advise the Independent Board Committee and the Shareholders in respect of the same.

The purpose of this circular is to provide you with, among other things, further details in relation to the Share Purchase Agreement and the Transaction, the recommendation of the Independent Board Committee, the advice of the Independent Financial Adviser and other information required to be disclosed under the Listing Rules.

THE DISPOSAL

On 15 November 2019 (after trading hours), Sinomax Zhejiang (as vendor), an indirect wholly-owned subsidiary of the Company, entered into the Share Purchase Agreement with Mr. Liu (as purchaser), pursuant to which Sinomax Zhejiang has conditionally agreed to sell, and Mr. Liu has conditionally agreed to acquire, 51% equity interest in Chengdu Xingang at the Consideration of RMB157,000,000 (equivalent to approximately HK$172,700,000) subject to the terms and conditions therein.

- 6 -

LETTER FROM THE BOARD

THE SHARE PURCHASE AGREEMENT

The principal terms of the Share Purchase Agreement are summarised below:-

Date	:	15 November 2019 (after trading hours)
Parties	:	(i)	Sinomax Zhejiang, as vendor; and
		(ii)	Mr. Liu, as purchaser

Assets to be disposed

Pursuant to the Share Purchase Agreement, Sinomax Zhejiang has conditionally agreed to sell, and Mr. Liu has conditionally agreed to acquire, 51% equity interest in Chengdu Xingang.

Consideration

The Consideration of RMB157,000,000 (equivalent to approximately HK$172,700,000) shall be paid by Mr. Liu to Sinomax Zhejiang by way of bank transfer in the following manner:

an amount of RMB20,000,000 (equivalent to approximately HK$22,000,000) shall be paid within thirty (30) days from the date of the Share Purchase Agreement as the first payment;
an amount of RMB30,000,000 (equivalent to approximately HK$33,000,000) (the "Second Payment") shall be paid within ninety (90) days from the date of the Share Purchase Agreement;
an amount of RMB50,000,000 (equivalent to approximately HK$55,000,000) (the "Third Payment") shall be paid within one (1) year from the due date of the Second Payment (being the ninetieth (90th) day from the date of the Share Purchase Agreement) (the "Second Payment Due Date"), together with the payable interest which shall accrue from and including the Second Payment Due Date until and including the date of actual payment of the Third Payment at the rate of 3% per annum on the Third Payment; and

- 7 -

LETTER FROM THE BOARD

the remaining balance of RMB57,000,000 (equivalent to approximately HK$62,700,000) (the "Fourth Payment") shall be paid within two (2) years from the Second Payment Due Date, together with the payable interest which shall accrue from and including the Second Payment Due Date until and including the date of actual payment of the Fourth Payment at the rate of 3% per annum on the Fourth Payment.

The Consideration, after considering the net present value effect arising from the above settlement arrangement, shall be approximately RMB152.5 million (equivalent to approximately HK$167.8 million).

The Consideration was determined after arm's length negotiations between Sinomax Zhejiang and Mr. Liu with reference to, among other things, (i) the historical financial performance, financial position, results of operations and business prospects of Chengdu Xingang; (ii) the unaudited net asset value of Chengdu Xingang in accordance with the accounting standards generally accepted in Hong Kong as at 30 June 2019 of approximately RMB122.2 million (equivalent to approximately HK$134.5 million); (iii) the preliminary valuation of the Property owned by Chengdu Xingang as assessed by an independent qualified valuer; and (iv) the prevailing market conditions and economic landscape.

In addition, the payment terms in respect of the Consideration was a commercial decision between the Group and Mr. Liu determined after arm's length negotiation with reference to, among other things: (i) pursuant to the Share Purchase Agreement, Sinomax Zhejiang is entitled to receive interest at the rate of 3% per annum on the Third and Fourth Payments which shall accrue on the Second Payment Due Date until the date of actual payment of the Third and Fourth Payments, respectively, which shall serve as additional interest income to the Group for accepting the deferred payment arrangement; and (ii) upon Completion, the pledge of 51% equity interest in Chengdu Xingang by Mr. Liu to Sinomax Zhejiang pursuant to the Share Pledge Agreement shall serve as security to secure the obligations of Mr. Liu under the Share Purchase Agreement to pay to Sinomax Zhejiang the Consideration in full. Having taken into due consideration of the foregoing, the Directors are of the view that the payment terms in respect of the Consideration under the Share Purchase Agreement are fair and reasonable to the Company and are in the interests of the Company and the Shareholders as a whole.

- 8 -

LETTER FROM THE BOARD

If the revaluation surplus of the Disposal is taken into account, the unaudited net proforma gain on the Disposal would amount to approximately HK$16.4 million, being (i) the difference between (A) the Consideration, after having considered the net present value effect arising from the settlement arrangement thereof, of approximately HK$167.8 million; and (B) the proforma net asset value of 51% equity interest in Chengdu Xingang amounting to HK$143.0 million, being the unaudited net asset value of Chengdu Xingang as at 30 June 2019 as adjusted by the fair value of the Property held by Chengdu Xingang with reference to the valuation report of the Property prepared by Asset Appraisal Limited as set out in Appendix II to this circular, and

further adjusted by the Group's estimated capital gain tax under the relevant tax laws in the PRC of approximately HK$8.3 million calculated based on 15% of the difference between the Consideration and 51% of the registered capital of Chengdu Xingang.

Condition precedent

Completion is conditional upon the Company having compiled with all relevant requirements of the Listing Rules and having obtained the necessary board and/or shareholders' approvals in respect of the Share Purchase Agreement and the Transaction.

If the above condition is not fulfilled on or before the Long Stop Date, the Share Purchase Agreement shall cease to have effect except for any liabilities arising from antecedent breaches of the terms thereof.

A written shareholder's approval in respect of the Share Purchase Agreement and the Transaction has been obtained from Sinomax Enterprises, which is beneficially interested in approximately 72.91% of the entire issued share capital of the Company as at the Latest Practicable Date.

Completion

Completion shall take place on the third (3rd) Business Day after the fulfillment of the above condition or such other day as the parties to the Share Purchase Agreement may agree in writing.

- 9 -

LETTER FROM THE BOARD

INFORMATION ON MR. LIU

As at the date of the Share Purchase Agreement, Mr. Liu, being a director of Chengdu Xingang, legally and beneficially owns 49% equity interest in Chengdu Xingang and is therefore a substantial shareholder of Chengdu Xingang.

INFORMATION ON THE GROUP AND SINOMAX ZHEJIANG

The Company is incorporated under the laws of the Cayman Islands with limited liability, the shares of which are listed on the Main Board of the Stock Exchange. The Group is principally engaged in the manufacturing and sale of health and household products and polyurethane foam. The Group's health and household products are mainly represented by quality visco-elastic pillows, mattress toppers and mattresses.

Sinomax Zhejiang is a company established in the PRC with limited liability and is principally engaged in the manufacturing and sale of polyurethane foam to furniture manufacturers. Sinomax Zhejiang is an indirect wholly-owned subsidiary of the Company.

INFORMATION ON CHENGDU XINGANG

Chengdu Xingang is a company established in the PRC with limited liability and owned as to 51% and 49% by Sinomax Zhejiang and Mr. Liu, respectively, as at the date of the Share Purchase Agreement. Chengdu Xingang is principally engaged in the manufacturing and sale of polyurethane foam, sales of decorative materials, sofa materials, cloth materials and mattress materials primarily to furniture manufacturers in the PRC.

As at the Latest Practicable Date, Chengdu Xingang owns the Property which is situated in Furniture Industrial Park, Xinfan Town, Xindu District, Chengdu City, Sichuan Province, the PRC*（中國四川省成都市新都區新繁鎮家具工業園）with an area of approximately 100,287.72 square metres. A valuation of the Property was performed by Asset Appraisal Limited, an independent valuer appointed by the Company, which valued the market value of the Property at RMB181,100,000 (equivalent to approximately HK$199,210,000) as at 31 October 2019. The valuation report of the Property prepared by Asset Appraisal Limited is set out in Appendix II of this circular.

- 10 -

LETTER FROM THE BOARD

Set forth below is the audited and unaudited financial information of Chengdu Xingang for each of the two financial years ended 31 December 2017 and 2018 and the six months ended 30 June 2019 as extracted from its financial statements prepared in accordance with the accounting standards generally accepted in the PRC:

	For the	For the	For the
	year ended	year ended	six months
	31 December	31 December	ended 30 June
	2017	2018	2019
	(approximately)	(approximately)	(approximately)
	RMB ('000)	RMB ('000)	RMB ('000)
	audited	audited	unaudited
Revenue	148,187	172,742	53,504
Net profit/(loss) before taxation and
extraordinary items	5,075	1,923	(351)
Net profit/(loss) after taxation and
extraordinary items	3,976	1,194	(351)
	As at	As at	As at
	31 December	31 December	30 June
	2017	2018	2019
	(approximately)	(approximately)	(approximately)
	RMB ('000)	RMB ('000)	RMB ('000)
	audited	audited	unaudited
Total assets	163,368	157,313	153,189
Total liabilities	37,033	29,755	26,523
Net assets	126,335	127,558	126,666

- 11 -

LETTER FROM THE BOARD

FINANCIAL EFFECT OF THE DISPOSAL

According to the interim report of the Company for the six months ended 30 June 2019, the unaudited net asset value of the Group as at 30 June 2019 was approximately HK$1,234.5 million. As a result of the Disposal, it is estimated that the Group will record an unaudited gain of approximately HK$33.3 million, being the difference between the Consideration and the unaudited net asset value of Chengdu Xingang in accordance with the accounting standards generally accepted in Hong Kong as at 30 June 2019 and before taking into account the taxes, transaction fees and other incidental costs attributable to the Disposal. The actual amount of the gain (or loss, as the case may be) from the Disposal to be recognised in the consolidated financial statements of the Group depends on the audited net asset value of Chengdu Xingang as at the date of Completion and is subject to review by the auditors of the Company.

Further, Chengdu Xingang recorded an unaudited net loss after tax of approximately RMB351,000 (equivalent to approximately HK$386,100) for the six months ended 30 June 2019. Upon Completion, the Company will cease to own any equity interest in Chengdu Xingang and Chengdu Xingang will cease to be a subsidiary of the Company. Accordingly, the results, assets and liabilities of Chengdu Xingang will no longer be consolidated into the financial statements of the Group. Taking into account the estimated unaudited gain from the Disposal of approximately HK$33.3 million, it is expected that the Disposal will have a positive effect on the earnings of the Group.

Save as disclosed herein, the Disposal will not have any material impact on the earnings and net assets and liabilities of the Group.

USE OF PROCEEDS

The Company intends to apply the net proceeds from the Disposal of approximately RMB157.0 million in the following manner: (i) approximately RMB100.0 million will be used to repay the bank borrowings of the Group; and (ii) the remaining amount of approximately RMB57.0 million will be used as general working capital of the Group.

REASONS FOR AND BENEFITS OF THE DISPOSAL

Reference is made to the 2016 Announcement. In 2016, Sinomax Zhejiang acquired 51% equity interest in Chengdu Xingang from Mr. Liu pursuant to the equity transfer agreement dated 19 February 2016 and entered into between Sinomax Zhejiang (as purchaser) and Mr. Liu (as vendor). The original acquisition cost in respect of the 2016 Acquisition was approximately RMB81.7 million (equivalent to approximately HK$89.9 million), being the consideration of the 2016 Acquisition.

- 12 -

LETTER FROM THE BOARD

As disclosed in the 2016 Announcement, the Company entered into the 2016 Acquisition with a view to tapping into the market of polyurethane foam in Chengdu City and broadening the revenue sources of the Group. However, for the two financial years ended 31 December 2017 and 2018, (i) the net profit before tax of Chengdu Xingang decreased by approximately RMB3.16 million (equivalent to approximately HK$3.48 million) (or approximately 62.11%) from approximately RMB5.08 million (equivalent to approximately HK$5.59 million) to approximately RMB1.92 million (equivalent to approximately HK$2.11 million); and (ii) the net profit after tax of Chengdu Xingang decreased by approximately RMB2.78 million (equivalent to approximately HK$3.06 million) (or approximately 70.03%) from approximately RMB3.97 million (equivalent to approximately HK$4.37 million) to approximately RMB1.19 million (equivalent to approximately HK$1.31 million). The decrease in the net profit before and after tax of Chengdu Xingang was mainly attributable to unanticipated changes in the prevailing market conditions since the 2016 Acquisition, including, among other things: (i) significant increase in the costs of the principal raw materials for manufacturing polyurethane foam which include, polypropylene glycol or polypropylene oxide and toluene diisocyanate; and (ii) intense industry competition in the polyurethane foam manufacturing industry faced by the Group, which, in the views of the Directors, fell short of the expectation of the Board as contemplated at the time of the entering into of the 2016 Acquisition.

In light of the historical financial performance and results of operations of Chengdu Xingang and having taken into account, (i) that as a result of the Transaction, it is estimated that the Group will record an unaudited gain of approximately HK$33.3 million (as illustrated above); (ii) that upon Completion, the pledge of 51% equity interest in Chengdu Xingang by Mr. Liu to Sinomax Zhejiang pursuant to the Share Pledge Agreement will serve as security to secure the payment of the Consideration in full by Mr. Liu; and (iii) the unanticipated changes and fluctuations in the polyurethane foam manufacturing industry in the PRC and the prevailing market conditions, the Directors consider that the Transaction offers a timely opportunity for the Group to better utilise its resources for the further development of the Group's business and to enhance the interests of the Company and the Shareholders as a whole.

Accordingly, the Directors (excluding the members of the Independent Board Committee whose opinion, after taking into consideration the advice of the Independent Financial Adviser, is set out in the section headed "Letter from the Independent Board Committee" in this circular) are of the view that the terms of the Share Purchase Agreement and the Transaction have been negotiated on an arm's length basis, are on normal commercial terms which are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

As none of the Directors has any material interest in the Share Purchase Agreement and the Transaction, no Director was required to abstain from voting on the Board resolutions of the Company approving the Share Purchase Agreement and the Transaction.

- 13 -

LETTER FROM THE BOARD

IMPLICATION UNDER THE LISTING RULES

As one or more of the applicable percentage ratios (as defined in the Listing Rules) in respect of the Transaction are more than 25% but less than 75%, the Transaction constitutes a major transaction for the Company under Chapter 14 of the Listing Rules and is subject to the reporting, announcement, circular and shareholders' approval requirements under Chapter 14 of the Listing Rules.

As at the date of the Share Purchase Agreement, Mr. Liu, being a director of Chengdu Xingang, who legally and beneficially owns 49% equity interest in Chengdu Xingang, is a substantial shareholder of Chengdu Xingang and therefore a connected person of the Company. Accordingly, the Transaction also constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules and is subject to the reporting, announcement and independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

To the best of the knowledge, information and belief of the Directors, having made all reasonable enquiries, as at the Latest Practicable Date, none of the Shareholders and their respective associates has any material interest in the Share Purchase Agreement and the Transaction (including the Disposal). As such, no Shareholder would be required to abstain from voting on the resolution in respect of the Share Purchase Agreement and the Transaction (including the Disposal) if the Company were to convene a general meeting for the purpose of approving the same. As at the Latest Practicable Date, Sinomax Enterprises is the controlling Shareholder of the Company and beneficially holds 1,275,906,000 Shares, representing approximately 72.91% of the entire issued share capital of the Company. A written shareholder's approval in respect of the Share Purchase Agreement and the Transaction (including the Disposal) has been obtained from Sinomax Enterprises. Pursuant to Rule 14.44 of the Listing Rules, such written shareholder's approval may be accepted in lieu of holding a general meeting of the Company. In addition, the Company has applied to the Stock Exchange for, and the Stock Exchange has granted, a waiver from the requirement to convene a general meeting of the Company for the purpose of approving the Disposal under Rule 14A.37 of the Listing Rules such that the written shareholder's approval obtained from Sinomax Enterprises is also accepted in lieu of convening a general meeting of the Company under Chapter 14A of the Listing Rules. Accordingly, no general meeting of the Company will be convened for the purpose of approving the Disposal.

- 14 -

LETTER FROM THE BOARD

The Independent Board Committee, comprising all independent non-executive Directors, has been established to advise the Shareholders in respect of the Share Purchase Agreement and the Transaction. The Independent Financial Adviser has been appointed by the Company to advise the Independent Board Committee and the Shareholders in respect of the same.

RECOMMENDATION

The Directors (including the members of the Independent Board Committee whose opinion, after taking into consideration the advice of the Independent Financial Adviser, is set out in the section headed "Letter from the Independent Board Committee" in this circular) are of the view that the terms of the Share Purchase Agreement and the Transaction have been negotiated on an arm's length basis, are on normal commercial terms which are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors would recommend the Shareholders to vote in favour of the resolution for approving the Share Purchase Agreement and the Transaction if a general meeting of the Company is required to be held to consider and approve the same.

ADDITIONAL INFORMATION

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

Yours faithfully,

For and on behalf of the Board

Sinomax Group Limited

Lam Chi Fan

Chairman

- 15 -

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Sinomax Group Limited

盛諾集團有限公司

(Incorporated under the laws of the Cayman Islands with limited liability)

(Stock Code: 1418)

9 December 2019

To the Shareholders

Dear Sir or Madam,

MAJOR AND CONNECTED TRANSACTION

IN RELATION TO THE DISPOSAL OF 51% EQUITY INTEREST OF

CHENGDU XINGANG SPONGE CO., LTD.

We refer to the circular of the Company dated 9 December 2019 (the "Circular") to the Shareholders of which this letter forms part. Terms defined in the Circular shall have the same meanings when used in this letter unless the context otherwise requires.

We have been appointed by the Board as members of the Independent Board Committee to advise the Shareholders as to whether, in our opinion, the Share Purchase Agreement and the Transaction are on normal commercial terms which are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

We wish to draw your attention to the letter from the Board set out on pages 5 to 15 of the Circular, which sets out details of the Share Purchase Agreement and the Transaction. We also wish to draw your attention to the letter from the Independent Financial Adviser set out on pages 18 to 37 of the Circular, which contains its advice to the Independent Board Committee and the Shareholders in respect of the terms of the Share Purchase Agreement and the Transaction.

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Having taken into consideration the terms of the Share Purchase Agreement and the Transaction and the advice and recommendation of the Independent Financial Adviser, we are of the opinion that the terms of the Share Purchase Agreement and the Transaction are on normal commercial terms which are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Yours faithfully,

For and on behalf of the Independent Board Committee

Mr. Wong Chi Keung	Professor Lam Sing Kwong Simon
Independent non-executive Director	Independent non-executive Director
Mr. Fan Chun Wah Andrew, JP	Mr. Zhang Hwo Jie
Independent non-executive Director	Independent non-executive Director
Mr. Wu Tak Lung
Independent non-executive Director

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the full text of the letter of advice from Lego Corporate Finance Limited, the Independent Financial Adviser to the Independent Board Committees and the Shareholders, in respect of the Share Purchase Agreement and the Transaction, which has been prepared for the purpose of inclusion in this circular.

9 December 2019

To the independent Board Committee and the Shareholders

Dear Sirs or Madams,

MAJOR AND CONNECTED TRANSACTION

IN RELATION TO THE DISPOSAL OF 51% EQUITY INTEREST IN

CHENGDU XINGANG SPONGE CO., LTD.

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to the Independent Board Committee and the Shareholders in respect of the Share Purchase Agreement and the Transaction, details of which are set out in the "Letter from the Board" (the "Letter from the Board") contained in the circular issued by the Company to the Shareholders dated 9 December 2019 (the "Circular"), of which this letter forms part. Terms used in this letter shall have the same meanings as defined in the Circular unless the context otherwise requires.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As at the Latest Practicable Date, Mr. Liu, being a director of Chengdu Xingang, who legally and beneficially owns 49% equity interest in Chengdu Xingang, is a substantial shareholder of Chengdu Xingang and therefore a connected person of the Company. Accordingly, the Transaction also constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules and is subject to the reporting, announcement and independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

The Independent Board Committee, comprising all independent non-executive Directors, namely Mr. Wong Chi Keung, Professor Lam Sing Kwong Simon, Mr. Fan Chun Wah Andrew, JP, Mr. Zhang Hwo Jie and Mr. Wu Tak Lung, has been established to advise the Shareholders as to whether the terms of the Share Purchase Agreement and the transactions contemplated thereunder are on normal commercial terms and are fair and reasonable and in the interests of the Company and the Shareholders as a whole, and to advise the Shareholders on how to vote if a general meeting were to be convened to approve the Transaction. As the Independent Financial Adviser, our role is to give an independent opinion to the Independent Board Committee and the Shareholders in such regard.

As at the Latest Practicable Date, Lego Corporate Finance Limited did not have any relationships or interests with the Company that could reasonably be regarded as relevant to the independence of Lego Corporate Finance Limited. In the last two years, there was no engagement between the Group and Lego Corporate Finance Limited. Apart from normal professional fees paid or payable to us in connection with this appointment as the Independent Financial Adviser, no arrangements exist whereby we have received or will receive any fees or benefits from the Company. Accordingly, we are qualified to give independent advice in respect of the Transaction.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

BASIS OF OUR OPINION

In formulating our opinion and advice, we have relied on (i) the information and facts contained or referred to in the Circular; (ii) the information supplied by the Group and its advisers;

the opinions expressed by and the representations of the management of the Group; and (iv) our review of the relevant public information. We have assumed that all the information provided and representations and opinions expressed to us by the Directors and/or the management of the Group, for which they are solely and wholly responsible for, or contained or referred to in the Circular were true, accurate and complete in all respects as at the date thereof and may be relied upon. We have also assumed that all statements contained and representations made or referred to in the Circular are true at the time they were made and continue to be true as at the date of the Circular and all such statements of belief, opinions and intentions of the Directors and the management of the Group and those as set out or referred to in the Circular were reasonably made after due and careful enquiry. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Directors and/or the management of the Group. We have also sought and received confirmation from the Directors that no material facts have been withheld or omitted from the information provided and referred to in the Circular and that all information or representations provided to us by the Directors and/or the management of the Group are true, accurate, complete and not misleading in all respects at the time they were made and continued to be so until the date of the Latest Practicable Date.

We consider that we have reviewed sufficient information currently available to reach an informed view and to justify our reliance on the accuracy of the information contained in the Circular so as to provide a reasonable basis for our recommendation. We have not, however, carried out any independent verification of the information provided, representations made or opinion expressed by the Directors and the management of the Group, nor have we conducted any form of in-depth investigation into the business, affairs, operations, financial position or future prospects of the Company, or any of their respective subsidiaries and associates.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our recommendation in respect of the Share Purchase Agreement and the Transaction, we have considered the following principal factors and reasons:

1. Background information of the Group

1.1. Information on the Group

The Company is incorporated under the laws of the Cayman Islands with limited liability, the shares of which are listed on the Main Board of the Stock Exchange. The Group is principally engaged in the manufacturing and sales of health and household products and polyurethane foam. The Group's health and household products are mainly represented by visco-elastic pillows, mattress toppers and mattresses.

The following table summarises the financial information of the Group for the years ended 31 December 2017 and 2018 and the six months ended 30 June 2018 and 2019 as extracted from the annual report of the Company for the year ended 31 December 2018 (the "2018 Annual Report") and the interim report of the Company for the six months ended

30 June 2019 (the "2019 Interim Report").

	For the year	For the six months
	ended 31 December	ended 30 June
	2017	2018	2018	2019
	HK$'000	HK$'000	HK$'000	HK$'000
	(audited)	(audited)	(unaudited)	(unaudited)
Revenue	4,183,786	4,263,322	2,038,915	1,479,883
- Sales of health and
household products	2,478,265	2,509,206	1,151,208	915,627
- Sales of polyurethane foam	1,705,521	1,754,116	887,707	564,256
Gross profit	829,197	772,043	347,309	364,958
Profit for the year/period	50,785	4,842	9,084	10,552

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

			As at
	As at 31 December	30 June
	2017	2018	2019
	HK$'000	HK$'000	HK$'000
	(audited)	(audited)	(unaudited)
Bank balances and cash	155,485	234,435	297,847
Total assets	2,883,172	2,903,219	3,031,901
Unsecured bank borrowings	736,054	873,757	786,281
Total liabilities	1,573,706	1,677,376	1,797,410
Net assets	1,309,466	1,225,843	1,234,491

For the years ended 31 December 2017 and 2018

The revenue of the Group amounted to approximately HK$4,183.8 million and HK$4,263.3 million for the year ended 31 December 2017 and 2018, respectively, representing an increase of approximately HK$79.5 million or 1.9%. The gross profit of the Group amounted to approximately HK$829.2 million and HK$772.0 million for the year ended 31 December 2017 and 2018, respectively, representing a decrease of approximately HK$57.2 million or 6.9%.

According to the 2018 Annual Report, the increase in revenue was mainly due to increase in market share of foam sales in the China market. The increase in revenue was partially offset by the decrease in revenue generated from the US, Europe and other overseas markets mainly due to (i) delay in sales projects with a US customer; and (ii) reduce in demand of the Group's product from the weak economy in Europe and other overseas markets. The Group's gross profit decreased despite its revenue increased mainly due to (i) the significant increase in cost incurred in the trial run of production in the Group's factory located in the US; and (ii) the significant increase in the purchase price of a key raw material of polyurethane foam during the year ended 31 December 2018, as compared to the year ended 31 December 2017.

The profit after tax for the year ended 31 December 2018 was approximately HK$4.8 million, representing a decrease of approximately 90.5% compared with the profit after tax of approximately HK$50.8 million for the year ended 31 December 2017 mainly due to (i) the decrease in gross profit as discussed above; and (ii) additional import duties imposed on shipments for goods due to the outbreak of the U.S.-China and the U.S.-Canada trade wars.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As at 31 December 2018, the total assets of the Group amounted to approximately HK$2,903.2 million which comprised mainly the (i) trade and other receivables amounted to HK$843.4 million, (ii) property, plant and equipment amounted to HK$682.1 million and (iii) inventories amounted to HK$531.1 million.

As at 31 December 2018, total liabilities of the Group amounted to approximately HK$1,677.4 million, of which unsecured bank borrowings amounted to HK$873.8 million and trade and other payables amounted to approximately HK$600.3 million.

For the six months ended 30 June 2018 and 2019

The revenue of the Group amounted to approximately HK$2,038.9 million and HK$1,479.9 million for the six months ended 30 June 2018 and 2019, respectively, representing a decrease of approximately HK$559.0 million or 27.4%. The gross profit of the Group amounted to approximately HK$347.3 million and HK$365.0 million for the six months ended 30 June 2018 and 2019, respectively, representing an increase of approximately HK$17.7 million or 5.1%.

According to the 2019 Interim Report, the decrease in revenue was mainly due to decrease in sales in China market and North American market. In particular, the Group experienced some delay in its projects with certain customers in the United States of America. Despite the decrease in revenue, the Group's gross profit increased by approximately HK$17.7 million or 5.1%, and the gross profit margin increased by

7.7 percentage point from approximately 17.0% to approximately 24.7%, as compared to the corresponding period in 2018 primarily as a result of the significant decrease in the purchase price of a key raw material of polyurethane foam.

The profit after tax for the six months ended 30 June 2019 was approximately HK$10.6 million, representing an increase of approximately 16.5% compared with the profit after tax of approximately HK$9.1 million for the six months ended 30 June 2018. As disclosed in the 2019 Interim Report, the increase in profit for the six months ended 30 June 2019 as compared to the profit for the six months ended 30 June 2018 was mainly attributable to (i) the increase in gross profit as discussed above; (ii) decrease in administrative expenses of approximately HK$5.1 million; and (iii) the reversal of impairment losses of approximately HK$2.4 million during the period which were partially mitigated by (a) the increase in selling and distribution expenses of approximately HK$7.1 million and (b) the increase in finance cost of approximately HK$5.3 million.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As at 30 June 2019, the total assets of the Group amounted to approximately HK$3,031.9 million, which comprised mainly property, plant and equipment amounted to HK$679.6 million, inventories amounted to HK$600.6 million, and trade and other receivables amounted to HK$559.9 million.

As at 30 June 2019, total liabilities of the Group amounted to approximately HK$1,797.4 million, of which unsecured bank borrowings amounted to HK$786.3 million, trade and other payables amounted to approximately HK$517.2 million.

2. Background information of Chengdu Xingang

As advised by the management of the Group, as at the Latest Practicable Date, Chengdu Xingang owns two groups of properties (the "Properties") located at Furniture Industrial Park, Xinfan Town, Xindu District, Chengdu City, Sichuan Province, the PRC which comprise of industrial complex with industrial buildings, dormitory buildings and office buildings which were constructed in about 2011. The Properties are built on two parcels of land (the "Land Parcels") that have a total area of approximately 100,288 square meters (sq. m.). Please refer to the property valuation report as set out in Appendix II to the Circular (the "Valuation Report") for details of the Properties.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

2.1 Financial information of Chengdu Xingang

Set out below is the summary of the audited and unaudited financial information of Chengdu Xingang for each of the two years ended 31 December 2018 and the six months ended 30 June 2019 based on its audited accounts and unaudited management accounts prepared in accordance with the accounting standards generally accepted in the PRC:

	For the	For the	For the
	year ended	year ended	six months
	31 December	31 December	ended 30 June
	2017	2018	2019
	(approximately)	(approximately)	(approximately)
	RMB ('000)	RMB ('000)	RMB ('000)
	audited	audited	unaudited
Revenue	148,187	172,742	53,504
Net profit/(loss) before taxation
and extraordinary items	5,075	1,923	(351)
Net profit/(loss) after taxation
and extraordinary items	3,976	1,194	(351)
	As at	As at	As at
	31 December	31 December	30 June
	2017	2018	2019
	(approximately)	(approximately)	(approximately)
	RMB ('000)	RMB ('000)	RMB ('000)
	audited	audited	unaudited
Total assets	163,368	157,313	153,189
Total liabilities	37,033	29,755	26,523
Net assets	126,335	127,558	126,666

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As set out in the table above, the revenue of Chengdu Xingang increased from approximately RMB148.2 million for the year ended 31 December 2017 to approximately RMB172.7 million for the year ended 31 December 2018, representing an increase of approximately 16.6%. As advised by the management of the Group, such increase was primarily due to the increase in the unit selling price of polyurethane foam (at a lesser extent) as a result of the increase of material costs (at a larger extent) as Chengdu Xingang generally determines the prices of its polyurethane foam on a cost-plus basis. Despite the increase in revenue, net profit before and after taxation of Chengdu Xingang for the year ended 31 December 2018 were approximately RMB1.9 million and RMB1.2 million respectively, representing a substantial decrease of approximately 62.1% and 70.0% as compared with that for the year ended 31 December 2017, respectively. We were advised that the substantial decrease in profit of Chengdu Xingang for the year ended 31 December 2018 was mainly due to (i) increase in material costs; (ii) intense industry competition; and (iii) fluctuation of product price under the prevailing market conditions.

According to the management accounts of Chengdu Xingang as at 30 June 2019 provided by the Company, the non-current assets of Chengdu Xingang amounted to approximately RMB74.0 million which were mainly (i) the book value of the Properties of approximately RMB54.6 million; and (ii) intangible assets of approximately RMB19.4 million which mainly comprised of the net book value of land use rights of the Land Parcels as at 30 June 2019. The current assets of Chengdu Xingang amounted to approximately RMB79.2 million which were principally (i) trade and other receivables amounted to approximately RMB43.3 million; and (ii) inventories amounted to approximately RMB28.1 million. The current liabilities of Chengdu Xingang amounted to approximately RMB26.5 million which were principally (i) trade payables of approximately RMB12.0 million; and

a short-term bank loan of approximately RMB8.5 million. As at 30 June 2019, the net assets of Chengdu Xingang amounted to approximately RMB126.7 million.

3. Information on the Purchaser

As at the Latest Practicable Date, Mr. Liu, being a director of Chengdu Xingang, who also

legally and beneficially owns 49% equity interest in Chengdu Xingang and is therefore a substantial shareholder of Chengdu Xingang.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

4. Reasons for and benefits of the Transaction

4.1 Financial performance of Chengdu Xingang

Reference is made to the announcement of the Company dated 19 February 2016 in relation to the 2016 Acquisition (as defined below) (the "2016 Announcement"). In 2016, Sinomax Zhejiang acquired 51% equity interest in Chengdu Xingang from Mr. Liu pursuant to the equity transfer agreement dated 19 February 2016 and entered into between Sinomax Zhejiang (as purchaser) and Mr. Liu (as vendor) (the "2016 Acquisition"). The original acquisition cost in respect of the 2016 Acquisition was approximately RMB81.7 million (equivalent to approximately HK$89.9 million), being the consideration of the 2016 Acquisition.

As disclosed in the 2016 Announcement, the Company entered into the 2016 Acquisition with a view to tapping into the market of polyurethane foam in Chengdu City and broadening the revenue sources of the Group. However, as discussed above, the net profit before and after taxation of Chengdu Xingang for the year ended 31 December 2018 were approximately RMB1.9 million and RMB1.2 million respectively, representing a substantial decrease of approximately 62.1% and 70.0% as compared with that for the year ended 31 December 2017, respectively. Such decrease was mainly due to unanticipated changes in the prevailing market conditions since the 2016 Acquisition, including, among other things: (i) significant increase in the costs of the principal raw materials for manufacturing polyurethane foam which include, polypropylene glycol or polypropylene oxide and toluene diisocyanate; and (ii) intense industry competition in the polyurethane foam manufacturing industry faced by the Group.

As advised by the management of the Group, we understand that the key raw materials for manufacturing of polyurethane foam include polypropylene glycol or polypropylene oxide ("PPG") and toluene diisocyanate ("TDI"). Both the market prices of TDI and PPG were fluctuated during the past three years, ranging from approximately RMB9,700 per metric ton in May 2017 to RMB15,000 per metric ton in January 2018 for PPG; and approximately RMB22,000 per metric ton in July 2017 to approximately RMB42,000 per metric ton in October 2017 for TDI. Accordingly, the material prices of PPG and TDI remain uncertain in the future as such may significantly affect the financial performance of Chengdu Xingang as a whole.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We have discussed with the management of the Group in relation to the competition in the polyurethane foam market in recent years and we understand that the domestic polyurethane foam manufacturers in Chengdu City, Sichuan Province, the PRC has increased from approximately 13 key players in 2017 to approximately 38 key players in 2019, and that most of the polyurethane foam that were developed and manufactured by them are very competitive in terms of their selling prices as compared to the polyurethane form manufactured by the Group.

We have also discussed with the management of the Group and understood that given the lower than expected profitability of Chengdu Xingang as discussed above, the revenue generated from Chengdu only accounted for approximately 4.5% of the Group's total revenue for the year ended 31 December 2018. The net profit of Chengdu Xingang for the year ended 31 December 2018 amounted to approximately RMB1.2 million (equivalent to approximately HK$1.3 million), which was not significant and represents a low return of investment of approximately 1.2% of the total costs of investment of the Group in Chengdu Xingang of approximately RMB102.1 million (equivalent to approximately HK$112.3 million), which comprises the aggregate of the consideration of the 2016 Acquisition of approximately RMB81.7 million (equivalent to approximately HK$89.9 million) and the subsequent injection of capital in Chengdu Xingang by Sinomax Zhejiang of approximately RMB20.4 million (equivalent to approximately HK$22.4 million).

As a result, the Disposal, if materialised, provides a timely opportunity for the Group to realise the investment in Chengdu Xingang given the proceeds from the Disposal of approximately RMB157.0 million represents (i) a surplus of approximately 92.2% over the cost of the investment of 51% equity interest of Chengdu Xingang in approximately three years; and (ii) an implied price-to-earnings ratio of approximately 257.8 times as calculated by the adjusted consideration of the entire equity interest of Chengdu Xingang (which is approximately RMB307.8 million) over the net profit of Chengdu Xingang for the year ended 31 December 2018.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

4.2 The use of cash proceeds

As set out in the Letter from the Board, the Group will receive a cash consideration in the amount of approximately RMB157.0 million under the Transaction. The Group intends to apply the said cash consideration as follows: (i) approximately RMB100.0 million to repay the bank borrowings of the Group; and (ii) the remaining amount of approximately RMB57.0 million to general working capital of the Group.

We note from the 2019 Interim Report that the unsecured bank borrowings of the Group amounted to approximately RMB786.3 million as at 30 June 2019, of which approximately RMB561.0 million will fall due within one year, while the bank balances and cash was only amounted to approximately RMB297.8 million as at 30 June 2019. In view of the latest financial position of the Group as at 30 June 2019, we are of the view that having part of the cash proceeds allocated to meet the Group's financial needs for the repayment of the Group's bank borrowings will enhance the Group's overall liquidity and will give the Group greater flexibility in utilising its financial resources to meet its operation needs.

Our view

In light of the historical financial performance and results of operations of Chengdu Xingang as discussed above and having taken into account, (i) that as a result of the Transaction, it is estimated that the Group will record an unaudited gain of approximately HK$33.3 million (the analysis of which will be discussed below);

that upon Completion, the pledge of 51% equity interest in Chengdu Xingang by Mr. Liu to Sinomax Zhejiang pursuant to the Share Pledge Agreement will serve as security to secure the payment of the Consideration in full by Mr. Liu; (iii) the unanticipated changes and fluctuations in the polyurethane foam manufacturing industry in the PRC and the prevailing market conditions; and (iv) the proceeds from the Disposal will improve the Group's overall liquidity and capital resources and improve its gearing position, and would enable the Group to better utilise its resources for the further development of the Group's business and to enhance the interests of the Company and Shareholders as a whole, we concur with the Directors that, the reasons for the Disposal are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

5. Principal terms of the Share Purchase Agreement

5.1 Assets to be disposed

Pursuant to the Share Purchase Agreement, Sinomax Zhejiang has conditionally agreed to sell, and Mr. Liu has conditionally agreed to acquire, 51% equity interest in Chengdu Xingang.

5.2 Consideration

The Consideration of RMB157,000,000 (equivalent to approximately HK$172,700,000) shall be paid by Mr. Liu to Sinomax Zhejiang by way of bank transfer in the following manner:

an amount of RMB20,000,000 (equivalent to approximately HK$22,000,000) shall be paid within thirty (30) days from the date of the Share Purchase Agreement as the first payment;
an amount of RMB30,000,000 (equivalent to approximately HK$33,000,000) (the "Second Payment") shall be paid within ninety (90) days from the date of the Share Purchase Agreement;
an amount of RMB50,000,000 (equivalent to approximately HK$55,000,000) (the "Third Payment") shall be paid within one (1) year from the due date of the Second Payment (being the ninetieth (90th) day from the date of the Share Purchase Agreement) (the "Second Payment Due Date"), together with the payable interest which shall accrue from and including the Second Payment Due Date until and including the date of actual payment of the Third Payment at the rate of 3% per annum on the Third Payment; and
the remaining balance of RMB57,000,000 (equivalent to approximately HK$62,700,000) (the "Fourth Payment") shall be paid within two (2) years from the Second Payment Due Date, together with the payable interest which shall accrue from and including the Second Payment Due Date until and including the date of actual payment of the Fourth Payment at the rate of 3% per annum on the Fourth Payment.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

In assessing the fairness and reasonableness of the Consideration, we have discussed with the management of the Group to understand the principal basis in determining the Consideration and reviewed the Valuation Report. As advised by the Company, the Consideration was determined after arm's length negotiations between Sinomax Zhejiang and Mr. Liu with reference to, among other things, (i) the historical financial performance, financial position, results of operations and business prospects of Chengdu Xingang; (ii) the unaudited net asset value of Chengdu Xingang as at 30 June 2019 of approximately RMB126.7 million (equivalent to approximately HK$139.3 million); (iii) the valuation of the Properties owned by Chengdu Xingang as assessed by an independent qualified valuer; and (iv) the prevailing market conditions and economic landscape.

In addition, the payment terms in respect of the Consideration was a commercial decision between the Group and Mr. Liu determined after arm's length negotiation with reference to, among other things: (i) pursuant to the Share Purchase Agreement, Sinomax Zhejiang is entitled to receive interest at the rate of 3% per annum on the Third and Fourth Payments which shall accrue on the Second Payment Due Date until the date of actual payment of the Third and Fourth Payments, respectively, which shall serve as additional interest income to the Group for accepting the deferred payment arrangement; and (ii) upon Completion, the pledge of 51% equity interest in Chengdu Xingang by Mr. Liu to Sinomax Zhejiang pursuant to the Share Pledge Agreement shall serve as security to secure the obligations of Mr. Liu under the Share Purchase Agreement to pay Sinomax Zhejiang the Consideration in full. We have further compared the interest rate on the Third and Fourth Payments (the "Interest Rate") with the time deposit rates offered by the principal bank of Sinomax Zhejiang, and noticed that the Interest Rate of 3% per annum is higher than the 3-year time deposit rate of 2.75% per annum offered by the principal bank of Zhejiang Sinomax. Having taken into due consideration of the foregoing, the Directors are of the view, and we concur that the payment terms in respect of the Consideration under the Share Purchase Agreement are fair and reasonable to the Company and are in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Valuation of the Properties

Experience of the valuer and its engagement

The Properties were valued by Asset Appraisal Limited ("Asset Appraisal"), an independent property valuer appointed by the Company. The Valuation Report is contained in Appendix II to the Circular. We have conducted an interview with Asset Appraisal regarding its experience in valuing similar industrial complex interests in the PRC, and its independence. Based on our interview with Asset Appraisal, we understand that Asset Appraisal is an established independent property valuer with a large number of completed assignments acting for listed companies with property interests in, among others, the PRC. We also understand that the valuer-in-charge of the Asset Appraisal's valuation team has approximately 22 years' post-qualification experience in the valuation of the properties in the PRC and the relevant valuation team member has valuation experience of approximately 5 years.

We have also reviewed the terms of engagement letter of Asset Appraisal and noted that the purpose of which is to prepare a property valuation report and provide the Company with the opinion of value on the Properties. The engagement letter also contains standard valuation scopes that are typical of property valuation carried out by independent property valuers. There is no limitation of the scope of work which might have an adverse impact on the degree of assurance given by Asset Appraisal in the Valuation Report. We also understand from Asset Appraisal that it has carried out on- site inspections and made relevant enquiries and obtained further information for the purpose of the valuation for the market value of the Properties as at 31 October 2019 (the "Valuation") and no irregularities were noted during the course of the Valuation.

Based on the above, we are satisfied that the responsible person of the Asset Appraisal for the Valuation Report has relevant qualification as well as sufficient experience in performing the Valuation, and that the engagement is under normal commercial terms and the scope of Asset Appraisal's work is appropriate in conducting the Valuation.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Valuation methodologies

In arriving at its opinion of values, Asset Appraisal has adopted the direct comparison method where comparison based on prices information of comparable properties is made (the "Comparison Method"). Comparable properties of similar size, character and location are analysed and carefully weighed against all the respective advantages and disadvantages of each of property in order to arrive at a fair comparison of market value.

Based on the above, we have discussed with Asset Appraisal on the rationale of adopting the different valuation methodologies for valuing the Properties. According to Asset Appraisal, the Comparison Method is the most appropriate valuation method for assessing the market values of the Properties as each of the property is standardised industrial property, of which prices information of similar properties is readily accessible from the market. Income approach is not considered as it is an indirect method which relies on different assumptions of the investment yield and future income in arriving the valuation and cost method is not preferred when market information of similar properties is readily available.

After considering the reasons for Asset Appraisal's choice of adopting the Comparison Method for valuing the Properties, we are of the view that the valuation methodologies used are reasonable and acceptable in establishing the market values of the Properties as at 31 October 2019.

Valuation bases and assumptions

In arriving at the appraised value for the Properties, Asset Appraisal started by collecting and analysing the recent market price information of properties with similar nature and falling within industrial zones of Chengdu City as well as the vicinity of the Properties.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We noted that Asset Appraisal has made various assumptions for the Valuation, including (a) the owner sells the properties on the market in their existing state without the benefit of deferred terms contracts, leaseback, joint ventures, management agreement which would serve to affect the value of the properties; and (b) as the properties were held by the owner by means of long term land use rights, the owner of the properties has free and uninterrupted rights to occupy, use, transfer, lease or assign the property for the whole of its unexpired land use right term. Details of the assumptions made by Asset Appraisal for the Valuation are set out in the Appendix

to the Circular. We have discussed with the Company and Asset Appraisal and reviewed on the key assumptions made and nothing has come to our attention that would lead us to doubt the fairness and reasonableness of the principal bases and assumptions adopted in the Valuation Report.

After taken into account the above, we consider that the bases and assumptions adopted by Asset Appraisal for the valuation methodologies as discussed above are reasonable and in line with market practice.

Adjusted net asset value

According to the appraised market values of the Properties held by Chengdu Xingang and its unaudited management accounts as at 30 June 2019 provided by the Company, we have adjusted its net asset value by the market value of the Properties (the "Adjusted NAV") as follows:

	RMB'000
Unaudited net assets value of Chengdu Xingang
as at 30 June 2019	126,666
Add: Revaluation surplus arising from the Valuation of
the Properties as at 30 June 2019	107,078
Adjusted NAV	233,744
Adjusted NAV attributable to the
51% equity interest in Chengdu Xingang	119,209

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Based on (i) the valuation of the Properties as assessed by Asset Appraisal of approximately RMB181.1 million and the corresponding revaluation surplus of the Properties of approximately RMB107.1 million as advised by the Company; and (ii) the unaudited net asset value of the Chengdu Xingang as at 30 June 2019 of approximately RMB126.7 million, the Adjusted NAV is approximately RMB233.7 million while the Adjusted NAV attributable to the 51% equity interest in Chengdu Xingang is approximately RMB119.2 million. The Consideration of approximately RMB157.0 million (equivalent to approximately HK$172.7 million) to be received by the Group represents a premium of approximately RMB37.8 million or 31.7% to the Adjusted NAV attributable to its 51% equity interest in Chengdu Xingang of approximately RMB119.2 million. As such, we consider that the Consideration is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

5.3 Other major terms of the Share Purchase Agreement

Pursuant to the Share Purchase Agreement, upon Completion, Mr. Liu (as pledgor) and Sinomax Zhejiang (as pledgee) shall enter into the Share Pledge Agreement, pursuant to which 51% equity interest in Chengdu Xingang shall be pledged by Mr. Liu to Sinomax Zhejiang to secure the payment of the Consideration in full by Mr. Liu. This will provide security to the Company over the payment obligation owed by Mr. Liu to Sinomax Zhejiang to pay the Consideration in full. Accordingly, we consider that it is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

In light of the above, we are of the view that the major terms of the Share Purchase Agreement are on normal commercial terms, fair and reasonable so far as the Shareholders are concerned, and are in the interests of the Company and the Shareholders as a whole.

6. Possible financial effects of the Disposal

Upon Completion, Chengdu Xingang will cease to be a subsidiary of the Company and the financial results of Chengdu Xingang will no longer be consolidated into the financial statements of the Company.

6.1 Net asset value

According to the 2019 Interim Report, the unaudited net asset value of the Group as at 30 June 2019 was approximately HK$1,234.5 million. As disclosed in the Letter from the Board, it is estimated that the Group will record an unaudited gain on Disposal of approximately HK$33.3 million. As a result, the net asset value of the Group will likely to increase accordingly.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

6.2 Earnings

It is noted that Chengdu Xingang recorded net loss after taxation of approximately RMB351,000 for the six months ended 30 June 2019. After Completion, the revenue and profit/loss of Chengdu Xingang will not be consolidated into the financial statements of the Company.

As disclosed in the Letter from the Board, it is estimated that the Group will record an unaudited gain on Disposal of approximately HK$33.3 million. Notwithstanding that the revenue and profit/loss of Chengdu Xingang will not be reflected in the financial statements of the Company after Completion, taking into account the gain on Disposals of approximately HK$33.3 million, the Disposal will likely have a positive effect on the earnings of the Group.

Shareholders and potential investors of the Company should note that the actual amount of gain on the Disposal should be calculated on the basis of the relevant figures as at the date of the Completion and therefore would or would not be different from the abovementioned.

6.3 Liquidity and working capital

According to the 2019 Interim Report, the unaudited bank balance and cash of the Group as at 30 June 2019 was approximately HK$297.8 million, of which approximately HK$8.9 million was held by Chengdu Xingang. The net proceeds of the Disposals (after deducting all relevant expenses in relation to the Disposals) of approximately HK$155.4 million will be applied to general working capital of the Group for the payment of operating costs and/or reserve for repayment of bank loans of the Group as and when appropriate. It is expected that the Disposal will likely have a positive effect on the working capital and cash flow of the Group.

In view of the foregoing, in particular, the estimated gain on the Disposal which will have positive impact on the Group's earnings, net asset value and working capital, we concur in the view of the Directors that the Disposal will not have material adverse impact to the Group.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

7. Recommendation

Having taken into consideration the principal factors and reasons as described above, we are of the opinion that, although the Disposal is not in the ordinary and usual course of business of the Company, the terms of the Share Purchase Agreement and the Transaction are on normal commercial terms, fair and reasonable so far as the Shareholders are concerned and in the interests of the Company and the Shareholders as a whole. Accordingly, we advise the Shareholders, as well as the Independent Board Committee to recommend the Shareholders, to vote in favour of the relevant resolution if a general meeting were to be convened to approve the Share Purchase Agreement and the Transaction.

Yours faithfully,

For and on behalf of

Lego Corporate Finance Limited

Gary Mui

Chief Executive Officer

Mr. Gary Mui is a licensed person registered with the Securities and Futures Commission and a responsible officer of Lego Corporate Finance Limited to carry out Type 6 (advising on corporate finance) regulated activity under the Securities and Futures Ordinance (Chapter 571 of the laws of Hong Kong). He has over 20 years of experience in the finance and investment banking industries.

- 37 -

APPENDIX I	FINANCIAL INFORMATION OF THE GROUP

1. FINANCIAL INFORMATION OF THE GROUP

Financial information of the Group for each of the three years ended 31 December 2016, 2017 and 2018 are enclosed in the annual reports of the Company for the years ended 31 December 2016, 2017 and 2018 respectively, which are published on the website of the Stock Exchange (www.hkex.com.hk) on 27 April 2017, 27 April 2018 and 26 April 2019, respectively.

Financial information of the Group for the six months ended 30 June 2019 is enclosed in the interim report of the Company for the period ended 30 June 2019, which is published on the website of the Stock Exchange (www.hkex.com.hk) on 16 September 2019.

2. STATEMENT OF INDEBTEDNESS AND CONTINGENT LIABILITIES

At the close of business on 31 October 2019, being the latest practicable date for the purpose of this indebtedness statement, the Group had indebtedness of approximately HK$1,074.8 million, including outstanding unsecured bank borrowings of approximately HK$767.1 million and lease liabilities of approximately HK$307.7 million.

Unsecured bank borrowings

As at 31 October 2019, certain unsecured bank borrowings of the Group amounting to approximately HK$649.3 million are guaranteed by entities within the Group or a non- controlling shareholder of the Company's subsidiary. The remaining unsecured bank borrowings amounting to approximately HK$117.8 million are not guaranteed.

Lease liabilities

As at 31 October 2019, certain lease liabilities of the Group amounting to approximately HK$288.0 million are secured by rental deposits and the remaining lease liabilities amounting to approximately HK$19.7 million are unsecured. All lease liabilities are unguaranteed.

Save as aforesaid or otherwise disclosed herein, and apart from intra-group liabilities and normal trade payables in the ordinary course of business, as at the close of business on 31 October 2019, the Group did not have any debt securities authorised or created but unissued, or any term loans, other borrowings or indebtedness in the nature of borrowing including bank overdrafts, loans, liabilities under acceptances (other than normal trade bills), acceptance credits, other recognised lease liabilities or lease commitments, mortgages or charges, material contingent liabilities or guarantees outstanding.

I - 1

APPENDIX I	FINANCIAL INFORMATION OF THE GROUP

To the best of the knowledge of the Directors, having made all reasonable enquiries, there has been no material change in the level of indebtedness of the Group since 31 October 2019.

3. WORKING CAPITAL STATEMENT

After taking into account the Remaining Group's internal resources, the estimated net proceeds from the Disposal and the presently available banking facilities and in the absence of unforeseen circumstances, the Directors are satisfied that, the working capital available to the Remaining Group is sufficient for the Remaining Group's requirement for at least 12 months from the date of this circular.

4. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

The Group is principally engaged in the business of manufacture and sale of health and household products and polyurethane foam primarily for customers located in the PRC, Hong Kong and Macau (the "China Market") and the U.S., Canada and other North American countries (the "North American Market").

In 2019, there is a general slowdown in the economy around the world. For the six months ended 30 June 2019, the Group's sales in the China Market decreased by approximately 24.87% as compared to the six months ended 30 June 2018, whilst the Group's sales in the North American Market decreased by approximately 31.55% as compared to the six months ended 30 June 2018. The Board expects that the operating environment for the Group's business in the U.S. will continue to be uncertain primarily due to, among other things, the U.S.-China and the U.S.-Canada trade wars and the antidumping investigation which has been initiated in the mattress industry in the U.S. for mattresses imported from China.

In light of the economic landscape in the China Market and the historical financial performance and results of operations of Chengdu Xingang, and having taking into account the reasons for and benefits of the Transaction as stated above, the Directors (excluding the members of the Independent Board Committee) consider that the Share Purchase Agreement and the Transaction offer an opportunity for the Group to better utilise its resources for the further development of the Group's business and therefore it is in the interests of the Company and the Shareholders as a whole to enter into the Agreements and the Transaction.

I - 2

APPENDIX I	FINANCIAL INFORMATION OF THE GROUP

On the other hand, with a view to expanding its global customer network and diversifying its customer base, the Group has set up production facilities in Vietnam in 2019 to provide polyurethane foam to customers located in Southeast Asia and to produce end consumer health products. Trial production has started in the production facilities in Vietnam in the second quarter of 2019. The Board anticipates that the production facilities in Vietnam, in addition to the Group's existing factories located in the PRC and the U.S., would enhance the Group's flexibility in its production and logistic schedule to minimise overall costs (including production, tariff and transportation).

5. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 December 2018, being the date to which the latest published audited financial statements of the Group were made up.

I - 3

APPENDIX II	VALUATION REPORT

The following is the text of a letter, summary of valuation and valuation certificate, prepared for the purpose of incorporation in this circular received from Asset Appraisal Limited, an independent valuer, in connection with its valuation as at 31 October 2019 of the Property held by Chengdu Xingang.

Rm 901, 9/F., On Hong Commercial Building 145 Hennessy Road, Wanchai, Hong Kong

145

9 901

Tel : (852) 2529 9448 Fax : (852) 3554 5854

Date: 9 December 2019

The Board of Directors

Sinomax Group Limited

Units 2005-2007

Level 20, Tower 1

MegaBox Enterprise Square Five

38 Wang Chiu Road

Kowloon Bay, Hong Kong

Dear Sirs,

Re: Valuation of An Industrial Complex situated in Furniture Industrial Park, Xinfan Town, Xindu District, Chengdu City, Sichuan Province, in the People's Republic of China (the "PRC")

In accordance with the instructions from Sinomax Group Limited (the "Company") to value the captioned land parcel (the "Property"), we confirm that we have inspected the Property, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market value of the Property as at 31 October 2019 (the "valuation date").

BASIS OF VALUATION

The valuation is our opinion of the market value which we would define as intended to mean "the estimated amount for which an asset or liability should exchange on the date of valuation 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".

II - 1

APPENDIX II	VALUATION REPORT

TITLESHIP

We have been provided with copies of legal documents regarding title to the Property. However, we have not verified ownership of the Property and to ascertain any amendment which may not appear on the copies handed to us.

We have also relied upon the legal opinion provided by the PRC legal advisers, namely Tian Yuan Law Firm (the "PRC Legal Opinion"), to the Company on the title and other legal matters relation to the Property.

VALUATION METHODOLOGY

In valuing the Property, we have adopted the Market Approach by making use of the Comparison Method where comparison based on price information of comparable properties is made. Comparable properties of similar size, character and location are analysed and carefully weighted against all the respective advantages and disadvantages of each property in order to arrive at a fair comparison of market values.

ASSUMPTIONS

Our valuation has been made on the assumption that the owner sell the Property on the market in its existing states without the benefit of deferred terms contracts, leaseback, joint ventures, management agreements or any similar arrangement which would serve to affect the value of the Property.

As the Property is held by the owner by means of long term Land Use Rights granted by the Government, we have assumed that the owner has good legal title to the Property and has free and uninterrupted rights to occupy, use, transfer, lease or assign the Property for the whole of its unexpired land use right term.

Other special assumptions for our valuation (if any) would be stated out in the footnotes of the valuation certificate attached herewith.

II - 2

APPENDIX II	VALUATION REPORT

LIMITING CONDITIONS

No allowance has been made in our report for any charges, mortgages or amounts owing on the Property nor for any expenses or taxation which may be incurred in holding it. Unless otherwise stated, it is assumed that the Property is free from encumbrances, restrictions and outgoings of an onerous nature, which could affect its value.

We have relied to a very considerable extent on the information given by the Company 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 not carried out detailed site measurement to verify the correctness of the site area in respect of the Property but have assumed that the site area shown on the legal documents handed to us are correct. All documents of the Property have been used as reference only and all dimensions, measurements and areas are approximations.

The Land Parcels were lasted inspected by Zhou Tong, who is a registered PRC Real Estate Appraiser, on, on 8 November 2019. However, no site investigation has been carried out to determine the suitability of ground conditions or the services of the Property. Our valuation has been made on the basis that these aspects are satisfactory and that no extraordinary expenses or delays will be incurred for any future construction that may be carried out on the Property.

The market value estimate contained within this report specifically excludes the impact of environmental contamination resulting from earthquakes or other causes. It is recommended that the reader of this report consult a qualified environmental auditor for the evaluation of possible environmental defects, the existence of which could have a material impact on market value.

No soil analysis or geological studies were ordered or made in conjunction with this report, nor were any water, oil, gas, or other subsurface minerals use rights or conditions investigated.

We have had no reason to doubt the truth and accuracy of the information provided to us by the Company. We have also sought confirmation from the Company that no material factors have been omitted from the information supplied. We consider that we have been provided with sufficient information to reach an informed view, and we have no reason to suspect that any material information has been withheld.

II - 3

APPENDIX II	VALUATION REPORT

In valuing the Property, we have complied with all the requirements contained in Chapter 5 and Practice Note 12 to the Rules Governing the Listing of Securities issued by The Stock Exchange of Hong Kong Limited; the HKIS Valuation Standards (2017 Edition) published by The Hong Kong Institute of Surveyors.

All monetary sums stated in this report are in Renminbi (RMB).

Our summary of valuation and valuation certificate are attached herewith.

Yours faithfully,

for and on behalf of

Asset Appraisal Limited

Tse Wai Leung

MFin BSc MRICS MHKIS RPS(GP)

Director

Tse Wai Leung is a member of the Royal Institution of Chartered Surveyors, a member of The Hong Kong Institute of Surveyors, a Registered Professional Surveyor in General Practice and a qualified real estate appraiser in the PRC. He is on the list of Property Valuers for Undertaking Valuations for Incorporation or Reference in Listing Particulars and Circulars and Valuations in Connection with Takeovers and Mergers of the Hong Kong Institute of Surveyors, Registered Business Valuer under the Hong Kong Business Forum and has over 10 years' experience in valuation of properties, ports and logistics facilities in the PRC.

II - 4

APPENDIX II	VALUATION REPORT

SUMMARY OF VALUATION

Market Value in

Existing State

as at

31 October

2019

(RMB)

Property

Group I - Property interest held for investment purpose

1. Block No. 9 (Portion), 10, 11, 12 and 14 (Portion) within an Industrial Complex situated in Furniture Industrial Park

Xinfan Town Xindu District Chengdu City Sichuan Province

the PRC

81,800,000

Group II - Property interest held for self occupation

2. Block Nos. 1, 2, 3, 5, 6, 8, 9 (Portion), 13, 14 (Portion) and 15 within an Industrial Complex situated in

Furniture Industrial Park Xinfan Town

Xindu District

Chengdu City
Sichuan Province
the PRC	99,300,000

Total:	181,100,000

II - 5

APPENDIX II	VALUATION REPORT

VALUATION CERTIFICATE

Group I - Property interests held for investment purpose

			Market Value
			in existing
		Particulars of	state as at
Property No. 1	Description and Tenure	occupancy	31 October 2019

Block No. 9 (Portion), 10, 11, 12	The subject industrial complex is lying at the
and 14 (Portion) within	western side of Cheng-Wan Highway（成萬
an Industrial Complex situated in	高速公路）and is falling within an industrial
Furniture Industrial Park Xinfan	zone namely Chengdu Furniture Industrial
Town	Park（成都家具產業城）which is about 3
Xindu District	kilometres at the south of the core area of
Chengdu City	Xinfan Town. General environment of the
Sichuan Province	development is mainly industrial in nature.
the PRC
（中國四川省成都市新都區新	The development is standing on a parcel of
繁鎮家具工業園內之廠房）	industrial land with an area of 100,287.72
	square metres on which various blocks of
	single to 5-storey buildings with a total gross
	floor area of 97,251.39 square metres were
	erected. The buildings were completed in
	between 2008 and 2010.
	The property comprise portion of a 2-storey
	industrial building (Block 9), the whole of
	three blocks of 3-storey industrial building
	(Block Nos. 10 to 12) and portion of a
	4-storey dormitory building (Block No. 14)
	which were completed in between 2008 and
	2010. The total gross floor area of the property
	is 42,705 square metres of which 1,153 square
	metres is attributable to dormitory purpose.
	The land use rights of the property have been
	granted for a term expiring on 18 June 2059
	for industrial use.

The property is subject to

RMB81,800,000

various tenancies for terms expiring on between 31 October 2020 and 31 August 2025 at a current total monthly rent of approximately RMB336,000.

II - 6

APPENDIX II	VALUATION REPORT

Notes:

As stipulated in a Land Use Rights Certificate (Ref: Xin Du Guo Yong 新都國用(2009) No. 10597) dated 13 July 2009, the land use rights of the subject development have been granted to 成都新港海綿有限公司 for a term expiring on 18 June 2059 for industrial use.
As stipulated in 4 sets of Building Ownership Certificate (Ref: Xin Fang Quan Zheng Jian Zheng Zhi 新房權証監證字 Nos.0610533, 0610536 to 0610538) all dated 17 May 2011, Block Nos. 9 to 12 and 14 with a total gross floor area of 51,351.43 square metres (of which 49,658 square metres is attributable to the property) are held 成都新港海綿有限公司 for industrial use.
Opinion of the PRC Lawyer on the Property is summarized as follows:
1. 成都新港海綿有限公司 has obtained all necessary and valid certificate, legal capacity and consent for the lawful usage of the Property.
2. as revealed from the title search results obtained from the Real Estate Registration Centre of Xindu District, Chengdu City（成都市新都區不動產登記中心）on 14 November 2019, the land use rights and building ownership rights of the Property held by 成都新港海綿有限公司 were not sealed or frozen by the People's Court of Law and were free from any third party right.
3. 成都新港海綿有限公司 has free and unfettered rights to use and transfer the Property free from restriction from any third party throughout the unexpired land use right terms.

II - 7

APPENDIX II	VALUATION REPORT

VALUATION CERTIFICATE

Group II - Property interests held for self occupation

			Market Value
			in existing
		Particulars of	state as at
Property No. 2	Description and Tenure	occupancy	31 October 2019
Block Nos. 1, 2, 3, 5, 6,	The subject industrial complex is lying at the	The property	RMB99,300,000
8, 9 (Portion), 13,	western side of Cheng-Wan Highway（成萬	is occupied by the Group.
14 (Portion) and 15 within	高速公路）and is falling within an industrial
an Industrial Complex situated in	zone namely Chengdu Furniture Industrial
Furniture Industrial Park	Park（成都家具產業城）which is about 3
Xinfan Town	kilometres at the south of the core area of
Xindu District	Xinfan Town. General environment of the
Chengdu City	development is mainly industrial in nature.
Sichuan Province
the PRC	The development is standing on a parcel of
	industrial land with an area of 100,287.72
	square metres on which various blocks of
	single to 5-storey buildings with a total gross
	floor area of 97,251.39 square metres were
	erected. The buildings were completed in
	between 2008 and 2010.

The property comprise the whole of 6 blocks of single-storey industrial building (Block Nos. 1, 2, 3, 5, 6 and 8), portion of a 2-storey industrial building (Block No. 9), the whole of a 2-storey industrial building (Block No. 13), portion of a 4-storey dormitory building (Block No. 14) and the whole of a 5-storey composite office building (Block No. 15) which were completed in between 2008 and 2010. The total gross floor area of the property is 49,658 square metres of which 2,966 square metres is attributable to dormitory purpose and 5,263.56 square metres is attributable to composite office purpose.

The land use rights of the property have been granted for a term expiring on 18 June 2059 for industrial use.

II - 8

APPENDIX II	VALUATION REPORT

Notes:

As stipulated in a Land Use Rights Certificate (Ref: Xin Du Guo Yong 新都國用(2009) No. 10597) dated 13 July 2009, the land use rights of the subject development have been granted to 成都新港海綿有限公司 for a term expiring on 18 June 2059 for industrial use.
As stipulated in 10 sets of Building Ownership Certificate (Ref: Xin Fang Quan Zheng Jian Zheng Zhi 新房權証監證字 Nos.0610532 to 0610534, 0610538, 0610541 to 0610546) all dated 17 May 2011, Block Nos. 1, 2, 3, 5, 6, 8, 9, 13, 14 and 15 with a total gross floor area of 59,127.29 square metres (of which 43,245 square metres is attributable to the property) are held 成都新港海綿有限公司 for industrial use.
Opinion of the PRC Lawyer on the Property is summarized as follows:
1. 成都新港海綿有限公司 has obtained all necessary and valid certificate, legal capacity and consent for the lawful usage of the Property.
2. as revealed from the title search results obtained from the Real Estate Registration Centre of Xindu District, Chengdu City（成都市新都區不動產登記中心）on 14 November 2019, the land use rights and building ownership rights of the Property held by 成都新港海綿有限公司 were not sealed or frozen by the People's Court of Law and were free from any third party right.
3. 成都新港海綿有限公司 has free and unfettered rights to use and transfer the Property free from restriction from any third party throughout the unexpired land use right terms.

II - 9

APPENDIX III	GENERAL INFORMATION

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respect and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DISCLOSURE OF INTERESTS

Interest of Directors and chief executives of the Company

As at the Latest Practicable Date, the interests and short positions of the Directors or the chief executive of the Company in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO), which (i) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) were required, pursuant to section 352 of the SFO, to be entered into the register referred to therein; or (iii) were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies as set out in Appendix 10 to the Listing Rules, to be notified to the Company and the Stock Exchange, were as follows:

Long positions in the shares of the Company

				Approximate
				percentage of
				issued share
	Capacity and	Number of		capital of the
Name of Director	nature of interest	Shares held		Company (1)
Mr. Lam Chi Fan	Founder of a	1,275,906,000	(2)	72.91%
	discretionary trust
	Beneficial owner	1,500,000	(3)	0.09%
Mr. Cheung Tung	Beneficial owner	1,500,000	(3)	0.09%
Mr. Chen Feng	Beneficial owner	1,000,000	(3)	0.06%

III - 1

APPENDIX III		GENERAL INFORMATION

				Approximate
				percentage of
				issued share
	Capacity and	Number of		capital of the
Name of Director	nature of interest	Shares held		Company (1)
Ms. Lam Fei Man	Beneficial owner	1,000,000	(3)	0.06%
Mr. Lam Kam Cheung	Beneficial owner	1,000,000	(3)	0.06%
Mr. Wong Chi Keung	Beneficial owner	300,000	(3)	0.02%
Professor Lam Sing	Beneficial owner	300,000	(3)	0.02%
Kwong, Simon
Mr. Fan Chun Wah,	Beneficial owner	300,000	(3)	0.02%
Andrew, J.P
Mr. Zhang Hwo Jie	Beneficial owner	300,000	(3)	0.02%
Mr. Wu Tak Lung	Beneficial owner	300,000	(3)	0.02%

Notes:

The percentage is compiled based on the total number of 1,750,002,000 shares of the Company in issue as at the Latest Practicable Date.
These Shares are held by Sinomax Enterprises. Sinomax Enterprises is legally and beneficially owned as to 37.5% by Chi Fan Holding Limited, which is owed as to 100% by The Frankie Trust. The Frankie Trust is a discretionary family trust established by Mr. Lam Chi Fan as settlor and Vistra Trust (BVI) Limited acting as the trustee. The beneficiaries of The Frankie Trust are Mr. Lam Chi Fan and his family members.
None of the share options granted to each of Mr. Lam Chi Fan, Mr. Cheung Tung, Mr. Chen Feng, Ms. Lam Fei Man and Mr. Lam Kam Cheung, each being an executive Director, under the Pre- IPO Share Option Scheme Option which remained outstanding immediately before the lapse of the Pre-IPO Share Option Scheme on 10 July 2019 had been exercised. Each of Mr. Lam Chi Fan, Mr. Cheung Tung, Mr. Chen Feng, Ms. Lam Fei Man and Mr. Lam Kam Cheung, each being the executive Director, has been granted share options to subscribe for 1,500,000, 1,500,000, 1,000,000, 1,000,000 and 1,000,000 Shares, respectively, under the Post-IPO Share Option Scheme, all of which are still outstanding. Each of Mr. Wong Chi Keung, Professor Lam Sing Kwong Simon, Mr. Fan Chun Wah Andrew, Mr. Zhang Hwo Jie and Mr. Wu Tak Lung, each being an independent non-executive Director, has been granted share options to subscribe for 300,000 shares respectively, under the Post-IPO Share Option Scheme.

III - 2

APPENDIX III		GENERAL INFORMATION

Long positions in the shares of an associated corporation - Sinomax Enterprises
			Approximate
			percentage of
			issued share
			capital of
	Capacity and	Number of	the Sinomax
Name of Director	nature of interest	shares held	Enterprises (Note)
Mr. Lam Chi Fan	Beneficiary of	15	37.5%
	The Frankie Trust
Mr. Cheung Tung	Beneficiary of The	5	12.5%
	Cheung's Family Trust
Mr. Chen Feng	Beneficiary of The Feng	5	12.5%
	Chen's Family Trust

Note: The above percentage is compiled based on the total number of 40 shares of Sinomax Enterprises in issue as at the Latest Practicable Date, and the remaining 15 shares of Sinomax Enterprises in issue are owned by The James' Family Holding Limited, which is owed as to 100% by The James' Family Trust. The James' Family Trust is a discretionary family trust established by Ms. Cheung Shui Ying (the mother of Mr. Cheung Tung) as settlor and Vistra Trust (BVI) Limited acting as the trustee. The beneficiaries of The James' Family Trust are Ms. Cheung Shui Ying and her family members.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors nor the chief executive of the Company had or was deemed to have any interests or short positions in the shares, underlying shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which (i) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) were required, pursuant to section 352 of the SFO, to be entered into the register referred to therein; or (iii) were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies as set out in Appendix 10 to the Listing Rules, to be notified to the Company and the Stock Exchange.

III - 3

APPENDIX III	GENERAL INFORMATION

Interest of substantial Shareholders

As at the Latest Practicable Date, according to the register kept by the Company pursuant to section 336 of SFO, and so far as is known to the Directors or chief executive of the Company, the following persons (other than a Director or a chief executive of the Company) had an interest or short position in the shares and underlying shares of the Company which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO (including interests and short positions which they are taken or deemed to have under such provision of the SFO) or who were directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying voting rights to vote in all circumstances at general meeting of any members of the Group, or any options in respect of such capital:

Long positions in the shares of the Company

			Approximate
			percentage of
			issued share
Name of substantial	Capacity and	Number of	capital of the
Shareholder	nature of interest	Shares held	Company (1)
Sinomax Enterprises (2)	Beneficial owner	1,275,906,000	72.91%
Chi Fan Holding Limited	Interest of a controlled	1,275,906,000 (3)	72.91%
	corporation
The James' Family	Interest of a controlled	1,275,906,000 (4)	72.91%
Holding Limited	corporation
Vistra Trust (BVI)	Trustee of various trusts	1,275,906,000	72.91%
Limited (5)
Ms. Cheung Shui Ying	Founder of a	1,275,906,000 (6)	72.91%
	discretionary trust
Ms. Li Ching Hau	Interest of spouse	1,284,056,000 (7)	73.37%

III - 4

APPENDIX III	GENERAL INFORMATION

Notes:

The percentage is compiled based on the total number of 1,750,002,000 shares of the Company in issue as at the Latest Practicable Date.
The issued share capital of Sinomax Enterprises is legally owned as to 37.5%, 12.5%, 37.5% and 12.5% by Chi Fan Holding Limited, Wing Yiu Investments Limited, The James' Family Holding Limited and Venture Win Holdings Limited, respectively, and beneficially owned in the same proportion by The Frankie Trust, The Cheung's Family Trust, The James' Family Trust and The Feng Chen's Family Trust, respectively.
These Shares are held by Sinomax Enterprises, which is held as to 37.5% by Chi Fan Holding Limited.
These Shares are held by Sinomax Enterprises, which is held as to 37.5% by The James' Family Holding Limited.
Vistra Trust (BVI) Limited acts as the trustee of The Frankie Trust, The Cheung's Family Trust, The James' Family Trust and The Feng Chen's Family Trust. The beneficiaries of The Frankie Trust are Mr. Lam Chi Fan and his family members. The beneficiaries of The Cheung's Family Trust are Mr. Cheung Tung and his family members. The beneficiaries of The James' Family Trust are Ms. Cheung Shu Ying and her family members. The beneficiaries of The Feng Chen's Family Trust are Mr. Cheng Feng and his family members.
These Shares are held by Sinomax Enterprises. Sinomax Enterprises is legally and beneficially owned as to 37.5% by The James' Family Holding Limited, which is owed as to 100% by The James' Family Trust. The James' Family Trust is a discretionary family trust established by Ms. Cheung Shui Ying as settlor and Vistra Trust (BVI) Limited acting as the trustee. The beneficiaries of The James' Family Trust are Ms. Cheung Shui Ying and her family members.
Ms. Li Ching Hau is the spouse of Mr. Lam Chi Fan, an executive Director and Chairman of the Board, who owns 1,284,056,000 Shares. Pursuant to the SFO, Ms. Li Ching Hau is deemed to be interested in the 1,284,056,000 Shares held by Mr. Lam Chi Fan.

Save as disclosed above, as at the Latest Practicable Date, according to the register kept by the Company pursuant to section 336 of SFO, and so far as is known to the Directors or chief executives of the Company, no person (other than a Director or chief executive of the Company) had an interest or short position in the shares and underlying shares of the Company which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO (including interests and short positions which they are taken or deemed to have under such provision of the SFO) or who was directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying voting rights to vote in all circumstances at general meeting of any members of the Group, or any options in respect of such capital.

III - 5

APPENDIX III	GENERAL INFORMATION

3. DIRECTORS' SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors has entered or proposed to enter into a service contract with any member of the Group which is not expiring or determinable by the employer within one year without payment of compensation (other than statutory compensation).

4. COMPETING INTERESTS OF DIRECTORS

As at the Latest Practicable Date, none of the Directors or their respective associates had any interests in a business which competes or is likely to compete, either directly or indirectly, with the business of the Group or had any other conflict of interests with the Group pursuant to Rule 8.10 of the Listing Rules.

5. INTEREST IN CONTRACTS AND ASSETS

As at the Latest Practicable Date, none of the Directors or the chief executives of the Company had any direct or indirect interests in any assets which had been acquired or disposed of by or leased to any member of the Group, or were proposed to be acquired or disposed of by or leased to any member of the Group since 31 December 2018, being the date to which the latest published audited financial statements of the Group were made up.

As at the Latest Practicable Date, none of the Directors was materially interested, directly or indirectly, in any contract or arrangement entered into by any member of the Group which was subsisting as at the Latest Practicable Date and which was significant in relation to the business of the Group.

6. LITIGATION

As at the Latest Practicable Date, none of the members of the Group was engaged in any litigation, arbitration or claim of material importance and no litigation, arbitration or claim of material importance was known to the Directors to be pending or threatened against any member of the Group.

III - 6

APPENDIX III	GENERAL INFORMATION

7. EXPERTS

The following are the qualification of the experts who have given an opinion or advice contained in this circular:

Name	Qualifications
Lego Corporate Finance Limited	a corporation licensed to carry out Type 6 (advising
	on corporate finance) regulated activity under the
	SFO
Asset Appraisal Limited	Independent qualified valuer

Each of the above experts has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its report or letter or opinion as set out in this circular and references to its name in the form and context in which it appears in this circular.

As at the Latest Practicable Date, each of the experts above did not have any shareholding, directly or indirectly, in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

As at the Latest Practicable Date, each of the experts above did not have any interest, direct or indirect, in any asset which since 31 December 2018, being the date to which the latest published audited consolidated financial statements of the Group were made up, have been acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group.

III - 7

APPENDIX III	GENERAL INFORMATION

8. MATERIAL CONTRACTS

The following material contracts (not being contracts in the ordinary course of business) have been entered into by members of the Group within the two years immediately preceding the date of this circular:

the facility agreement (the "Facility Agreement") dated 13 June 2018 entered into between Sinomax International Trading Limited, a wholly-owned subsidiary of the Company (as borrower), the Company (as guarantor), Hang Seng Bank Limited, OCBC Wing Hang Bank Limited and United Overseas Bank Limited (as lenders and mandated lead arrangers), and Hang Seng Bank Limited (as agent and security trustee), pursuant to which term loan facilities of up to the aggregate principal amount of USD35 million and HK$273 million with a final maturity date falling thirty-six months after the date of the Facility Agreement, details of which are set out in the Company's announcement dated 13 June 2018;
the compensation agreement dated 1 November 2018 and entered into between Modern Time Industrial Limited*（時代實業有限公司）("Modern Time")and Shanghai Luen Tai Polyurethane Co. Ltd.*（上海聯大海綿有限公司）("Shanghai Luen Tai") and an indirect wholly-owned subsidiary of the Company, pursuant to which Modern Time agreed to compensate Shanghai Luen Tai for the costs and loss arising from the demolition of Building Nos. 1 to 22, No. 609 Zhongku Road, Maogang Town (Wuku), Songjiang District, Shanghai, the PRC, with a total gross floor area of 15,829 sq. m. erected on a parcel of land with a total site area of 37,357 sq. m. located in Songjiang District, Shanghai, the PRC and the surrender of the same to the government of Songjiang District, Shanghai, the PRC in the amount of RMB6 million (equivalent to approximately HK$6.74 million), details of which are set out in the Company's announcement dated 1 November 2018;
the lease agreement dated 18 December 2018 and entered into between Dongguan Sinohome Limited*（東莞賽諾家居用品有限公司）(as tenant), a company established in PRC as a wholly foreign-owned enterprise and an indirect wholly- owned subsidiary of the Company and Dongguan Donglian Furniture Co., Ltd.*（東莞東聯傢俱有限公司）(as landlord), a company established in PRC as a wholly foreign- owned enterprise and indirectly wholly-owned by Sinomax Enterprises in relation to the lease of the certain premises located in No. 1 Dajieling Road, Shahu Village, Tang Xia Town, Dongguan, Guangdong Province, PRC*（中國廣東省東莞市塘廈鎮沙湖村大結嶺路1號）for a term of three years commencing from 1 January 2019 to 31 December 2021, details of which are set out in the Company's announcement dated 18 December 2018;

III - 8

APPENDIX III	GENERAL INFORMATION

the letter agreement dated 30 August 2019 and entered into between Sinomax East, Inc. ("Sinomax East") (as purchaser), an indirect wholly-owned subsidiary of the Company, and 800 Broadway (as vendor),, in relation to the acquisition of the property located at 1740 JP Hennessy Drive, LaVergne, TN, 37086, the U.S., together with any and all buildings and other improvements thereon including a certain approximately 505,000 sq. ft. industrial facility, and all rights, easements and appurtenances thereto (the "Property") by Sinomax East (the "Sale");
the purchase and sale agreement dated 30 August 2019 and entered into between Sinomax East and WPT Acquisitions, LLC (the "Purchaser"), tin relation to the sale of the Property by Sinomax East (as vendor) to the Purchaser (as purchaser) and the leaseback arrangement in respect of the Property between Sinomax East (as tenant) and the Purchaser (as landlord) upon the completion of the Sale; and
the Share Purchase Agreement.

9. GENERAL

The company secretary of the Company is Mr. Lam Kam Cheung, a fellow member of the Association of Chartered Certified Accountants and a member of the Hong Kong Institute of Certified Public Accountants.
The registered office of the Company is situated at P.O. Box 309, Ugland House, Grand Cayman KY1-1104, Cayman Islands. The head office and principal place of business of the Company in Hong Kong is located at Units 2005-2007, Level 20 Tower 1, MegaBox Enterprise Square Five, 38 Wang Chiu Road, Kowloon Bay, Hong Kong.
The principal share registrar and transfer office of the Company is Maples Fund Services (Cayman) Limited at P.O. Box 1093, Boundary Hall, Cricket Square, Grand Cayman KY1-1102, Cayman Islands.
The branch share registrar of the Company in Hong Kong is Tricor Investor Services Limited at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong.
The English text of this circular shall prevail over the Chinese text in the case of any inconsistency.

III - 9

APPENDIX III	GENERAL INFORMATION

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection at the principal office of the Company at Units 2005-2007, Level 20 Tower 1, MegaBox Enterprise Square Five, 38 Wang Chiu Road, Kowloon Bay, Hong Kong during normal business hours on any business day, from the date of this circular up to and including the date which is 14 days from the date of this circular:

the memorandum and articles of association of the Company;
the annual reports of the Company for the two financial years ended 31 December 2017 and 2018;
the interim report of the Company for the six months ended 30 June 2019;
the material contracts as referred to in the section headed "8. MATERIAL CONTRACTS" in this appendix;
the written consents from the Independent Financial Adviser and Asset Appraisal Limited referred to in the section headed "Experts" in this appendix;
the valuation report and certificate issued by Asset Appraisal Limited in respect of the Property as set out in Appendix II to this circular;
a copy of each circular issued pursuant to the requirements set out in Chapter 14 and/ or Chapter 14A of the Listing Rules which has been issued since 31 December 2018 (being the date to which the latest published audited consolidated accounts of the Company have been made up); and
this circular.

III - 10

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Sinomax Group Ltd. published this content on 09 December 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 09 December 2019 04:05:07 UTC

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