COSCO SHIPPING : POSSIBLE DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO PARTICIPATION IN A CONSORTIUM TO ACQUIRE NOT MORE THAN 10% INTEREST IN CCCC DREDGING (GROUP) CO., LTD.

September 17, 2019 at 05:37 am EDT

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or otherwise transferred all your shares in COSCO SHIPPING Holdings Co., Ltd., you should at once hand this circular and the accompanying supplemental notice of EGM and the revised form of proxy to the purchaser(s) or 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 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.

中遠海運控股股份有限公司

COSCO SHIPPING Holdings Co., Ltd.*

(a joint stock limited company incorporated in the People's Republic of China with limited liability)

(Stock Code: 1919)

POSSIBLE DISCLOSEABLE AND CONNECTED TRANSACTION

IN RELATION TO

PARTICIPATION IN A CONSORTIUM TO ACQUIRE

NOT MORE THAN 10% INTEREST IN

CCCC DREDGING (GROUP) CO., LTD.*

Independent Financial Adviser

to the Independent Board Committee and the Independent Shareholders

A letter from the Board is set out on pages 6 to 19 of this circular. A letter from the Independent Board Committee to the Independent Shareholders is set out on page 20 of this circular. A letter from the Independent Financial Adviser containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 21 to 50 of this circular.

A supplemental notice convening the EGM on Wednesday, 9 October 2019 at Conference Room, 47th Floor, COSCO Tower, 183 Queen's Road Central, Hong Kong and Ocean Hall, 5th Floor, Shanghai Ocean Hotel, No. 1171, Dong Da Ming Road, Shanghai, the PRC, together with a revised form of proxy, are enclosed with this circular.

The reply slip despatched to the Shareholders in respect of the EGM on 24 August 2019 remains to be a valid reply slip for the EGM.

Whether or not you intend to attend the EGM, you are requested to complete and return the revised form of proxy in accordance with the instructions printed thereon. The revised form of proxy should be returned to the H share registrar of the Company, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 24 hours before the time appointed for the EGM or any adjournment thereof. Completion and return of the revised form of proxy will not preclude you from attending and voting in person at the EGM or at any adjournment thereof should you so wish.

For identification purpose only

18 September 2019

CONTENTS
	Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
LETTER FROM THE INDEPENDENT BOARD COMMITTEE. . . . . . . . . . . . . .	20
LETTER FROM TONGHAI CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	21
APPENDIX I - GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . .	I-1

- i -

DEFINITIONS

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

"Board"	the board of Directors
"CASBE"	China Accounting Standards for Business Enterprises
"CBEX"	China Beijing Equity Exchange, a comprehensive equity
	trading institution approved by the People's Government
	of Beijing Municipality
"CCCC"	China Communications Construction Company Limited,
	a joint stock limited company duly incorporated in the
	PRC with limited liability, the H shares of which are
	listed on the Main Board of the Stock Exchange (Stock
	Code: 1800) and the A shares of which are listed on the
	Shanghai Stock Exchange in the PRC (Stock Code:
	601800)
"CCCC's Announcement and	the announcement dated 18 June 2019 and the circular
Circular"	dated 10 July 2019 of CCCC
"CCCC Dredging"	CCCC Dredging (Group) Co., Ltd.* (中交疏浚(集團)股
	份有限公司), an enterprise established under the laws of
	the PRC and a subsidiary of CCCC
"CCCC Dredging Group"	CCCC Dredging and its subsidiaries
"CCCC Dredging Sale Shares"	the CCCC Dredging Shares to be transferred from CCCC
	to third parties under the Tender Process
"CCCC Dredging Share(s)"	share(s) in CCCC Dredging
"CCCG"	China Communications Construction Group (Limited)*
	(中國交通建設集團有限公司), a state-owned enterprise
	established under the laws of the PRC and the controlling
	shareholder of CCCC
"CCCG Subscription"	the proposed subscription of 2,024,291,498 CCCC
	Dredging Shares by CCCG as referred to in CCCC's
	Announcement and Circular

- 1 -

	DEFINITIONS
"CCCG Transfer"	the proposed transfer of 3,495,604,287 CCCC Dredging
	Shares by CCCC to CCCG as referred to in CCCC's
	Announcement and Circular
"Company"	COSCO SHIPPING Holdings Co., Ltd.* (中遠海運控股
	股份有限公司), a joint stock limited company
	incorporated in the PRC with limited liability, the H
	shares of which are listed on the Main Board of the Stock
	Exchange (stock code: 1919) and the A shares of which
	are listed on the Shanghai Stock Exchange (stock code:
	601919)
"connected person(s)"	has the meaning ascribed thereto in the Listing Rules
"Consortium"	a consortium comprising Shanghai Terminal, COSCO
	SHIPPING Tianjin and the Other Investor(s)
"Consortium Agreement"	an agreement proposed to be entered into among
	members of the Consortium, pursuant to which the
	Consortium will seek to acquire 4,580,082,373 CCCC
	Dredging Shares from CCCC on CBEX by way of
	participation in the Tender Process
"COSCO"	China Ocean Shipping Company Limited* (中國遠洋運
	輸有限公司), a PRC state-owned enterprise, the
	controlling shareholder of the Company and a wholly-
	owned subsidiary of COSCO SHIPPING
"COSCO SHIPPING"	China COSCO Shipping Corporation Limited* (中國遠洋
	海運集團有限公司), a PRC state-owned enterprise and
	the indirect controlling shareholder of the Company
"COSCO SHIPPING Ports"	COSCO SHIPPING Ports Limited, a company
	incorporated in Bermuda with limited liability, whose
	shares are listed on the Main Board of the Stock
	Exchange (Stock Code: 1199) and a non-wholly owned
	subsidiary of the Company
"COSCO SHIPPING Ports	COSCO SHIPPING Ports and its subsidiaries
Group"
"COSCO SHIPPING Tianjin"	COSCO SHIPPING (Tianjin) Company Limited* (中遠
	海運(天津)有限公司), a wholly-owned subsidiary of
	COSCO SHIPPING

- 2 -

	DEFINITIONS
"CRBC"	China Road and Bridge Corporation* (中國路橋工程有限
	責任公司), a subsidiary of CCCC
"Director(s)"	the director(s) of the Company
"EGM"	the extraordinary general meeting of the Company to be
	held on Wednesday, 9 October 2019 for considering and
	approving, among other things, if appropriate, the
	transactions under the Consortium Agreement
"Enlarged CCCC Dredging	the issued share capital of CCCC Dredging as enlarged
Issued Share Capital"	by the CCCG Subscription
"Group"	the Company and its subsidiaries
"Hong Kong"	the Hong Kong Special Administrative Region of the
	PRC
"Independent Board Committee"	an independent committee of the Board comprising all
	the independent non-executive Directors appointed to
	advise the Independent Shareholders
"Independent Financial Adviser"	China Tonghai Capital Limited, a corporation licensed to
or "Tonghai Capital"	carry out Type 1 (dealing in securities) and Type 6
	(advising on corporate finance) regulated activities under
	the SFO, being the independent financial adviser
	appointed to advise the Independent Board Committee
	and the Independent Shareholders in respect of the
	Consortium Agreement and the ST Acquisition
"Independent Shareholders"	Shareholders who are not prohibited or required to
	abstain from voting under the Listing Rules to approve
	the relevant transaction at the EGM
"Joint Acquisition"	the proposed acquisition by the Consortium of
	4,580,082,373 CCCC Dredging Shares (representing
	approximately 38.8952% of the existing issued share
	capital of CCCC Dredging and approximately 33.1896%
	of the Enlarged CCCC Dredging Issued Share Capital
	contemplated under the Consortium Agreement
"Latest Practicable Date"	16 September 2019, being the latest practicable date prior
	to the printing of this circular for ascertaining certain
	information contained herein

- 3 -

	DEFINITIONS
"Listing Rules"	the Rules Governing the Listing of Securities on the
	Stock Exchange
"Other Investor"	an investor (other than Shanghai Terminal and COSCO
	SHIPPING Tianjin) which is to be a member of the
	Consortium and a party to the Consortium Agreement
"percentage ratios"	has the meanings ascribed to it under Rule 14.07 of the
	Listing Rules
"PRC"	the People's Republic of China, which for the purpose of
	this circular and unless the context suggests otherwise,
	shall exclude Hong Kong, the Macau Special
	Administrative Region and Taiwan
"RMB"	Renminbi, the lawful currency of the PRC
"SFO"	the Securities and Futures Ordinance (Chapter 571 of the
	Laws of Hong Kong)
"Shanghai Terminal"	Shanghai China Shipping Terminal Development Co.,
	Ltd.* (上海中海碼頭發展有限公司), a company
	incorporated in the PRC with limited liability and a
	wholly-owned subsidiary of the COSCO SHIPPING
	Ports and therefore a non-wholly owned subsidiary of the
	Company
"Shareholder(s)"	the shareholder(s) of the Company
"Shares"	ordinary shares (including A shares and H shares) of
	RMB1.00 each in the total registered capital of the
	Company
"ST Acquisition"	the proposed acquisition by Shanghai Terminal of not
	more than 1,379,973,946 CCCC Dredging Shares
	contemplated under the Consortium Agreement
"Stock Exchange"	The Stock Exchange of Hong Kong Limited
"Supervisor(s)"	the supervisor(s) of the Company

- 4 -

	DEFINITIONS
"Tender Process"	a public tender process being conducted on CBEX by
	way of which CCCC will transfer not more than
	4,580,082,373 CCCC Dredging Shares (representing
	approximately 38.8952% of the existing issued share
	capital of CCCC Dredging and approximately 33.1896%
	of the Enlarged CCCC Dredging Issued Share Capital)
"%"	per cent

For identification purposes only

- 5 -

LETTER FROM THE BOARD

中遠海運控股股份有限公司

COSCO SHIPPING Holdings Co., Ltd.*

(a joint stock limited company incorporated in the People's Republic of China with limited liability)

(Stock Code: 1919)

Directors:	Registered Office:
Mr. XU Lirong1 (Chairman)	2nd Floor, 12 Yuanhang Business Centre
Mr. WANG Haimin1 (Vice Chairman)	Central Boulevard and East Seven Road
Mr. YANG, Liang Yee Philip2	Junction
Mr. WU Dawei2	Tianjin Port Free Trade Zone
Mr. ZHOU Zhonghui2	Tianjin, the PRC
Mr. TEO Siong Seng2
	Principal Place of Business:
	48/F, COSCO Tower
	183 Queen's Road Central
	Hong Kong

Executive Director
Independent Non-executive Director

For identification purpose only

18 September 2019

To the Shareholders

Dear Sir or Madam,

POSSIBLE DISCLOSEABLE AND CONNECTED TRANSACTION

IN RELATION TO

PARTICIPATION IN A CONSORTIUM TO ACQUIRE

NOT MORE THAN 10% INTEREST IN

DREDGING (GROUP) CO., LTD.*

1. INTRODUCTION

Reference is made to the announcements of the Company dated 23 August 2019 and 12

September 2019 in relation to the Consortium Agreement to be entered into by Shanghai Terminal (a wholly-owned subsidiary of COSCO SHIPPING Ports and hence a non-wholly owned subsidiary of the Company) with COSCO SHIPPING Tianjin (a wholly-owned subsidiary of COSCO SHIPPING, the controlling Shareholder) and one or more other

- 6 -

LETTER FROM THE BOARD

investors, pursuant to which Shanghai Terminal will acquire not more than 1,379,973,946

Dredging Shares (representing approximately 10% of the Enlarged CCCC Dredging Issued Share Capital from CCCC at a consideration not exceeding approximately RMB3,409 million if the Consortium is successful in the Tender Process. The transactions under the Consortium Agreement constitute a discloseable and connected transaction of the Company which is subject to the announcement and shareholders' approval requirements under Chapter 14 of the Listing Rules and the reporting, announcement and independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

The purposes of this circular are:

to provide you with further details of the Consortium Agreement and the ST Acquisition; and
to provide you with the letter of recommendation from the Independent Board Committee and the letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in relation to the transactions under the Consortium Agreement.

As the entering into of the Consortium Agreement will be subject to the approval of independent shareholders of COSCO SHIPPING Ports and the approval of the Independent Shareholders and the successful formation of the Consortium, the Consortium Agreement may or may not be entered into. Further, the ST Acquisition may or may not materialise depending on whether the Consortium is successful in bidding under the Tender Process. There is no assurance that the ST Acquisition will take place or as to when it may take place. Shareholders and potential investors in the Company should exercise caution when dealing in the securities of the Company.

2. THE CONSORTIUM AGREEMENT

Shanghai Terminal proposed to enter into the Consortium Agreement after the approvals of the independent shareholders of the Company and COSCO SHIPPING Port of the transactions under the Consortium Agreement have been obtained. Although the identities of the Other Investor(s) have not been confirmed yet, if the Consortium Agreement is successfully entered into, it will be on terms substantially the same as those disclosed herein, including the number of CCCC Dredging Shares to be acquired by Shanghai Terminal and COSCO SHIPPING Tianjin. Accordingly, the Board considered that the Independent Shareholders will have sufficient information to make an informed voting decision on the Consortium Agreement and the ST Acquisition notwithstanding that the Consortium Agreement has not been entered into at the time of this circular and the EGM. If COSCO SHIPPING Ports Group is not able to find suitable investors which are prepared to enter into the Consortium Agreement, the ST Acquisition will not proceed.

- 7 -

LETTER FROM THE BOARD

Parties

Shanghai Terminal, a wholly-owned subsidiary of COSCO SHIPPING Ports and hence a non-wholly-owned subsidiary of the Company.
COSCO SHIPPING Tianjin, a wholly-owned subsidiary of COSCO SHIPPING (a controlling Shareholder).
The Other Investor(s). The identities of the Other Investor(s) are yet to be confirmed.

The Company will ensure that, to the best of the Directors' knowledge, information and belief having made all reasonable enquiries, the Other Investors and their ultimate beneficial owners will be third parties independent of the Company and connected persons of the Company.

There is no prior or existing relationship or arrangement (whether expressed or implied) among the members of the Consortium in respect of the Joint Acquisition, except for the proposed entering into of the Consortium Agreement.

Joint Acquisition

The Consortium will seek to acquire 4,580,082,373 CCCC Dredging Shares (representing approximately 38.8952% of the existing issued share capital of CCCC Dredging and approximately 33.1896% of the Enlarged CCCC Dredging Issued Share Capital) from CCCC on CBEX through the Tender Process. If the Consortium is successful in the Tender Process, members of the Consortium will enter into a sale and purchase agreement with CCCC, pursuant to which members of the Consortium will acquire CCCC Dredging Shares as follows:

		Approximate
		percentage of the
		Enlarged CCCC
	Number of CCCC	Dredging Issued
	Dredging Shares	Share Capital
Shanghai Terminal	1,379,973,946	10%
COSCO SHIPPING Tianjin	689,986,973	5%
Other Investors	2,510,121,454	18.1896%

Among the members of the Consortium, Shanghai Terminal will acquire the highest proportion of the CCCC Dredging Sale Shares.

Shanghai Terminal will be appointed as the contact person to assist in handling the relevant procedures in relation to the Joint Acquisition with CBEX. As at the Latest Practicable Date, no binding sale and purchase agreement had been entered into between the Consortium and CCCC in relation to the Joint Acquisition.

- 8 -

LETTER FROM THE BOARD

Proposed consideration

Unless agreed otherwise by all members of the Consortium in the event of more than one intended transferees of the CCCC Dredging Sale Shares arising in the Tender Process (i.e. if there are other qualified bidders (apart from members of the Consortium) submitting a bid to acquire CCCC Dredging Shares under the Tender Process), the consideration for the Joint Acquisition will not exceed RMB2.47 per CCCC Dredging Share. Accordingly, the consideration payable by Shanghai Terminal will not exceed approximately RMB3,409 million, which will be funded by the internal resources and/or external financing (including bank borrowings) of COSCO SHIPPING Ports Group. COSCO SHIPPING Ports currently expects the proportions of funding by internal resources and external financing to be 40% and 60% respectively, but the actual proportions will depend on the COSCO SHIPPING Ports Group's financial situation and the market situation at around the time at which payments are to be made. The consideration will be payable in accordance with the terms and conditions of the Tender Process and the sale and purchase agreement to be entered into with CCCC by the members of the Consortium. As at 30 June 2019, COSCO SHIPPING Ports Group had cash and cash equivalents of approximately US$558 million and banking facilities available but unused of approximately US$993 million. Accordingly, it is expected that COSCO SHIPPING Ports Group will have sufficient financial resources to fulfil its payment obligations for the ST Acquisition. The Company will re-comply with the announcement, circular and independent shareholders' approval requirements pursuant to the Listing Rules before agreeing on a new bidding price above RMB2.47 per CCCC Dredging Share.

The maximum consideration of RMB2.47 per CCCC Dredging Share is equal to the floor purchase price set by CCCC for the Tender Process, which is also equal to the price per CCCC Dredging Share payable by the controlling shareholder of CCCC for its acquisition of and subscription of CCCC Dredging Shares as referred to in the section headed "3. The Tender Process" below. As stated in the announcement of CCCC dated 18 June 2019, the price per

Dredging Share, being RMB2.47 (rounded up to 2 decimal places), was calculated by dividing the appraised net assets value of CCCC Dredging as at 31 December 2018 of RMB28,969.953 million as set out in the valuation report prepared by China Tong Cheng Assets Appraisal Co. Ltd. (中通誠資產評估有限公司), which is a qualified valuer in the PRC, using the asset-based approach, by the total number of CCCC Dredging Shares in issue as at the date of such announcement (i.e. 11,775,447,964 shares). According to the circular of CCCC dated 10 July 2019, such valuation was based on the assumption that the distribution of dividends of RMB4,080.96 million by CCCC Dredging approved on 30 April 2019 had been implemented by 31 December 2018.

The proposed maximum consideration for the ST Acquisition was determined taking into account, among other things, (1) the abovementioned valuation; (2) the future prospects of

Dredging; and (3) the synergy between CCCC Dredging and COSCO SHIPPING Ports
Group.

- 9 -

LETTER FROM THE BOARD

Members of the Consortium shall pay to CBEX the deposits in proportion to the number of CCCC Dredging Sale Shares to be acquired by them respectively in accordance with the terms of the Tender Process. Payment of the consideration for the Joint Acquisition will also be governed by the sale and purchase agreement to be entered into with CCCC if the Consortium is successful in the Tender Process.

Liabilities for breach

If any member of the Consortium purports to terminate the Consortium without cause, or breaches the Consortium Agreement, the sale and purchase agreement with CCCC or the rules of CBEX resulting in the Consortium failing to acquire the CCCC Dredging Sale Shares, the other non-defaulting members may claim against such member for the loss suffered, including claims made by third parties against the non-defaulting members, the deposits and consideration for the CCCC Dredging Shares paid by the non-defaulting members which cannot be recovered and the non-defaulting members' costs of financing or loss of interest in respect of the deposits and consideration. Accordingly, if Shanghai Terminal breaches the provisions of the Tender Process or the sale and purchase agreement to be entered into with CCCC, any deposit or purchase price paid by it may be forfeited and it will also be liable to the other members of the Consortium for any loss which may be suffered by them. However, the Consortium Agreement does not contain any provision for the non-defaulting member(s) to take up the portion of the CCCC Dredging Sale Shares not taken up by the defaulting member(s).

According to the advice of the PRC legal counsel of COSCO SHIPPING Ports, Shanghai Terminal will not have any liability to CCCC (including forfeiture of any deposit or purchase price paid by Shanghai Terminal or becoming obliged to take up any portion of the CCCC Dredging Sale Shares not taken up by any other member of the Consortium) for any breach by any other member of the Consortium of the provisions of the Tender Process (including those referred to in the section headed "The Tender Process" below) or the sale and purchase agreement to be entered into with CCCC, and Shanghai Terminal will be entitled to a refund of any deposit or purchase price paid by Shanghai Terminal if the ST Acquisition does not proceed as a result of any such breach by any other member of the Consortium.

3. THE TENDER PROCESS

According to CCCC's Announcement and Circular, (a) CCCG (the controlling shareholder of CCCC) would acquire 3,495,604,287 CCCC Dredging Shares from CCCC and subscribe for 2,024,291,498 CCCC Dredging Shares both at a consideration of RMB2.47 per

Dredging Share; and (b) CCCC proposed to further transfer not more than 5,519,895,784 CCCC Dredging Shares to third parties at the floor purchase price of RMB2.47 per CCCC Dredging Share on an equity exchange in the PRC by way of public tender, representing not more than 40% of the Enlarged CCCC Dredging Issued Share Capital. As far as the Company was aware, as at the Latest Practicable Date, completion of the CCCG Transfer and the CCCG Subscription had not taken place.

- 10 -

LETTER FROM THE BOARD

As stated in the announcement of CCCC dated 11 September 2019, the Tender Process would be officially announced on CBEX on 12 September 2019. A summary of key provisions of the Tender Process is set out below:

The number of CCCC Dredging Sale Shares available for bidding is 4,580,082,373 (representing approximately 38.8952% of the existing issued share capital of CCCC Dredging and approximately 33.1896% of the Enlarged CCCC Dredging Issued Share Capital).
The minimum bid price is RMB11,312,803,461.31 (equivalent to RMB2.47 per CCCC Dredging Share).
The period for submission of bids is 20 business days commencing on 12 September 2019, to be extended by five business days at a time until a bid is received.
The qualifications which a bidder will need to meet include (i) it shall be an enterprise legal person or other economic organisation in the PRC established and validly existing in accordance with laws; (ii) it shall have good business credit, financial status and ability to pay; and (iii) other conditions stipulated by the laws and administrative regulations of the PRC. If a bidder is a private equity fund (if any), it shall undertake that it has completed the filings in respect of the private equity fund and the fund manager.
Bidders have the right to conduct due diligence on CCCC Dredging before the deadline for submission of bids.
Each bidder shall pay a security deposit of RMB1,131,280,346.11 to CBEX within three business days after CBEX's confirmation of its qualification for bidding.
In any of the following circumstances (unless caused by CCCC), 100% of the security deposit paid by a bidder will be forfeited as compensation to CCCC (and if it is insufficient to compensate CCCC, CCCC may continue to pursue the bidder in respect of its actual loss): (i) the bidder withdraws its bid unilaterally after being qualified and paid the security deposit; (ii) the bidder fails to participate in the subsequent bidding process when there are two or more qualified bidders; (iii) no bidder bids in the subsequent bidding process where the starting bid price is the listed floor purchase price; (iv) after being determined as the successful bidder, it fails to enter into a sale and purchase agreement with CCCC within five business days or fails to pay the balance of the purchase price or transaction service fee within five business days from the effective date of the sale and purchase agreement; or (v) breach of the relevant provisions in respect of the security deposit or other breaches by the bidder.

- 11 -

LETTER FROM THE BOARD

Upon the expiry of the deadline for submission of bids, if there is only one eligible bidder, then the transaction will be implemented by way of agreement; otherwise an online bidding process will be used to determine the successful bidder.
The successful bidder shall enter into a sale and purchase agreement with CCCC within five business days after CBEX's confirmation of successful bidder.
The successful bidder shall pay the balance of the purchase price (that is, after deducting the security deposit) to CBEX within five business days from the effective date of the sale and purchase agreement.
CCCC agreed that, following completion of the transfer of the CCCC Dredging Shares, (i) the board of directors of CCCC Dredging shall comprise not more than 9 directors, and the successful bidder (or, if the successful bidder is a consortium, the member of the consortium holding the highest proportion of the CCCC Dredging Shares) is entitled to nominate one director; (ii) if the successful bidder is a consortium, (A) then if there are not more than two members in the consortium, the member of the consortium holding the second highest proportion of the CCCC Dredging Shares is entitled to nominate one supervisor of CCCC Dredging; and (B) otherwise, the members of the consortium holding the second and third highest proportions of the CCCC Dredging Shares are each entitled to nominate one supervisor of CCCC Dredging; and (iii) if the bidder is a single enterprise legal person or other economic organisation, it is not entitled to nominate any supervisor of CCCC Dredging.
CCCC shall procure CCCC Dredging to complete the business registration or filing procedures in relation to the transaction with the competent registration authority(ies) within 30 days after payment of the purchase price by the successful bidder and issuance of the transaction certificate by CBEX (the date on which such procedures are completed is referred to below as the "Completion Date").
As at 31 December 2018, non-operating payables in the amount of RMB5,227 million were due from CCCC Dredging to CCCC and its subsidiaries, which included dividends due from CCCC Dredging's 2015 distribution of accumulated profits (the balance of which as at 31 December 2018 was RMB3,972 million). CCCC Dredging will pay all non-operating payables to CCCC within five business days from the Completion Date.

- 12 -

LETTER FROM THE BOARD

According to CCCC's Announcement and Circular, in relation to CCCG's purchase of and subscription for CCCC Dredging Shares:

The amount of the profit or loss during the transition period from 1 January 2019 (being the day immediately following the benchmark date of 31 December 2018 for appraisal of the net assets value of CCCC Dredging as referred to above) to and including the completion date (i.e. the date when the filing or registration procedures for the change with the competent authority for industry and commerce in relation to such purchase and subscription has been completed) shall be determined based on the auditor's report for the transition period prepared by the auditor within 60 days from the completion date.
If CCCC Dredging records a profit during the transition period pursuant to the auditor's report, CCCC Dredging shall pay such profit to the existing shareholders, i.e. CCCC and its subsidiary, CRBC, by way of dividend distribution in proportion to their shareholdings in CCCC Dredging.
If CCCC Dredging records a loss during the transition period pursuant to the auditor's report, CCCC guarantees that the existing shareholders, i.e. CCCC and its subsidiary, CRBC, will pay such loss to CCCC Dredging in cash in proportion to their shareholdings in CCCC Dredging.
If the completion date falls on or before the 15th day of a month, the audit period will commence from 1 January 2019 and end at the end of the preceding month; otherwise, the audit period will commence from 1 January 2019 and end at the end of that month.
CCCC expects that CCCC Dredging will not record a loss during the transition period.

If the Consortium is successful in the Tender Process and CCCC requires a similar arrangement as set out in paragraphs (a) to (e) above to be provided in the sale and purchase agreement for the Joint Acquisition, COSCO SHIPPING Ports Group is prepared to accept such arrangement, (which may or may not include the arrangement referred to in paragraph (c) above since CCCC expected that CCCC Dredging would not record a loss during the transition period). Given the relatively remote possibility of CCCC Dredging recording loss during the transaction period, COSCO SHIPPING Ports considers that the terms of the sale and purchase agreement will still be fair and reasonable even if such similar arrangement (with or without the arrangement referred to in paragraph (c) above) is included therein. Accordingly, if the resolution to be proposed at the EGM to approve the transactions under the Consortium Agreement is approved by the Independent Shareholders, they will be taken to have approved the acceptance of such arrangement by COSCO SHIPPING Ports Group.

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LETTER FROM THE BOARD

4. INFORMATION ON CCCC DREDGING

CCCC Dredging is an enterprise established under the laws of the PRC and a subsidiary of CCCC. The scope of CCCC Dredging's business mainly includes capital dredging, maintenance dredging, environmental dredging, and reclamation, as well as supporting projects related to dredging and land reclamation.

Set out below is certain consolidated financial information of CCCC Dredging and its subsidiaries (prepared in accordance with CASBE) for the two financial years ended 31 December 2017 and 31 December 2018 and the six months ended 30 June 2019 and as at 31 December 2018 and 30 June 2019.

			For the
	For the	For the	six months
	financial year	financial year	ended
	ended 2017	ended 2018	30 June 2019
	RMB'000	RMB'000	RMB'000
	(audited)	(audited)	(unaudited)
Net profit before taxation	2,518,693	1,552,583	570,170
Net profit after taxation	1,955,036	1,266,919	493,094
		As at	As at
		31 December	30 June
		2018	2019
		RMB'000	RMB'000
		(audited)	(unaudited)
Net assets		32,789,879	29,718,771

The decrease in the consolidated net assets of CCCC Dredging as at 30 June 2019 from that as at 31 December 2018 was mainly due to the distribution of dividends of RMB4,080.96 million by CCCC Dredging, which was approved on 30 April 2019 (as referred to in the basis of the valuation described above).

5. REASONS FOR AND BENEFITS OF ENTERING INTO THE CONSORTIUM AGREEMENT AND THE ST ACQUISITION

CCCC Dredging is the largest dredging company in the world and its dredging business accounts for approximately 70% of the market share in the domestic market in the PRC. Leveraging the leading market position in the industry, CCCC Dredging's returns are relatively stable and its business enjoys strong scarcity. In addition, CCCC Dredging proactively develops its environmental protection and marine engineering business and meanwhile expands its overseas business, which has great growth potential. It is expected that such businesses will contribute stable net profit and growth potential to COSCO SHIPPING Ports Group.

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LETTER FROM THE BOARD

The proposed investment in CCCC Dredging by COSCO SHIPPING Ports Group would contribute to the carrying out of COSCO SHIPPING Ports' strategy of extending its global footprint to build a global terminal network with highly efficient and cost-effective services to serve shipping alliances globally.

Dredging's ports dredging business has strong synergy with COSCO SHIPPING Port Group's ports business. The terminals acquired by COSCO SHIPPING Port Group since 2017 are mainly greenfield terminals, which have strong demand for waterway dredging. Therefore, COSCO SHIPPING Ports expects that following the ST Acquisition, the greenfield terminals of COSCO SHIPPING Ports Group will enhance its business cooperation with CCCC Dredging and could benefit from potential cost reduction in dredging due to better and more dredging services provided by CCCC Dredging, as well as more effective communications and progress management. The strategic investment will enable COSCO SHIPPING Port Group to leverage on the market leading position of CCCC Dredging to develop ports extended business. Therefore, it is expected that the ST Acquisition will allow COSCO SHIPPING Ports Group to get involved in upstream industrial services and enable COSCO SHIPPING Ports Group to leverage on the synergy of its overseas expansion and optimise its investment portfolio.

COSCO SHIPPING Ports' current terminals portfolio covers the five main port regions in Mainland China, Southeast Asia, Middle East, Europe, South America and the Mediterranean. Taking into the above factors and the view of COSCO SHIPPING Ports, the Company believes that, with the proposed investment in CCCC Dredging, COSCO SHIPPING Ports could leverage on the brand and global recognition and the rich experience in overseas dredging projects of CCCC Dredging to further extend its international presence, align with the "Belt & Road Initiative" and strengthen its leading position as a global port operator.

Considering the flexibility of future capital expenditure of COSCO SHIPPING Ports Group in ports business and that the ports dredging business of CCCC Dredging is not a principal business of COSCO SHIPPING Ports Group, but only an extension of the upstream industrial chain of the ports business, COSCO SHIPPING Ports believes that it would be appropriate to acquire not more than 1,379,973,946 CCCC Dredging Shares (representing approximately 10% of the Enlarged CCCC Dredging Issued Share Capital) rather than all the 4,580,082,373 CCCC Dredging Shares available for purchase. As COSCO SHIPPING Tianjin and the Other Investors are also interested in acquiring CCCC Dredging Sale Shares, the Consortium is proposed to be formed so that COSCO SHIPPING Ports Group can participate in the Tender Process.

Taking into account the market leading position of CCCC Dredging and its synergy with the ports business of COSCO SHIPPING Ports Group, the Company believes that the ST Acquisition is in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE BOARD

6. INFORMATION ON THE PARTIES

Information on Shanghai Terminal, COSCO SHIPPING Ports Group and the Group

Shanghai Terminal is principally engaged in ports investment.

COSCO SHIPPING Ports Group is principally engaged in the businesses of managing and operating terminals, and related businesses.

The Group provides a wide range of container shipping and terminal services covering the whole shipping value chain for both international and domestic customers.

Information on COSCO SHIPPING Tianjin and COSCO SHIPPING

COSCO SHIPPING Tianjin is a wholly-owned subsidiary of COSCO SHIPPING. It is principally engaged in the provision of, among others, an investment and operation platform for socialised industries in the Beijing-Tianjin-Hebei region, an incubation platform for new technology and new business form, as well as a service platform for group-wide localised management.

COSCO SHIPPING is a company incorporated under the laws of the PRC, and is a state-owned enterprise wholly-owned and controlled by the State-owned Assets Supervision and Administration Commission of the State Council of the PRC. The scope of business of COSCO SHIPPING and its subsidiaries includes international shipping, ancillary business in international maritime transportation, import and export of goods and technologies, international freight agency business, leasing of self-owned vessels, sales of vessels, containers and steel and maritime engineering.

Information on CCCC

is a leading transportation infrastructure enterprise in the PRC. It is primarily engaged in providing customers with integrated solutions services for each stage of the infrastructure projects leveraging on its extensive operating experience, expertise and knowhow accumulated from projects undertaken in a wide range of areas over the past six decades.

To the best of the Directors' knowledge, information and belief having made all reasonable enquiries, CCCC and its ultimate beneficial owner are third parties independent of the Company and connected persons of the Company.

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LETTER FROM THE BOARD

7. IMPLICATIONS UNDER THE LISTING RULES

As one or more of the applicable percentage ratios for the transactions under the Consortium Agreement under Listing Rules exceeds 5% but is less than 25% (assuming that 1,379,973,946 CCCC Dredging Shares are to be acquired by Shanghai Terminal at a consideration of RMB2.47 per CCCC Dredging Share, and the Consortium is successful in its bidding in the Tender Process), the transactions under the Consortium Agreement will constitute a discloseable transaction of the Company under Chapter 14 of the Listing Rules subject to the reporting and announcement requirements.

As COSCO SHIPPING Tianjin is a wholly-owned subsidiary of COSCO SHIPPING (a controlling Shareholder), it is a connected person of the Company. Accordingly, the transactions under the Consortium Agreement will also constitute a connected transaction of the Company, and are therefore also subject to the reporting, announcement and independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

8. DIRECTORS' CONFIRMATION

Mr. Xu Lirong Mr. Huang Xiaowen, Mr. Wang Haimin and Mr. Zhang Wei, who are Directors or former Directors nominated by COSCO, have abstained from voting on the relevant resolution of the Board approving the transactions under the Consortium Agreement pursuant to the articles of association of the Company. Save as disclosed above, none of the Directors has a material interest in the transactions under the Consortium Agreement and is required to abstain from voting on the relevant resolution.

9. EGM

The EGM will be held for the Shareholders to consider and, if thought fit, approve, among other things, the transactions under the Consortium Agreement.

The EGM will be held at Conference Room, 47th Floor, COSCO Tower, 183 Queen's Road Central, Hong Kong and Ocean Hall, 5th Floor, Shanghai Ocean Hotel, No.1171, Dong Da Ming Road, Shanghai, People's Republic of China on Wednesday, 9 October 2019 at 10:00 a.m.

A supplemental notice of the EGM, together with a revised form of proxy, are enclosed with this circular. The reply slip despatched to the Shareholders in respect of the EGM on 24 August 2019 remains to be a valid reply slip for the EGM.

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LETTER FROM THE BOARD

Completion and return of the revised form of proxy will not preclude you from attending and voting in person at the EGM or at any adjourned thereof should you so wish, but in such event the instrument appointing a proxy shall be deemed to be revoked.

Pursuant to Rule 13.39(4) of the Listing Rules, any vote of the Shareholders should be taken at a general meeting of the Company shall be taken by poll except where the Chairman, in good faith, decides to allow a resolution which relates purely to a procedural or administrative matter to be voted on by a show of hands. An announcement of the poll result will be made by the Company after the EGM in the manner prescribed under Rule 13.39(5) of the Listing Rules.

COSCO SHIPPING and its associates, being connected persons of the Company and having a material interest in the transactions under the Consortium Agreement, control or are entitled to exercise control over the voting rights in respect of 5,579,222,079 A Shares and 87,635,000 H Shares, representing approximately 46.22% of the total issued share capital of the Company as at the Latest Practicable Date. In accordance with the Listing Rules, they will abstain from voting at the EGM on the resolution to approve the transactions under the Consortium Agreement. Save as disclosed above, to the best of the knowledge, information and belief of the Directors and having made all reasonable enquiries, none of the Shareholders has any material interest in the transactions under the Consortium Agreement and accordingly, none of the Shareholders is required to abstain from voting on the relevant resolution to be proposed at the EGM.

10. RECOMMENDATION

Tonghai Capital has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the transactions under the Consortium Agreement. A copy of the letter from Tonghai Capital is set out in the section headed "Letter from Tonghai Capital" of this circular.

The Independent Board Committee, comprising Mr. Yang, Liang Yee Philip, Mr. Wu Dawei, Mr. Zhou Zhonghui and Mr. Teo Siong Seng, has been established to advise the Independent Shareholders as to the terms of the transactions under the Consortium Agreement and to advise the Independent Shareholders on how to vote in respect of such matters at the EGM, taking into account the recommendation of the Independent Financial Adviser. A copy of the letter from the Independent Board Committee is in the section headed "Letter from the Independent Board Committee" of this circular.

The Independent Board Committee, after taking into consideration the terms of the transactions under the Consortium Agreement and the advice from the Independent Financial Adviser, is of the view that the transactions under the Consortium Agreement, whilst not in the ordinary and usual course of business of the Group, are on normal commercial terms, fair and

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LETTER FROM THE BOARD

reasonable and in the interests of the Company and the Shareholders as a whole and, accordingly, recommend the Independent Shareholders to vote in favour of the relevant resolution to be proposed at the EGM to approve the transactions under the Consortium Agreement.

11. ADDITIONAL INFORMATION

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

Yours faithfully,

For and on behalf of

COSCO SHIPPING Holdings Co., Ltd.*

Guo Huawei

Company Secretary

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

中遠海運控股股份有限公司

COSCO SHIPPING Holdings Co., Ltd.*

(a joint stock limited company incorporated in the People's Republic of China with limited liability)

(Stock Code: 1919)

18 September 2019

To the Independent Shareholders

Dear Sir or Madam,

POSSIBLE DISCLOSEABLE AND CONNECTED TRANSACTION

IN RELATION TO

PARTICIPATION IN A CONSORTIUM TO ACQUIRE

NOT MORE THAN 10% INTEREST IN

CCCC DREDGING (GROUP) CO., LTD.*

The Independent Board Committee has been established to advise you in connection with the transactions under the Consortium Agreement, details of which are set out in the letter from the Board contained in the circular to the Shareholders dated 18 September 2019 (the "Circular"), of which this letter forms part. Terms defined in the Circular shall have the same meanings when used herein, unless the context otherwise requires.

Having considered the terms of the transactions under the Consortium Agreement and the advice of Tonghai Capital in relation thereto as set out on pages 21 to 50 of the Circular, we are of the opinion that the transactions under the Consortium Agreement, while not in the ordinary and usual course of business of the Group, are on normal commercial terms, their terms are fair and reasonable and they are in the interests of the Company and the Shareholders as a whole. We therefore recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM to approve the transactions under the Consortium Agreement.

Yours faithfully,

For and on behalf of the Independent Board Committee

Mr. YANG, Liang	Mr. WU Dawei	Mr. ZHOU	Mr. TEO
Yee Philip		Zhonghui	Siong Seng
	Independent non-executive Directors

For identification purpose only

- 20 -

LETTER FROM TONGHAI CAPITAL

The following is the full text of a letter of advice from Tonghai Capital, the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the transactions contemplated under the Consortium Agreement, which has been prepared for the purpose of incorporation in this circular.

18 September 2019

To the Independent Board Committee and the Independent Shareholders

COSCO SHIPPING Holdings Co., Ltd. 8th Floor, No.658 Dong Da Ming Road Shanghai

The PRC

Dear Sir or Madam,

POSSIBLE DISCLOSEABLE AND CONNECTED TRANSACTION

IN RELATION TO

PARTICIPATION IN A CONSORTIUM TO

ACQUIRE NOT MORE THAN 10% INTEREST IN

CCCC DREDGING (GROUP) CO., LTD.

INTRODUCTION

We refer to our appointment as the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the transactions contemplated under the Consortium Agreement, 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 18 September 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.

It was announced on 23 August 2019 that Shanghai Terminal (a wholly-owned subsidiary of COSCO SHIPPING Ports and therefore a non-wholly owned subsidiary of the Company) proposed to enter into the Consortium Agreement with COSCO SHIPPING Tianjin and the Other Investors, pursuant to which the Consortium will seek to acquire 4,580,082,373 CCCC Dredging Shares (representing approximately 33.1896% of the Enlarged CCCC Dredging Issued Share Capital) from CCCC on CBEX through the Tender Process at a maximum consideration of RMB2.47 per CCCC Dredging Share. If the Consortium is successful in the Tender Process, members of the Consortium will enter into a sale and purchase agreement with

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LETTER FROM TONGHAI CAPITAL

CCCC, pursuant to which Shanghai Terminal, COSCO SHIPPING Tianjin and the Other Investors will acquire 1,379,973,946 CCCC Dredging Shares (representing approximately 10% of the Enlarged CCCC Dredging Issued Share Capital), 689,986,973 CCCC Dredging Shares (representing approximately 5% of the Enlarged CCCC Dredging Issued Share Capital) and the balance of the CCCC Dredging Sale Shares, respectively. Therefore, Shanghai Terminal will acquire not more than 1,379,973,946 CCCC Dredging Shares, representing approximately 10% of the Enlarged CCCC Dredging Issued Share Capital.

COSCO SHIPPING Tianjin is a wholly-owned subsidiary of COSCO SHIPPING, the controlling Shareholder, and is therefore a connected person of the Company. Accordingly, the entering into of the Consortium Agreement by Shanghai Terminal with, among others, COSCO SHIPPING Tianjin will constitute a connected transaction of the Company under Chapter 14A of the Listing Rules. As the highest of the applicable percentage ratios for the transactions contemplated under the Consortium Agreement exceeds 5% but is below 25% (assuming that 1,379,973,946 CCCC Dredging Shares are to be acquired by Shanghai Terminal at a consideration of RMB2.47 per CCCC Dredging Share, and if the Consortium is successful in its bidding in the Tender Process), the entering into of the Consortium Agreement will constitute a discloseable transaction of the Company under Chapter 14 of the Listing Rules. Accordingly, the entering into of the Consortium Agreement is subject to the reporting, announcement and independent shareholders' approval requirements under the Listing Rules.

The Independent Board Committee, comprising Mr. Yang, Liang Yee Philip, Mr. Wu Dawei, Mr. Zhou Zhonghui and Mr. Teo Siong Seng, has been established to advise the Independent Shareholders as to whether (i) the terms of the Consortium Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; and (ii) the entering into of the Consortium Agreement is in the ordinary and usual course of business of the Group and is in the interests of the Company and the Shareholders as a whole, and to advise the Independent Shareholders on how to vote in respect of the relevant resolution to be proposed at the EGM to approve the Consortium Agreement. As the Independent Financial Adviser, our role is to give an independent opinion to the Independent Board Committee and the Independent Shareholders in such regard.

Other than being the Independent Financial Adviser, we also act as the independent financial adviser to the independent board committee and the independent shareholders of COSCO SHIPPING Ports (a non-wholly owned subsidiary of the Company) in respect of the Consortium Agreement. Apart from normal professional fees paid or payable to us in connection with the aforesaid appointments, no arrangements exist whereby we had received any fees or benefits from the Company, COSCO SHIPPING, CCCC and their respective subsidiaries. In the past two years and up to the Latest Practicable Date, a subsidiary of COSCO SHIPPING provided freight forwarding and customs clearance services to a subsidiary of a holding company of Tonghai Capital in an aggregate contract value of approximately RMB981,000. As the aggregate contract value of the services provided constituted only approximately 0.01% of total operating expenses of the holding company and its subsidiaries (including Tonghai Capital) on a consolidated basis for the year ended 31 December 2018, we consider the value to be immaterial and that the aforesaid relationship will not affect the objectivity of our advice. Save as the aforesaid, as at the Latest Practicable Date, we did not have any other relationships or interests with the Company, COSCO SHIPPING, CCCC and their respective subsidiaries. Accordingly, we are qualified to give independent advice in respect of the Consortium Agreement.

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LETTER FROM TONGHAI CAPITAL

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; (iii) the opinions expressed by and the representations of the Directors and 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 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 Latest Practicable Date 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 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 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 Circular.

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, CCCC Dredging and their respective subsidiaries.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our recommendation, we have considered the following principal factors and reasons:

1. The Tender

Background of the Tender

As stated in the announcement dated 18 June 2019 and the circular dated 10 July

2019 of CCCC:

the controlling shareholder of CCCC agreed to acquire certain CCCC Dredging Shares from CCCC and subscribe for certain new CCCC Dredging Shares both at the same consideration of RMB2.47 per CCCC Dredging Share (i.e. the CCCG Transfer and the CCCG Subscription); and

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LETTER FROM TONGHAI CAPITAL

CCCC proposed to further transfer not more than 5,519,895,784 CCCC Dredging Shares to third parties (other than the controlling shareholder of CCCC and its subsidiaries) at the floor purchase price of RMB2.47 per CCCC Dredging Share on an equity exchange in the PRC by way of public tender, representing not more than 40% of the Enlarged CCCC Dredging Issued Share Capital (the "Tender").

The CCCG Transfer and the CCCG Subscription were approved by the independent shareholders of CCCC on 5 August 2019. As far as the Company was aware, as at the Latest Practicable Date, completion of the CCCG Transfer and the CCCG Subscription had not taken place.

The Tender Process

As stated in the announcement of CCCC dated 11 September 2019, the Tender Process was officially announced on CBEX on 12 September 2019. Key provisions of the Tender Process include the following:

the number of CCCC Dredging Sale Shares available for bidding is 4,580,082,373 (representing approximately 38.8952% of the existing issued share capital of CCCC Dredging and approximately 33.1896% of the Enlarged
1. Dredging Issued Share Capital);
the minimum bid price is RMB11,312,803,461.31 (equivalent to RMB2.47 per
1. Dredging Share);
each bidder shall pay a security deposit of RMB1,131,280,346.11 to CBEX within three business days after CBEX's confirmation of its qualification for bidding;
the successful bidder shall enter into a sale and purchase agreement with
1. within five business days after CBEX's confirmation of successful bidder; and
the successful bidder shall pay the balance of the purchase price (that is, after deducting the security deposit) to CBEX within five business days from the effective date of the sale and purchase agreement.

For details of other provisions of the Tender Process, please refer to the section headed "3. The Tender Process" in the Letter from the Board.

2. The Consortium Agreement

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LETTER FROM TONGHAI CAPITAL

independent shareholders of COSCO SHIPPING Ports in respect of the Consortium Agreement and the transactions contemplated thereunder. Set out below are the major terms of the Consortium Agreement to be entered into:

Subject matter

The Consortium will seek to acquire 4,580,082,373

Dredging Shares (representing approximately 33.1896% of the Enlarged CCCC Dredging Issued Share Capital) from CCCC on CBEX through the Tender Process. If the Consortium is successful in the Tender Process, members of the Consortium will enter into a sale and purchase agreement with CCCC, pursuant to which Shanghai Terminal, COSCO SHIPPING Tianjin and the Other Investors will acquire 1,379,973,946 CCCC Dredging Shares (representing approximately 10% of the Enlarged CCCC Dredging Issued Share Capital), 689,986,973 CCCC Dredging Shares (representing approximately 5% of the Enlarged CCCC Dredging Issued Share Capital) and the balance of the CCCC Dredging Sale Shares, respectively.

Consideration

: A maximum of RMB2.47 per CCCC Dredging Share.

The total consideration for the ST Acquisition will not exceed approximately RMB3,409 million.

The consideration for the Joint Acquisition will be payable in accordance with the terms and conditions of the Tender Process and the sale and purchase agreement to be entered into with CCCC by the members of the Consortium if the Consortium is successful in the Tender Process.

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LETTER FROM TONGHAI CAPITAL

Liabilities for breach	:	If any member of the Consortium purports to terminate
		the Consortium Agreement without cause, or breaches
		the Consortium Agreement, the sale and purchase
		agreement with CCCC or the rules of CBEX resulting
		in the Consortium failing to acquire the CCCC
		Dredging Sale Shares, the other non-defaulting
		members may claim against such member for the loss
		suffered, including claims made by third parties
		against the non-defaulting members, the deposits and
		consideration for the CCCC Dredging Shares paid by
		the non-defaulting members which cannot be
		recovered and the non-defaulting members' costs of
		financing or loss of interest in respect of the deposits
		and consideration. Accordingly, if Shanghai Terminal
		breaches the provisions of the Tender Process or the
		sale and purchase agreement to be entered into with
		CCCC, any deposit or purchase price paid by it may be
		forfeited and it will also be liable to the other members
		of the Consortium for any loss which may be suffered
		by them.
		The Consortium Agreement does not contain any
		provision for the non-defaulting member(s) to take up
		the portion of the CCCC Dredging Sale Shares not
		taken up by the defaulting member(s).
		According to the PRC legal opinion of Commerce &
		Finance Law Offices (legal adviser to COSCO
		SHIPPING Ports as to the PRC law) obtained by
		COSCO SHIPPING Ports, Shanghai Terminal will not
		have any liability to CCCC (including forfeiture of any
		deposit or purchase price paid by Shanghai Terminal or
		becoming obliged to take up any portion of the CCCC
		Dredging Sale Shares not taken up by any other
		member of the Consortium) for any breach by any
		other member of the Consortium of the provisions of
		the Tender Process (including those set out in the
		section headed "3. The Tender Process" in the Letter
		from the Board) or the sale and purchase agreement to
		be entered into with CCCC, and Shanghai Terminal
		will be entitled to a refund of any deposit or purchase
		price paid by Shanghai Terminal if the ST Acquisition
		does not proceed as a result of any such breach by any
		other member of the Consortium.

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LETTER FROM TONGHAI CAPITAL

The consideration for the ST Acquisition is expected to be financed as to 40% by internal resources and as to 60% by external financings (including bank borrowings) of the COSCO SHIPPING Ports Group. However, the actual proportions of funding will depend on the COSCO SHIPPING Ports Group's financial situation and the market situation at around the time at which payments are to be made.

We have reviewed the major terms of the Consortium Agreement in draft form and no unusual terms were noted. We consider that the terms of the Consortium Agreement are on normal commercial terms. As stated in the Letter from the Board, if the Consortium Agreement is successfully entered into, it will be on terms substantially the same as those disclosed in the Circular, including the number of CCCC Dredging Shares to be acquired by Shanghai Terminal and COSCO SHIPPING Tianjin.

According to CCCC's Announcement and Circular, in relation to CCCG's purchase of and subscription for CCCC Dredging Shares:

the amount of the profit or loss during the transition period from 1 January 2019 (being the day immediately following the benchmark date of 31 December 2018 for appraisal of the net assets value of CCCC Dredging) to and including the completion date (i.e. the date when the filing or registration procedures for the change with the competent authority for industry and commerce in relation to such purchase and subscription has been completed) shall be determined based on the auditor's report for the transition period prepared by the auditor within 60 days from the completion date;
if CCCC Dredging records profit during the transition period pursuant to the auditor's report, CCCC Dredging shall pay such profit to the existing shareholders, i.e. CCCC and its subsidiary, CRBC, by way of dividend distribution in proportion to their shareholdings in CCCC Dredging;
if CCCC Dredging records loss during the transition period pursuant to the auditor's report, CCCC guarantees that the existing shareholders, i.e. CCCC and its subsidiary, CRBC, will pay such loss to CCCC Dredging in cash in proportion to their shareholdings in CCCC Dredging;
if the completion date falls on or before the 15th day of a month, the audit period will commence from 1 January 2019 and end at the end of the preceding month; otherwise, the audit period will commence from 1 January 2019 and end at the end of that month; and
CCCC expects that CCCC Dredging will not record loss during the transition period.

If the Consortium is successful in the Tender Process and CCCC requires a similar arrangement to be provided in the sale and purchase agreement for the Joint Acquisition, the COSCO SHIPPING Ports Group is prepared to accept it, even if it does not include the

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LETTER FROM TONGHAI CAPITAL

arrangement referred to in paragraph (c) above since CCCC expected that CCCC Dredging would not record loss during the transition period (collectively, the "Arrangement"). Taking into account (a) that the same arrangement will also be applied to the Other Investors in the Consortium; and (b) the profitable track record of CCCC Dredging in the last five financial years, we consider the Arrangement to be fair and reasonable.

3. Information on the Group

Business

The Group is principally engaged in providing container shipping, managing and operating container terminals and other terminal related businesses. It operates its business mainly through two segments. The container shipping segment is engaged in the transportation of goods across the Pacific, Asia and Europe, and other international routes. The terminal operation and investment segment is engaged in the operation and management of ports. The Company operates its terminal operation and investment segment through its non-wholly owned subsidiary, COSCO SHIPPING Ports, a company listed on the Stock Exchange.

In July 2018, the Company acquired Orient Overseas (International) Limited ("OOIL"), a company listed on the Stock Exchange (stock code: 316) and achieved a leap-forward development in terms of the size of its fleet. The Group ranked third in the industry in terms of shipping capacity and has become one of the first-tier container shipping companies in the world. As at 31 December 2018, the Group operated a fleet comprising 477 container vessels with total shipping capacity of 2.76 million twenty-foot equivalent unit ("TEU") and had orders of nearly 180,000 TEU in terms of shipping capacity.

The COSCO SHIPPING Ports Group is principally engaged in the businesses of managing and operating terminals and their related businesses. It is one of the leading port operators in the world and its terminals portfolio covers five main port regions in the PRC, Southeast Asia, Middle East, Europe and the Mediterranean. As at 30 June 2019, it operated and managed 288 berths at 37 ports worldwide, of which 197 were for containers, with a total designed annual handling capacity of approximately 110 million TEU. The COSCO SHIPPING Ports Group strives to build a global terminal network with controlling stake that offers linkage effects on costs, services and synergies, a synergistic platform that offers mutual benefits to all in the shipping industry.

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LETTER FROM TONGHAI CAPITAL

Financial results

Set out below are the consolidated income statements of the Group for the two years ended 31 December 2018 and the six months ended 30 June 2019 as extracted from the 2018 annual report (the "2018 Annual Report") and the 2019 interim results announcement of the Company (the "2019 Interim Results"):

	For the six months	For the year
	ended 30 June	ended 31 December
	2019		2018		2018	2017
	(RMB'000)	(RMB'000)	(RMB'000)	(RMB'000)
	(unaudited)	(unaudited)	(audited)	(audited)
Continuing operation
Revenues	71,762,486		45,041,047		120,342,284		90,399,078
Cost of services and
inventories sold	(64,400,210)	(42,186,575)	(110,725,942)	(82,761,870)
Gross profit
7,362,276		2,854,472		9,616,342		7,637,208
Other income, net	789,226		325,222		2,199,387		1,108,134
Gain on disposal of a
joint venture	-	-	-	1,886,333
Gain on remeasurement
of previously held
interest of an
available-for-sale
financial asset upon
further acquisition to
become an associate	-	-	-	264,099
Selling, administrative
and general expenses	(4,355,317)	(2,031,274)	(6,816,932)	(5,232,051)
Operating profit	3,796,185		1,148,420		4,998,797		5,663,723
Finance income	431,344		187,270		571,051		484,725
Finance costs	(3,093,808)	(1,276,395)	(3,998,008)	(2,147,368)

Net finance costs	(2,662,464)	(1,089,125)	(3,426,957)	(1,662,643)

	1,133,721		59,295		1,571,840		4,001,080
Share of profits less
losses of
- joint ventures	397,120		330,688		697,250		641,548
- associates	693,136		686,798		1,380,277		1,060,408
Profit before income

tax from continuing
operation	2,223,977		1,076,781		3,649,367		5,703,036
Income tax expense	(359,828)	(307,643)	(818,961)	(872,351)
Profit for the

period/year from
continuing
operation	1,864,149		769,138		2,830,406		4,830,685

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LETTER FROM TONGHAI CAPITAL

	For the six months	For the year
	ended 30 June	ended 31 December
	2019		2018		2018		2017
	(RMB'000)	(RMB'000)	(RMB'000)	(RMB'000)
	(unaudited)	(unaudited)	(audited)	(audited)
Discontinued
operation
Profit for the
period/year from
discountinued
operation	150,920		-	195,955		-
Profit for the

period/year	2,015,069		769,138		3,026,361		4,830,685
Profit attributable to
equity holders of
the Company
arising from:
- Continuing
operation	1,051,196		40,796		1,083,059		2,661,936
- Discontinued
operation	113,190		-	146,967		-

	1,164,386		40,796		1,230,026		2,661,936

Year ended 31 December 2018 compared to year ended 31 December 2017

The Group primarily generates its revenue from the container shipping and container terminal businesses. Revenue increased by approximately 33.1% from approximately RMB90,399.1 million for the year ended 31 December 2017 to approximately RMB120,342.3 million for the year ended 31 December 2018, primarily due to the financial results of OOIL were consolidated into the financial statements of the Group following completion of the acquisition of OOIL in July 2018. Excluding the contribution of OOIL, revenue of the Group increased by approximately 7.2% for the year ended 31 December 2018 as compared to the previous year.

For the year ended 31 December 2018, revenue from container shipping and related business (from external customers) amounted to approximately RMB114,753.1 million, representing an increase of approximately 32.3% from approximately RMB86,742.3 million in the previous year.

The increase in revenue generated from the container terminal and related business (from external customers) by approximately 50.5% from approximately RMB3,656.8 million for the year ended 31 December 2017 to approximately RMB5,503.7 million for the year ended 31 December 2018 was mainly due to the growth of the terminal business.

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LETTER FROM TONGHAI CAPITAL

Cost of services and inventories sold mainly comprises equipment and cargo transportation costs, voyage costs, vessel costs and cost of services related to the container shipping and related business as well as container terminal and related business costs. It increased by approximately 33.8% from approximately RMB82,761.9 million for the year ended 31 December 2017 to approximately RMB110,725.9 million for the year ended 31 December 2018. Excluding the effect of acquisition of OOIL, cost of services and inventories sold increased by approximately 9.1% as compared to the previous year, primarily due to the increase in the shipping cost per TEU for the container shipping and related business as well as the growth of the terminal business.

As a result of the increase in subsidies for demolition of vessels and the net foreign exchange gains in 2018 as compared to the net foreign exchange losses in 2017, other income, net increased significantly from approximately RMB1,108.1 million for the year ended 31 December 2017 to approximately RMB2,199.4 million for the year ended 31 December 2018.

In 2017, the Group disposed of 20% equity interest in Qingdao Qianwan Container Terminal Co., Ltd., a joint venture company, and acquired additional equity interest in Qingdao Port International Co., Ltd. ("QPI"), which was recognised as an associate of the Company instead of available-for-sale financial assets prior to the acquisition, resulting in a one-off gain of approximately RMB2,150.4 million in aggregate.

As a result of the consolidation of the financial results of OOIL into the Group, selling, administrative and general expenses and finance income increased by approximately 30.3% and 17.8% for the year ended 31 December 2018, respectively, as compared to the previous year.

For the year ended 31 December 2018, finance costs amounted to approximately RMB3,998.0 million, as compared to approximately RMB2,147.4 million in the previous year, primarily due to the increase in the interest rate of USD-denominated loans and the interest-bearing liabilities of the Group, resulting in the increase in the interest expenses of borrowings and bank processing fees.

Subsequent to the acquisition of OOIL, in July 2018, OOIL, a subsidiary of the Company and the U.S. Departments of Homeland Security and Justice entered into an agreement to divest the Group's investments which directly or indirectly operate the Long Beach Container Terminal, Inc. (i.e. the terminal business in the U.S.). The profit from the discontinued operation of approximately RMB196.0 million in 2018 represented the after-tax profit generated from such U.S. terminal business of OOIL in the second half of 2018. In 2017, the Group did not have any discontinued operation.

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LETTER FROM TONGHAI CAPITAL

As a result of the aforesaid, profit attributable to equity holders of the Company arising from continuing operation decreased from approximately RMB2,661.9 million for the year ended 31 December 2017 to approximately RMB1,083.1 million for the year ended 31 December 2018.

Six months ended 30 June 2019 compared to six months ended 30 June 2018

Revenue increased by approximately 59.3% from approximately RMB45,041.0 million for the six months ended 30 June 2018 to approximately RMB71,762.5 million for the six months ended 30 June 2019, primarily due to the financial results of OOIL were consolidated into the financial statements of the Group following completion of the acquisition of OOIL in July 2018. By including the revenue of OOIL for the six months ended 30 June 2018, revenue of the Group increased by approximately 10.2% for the six months ended 30 June 2019 as compared to the corresponding period in 2018.

For the six months ended 30 June 2019, revenue from container shipping and related business (from external customers) amounted to approximately RMB68,904.3 million, representing an increase of approximately 62.6% from approximately RMB42,364.7 million for the corresponding period in 2018.

Revenue from the container terminal and related business (from external customers) increased by approximately 6.8% from approximately RMB2,676.3 million for the six months ended 30 June 2018 to approximately RMB2,858.2 million for the six months ended 30 June 2019.

Cost of services and inventories sold increased by approximately 52.7% from approximately RMB42,186.6 million for the six months ended 30 June 2018 to approximately RMB64,400.2 million for the six months ended 30 June 2019. By including the cost of services and inventories sold of OOIL for the six months ended 30 June 2018, cost of services and inventories sold of the Group increased by approximately 6.1% for the six months ended 30 June 2019 as compared to the corresponding period in 2018.

Other income, net increased from approximately RMB325.2 million for the six months ended 30 June 2018 to approximately RMB789.2 million for the six months ended 30 June 2019, primarily attributable to the contribution of OOIL following completion of the acquisition of OOIL, which was partially offset by the issuance of new shares by QPI, an associate of the Group, in the first half of 2019 resulting in a net loss from dilution of approximately RMB153.0 million.

As a result of the consolidation of the financial results of OOIL into the Group, selling, administrative and general expenses and finance income increased by approximately 114.4% and 130.3% for the six months ended 30 June 2019, respectively, as compared to the corresponding period in 2018.

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LETTER FROM TONGHAI CAPITAL

For the six months ended 30 June 2019, finance costs amounted to approximately RMB3,093.8 million, as compared to approximately RMB1,276.4 million for the corresponding period in 2018, mainly due to the consolidation of the finance costs of OOIL into the Group and the increase in borrowings upon acquisition of OOIL as well as the implementation of the new accounting standard on leases since 1 January 2019.

The after-tax profit generated from the discontinued operation of the Group, the U.S. terminal business of OOIL, in the first half of 2019 was approximately RMB150.9 million. For the six months ended 30 June 2018, the Group did not have any discontinued operation.

As a result of the aforesaid, profit attributable to equity holders of the Company arising from continuing operation increased from approximately RMB40.8 million for the six months ended 30 June 2018 to approximately RMB1,051.2 million for the six months ended 30 June 2019.

Financial position

Set out below are the extracts of the consolidated balance sheets of the Group as at 31 December 2018 and 2017 and 30 June 2019 as extracted from the 2018 Annual Report and the 2019 Interim Results:

	As at
	30 June	As at 31 December
	2019		2018		2017
	(RMB'000)	(RMB'000)	(RMB'000)
	(unaudited)	(audited)	(audited)
ASSETS
Non-current assets
Property, plant and equipment	102,744,554		115,385,537		57,420,313
Right-of-use assets	36,885,549		-	-
Joint ventures	9,974,447		9,886,112		8,169,778
Associates	18,762,982		18,991,354		17,692,258
Other non-current assets	21,279,064		23,864,798		10,500,819

	189,646,596		168,127,801		93,783,168
Current assets
Trade and other receivables and
contract assets	16,011,131		14,852,027		10,986,870
Cash and bank balances	31,869,837		32,837,729		25,738,526
Other current assets	18,467,494		12,326,248		2,681,441

	66,348,462		60,016,004		39,406,837
Total assets	255,995,058		228,143,805		133,190,005

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LETTER FROM TONGHAI CAPITAL

	As at
	30 June	As at 31 December
	2019		2018		2017
	(RMB'000)	(RMB'000)	(RMB'000)
	(unaudited)	(audited)	(audited)
LIABILITIES
Current liabilities
Trade and other payables and
contract liabilities	31,435,878		29,698,425		23,185,929
Short-term borrowings	26,050,827		48,220,619		10,939,802
Current portion of long-term
borrowings	6,829,369		8,730,823		8,540,731
Current portion of lease
liabilities	7,390,963		-	-
Other current liabilities	7,519,909		2,204,094		895,100

	79,226,946		88,853,961		43,561,562
Non-current liabilities
Long term borrowings	82,351,085		80,244,198		43,909,214
Lease liabilities	27,092,815		-	-
Other non-current liabilities	4,516,507		2,692,757		2,008,649

	113,960,407		82,936,955		45,917,863
Total liabilities	193,187,353		171,790,916		89,479,425

EQUITY
Equity attributable to the equity
holders of the company
Share capital	12,259,529		10,216,274		10,216,274
Reserves	17,153,963		12,669,939		10,453,013

	29,413,492		22,886,213		20,669,287
Non-controlling interests	33,394,213		33,466,676		23,041,293

	62,807,705		56,352,889		43,710,580

Total assets of the Group primarily consist of (1) property, plant and equipment which are mainly leasehold land and buildings, container vessels, terminal equipment and improvement, containers and assets under construction; (2) right-of- use assets are primarily the leases of container vessels, concession rights and land

use rights; (3) investments in joint ventures and associates; (4) trade and other

receivables and contract assets; and (5) cash and bank balances. Total liabilities of

the Group primarily consist of (1) borrowings; (2) lease liabilities; and (3) trade and

other payables and contract liabilities.

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LETTER FROM TONGHAI CAPITAL

31 December 2018 compared to 31 December 2017

As at 31 December 2018, total assets and total liabilities of the Group amounted to approximately RMB228,143.8 million and RMB171,790.9 million, representing an increase of approximately 71.3% and 92.0%, respectively, from those as at 31 December 2017, primarily due to the consolidation of the financial results of OOIL into the Group following completion of the acquisition of OOIL in July 2018. Property, plant and equipment, investments in joint ventures and associates, trade and other receivables and contract assets, and cash and bank balances (excluding restricted bank deposits) accounted for approximately 50.6%, 12.7%, 6.5% and 14.4% of total assets, whereas borrowings and trade and other payables and contract liabilities accounted for approximately 79.9% and 17.3% of total liabilities, as at 31 December 2018, respectively.

Net assets attributable to equity holders of the Company increased by approximately 10.7% to approximately RMB22,886.2 million as at 31 December 2018 as compared to 31 December 2017. As at 31 December 2018, the Group had net current liabilities of approximately RMB28,838.0 million with a current ratio of approximately 0.7 time.

The net debt to total equity ratio, defined as total borrowings less cash and bank balances (excluding restricted bank deposits) and divided by total equity, was approximately 185.2% as at 31 December 2018, as compared to approximately 86.1% as at 31 December 2017.

30 June 2019 compared to 31 December 2018

As at 30 June 2019, total assets and total liabilities of the Group amounted to approximately RMB255,995.1 million and RMB193,187.4 million, representing an increase of approximately 12.2% and 12.5%, respectively, from those as at 31 December 2018, primarily due to the implementation of the new accounting standard on leases since 1 January 2019. Property, plant and equipment, right-of-use assets, investments in joint ventures and associates, trade and other receivables and contract assets, and cash and bank balances (excluding restricted bank deposits) accounted for approximately 40.1%, 14.4%, 11.2%, 6.3% and 12.4% of total assets, whereas borrowings, lease liabilities and trade and other payables and contract liabilities accounted for approximately 59.6%, 17.8% and 16.3% of total liabilities, as at 30 June 2019, respectively.

Net assets attributable to equity holders of the Company increased by approximately 28.5% to approximately RMB29,413.5 million as at 30 June 2019 as compared to 31 December 2018. As at 30 June 2019, the Group had net current liabilities of approximately RMB12,878.5 million with a current ratio of approximately 0.8 time. The decrease in the Group's net current liabilities as at 30

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LETTER FROM TONGHAI CAPITAL

June 2019 of approximately RMB15,959.5 million as compared to that as at 31 December 2018 was primarily due to the financial performance in the first half of 2019, non-public issuance of A Shares and repayment of borrowings.

As disclosed in the 2019 Interim Results, the working capital and capital resources of the Group have been and will continue to be generated from cash flows from operating activities, proceeds from new share issuance and debt financing from banks. Taking into account that (1) the Group had cash and bank balances (excluding restricted bank deposits) of approximately RMB31,869.8 million as at 30 June 2019;

the unutilised bank loan facilities of the Group were approximately RMB46,252.5 million as at 30 June 2019; and (3) the capital commitments for future construction of container vessels and containers and investment in terminals were approximately RMB7,303.5 million as at 30 June 2019, we concur with the Company that the Group will have sufficient working capital to meet its present requirement for at least twelve months following the date of the publication of the Circular and in the absence of unforeseen circumstances, after taking into account the effect of the ST Acquisition.

The net debt to total equity ratio, defined as total borrowings less cash and bank balances (excluding restricted bank deposits) and divided by total equity, was approximately 132.7% as at 30 June 2019, as compared to approximately 185.2% as at 31 December 2018.

4. Information on the CCCC Dredging Group

Business

CCCC Dredging is an enterprise established under the laws of the PRC and is currently a subsidiary of CCCC. The CCCC Dredging Group is principally engaged in dredging business, land reclamation business, pre-dredging and post-dredging services, environmental and marine engineering business. The scope of dredging business mainly includes capital dredging, maintenance dredging, environment dredging and reclamation, as well as supporting projects related to dredging and land reclamation.

Dredging is the removal of sediments from harbours, lakes, rivers and water treatment settling ponds to permit the passage of ships and barges, to increase the capacity of water storage reservoirs, to improve waterways and to build and maintain beaches. Depending on its purposes, dredging can be largely classified into dredging for navigation, for reclamation and for environmental protection. Dredging for navigation can be further classified into capital dredging, which refers to the initial dredging works necessary for the construction of ports and navigation channels, and maintenance dredging, which refers to the dredging works later required of ports and navigation to ensure that they continue to provide adequate dimensions to permit the passage of ships.

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LETTER FROM TONGHAI CAPITAL

As stated in the Letter from the Board, CCCC Dredging is the largest dredging company in the world and its dredging business accounts for approximately 70% of the market share in the PRC. As at 30 June 2019, CCCC Dredging's dredging capacity amounted to approximately 790 million cubic meters under standard operating conditions.

According to the prospectus dated 23 October 2018 issued by CCCC Dredging in relation to the issuance of corporate bonds in 2018, CCCC Dredging has the following competitive advantages:

1. CCCC Dredging is the leading supplier of dredging and land reclamation services in the world in terms of dredging capacity, achieving economies of scale;
2. the dredging vessels and equipment owned and used by CCCC Dredging have contributed to the efficient and safe operation of CCCC Dredging; and
3. CCCC Dredging possesses strong survey, design and research and development capabilities.
Financial results
Set out below is the consolidated financial information of the CCCC Dredging

Group for the two years ended 31 December 2018 and the six months ended 30 June 2019 prepared in accordance with CASBE:

		For the six months	For the year ended
		ended 30 June	31 December
		2019		2018	2018		2017
		(RMB	(RMB	(RMB	(RMB
		million)	million)	million)	million)
		(unaudited)	(unaudited)	(audited)	(audited)
Revenue	16,745		15,879		34,228		34,582
Cost of sales	(14,876)	(13,786)	(29,278)	(29,669)
Gross profit
1,869		2,093		4,950		4,913
Selling and marketing
expenses	(65)	(56)	(128)	(89)
Administrative expenses	(872)	(849)	(2,249)	(2,316)
Research and
development expenses	(310)	(310)	(695)	(515)
Net finance expenses	(199)	(250)	(427)	(384)
Other income and
expenses, net	140		(86)	52		838

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LETTER FROM TONGHAI CAPITAL

		For the six months	For the year ended
		ended 30 June	31 December
		2019		2018	2018	2017
		(RMB	(RMB	(RMB	(RMB
		million)	million)	million)	million)
		(unaudited)	(unaudited)	(audited)	(audited)
Operating profit	563		542		1,503	2,447
Other non-operating
income	7		27		49	72
Profit before income

tax	570		569		1,552	2,519
Income tax expenses	(77)	(142)	(285)	(564)

Profit for the
period/year	493		427		1,267	1,955

Profit attributable to
equity holders of
CCCC Dredging	444		417		1,281	2,009

Year ended 31 December 2018 compared to year ended 31 December 2017

Revenue of the CCCC Dredging Group decreased slightly by approximately

1.0% from approximately RMB34,582 million for the year ended 31 December 2017 to approximately RMB34,228 million for the year ended 31 December 2018. Despite the slight decrease in revenue, the value of new contracts of the CCCC Dredging Group reached approximately RMB56,983 million in 2018, representing an increase of approximately 17.5%, as compared with the previous year.

Gross profit of the CCC Dredging Group increased slightly by approximately

0.8% from approximately RMB4,913 million for the year ended 31 December 2017 to approximately RMB4,950 million for the year ended 31 December 2018. Gross profit margin increased from approximately 14.2% for the year ended 31 December 2017 to approximately 14.5% for the year ended 31 December 2018, mainly attributable to the undertaking of certain dredging projects with higher profit margins.

Administrative expenses including impairment losses on financial and contract assets for the dredging business were approximately RMB2,249 million for the year ended 31 December 2018, representing a decrease of approximately 2.9%, from approximately RMB2,316 million for the year ended 31 December 2017.

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LETTER FROM TONGHAI CAPITAL

Profit attributable to equity holders of CCCC Dredging decreased by approximately 36.2% from approximately RMB2,009 million for the year ended 31 December 2017 to approximately RMB1,281 million for the year ended 31 December 2018, primarily due to higher investment gains resulted from disposal of certain financial assets in 2017 which was included in other income and expenses, net.

Based on the profit attributable to equity holders of CCCC Dredging of approximately RMB1,281 million for the year ended 31 December 2018 and 11,775,447,964 CCCC Dredging Shares as at 31 December 2018, the earnings per CCCC Dredging Share was approximately RMB0.1088.

Six months ended 30 June 2019 compared to six months ended 30 June 2018

Revenue of the CCCC Dredging Group increased by approximately 5.5% from approximately RMB15,879 million for the six months ended 30 June 2018 to approximately RMB16,745 million for the six months ended 30 June 2019.

Gross profit of the CCCC Dredging Group decreased by approximately 10.7% from approximately RMB2,093 million for the six months ended 30 June 2018 to approximately RMB1,869 million for the six months ended 30 June 2019. Gross profit margin decreased from approximately 13.2% for the six months ended 30 June 2018 to approximately 11.2% for the six months ended 30 June 2019, mainly attributable to the fluctuation of market environment, the increase in subcontracting costs and the increase in price of raw materials.

Administrative expenses including impairment losses on financial and contract assets for the dredging business were approximately RMB872 million for the six months ended 30 June 2019, representing an increase of approximately 2.7%, from approximately RMB849 million for the six months ended 30 June 2018.

Profit attributable to equity holders of CCCC Dredging increased by approximately 6.5% from approximately RMB417 million for the six months ended 30 June 2018 to approximately RMB444 million for the six months ended 30 June 2019, primarily attributable to the decrease in net finance expenses and the increase in other income and expenses, net, which were partially offset by the decrease in gross profit and the increase in administrative expenses.

Based on the profits attributable to equity holders of CCCC Dredging for the year ended 31 December 2018 and for the six months ended 30 June 2018 and 2019, the profit attributable to equity holders of CCCC Dredging for the twelve months ended 30 June 2019 was approximately RMB1,308 million (i.e. RMB1,281 million

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LETTER FROM TONGHAI CAPITAL

less RMB417 million plus RMB444 million) (the "LTM Profit"). Based on the LTM

Profit of approximately RMB1,308 million and 11,775,447,964 CCCC Dredging

Shares as at 30 June 2019, the earnings per CCCC Dredging Share was

approximately RMB0.1111.

Financial position

Set out below is the consolidated statement of financial position of the CCCC Dredging Group as at 31 December 2017 and 2018 and 30 June 2019 prepared in accordance with CASBE:

	As at
	30 June	As at 31 December
	2019		2018	2017
	(RMB	(RMB	(RMB
	million)	million)	million)
	(unaudited)	(audited)	(audited)
ASSETS
Non-current assets
Fixed assets	13,560		15,396		14,701
Trade receivables	12,110		12,252		10,815
Long-term investment	6,299		5,662		4,691
Others	12,845		9,105		7,465

	44,814		42,415		37,672
Current assets
Trade and bills receivables	16,381		16,836		13,185
Cash and cash equivalents	6,730		8,019		8,332
Contract assets	12,583		10,168		-
Others (Note)	17,159		17,601		26,868

	52,853		52,624		48,385
Total assets	97,667		95,039		86,057

LIABILITIES
Current liabilities
Trade and bills payables	24,885		25,963		22,171
Bank and other borrowings	7,174		4,451		6,253
Others	18,613		14,951		14,562

	50,672		45,365		42,986
Non-current liabilities
Bond payable	9,946		9,981		5,987
Bank and other borrowings	3,132		2,931		3,377
Others	4,198		3,972		3,577

	17,276		16,884		12,941
Total liabilities	67,948		62,249		55,927

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LETTER FROM TONGHAI CAPITAL

	As at
	30 June	As at 31 December
	2019		2018	2017
	(RMB	(RMB	(RMB
	million)	million)	million)
	(unaudited)	(audited)	(audited)
EQUITY
Capital and reserves attributable
to the equity holders of
CCCC Dredging	27,179		30,332		28,644
Non-controlling interests	2,540		2,458		1,486

	29,719		32,790		30,130

Note: Mainly included prepayments, other receivables, inventories and other current assets.

Total assets of the CCCC Dredging Group primarily consist of (1) fixed assets which are mainly dredgers, vessels and tankers for dredging; (2) trade and bills receivables; (3) contract assets; and (4) cash and cash equivalents. Total liabilities of the CCCC Dredging Group primarily consist of (1) trade and bills payables; (2) bond payable; and (3) bank and other borrowings.

31 December 2018 compared to 31 December 2017

As at 31 December 2018, total assets and total liabilities of the CCCC Dredging Group amounted to approximately RMB95,039 million and RMB62,249 million, representing an increase of approximately 10.4% and 11.3%, from those as at 31 December 2017, primarily due to the increase in trade and bills receivables and the issuance of corporate bonds of RMB4,000 million in 2018, respectively.

Fixed assets, trade and bills receivables, contract assets and cash and cash equivalents accounted for approximately 16.2%, 30.6%, 10.7% and 8.4% of total assets, whereas trade and bills payables, bond payable and bank and other borrowings accounted for approximately 41.7%, 16.0% and 11.9% of total liabilities, as at 31 December 2018, respectively.

Net assets attributable to equity holders of CCCC Dredging increased by approximately 5.9% to approximately RMB30,332 million as at 31 December 2018. After excluding the special dividends (the "Dividends") of approximately RMB4,081 million declared by CCCC Dredging on 30 April 2019, the net assets attributable to equity holders of CCCC Dredging would be approximately RMB26,251 million (the "Adjusted NAV") as at 31 December 2018. As at 31 December 2018, the CCCC Dredging Group had net current assets of approximately RMB7,259 million with a current ratio of approximately 1.2 times.

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LETTER FROM TONGHAI CAPITAL

The net debt to total equity ratio, defined as the sum of bond payable and total borrowings less cash and cash equivalents and divided by total equity, was approximately 28.5% as at 31 December 2018, as compared to approximately 24.2% as at 31 December 2017, primarily due to the issuance of corporate bonds of RMB4,000 million in 2018.

30 June 2019 compared to 31 December 2018

As at 30 June 2019, total assets and total liabilities of the CCCC Dredging Group amounted to approximately RMB97,667 million and RMB67,948 million, representing an increase of approximately 2.8% and 9.2%, from those as at 31 December 2018.

Fixed assets, trade and bills receivables, contract assets and cash and cash equivalents accounted for approximately 13.9%, 29.2%, 12.9% and 6.9% of total assets, whereas trade and bills payables, bond payable and bank and other borrowings accounted for approximately 36.6%, 14.6% and 15.2% of total liabilities, as at 30 June 2019, respectively.

Net assets attributable to equity holders of CCCC Dredging decreased by approximately 10.4% to approximately RMB27,179 million as at 30 June 2019, primarily due to the distribution of the Dividends. As at 30 June 2019, the CCCC Dredging Group had net current assets of approximately RMB2,181 million with a current ratio of approximately 1.0 time.

The net debt to total equity ratio, defined as the sum of bond payable and total borrowings less cash and cash equivalents and divided by total equity, was approximately 45.5% as at 30 June 2019, as compared to approximately 28.5% as at 31 December 2018, primarily due to the increase in borrowings and the decrease in total equity.

Outlook

CCCC Dredging is the largest dredging enterprise in the PRC and in the world. As disclosed in the 2018 annual report of CCCC, although the traditional dredging and reclamation business of CCCC Dredging has been affected by the upgrading of environmental policies and the implementation of strict control over sea reclamation by the PRC government, CCCC Dredging adopted several initiatives to seize opportunities in both traditional and emerging businesses. While CCCC Dredging obtained contracts of projects in the PRC to maintain its dominant position in the domestic coastal dredging and reclamation market, it has been actively developing emerging business in relation to ecological and environmental protection and water environment management such as inland waterway development and river basin improvement, with a view to creating new growth drivers. CCCC Dredging's environmental and marine engineering business recorded a significant growth from previous years. In the overseas market, CCCC

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LETTER FROM TONGHAI CAPITAL

Dredging managed to pursue its overseas development strategy with the value of contracts from overseas dredging business exceeding RMB5,000 million, accounting for approximately 10% of the value of new contracts from the business.

The dredging industry is related to the port construction and marine transportation industries and is driven by the general growth in population, trade and economy as a whole. Growing population places pressure on countries with limited land to carry out land reclamation. The growth in global economy creates a need for expanding existing ports and further maintaining the existing waterways as well as constructing new ports and waterways. The uncertainties in the global economy caused by the US-China trade war may affect the dredging industry. In face of the uncertainties in the global economy, the growth in the dredging industry may be restricted in the short run. Despite these challenges, the accelerated globalisation of trade is expected to continue to drive the demand for dredging services. Coupled with CCCC Dredging's leading market position and its initiatives in developing both traditional and emerging businesses and extending its international presence, we are of the view that the outlook of CCCC Dredging is optimistic in the long run.

5. Reasons for and benefits of the ST Acquisition

The CCCC Dredging Group is principally engaged in dredging business, land reclamation business, pre-dredging and post-dredging services, environmental and marine engineering business.

As stated in the Letter from the Board, CCCC Dredging is the largest dredging company in the world and its dredging business accounts for approximately 70% of the market share in the PRC. Given CCCC Dredging's dominant market position and the scarcity of its business, the Company considers that CCCC Dredging's returns are relatively stable. As CCCC Dredging proactively develops its environmental protection and marine engineering business and expands overseas business, the Company expects that the growth potential of such businesses will contribute stable profit to the COSCO SHIPPING Ports Group.

We have discussed with the management of the Group in respect of the reasons for the ST Acquisition. The management of the Group is of the view that the COSCO SHIPPING Ports Group's investment in CCCC Dredging aligns with its strategy of extending its global footprint to build a global terminal network with highly efficient and cost-effective services to serve shipping alliances globally.

As advised by the management of the Group, the dredging services provided by CCCC Dredging is complementary to the COSCO SHIPPING Ports Group's business as a port operator. The CCCC Dredging Group has been providing dredging services to the COSCO SHIPPING Ports Group. The ST Acquisition would extend the COSCO SHIPPING Ports Group's upstream industrial services and support the COSCO SHIPPING Ports Group's ports operation business given the fact that the terminals acquired by the COSCO SHIPPING Ports Group since 2017 are mainly greenfield terminals with strong demand for waterway dredging.

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LETTER FROM TONGHAI CAPITAL

The management of the Group also considers that with the investment in CCCC Dredging, the COSCO SHIPPING Ports Group could leverage on the brand and global recognition as well as the rich experience in overseas dredging projects of CCCC Dredging to further extend its international presence.

As disclosed in the Letter from the Board, taking into account the flexibility of future capital expenditure of the COSCO SHIPPING Ports Group in its ports business and that the business of CCCC Dredging is not a principal business of the COSCO SHIPPING Ports Group, but only an extension of the COSCO SHIPPING Ports Group's upstream industrial services to support its ports business, the Company considers that it would be appropriate to acquire not more than 10% of the Enlarged CCCC Dredging Issued Share Capital instead of the entire 33.1896% of the Enlarged CCCC Dredging Issued Share Capital available for purchase. As at 30 June 2019, the COSCO SHIPPING Ports Group had cash and cash equivalents (excluding restricted bank deposits) of approximately US$558 million and unutilised banking facilities of approximately US$993 million. As such, we concur with the Company that the COSCO SHIPPING Ports Group will have sufficient financial resources to fulfill its payment obligation for the ST Acquisition. We also consider that the acquisition of the entire 33.1896% of the Enlarged CCCC Dredging Issued Share Capital for a total consideration of approximately US$1,645.6 million would reduce the COSCO SHIPPING Ports Group's financial resources and/or banking facilities otherwise available for the working capital requirement of its ports business.

Based on the aforesaid, we consider that the ST Acquisition is in line with the COSCO SHIPPING Ports Group's strategy and would supplement the COSCO SHIPPING Ports Group's existing business with the market potential and the brand and global recognition of

Dredging. As such, we are of the view that the ST Acquisition is in the interests of the Company and the Shareholders as a whole.

6. Evaluation for the consideration for the Joint Acquisition

Basis of the consideration

The consideration for the Joint Acquisition will not exceed RMB2.47 per CCCC Dredging Share which is:

equal to the floor purchase price set by CCCC for the Tender;
the same as the price per CCCC Dredging Share payable by the controlling shareholder of CCCC pursuant to the CCCG Transfer and the CCCG Subscription; and

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LETTER FROM TONGHAI CAPITAL

1. calculated by dividing the appraised net assets value of CCCC Dredging as at 31 December 2018 of RMB28,969.953 million as set out in the valuation report prepared by China Tong Cheng Assets Appraisal Co. Ltd. (中通誠資產評估有限公司), which is a qualified valuer in the PRC, by the total number of CCCC Dredging Shares in issue as at 18 June 2019, being the date of announcement of the CCCG Transfer, the CCCG Subscription and the Tender (i.e. 11,775,447,964 CCCC Dredging Shares). Such valuation was prepared in compliance with the relevant PRC regulatory requirements and professional standards.
Comparable companies
For the purpose of assessing the fairness and reasonableness of the consideration for

the ST Acquisition, we have considered the two most commonly used benchmarks in valuing a company, namely price-to-earnings multiple ("P/E") and price-to-book multiple ("P/B").

The CCCC Dredging Group is principally engaged in dredging business, land reclamation business, pre-dredging and post-dredging services, environmental and marine engineering business.

In assessing the fairness and reasonableness of the consideration for the ST Acquisition (i.e. RMB2.47 per CCCC Dredging Share), we have attempted to identify companies listed in Hong Kong or the PRC that derived a majority of their revenue from dredging and related businesses based on their latest published annual results. Based on the aforesaid criteria, we could identify only one such company, namely China Dredging Environment Protection Holdings Limited (stock code: 871) ("China Dredging").

Taking into account that there is only one comparable company listed in Hong Kong or the PRC, we have further considered overseas-listed companies which generated a majority of their revenue from dredging and related businesses based on their latest published annual results (together with China Dredging, the "Comparable Companies"). Although the businesses, scale of the operations or prospects of the Comparable Companies may not be the same as CCCC Dredging, we consider that this sample is fair and representative and is appropriate for the evaluation of the consideration for the ST Acquisition as the Comparable Companies operate in the same business sector as CCCC Dredging.

- 45 -

LETTER FROM TONGHAI CAPITAL

The following table sets out the details of the Comparable Companies as at 23

August 2019, being the date of announcement of the Joint Acquisition:

			Market
			capitalisation
			as at
			23 August	P/B	P/E
Company name	Stock code	Principal businesses	2019	(Note 1)	(Note 2)
			(US$ million)	(times)	(times)
Ackermans & van	ACKB BB	Ackermans is an industrial	4,805.8	1.3	10.9
Haaren NV		holding company. The
("Ackermans")		company's holdings are
		in the contracting-
		dredging environmental,
		financial, and staffing
		services, as well as
		private equity investing.
Royal Boskalis	BOKA NA	RBW constructs and	2,614.1	0.9	N/A
Westminster N.V.		maintains ports,			(Note 5)
("RBW")		waterways, coastlines,
		and riverbanks. The
		company provides
		dredging services and
		also engages in land
		reclamation activities.
		RBW offers hydraulic
		engineering, coastal
		protection, and land
		reclamation solutions.
TOA	1885 JP	TOA is a general	270.0	0.4	8.7
CORPORATION		contractor operating
("TOA")		nationwide and overseas.
		The company performs
		waterfront and land civil
		engineering works for
		harbour facilities. It also
		provides dredging,
		reclamation, and land
		improvement works.
National Marine	NMDC UH	National Marine offers	224.6	0.2	4.6
Dredging		dredging services. The
Company		company operates ships
("National		that deepen waterways.
Marine")

- 46 -

LETTER FROM TONGHAI CAPITAL

			Market
			capitalisation
			as at
			23 August	P/B	P/E
Company name	Stock code	Principal businesses	2019	(Note 1)	(Note 2)
			(US$ million)	(times)	(times)
Wakachiku	1888 JP	Wakachiku performs	180.3	0.7	5.5
Construction		waterfront civil
Co., Ltd.		engineering works for
("Wakachiku")		man-made island
		projects and dredging
		and reclamation works.
		It also constructs
		infrastructure such as
		dams, energy plants, and
		tunnels.
Dredging	DCIL IN	DCIL carries out dredging	118.3	0.5	19.0
Corporation of		activities which include
India Ltd.		executing capital and
("DCIL")		maintenance dredging
		for ports to open new
		parts and to expand the
		existing ports.
China Dredging	871 HK	China Dredging provides	26.5	0.1	N/A
		capital dredging,			(Note 5)
		reclamation dredging,
		maintenance dredging,
		environmental protection
		dredging services, and
		dredging-related
		construction services.
			Average	0.6	9.7
			Maximum	1.3	19.0
			Minimum	0.1	4.6
The ST Acquisition				1.1	22.2
				(Note 3)	(Note 4)

Source: Bloomberg

Notes:

Calculated based on the market capitalisations of the respective Comparable Companies as at 23 August 2019, being the date of announcement of the Joint Acquisition, divided by the equity attributable to owners of the respective Comparable Companies disclosed in their respective latest published annual or interim results, as extracted from Bloomberg.
Calculated based on the closing prices of the respective Comparable Companies as at 23 August 2019 divided by the respective earnings per share for the latest published twelve-month period, as extracted from Bloomberg.
Calculated based on the consideration for the ST Acquisition of approximately RMB3,409 million, the Adjusted NAV of approximately RMB26,251 million and the proceeds from the CCCG Subscription of approximately RMB5,000 million. We noted the arrangement in relation

- 47 -

LETTER FROM TONGHAI CAPITAL

to the profit or loss of CCCC Dredging subsequent to 31 December 2018 as set out in the section headed "3. The Tender Process" in the Letter from the Board and considered that this will not affect our assessment of the consideration for the ST Acquisition in this section.

Calculated based on the consideration for the ST Acquisition of RMB2.47 per CCCC Dredging Share and the earnings per CCCC Dredging Share of approximately RMB0.1111 for the twelve months ended 30 June 2019.
The companies incurred losses in their latest financial year. As a result, they were excluded for the purpose of analysing the P/E of the Comparable Companies.

The P/B of the Comparable Companies ranged from approximately 0.1 time to approximately 1.3 times, with an average of approximately 0.6 time. The P/B implied by the ST Acquisition of approximately 1.1 times is within the range of the P/B of the Comparable Companies.

The P/E of the Comparable Companies ranged from approximately 4.6 times to approximately 19.0 times with an average of approximately 9.7 times. The P/E implied by the ST Acquisition of approximately 22.2 times is above the highest P/E of the Comparable Companies of 19.0 times. Although the P/E implied by the ST Acquisition is above the highest P/E of the Comparable Companies, we consider that the difference is acceptable taking into account the following:

the unique position of CCCC Dredging as the market leader in the dredging industry in the PRC and the world, which justifies the higher valuation of CCCC Dredging as compared to those of the Comparable Companies;
the ST Acquisition represents an opportunity for the COSCO SHIPPING Ports Group to invest in the dredging business, which is complementary to the COSCO SHIPPING Ports Group's ports operation business;
the consideration for the ST Acquisition of RMB2.47 per CCCC Dredging Share is the same as the minimum bid price of the Tender;
all members of the Consortium (including Shanghai Terminal, COSCO SHIPPING Tianjin and the Other Investors) will acquire the CCCC Dredging Sale Shares at RMB2.47 per CCCC Dredging Share under the Joint Acquisition. The Other Investors and their respective ultimate beneficial owners will be, to the best of the Directors' knowledge, information and belief having made all reasonable enquiry, third parties independent of the Company and its connected persons; and
the consideration of RMB2.47 per CCCC Dredging Share is also the same as the consideration for the CCCG Transfer and the CCCG Subscription, the agreement of which was executed on 18 June 2019. A comparable transaction is a basis for considering the valuation of a target company. The most recent transactions provide better indication on the fair value of the target company.

- 48 -

LETTER FROM TONGHAI CAPITAL

The aforesaid transactions were related to the transfer of CCCC Dredging Shares, which involved the same target company under the ST Acquisition. As the CCCG Transfer and the CCCG Subscription were recent transactions on the transfer of CCCC Dredging Shares, this is a prominent reference for assessing the consideration for the ST Acquisition.

Based on the aforesaid, we consider that the consideration for the ST Acquisition to be fair and reasonable.

7. Financial effects of the ST Acquisition

Upon completion of the ST Acquisition, the Company is expected to have a significant influence over CCCC Dredging and CCCC Dredging is expected to become an associate of the Company. The interests in an associate will be accounted for using the equity method from the date on which it becomes an associate in accordance with the relevant accounting standard. The Group's investment in CCCC Dredging is initially recognised at cost and the carrying amount is adjusted to recognise the Group's share of the profit or loss and other comprehensive income of CCCC Dredging after completion of the ST Acquisition.

Earnings

Upon completion of the ST Acquisition, the Group's share of post-acquisition profit or loss of CCCC Dredging shall be recognised in the consolidated income statement of the Group. As CCCC Dredging recorded profits in recent years, the ST Acquisition might have a positive impact on the results of the Group after completion of the ST Acquisition.

Working capital

As at 30 June 2019, the Group had cash and bank balances (excluding restricted bank deposits) and borrowings of approximately RMB31,869.8 million and RMB115,231.3 million, respectively, resulting in a net debt (defined as borrowings less cash and bank balances) of approximately RMB83,361.5 million. Since the ST Acquisition will be funded by the internal resources and/or external financings (including bank borrowings) of the COSCO SHIPPING Ports Group, the Group's net debt is expected to increase following completion of the ST Acquisition.

Taking into account the financial resources and banking facilities available to the Group, we consider that there is no material adverse impact on the working capital position of the Group upon completion of the ST Acquisition.

- 49 -

LETTER FROM TONGHAI CAPITAL

Assets and liabilities

As stated in the Letter from the Board, after completion of the ST Acquisition,

Dredging is expected to become an associate of the Company. The ST Acquisition is expected to be funded as to 40% by the internal resources and as to 60% by external financings (including bank borrowings) of the COSCO SHIPPING Ports Group. As such, upon completion of the ST Acquisition, total assets and total liabilities of the Group are expected to increase. The ST Acquisition would have no material effect on the net assets value of the Group.

It should be noted that the aforementioned analyses are for illustrative purpose only and do not purport to represent how the financial performance and position of the Group will be upon completion of the ST Acquisition.

RECOMMENDATION

Having considered the principal factors and reasons described above, we consider that the terms of the Consortium Agreement are on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned. We also consider that the entering into of the Consortium Agreement, while not in the ordinary and usual course of business of the Group, is in the interests of the Company and the Shareholders as whole. Accordingly, we advise the Independent Board Committee to recommend, and we ourselves recommend, the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM to approve the Consortium Agreement.

Yours faithfully,

For and on behalf of

China Tonghai Capital Limited

Noelle Hung	Larry Choi
Managing Director	Director

Ms. Noelle Hung is a licensed person and a responsible officer of China Tonghai Capital Limited registered with the Securities and Futures Commission to carry out type 6 (advising on corporate finance) regulated activity under the SFO. She has about 20 years of experience in corporate finance.

Mr. Larry Choi is a licensed person and a responsible officer of China Tonghai Capital Limited registered with the Securities and Futures Commission to carry out type 6 (advising on corporate finance) regulated activity under the SFO. He has about eight years of experience in corporate finance.

- 50 -

APPENDIX I

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 respects 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 OF DIRECTORS, SUPERVISORS AND CHIEF EXECUTIVE

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

Long positions in the shares, underlying shares and debentures of the Company

			Percentage of
			total number of	Percentage of
		Number of	the relevant class	total number of
Name of Director	Capacity	Shares held	of Shares	issued Shares
Mr. TEO Siong	Beneficial owner	161,000 H Shares	0.00624%	0.00131%
Seng

- I-1 -

APPENDIX I

GENERAL INFORMATION

Long positions in the shares, underlying shares and debentures of associated corporations of the Company of associated corporations

				Percentage of
				total number of
				issued shares of
				the relevant class
Name of	Name of			of the relevant
associated	Director/		Number of	associated
corporation	Supervisor	Capacity	shares held	corporation
COSCO SHIPPING	Mr. TEO Siong	Beneficial owner	200,000 A shares	0.0017%
Development	Seng
Co., Ltd.	Mr. DENG	Interest of Spouse	38,000 A shares	0.0005%
	Huangjun
COSCO SHIPPING	Mr. DENG	Beneficial owner	1,251,059 shares	0.040%
Ports	Huangjun1

Note:

1. As at the Latest Practicable Date, Mr. DENG Huangjun was interested in 51,059 shares and 1,200,000 share options of COSCO SHIPPING Ports.

As at the Latest Practicable Date, save as disclosed below, so far as is known to the Directors, no Director was a director or employee of a company which has an interest or short position in the shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and
3 of Part XV of the SFO:

Name of Director	Position held in COSCO SHIPPING
XU Lirong	Chairman of the board of directors and party
	secretary
WANG Haimin	Deputy general manager and a party committee
	member

Save as disclosed above, as at the Latest Practicable Date, so far as was known to the Directors, (i) none of the Directors, Supervisors or chief executive of the Company had any interest or short positions in any shares or underlying shares or interest in debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which 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 or short positions which they were taken or deemed to have under such provisions of the SFO), or which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or which were required, pursuant to the Model Code, to be notified to the Company and the Stock Exchange;

- I-2 -

APPENDIX I

GENERAL INFORMATION

and (ii) none of the Directors was a director or employee of a company which had an interest or short position in the shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

3. DIRECTORS' INTERESTS IN COMPETING BUSINESS

As at the Latest Practicable Date, so far as the Directors were aware, none of the Directors or their respective close associates had any interest in any business, which competes or may compete, either directly or indirectly, with the business of the Group as if each of them were treated as a controlling shareholder of the Company under Rule 8.10 of the Listing Rules.

4. DIRECTORS' AND SUPERVISORS' INTERESTS IN ASSETS

As at the Latest Practicable Date, none of the Directors or Supervisors had any direct or indirect interest in any asset which had been, since 31 December 2018, being the date to which the latest published audited consolidated financial statements of the Company were made up, 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.

5. DIRECTORS' AND SUPERVISORS' INTERESTS IN CONTRACTS

As at the Latest Practicable Date, none of the Directors or Supervisors was materially interested in any contract or arrangement subsisting and which is significant in relation to the business of the Group.

6. DIRECTORS' AND SUPERVISORS' INTERESTS IN SERVICE CONTRACTS

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

7. EXPERT AND CONSENT

The following is the qualification of the expert who has been named in this circular and whose opinion or advice is contained in this circular:

Name	Qualification
China Tonghai Capital	a corporation licensed to carry out Type 1 (dealing
Limited	in securities) and Type 6 (advising on corporate
	finance) regulated activities under the SFO

- I-3 -

APPENDIX I

GENERAL INFORMATION

As at the Latest Practicable Date, Tonghai Capital was not beneficially interested in the share capital of any member of the Group, and did not have any 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, Tonghai Capital did not have any direct or indirect interest in any assets which had been, since 31 December 2018 (being the date to which the latest published audited accounts of the Group were made up), acquired or disposed of by, or leased to, or were proposed to be acquired or disposed of by, or leased to, any member of the Group.
Tonghai Capital has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter or opinion and references to its name in the form and context in which they respectively appear.

8. LITIGATION

There was no litigation or claim of material importance pending or threatened against any member of the Group as at the Latest Practicable Date.

9. MATERIAL ADVERSE CHANGE

The Directors confirm that, 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 consolidated financial statements of the Company were made up.

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection at the principal place of business of the Company at 48/F, COSCO Tower, 183 Queen's Road Central, Hong Kong from 9:30 a.m. to 5:30 p.m., Monday to Friday (other than public holidays) from the date of this circular up to and including the date of the EGM:

the articles of association of the Company;
the letter from the Independent Board Committee to the Independent Shareholders, the text of which is set out on page 20 of this circular;
the letter from Tonghai Capital to the Independent Board Committee and the Independent Shareholders, the text of which is set out on pages 21 to 50 of this circular;
the annual reports of the Company for each of the two financial years ended 31 December 2017 and 2018;
- I-4-

APPENDIX I

GENERAL INFORMATION

the unaudited consolidated financial statements of CCCC Dredging for the six months ended 30 June 2019;
the written consent referred to in the section headed "Expert and Consent" in this Appendix; and
this circular.

11. GENERAL

The company secretary of the Company is Dr. GUO Huawei, who is a senior economist.
The registered office of the Company is located at 2nd Floor, 12 Yuanhang Business Centre, Central Boulevard and East Seven Road Junction, Tianjin Airport Economic Zone, Tianjin, the PRC. The head office and principal place of business of the Company in Hong Kong is located at 48/F, COSCO Tower, 183 Queen's Road Central, Hong Kong.
The Hong Kong branch share registrar and transfer office of the Company is Computershare Hong Kong Investor Services Limited located at Shops 1712 to 1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong.
This circular in both English and Chinese is available in printed form and published on the respective websites of the Company at "http://hold.coscoshipping.com" and Hong Kong Exchanges and Clearing Limited at "http://www.hkexnews.hk". To the extent that there are any inconsistencies between the English version and the Chinese version of this circular, the English version shall prevail.

- I-5 -

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COSCO Shipping Holdings Company Limited published this content on 17 September 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 September 2019 09:36:08 UTC

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COSCO SHIPPING Holdings Co., Ltd. Shanghai S.E.

Equities

601919

CNE100000601

Marine Freight & Logistics

COSCO SHIPPING : POSSIBLE DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO PARTICIPATION IN A CONSORTIUM TO ACQUIRE NOT MORE THAN 10% INTEREST IN CCCC DREDGING (GROUP) CO., LTD.

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