China Yongda Automobile Services Hldg : Circulars - (1) VERY SUBSTANTIAL DISPOSAL AND VERY SUBSTANTIAL ACQUISITION IN RELATION TO THE PROPOSED DISPOSAL OF 100% EQUITY INTERESTS IN SHANGHAI YONGDA AUTOMOBILE GROUP CO., LT

printmgr file 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 licensed securities dealer or registered institution in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in China Yongda Automobiles Services Holdings Limited, you should at once hand this circular together with the accompanying form of proxy to the purchaser(s) or transferee(s) or to the bank, licensed securities dealer or registered institution in securities 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. CHINA YONGDA AUTOMOBILES SERVICES HOLDINGS LIMITED

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 03669)

1. VERY SUBSTANTIAL DISPOSAL AND VERY SUBSTANTIAL ACQUISITION IN RELATION TO THE PROPOSED DISPOSAL OF 100% EQUITY INTERESTS IN SHANGHAI YONGDA AUTOMOBILE GROUP CO., LTD. AND THE PROPOSED SUBSCRIPTION OF SHARES IN SUZHOU YANGTZE NEW MATERIALS CO., LTD.
2. PROPOSED SPIN-OFF OF SHANGHAI YONGDA AUTOMOBILE GROUP CO., LTD. AND
3. NOTICE OF EXTRAORDINARY GENERAL MEETING

Independent Financial Adviser to the Independent Board Committee and the Shareholders of China Yongda Automobiles Services Holdings Limited

Capitalized terms used in this cover page shall have the same meanings as those defined in this circular.

A letter from the Board is set out on pages 5 to 29 of this circular. A letter from the Independent Board Committee is set out on page 30 of this circular. A letter from the Independent Financial Adviser to the Independent Board Committee and the Shareholders is set out on pages 31 to 64 of this circular.

A notice convening the EGM to be held at Yongda International Tower, 2277 Longyang Road, Pudong New Area, Shanghai, PRC, on Monday, June 20, 2016 at 10 a.m., or any adjournment thereof, is set out on pages EGM-1 to EGM-2 of this circular. A form of proxy for use at the EGM is enclosed. Whether or not you propose to attend the EGM, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return the same to the Hong Kong 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 practicable but in any event not later than 48 hours before the time appointed for holding of the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof (as the case may be) should you so wish and in such event, the proxy shall be deemed to be revoked.

June 2, 2016

TABLE OF CONTENTS

Page

DEFINITIONS ..................................................................... 1 LETTER FROM THE BOARD ....................................................... 5 LETTER FROM THE INDEPENDENT BOARD COMMITTEE ........................... 30 LETTER FROM THE INDEPENDENT FINANCIAL ADVISER ........................... 31 APPENDIX I FINANCIAL INFORMATION OF THE GROUP ......................... I-1 APPENDIX II FINANCIAL INFORMATION OF THE SPIN-OFF GROUP ............... II-1 APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP AFTER COMPLETION OF THE VERY SUBSTANTIAL ACQUISITION AND DISPOSAL ..................................................... III-1 APPENDIX IV MANAGEMENT DISCUSSION AND ANALYSIS OF THE SPIN-OFF GROUP AND THE RETAINED GROUP ................................ IV-1 APPENDIX V LETTERS RELATING TO DISCOUNTED FUTURE ESTIMATED CASHFLOW ........................................................ V-1 APPENDIX VI GENERAL INFORMATION .......................................... VI-1 NOTICE OF EXTRAORDINARY GENERAL MEETING ................................ EGM-1

i

In this circular, unless the context otherwise requires, the following expressions have the meanings set out below:

"4S Dealership Businesses" the Group's (i) new passenger vehicle sales business, (ii) after-sales

services business; (iii) distribution of automobile finance and insurance products; and (iv) other ancillary business

"A-share Listco" Suzhou Yangtze New Materials Co., Ltd. (

), a joint stock company established under the laws of the PRC, whose shares are listed on the Shenzhen Stock Exchange of the PRC (stock code: 002652)

"A-share Listco Acquisition" the subscription by Yongda Investment for the Consideration Shares

to be issued by the A-share Listco pursuant to the Share Issuance and Asset Purchase Agreement

"A-share Listco Assets" all the assets and liabilities of the A-share Listco as at December 31,

2015

"Asset Restructuring" the asset restructuring of the A-share Listco contemplated under the

Share Issuance and Asset Purchase Agreement as set out in the paragraph headed "Asset Restructuring" under the section headed "Assets Restructuring Agreements-(1) Share Issuance and Asset Purchase Agreement"

"Asset Restructuring Agreements" the Share Issuance and Asset Purchase Agreement, the Share Transfer

Agreement, the Material Asset Disposal Agreement and the Profit Compensation Agreement

"Automobile Group" Shanghai Yongda Automobile Group Co., Ltd.

(), an indirect wholly-owned subsidiary of the Company

"Automobile Group Disposal" the disposal of 100% equity interests in Automobile Group held by

Yongda Investment to the A-share Listco in exchange for the issuance of the Consideration Shares by the A-share Listco pursuant to the terms of the Share Issuance and Asset Purchase Agreement

"Board" the board of directors of the Company

"Business Day" any day other than a Saturday or Sunday or public holiday in the PRC "Committed Net Profits" the amounts of net profits after tax attributable to Automobile Group

(after deducting non-recurring profit and loss, provided that non- recurring profit and loss does not include any profit or loss of Automobile Group arising from the ordinary course of business during the period from January 1, 2016 to completion of its internal restructuring) during the Profit Compensation Period committed by Yongda Investment under the Profit Compensation Agreement

"Company" China Yongda Automobiles Services Holdings Limited, an exempted company incorporated in the Cayman Islands on November 7, 2011 with limited liability, the Shares of which are listed on the Main Board of the Stock Exchange

"Compensation Shares" the share(s) of the A-share Listco to be repurchased by the A-share

Listco from Yongda Investment pursuant to the Profit Compensation Agreement

"Completion" completion of the Asset Restructuring as contemplated under the Share Issuance and Asset Purchase Agreement

"Consideration" the consideration for the Automobile Group Disposal under the Share Issuance and Asset Purchase Agreement

"Consideration Shares" new A-shares to be allotted and issued by the A-share Listco to

Yongda Investment as consideration for the Automobile Group Disposal pursuant to the Share Issuance and Asset Purchase Agreement

"CSRC" China Securities Regulatory Commission

"Deloitte" Deloitte Touche Tohmatsu, certified public accountants and the auditors of the Company

"Director(s)" the director(s) of the Company

"EGM" the extraordinary general meeting to be convened by the Company for the purpose of approving the Asset Restructuring Agreements and the Proposed Spin-off, including any adjournment thereof

"Finance Leasing Business" the finance leasing business which is conducted by Yongda Finance

Leasing and Yongsheng Finance Leasing

"Grandall" Grandall Law Firm (Shanghai), legal advisers to the Company as to PRC law

"Group" the Company and its subsidiaries (including Automobile Group)

"HK$" Hong Kong dollar(s), the lawful currency of Hong Kong

"Hong Kong" Hong Kong Special Administrative Region of the People's Republic of China

"Independent Board Committee" an independent committee of the Board comprising Mr. Lyu Wei,

Mr. Chen Xianglin and Ms. Zhu Anna Dezhen, being all the independent non-executive Directors, formed for the purpose of advising the Shareholders in relation to the Proposed Spin-off

"Independent Financial Adviser" Somerley Capital Limited, a corporation licensed by the SFC to carry

out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO, being appointed as the independent financial adviser to the Independent Board Committee and the Shareholders in relation to the Proposed Spin-off and the transactions contemplated thereunder

"Independent Valuer" Yinxin Asset Appraisal Co., Ltd. (), an

independent qualified valuer in the PRC, which has been engaged by the A-share Listco to conduct valuation of the entire equity interests of the Automobile Group as at the Valuation Reference Date

"JS Baozun" JS Baozun Investment Group Co., Ltd.(), a limited liability company incorporated under the laws of the PRC