Shanghai Electric : DISCLOSEABLE TRANSACTION

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, 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 announcement.

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SHANGHAI ELECTRIC GROUP COMPANY LIMITED

上海電氣集團股份有限公司

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

(Stock Code: 02727)

DISCLOSEABLE TRANSACTION

ANNOUNCEMENT ON EXTERNAL INVESTMENT

Discloseable Transaction

Reference is made to the announcement of Shanghai Electric Group Company Limited (the "Company") dated 11 November 2019 in relation to that the Company entered into a share transfer agreement with Mr. Wang Weidong and Ms. Xu Xiaoju, pursuant to which, the Company will acquire 36,589,932 shares held by Mr. Wang Weidong and Ms. Xu Xiaoju in Shenzhen Yinghe Technology Co., Ltd (深圳市贏合科技股份有限 公司) (the "Target Company" or the "Yinghe Technology") at a price of RMB26.21 per share (the "First Share Transfer"), representing 9.73% of the total share capital of Yinghe Technology and the total transfer price of the target shares is RMB959,022,117.72, that Mr. Wang Weidong and Ms. Xu Xiaoju entered into the Commitment on Waiver of All Voting Rights, and that the Company entered into the Conditional Share Subscription Agreement with Yinghe Technology, pursuant to which, the Company proposes to subscribe for the shares of Yinghe Technology to be issued under the non-public issuance with full amount in cash of no more than RMB2,000 million (together with the aforesaid transactions, the "Acquisition Transactions"), and the announcement of the Company dated 18 December 2019 in relation to the completion of the First Share Transfer of the Acquisition Transactions. Terms defined in the abovementioned announcements shall have the same meaning when used herein unless the context herein requires otherwise.

As of the date of this announcement, Yinghe Technology has changed its board of directors and the number of directors nominated by the Company represented more than half of the number of the seats on the board of Yinghe Technology, and Mr. Wang Weidong and Ms. Xu Xiaoju give up the voting rights attached to the 109,769,800 shares held by them in Yinghe Technology. The Company is the controlling shareholder of Yinghe Technology and Yinghe Technology is a subsidiary of the Company. The State-

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owned Assets Supervision and Administration Commission of Shanghai Municipal Government is the ultimate beneficial owner of Yinghe Technology.

On 16 February 2020, the Company entered into the Share Transfer Agreement with Mr. Wang Weidong and Ms. Xu Xiaoju, pursuant to which, the Company will acquire 27,442,449 shares held by Mr. Wang Weidong and Ms. Xu Xiaoju in Yinghe Technology at a price of RMB41.85per share, representing 7.30% of the total share capital of Yinghe Technology and the total transfer price of the target shares is RMB1,148,466,490.65(the "Transaction" or the "Share Transfer").

Listing Rules Implications

As the highest applicable percentage ratios in respect of the Transaction, aggregated with the applicable ratios for the Acquisitions Transactions according to Rule 14A.81 of the Listing Rules, exceed 5% but all applicable percentage ratios are less than 25%, such Transaction constitute discloseable transaction under Chapter 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules") and are subject to notification and announcement requirements under Chapter 14 of the Listing Rules.

As Mr. Wang Weidong and Ms. Xu Xiaoju give up the voting rights attached to the 109,769,800 shares held by them in Yinghe Technology, they do not constitute substantial shareholders of the Yinghe Technology, a subsidiary of the Company and thus the Transaction does not constitute a connected transaction under Chapter 14A of the Listing Rules.

The coming into effect and completion of the Transaction is subject to satisfaction of several conditions precedent and investors are advised to be cautious when dealing in securities of the Company.

I. Overview of the Transaction

1. On 16 February 2020, the Company entered into the Share Transfer Agreement with Mr. Wang Weidong and Ms. Xu Xiaoju, pursuant to which, the Company will acquire 27,442,449 shares held by Mr. Wang Weidong and Ms. Xu Xiaoju in Yinghe Technology at a price of RMB41.85 per share, representing 7.30% of the total share capital of Yinghe Technology and the total transfer price of the target shares is RMB1,148,466,490.65.

1. Relevant resolutions in respect of the Transaction were considered and approved at the 28th meeting of the fifth session of the Board of Directors held by the Company on 16 February 2020.

1. The Transaction neither constitutes a connected transaction nor a related-party transaction or material asset restructuring under applicable PRC laws and regulations.

1. BASIC INFORMATION OF THE PARTIES CONCERNED
   (I) Mr. Wang Weidong
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Mr. Wang Weidong, a Chinese citizen with no right of permanent overseas residence, chairman and president of Yinghe Technology, also serves as an executive director and general manager of Jiangxi Yinghe Technology Co., Ltd (江西省贏合科技有限公司), an executive director and general manager of Huizhou Yinghe Technology Co., Ltd (惠州市贏合科技有限公司), an executive director of Shenzhen Huihe Smart Technology Co., Ltd (深圳市慧合智慧科技 有限公司), an executive director of Huizhou Longhe Technology Co., Ltd (惠州市隆合科技 有限公司), an executive director of Shenzhen Hehe Automation Company Limited (深圳市 和合自動化有限公司) and an executive director of Dongguan Areconn Precision Engineering Company Limited (東莞市雅康精密機械有限公司)，all of which are subsidiaries of Yinghe Technology.

Mr. Wang Weidong has no related-party relationship with the Company, its shareholders holding over 5% equity interests, de facto controller, directors, supervisors and senior management of the Company.

(II) Ms. Xu Xiaoju

Ms. Xu Xiaoju, the spouse of and person acting in concert (as defined according to the applicable PRC laws and regulations) with Mr. Wang Weidong, is a Chinese citizen with no right of permanent overseas residence. She formerly served as the manager of the business department of Shenzhen Luhua Battery Co., Ltd ( 深 圳 市 路 華 電池有 限 公 司 ) and the marketing manager of Shenzhen Fusite Battery Co., Ltd (深圳市福斯特電池有限公司). She acted as a director and the vice president of Yinghe Technology from June 2006 to November 2018, and has been serving as the vice president of Yinghe Technology since November 2018. Ms. Xu Xiaoju has no related-party relationship with Shanghai Electric, its shareholders holding over 5% equity interests, de facto controller, directors, supervisors and senior management of the Company.

To the best of knowledge, information and belief of the directors after making all reasonable enquiries, Mr. Wang Weidong and Ms. Xu Xiaoju are third parties independent of the Company and its connected persons.

As of the date of this announcement, save for Yinghe Technology and its subsidiaries, the basic information on the core enterprises controlled by Mr. Wang Weidong and Ms. Xu Xiaoju is as follows:

	Registered
Company	Capital
Name	(RMB 0'000)	Investors	Business Scope
Yinghe		Mr. Wang Weidong holds 70%	Industrial	investment in
30,000.00	shares; Ms. Xu Xiaoju holds	(specific projects shall be
Holdings
	30% shares。	applied	separately)
Co., Ltd.
		information consultation

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	Registered
Company	Capital
Name	(RMB 0'000)	Investors			Business Scope
(贏合控股						(excluding	restricted
有限公司)						items);		marketing
						planning.
						Design,	research	and
						development and sales of
						semiconductor integrated
						circuit;	research		and
						development			and
						maintenance	of	testing
						equipment			of
		Yinghe Holdings Co., Ltd. (贏合	semiconductor integrated
		控 股 有 限 公 司 )	holds	52%	circuit;	technical	service
		and technical consultation
		shares;	Shenzhen	Yifan
		of		semiconductor
		Technology	Partnership
		integrated circuit;	testing
Shenzhen		Enterprise (Limited Partnership)
	of	TFT	(including
	( 深 圳 市 益 凡 技 術 合 夥 企 業
Shenghe
	（ 有 限 合 夥 ） )	holds	20%	AMOLED)		screen,
Technolog		research and development
	shares;	Shenzhen	Shijie
y Co., Ltd.	13,800.00	and maintenance of aging
Technology	Partnership
(深圳市晟		equipment;		design,
	Enterprise (Limited Partnership)
合技術有		research and development
	( 深 圳 市 視 界 技 術 合 夥 企 業
限公司)		of	computer	system
		（ 有 限 合 夥 ） )	holds	10%	integration,	network
		shares;	Mr. Wang Weidong
		equipment and intelligent
		holds 6% shares; Shi Wei holds	network			control
		8% shares; and Huang Bo holds	equipment;	sales	of
		4% shares。			integrated	circuits,
						communication products,
						computer	software,
						electronic	components
						and	digital	products;
						domestic trade; operation
						of	import	and	export
						business.
Guangdong		Shenzhen Shenghe Technology	Technology research and
Shenghe	10,000.00	Co., Ltd. (深圳市晟合技術有	development,	technical
Technolog		限公司) holds 100% shares.	consultation and technical
y Co., Ltd.		services	of	IC Drivers;

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	Registered
Company	Capital
Name	(RMB 0'000)	Investors	Business Scope
(廣東晟合			research					and
技術有限			development,
公司)			manufacturing	and	sales
		of	chip	equipment		and
			raw	materials	for chips;
			import and export of its
			own		goods		and
			technologies.	(operating
			activities		in	connection
			with the items subject to
			approval according to the
			law may only be carried
			out after approval by the
			competent authorities)
			General	items	under	the
			venture			investment
			business	include: supply
			chain		management;
			domestic		trade;		E-
Shenzhen			commerce, import		and
		export business operation;
Yinghe
		industrial	investment	in
supply	10,000.00
	(specific projects shall be
chain
	Yinghe Holdings Co., Ltd. (贏合	applied		separately);
manageme
		technical development of
nt Co., Ltd.		控 股 有 限 公 司 ) holds 100%
(深圳市贏		shares	computer	software		and
合供應鏈			hardware;	transportation
		and	handling	(the above
管理有限
		items shall not include the
公司)
		items that	are	prohibited
			by	laws,	administrative
			regulations,	the	State
			Council		decisions		and
			those	required	prior
			approval).

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As of the date of this announcement, Mr. Wang Weidong and Ms. Xu Xiaoju have no relationship with the Company in terms of other property rights, business, assets, creditor's rights and debts as well as staff.

1. BASIC INFORMATION ON THE TARGET COMPANY
   (I) Overview of the Target Company

Company		Shenzhen Yinghe Technology Co., Ltd
name
Registered		Suite 1002A, Unit A2, Building A1A2, China Merchants Guangming
	Science Park, Guanguang Road, Fenghuang Community, Fenghuang
address
	Street, Guangming District, Shenzhen City, Guangdong Province
Legal		Mr. Wang Weidong
representative
Registered		RMB376,003,470
capital
Date	of	26 June 2006
establishment
Stock		Yinghe Technology
abbreviation
Stock code		300457
Place	of	Shenzhen Stock Exchange
listing
		Research and development, production and sales of automation
		equipment and after-sales services; technical development, design,
Scope	of	production and sales of hardware products; sales of battery raw
business		materials, finished batteries, electronic components, mobile phones,
		mobile phone accessories, car accessories; domestic commerce,
		material supply and marketing, import and export of goods and
		technologies; property leasing; property management; equipment
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leasing (excluding financial leasing activities); processing and transformation of automation equipment and parts. (The above items shall not include the items that are prohibited by laws, administrative regulations, the State Council decisions and those required prior approval.)

(II) Shareholding Structure of the Target Company

As of the date of this announcement, the total share capital of Yinghe Technology is 376,003,470 shares. Mr. Wang Weidong holds 99,319,433 shares of Yinghe Technology, representing 26.41% of the total share capital. Ms. Xu Xiaoju, the spouse of Mr. Wang Weidong, holds 10,450,367 shares of Yinghe Technology. Mr. Wang Weidong and the person acting in concert (as defined according to the applicable PRC laws and regulations) with him collectively hold 109,769,800 shares, representing 29.19% of the total share capital. The Company holds 36,589,932 shares of Yinghe Technology, representing 9.73% of the total share capital. As Mr. Wang Weidong and Ms. Xu Xiaoju give up the voting rights attached to the 109,769,800 shares held by them in Yinghe Technology, the Company is the controlling shareholder of Yinghe Technology and Yinghe Technology is a subsidiary of the Company. The State-owned Assets Supervision and Administration Commission of Shanghai Municipal Government is the ultimate beneficial owner of Yinghe Technology.

(III) Principal Business of the Target Company

Yinghe Technology is committed to the research and development, design, manufacturing, sales and service of lithium-ion battery production equipment and its main products include winding machine, coating machine, laminating machine, die cutting machine and other equipment. As one of the first domestic companies which engage in the research and development, production and sales of lithium-ion battery production equipment, Yinghe Technology has been recognized by domestic and foreign front-line customers through continuous research and development and innovation, as well as profound technology and experience accumulation in the field of lithium battery equipment production.

Yinghe Technology follows up and provides services to the whole process from planning and design, product drawing, equipment production to equipment testing, production operation and maintenance, and fulfils in full customized demands for informationization, intellectualization from customers.

(IV) Financial Information of the Target Company

Key financial data of Yinghe Technology for the year ended 31 December 2018 and the nine months ended 30 September 2019 is set out in the table below:

Unit: RMB0'000

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		As of 30 September 2019	As of 31 December 2018
	Total assets	570,562.37	514,249.64
	Total liabilities	247,785.22	213,685.03
	Equity interest attributable to the	319,467.53	296,495.51
	owner of the parent company

		For the nine months	For the year ended 31
		ended 30 September	December 2018
		2019
	Revenue	138,154.34	208,728.51
	Total profit	30,626.71	37,962.20
	Net profit attributable to the	23,820.42	32,451.59
	owner of the parent company

Note: The financial data of Yinghe Technology for the year ended 31 December 2018 has been audited by Ruihua Certified Public Accountants (Special General Partnership). The financial data for the nine months ended 30 September 2019 is unaudited.

Net profit before and after tax of Yinghe Technology for the two years ended 31 December

2018 are as follows:

		Unit: RMB0'000
	For the year ended 31	For the year ended 31
	December 2017	December 2018
Net profit before tax	25,286.42	37,962.20
Net profit after tax	22,563.09	33,049.21

.IV. MAJOR CONTENTS OF THE AGREEMENTS

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(I) Major Contents of the Share Transfer Agreement

On 16 February 2020, the Company entered into the Share Transfer Agreement with Mr. Wang Weidong and Ms. Xu Xiaoju, the main contents of which are as follows:

1. Share transfer and consideration therefor

Upon negotiation, both parties have agreed to set the total transfer price of the underlying shares (the "Underlying Shares") at RMB41.85 (the "Share Transfer Price") with the transfer price per share being RMB1,148,466,490.65, which is determined with reference to 90% of the closing price of the A shares of Yinghe Technology on the day prior to the entering into of this agreement ( the "Price Per Share").

In case of any distribution of bonus shares out of accumulated undistributed profits or any conversion of capital or surplus reserves into share capital by Yinghe Technology during the period from the date of this agreement to the date of the official transfer of the Underlying Shares to the Company, the number of the Underlying Shares under this agreement shall be increased accordingly so that the number of the increased Underlying Shares is equal to the sum of 27,442,449 shares held by Mr. Wang Weidong and Ms. Xu Xiaoju in Yinghe Technology prior to the distribution or conversion and the additional shares distributed to or held by Mr. Wang Weidong and Ms. Xu Xiaoju in respect of their existing holdings as a result of the distribution or conversion, and the Price Per Share shall be adjusted accordingly so that the amount of the Share Transfer Price shall remain unchanged.

In case of any distribution of cash dividends out of the accumulated undistributed profits by the Company to Mr. Wang Weidong and Ms. Xu Xiaoju during the period from the date of this agreement to the date of the official transfer of the Underlying Shares to the Company, the actual amount of cash dividends distributed on the Underlying Shares shall be deducted from the Share Transfer Price payable by the Company to Mr. Wang Weidong and Ms. Xu Xiaoju.

2. Conditions precedent to Completion

The Company's obligation to pay the Share Transfer Price under this agreement and Mr. Wang Weidong and Ms. Xu Xiaoju's obligation to complete procedures for the transfer of the Underlying Shares under this agreement shall be conditional upon the following conditions (the "Conditions Precedent to Completion") being satisfied or waived in writing by the Company before 31 March 2020:

1. The pledge on the Underlying Shares having been released and the Underlying Shares are not subject to other restrictions on rights (including other pledges), or judicial measures (including seizure and freezing);
2. Mr. Wang Weidong and Ms. Xu Xiaoju and Yinghe Technology having performed and observed the agreements, commitments and obligations as required under this agreement, without any material breach of this agreement;
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1. The Shenzhen Stock Exchange having issued a letter of confirmation on the share transfer by agreement as required by the procedures for the transfer by agreement of the Underlying Shares in accordance with the Guidelines on Agreed Transfer of Shares of Listed Companies of the Shenzhen Stock Exchange (《深圳證券交易所上市公司股份協議轉讓業務辦理指 引》) and the Guidance on Agreed Transfer of Tradable Shares of Listed Companies of the Shenzhen Stock Exchange (《深圳證券交易所上市公司流通股協議轉讓業務辦理指南》);
2. Mr. Wang Weidong and Ms. Xu Xiaoju having obtained the Individual Income Tax Payment Certificates issued by the competent tax authority in respect of their tax obligations for the share transfer; and
3. Mr. Wang Weidong and Ms. Xu Xiaoju having issued a written confirmation, together with supporting documents, to the Company that all the Conditions Precedent to Completion as stipulated in this agreement have been met (or waived in writing by the Company).

3. Payment and share transfer

The Company shall pay the total of the Share Transfer Price in one lump sum to the accounts designated by Mr. Wang Weidong and Ms. Xu Xiaoju within five working days after the transfer of the Underlying Shares, details of which are set out below:

	Amount of the Share Transfer Price (RMB)
Mr. Wang Weidong	1,039,129,557.30
Ms. Xu Xiaoju	109,336,933.35
Total:	1,148,466,490.65

1. Mr. Wang Weidong and Ms. Xu Xiaoju should simultaneously issue a certificate to the Company after they received the above payments in accordance with the agreement that the Company has paid the corresponding Share Transfer Price.
2. During the implementation of this agreement, the Company, Mr. Wang Weidong and Ms. Xu Xiaoju shall handle and urge Yinghe Technology to deal with relevant information disclosure matters in accordance with the relevant securities management laws and regulations and regulations of securities registration or securities transaction authorities. In addition, the Company, Mr. Wang Weidong and Ms. Xu Xiaoju shall submit all written materials required to perform this agreement unconditionally and go through all the procedures and formalities required to implement the Share Transfer.
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1. The Company, Mr. Wang Weidong and Ms. Xu Xiaoju agree that the Share Transfer Price for the Share Transfer shall be a part of the "the total price of the share transfer transaction" agreed under the "Performance Commitment Agreement".

V. PURPOSE OF THE TRANSACTION AND IMPACT THEREOF ON THE COMPANY

Upon the completion of the Transaction, the Company will further enhance its control over Yinghe Technology, which could help the Company seize the development opportunity in the field of lithium battery manufacturing, which will be conducive to the further optimization of the Company's industrial layout structure to ultimately improve the Company's overall competitiveness.

VI. RISK WARNING FOR THE TRANSACTION

1. After the Share Transfer Agreement takes effect, it is also required to proceed with relevant procedures in accordance with relevant requirements of the Shenzhen Stock Exchange on agreed transfer, and registration of share transfer with Shenzhen Branch of China Securities Depository and Clearing Corporation Limited; there are certain uncertainties with the agreed share transfer and voting rights entrustment;

1. The Transaction is exposed to the risk that the parties to the Transaction may not fulfill their obligations according to the agreements;

1. The products of the Target Company mainly include production equipment for lithium batteries, and the equipment manufacturing industry is closely related to the downstream market demands for and fixed asset investment to lithium batteries. Under the powerful support of state policies, new energy and its equipment manufacturing industry have maintained rapid growth in recent years. However, if any adverse change in external economic environment or any significant change in the above factors that affect market demands occurs, lithium batteries and related equipment manufacturing industry will be affected significantly, and further the business operation and results of the Target Company will be adversely affected.

Considering the above risk factors to which the Transaction is exposed, investors are advised to be cautious of investment risks.

VII. GENERAL INFORMATION

The Company is one of the largest industrial equipment manufacturing conglomerates in China engaged in the following principal activities: (i) design, manufacturing and sale of nuclear power nuclear island equipment products, wind power equipment products and heavy machinery including large forging components, and provision of solution package for comprehensive utilisation of solid waste, sewage treatment, power station environment protection and distributed energy systems; (ii) design, manufacturing and sale of thermal power

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equipment products and auxiliary equipment, nuclear power conventional island equipment products and power transmission and distribution equipment products; (iii) design, manufacturing and sale of elevators, electric motors, machine tools and other integrated electromechanical equipment products; and (iv) provision of integrated engineering services for power station projects and other industries, financial products and services, and functional services including international trading services, financial lease and related consulting services, insurance brokerage services and other functional services. The ultimate beneficial owner of the Group is Shanghai State-owned Assets Supervision and Administration Commission.

VIII. OPINIONS OF THE BOARD OF DIRECTORS

None of the directors of the Company has a material interest in the Transaction and shall abstain from voting on the relevant board resolutions in respect of the Transaction.

Having made due and reasonable inquiries, the directors (including the independent non- executive directors) of the Company are of the opinion that the Transaction is fair and reasonable, and are in the interest of the Company and the shareholders of the Company as a whole.

IX. LISTING RULES IMPLICATIONS

As the highest applicable percentage ratio for the transaction contemplated under the Transaction, aggregated with the applicable ratios for the Acquisitions Transactions according to Rule 14A.81 of the Listing Rules, is more than 5%, but all applicable percentage ratios are less than 25%, such transaction constitute discloseable transaction under Chapter 14 of the Listing Rules and are subject to notification and announcement requirements under Chapter 14 of the Listing Rule.

As Mr. Wang Weidong and Ms. Xu Xiaoju give up the voting rights attached to the 109,769,800 shares held by them in Yinghe Technology, they do not constitute substantial shareholders of the Yinghe Technology, a subsidiary of the Company and thus the Transaction does not constitute a connected transaction under Chapter 14A of the Listing Rules.

The coming into effect and completion of the Transaction is subject to satisfaction of several conditions precedent and investors are advised to be cautious when dealing in securities of the Company.

By order of the Board

Shanghai Electric Group Company Limited

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ZHENG Jianhua

Chairman of the Board

Shanghai, the PRC, 17 February 2020

As at the date of this announcement, the executive directors of the Company are Mr. ZHENG Jianhua, Mr. HUANG Ou, Mr. ZHU Zhaokai and Mr. ZHU Bin; the non-executive directors of the Company are Ms. YAO Minfang and Ms. LI An; and the independent non-executive directors of the Company are Dr. CHU Junhao, Dr. XI Juntong and Dr. XU Jianxin.

* For identification purpose only

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